Parachute Tax Gross Up. (i) If (a) it shall be determined that any payment, benefit or distribution (or combination thereof) by the Company, the Acquiring Company or any of their respective affiliates, or one or more trusts established by the Company for the benefit of its employees, to or for your benefit (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, or otherwise) (a "Payment") is subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by you with respect to such excise tax (such excise tax, together with any such interest and penalties, hereinafter collectively referred to as the "Excise Tax") and (b) such Excise Tax would be equal to $50,000 or less, then such Payments shall be reduced to the extent necessary so that the Payment is equal to 2.99 times your "base amount" (as defined in Section 280G(b)(3) of the Code). If (x) it shall be determined that any Payment is subject to Excise Tax and (y) such Excise Tax would be greater than $50,000, then you shall be entitled to receive from the Company an additional payment (a "Gross-Up Payment") in an amount such that after payment by you of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (ii) All determinations required to be made under this Paragraph 2, 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 such determination, shall be made by BDO Xxxxxxx, LLP or such other nationally recognized certified public accounting firm as may be designated by the Company (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and you within ten business days of the receipt of notice from you that there has been a Payment, or such earlier time as is requested by the Company; provided that for purposes of determining the amount of any Gross-Up Payment, you shall be deemed to pay federal income tax at the highest marginal rates applicable to individuals in the calendar year in which any such Gross-Up Payment is to be made and deemed to pay state and local income taxes at the highest effective rates applicable to individuals in the state or locality of your residence or place of employment in the calendar year in which any such Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes, taking into account limitations applicable to individuals subject to federal income tax at the highest marginal rates. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Paragraph 2, shall be paid by the Company to you (or to the appropriate taxing authority on your behalf) when due. If the Accounting Firm determines that no Excise Tax is payable by you, it shall so indicate to you in writing. Any determination by the Accounting Firm shall be binding upon the Company and you. As a result of the uncertainty in the application of Section 4999 of the Code, it is possible that the amount of the Gross-Up Payment determined by the Accounting Firm to be due to (or on behalf of) you was lower than the amount actually due ("Underpayment"). In the event that the Company exhausts its remedies pursuant to Paragraph 2(iii) and you thereafter are required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of you. (iii) You shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of any Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after you are is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. You shall not pay such claim prior to the expiration of the thirty day period following the date on which you give such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies you in writing prior to the expiration of such period that it desires to contest such claim, you shall (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order to effectively contest such claim and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold you 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 such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Paragraph 2(iii), the Company shall control all proceedings taken in connection with such 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 such claim and may, at its sole option, either direct you to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and you agrees to prosecute such 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; provided, further, that if the Company directs you to pay such claim and sue for a refund, the Company shall advance the amount of such payment to you, on an interest-free basis, and shall indemnify and hold you harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; provided, further, that if you are required to extend the statute of limitations to enable the Company to contest such claim, you may limit this extension solely to such 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 you 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. (iv) If, after the receipt by you of an amount paid or advanced by the Company pursuant to this Paragraph 2, you become entitled to receive any refund with respect to a Gross-Up Payment, you shall (subject to the Company's complying with the requirements of Paragraph 2(iii)) promptly pay to the Company the amount of such refund received (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by you of an amount advanced by the Company pursuant to Paragraph 2(iii), a determination is made that you shall not be entitled to any refund with respect to such claim and the Company does not notify you in writing of its intent to contest such denial of refund prior to the expiration of thirty days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of the Gross-Up Payment required to be paid.
