Golden Parachute Excise Tax. In the event that the benefits provided for in this Agreement or otherwise payable to the Employee constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) that are subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Employee shall receive (i) a one-time payment from the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company sufficient to pay the additional excise tax and federal, state and local income and employment taxes arising from the Excise Tax Gross-Up made by the Company to the Employee pursuant to this Section 6 (the “Additional Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6.
Appears in 10 contracts
Samples: Change of Control Severance Agreement, Change of Control Severance Agreement (XOMA Corp), Change of Control Severance Agreement (XOMA Corp)
Golden Parachute Excise Tax. (a) In the event it will be determined that any payment or distribution by the benefits provided Company or other amount with respect to the Company to or for in the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise payable otherwise, but determined without regard to any additional payments required under this Section 6 (a “Payment”), is (or will be) subject to the Employee constitute “parachute payments” within the meaning of excise tax imposed by Section 280G 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) that or any interest or penalties are subject (or will be) incurred by Executive with respect to the excise tax imposed by Section 4999 of the Code with respect to the Company (the excise tax, together with any interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Employee shall Executive will be entitled to receive an additional cash payment (ia “Gross-Up Payment”) a one-time payment from the Company sufficient in an amount equal to pay such excise tax (the “sum of the Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company amount sufficient to pay the additional excise tax cumulative Excise Tax and federal, state all cumulative income taxes (including any interest and local penalties imposed with respect to such taxes) relating to the Gross-Up Payment so that the net amount retained by Executive is equal to all payments to which Employee is entitled pursuant to the terms of this Agreement (excluding the Gross-Up Payment) or otherwise less income and employment taxes arising from (but not reduced by the Excise Tax or by income taxes attributable to the Gross-Up Payment).
(b) Subject to the provisions of Section 6(c), all determinations required to be made under this Section 6, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at the determination, will be made by a nationally recognized certified public accounting firm selected by the Company with the consent of Executive, which should not unreasonably be withheld (the “Accounting Firm”) which will provide detailed supporting calculations both to the Company and Executive within 30 days after the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm will be borne solely by the Company. The Company, as determined in accordance with this Section 6, will pay any Gross-Up Payment to Executive within five days after the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, it will so indicate to Executive in writing. Any determination by the Accounting Firm will be binding upon the Company and Executive. As a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm, it is possible that Gross-Up Payments that the Company should have made will not have been made (an “Underpayment”), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies in accordance with Section 6(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm will determine the amount of Underpayment that has occurred and the Underpayment will be promptly paid by the Company to or for the Employee pursuant to this Section 6 benefit of Executive.
(the “Additional Gross-Up”). Unless c) Executive will notify the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined claim by the Internal Revenue Service that, if successful, would require a Gross-Up Payment (that has not already been paid by the Company). The notification will be given as soon as practicable but no later than ten business days after Executive is informed in writing of the claim and will apprise the Company of the nature of the claim and the date on which the claim is requested to be greater paid. Executive will not pay the claim prior to the expiration of the 30-day period following the date on which Executive gives notice to the Company or lesser than any shorter period ending on the amount so determined date that any payment of taxes with respect to the claim is due. If the Company notifies Executive in writing prior to the expiration of the 30-day period that it desires to contest the claim, Executive will:
(i) give the Company any information reasonably requested by the Accountants, Company relating to the claim;
(ii) take any action in connection with contesting the claim as the Company will reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to the claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to contest the claim; and
(iv) permit the Company to participate in any proceedings relating to the claim.
(d) The Company will bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with the Employee agree to promptly contest and will indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to penalties with respect thereto) imposed as a result of the other party as representation and payment of costs and expenses. Without limitation of the Accountants reasonably determine is appropriate. For purposes forgoing provisions of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear will control all costs the Accountants may reasonably incur proceedings taken in connection with the contest and, at its sole option, may pursue or forego any calculations contemplated and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of the claim and may, at its sole option, either direct Executive to pay the tax claimed and sxx for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute the contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company will determine. If the Company directs Executive to pay the claim and sxx for a refund, the Company will advance the amount of the payment to Executive, on an interest-free basis, and will indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to the advance or with respect to any imputed income with respect to the advance; and any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which the contested amount is claimed to be due will be limited solely to the contested amount. The Company’s control of the contest will be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive will be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 6(d), Executive becomes entitled to receive any refund with respect to the claim, Executive will, subject to the Company’s compliance with the requirements of Section 6(d), promptly pay to the Company the amount of the refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to this Section 66(d), a determination is made that Executive will not be entitled to any refund with respect to the claim and the Company does not notify Executive in writing of its intent to contest the denial of refund prior to the expiration of 30 days after the determination, then the advance will be forgiven and will not be required to be repaid and the amount of the advance will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
Appears in 6 contracts
Samples: Employment Agreement (Solectron Corp), Employment Agreement (Solectron Corp), Employment Agreement (Solectron Corp)
Golden Parachute Excise Tax. In the event that the benefits provided for in this Agreement or otherwise payable to the Employee constitute “"parachute payments” " within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “"Code”") that are subject to the excise tax imposed by Section 4999 of the Code (the “"Excise Tax”"), then the Employee shall receive (i) a one-time payment from the Company sufficient to pay such excise tax (the “"Excise Tax Gross-Up”"), and (ii) an additional one-time payment from the Company sufficient to pay the additional excise tax and federal, federal and state and local income and employment taxes arising from the Excise Tax Gross-Up made by the Company to the Employee pursuant to this Section 6 (the “"Additional Gross-Up”"); provided, however, that the Company shall only pay the Excise Tax Gross-Up and Additional Gross-Up if the cumulative value of such payments to the Employee equals or exceeds $10,000. In the event that such payments to the Employee is less than $10,000, then the Employee's benefits hereunder shall be either (x) delivered in full, or (y) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the Excise Tax, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s 's excise tax liability and the amount required to be paid under this Section 6 7 shall be made in writing in good faith by the accounting firm serving as the Company’s 's independent public accountants immediately prior to the Change of Control (the “"Accountants”"). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 67, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “"substantial authority” " tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 67. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 67.
Appears in 5 contracts
Samples: Change of Control Severance Agreement (Cholestech Corporation), Change of Control Severance Agreement (Cholestech Corporation), Change of Control Severance Agreement (Cholestech Corporation)
Golden Parachute Excise Tax. In (a) If any of the event that payments or benefits received or to be received by the benefits provided for Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Agreement or otherwise payable any other plan, arrangement or agreement) (such payments or benefits, excluding the Gross-Up Payment defined below, being hereinafter referred to as the Employee constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”"Total Payments") that are will be subject to the excise tax imposed by under Section 4999 of the Code (the “"Excise Tax”"), then the Employee shall receive provisions of either subclause (i) a one-time payment from the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and or (ii) of this section shall apply: (i) if the Total Payments are less than 115% of the maximum amount of such payments that could be made without imposition of Excise Tax (the "Safe Harbor Amount"), then the Total Payments will be reduced to the Safe Harbor Amount; or (ii) if the Total Payments equal or exceed 115% of the Safe Harbor Amount, the Company shall pay to the Executive an additional oneamount (the "Gross-time payment from Up Payment") such that the Company sufficient to pay net amount retained by the additional excise tax Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes arising from the and Excise Tax upon the Gross-Up made by the Company Payment, shall be equal to the Employee pursuant Total Payments.
(b) The calculations necessary to give effect to this Section 6 (the “Additional Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 section shall be made in writing in good faith performed by the accounting firm serving as the Company’s independent public accountants which was immediately prior to the Change of Control in Control, the Company's independent auditor (the “Accountants”"Auditor"). The initial For purposes of determining whether any of the Total Payments will exceed the Safe Harbor Amount and the amount of the Excise Tax Gross-Up and Additional Gross-Up payments hereunderTax, if any, (i) all of the Total Payments shall either be treated as "parachute payments" (xwithin the meaning of section 280G(b)(2) paid of the Code) unless, in the opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Employee no later than ten Executive and selected by the Auditor, such payments or benefits (10in whole or in part) days prior to the due date for the payment do not constitute parachute payments, including by reason of any excise tax, or (ysection 280G(b)(4)(A) paid to the Internal Revenue Service on behalf of the Employee no later than Code, (ii) all "excess parachute payments" within the due date for meaning of section 280G(b)(1) of the payment of any excise tax. In the event that Code shall be treated as subject to the Excise Tax incurred by unless, in the Employee is opinion of Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Internal Revenue Service to be greater or lesser than Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount so determined by of the AccountantsGross-Up Payment, the Company and Executive shall be deemed to pay federal income tax at the Employee agree to promptly (but highest marginal rate of federal income taxation in no event later than the end of the calendar year in which the applicable Gross-Up Payment is to be made and state and local income taxes are paid to at the highest marginal rate of taxation in the state and locality of the Executive's residence on the date of termination of employment, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(or received fromc) In the Internal Revenue Serviceevent that subclause (i) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 614(a) applies, the Accountants may make reasonable assumptions Executive and approximations concerning applicable taxes the Company shall jointly agree on the allocation of any reduction in the Total Payments.
(d) The provisions of this Section 14 shall be applied without giving effect to any cap or limitation on benefits under the Company's Supplemental Executive Retirement Plan that is intended to avoid Excise Tax, and may rely on interpretations concerning the Company hereby waives the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish any such provision to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6Executive.
Appears in 3 contracts
Samples: Employment Agreement (Gradall Industries Inc), Employment Agreement (Gradall Industries Inc), Employment Agreement (Gradall Industries Inc)
Golden Parachute Excise Tax. In the event that the benefits provided for in this Agreement or otherwise payable to the Employee constitute “"parachute payments” " within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “"Code”") that are subject to the excise tax imposed by Section 4999 of the Code (the “"Excise Tax”"), then the Employee shall receive (i) a one-time payment from the Company sufficient to pay such excise tax (the “"Excise Tax Gross-Up”"), and (ii) an additional one-time payment from the Company sufficient to pay the additional excise tax and federal, federal and state and local income and employment taxes arising from the Excise Tax Gross-Up made by the Company to the Employee pursuant to this Section 6 (the “"Additional Gross-Up”"); provided, however, that the Company shall only pay the Excise Tax Gross-Up and Additional Gross-Up if the cumulative value of such payments to the Employee equals or exceeds $10,000. In the event that such payments to the Employee is less than $10,000, then the Employee's benefits hereunder shall be either (x) delivered in full, or (y) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the Excise Tax, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s 's excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s 's independent public accountants immediately prior to the Change of Control (the “"Accountants”"). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “"substantial authority” " tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6."
Appears in 3 contracts
Samples: Change of Control Severance Agreement (Cholestech Corporation), Change of Control Severance Agreement (Cholestech Corporation), Change of Control Severance Agreement (Cholestech Corporation)
Golden Parachute Excise Tax. In the event that If the benefits provided for in this Agreement or otherwise payable to the Employee Executive constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) that are and will be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Employee Executive’s severance benefits under Section 2 shall receive be (i) a one-time payment from the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”)delivered in full, and or (ii) an additional one-time payment from delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Company sufficient to pay Excise Tax, whichever of the additional excise tax and foregoing amounts, taking into account the applicable federal, state and local income taxes and employment taxes arising from the Excise Tax GrossTax, results in the receipt by Executive on an after-Up made by tax basis, of the Company to the Employee pursuant to this Section 6 (the “Additional Gross-Up”)greatest amount of severance benefits. Unless the Company and the Employee Executive otherwise agree in writing, the any determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 5 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 65, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code for which there is a “substantial authority” tax reporting positionCode. The Company and the Employee Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. If the Accountants determine that reduction of Executive’s severance benefits is required by this Section 65 such that no portion of Executive’s severance benefits will be subject to the Excise Tax, the severance benefits shall be reduced in the following order: (i) cash severance pay that is exempt from Section 409A, (ii) any other cash severance pay, (iii) any other cash payable that is a severance benefit other than stock appreciation rights, (iv) any stock appreciation rights, (v) any restricted stock and/or restricted stock units, and (vi) stock options. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 65.
