Gross-up for Certain Taxes. In the event that it is determined that any payment (other than the Gross-Up payment provided for in this Section 4(g)) or distribution by the Company (or any of its Affiliates) to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision thereto) by reason of being considered “contingent on a change in ownership or control” of the Company, within the meaning of Section 280G of the Code or any successor provision thereto (such tax being hereafter referred to as the “Excise Tax”), then the Executive will be entitled to receive an additional payment or payments (a “Gross-Up Payment”). The Gross-Up Payment will be in an amount such that, after payment by the Executive of all taxes, penalties and interest, including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. For purposes of determining the amount of the Gross-Up Payment, the Executive will be considered to pay (A) federal income taxes at the highest rate in effect in the year in which the Gross-Up Payment will be made and (B) state and local income taxes at the highest rate in effect in the state or locality in which the Gross-Up Payment would be subject to state or local tax, net of the maximum reduction in federal income tax that could be obtained from deduction of such state and local taxes. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to in this Section 4(g) will be made at the expense of the Company by the Company’s regular independent accounting firm (the “Accounting Firm”), which shall provide detailed supporting calculations. Any determination by the Accounting Firm will be binding upon the Company and the Executive. The Gross-Up Payment will be paid to the Executive as soon as administratively practicable following the later of (i) the date Executive is required to pay the excise tax imposed by Section 4999 of the Code, or (ii) in the event the Executive is determined, in accordance with the methods specified in the regulations issued under Section 409A of the Code, to be a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code) of the Company at the time of the Executive’s “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Code and the applicable regulations and administrative guidance issued thereunder), the first day of the seventh month after the date of the Executive’s “separation from service” or, if earlier, the date of death of Executive. In the event that the Excise Tax is later determined by the Accounting Firm or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the Gross-Up Payment at the time the payment is made under this Section 4(g) (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of such payment), the Company shall make an additional payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined. In the event that the Excise Tax is subsequently determined by the Accounting Firm or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the Gross-Up Payment at the time payment is made under this Section 4(g), the Executive shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior payment that would not have been paid if such Excise Tax had been applied in initially calculating such payment, plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event that any portion of the payment made hereunder that is to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received or credited to the Executive by such tax authority for the period it held such portion. The Gross-Up Payment will be made in a manner that complies with Treasury Regulation § 1.409A-3(i)(1)(v).
Appears in 15 contracts
Samples: Employment Agreement (Reata Pharmaceuticals Inc), Employment Agreement (Reata Pharmaceuticals Inc), Employment Agreement (Reata Pharmaceuticals Inc)
Gross-up for Certain Taxes. In the event that it is determined that any payment (other than the Gross-Up payment provided for in this Section 4(g)) or distribution by the Company (or any of its Affiliates) to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision thereto) by reason of being considered “contingent on a change in ownership or control” of the Company, within the meaning of Section 280G of the Code or any successor provision thereto (such tax being hereafter referred to as the “Excise Tax”), then the Executive will be entitled to receive an additional payment or payments (a “Gross-Up Payment”). The Gross-Up Payment will be in an amount such that, after payment by the Executive of all taxes, penalties and interest, including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. For purposes of determining the amount of the Gross-Up Payment, the Executive will be considered to pay (A) federal income taxes at the highest rate in effect in the year in which the Gross-Up Payment will be made and (B) state and local income taxes at the highest rate in effect in the state or locality in which the Gross-Up Payment would be subject to state or local tax, net of the maximum reduction in federal income tax that could be obtained from deduction of such state and local taxes. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to in this Section 4(g) will be made at the expense of the Company by the Company’s regular independent accounting firm (the “Accounting Firm”), which shall provide detailed supporting calculations. Any determination by the Accounting Firm will be binding upon the Company and the Executive. The Gross-Up Payment will be paid to the Executive as soon as administratively practicable following the later of (i) the date Executive is required to pay the excise tax imposed by Section 4999 of the Code, or (ii) in the event the Executive is determined, in accordance with the methods specified in the regulations issued under Section 409A of the Code, to be a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code) of the Company at the time of the Executive’s “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Code and the applicable regulations and administrative guidance issued thereunder), the first day of the seventh month after the date of the Executive’s “separation from service” or, if earlier, the date of death of Executive. In the event that the Excise Tax is later determined by the Accounting Firm or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the Gross-Up Payment at the time the payment is made under this Section 4(g) (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of such payment), the Company shall make an additional payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined. In the event that the Excise Tax is subsequently determined by the Accounting Firm or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the Gross-Up Payment at the time payment is made under this Section 4(g), the Executive shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior payment that would not have been paid if such Excise Tax had been applied in initially calculating such payment, plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event that any portion of the payment made hereunder that is to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received or credited to the Executive by such tax authority for the period it held such portion. The Gross-Up Payment will be made in a manner that complies with Treasury Regulation § 1.409A-3(i)(1)(v).