Appears in 1 contract
Parachute Tax Gross Up. (i1) If (aSubject to paragraph 4(C)(2), below, if the Total Payments would result in the imposition of a Parachute Excise Tax on Employee, the Company will make an additional payment to Employee in an amount such that, after the payment of all federal and state income, employment and excise taxes on both the Total Payments and the additional payment made pursuant to this paragraph 4(C)(1), Employee will be in the same after-tax position as if no Parachute Excise Tax had been imposed. In determining whether a Parachute Excise Tax will be imposed upon Employee, the parties agree to take into account the value of the restrictive covenants contained in paragraphs 9(A) it shall be and 9(B) and the consulting services contained in paragraph 4(B), all as determined that any payment, benefit or distribution (or combination thereof) in good faith by the Board, after consultation with the Company, the Acquiring Company or ’s professional advisors.
(2) Notwithstanding any of their respective affiliates, or one or more trusts established by the Company for the benefit of its employees, to or for your benefit (whether paid or payable or distributed or distributable pursuant to the terms other provision of this Agreement, or otherwise) (a "Payment") is subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by you with respect to such excise tax (such excise tax, together with any such interest and penalties, hereinafter collectively referred to as the "Excise Tax") and (b) such Excise Tax would be equal to $50,000 or less, then such Payments shall be reduced to the extent necessary so that the Payment is equal to 2.99 times your "base amount" (as defined in Section 280G(b)(3) of the Code). If (x) it shall be determined that any Payment is subject to Excise Tax and (y) such Excise Tax would be greater than $50,000, then you shall be entitled to receive from the Company an no additional payment (a "Gross-Up Payment") in an amount such that after payment by you of all taxes (including any interest or penalties imposed with respect will be made to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect theretoEmployee pursuant to paragraph 4(C)(1) and the Excise Tax imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up Payment equal Total Payments will instead be reduced or limited to the Excise Tax imposed upon Capped Amount, if:
(i) Employee resigns his employment during the Payments.6 month period immediately following any Change in Control and there is not otherwise Good Reason for that resignation; or
(ii) All determinations the additional payment described above in paragraph 4(C)(1) would not cause the Total After-Tax Payments to exceed the Capped Amount (after reduction for all applicable taxes) by more than 20%.
(3) The determination of whether and to what extent reductions or payments under this paragraph 4(C) are required to will be made under in good faith by the Board, after consultation with the Company’s professional advisors. In the event of any underpayment or overpayment to Employee (determined after the application of this Paragraph 2paragraph 4(C)), including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to underpayment or overpayment will be utilized in arriving at such determination, shall be made by BDO Xxxxxxx, LLP or such other nationally recognized certified public accounting firm as may be designated by the Company (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and you within ten business days of the receipt of notice from you that there has been a Payment, or such earlier time as is requested by the Company; provided that for purposes of determining the amount of any Gross-Up Payment, you shall be deemed to pay federal income tax at the highest marginal rates applicable to individuals in the calendar year in which any such Gross-Up Payment is to be made and deemed to pay state and local income taxes at the highest effective rates applicable to individuals in the state or locality of your residence or place of employment in the calendar year in which any such Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes, taking into account limitations applicable to individuals subject to federal income tax at the highest marginal rates. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Paragraph 2, shall be immediately paid by the Company to you (Employee or refunded by Employee to the appropriate taxing authority on your behalf) when due. If the Accounting Firm determines that no Excise Tax is payable by you, it shall so indicate to you in writing. Any determination by the Accounting Firm shall be binding upon the Company and you. As a result of the uncertainty in the application of Section 4999 of the Code, it is possible that the amount of the Gross-Up Payment determined by the Accounting Firm to be due to (or on behalf of) you was lower than the amount actually due ("Underpayment"). In the event that the Company exhausts its remedies pursuant to Paragraph 2(iii) and you thereafter are required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of you.
