Common use of Internal Revenue Code Section 280g Gross Up Clause in Contracts

Internal Revenue Code Section 280g Gross Up. (a) In the event that it shall be determined that any payment (other than the payment provided for in this Section 18) or distribution of any type to or for the benefit of Employee, by the Parent, any affiliate of the Parent, any “Person” (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, a “Person”) who acquires ownership or effective control of the Parent or ownership of a substantial portion of the Parent’s assets (within the meaning of Section 280G of the Code, and the regulations thereunder) or any affiliate of such Person, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”), is or 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 (such excise tax, together with any such interest and penalties, are collectively referred to as the “Excise Tax”), then Employee shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including any income tax, employment tax or Excise Tax, imposed upon the Gross-Up Payment, Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments. (b) All mathematical determinations, and all determinations as to whether any of the Total Payments are “parachute payments” (within the meaning of Section 280G of the Code), that are required to be made under this Section 18, including determinations as to whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and amounts relevant to the last sentence of this Section 18(b), shall be made by an independent accounting firm selected by Employee from among the six (6) largest accounting firms in the United States (the “Accounting Firm”), which shall provide its determination (the “Determination”), together with detailed supporting calculations regarding the amount of any Gross-Up Payment and any other relevant matter, both to the Company and Employee by no later than ten (10) days following the date of termination, if applicable, or such earlier time as is requested by the Company or Employee (if Employee reasonably believes that any of the Total Payments may be subject to the Excise Tax). If the Accounting Firm determines that no Excise Tax is payable by Employee, it shall furnish Employee and the Company with an opinion reasonably acceptable to Employee and the Company that no Excise Tax is payable (including the reasons therefor) and that Employee has substantial authority not to report any Excise Tax on his federal income tax return. If a Gross-Up Payment is determined to be payable, it shall be paid to Employee within twenty (20) days after the Determination (and all accompanying calculations and other material supporting the Determination) is delivered to the Company by the Accounting Firm. Any determination by the Accounting Firm shall be binding upon the Company and Employee, absent manifest error. 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 hereunder, it is possible that Gross-Up Payments not made by the Company should have been made (“Underpayment”), or that Gross-Up Payments will have been made by the Company which should not have been made (“Overpayments”). In either such event, the Accounting Firm shall determine the amount of the Underpayment or Overpayment that has occurred. In the case of an Underpayment, the amount of such Underpayment (together with any interest and penalties payable by Employee as a result of such Underpayment) shall be promptly paid by the Company to or for the benefit of Employee. In the case of an Overpayment, Employee shall, at the direction and expense of the Company, take such steps as are reasonably necessary (including the filing of returns and claims for refund), follow reasonable instructions from, and procedures established by, the Company, and otherwise reasonably cooperate with the Company to correct such Overpayment, provided, however, that (i) Employee shall not in any event be obligated to return to the Company an amount greater than the net after-tax portion of the Overpayment that he has retained or has recovered as a refund from the applicable taxing authorities and (ii) this provision shall be interpreted in a manner consistent with the intent of Section 18(a), which is to make Employee whole, on an after-tax basis, from the application of the Excise Tax, it being understood that the correction of an Overpayment may result in Employee repaying to the Company an amount which is less than the Overpayment. The fees and expenses of the Accounting Firm shall be paid by the Company. (c) Any Gross-Up Payment shall be paid no later than the last day of Employee’s taxable year next following Employee’s taxable year in which the taxes imposed in respect of which the Gross-Up Payment is being made are remitted to the applicable taxing authority.