Appears in 1 contract
Gross-up for Certain Taxes. In the event that it is determined that any payments to Executive pursuant to this Agreement or any payment (other than the Gross-Up payment provided for in this Section 4(g)) received by Executive or distribution paid by the Company (on Executive’s behalf is treated as contingent on a change of ownership or control of the Company or in the ownership of a substantial portion of the assets of the Company or any of its Affiliatesperson affiliated with the Company (but only if such payment or other benefit is in connection with Executive’s employment relationship with the Company) to or (collectively, the “Total Value”) shall result in Executive becoming liable for the benefit payment of Executive, whether paid or payable or distributed or distributable any excise taxes pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax imposed by Section section 4999 of the Code (or any successor provision thereto) by reason of being considered “contingent on a change in ownership or control” of the Company, within the meaning of Section 280G of the Code or any successor provision thereto (such tax being hereafter referred to as the “Excise Tax”), then the Executive will shall be entitled to receive an additional payment or equal to the amount of any Excise Tax payable by Executive pursuant to section 4999 of the Code as a result of such payments plus all federal, state and local taxes applicable to the Company’s payment of such Excise Tax, including any additional taxes due under section 4999 of the Code with respect to payments made pursuant to this provision. Calculations for these purposes shall assume the highest marginal rate applicable at the time of calculation. The intent of this Section 6 is to provide that the Company shall pay Executive an additional amount (a the “Gross-Up Payment”). The Gross-Up Payment will be in an ) such that the net amount such that, retained by Executive after payment by the Executive deduction: (i) of all taxes, penalties and interest, including any Excise Tax imposed upon on the Total Value; and (ii) of any excise tax, federal, state or local income, payroll, and/or other taxes, imposed on the Gross-Up Payment, shall equal the Total Value. If Executive retains determines that Executive is liable for an amount of the Gross-Up Payment equal to the Excise Tax imposed upon with respect to a payment or other benefit, Executive must promptly so notify the PaymentCompany in writing. For purposes Upon receipt of determining such notice from Executive, the amount Company must, within twenty (20) days thereafter, either (a) notify Executive, in writing, that the Company agrees with Executive’s determination of Excise Tax liability, in which case the Company shall become obligated to immediately pay to Executive the Gross-Up Payment, or (b) submit to Executive an opinion, prepared by counsel of the Company’s choice which counsel is reasonably satisfactory to Executive, that Executive will is not liable for the Excise Tax (the “Tax Opinion”). If the Tax Opinion is provided to Executive and Executive nevertheless chooses not to contest the assertion of the Excise Tax, the Company shall be considered relieved of its obligation to pay (A) federal income taxes at the highest rate in effect in the year in which make the Gross-Up Payment will specified hereunder. If Executive chooses to contest the assertion of the Excise Tax after receipt of the Tax Opinion, Executive may do so with counsel of Executive’s choice that is reasonably satisfactory to the Company and the reasonable legal fees and expenses of such contest shall be made and (B) state and local income taxes at paid by the highest rate in effect in Company, on a monthly basis, subject to the state or locality in which Company’s receipt of proper documentation therefore. If the Excise Tax is so contested with such counsel but such contest is not successful, then the Company shall pay to Executive the Gross-Up Payment would be subject to state upon the earlier of ten (10) days after (1) the entry of a final judgment, decree, or local tax, net other order by a court of competent jurisdiction that Executive is liable for the maximum reduction in federal income tax that could be obtained from deduction of such state and local taxes. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, or (2) a mutual determination of Executive and the calculation Company not to proceed further with the contest. The Company also shall reimburse Executive at that time for any penalties and interest attributable to any delay in payment of the amounts referred to in this Section 4(g) will be made at the expense of the Company Excise Tax that results from a decision by the Company’s regular independent accounting firm (the “Accounting Firm”), which shall provide detailed supporting calculations. Any determination by the Accounting Firm will be binding upon the Company and the Executive. The Gross-Up Payment will be paid to the Executive as soon as administratively practicable following the later of (i) the date Executive is required not to pay the excise tax imposed Excise Tax liability based upon the Tax Opinion or a decision by Section 4999 of the Code, or (ii) in the event the Executive is determined, in accordance with the methods specified in the regulations issued under Section 409A of the Code, to be a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code) of the Company at the time of the Executive’s “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Code and the