(iii) You shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of any Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after you are is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. You shall not pay such claim prior to the expiration of the thirty day period following the date on which you give such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies you in writing prior to the expiration of such period that it desires to contest such claim, you shall (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order to effectively contest such claim and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold you 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 such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Paragraph 2(iii), the Company shall control all proceedings taken in connection with such 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 such claim and may, at its sole option, either direct you to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and you agrees to prosecute such 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; provided, further, that if the Company directs you to pay such claim and sue for a refund, the Company shall advance the amount of such payment to you, on an interest-free basis, and shall indemnify and hold you harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; provided, further, that if you are required to extend the statute of limitations to enable the Company to contest such claim, you may limit this extension solely to such 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 you shall be entitled to settle or contest, as the case may be, any other issue raised by with interest at the Internal Revenue Service or any other taxing authorityapplicable federal rate specified in Section 7872(f)(2) of the Code.
(iv4) If, after the receipt by you For purposes of an amount paid or advanced by the Company pursuant to this Paragraph 2, you become entitled to receive any refund with respect to a Gross-Up Payment, you shall (subject to the Company's complying with the requirements of Paragraph 2(iii)) promptly pay to the Company the amount of such refund received (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by you of an amount advanced by the Company pursuant to Paragraph 2(iii), a determination is made that you shall not be entitled to any refund with respect to such claim and the Company does not notify you in writing of its intent to contest such denial of refund prior to the expiration of thirty days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of the Gross-Up Payment required to be paid.Agreement:
Appears in 1 contract
Parachute Tax Gross Up. (i) If (a) it shall be determined You and Xxxxx do not believe that any paymentof the amounts or benefits to be provided you pursuant to this Agreement or otherwise are “parachute payments” (as defined below) and each agree to report that such amounts and benefits are not “parachute payments” for federal income tax purposes. Nevertheless, benefit Xxxxx will provide you the following:
A. If any payments or distribution (benefits received or combination thereof) to be received by the Company, the Acquiring Company or any of their respective affiliates, or one or more trusts established by the Company for the benefit of its employees, to or for your benefit (you whether paid or payable or distributed or distributable pursuant to the terms of this AgreementAgreement or any other plan, arrangement or agreement with the Company, or otherwise) (with any Person whose actions result in a "Payment") is subject to the excise tax imposed by Section 4999 of the Code Change in Control or any interest Person affiliated with the Company or penalties are incurred by you with respect to such excise tax Person (such excise taxpayments or benefits, together with any such interest and penaltiesexcluding the Gross-Up Payment, being hereinafter collectively referred to as the "“Total Payments”) are subject to the Excise Tax") and (b) such Excise Tax would be equal , Xxxxx shall pay to $50,000 or less, then such Payments shall be reduced to the extent necessary so that the Payment is equal to 2.99 times your "base amount" (as defined in Section 280G(b)(3) of the Code). If (x) it shall be determined that any Payment is subject to Excise Tax and (y) such Excise Tax would be greater than $50,000, then you shall be entitled to receive from the Company an additional payment amount (a "the “Gross-Up Payment"”) in an amount such that the net amount retained by you, after payment by you deduction of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (Excise Tax on the Total Payments and any interest federal, state and penalties imposed with respect thereto) local income and the employment taxes and Excise Tax imposed upon the Gross-Up Payment, you retain an shall be equal to the Total Payments.
B. For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute payments” (within the meaning of Code Section 280G(b)(2)) unless, in the opinion of Xxxxx, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Code Section 280G(b)(4)(A), (ii) all “excess parachute payments” within the meaning of Code Section 280G(b)(1) shall be treated as subject to the Excise Tax unless, in the opinion of Xxxxx, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of Code Section 280G(b)(4)(B)) 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 non-cash benefits or any deferred payment or benefit shall be determined by Xxxxx in accordance with the principles of Code Sections 280G(d)(3) and (4). Xxxxx and you agree that the determination described in this Item A.8.B shall take the form of a letter from Xxxxx accompanied by calculations prepared by a national accounting firm selected by Xxxxx (the “Accounting Firm”).
C. The Gross-Up Payment equal (or portion thereof) will be paid to you on the day of the payment of the Total Payments (or portion thereof) that give rise to the Excise Tax imposed upon the Payments.