Appears in 3 contracts
Samples: Change of Control Agreement (Xilinx Inc), Change of Control Agreement (Xilinx Inc), Change of Control Agreement (Xilinx Inc)
Golden Parachute Excise Tax. In the event that the benefits provided Employer shall reimburse Employee for in this Agreement or otherwise payable to the Employee constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”a) that are subject to the any excise tax imposed by Section 4999 of the Code on any portion of the compensation or benefits payable by Employer or any of its parents, subsidiaries or other affiliates to Employee under this Agreement, all other contracts, arrangements or programs, and (the “Excise Tax”), then the Employee shall receive (ib) a one-time payment from the Company sufficient to pay any such excise tax (the “Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company sufficient to pay the additional excise tax and federal, state and local income and employment any other taxes arising from the Excise Tax Gross-Up made imposed by the Company Code or under state or local law on the payments provided for in this Section 10 (including but not limited to the afore-described payments in this sentence). Employee pursuant and Employer agree to reasonably cooperate to mitigate the amount of any such tax that might become payable. Employer shall pay to Employee the payments, or portions thereof, provided for in this Section 6 (the “Additional Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no 10 not later than ten fifteen (1015) days prior to the date on which such taxes, or portions thereof, are due date for as determined by the tax counsel referred to below. Tax counsel selected by Employer and reasonably acceptable to Employee shall determine the amounts (if any) due Employee under this Section 10, based on the actual tax rates to which Employee is subject at the time (or, if the actual tax rates cannot be determined at such time, based on the highest marginal tax rates of Employee). Employee shall provide such counsel with such information as such counsel reasonably requests in connection with such determination. All determinations of tax counsel shall be binding on Employee and Employer. Tax counsel shall determine that payments shall be due hereunder only if, and to the extent that, it is more likely than not that the payments or benefits are subject to a tax. In making the determinations required by this Section 10, tax counsel may rely on benefit consultants, accountants or other experts. Employer agrees to pay all reasonable fees and expenses of such tax counsel, benefits consultants, accountants or other experts. If, subsequent to the payment to Employee of any excise taxpayments pursuant to this Section 10, the tax counsel referred to in this Section 10 reasonably determines that the amount of the payments paid pursuant to this Section 10 are greater than, or (y) paid less than, the amount required to the Internal Revenue Service on behalf of the have been paid, Employee no later than the due date for the payment of any excise taxshall reimburse Employer an amount, or Employer shall pay to Employee an additional amount, respectively, based upon such determination. In the event that tax counsel referred to in this Section 10 reasonably determines that Employee is required to pay excise tax, interest or penalties to a governmental taxing authority as a result of his non-payment of taxes where such tax counsel had determined that such taxes need not be paid or as a result of a miscalculation of such taxes, Employer shall pay to Employee an additional amount equal to (i) the Excise Tax incurred amount of such interest and/or penalties, (ii) the excise tax which was not paid and (iii) any excise tax and any other taxes imposed by the Employee is determined by Code or under state or local law on the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but payments provided for in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6sentence.
Appears in 3 contracts
Samples: Employment Agreement (AutoGenomics, Inc.), Employment Agreement (AutoGenomics, Inc.), Employment Agreement (AutoGenomics, Inc.)
Golden Parachute Excise Tax. In the event that the benefits provided for in this Agreement or otherwise payable to the Employee constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) that are subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Employee shall receive (i) a one-time payment from the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company sufficient to pay the additional excise tax and federal, federal and state and local income and employment taxes arising from the Excise Tax Gross-Up made by the Company to the Employee pursuant to this Section 6 (the “Additional Gross-Up”); provided, however, that the Company shall only pay the Excise Tax Gross-Up and Additional Gross-Up if the cumulative value of such payments to the Employee equals or exceeds $10,000. In the event that such payments to the Employee is less than $10,000, then the Employee’s benefits hereunder shall be either (x) delivered in full, or (y) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the Excise Tax, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6.
Appears in 2 contracts
Samples: Change of Control Severance Agreement (Cholestech Corporation), Change of Control Severance Agreement (Cholestech Corporation)
Golden Parachute Excise Tax. (a) In the event it shall be determined that any payment or distribution by the benefits provided Company or other amount with respect to the Company to or for in the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise payable otherwise, but determined without regard to any additional payments required under this Section 5 (a “Payment”), is (or will be) subject to the Employee constitute “parachute payments” within the meaning of excise tax imposed by Section 280G 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) that or any interest or penalties are subject (or will be) incurred by the Employee with respect to the excise tax imposed by Section 4999 of the Code with respect to the Company (the excise tax, together with any interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Employee shall be entitled to receive an additional cash payment (ia “Gross-Up Payment”) a one-time payment from the Company sufficient in an amount equal to pay such excise tax (the “sum of the Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company amount sufficient to pay the additional excise tax cumulative Excise Tax and federal, state all cumulative income taxes (including any interest and local penalties imposed with respect to such taxes) relating to the Gross-Up Payment so that the net amount retained by the Employee is equal to all payments to which Employee is entitled pursuant to the terms of this Agreement (excluding the Gross-Up Payment) or otherwise less income and employment taxes arising from (but not reduced by the Excise Tax or by income taxes attributable to the Gross-Up Payment).
(b) Subject to the provisions of subsection (c) of this Section 5, all determinations required to be made under this Section 5, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at the determination, shall be made by a nationally recognized certified public accounting firm selected by the Company to with the Employee pursuant to this Section 6 consent of the Employee, which should not unreasonably be withheld (the “Additional Gross-UpAccounting Firm”). Unless ) which shall provide detailed supporting calculations both to the Company and the Employee otherwise agree within 30 days after the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. The Company, as determined in accordance with this Section 5, shall pay any Gross-Up Payment to the Employee within five days after the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by the Employee, it shall so indicate to the Employee in writing, . Any determination by the determination Accounting Firm shall be binding upon the Company and the Employee. As a result of uncertainty in the application of Section 4999 of the Employee’s excise tax liability and Code at the amount time of the initial determination by the Accounting Firm, it is possible that Gross-Up Payments that the Company should have made will not have been made (an “Underpayment”), consistent with the calculations required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event the Company exhausts its remedies in accordance with subsection (c) of this Section 5 and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of Underpayment that has occurred and the Excise Tax incurred Underpayment shall be promptly paid by the Company to or for the benefit of the Employee.
(c) The Employee is determined shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require a Gross-Up Payment (that has not already been paid by the Company). The notification shall be given as soon as practicable but no later than ten business days after the Employee is informed in writing of the claim and shall apprise the Company of the nature of the claim and the date on which the claim is requested to be greater paid. The Employee shall not pay the claim prior to the expiration of the 30-day period following the date on which the Employee gives notice to the Company or lesser than any shorter period ending on the amount so determined date that any payment of taxes with respect to the claim is due. If the Company notifies the Employee in writing prior to the expiration of the 30-day period that it desires to contest the claim, the Employee shall:
(i) give the Company any information reasonably requested by the Accountants, Company relating to the claim;
(ii) take any action in connection with contesting the claim as the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to the claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to make a determination under this Section 6contest the claim; and
(iv) permit the Company to participate in any proceedings relating to the claim. The Company shall bear and pay directly all costs the Accountants may reasonably incur and expenses (including additional interest and penalties) incurred in connection with the contest and shall indemnify and hold the Employee harmless, on an after-tax basis, for any calculations contemplated by Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of the representation and payment of costs and expenses. Without limitation of the forgoing provisions of this Section 65, the Company shall control all proceedings taken in connection with the contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of the claim and may, at its sole option, either direct the Employee to pay the tax claimed and sxx for a refund or contest the claim in any permissible manner, and the Employee agrees to prosecute the contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine. If the Company directs the Employee to pay the claim and sxx for a refund, the Company shall advance the amount of the payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to the advance or with respect to any imputed income with respect to the advance; and any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which the contested amount is claimed to be due shall be limited solely to the contested amount. The Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to subsection (c) of this Section 5, the Employee becomes entitled to receive any refund with respect to the claim, the Employee shall, subject to the Company’s compliance with the requirements of subsection (c) of this Section 5, promptly pay to the Company the amount of the refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to subsection (c) of this Section 5, a determination is made that the Employee shall not be entitled to any refund with respect to the claim and the Company does not notify the Employee in writing of its intent to contest the denial of refund prior to the expiration of 30 days after the determination, then the advance shall be forgiven and shall not be required to be repaid and the amount of the advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
Appears in 2 contracts
Samples: Management Retention Agreement (Palm Inc), Management Retention Agreement (Palm Inc)
Golden Parachute Excise Tax. In the event that If the benefits provided for in this Agreement or otherwise payable to the Employee Executive constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) that are and will be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Employee Executive’s severance benefits under Section 2 shall receive be (i) a one-time payment from the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”)delivered in full, and or (ii) an additional one-time payment from delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Company sufficient to pay Excise Tax, whichever of the additional excise tax and foregoing amounts, taking into account the applicable federal, state and local income taxes and employment taxes arising from the Excise Tax GrossTax, results in the receipt by Executive on an after-Up made by tax basis, of the Company to the Employee pursuant to this Section 6 (the “Additional Gross-Up”)greatest amount of severance benefits. Unless the Company and the Employee Executive otherwise agree in writing, the any determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 5 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 65, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code for which there is a “substantial authority” tax reporting positionCode. The Company and the Employee Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. If the Accountants determine that reduction of Executive’s severance benefits is required by this Section 65 such that no portion of Executive’s severance benefits will be subject to the Excise Tax, the severance benefits shall be reduced in the following order: (i) cash severance pay that is exempt from Section 409A, (ii) any other cash severance pay, (iii) any other cash payable that is a severance benefit other than stock appreciation rights, (iv) any stock appreciation rights, (v) any restricted stock, and (vi) stock options. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 65.
Appears in 2 contracts
Samples: Change of Control Agreement (PMC Sierra Inc), Change of Control Agreement (PMC Sierra Inc)
Golden Parachute Excise Tax. In the event that the benefits provided for in this Agreement or otherwise payable to the Employee constitute “"parachute payments” " within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “"Code”") that are subject to the excise tax imposed by Section 4999 of the Code (the “"Excise Tax”"), then the Employee shall receive (i) a one-time payment from the Company sufficient to pay such excise tax (the “"Excise Tax Gross-Up”"), and (ii) an additional one-time payment from the Company sufficient to pay the additional excise tax and federal, federal and state and local income and employment taxes arising from the Excise Tax Gross-Up made by the Company to the Employee pursuant to this Section 6 (the “"Additional Gross-Up”"); provided, however, that the Company shall only pay the Excise Tax Gross-Up and Additional Gross-Up if the cumulative value of such payments to the Employee equals or exceeds $10,000. In the event that such payments to the Employee is less than $10,000, then the Employee's benefits hereunder shall be either (x) delivered in full, or (y) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the Excise Tax, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s 's excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s 's independent public accountants immediately prior to the Change of Control (the “"Accountants”"). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “"substantial authority” " tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6.
Appears in 2 contracts
Samples: Change of Control Severance Agreement (Cholestech Corporation), Change of Control Severance Agreement (Cholestech Corporation)
Golden Parachute Excise Tax. In 5.01 Subject to Section 5.07, if there is a Change in Control and any payment (other than the event that the benefits Gross-Up payments provided for in this Section 5.01) or distribution by the Company to or for the benefit of Executive, whether pursuant to the terms of this Agreement or otherwise payable to otherwise, including without limitation any lapse or termination of any restriction on, deferral period or the Employee constitute “parachute payments” within the meaning vesting or exercisability of Section 280G of the Internal Revenue Code of 1986any payment, as amended distribution, or benefit (the “Code”) that are a "Payment"), is subject to the excise tax imposed by Section 4999 of the Code (such tax, together with any interest and penalties thereon, other than any criminal or fraud penalties, being hereafter referred to as the “"Excise Tax”"), then the Employee shall Executive will be entitled to receive an additional payment (i) a one"Gross-time Up Payment"). The Gross-Up Payment will be in an amount such that, after payment from the Company sufficient by Executive of all taxes thereon (including any interest or penalties, other than any criminal or fraud penalties, imposed with respect to pay such excise tax (the “taxes), including any Excise Tax and any income tax imposed upon the Gross-Up”)Up Payment, and (ii) Executive retains an additional oneamount of the Gross-time payment from the Company sufficient Up Payment equal to pay the additional excise tax and federal, state and local income and employment taxes arising from the Excise Tax imposed upon the Payment.