applicable regulations and administrative guidance issued thereunder), the first day of the seventh month after the date of the Executive’s “separation from service” or, if earlier, the date of death of Executive. In the event that not to pay the Excise Tax is later determined by the Accounting Firm or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the Gross-Up Payment at the time the payment is made under this Section 4(g) (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of such payment), the Company shall make an additional payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined. In the event that the Excise Tax is subsequently determined by the Accounting Firm or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the Gross-Up Payment at the time payment is made under this Section 4(g), the Executive shall repay due to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior payment that would not have been paid if such Excise Tax had been applied in initially calculating such payment, plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event that any portion of the payment made hereunder that is to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received or credited to the Executive by such tax authority for the period it held such portion. The Gross-Up Payment will be made in a manner that complies with Treasury Regulation § 1.409A-3(i)(1)(v)Opinion.
Appears in 1 contract
Samples: Employment Agreement (7 Eleven Inc)
Gross-up for Certain Taxes. (i) In the event that it is determined that any part of any payment or benefit received (other than the Gross-Up payment provided for in this Section 4(g)including, without limitation, acceleration of vesting of stock options) or distribution by the Company (or any of its Affiliates) to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise the Option Agreement (the "Contract Payments") or any part of any payment or benefit received or to be received by the Executive or for the Executive's benefit pursuant to or by reason of any other agreement, policy, plan, program arrangement or arrangement, including without limitation any stock option or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any agreement of the foregoing Company or any affiliate (a “Payment”)"Other Payments" and, together with the Contract Payments, the "Payments") would be subject to taxes (the excise tax "Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (or any successor provision thereto) by reason of being considered “contingent on a change in ownership or control” of the Company, within the meaning of Section 280G of the Code or any successor provision thereto (such tax being hereafter referred to as the “Excise Tax”"Code"), then determined as provided below, the Executive will be entitled Company shall pay to receive the Executive, at the time specified in paragraph (ii) below, an additional payment or payments amount (a “the "Gross-Up Payment”). The Gross-Up Payment will be in an ") such that the net amount such thatretained by the Executive, after payment by deduction of the Executive of all taxes, penalties and interest, including any Excise Tax imposed upon on the Payments and any federal, state and local income tax and the Excise Tax on the Gross-Up Payment, and any interest, penalties or additions to tax payable by the Executive retains an amount with respect thereto, shall be equal to the total present value (using the applicable federal rate as defined in Section 1274(d) of the Gross-Up Payment equal Code in such calculation) of the Payments at the time such Payments are to be made. For purposes of determining whether any of the Payments shall be subject to the Excise Tax imposed upon and the Paymentamounts of such Excise Tax, (A) the total amount of the Payments shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, except to the extent that, in the opinion of independent counsel selected by the Company and reasonably acceptable to the Executive ("Independent Counsel"), a Payment (in whole or in part) does not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code, or such "excess parachute payments" (in whole or in part) are not subject to the Excise Tax, (B) the amount of the Payments that shall be treated as subject to the Excise Tax shall be equal to the lesser of (1) the total amount of the Payments or (2) the amount of "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code (after applying clause (A) hereof), and (C) the value of any noncash benefits or any deferred payment or benefit shall be determined by Independent Counsel in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive will shall be considered deemed to pay (A) federal income taxes at the highest rate in effect marginal rates of federal income taxation applicable to individuals in the calendar year in which the Gross-Up Payment will is to be made and (B) state and local income taxes at the highest rate marginal rates of taxation applicable to individuals as are in effect in the state or and locality of the Executive's residence in the calendar year in which the Gross-Up Payment would is to be subject to state or local taxmade, net of the maximum reduction in federal income tax taxes that could can be obtained from deduction of such state and local taxes. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred taking into account any limitations applicable to in this Section 4(g) will be made individuals subject to federal income tax at the expense of the Company by the Company’s regular independent accounting firm highest marginal rates.