(ii) All determinations required to be made under this Paragraph 2Tax; provided, including whether and when a Gross-Up Payment is required and however, that if the amount of such Gross-Up Payment and (or a portion thereof) cannot be fully determined on or before the assumptions date on which payment is due, Xxxxx will pay to you by such date an amount estimated in good faith by the Accounting Firm to be utilized in arriving at such determination, shall be made by BDO Xxxxxxx, LLP or such other nationally recognized certified public accounting firm as may be designated by the Company (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and you within ten business days of the receipt of notice from you that there has been a Payment, or such earlier time as is requested by the Company; provided that for purposes of determining the minimum amount of any Gross-Up Payment, you shall be deemed to pay federal income tax at the highest marginal rates applicable to individuals in the calendar year in which any such Gross-Up Payment is to be made (or portion thereof) and deemed to will pay state and local income taxes at the highest effective rates applicable to individuals in the state or locality remainder of your residence or place of employment in the calendar year in which any such Gross-Up Payment is to (or portion thereof) (together with interest at the rate provided in Code Section 1274(b)(2)(B)) as soon as the amount thereof can be madedetermined, net but in no event later than 45 days after complete payment of the maximum reduction Total Payments. Further, in federal income taxes the event that can be obtained from deduction on the day of such state and local taxes, taking into account limitations applicable to individuals subject to federal income tax at the highest marginal rates. All fees and expenses payment of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Paragraph 2, shall be paid by the Company to you Total Payments (or to portion thereof) (or the appropriate taxing authority on your behalf) when due. If the Accounting Firm determines that 45-day period following such payments), no Excise Tax is payable by you, it shall so indicate to you in writing. Any determination by the Accounting Firm shall be binding upon the Company and you. As a result of the uncertainty in the application of Section 4999 of the Code, it is possible that the amount of the Gross-Up Payment (or portion thereof) is determined by the Accounting Firm to be due to and it is subsequently determined that a Gross-Up Payment (or on behalf ofportion thereof) is owing to you, such Gross-Up Payment (or portion thereof) will be made by Xxxxx to you was lower at the date that such Gross-Up Payment amount (or portion thereof) is determined by the Accounting Firm to be payable to you. Any Gross-Up Payment that you become entitled to receive will be paid to you as provided in this Item A.8 and in any event not later than the amount actually due ("Underpayment"). last day of the calendar year after the calendar year in which you remit the related taxes, or where as a result of an audit or litigation no taxes are remitted, not later than the last day of the calendar year in which such audit is completed or there is a final and nonappealable settlement or other resolution of the litigation.
D. In the event that the Company exhausts its remedies pursuant Excise Tax is finally determined to Paragraph 2(iii) and you thereafter are required to make a payment of any Excise Tax, the Accounting Firm shall determine be less than the amount of taken into account hereunder in calculating the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of you.
(iii) You shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of any Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after you are is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. You shall not pay such claim prior to the expiration of the thirty day period following the date on which you give such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies you in writing prior to the expiration of such period that it desires to contest such claim, you shall (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order to effectively contest such claim and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold you 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 such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Paragraph 2(iii), the Company shall control all proceedings taken in connection with such 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 such claim and may, at its sole option, either direct you to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and you agrees to prosecute such 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; provided, further, that if the Company directs you to pay such claim and sue for a refund, the Company shall advance the amount of such payment to you, on an interest-free basis, and shall indemnify and hold you harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; provided, further, that if you are required to extend the statute of limitations to enable the Company to contest such claim, you may limit this extension solely to such 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 you 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.