5.02 Subject to the provisions of Section 5.05, all determinations required to be made under this Section 5, including whether a Gross-Up Payment is required to be paid by the Company and the amount of such Gross-Up Payment, if any, will be made by a nationally recognized accounting firm (the "Accounting Firm") selected by the Company. The Company will direct the Accounting Firm to submit its determination and detailed supporting calculations to both the Company and Executive within thirty (30) calendar days after the Change in Control, the Date of Termination, if applicable, and any such other time or times as may be reasonably requested by the Company or Executive. If the Accounting Firm determines that any Excise Tax is payable by Executive, the Company will pay the required Gross-Up Payment, less any applicable withholding, to Executive, as soon as reasonably practicable after receipt of such determination and calculations with respect to any Payment to Executive. If the Accounting Firm determines that no Excise Tax is payable by Executive, it will, at the same time as it makes such determination, furnish the Company and Executive an opinion that Executive has substantial authority not to report any Excise Tax on his tax return. As a result of the uncertainty in the application of Section 4999 of the Code, it is possible that Gross-Up Payments which will not have been made by the Company to the Employee pursuant to this Section 6 should have been made hereunder (the “Additional Gross-Up”an "Underpayment"). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Company exhausts or fails to pursue its remedies pursuant to Section 5.05 and Executive thereafter is required to make a payment of any Excise Tax incurred by Tax, Executive will direct the Employee Accounting Firm to determine the amount of the Underpayment and to submit its determination and detailed supporting calculations to both the Company and Executive as promptly as possible. The Company will promptly pay any such Underpayment to, or for the benefit of, Executive as soon as reasonably practicable after receipt of such determination and calculations (and, in all events, no later than the last day of the taxable year following the taxable year in which the applicable amount is determined by submitted to the Internal Revenue Service or other taxing authority).
5.03 Any determination by the Accounting Firm as to be greater or lesser than the amount so determined by of the Accountants, Gross-Up Payment will be binding upon the Company and Executive.
5.04 The fees and expenses of the Employee agree Accounting Firm for its services hereunder will be borne by the Company.
5.05 Executive will notify the Company in writing within five (5) days of any claim by any taxing authority that, if successful, would require the payment by the Company of a Gross-Up Payment or any additional Gross-Up Payment. Executive will not pay such claim prior to the earlier of (x) the expiration of the thirty (30) calendar-day period following the date on which he gives such notice to the Company and (y) the date that any payment of amount with respect to such claim is due. If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive will:
(a) provide the Company with any written records or documents in his possession relating to such claim reasonably requested by the Company;
(b) take such action in connection with contesting such claim as the Company may reasonably request in writing from time to time, including without limitation accepting legal representation with respect to such claim by an attorney selected by the Company;
(c) cooperate with the Company in good faith in order effectively to contest such claim; and
(d) permit the Company to participate in and control any proceedings relating to such claim; except that the Company will bear and pay directly all costs and expenses (including interest and penalties) incurred in connection with such contest and will indemnify and hold harmless Executive, on an after-tax basis, for and against any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such contest and payment of costs and expenses.
5.06 If, after the receipt by Executive of an amount advanced by the Company pursuant to this Section 5, Executive receives any refund with respect to such claim, Executive will (subject to the Company's complying with the requirements of Section 5.05 above) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after any taxes applicable thereto).
5.07 Notwithstanding any provision of this Section 5 to the contrary, if the aggregate "present value" of the "parachute payments" to be paid or provided to Executive under this Agreement or otherwise does not exceed 1.15 multiplied by three times Executive's "base amount," then, in lieu of such Gross-Up Payment, the payments and benefits to be paid or provided under this Agreement will be reduced to the minimum extent necessary (but in no event later to less than the end zero) so that no portion of the calendar year in which the applicable taxes are paid any payment or benefit to (or received from) the Internal Revenue Service) make such additional Executive, as so reduced, constitutes an "excess parachute payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. ." For purposes of making the calculations required by this Section 65.07, the Accountants may make reasonable assumptions terms "excess parachute payment," "present value," "parachute payment," and approximations concerning applicable taxes and may rely on interpretations concerning "base amount" will have the application meanings assigned to them by Section 280G of the Code for which there is a “substantial authority” tax reporting positionCode. The Company and the Employee shall furnish determination of whether any reduction in such payments or benefits to be provided under this Agreement is required pursuant to the Accountants such information and documents as preceding sentence will be made at the Accountants may reasonably request in order to make a determination under this Section 6. The expense of the Company shall bear all costs by the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6Accounting Firm.
Appears in 2 contracts
Samples: Change in Control Severance Agreement (Childrens Place Retail Stores Inc), Change in Control Severance Agreement (Childrens Place Retail Stores Inc)
Golden Parachute Excise Tax. (a) In the event that the benefits provided for in this Agreement or otherwise payable with respect to the Employee a Change of Control occurring on or before February 10, 2019, constitute “parachute payments” within the meaning of under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) that are subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Employee shall receive (i) a one-time payment from the Company XOMA sufficient to pay such excise tax Excise Tax (the “Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company XOMA sufficient to pay the additional excise tax and federal, state and local income and employment taxes arising from the Excise Tax Gross-Up made by the Company to the Employee pursuant to under this Section 6 5 (the “Additional Gross-Up”). Unless the Company and the Employee Parties otherwise agree in writing, the determination of the Employee’s excise tax Excise Tax liability and the amount required to be paid under this Section 6 5(a) shall be made in writing in good faith by the accounting firm serving as the CompanyXOMA’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service (“IRS”) on behalf of the Employee no later than the due date for the payment of any excise taxExcise Tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service IRS to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee Parties agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue ServiceIRS) make such additional payment, including interest and any tax penalties, to the other party Party as the Accountants reasonably determine is appropriate.
(b) In the event that the benefits provided for in this Agreement or otherwise with respect to a Change of Control occurring after February 10, 2019 (each, a “280G Payment”), would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the Excise Tax, then any such 280G Payment provided pursuant to this Agreement (a “Payment”) shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount (i.e., the amount determined by clause (x) or by clause (y)), 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 Employee’s receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for Employee. If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).
(c) Notwithstanding any provision of Section 5(b) to the contrary, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit for Employee as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without Cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.
(d) Unless Employee and XOMA agree on an alternative accounting firm, the Accountants shall perform the foregoing calculations. If the Accountants are serving as accountant or auditor for the individual, entity or group effecting the Change of Control transaction, XOMA shall appoint a nationally recognized accounting firm to make the determinations required by this Section 5. For purposes of making the calculations required by this Section 65, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee Parties shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 65. The Company XOMA shall bear all reasonable costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 65. XOMA shall use commercially reasonable efforts to cause the Accountants to make the determinations hereunder to provide its calculations, together with detailed supporting documentation, to Employee and XOMA within fifteen (15) calendar days after the date on which Employee’s right to a 280G Payment becomes reasonably likely to occur (if requested at that time by Employee or XOMA) or such other time as requested by Employee or XOMA.
(e) If Employee receives a Payment for which the Reduced Amount was determined pursuant to clause (x) of Section 5(b) and the Internal Revenue Service determines thereafter that some portion of the Payment is subject to the Excise Tax, Employee agrees to promptly return to XOMA a sufficient amount of the Payment (after reduction pursuant to clause (x) of Section 5(b)) so that no portion of the remaining Payment is subject to the Excise Tax. For the avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y) of Section 5(b), Employee shall have no obligation to return any portion of the Payment pursuant to the preceding sentence.
Appears in 2 contracts
Samples: Change of Control Severance Agreement (XOMA Corp), Change of Control Severance Agreement (XOMA Corp)
Golden Parachute Excise Tax. (a) In the event it will be determined that any payment or distribution by the benefits provided for in this Agreement Company or otherwise payable other amount with respect to the Employee constitute “parachute payments” within Company to or for the meaning benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of Section 280G 5(b) of this Agreement, but determined without regard to any additional payments required under this Section 6 (a “Payment”), is (or will be) subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) that or any interest or penalties are subject (or will be) incurred by Executive with respect to the excise tax imposed by Section 4999 of the Code with respect to the Company (the excise tax, together with any interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Employee shall Executive will be entitled to receive an additional cash payment (ia “Gross-Up Payment”) a one-time payment from the Company sufficient in an amount equal to pay such excise tax (the “sum of the Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company amount sufficient to pay the additional excise tax cumulative Excise Tax and federal, state all cumulative income taxes (including any interest and local penalties imposed with respect to such taxes) relating to the Gross-Up Payment so that the net amount retained by Executive is equal to all payments to which Employee is entitled pursuant to the terms of this Agreement (excluding the Gross-Up Payment) or otherwise less income and employment taxes arising from (but not reduced by the Excise Tax or by income taxes attributable to the Gross-Up Payment).
(b) Subject to the provisions of Section 6(c), all determinations required to be made under this Section 6, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at the determination, will be made by a nationally recognized certified public accounting firm selected by the Company with the consent of Executive, which should not unreasonably be withheld (the “Accounting Firm”) which will provide detailed supporting calculations both to the Company and Executive within 30 days after the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm will be borne solely by the Company. The Company, as determined in accordance with this Section 6, will pay any Gross-Up Payment to Executive within five days after the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, it will so indicate to Executive in writing. Any determination by the Accounting Firm will be binding upon the Company and Executive. As a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm, it is possible that Gross-Up Payments that the Company should have made will not have been made (an “Underpayment”), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies in accordance with Section 6(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm will determine the amount of Underpayment that has occurred and the Underpayment will be promptly paid by the Company to or for the Employee pursuant to this Section 6 benefit of Executive.
(the “Additional Gross-Up”). Unless c) Executive will notify the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined claim by the Internal Revenue Service that, if successful, would require a Gross-Up Payment (that has not already been paid by the Company). The notification will be given as soon as practicable but no later than ten business days after Executive is informed in writing of the claim and will apprise the Company of the nature of the claim and the date on which the claim is requested to be greater paid. Executive will not pay the claim prior to the expiration of the 30-day period following the date on which Executive gives notice to the Company or lesser than any shorter period ending on the amount so determined date that any payment of taxes with respect to the claim is due. If the Company notifies Executive in writing prior to the expiration of the 30-day period that it desires to contest the claim, Executive will:
(i) give the Company any information reasonably requested by the Accountants, Company relating to the claim;
(ii) take any action in connection with contesting the claim as the Company will reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to the claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to contest the claim; and
(iv) permit the Company to participate in any proceedings relating to the claim.
(d) The Company will bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with the Employee agree to promptly contest and will indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to penalties with respect thereto) imposed as a result of the other party as representation and payment of costs and expenses. Without limitation of the Accountants reasonably determine is appropriate. For purposes forgoing provisions of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear will control all costs the Accountants may reasonably incur proceedings taken in connection with the contest and, at its sole option, may pursue or forego any calculations contemplated and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of the claim and may, at its sole option, either direct Executive to pay the tax claimed and sxx for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute the contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company will determine. If the Company directs Executive to pay the claim and sxx for a refund, the Company will advance the amount of the payment to Executive, on an interest-free basis, and will indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to the advance or with respect to any imputed income with respect to the advance; and any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which the contested amount is claimed to be due will be limited solely to the contested amount. The Company’s control of the contest will be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive will be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 6(d), Executive becomes entitled to receive any refund with respect to the claim, Executive will, subject to the Company’s compliance with the requirements of Section 6(d), promptly pay to the Company the amount of the refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to this Section 66(d), a determination is made that Executive will not be entitled to any refund with respect to the claim and the Company does not notify Executive in writing of its intent to contest the denial of refund prior to the expiration of 30 days after the determination, then the advance will be forgiven and will not be required to be repaid and the amount of the advance will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
Appears in 1 contract
Golden Parachute Excise Tax. In (a) If the event Bonus, or any portion thereof, along with the aggregate amount of any other payments or benefits that could be paid, provided or delivered to you by OneBeacon, Parent or their respective affiliates (the benefits provided for in this Agreement or otherwise payable to the Employee constitute “Aggregate Payments”) are considered “parachute payments” within the meaning of (as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)) that are (the Bonus and such payments and benefits, the “Parachute Payments”), whether under this Retention Agreement or any other agreement, plan, program and arrangement of OneBeacon, Parent or their respective affiliates, and would, but for this Section 4, be subject to the excise tax imposed by under Section 4999 of the Code (the “Excise Tax”), then prior to making the Employee Parachute Payments, a calculation shall receive be made comparing (i) a one-time the Net Benefit (as defined below) to you of the Aggregate Payments after payment from of the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and to (ii) an additional one-time payment from the Company sufficient Net Benefit to pay you if the additional excise tax and Parachute Payments are limited to the extent necessary to avoid being subject to the Excise Tax. Aggregate Payments to which you are otherwise entitled shall be reduced or eliminated or paid in full, as applicable, in order to produce the greatest Net Benefit to you after taking into account any Excise Tax payable by you; provided that if the Net Benefit to you, before applying any such reduction or elimination of Aggregate Payments, is no more than 10% greater than the Net Benefit to you, assuming Aggregate Payments are reduced or eliminated so as to avoid your being subject to the Excise Tax, then OneBeacon may, in its sole discretion, reduce or eliminate the Aggregate Payments to the extent necessary so that no portion thereof would be subject to the Excise Tax. “Net Benefit” means the present value of the Aggregate Payments net of all federal, state state, local, foreign income, employment, and local income and employment excise taxes arising from (including the Excise Tax Gross-Up made by the Company to the Employee pursuant to this Section 6 (the “Additional Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penaltiesTax, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6extent applicable).