Internal Revenue Code Section 280g Gross Up. (a) In the event that it shall be determined that any payment (other than the payment provided for in this Section 18) or distribution of any type to or for the benefit of Employeethe Chairman, by the Parent, any affiliate of the Parent, any “Person” (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, a “Person”) who acquires ownership or effective control of the Parent or ownership of a substantial portion of the Parent’s assets (within the meaning of Section 280G of the Code, and the regulations thereunder) or any affiliate of such Person, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”), is or 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 (such excise tax, together with any such interest and penalties, are collectively referred to as the “Excise Tax”), then Employee the Chairman shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Employee the Chairman of all taxes (including any interest or penalties imposed with respect to such taxes), including any income tax, employment tax or Excise Tax, imposed upon the Gross-Up Payment, Employee the Chairman retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments. (b) All mathematical determinations, and all determinations as to whether any of the Total Payments are “parachute payments” (within the meaning of Section 280G of the Code), that are required to be made under this Section 18, including determinations as to whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and amounts relevant to the last sentence of this Section 18(b), shall be made by an independent accounting firm selected by Employee the Chairman from among the six (6) largest accounting firms in the United States (the “Accounting Firm”), which shall provide its determination (the “Determination”), together with detailed supporting calculations regarding the amount of any Gross-Up Payment and any other relevant matter, both to the Company and Employee the Chairman by no later than ten (10) days following the date of termination, if applicable, or such earlier time as is requested by the Company or Employee the Chairman (if Employee the Chairman reasonably believes that any of the Total Payments may be subject to the Excise Tax). If the Accounting Firm determines that no Excise Tax is payable by Employeethe Chairman, it shall furnish Employee the Chairman and the Company with an opinion reasonably acceptable to Employee the Chairman and the Company that no Excise Tax is payable (including the reasons therefor) and that Employee the Chairman has substantial authority not to report any Excise Tax on his federal income tax return. If a Gross-Up Payment is determined to be payable, it shall be paid to Employee the Chairman within twenty (20) days after the Determination (and all accompanying calculations and other material supporting the Determination) is delivered to the Company by the Accounting Firm. Any determination by the Accounting Firm shall be binding upon the Company and Employeethe Chairman, absent manifest error. 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 hereunder, it is possible that Gross-Up Payments not made by the Company should have been made (“Underpayment”), or that Gross-Up Payments will have been made by the Company which should not have been made (“Overpayments”). In either such event, the Accounting Firm shall determine the amount of the Underpayment or Overpayment that has occurred. In the case of an Underpayment, the amount of such Underpayment (together with any interest and penalties payable by Employee the Chairman as a result of such Underpayment) shall be promptly paid by the Company to or for the benefit of Employeethe Chairman. In the case of an Overpayment, Employee the Chairman shall, at the direction and expense of the Company, take such steps as are reasonably necessary (including the filing of returns and claims for refund), follow reasonable instructions from, and procedures established by, the Company, and otherwise reasonably cooperate with the Company to correct such Overpayment, provided, however, that (i) Employee the Chairman shall not in any event be obligated to return to the Company an amount greater than the net after-tax portion of the Overpayment that he has retained or has recovered as a refund from the applicable taxing authorities and (ii) this provision shall be interpreted in a manner consistent with the intent of Section 18(a), which is to make Employee the Chairman whole, on an after-tax basis, from the application of the Excise Tax, it being understood that the correction of an Overpayment may result in Employee the Chairman repaying to the Company an amount which is less than the Overpayment. The fees and expenses of the Accounting Firm shall be paid by the Company. (c) Any Gross-Up Payment shall be paid no later than the last day of Employeethe Chairman’s taxable year next following Employeethe Chairman’s taxable year in which the taxes imposed in respect of which the Gross-Up Payment is being made are remitted to the applicable taxing authority.

Internal Revenue Code Section 280g Gross Up. (a) In If as a result of a Change in Control the event that it Executive becomes entitled to acceleration of benefits under this Salary Continuation Agreement or under any other plan or agreement of or with the Bank or NewMil Bancorp, Inc. (together, the "Total Benefits"), and if any of the Total Benefits will be subject to the Excise Tax as set forth in Sections 280G and 4999 of the Internal Revenue Code of 1986 (the "Excise Tax"), the Bank shall pay to the Executive the following additional amounts, consisting of (1) a payment equal to the Excise Tax payable by the Executive on the Total Benefits under Section 4999 of the Internal Revenue Code (the "Excise Tax Payment"), and (2) a payment equal to the amount necessary to provide the Excise Tax Payment net of all income, payroll and excise taxes. Together, the additional amounts described in clauses (1) and (2) are referred to in this Agreement as the "Gross-Up Payment Amount." Payment of the Gross-Up Payment Amount shall be determined that made in addition to the amount set forth in Section 2.4 hereof. (b) For purposes of determining whether any payment of the Total Benefits will be subject to the Excise Tax and the amount of such Excise Tax, (1) any other than the payment provided for in this Section 18) payments or distribution of any type benefits received or to or for the benefit of Employee, be received by the Parent, any affiliate of the Parent, any “Person” Executive (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, a “Person”) who acquires ownership or effective control of the Parent or ownership of a substantial portion of the Parent’s assets (within the meaning of Section 280G of the Code, and the regulations thereunder) or any affiliate of such Person, whether paid or payable or distributed or distributable pursuant to under the terms of this Agreement or otherwise (any other agreement, or other plan or arrangement with the “Total