(the “Accounting Firm”), which shall provide detailed supporting calculations. Any determination by the Accounting Firm will be binding upon the Company and the Executive. ii) The Gross-Up Payment will Payments provided for in paragraph (i) hereof shall be paid made upon the earlier of (A) the payment to the Executive as soon as administratively practicable following the later of any Payment or (iB) the date Executive is required to pay the excise tax imposed by Section 4999 of the Code, or (ii) in the event imposition upon the Executive or payment by the Executive of any Excise Tax.
(iii) If it is determined, in accordance with established pursuant to a final determination of a court or an Internal Revenue Service proceeding or the methods specified in the regulations issued under Section 409A opinion of the Code, to be a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code) of the Company at the time of the Executive’s “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Code and the applicable regulations and administrative guidance issued thereunder), the first day of the seventh month after the date of the Executive’s “separation from service” or, if earlier, the date of death of Executive. In the event Independent Counsel that the Excise Tax is later determined by less than the Accounting Firm amount taken into account under paragraph (i) hereof, the Executive shall repay to the Company within thirty (30) days of the Executive's receipt of notice of such final determination or pursuant to any proceeding or negotiations with opinion the Internal Revenue Service to exceed portion of the Gross-Up Payment at attributable to such reduction (plus the time portion of the payment Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive if such repayment results in a reduction in Excise Tax or a federal, state and local income tax deduction) plus any interest received by the Executive on the amount of such repayment. If it is made under this Section 4(g) established pursuant to a final determination of a court or an Internal Revenue Service proceeding or the opinion of Independent Counsel that the Excise Tax exceeds the amount taken into account hereunder (including, but not limited to, including by reason of any payment the existence or amount of which cannot be determined at the time of such paymentthe Gross-Up Payment), the Company shall make an additional payment Gross-Up Payment in respect of such excess within thirty (plus any interest or penalty payable with respect to such excess30) at days of the time that the amount Company's receipt of notice of such excess is finally determined. final determination or opinion.
(iv) In the event that of any change in, or further interpretation of, Sections 280G or 4999 of the Excise Tax is subsequently determined by Code and the Accounting Firm or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the Gross-Up Payment at the time payment is made under this Section 4(g)regulations promulgated thereunder, the Executive shall repay be entitled, by written notice to the Company, at to request an opinion of Independent Counsel regarding the time that the amount application of such reduction in the Excise Tax is finally determined, the portion change or interpretation to any of such prior payment that would not have been paid if such Excise Tax had been applied in initially calculating such payment, plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event that any portion of the payment made hereunder that is to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received use its best efforts to cause such opinion to be rendered as promptly as practicable. All fees and expenses of Independent Counsel incurred in connection with this Agreement shall be paid by the Company.
(v) The Company shall indemnify and hold harmless the Executive from and against any fees and expenses (including fees and expenses of attorneys and accountants) incurred in connection with any Internal Revenue Service audit or credited proceeding that relates to the Executive by such tax authority for the period it held such portion. The Gross-Up Payment will be made in a manner that complies with Treasury Regulation § 1.409A-3(i)(1)(v)Excise Tax.