Appears in 1 contract
Samples: Retention Agreement (OneBeacon Insurance Group, Ltd.)
Golden Parachute Excise Tax. (a) In the event it will be determined that any payment or distribution by the benefits provided Company or other amount with respect to the Company to or for in the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise payable otherwise, but determined without regard to any additional payments required under this Section 12 (a "PAYMENT"), is (or will be) subject to the Employee constitute “parachute payments” within the meaning of excise tax imposed by Section 280G 4999 of the Internal Revenue Code of 1986, as amended (the “Code”"CODE") that or any interest or penalties are subject (or will be) incurred by Executive with respect to the excise tax imposed by Section 4999 of the Code with respect to the Company (the “Excise Tax”excise tax, together with any interest and penalties, are hereinafter collectively referred to as the "EXCISE TAX"), then the Employee shall Executive will be entitled to receive an additional cash payment (ia "GROSS-UP PAYMENT") a one-time payment from the Company sufficient in an amount equal to pay such excise tax (the “sum of the Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company amount sufficient to pay the additional excise tax cumulative Excise Tax and federal, state all cumulative income taxes (including any interest and local penalties imposed with respect to such taxes) relating to the Gross-Up Payment so that the net amount retained by Executive is equal to all payments to which Employee is entitled pursuant to the terms of this Agreement (excluding the Gross-Up Payment) or otherwise less income and employment taxes arising from (but not reduced by the Excise Tax or by income taxes attributable to the Gross-Up Payment).
(b) Subject to the provisions of Section 12(c), all determinations required to be made under this Section 12, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at the determination, will be made by a nationally recognized certified public accounting firm selected by the Company with the consent of Executive, which should not unreasonably be withheld (the "ACCOUNTING FIRM") which will provide detailed supporting calculations both to the Company and Executive within thirty (30) days after the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm will be borne solely by the Company. The Company, as determined in accordance with this Section 12, will pay any Gross-Up Payment to Executive within five (5) days after the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, it will so indicate to Executive in writing. Any determination by the Accounting Firm will be binding upon the Company and Executive; provided, however, that as a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm, it is possible that Gross-Up Payments that the Company should have made will not have been made (an "UNDERPAYMENT"), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies in accordance with Section 12(c), or elects not to exercise such remedies, and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm will determine the amount of Underpayment that has occurred and the Underpayment will be promptly paid by the Company to or for the Employee pursuant to this Section 6 benefit of Executive.
(c) Executive will notify the “Additional Company in writing of any claim by the Internal Revenue Service that, if successful, would require a Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be Up Payment (that has not already been paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either notification will be (x) paid to the Employee given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of the claim and will apprise the Company of the nature of the claim and the date on which the claim is requested to be paid. Executive will not pay the claim prior to the due expiration of the 30-day period following the date on which Executive gives notice to the Company or any shorter period ending on the date that any payment of taxes with respect to the claim is due. If the Company notifies Executive in writing prior to the expiration of the 30-day or shorter period that it desires to contest the claim, Executive will:
(i) give the Company any information reasonably requested by the Company relating to the claim;
(ii) take any action in connection with contesting the claim as the Company will reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to the claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to contest the claim; and
(iv) permit the Company to participate in any proceedings relating to the claim.
(d) The Company will bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with the contest and will indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of the representation and payment of costs and expenses. Without limitation of the forgoing provisions of this Section 12, the Company will control all proceedings taken in connection with the contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of the claim and may, at its sole option, either direct Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute the contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company will determine. If the Company directs Executive to pay the claim and xxx for a refund, the Company will advance the amount of the payment to Executive, on an interest-free basis, and will indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to the advance or with respect to any imputed income with respect to the advance; and any extension of the statute of limitations relating to payment of taxes for the payment taxable year of any excise tax, or (y) paid Executive with respect to which the contested amount is claimed to be due will be limited solely to the Internal Revenue Service on behalf contested amount. The Company's control of the Employee no later than contest will be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive will be entitled to settle or contest, as the due date for the payment of case may be, any excise tax. In the event that the Excise Tax incurred by the Employee is determined other issue raised by the Internal Revenue Service or any other taxing authority. If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 12(d), Executive becomes entitled to receive any refund with respect to the claim, Executive will, subject to the Company's compliance with the requirements of Section 12(d), promptly pay to the Company the amount of the refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to this Section 12(d), a determination is made that Executive will not be entitled to any refund with respect to the claim and the Company does not notify Executive in writing of its intent to contest the denial of refund prior to the expiration of thirty (30) days after the determination, then the advance will be forgiven and will not be required to be greater or lesser than repaid and the amount so determined by of the Accountantsadvance will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) Should the Company and the Employee agree elect not to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) contest the Internal Revenue ServiceService claim in accordance with the foregoing provisions of Section 12(c) make or otherwise not provide Executive with written notice of its intention to contest such additional paymentclaim within the applicable thirty (30) day or shorter notice period provided in Section 12(c), including interest and any tax penalties, then the Company will promptly thereafter pay Executive the applicable Gross-Up Payment attributable to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6claim.
Appears in 1 contract
Golden Parachute Excise Tax. (a) In the event it will be determined that any payment or distribution by the benefits provided Company or other amount with respect to the Company to or for in the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise payable otherwise, but determined without regard to any additional payments required under this Section 6 (a "Payment"), is (or will be) subject to the Employee constitute “parachute payments” within the meaning of excise tax imposed by Section 280G 4999 of the Internal Revenue Code of 1986, as amended (the “"Code”") that or any interest or penalties are subject (or will be) incurred by Executive with respect to the excise tax imposed by Section 4999 of the Code with respect to the Company (the “excise tax, together with any interest and penalties, are hereinafter collectively referred to as the "Excise Tax”"), then the Employee shall Executive will be entitled to receive an additional cash payment (ia "Gross-Up Payment") a one-time payment from the Company sufficient in an amount equal to pay such excise tax (the “sum of the Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company amount sufficient to pay the additional excise tax cumulative Excise Tax and federal, state all cumulative income taxes (including any interest and local penalties imposed with respect to such taxes) relating to the Gross-Up Payment so that the net amount retained by Executive is equal to all payments to which Employee is entitled pursuant to the terms of this Agreement (excluding the Gross-Up Payment) or otherwise less income and employment taxes arising from (but not reduced by the Excise Tax or by income taxes attributable to the Gross-Up Payment).
(b) Subject to the provisions of Section 6(c), all determinations required to be made under this Section 6, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at the determination, will be made by a nationally recognized certified public accounting firm selected by the Company with the consent of Executive, which should not unreasonably be withheld (the "Accounting Firm") which will provide detailed supporting calculations both to the Company and Executive within 30 days after the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm will be borne solely by the Company. The Company, as determined in accordance with this Section 6, will pay any Gross-Up Payment to Executive within five days after the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, it will so indicate to Executive in writing. Any determination by the Accounting Firm will be binding upon the Company and Executive. As a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm, it is possible that Gross-Up Payments that the Company should have made will not have been made (an "Underpayment"), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies in accordance with Section 6(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm will determine the amount of Underpayment that has occurred and the Underpayment will be promptly paid by the Company to or for the Employee pursuant to this Section 6 benefit of Executive.
(the “Additional Gross-Up”). Unless c) Executive will notify the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined claim by the Internal Revenue Service that, if successful, would require a Gross-Up Payment (that has not already been paid by the Company). The notification will be given as soon as practicable but no later than ten business days after Executive is informed in writing of the claim and will apprise the Company of the nature of the claim and the date on which the claim is requested to be greater paid. Executive will not pay the claim prior to the expiration of the 30-day period following the date on which Executive gives notice to the Company or lesser than any shorter period ending on the amount so determined date that any payment of taxes with respect to the claim is due. If the Company notifies Executive in writing prior to the expiration of the 30-day period that it desires to contest the claim, Executive will:
(i) give the Company any information reasonably requested by the Accountants, Company relating to the claim;
(ii) take any action in connection with contesting the claim as the Company will reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to the claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to contest the claim; and
(iv) permit the Company to participate in any proceedings relating to the claim.
(d) The Company will bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with the Employee agree to promptly contest and will indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to penalties with respect thereto) imposed as a result of the other party as representation and payment of costs and expenses. Without limitation of the Accountants reasonably determine is appropriate. For purposes forgoing provisions of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear will control all costs the Accountants may reasonably incur proceedings taken in connection with the contest and, at its sole option, may pursue or forego any calculations contemplated and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of the claim and may, at its sole option, either direct Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute the contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company will determine. If the Company directs Executive to pay the claim and xxx for a refund, the Company will advance the amount of the payment to Executive, on an interest-free basis, and will indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to the advance or with respect to any imputed income with respect to the advance; and any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which the contested amount is claimed to be due will be limited solely to the contested amount. The Company's control of the contest will be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive will be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 6(d), Executive becomes entitled to receive any refund with respect to the claim, Executive will, subject to the Company's compliance with the requirements of Section 6(d), promptly pay to the Company the amount of the refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to this Section 66(d), a determination is made that Executive will not be entitled to any refund with respect to the claim and the Company does not notify Executive in writing of its intent to contest the denial of refund prior to the expiration of 30 days after the determination, then the advance will be forgiven and will not be required to be repaid and the amount of the advance will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
Appears in 1 contract
Golden Parachute Excise Tax. In (a) If the event Bonus, or any portion thereof, along with the aggregate amount of any other payments or benefits that could be paid, provided or delivered to you by OneBeacon, Parent or their respective affiliates (the benefits provided for in this Agreement or otherwise payable to the Employee constitute “Aggregate Payments”) are considered “parachute payments” within the meaning of (as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)) that are (the Bonus and such payments and benefits, the “Parachute Payments”), whether under this Retention Agreement or any other agreement, plan, program and arrangement of OneBeacon, Parent or their respective affiliates, and would, but for this Section 3, be subject to the excise tax imposed by under Section 4999 of the Code (the “Excise Tax”), then prior to making the Employee Parachute Payments, a calculation shall receive be made comparing (i) a one-time the Net Benefit (as defined below) to you of the Aggregate Payments after payment from of the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and to (ii) an additional one-time payment from the Company sufficient Net Benefit to pay you if the additional excise tax and Parachute Payments are limited to the extent necessary to avoid being subject to the Excise Tax. Aggregate Payments to which you are otherwise entitled shall be reduced or eliminated or paid in full, as applicable, in order to produce the greatest Net Benefit to you after taking into account any Excise Tax payable by you; provided that if the Net Benefit to you, before applying any such reduction or elimination of Aggregate Payments, is no more than 10% greater than the Net Benefit to you, assuming Aggregate Payments are reduced or eliminated so as to avoid your being subject to the Excise Tax, then OneBeacon may, in its sole discretion, reduce or eliminate the Aggregate Payments to the extent necessary so that no portion thereof would be subject to the Excise Tax. “Net Benefit” means the present value of the Aggregate Payments net of all federal, state state, local, foreign income, employment, and local income and employment excise taxes arising from (including the Excise Tax Gross-Up made by the Company to the Employee pursuant to this Section 6 (the “Additional Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penaltiesTax, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6extent applicable).