(iv) If, after the receipt by you of an amount paid or advanced by the Company pursuant to this Paragraph 2, you become entitled to receive any refund with respect to a Gross-Up Payment, you shall (subject repay to Xxxxx, within five business days following the Company's complying with later of the requirements of Paragraph 2(iii)) promptly pay to the Company date that the amount of such refund received (together with any interest paid or credited thereon after taxes applicable thereto). If, after reduction in the receipt by Excise Tax is fully determined and the date that such amount is fully refunded to you of an amount advanced by the Company pursuant to Paragraph 2(iii), a determination is made that you shall not be entitled to any refund with respect to such claim and the Company does not notify you in writing of its intent to contest such denial of refund prior to the expiration of thirty days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereofInternal Revenue Service, the amount portion of the Gross-Up Payment required attributable to be paidsuch reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment) being repaid by you, to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in your taxable income and wages for purposes of federal, state and local income and employment taxes. In the event that the Excise Tax is determined to exceed the amount originally remitted by you which was taken into account hereunder in calculating the Gross-Up Payment and you are obliged to remit additional Excise Taxes, you shall provide Xxxxx with written notice advising as to the amount of additional Excise Taxes which were so remitted and the date on which they were so remitted. As soon as practicable following receipt of such notice (but not later than the end of the taxable year following the year in which the additional Excise Taxes were remitted by you), Xxxxx shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by you with respect to such excess Excise Taxes). Xxxxx and you shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments.
E. For purposes of this Item A.8, the following terms shall have the following meanings:
Appears in 1 contract
Parachute Tax Gross Up. (i) If (a) it shall be determined In the event that any payment, payment or benefit received or distribution (or combination thereof) to be received by the Company, the Acquiring Company or any of their respective affiliates, or one or more trusts established by the Company for the benefit of its employees, to or for your benefit (whether paid or payable or distributed or distributable you pursuant to the terms of this AgreementAgreement (the “Contract Payments”) or in connection with or contingent upon a Change in Control of the Company pursuant to any other agreement, plan or otherwisearrangement with the Company or any of its subsidiaries (“Other Payments” and, together with the Contract Payments, the “Payments”) (a "Payment") is would be subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Internal Revenue Code or any interest or penalties are incurred by you with respect to such excise tax of 1986, as amended (such excise taxthe “Code”), together with any such interest and penalties, hereinafter collectively referred to as the "Excise Tax") and (b) such Excise Tax would be equal to $50,000 or less, then such Payments shall be reduced to the extent necessary so that the Payment is equal to 2.99 times your "base amount" (as defined in Section 280G(b)(3) of the Code). If (x) it shall be determined that any Payment is subject to Excise Tax and (y) such Excise Tax would be greater than $50,000, then you shall be entitled to receive from the Company shall pay to you an additional payment amount (a "the “Gross-Up Payment"”) in such that the net amount of Payments retained by you shall be equal to the amount you would have retained if none of such Payments were subject to the Excise Tax. In particular, the Company will timely pay to you an amount such that after payment by you of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Payments, any interest, penalties or additions to tax payable by you by reason of your filing income tax returns and making tax payments in a manner consistent with an opinion of tax counsel selected by the Company and reasonably acceptable to you (“Tax Counsel”), and any federal, state and local income tax and Excise Tax upon the Paymentspayments by the Company to you provided for by this Section 4A. Notwithstanding the foregoing provisions of this Section 4A(a), in the event the amount of Payments exceeds the product (“Parachute Payment Limit”) of 2.99 and your applicable “base amount” (as such term is defined for purposes of Section 4999 of the Code) by less than ten percent (10%) of your annual base salary, you shall be treated as having waived such rights with respect to Payments designated by you to the extent required such that the aggregate amount of Payments subject to the Excise Tax is less than the Parachute Payment Limit.