Payments”Bank or NewMil Bancorp, Inc., any person whose actions result in a Change in Control or any person affiliated with NewMil Bancorp, Inc. or such person) in connection with a Change in Control or the Executive's termination of employment shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Internal Revenue Code, and all "excess parachute payments," within the meaning of Section 280G(b)(1), is or will shall be treated as subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are collectively referred to as the “Excise Tax”), then Employee shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including any income tax, employment tax or Excise Tax, imposed upon unless in the opinion of the certified public accounting firm that is retained by NewMil Bancorp, Inc. as of the date immediately before the Change in Control (the "Accounting Firm"), such other payments or benefits (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4) of the Internal Revenue Code, or are otherwise not subject to the Excise Tax, (2) the amount of the Total Benefits which shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Total Benefits reduced by the amount of such Total Benefits that in the opinion of the Accounting Firm are not parachute payments, or (B) the amount of excess parachute payments within the meaning of Section 280G(b)(1) (after applying clause (1) above), and (3) the value of any noncash benefits or any deferred payment or benefit shall be determined by NewMil Bancorp, Inc.'s Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Internal Revenue Code. (c) For purposes of determining the Gross-Up PaymentPayment Amount, Employee retains an the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment Amount is to be made, and state and local income taxes 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 reduction in federal income taxes that could be obtained from deduction of state and local taxes (calculated by assuming that any reduction under Section 68 of the Internal Revenue Code in the amount of itemized deductions allowable to the Executive applies first to reduce the amount of state and local income taxes that would otherwise be deductible by the Executive, and applicable federal FICA and Medicare withholding taxes). (d) If the Excise Tax is later determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment, the Executive shall, when the amount of such reduction in Excise Tax is finally determined, repay to the Bank the portion of the Gross-Up Payment equal Amount attributable to the Excise Tax imposed upon the Total Payments. reduction (b) All mathematical determinations, and all determinations as to whether any of the Total Payments are “parachute payments” (within the meaning of Section 280G of the Code), plus that are required to be made under this Section 18, including determinations as to whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and amounts relevant to the last sentence of this Section 18(b), shall be made by an independent accounting firm selected by Employee from among the six (6) largest accounting firms in the United States (the “Accounting Firm”), which shall provide its determination (the “Determination”), together with detailed supporting calculations regarding the amount of any Gross-Up Payment and any other relevant matter, both to the Company and Employee by no later than ten (10) days following the date of termination, if applicable, or such earlier time as is requested by the Company or Employee (if Employee reasonably believes that any of the Total Payments may be subject to the Excise Tax). If the Accounting Firm determines that no Excise Tax is payable by Employee, it shall furnish Employee and the Company with an opinion reasonably acceptable to Employee and the Company that no Excise Tax is payable (including the reasons therefor) and that Employee has substantial authority not to report any Excise Tax on his federal income tax return. If a Gross-Up Payment is determined to be payable, it shall be paid to Employee within twenty (20) days after the Determination (and all accompanying calculations and other material supporting the Determination) is delivered to the Company by the Accounting Firm. Any determination by the Accounting Firm shall be binding upon the Company and Employee, absent manifest error. 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 hereunder, it is possible that Gross-Up Payments not made by the Company should have been made (“Underpayment”), or that Gross-Up Payments will have been made by the Company which should not have been made (“Overpayments”). In either such event, the Accounting Firm shall determine the amount of the Underpayment or Overpayment that has occurred. In the case of an Underpayment, the amount of such Underpayment (together with any interest and penalties payable by Employee as a result of such Underpayment) shall be promptly paid by the Company to or for the benefit of Employee. In the case of an Overpayment, Employee shall, at the direction and expense of the Company, take such steps as are reasonably necessary (including the filing of returns and claims for refund), follow reasonable instructions from, and procedures established by, the Company, and otherwise reasonably cooperate with the Company to correct such Overpayment, provided, however, that (i) Employee shall not in any event be obligated to return to the Company an amount greater than the net after-tax portion of the Overpayment that he has retained or has recovered as a refund from the applicable taxing authorities and (ii) this provision shall be interpreted in a manner consistent with the intent of Section 18(a), which is to make Employee whole, on an after-tax basis, from the application of the Excise Tax, it being understood that the correction of an Overpayment may result in Employee repaying to the Company an amount which is less than the Overpayment. The fees and expenses of the Accounting Firm shall be paid by the Company. (c) Any Gross-Up Payment shall be paid no later than the last day of Employee’s taxable year next following Employee’s taxable year in which the taxes imposed in respect of which the Gross-Up Payment is being made are remitted Amount attributable to the applicable taxing authorityExcise Tax, federal, state and local income taxes and FICA and Medicare withholding taxes imposed on the Gross-Up Payment Amount being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax, FICA and Medicare withholding taxes and/or a federal, state or local income tax deduction). If the Excise Tax is later determined to be more than the amount taken in account hereunder at the time of termination of the Executive's employment (including any payment the existence or amount of which cannot be determined at the time the Gross-Up Payment Amount is paid), the Bank shall make an additional Gross-Up Payment Amount to the Executive of the excess (plus any interest, penalties or additions payable by the Executive on the excess) when the amount of the excess is finally determined.