Appears in 1 contract
Samples: Retention Agreement (OneBeacon Insurance Group, Ltd.)
Golden Parachute Excise Tax. (a) In the event that the benefits provided for in this Agreement or otherwise payable provided by the Company to the Employee constitute “parachute payments” within the meaning (including, but not by way of Section 280G of the Internal Revenue Code of 1986limitation, as amended any accelerated vesting on equity awards) (the “CodeTotal Payments”) that are would subject the Employee to the an excise tax imposed by Section 4999 of the Code (the “Excise Tax”)) imposed under Section 4999 of the Code, then the Company will pay the Employee shall receive (i) a one-time payment from the Company an amount sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company amount sufficient to pay the additional excise tax Excise Tax and federal, state and local income and employment taxes arising from the Excise Tax Gross-Up payments made by the Company pursuant to Section 4(a)(i). Any amount required to be paid to the Employee pursuant to this Section 6 (the preceding sentence shall be referred to as the “Additional Gross-UpUp Payment.”). Unless the Company and the Employee otherwise agree in writing, the
(b) The determination of the Employee’s excise tax Excise Tax liability and the amount amount, if any, required to be paid under this Section 6 shall 4 will be made in writing in good faith by the accounting firm serving as (i) the Company’s independent public accountants immediately prior auditors, (ii) one of the four (4) largest United States accounting firms, or (iii) an accounting firm mutually agreed to by the Change of Control Employee and the Company (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 64, the Employee shall be deemed to pay federal, state and local income taxes at the highest marginal rate in effect in the calendar year in which the Gross-Up Payment will be made, based on the Employee’s residence. The Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code for which there is a “substantial authority” tax reporting positionCode. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 64. The Company shall bear will pay all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 64.
(c) The Accountants shall promptly determine the Gross-Up Payment after the Employee’s termination of employment (but in no event later than fifteen (15) days after the termination). The Gross-Up Payment shall be paid to the Employee within five (5) days after such Accountants’ determination. In addition, the Accountants shall make a determination of any Gross-Up Payment prior to the Employee’s termination of employment upon written request of the Employee and assuming the Employee has a reasonable basis at that time for believing that he or she may be entitled to a Gross-Up Payment under this Agreement. In the event that the initial Gross-Up Payment made to the Employee is finally determined to be too large or small, the following rules shall apply. If the initial Gross-Up Payment was too small, the Company shall promptly make an additional payment to the Employee equal to the shortfall plus any interest, penalties or additional amounts payable by the Employee with respect thereto. If the initial Gross-Up Payment is too large, then the Employee shall repay the amount of the excess to the Company plus interest on the amount of such repayment at one hundred and twenty percent (120%) of the applicable federal rate provided in section 1274 of the Code, but only to the extent that such repayment by the Employee would result in a dollar-for-dollar reduction in the Employee’s taxable income and wages for purposes of federal, state and local income and employment taxes. The Employee and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of the Excise Tax with respect to the Total Payments and associated income taxes, penalties and interest.
Appears in 1 contract
Golden Parachute Excise Tax. In the event that the benefits provided for in this Agreement or otherwise payable to the Employee constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) that are subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Employee shall receive (i) a one-time payment from the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company sufficient to pay the additional excise tax and federal, federal and state and local income and employment taxes arising from the Excise Tax Gross-Up made by the Company to the Employee pursuant to this Section 6 (the “Additional Gross-Up”); provided, however, that the Company shall only pay the Excise Tax Gross-Up and Additional Gross-Up if the cumulative value of such payments to the Employee equals or exceeds $10,000. In the event that such payments to the Employee is less than $10,000, then the Employee’s benefits hereunder shall be either (x) delivered in full, or (y) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the Excise Tax, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 5 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 65, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 65. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 65.
Appears in 1 contract
Samples: Change of Control Severance Agreement (Pinnacle Systems Inc)
Golden Parachute Excise Tax. In the event it shall be determined that any payment or distribution by the benefits provided Company or other amount with respect to the Company to or for in the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise payable otherwise, but determined without regard to any additional payments required under this Section 7 (a "Payment"), is (or will be) subject to the Employee constitute “parachute payments” within the meaning of excise tax imposed by Section 280G 4999 of the Internal Revenue Code of 1986, as amended (the “"Code”") that or any interest or penalties are subject (or will be) incurred by Executive with respect to the excise tax imposed by Section 4999 of the Code with respect to the Company (the “excise tax, together with any interest and penalties, are hereinafter collectively referred to as the "Excise Tax”"), then the Employee Executive shall be entitled to receive an additional cash payment (ia "Gross-Up Payment") a one-time payment from the Company sufficient in an amount equal to pay such excise tax (the “sum of the Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company amount sufficient to pay the additional excise tax cumulative Excise Tax and federal, state all cumulative income taxes (including any interest and local penalties imposed with respect to such taxes) relating to the Gross-Up Payment so that the net amount retained by Executive is equal to all payments to which Employee is entitled pursuant to the terms of this Agreement (excluding the Gross-Up Payment) or otherwise less income and employment taxes arising from (but not reduced by the Excise Tax or by income taxes attributable to the Gross-Up Payment). Subject to the provisions of Section 7(C), all determinations required to be made under this Section 7, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at the determination, shall be made by a nationally recognized certified public accounting firm selected by the Company with the consent of Executive, which should not unreasonably be withheld (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and Executive within 30 days after the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. The Company, as determined in accordance with this Section 7, shall pay any Gross-Up Payment to Executive within five days after the receipt of the Accounting Firm's determination or, if later, on the date when the Excise Tax payment is due. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall so indicate to Executive in writing. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm, it is possible that Gross-Up Payments that the Company should have made will not have been made (an "Underpayment") or that payments in excess of the amount that should have been made (an "Overpayment") were made, consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies in accordance with Section 7(C) and Executive thereafter is required to make a payment of any Excise Tax or if a smaller amount of Excise Tax is owed, the Accounting Firm shall determine the amount of Underpayment or Overpayment that has occurred and the Underpayment shall be promptly paid by the Company to or for the Employee benefit of Executive or the Overpayment shall be promptly paid by Executive to the Company. Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require a Gross-Up Payment (that has not already been paid by the Company). The notification shall be given as soon as practicable but no later than ten business days after Executive is informed in writing of the claim and shall apprise the Company of the nature of the claim and the date on which the claim is requested to be paid. Executive shall not pay the claim prior to the expiration of the 30- day period following the date on which Executive gives notice to the Company or any shorter period ending on the date that any payment of taxes with respect to the claim is due. If the Company notifies Executive in writing prior to the expiration of the 30- day period that it desires to contest the claim, Executive shall: give the Company any information reasonably requested by the Company relating to the claim; take any action in connection with contesting the claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to the claim by an attorney reasonably selected by the Company; cooperate with the Company in good faith in order effectively to contest the claim; and permit the Company to participate in any proceedings relating to the claim. The Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with the contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of the representation and payment of costs and expenses. Without limitation of the forgoing provisions of this Section 7, the Company shall control all proceedings taken in connection with the contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of the claim and may, at its sole option, either direct Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute the contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine. If the Company directs Executive to pay the claim and xxx for a refund, the Company shall advance the amount of the payment to Executive, on an interest-free basis, and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to the advance or with respect to any imputed income with respect to the advance; and any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which the contested amount is claimed to be due shall be limited solely to the contested amount. The Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. If, after the receipt by Executive of an amount advanced by the Company pursuant to this Section 6 7(D), Executive becomes entitled to receive any refund with respect to the claim, Executive shall, subject to the Company's compliance with the requirements of this Section 7(D), promptly pay to the Company the amount of the refund (the “Additional Gross-Up”together with any interest paid or credited thereon after taxes applicable thereto). Unless If, after the receipt by Executive of an amount advanced by the Company pursuant to this Section 7(D), a determination is made that Executive shall not be entitled to any refund with respect to the claim and the Employee otherwise agree Company does not notify Executive in writingwriting of its intent to contest the denial of refund prior to the expiration of 30 days after the determination, then the determination of the Employee’s excise tax liability advance shall be forgiven and shall not be required to be repaid and the amount of the advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid under this Section 6 paid. Notwithstanding the above, Executive and not the Company shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date liable for the payment of any excise tax, interest or (y) paid penalty that is due because of Executive's failure to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, notify the Company and or cooperate with the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party Company as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 67.
Appears in 1 contract
Golden Parachute Excise Tax. In the event that the (a) If a Change in Control occurs, and if any payments or benefits provided for in to the Executive by the Company under this Agreement, any Incentive and Retention Agreement or otherwise payable to the Employee (including, without limitation, accelerated vesting of any equity-based or other incentive awards) constitute parachute payments (“parachute payments” Parachute Payments”) within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) that are and will be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (collectively, the “Excise Tax”), then the Employee Company shall receive (i) a one-pay to the Executive, no later than 15 days prior to the time payment from the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company sufficient to pay the additional excise tax and federal, state and local income and employment taxes arising from the Excise Tax Gross-Up made by the Company to the Employee pursuant to this Section 6 (the “Additional Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount or any portion thereof) is required to be paid by the Executive or withheld by the Company, an additional amount (the “Gross-up Payment”) equal to the sum of the Excise Tax payable by the Executive, plus the amount necessary to put the Executive in the same after-tax position (taking into account any and all applicable federal, state, local and other income, employment and excise taxes (including the Excise Tax and any income, employment and excise taxes imposed on the Gross-up Payment)) in which the Executive would have been if the Executive had not incurred any excise tax liability under Section 4999 of the Code. For purposes of calculating the Gross-Up Payment, the Executive shall be deemed to pay income taxes at the highest applicable marginal rates for the calendar year with respect to which the Gross-Up Payment is to be made. For the avoidance of doubt, the provisions of this Section 6 4 of the Agreement shall apply with respect to all payments and benefits, whether or not the Executive is or becomes entitled to receive severance payments and benefits under Section 2 of the Agreement.
(b) All determinations as to whether a Gross-Up Payment is required and the amount of each Gross-Up Payment required by this Section shall be made in writing in good faith determined by a nationally known independent accounting firm selected by the accounting firm serving as the Company’s independent public accountants immediately prior Company and reasonably acceptable to the Change of Control Executive (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, Accountants shall either be (x) paid provide detailed supporting calculations to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than Executive as requested by the end of Company or the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting positionExecutive. The Company and the Employee Executive shall furnish to provide the Accountants with such information and documents as the Accountants may reasonably request in order to make a determination its determination(s) under this Section. In making its determinations, the Accountants may rely on reasonable, good faith interpretations, assumptions and approximations concerning the application of Sections 280G and 4999 of the Code. All fees and expenses of the Accountants will be borne by the Company. Subject to any determinations made by the Internal Revenue Service, all determinations made by the Accountants under this Section 6shall be final and binding on all interested persons.
(c) If a Gross-Up Payment is made and if it is subsequently established pursuant to a final determination of a court or an Internal Revenue Service proceeding or the written opinion of the Accountants that the Excise Tax upon which such Gross-Up Payment was based is higher or lower than previously reported, then the Accountants will re-determine the Gross-Up Payment based upon the revised Excise Tax amount. If the re-determined Gross-Up Payment is lower than what was previously determined, the Executive shall repay the difference to the Company within 30 days after his receipt of notice of such re-determination. If any such amount has been paid by the Executive as an Excise Tax or other tax, he shall cooperate with the Company in seeking a refund of any tax overpayments, and he shall not be required to make repayments to the Company until the overpaid taxes and interest thereon are refunded to him, at which time he shall pay to the Company the amount of the refund (to the extent applicable to the reduced Excise Tax) plus any interest received thereon from the government. If the re-determined Gross-Up Payment is higher than what was previously determined (including by reason of any payment the existence or amount of which could not be determined at the time of the prior determination), the Company shall make an additional Gross-up Payment to or for the benefit of the Executive (including any interest or penalties payable with respect to the additional Excise Tax amount) in an amount sufficient to put the Executive in the same after-tax position in which he would have been if the Excise Tax had not been imposed. Such payment will be made promptly (but not more than 30 days) after the date the Company is notified of the deficiency.”