(iib) All determinations required The Company shall obtain an opinion of Tax Counsel that initially determines whether any of the Payments will be subject to be made under this Paragraph 2, including whether and when a Gross-Up Payment is required the Excise Tax and the amount amounts of such Gross-Up Payment and the assumptions to be utilized in arriving at such determinationExcise Tax, shall be made by BDO Xxxxxxx, LLP or such other nationally recognized certified public accounting firm as may be designated by the Company (the "Accounting Firm") which shall provide detailed supporting calculations both to serve as the Company basis for reporting Excise Taxes and you within ten business days of the receipt of notice from you that there has been a Paymentfederal, or such earlier time as is requested by the Company; provided that for state and local income taxes on Payments hereunder. For purposes of determining the amount of any the Gross-Up Payment, you shall be deemed to pay federal income tax at the highest marginal rates of federal income taxation applicable to individuals in the calendar year in which any such the Gross-Up Payment is to be made and deemed to pay state and local income taxes at the highest effective marginal rates of taxation applicable to individuals as are in effect in the state or and locality of your residence or place of employment in the calendar year in which any such the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes, taking into account any limitations applicable to individuals subject to federal income tax at the highest marginal rates. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any .
(c) The Gross-Up PaymentPayments provided for in this Section 4A shall be made as to each Payment upon the earlier of (i) the payment to you of any such Contract Payment or Other Payment or (ii) the imposition upon you or payment by you of any Excise Tax or any federal, as determined state or local income tax on any payment pursuant to this Paragraph 2, shall be paid by Section 4A.
(d) If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding or the Company to you (or to opinion of Tax Counsel that the appropriate taxing authority on your behalf) when due. If the Accounting Firm determines that no Excise Tax is payable by youless than the amount taken into account under Section 4A hereof, it you shall so indicate repay to you in writing. Any determination by the Accounting Firm shall be binding upon the Company and you. As a result within five days of your receipt of notice of such final determination or opinion the uncertainty in the application of Section 4999 of the Code, it is possible that the amount portion of the Gross-Up Payment determined by the Accounting Firm to be due to (or on behalf of) you was lower than the amount actually due ("Underpayment"). In the event that the Company exhausts its remedies pursuant to Paragraph 2(iii) and you thereafter are required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of you.
(iii) You shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of any Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after you are is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. You shall not pay such claim prior to the expiration of the thirty day period following the date on which you give such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect attributable to such claim is due). If reduction (plus the Company notifies you in writing prior to the expiration of such period that it desires to contest such claim, you shall (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order to effectively contest such claim and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold you 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 such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Paragraph 2(iii), the Company shall control all proceedings taken in connection with such 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 such claim and may, at its sole option, either direct you to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and you agrees to prosecute such 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; provided, further, that if the Company directs you to pay such claim and sue for a refund, the Company shall advance the amount of such payment to you, on an interest-free basis, and shall indemnify and hold you harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; provided, further, that if you are required to extend the statute of limitations to enable the Company to contest such claim, you may limit this extension solely to such 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 you 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.
(iv) If, after the receipt by you of an amount paid or advanced by the Company pursuant to this Paragraph 2, you become entitled to receive any refund with respect to a Gross-Up Payment, you shall (subject to the Company's complying with the requirements of Paragraph 2(iii)) promptly pay to the Company the amount of such refund received (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by you of an amount advanced by the Company pursuant to Paragraph 2(iii), a determination is made that you shall not be entitled to any refund with respect to such claim and the Company does not notify you in writing of its intent to contest such denial of refund prior to the expiration of thirty days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount portion of the Gross-Up Payment required attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by you if such repayment results in a reduction in Excise Tax or a federal, state and local income tax deduction) plus any interest received by you on the amount of such repayment. If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding or the opinion of Tax Counsel that the Excise Tax exceeds the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be paiddetermined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess within five days of the Company’s receipt of notice of such final determination or opinion.