Appears in 1 contract
Gross-up for Certain Taxes. In the event that (a) If it is determined by the Company’s independent auditors that any payment (monetary or other than the Gross-Up payment provided for in this Section 4(g)) benefit received or distribution deemed received by Executive from the Company (or any of its Affiliates) to or for the benefit of Executive, whether paid or payable or distributed or distributable Affiliate thereof pursuant to the terms of this Agreement or otherwise pursuant to otherwise, whether or by reason of any not in connection with a Change in Control (such monetary or other agreementbenefits collectively, policy, plan, program or arrangement, including without limitation any stock option or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “PaymentPotential Parachute Payments”), would be is or will become subject to the any excise tax imposed by under Section 4999 of the Code (or any successor provision thereto) by reason of being considered “contingent on a change in ownership similar tax under any United States federal, state, local or control” of the Company, within the meaning of Section 280G of the Code or any successor provision thereto other law (such excise tax being hereafter referred to as the and all such similar taxes collectively, “Excise TaxTaxes”), then the Company shall, subject to Sections 8.10 and 8.11, within five business days after such determination, and in no event later than December 31 of the year after Executive will be entitled to receive pays such Excise Taxes, pay Executive an additional payment or payments amount (a the “Gross-Up Payment”) equal to the product of:
(i) the amount of such Excise Taxes multiplied by
(ii) the Gross-Up Multiple (as defined in Section 8.8). The Gross-Up Payment will be in an amount such that, after payment is intended to compensate Executive for all Excise Taxes payable by the Executive of with respect to Potential Parachute Payments and all taxes, penalties and interest, including any Taxes or Excise Tax imposed upon Taxes payable by Executive with respect to the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. For purposes of determining the amount of the Gross-Up Payment, the Executive will be considered to pay (A) federal income taxes at the highest rate in effect in the year in which the Gross-Up Payment will be made and (B) state and local income taxes at the highest rate in effect in the state or locality in which the Gross-Up Payment would be subject to state or local tax, net of the maximum reduction in federal income tax that could be obtained from deduction of such state and local taxes. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, tax (and the calculation of the amounts referred to in this Section 4(ginterest) will be made at the expense of the Company by the Company’s regular independent accounting firm (the “Accounting Firm”), which shall provide detailed supporting calculations. Any determination by the Accounting Firm will be binding upon the Company and the Executive. The Gross-Up Payment will be paid to the Executive as soon as administratively practicable following the later of (i) the date Executive is required to pay the excise tax imposed by Section 4999 of the Code, or (ii) in the event the Executive is determined, in accordance with the methods specified in the regulations issued under Section 409A of the Code, to Code shall not be a “specified employeeany similar tax” for purposes of this Agreement.
(within the meaning of Section 409A(a)(2)(B)(ib) The determination of the Code) Company’s independent auditors described in Section 8.5(a), including the detailed calculations of the Company at the time amounts of the Executive’s “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Code Potential Parachute Payments, Excise Taxes and the applicable regulations and administrative guidance issued thereunder), the first day of the seventh month after the date of the Executive’s “separation from service” or, if earlier, the date of death of Executive. In the event that the Excise Tax is later determined by the Accounting Firm or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the Gross-Up Payment at and the time the payment is made under this Section 4(g) (includingassumptions relating thereto, but not limited to, by reason of any payment the existence or amount of which cannot shall be determined at the time set forth in a written certificate of such payment), auditors (the “Company Certificate”) delivered to Executive. Executive or the Company may at any time request the preparation and delivery to Executive of a Company Certificate. The Company shall make an additional payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at cause the time that the amount of such excess is finally determined. In the event that the Excise Tax is subsequently determined by the Accounting Firm or pursuant to any proceeding or negotiations with the Internal Revenue Service Company Certificate to be less than the Gross-Up Payment at the time payment is made under this Section 4(g), the delivered to Executive shall repay to the Company, at the time that the amount of as soon as reasonably possible after such reduction in the Excise Tax is finally determined, the portion of such prior payment that would not have been paid if such Excise Tax had been applied in initially calculating such payment, plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event that any portion of the payment made hereunder that is to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received or credited to the Executive by such tax authority for the period it held such portion. The Gross-Up Payment will be made in a manner that complies with Treasury Regulation § 1.409A-3(i)(1)(v)request.