3. Notwithstanding anything to the contrary contained herein or in any other written or oral agreement or understanding, this Amendment will be canceled and will be of no further force or effect in the event that a Transaction is not consummated on or before August 31, 2014. If this Amendment is canceled in accordance with the preceding sentence, the terms of the Transition Agreement in effect prior to this Amendment shall thereafter continue to apply.
4. The Company shall bear all costs first sentence of the Accountants may reasonably incur flush paragraph at the end of Section 1(e) of the Agreement is amended to read as follows: “Notwithstanding the foregoing, the Executive will not have “Good Reason” to terminate his employment merely because the Executive is no longer a senior executive of a public company and/or has a change in connection with any calculations contemplated by this Section 6title, duties, authority, responsibilities or reporting structure as a result of the Transaction (including having a reporting relationship within a larger company) provided that the Executive retains a substantially similar level of responsibilities over the other portions and areas of the business for which he exercised responsibility prior to the Transaction.
Appears in 1 contract
Golden Parachute Excise Tax. In the event that the benefits provided The Company shall reimburse Employee for in this Agreement or otherwise payable to the Employee constitute “parachute payments” within the meaning of (i) any excise tax imposed by Section 280G 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) that are subject to the excise tax imposed by Section 4999 on any portion of the Code (the “Excise Tax”), then the Employee shall receive (i) a one-time payment from compensation or benefits payable by the Company sufficient or its Affiliates to pay such excise tax (the “Excise Tax Gross-Up”)Employee under this Agreement, all other contracts, arrangements or programs, and (ii) an additional one-time payment from the Company sufficient to pay the additional any such excise tax and federal, state and local income and employment any other taxes arising from the Excise Tax Gross-Up made imposed by the Company to Code or under state or local law on the Employee pursuant to payments provided for in this Section 6 (the “Additional Gross-Up”)7. Unless Employee and the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and to reasonably cooperate to mitigate the amount required of any such tax that might become payable. The Company shall pay to be paid under employee the payments, or portions thereof, provided for in this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no 7 not later than ten fifteen (1015) days prior to the date on which such taxes, or portions thereof, are due date for as determined by the tax counsel referred to below. Tax counsel selected by the Company and reasonably acceptable to Employee shall determine the amounts (if any) due Employee under this Section 7, based on the actual tax rates to which Employee is subject at the time. Employee shall provide such counsel with such information as such counsel reasonably requests in connection with such determination. All determinations of tax counsel shall be binding on Employee and the Company. Tax counsel shall determine that payments shall be due hereunder only if, and to the extent that, it is more likely than not that the payments or benefits are subject to a tax. In making the determinations required by this Section 7, tax counsel may rely on benefit consultants, accountants or other experts. The Company agrees to pay all reasonable fees and expenses of such tax counsel, benefits consultants, accountants or other experts. If, subsequent to the payment to Employee of any excise taxpayments pursuant to this Section 7, the tax counsel referred to in this Section 7 reasonably determines that the amount of the payments paid pursuant to this Section 7 are greater than, or (y) paid less than, the amount required to have been paid, Employee shall reimburse the Internal Revenue Service on behalf of Company an amount, or the Company shall pay to Employee no later than the due date for the payment of any excise taxan additional amount, respectively, based upon such determination. In the event that the Excise Tax incurred by the tax counsel referred to in this Section 7 reasonably determines that Employee is required to pay excise tax, interest or penalties to a governmental taxing authority as a result of his non-payment of taxes where such tax counsel had determined by the Internal Revenue Service to that such taxes need not be greater paid or lesser than the amount so determined by the Accountantsas a result of a miscalculation of such taxes, the Company and the shall pay to Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid an additional amount equal to (or received fromA) the Internal Revenue Serviceamount of such interest and/or penalties, (B) make such additional payment, including interest the excise tax which was not paid and (C) any excise tax and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required taxes imposed by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code or under state or local law on the payments provided for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6sentence.
Appears in 1 contract
Golden Parachute Excise Tax. In the event that the benefits provided for in this Agreement or otherwise payable to the Employee constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) that are subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Employee shall receive (i) a one-time payment from the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company sufficient to pay the additional excise tax and federal, state and local income and employment taxes arising from the Excise Tax Gross-Up made by the Company to the Employee pursuant to this Section 6 (the “Additional Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent inde- pendent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6.
Appears in 1 contract
Samples: Change of Control Severance Agreement (Xoma LTD /De/)
Golden Parachute Excise Tax. In (a) If any of the event that payments or benefits received or to be received by the benefits provided for Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Agreement or otherwise payable any other plan, arrangement or agreement) (such payments or benefits, excluding the Gross-Up Payment defined below, being hereinafter referred to as the Employee constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”"Total Payments") that are will be subject to the excise tax imposed by under Section 4999 of the Code (the “"Excise Tax”"), then the Employee shall receive provisions of either subclause (i) a one-time payment from the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and or (ii) of this section shall apply: (i) if the Total Payments are less than 115% of the maximum amount of such payments that could be made without imposition of Excise Tax (the "Safe Harbor Amount"), then the Total Payments will be reduced to the Safe Harbor Amount; or (ii) if the Total Payments equal or exceed 115% of the Safe Harbor Amount, the Company shall pay to the Executive an additional oneamount (the "Gross-time payment from Up Payment") such that the Company sufficient to pay net amount retained by the additional excise tax Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes arising from the and Excise Tax upon the Gross-Up made by the Company Payment, shall be equal to the Employee pursuant Total Payments.
(b) The calculations necessary to give effect to this Section 6 (the “Additional Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 section shall be made in writing in good faith performed by the accounting firm serving as the Company’s independent public accountants which was immediately prior to the Change of Control in Control, the Company's independent auditor (the “Accountants”"Auditor"). The initial For purposes of determining whether any of the Total Payments will exceed the Safe Harbor Amount and the amount of the Excise Tax Gross-Up and Additional Gross-Up payments hereunderTax, if any, (i) all of the Total Payments shall either be treated as "parachute payments" (xwithin the meaning of section 280G(b)(2) paid of the Code) unless, in the opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Employee no later than ten Executive and selected by the Auditor, such payments or benefits (10in whole or in part) days prior to the due date for the payment do not constitute parachute payments, including by reason of any excise tax, or (ysection 280G(b)(4)(A) paid to the Internal Revenue Service on behalf of the Employee no later than Code, (ii) all "excess parachute payments" within the due date for meaning of section 280G(b)(1) of the payment of any excise tax. In the event that Code shall be treated as subject to the Excise Tax incurred by unless, in the Employee is opinion of Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be 8 9 determined by the Internal Revenue Service to be greater or lesser than Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount so determined by of the AccountantsGross-Up Payment, the Company and Executive shall be deemed to pay federal income tax at the Employee agree to promptly (but highest marginal rate of federal income taxation in no event later than the end of the calendar year in which the applicable Gross-Up Payment is to be made and state and local income taxes are paid to at the highest marginal rate of taxation in the state and locality of the Executive's residence on the date of termination of employment, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(or received fromc) In the Internal Revenue Serviceevent that subclause (i) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 614(a) applies, the Accountants may make reasonable assumptions Executive and approximations concerning applicable taxes the Company shall jointly agree on the allocation of any reduction in the Total Payments.
(d) The provisions of this Section 14 shall be applied without giving effect to any cap or limitation on benefits under the Company's Supplemental Executive Retirement Plan that is intended to avoid Excise Tax, and may rely on interpretations concerning the Company hereby waives the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish any such provision to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6Executive.
Appears in 1 contract
Golden Parachute Excise Tax. In the event that If the benefits provided for in this Agreement or otherwise payable to the Employee Executive constitute “"parachute payments” " within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) that are and will be subject to the excise tax imposed by Section 4999 of the Code (the “"Excise Tax”"), then the Employee Executive's severance benefits under Section 2 shall receive be (i) a one-time payment from the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”)delivered in full, and or (ii) an additional one-time payment from delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Company sufficient to pay Excise Tax, whichever of the additional excise tax and foregoing amounts, taking into account the applicable federal, state and local income taxes and employment taxes arising from the Excise Tax GrossTax, results in the receipt by Executive on an after-Up made by tax basis, of the Company to the Employee pursuant to this Section 6 (the “Additional Gross-Up”)greatest amount of severance benefits. Unless the Company and the Employee Executive 4 otherwise agree in writing, the any determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 5 shall be made in writing in good faith by the accounting firm serving as the Company’s 's independent public accountants immediately prior to the Change of Control (the “"Accountants”"). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 65, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code for which there is a “substantial authority” tax reporting positionCode. The Company and the Employee Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. If the Accountants determine that reduction of Executive's severance benefits is required by this Section 65 such that no portion of Executive's severance benefits will be subject to the Excise Tax, the severance benefits shall be reduced in the following order: (i) cash severance pay that is exempt from Section 409A, (ii) any other cash severance pay, (iii) any other cash payable that is a severance benefit other than stock appreciation rights, (iv) any stock appreciation rights, (v) any restricted stock, and (vi) stock options. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 65.
Appears in 1 contract
Golden Parachute Excise Tax. In the event that the benefits provided for in this Agreement (i) If any payment or otherwise payable to the Employee constitute “parachute payments” benefit --------------------------- (within the meaning of Section 280G 280G(b)(2) of the Internal Revenue Code Code), to the Executive or for the Executive's benefit paid or payable or distributed or distributable pursuant to the terms of 1986this Agreement or otherwise in connection with, as amended or arising out of, the Executive's employment with the Company or a change in ownership or effective control of the Company or of a substantial portion of its assets (the “Code”) that are a "Parachute Payment" or "Parachute Payments"), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “"Excise Tax”"), then the Employee shall Executive will be entitled to receive an additional payment (ia "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties, other than interest and penalties imposed by reason of the Executive's failure to file timely a one-time payment from tax return or pay taxes shown due on the Company sufficient Executive's return, imposed with respect to pay such excise tax (taxes and the “Excise Tax), including any Excise Tax imposed upon the Gross- Up Payment, the Executive retains an amount of the Gross-Up”), and Up Payment equal to the Excise Tax imposed upon the Parachute Payments.
(ii) an additional one-time payment from the Company sufficient An initial determination as to pay the additional excise tax and federal, state and local income and employment taxes arising from the Excise Tax whether a Gross-Up Payment is required pursuant to this Agreement and the amount of such Gross-Up Payment shall be made at the Company's expense by the Company's regular outside auditors (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Executive within ten days of the Termination Date if applicable, or promptly upon request by the Company or by the Executive (provided the Executive reasonably believes that any of the Parachute Payments may be subject to the Excise Tax) and if the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to a Parachute Payment or Parachute Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such Parachute Payment or Parachute Payments. Within ten days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the "Dispute"). The Gross-Up Payment, if any, as determined pursuant to this Section 5(d)(ii) shall be paid by the Company to the Employee pursuant to this Section 6 (Executive within ten days of the “Additional Gross-Up”)receipt of the Accounting Firm's determination notwithstanding the existence of any Dispute. Unless If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required Executive subject to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting positionSection 5(d)(iii) below. The Company and the Employee Executive shall furnish resolve any Dispute in accordance with the terms of this Agreement.
(iii) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, the parties acknowledge that it is possible that a Gross-Up Payment (or a portion thereof) will be paid which should not have been paid (an "Excess Payment") or a Gross-Up Payment (or a portion thereof) which should have been paid will not have been paid (an "Underpayment"). An Underpayment shall be deemed to have occurred (i) upon notice (formal or informal) to the Accountants such information and documents as Executive from any governmental taxing authority that the Accountants Executive's tax liability (whether in respect of the Executive's current taxable year or in respect of any prior taxable year) may reasonably request in order be increased by reason of the imposition of the Excise Tax on a Parachute Payment or Parachute Payments with respect to which the Company has failed to make a sufficient Gross-Up Payment, (ii) upon a determination under this Section 6by a court, (iii) by reason of determination by the Company (which shall include the position taken by the Company, together with its consolidated group, on its federal income tax return) or (iv) upon the resolution of the Dispute to the Executive's satisfaction. The If an Underpayment occurs, the Executive shall promptly notify the Company and the Company shall bear promptly, but in any event, at least five days prior to the date on which the applicable government taxing authority has requested payment, pay to the Executive an additional Gross-Up Payment equal to the amount of the Underpayment plus any interest and penalties (other than interest and penalties imposed by reason of the Executive's failure to file timely a tax return or pay taxes shown due on the Executive's return) imposed on the Underpayment. An Excess Payment shall be deemed to have occurred upon a "Final Determination" (as hereinafter defined) that the Excise Tax shall not be imposed upon a Parachute Payment or Parachute Payments (or portion thereof) with respect to which the Executive had previously received a Gross-Up Payment. A "Final Determination" shall be deemed to have occurred when the Executive has received from the applicable government taxing authority a refund of taxes or other reduction in the Executive's tax liability by reason of the Excise Payment and upon either (x) the date a determination is made by, or an agreement is entered into with, the applicable governmental taxing authority which finally and conclusively binds the Executive and such taxing authority, or in the event that a claim is brought before a court of competent jurisdiction, the date upon which a final determination has been made by such court and either all costs appeals have been taken and finally resolved or the Accountants may reasonably incur time for all appeals has expired or (y) the statute of limitations with respect to the Executive's applicable tax return has expired. If an Excess Payment is determined to have been made, the amount of the Excess Payment shall be treated as a loan by the Company to the Executive and the Executive shall pay to the Company on demand (but not less than 10 days after the determination of such Excess Payment and written notice has been delivered to the Executive) the amount of the Excess Payment plus interest at an annual rate equal to the Applicable Federal Rate provided for in connection with any calculations contemplated by this Section 61274(d) of the Code from the date the Gross-Up Payment (to which the Excess Payment relates) was paid to the Executive until the date of repayment to the Company.
Appears in 1 contract
Golden Parachute Excise Tax. (a) In the event it will be determined that any payment or distribution by the benefits provided Company or other amount with respect to the Company to or for in the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise payable otherwise, but determined without regard to any additional payments required under this Section 12 (a "PAYMENT"), is (or will be) subject to the Employee constitute “parachute payments” within the meaning of excise tax imposed by Section 280G 4999 of the Internal Revenue Code of 1986, as amended (the “Code”"CODE") that or any interest or penalties are subject (or will be) incurred by Executive with respect to the excise tax imposed by Section 4999 of the Code with respect to the Company (the “Excise Tax”excise tax, together with any interest and penalties, are hereinafter collectively referred to as the "EXCISE TAX"), then the Employee shall Executive will be entitled to receive an additional cash payment (ia "GROSS-UP PAYMENT") a one-time payment from the Company sufficient in an amount equal to pay such excise tax (the “sum of the Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company amount sufficient to pay the additional excise tax cumulative Excise Tax and federal, state all cumulative income taxes (including any interest and local penalties imposed with respect to such taxes) relating to the Gross-Up Payment so that the net amount retained by Executive is equal to all payments to which Employee is entitled pursuant to the terms of this Agreement (excluding the Gross-Up Payment) or otherwise less income and employment taxes arising from (but not reduced by the Excise Tax or by income taxes attributable to the Gross-Up Payment).
(b) Subject to the provisions of Section 11(c), all determinations required to be made under this Section 11, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at the determination, will be made by a nationally recognized certified public accounting firm selected by the Company with the consent of Executive, which should not unreasonably be withheld (the "ACCOUNTING FIRM") which will provide detailed supporting calculations both to the Company and Executive within thirty (30) days after the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm will be borne solely by the Company. The Company, as determined in accordance with this Section 11, will pay any Gross-Up Payment to Executive within five (5) days after the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, it will so indicate to Executive in writing. Any determination by the Accounting Firm will be binding upon the Company and Executive; provided, however, that as a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm, it is possible that Gross-Up Payments that the Company should have made will not have been made (an "UNDERPAYMENT"), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies in accordance with Section 11(c), or elects not to exercise such remedies, and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm will determine the amount of underpayment that has occurred and the Underpayment will be promptly paid by the Company to or for the Employee pursuant to this Section 6 benefit of Executive.
(c) Executive will notify the “Additional Company in writing of any claim by the Internal Revenue Service that, if successful, would require a Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be Up Payment (that has not already been paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either notification will be (x) paid to the Employee given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of the claim and will apprise the Company of the nature of the claim and the date on which the claim is requested to be paid. Executive will not pay the claim prior to the due expiration of the 30-day period following the date on which Executive gives notice to the Company or any shorter period ending on the date that any payment of taxes with respect to the claim is due. If the Company notifies Executive in writing prior to the expiration of the 30-day or shorter period that it desires to contest the claim, Executive will:
(i) give the Company any information reasonably requested by the Company relating to the claim;
(ii) take any action in connection with contesting the claim as the Company will reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to the claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to contest the claim; and
(iv) permit the Company to participate in any proceedings relating to the claim.
(d) The Company will bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with the contest and will indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of the representation and payment of costs and expenses. Without limitation of the forgoing provisions of this Section 11, the Company will control all proceedings taken in connection with the contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of the claim and may, at its sole option, either direct Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute the contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company will determine. If the Company directs Executive to pay the claim and xxx for a refund, the Company will advance the amount of the payment to Executive, on an interest-free basis, and will indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to the advance or with respect to any imputed income with respect to the advance; and any extension of the statute of limitations relating to payment of taxes for the payment taxable year of any excise tax, or (y) paid Executive with respect to which the contested amount is claimed to be due will be limited solely to the Internal Revenue Service on behalf contested amount. The Company's control of the Employee no later than contest will be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive will be entitled to settle or contest, as the due date for the payment of case may be, any excise tax. In the event that the Excise Tax incurred by the Employee is determined other issue raised by the Internal Revenue Service or any other taxing authority. If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 11(d), Executive becomes entitled to receive any refund with respect to the claim, Executive will, subject to the Company's compliance with the requirements of Section 11(d), promptly pay to the Company the amount of the refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to this Section 11(d), a determination is made that Executive will not be entitled to any refund with respect to the claim and the Company does not notify Executive in writing of its intent to contest the denial of refund prior to the expiration of thirty (30) days after the determination, then the advance will be forgiven and will not be required to be greater or lesser than repaid and the amount so determined by of the Accountantsadvance will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) Should the Company and the Employee agree elect not to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) contest the Internal Revenue ServiceService claim in accordance with the foregoing provisions of Section 11(c) make or otherwise not provide Executive with written notice of its intention to contest such additional paymentclaim within the applicable thirty (30) day or shorter notice period provided in Section 11(c), including interest and any tax penalties, then the Company will promptly thereafter pay Executive the applicable Gross-Up Payment attributable to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6claim.
Appears in 1 contract
Golden Parachute Excise Tax. In (a) If any of the event that payments or benefits received or to be received by the benefits provided for Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Agreement or otherwise payable any other plan, arrangement or agreement) (such payments or benefits, excluding the Gross-Up Payment defined below, being hereinafter referred to as the Employee constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”"Total Payments") that are will be subject to the excise tax imposed by under Section 4999 of the Code (the “"Excise Tax”"), then the Employee shall receive provisions of either subclause (i) a one-time payment from the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and or (ii) of this section shall apply: (i) if the Total Payments are less than 115% of the maximum amount of such payments that could be made without imposition of Excise Tax (the "Safe Harbor Amount"), then the Total Payments will be reduced to the Safe Harbor Amount; or (ii) if the Total Payments equal or exceed 115% of the Safe Harbor Amount, the Company shall pay to the Executive an additional oneamount (the "Gross-time payment from Up Payment") such that the Company sufficient to pay net amount retained by the additional excise tax Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes arising from the and Excise Tax upon the Gross-Up made by the Company Payment, shall be equal to the Employee pursuant Total Payments.
(b) The calculations necessary to give effect to this Section 6 (the “Additional Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 section shall be made in writing in good faith performed by the accounting firm serving as the Company’s independent public accountants which was immediately prior to the Change of Control in Control, the Company's independent auditor (the “Accountants”"Auditor"). The initial For purposes of determining whether any of the Total Payments will exceed the Safe Harbor Amount and the amount of the Excise Tax Gross-Up and Additional Gross-Up payments hereunderTax, if any, (i) all of the Total Payments shall either be treated as "parachute payments" (xwithin the meaning of section 280G(b)(2) paid of the Code) unless, in the opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Employee no later than ten Executive and selected by the Auditor, such payments or benefits (10in whole or in part) days prior to the due date for the payment do not constitute parachute payments, including by reason of any excise tax, or (ysection 280G(b)(4)(A) paid to the Internal Revenue Service on behalf of the Employee no later than Code, (ii) all "excess parachute payments" within the due date for meaning of section 280G(b)(1) of the payment of any excise tax. In the event that Code shall be treated as subject to the Excise Tax incurred by unless, in the Employee is opinion of Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Internal Revenue Service to be greater or lesser than Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount so determined by of the AccountantsGross-Up Payment, the Company and Executive shall be deemed to pay federal income tax at the Employee agree to promptly (but highest marginal rate of federal income taxation in no event later than the end of the calendar year in which the applicable Gross-Up Payment is to be made and state and local income taxes are paid to at the highest marginal rate of taxation in the state and locality of the Executive's residence on the date of termination of employment, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(or received fromc) In the Internal Revenue Serviceevent that subclause (i) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 614(a) applies, the Accountants may make reasonable assumptions Executive and approximations concerning applicable taxes the Company shall jointly agree on the allocation of any reduction in the Total Payments.
(d) The provisions of this Section 14 shall be applied without giving effect to any cap or limitation on benefits under The Gradall Company's Amended and may rely on interpretations concerning Restated Supplemental Executive Retirement Plan that is intended to avoid Excise Tax, and the Company hereby waives the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish any such provision to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6Executive.
Appears in 1 contract
Golden Parachute Excise Tax. (a) In the event it shall be determined that any payment or distribution by the benefits provided Company or other amount with respect to the Company to or for in the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise payable otherwise, but determined without regard to any additional payments required under this Section 4 (a "PAYMENT"), is (or will be) subject to the Employee constitute “parachute payments” within the meaning of excise tax imposed by Section 280G 4999 of the Internal Revenue Code of 1986, as amended (the “Code”"CODE") that or any interest or penalties are subject (or will be) incurred by Executive with respect to the excise tax imposed by Section 4999 of the Code with respect to the Company (the “Excise Tax”excise tax, together with any interest and penalties, are hereinafter collectively referred to as the "EXCISE TAX"), then the Employee Executive shall be entitled to receive an additional cash payment (ia "GROSS-UP PAYMENT") a one-time payment from the Company sufficient in an amount equal to pay such excise tax (the “sum of the Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company amount sufficient to pay the additional excise tax cumulative Excise Tax and federal, state all cumulative income taxes (including any interest and local penalties imposed with respect to such taxes) relating to the Gross-Up Payment so that the net amount retained by Executive is equal to all payments to which Employee is entitled pursuant to the terms of this Agreement (excluding the Gross-Up Payment) or otherwise less income and employment taxes arising from (but not reduced by the Excise Tax or by income taxes attributable to the Gross-Up Payment).
(b) Subject to the provisions of Section 4(c), all determinations required to be made under this Section 4, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at the determination, shall be made by a nationally recognized certified public accounting firm selected by the Company with the consent of Executive, which should not unreasonably be withheld (the "ACCOUNTING FIRM") which shall provide detailed supporting calculations both to the Company and Executive within 30 days after the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. The Company, as determined in accordance with this Section 4, shall pay any Gross-Up Payment to Executive within five days after the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall so indicate to Executive in writing. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm, it is possible that Gross-Up Payments that the Company should have made will not have been made (an "UNDERPAYMENT"), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies in accordance with Section 4(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of Underpayment that has occurred and the Underpayment shall be promptly paid by the Company to or for the Employee pursuant to this Section 6 benefit of Executive.