Appears in 1 contract
Gross-up for Certain Taxes. In the event that If it is determined that any payment (other than the Gross-Up payment provided for in this Section 4(g)) benefit received or distribution deemed received by the Executive from the Company (or any of its Affiliates) to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant (collectively, “Payments”) is or will become subject to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any excise tax under Section 4999 of the foregoing Code or any similar tax payable under any United States federal, state, local or other law, but not including any tax payable under Section 409A of the Code (a such excise tax and all such similar taxes collectively, “PaymentExcise Taxes”), then the amount of such Payments shall be reduced to the extent necessary to avoid the imposition of Excise Taxes (the amount to which the Payments are reduced is hereinafter called the “Reduced Amount”), unless the portion of the Reduced Amount that the Executive would retain after the application of all applicable income and other taxes exclusive of Excise Taxes (hereinafter called the “Applicable Taxes”), would be subject less than the portion of the unreduced amount of the Payments that the Executive would retain after application of Excise Taxes and all Applicable Taxes. Notwithstanding the foregoing, if the Change of Control occurs prior to the excise tax imposed by Section 4999 effective date of the Code (or any successor provision thereto) by reason of being considered “contingent on a change in ownership or control” of the Company, within the meaning of Section 280G of the Code or any successor provision thereto (such tax being hereafter referred to as the “Excise Tax”)an IPO, then the Company shall pay the Executive will be entitled to receive an additional payment or payments amount (a “Gross-Up up Payment”) equal to the product of:
(a) the amount of such Excise Taxes multiplied by
(b) the Gross-up Multiple (as defined in Section 6.2). The Gross-Up up Payment will be in an amount such thatis intended to compensate the Executive for the Excise Taxes and any federal, after payment state, local or other income or excise taxes or other taxes payable by the Executive of all taxes, penalties and interest, including any Excise Tax imposed upon with respect to the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the up Payment. For all purposes of determining the amount of the Gross-Up Paymentthis Article VI, the Executive will shall be considered deemed to pay (A) federal income taxes at the highest rate in effect in the year in which the Gross-Up Payment will be made and (B) state and local income taxes at the highest rate in effect in the state or locality in which the Gross-Up Payment would be subject to state the highest effective marginal rates of federal, state, local or local tax, net of the maximum reduction in federal other income tax that could be obtained from deduction of such state and local or other taxes. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to in this Section 4(g) will be made at the expense of the Company by the Company’s regular independent accounting firm (the “Accounting Firm”), which shall provide detailed supporting calculations. Any determination by the Accounting Firm will be binding upon the Company and the Executive. The Gross-Up Payment will be paid to the Executive as soon as administratively practicable following the later of (i) the date Executive is required to pay the excise tax imposed by Section 4999 of the Code, or (ii) in the event the Executive is determined, in accordance with the methods specified in the regulations issued under Section 409A of the Code, to be a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code) of the Company at the time of the Executive’s “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Code and the applicable regulations and administrative guidance issued thereunder), the first day of the seventh month after the date of the Executive’s “separation from service” or, if earlier, the date of death of Executive. In the event that the Excise Tax is later determined by the Accounting Firm or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the Gross-Up Payment at the time the payment is made under this Section 4(g) (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of such payment), the Company shall make an additional payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined. In the event that the Excise Tax is subsequently determined by the Accounting Firm or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the Gross-Up Payment at the time payment is made under this Section 4(g), the Executive shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior payment that would not have been paid if such Excise Tax had been applied in initially calculating such payment, plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event that any portion of the payment made hereunder that is to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received or credited to the Executive by such tax authority for the period it held such portion. The Gross-Up Payment will be made in a manner that complies with Treasury Regulation § 1.409A-3(i)(1)(v).
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Samples: Employment Agreement (National Credit & Guaranty CORP)