(the “Additional Gross-Up”). Unless c) Executive shall notify the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined claim by the Internal Revenue Service that, if successful, would require a Gross-Up Payment (that has not already been paid by the Company). The notification shall be given as soon as practicable but no later than ten business days after Executive is informed in writing of the claim and shall apprise the Company of the nature of the claim and the date on which the claim is requested to be greater paid. Executive shall not pay the claim prior to the expiration of the 30-day period following the date on which Executive gives notice to the Company or lesser than any shorter period ending on the amount so determined date that any payment of taxes with respect to the claim is due. If the Company notifies Executive in writing prior to the expiration of the 30-day period that it desires to contest the claim, Executive shall:
(i) give the Company any information reasonably requested by the Accountants, Company relating to the claim;
(ii) take any action in connection with contesting the claim as the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to the claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to make a determination under this Section 6. contest the claim; and
(iv) permit the Company to participate in any proceedings relating to the claim.
(d) The Company shall bear and pay directly all costs the Accountants may reasonably incur and expenses (including additional interest and penalties) incurred in connection with the contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any calculations contemplated by Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of the representation and payment of costs and expenses. Without limitation of the forgoing provisions of this Section 64, the Company shall control all proceedings taken in connection with the contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of the claim and may, at its sole option, either direct Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute the contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine. If the Company directs Executive to pay the claim and xxx for a refund, the Company shall advance the amount of the payment to Executive, on an interest-free basis, and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to the advance or with respect to any imputed income with respect to the advance; and any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which the contested amount is claimed to be due shall be limited solely to the contested amount. The Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 4(d), Executive becomes entitled to receive any refund with respect to the claim, Executive shall, subject to the Company's compliance with the requirements of Section 4(d), promptly pay to the Company the amount of the refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to this Section 4(d), a determination is made that Executive shall not be entitled to any refund with respect to the claim and the Company does not notify Executive in writing of its intent to contest the denial of refund prior to the expiration of 30 days after the determination, then the advance shall be forgiven and shall not be required to be repaid and the amount of the advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
Appears in 1 contract
Samples: Change of Control Severance Agreement (Solectron Corp)
Golden Parachute Excise Tax. (a) In the event it will be determined that any payment or distribution by the benefits provided Company or other amount with respect to the Company to or for in the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise payable otherwise, but determined without regard to any additional payments required under this Section 6 (a “Payment”), is (or will be) subject to the Employee constitute “parachute payments” within the meaning of excise tax imposed by Section 280G 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) that or any interest or penalties are subject (or will be) incurred by Executive with respect to the excise tax imposed by Section 4999 of the Code with respect to the Company (the excise tax, together with any interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Employee shall Executive will be entitled to receive an additional cash payment (ia “Gross-Up Payment”) a one-time payment from the Company sufficient in an amount equal to pay such excise tax (the “sum of the Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company amount sufficient to pay the additional excise tax cumulative Excise Tax and federal, state all cumulative income taxes (including any interest and local penalties imposed with respect to such taxes) relating to the Gross-Up Payment so that the net amount retained by Executive is equal to all payments to which Employee is entitled pursuant to the terms of this Agreement (excluding the Gross-Up Payment) or otherwise less income and employment taxes arising from (but not reduced by the Excise Tax or by income taxes attributable to the Gross-Up Payment).
(b) Subject to the provisions of Section 6(c), all determinations required to be made under this Section 6, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at the determination, will be made by a nationally recognized certified public accounting firm selected by the Company with the consent of Executive, which should not unreasonably be withheld (the “Accounting Firm”) which will provide detailed supporting calculations both to the Company and Executive within 30 days after the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm will be borne solely by the Company. The Company, as determined in accordance with this Section 6, will pay any Gross-Up Payment to Executive within five days after the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, it will so indicate to Executive in writing. Any determination by the Accounting Firm will be binding upon the Company and Executive. As a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm, it is possible that Gross-Up Payments that the Company should have made will not have been made (an “Underpayment”), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies in accordance with Section 6(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm will determine the amount of Underpayment that has occurred and the Underpayment will be promptly paid by the Company to or for the Employee pursuant to this Section 6 benefit of Executive.
(the “Additional Gross-Up”). Unless c) Executive will notify the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined claim by the Internal Revenue Service that, if successful, would require a Gross-Up Payment (that has not already been paid by the Company). The notification will be given as soon as practicable but no later than ten business days after Executive is informed in writing of the claim and will apprise the Company of the nature of the claim and the date on which the claim is requested to be greater paid. Executive will not pay the claim prior to the expiration of the 30-day period following the date on which Executive gives notice to the Company or lesser than any shorter period ending on the amount so determined date that any payment of taxes with respect to the claim is due. If the Company notifies Executive in writing prior to the expiration of the 30-day period that it desires to contest the claim, Executive will:
(i) give the Company any information reasonably requested by the Accountants, Company relating to the claim;
(ii) take any action in connection with contesting the claim as the Company will reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to the claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to contest the claim; and
(iv) permit the Company to participate in any proceedings relating to the claim.
(d) The Company will bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with the Employee agree to promptly contest and will indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to penalties with respect thereto) imposed as a result of the other party as representation and payment of costs and expenses. Without limitation of the Accountants reasonably determine is appropriate. For purposes forgoing provisions of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear will control all costs the Accountants may reasonably incur proceedings taken in connection with the contest and, at its sole option, may pursue or forgo any calculations contemplated and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of the claim and may, at its sole option, either direct Executive to pay the tax claimed and sxx for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute the contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company will determine. If the Company directs Executive to pay the claim and sxx for a refund, the Company will advance the amount of the payment to Executive, on an interest-free basis, and will indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to the advance or with respect to any imputed income with respect to the advance; and any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which the contested amount is claimed to be due will be limited solely to the contested amount. The Company’s control of the contest will be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive will be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 6(d), Executive becomes entitled to receive any refund with respect to the claim, Executive will, subject to the Company’s compliance with the requirements of Section 6(d), promptly pay to the Company the amount of the refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to this Section 66(d), a determination is made that Executive will not be entitled to any refund with respect to the claim and the Company does not notify Executive in writing of its intent to contest the denial of refund prior to the expiration of 30 days after the determination, then the advance will be forgiven and will not be required to be repaid and the amount of the advance will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
Appears in 1 contract
Golden Parachute Excise Tax. In a. If any payment or benefit you would receive pursuant to a Change of Control from the event that Company together with any other payments which you have the benefits provided for right to receive from the Company or any corporation which is a member of an “affiliated group” as defined in this Agreement or otherwise payable to the Employee constitute “parachute payments” within the meaning of Section 280G 1504(a) of the Internal Revenue Code of 1986, as amended (the “Code”), without regard to Section 1504(b) that are of the Code otherwise (the “Payments”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Employee you shall receive a payment (ithe “Make-Whole Payment”) a one-time payment from the Company sufficient to pay such excise ensure that the net economic effect to you under this Section, on an after-tax (basis, is as if the “Section 4999 Excise Tax Grossdid not apply to you. Notwithstanding the foregoing and any other provision of this Section 5, under no circumstances will the Make-Up”), Whole Payment exceed four (4) million dollars.
b. The Make-Whole Payment will include (i) a payment from the Company to you equal to the Excise Tax and (ii) an additional one-time payment from the Company sufficient to pay you equal to the additional Section 4999 excise tax and federal, all federal and state and local income and employment taxes arising from the Excise Tax Gross-Up made payments by the Company to the Employee you pursuant to this Section 6 sentence; provided, however, that the Make-Whole Payment shall not exceed four (4) million dollars. For purposes of determining the “Additional Grossamount of the Make-Up”). Unless the Company and the Employee otherwise agree in writingWhole Payment, the determination you shall be deemed to have: (a) paid federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Make-Whole Payment is to be made; (b) paid applicable state and local income taxes at the highest rate of taxation for the calendar year in which the Make-Whole Payment is to be made, net of the Employee’s excise maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes; and (c) otherwise allowable deductions for federal income tax liability and the amount required purposes at least equal to those which would be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf disallowed because of the Employee no later than inclusion of the due date for Make-Whole Payment in the payment of any excise taxyour adjusted gross income. In the event that If the Excise Tax incurred by the Employee you is determined by the Internal Revenue Service to be greater more or lesser less than the amount so determined by the Accountantsaccountants pursuant to this Sections 5, then the Company and the Employee you agree to promptly (but in no event later than make a payment to the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional paymentother party, including interest and any tax penaltiespenalties if the Company must pay you, to the other party as the Accountants accountants reasonably determine is appropriateappropriate to ensure that the net economic effect to you under this Section 5, on an after-tax basis, is as if the Section 4999 Excise Tax did not apply to you; provided, however, that the Make-Whole Payment (in the aggregate) shall not exceed four (4) million dollars.
c. 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 transaction shall perform the foregoing calculations. For 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, or you and the Company otherwise agree that such accounting firm should not be engaged for purposes of making the calculations determinations required hereunder, another nationally recognized accounting firm may be appointed to make the determinations required hereunder as mutually agreed to by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6you. The Company shall bear all costs expenses with respect to the Accountants may determinations by such accounting firm required to be made hereunder.
d. The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and you within 15 calendar days after the date on which your right to a Payment is triggered (if requested at that time by the Company or you) or such other time as requested by the Company or you upon written notice that a payment related to a change of control of the Company has been or is to be made. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, it shall furnish the Company and you with an opinion reasonably incur in connection acceptable to you that no Excise Tax will be imposed with any calculations contemplated by this Section 6respect to such Payment.
Appears in 1 contract
Samples: Change of Control Agreement (Mercury Interactive Corp)
Golden Parachute Excise Tax. In the event that the benefits provided The Company shall reimburse Executive for in this Agreement or otherwise payable to the Employee constitute “parachute payments” within the meaning of (i) any excise tax imposed by Section 280G 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) that are subject to the excise tax imposed by Section 4999 on any portion of the Code (the “Excise Tax”), then the Employee shall receive (i) a one-time payment from compensation or benefits payable by the Company sufficient or its Affiliates to pay such excise tax (the “Excise Tax Gross-Up”)Executive under this Agreement, all other contracts, arrangements or programs, and (ii) an additional one-time payment from the Company sufficient to pay the additional any such excise tax and federal, state and local income and employment any other taxes arising from the Excise Tax Gross-Up made imposed by the Code or under state or local law on the payments provided for in this Section 6. Executive and the Company agree to reasonably cooperate to mitigate the Employee pursuant amount of any such tax that might become payable. The Company shall pay to Executive the payments, or portions thereof, provided for in this Section 6 (the “Additional Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no not later than ten fifteen (1015) days prior to the due date for the payment of any excise taxon which such taxes, or portions thereof, are due as determined by the tax counsel referred to below. Tax counsel selected by the Company and reasonably acceptable to Executive shall determine the amounts (yif any) paid due Executive under this Section 6, based on the actual tax rates to which Executive is subject at the time. Executive shall provide such counsel with such information as such counsel reasonably requests in connection with such determination. All determinations of tax counsel shall be binding on Executive and the Company. Tax counsel shall determine that payments shall be due hereunder only if, and to the Internal Revenue Service on behalf of extent that, it is more likely than not that the Employee no later than the due date for the payment of any excise payments or benefits are subject to a tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations determinations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and tax counsel may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting positionbenefit consultants, accountants or other experts. The Company agrees to pay all reasonable fees and the Employee shall furnish expenses of such tax counsel, benefits consultants, accountants or other experts. If, subsequent to the Accountants such information and documents as the Accountants may reasonably request in order payment to make a determination under Executive of payments pursuant to this Section 6. The , the tax counsel referred to in this Section 6 reasonably determines that the amount of the payments paid pursuant to this Section 6 are greater than, or less than, the amount required to have been paid, Executive shall reimburse the Company an amount, or the Company shall bear all costs pay to Executive an additional amount, respectively, based upon such determination. In the Accountants may reasonably incur event that tax counsel referred to in connection with any calculations contemplated by this Section 66 reasonably determines that Executive is required to pay excise tax, interest or penalties to a governmental taxing authority as a result of his non-payment of taxes where such tax counsel had determined that such taxes need not be paid or as a result of a miscalculation of such taxes, the Company shall pay to Executive an additional amount equal to (A) the amount of such interest and/or penalties, (B) the excise tax which was not paid and (C) any excise tax and any other taxes imposed by the Code or under state or local law on the payments provided for in this sentence.
Appears in 1 contract