Appears in 1 contract
Samples: Change of Control Retention Agreement (Wellchoice Inc)
Parachute Tax Gross Up. (i) If (a) it shall be determined In the event that any payment, benefit the payments or distribution (benefits ---------------------- provided for under this Agreement or combination thereof) by otherwise payable to the Company, the Acquiring Company or any of their respective affiliates, or one or more trusts established by the Company for the benefit of its employees, to or for your benefit (whether paid or payable or distributed or distributable Executive pursuant to this Agreement (either before or after the terms date of this Agreement) constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, or otherwiseas amended (the "Code") (a "Payment"or comparable provisions of applicable state laws) is and will be subject to the excise tax imposed by Section 4999 of the Code (or any interest comparable provisions of applicable state laws), then the Company shall pay to the Executive or penalties are incurred by you with respect to such excise relevant tax authorities (i) an amount sufficient to satisfy such excise tax, together with any such interest and penalties, hereinafter collectively referred to as the "Excise Tax") and (bii) such Excise Tax would be equal an additional amount sufficient to $50,000 or lesspay the excise tax and all taxes (including, then such Payments shall be reduced but not limited to, federal and state income and employment taxes) arising from the payments made by the Company to the extent necessary so that Executive or to relevant tax authorities pursuant to this sentence (collectively, the Payment is equal to 2.99 times your "base amount" (as defined in Section 280G(b)(3) of the Code). If (x) it shall be determined that any Payment is subject to Excise Tax and (y) such Excise Tax would be greater than $50,000, then you shall be entitled to receive from the Company an additional payment (a "Gross-Up PaymentPayments") ). All determinations of the Executive's excise tax liability shall be made in writing by the Company's independent accountants (the "Accountants"). For purposes of making the calculations required by this Section, 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 (or comparable provisions of applicable state laws). The Company and the 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. The Company shall bear all fees and costs the Accountants may reasonably charge or incur in connection with any calculations contemplated by this Section. The Company further agrees that, if at any time any tax authority determines that a greater excise tax liability is due than the amount which is determined by the Accountants, the Executive shall receive a further payment from the Company, or the Company shall pay to the relevant tax authorities, an additional amount sufficient to pay such that after payment by you of additional excise tax liability and all taxes taxes, interests and penalties (including any interest or penalties imposed with respect to such taxes), including, without limitationbut not limited to, federal and state income and employment taxes) arising from such further payment. The Executive further agrees that if at any income taxes (and any interest and penalties imposed time it is determined, by IRS ruling or otherwise, that, with respect thereto) regard to tax liabilities described in this paragraph, less or no tax is due, then the Executive agrees to cooperate fully with the Company and the Excise Tax imposed upon Accountants to apply for a refund or to claim a credit against his other tax liability for any such taxes which were previously paid and to promptly pay to the Company any such refunds which he receives or any such credits which he actually utilizes to reduce his other tax liabilities (net of any additional taxes which are payable by him on account of receipt of such refund or claim of such credit); and to repay to the Company any Gross-Up PaymentPayments which he received to cover any such taxes, you retain an amount which have not yet been paid (net of any adverse tax effect upon the Executive on account of receipt of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(ii) All determinations required to be made under this Paragraph 2, including whether Payments in one calendar year and when a Gross-Up Payment is required and the amount refund of such Gross-Up Payment and the assumptions to be utilized amounts in arriving at such determination, shall be made by BDO Xxxxxxx, LLP or such other nationally recognized certified public accounting firm as may be designated by the Company (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and you within ten business days of the receipt of notice from you that there has been a Payment, or such earlier time as is requested by the Companysubsequent calendar year); provided that for purposes of determining the amount of any Gross-Up Payment, you shall be deemed to pay federal income tax at the highest marginal rates applicable to individuals in the calendar year in which any such Gross-Up Payment is to be made and deemed to pay state and local income taxes at the highest effective rates applicable to individuals in the state or locality of your residence or place of employment in the calendar year in which any such Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes, taking into account limitations applicable to individuals subject to federal income tax at the highest marginal rates. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Paragraph 2, shall be paid by the Company to you (or to the appropriate taxing authority on your behalf) when due. If the Accounting Firm determines that no Excise Tax is payable by you, it shall so indicate to you in writing. Any determination by the Accounting Firm shall be binding upon the Company and you. As a result of the uncertainty in the application of Section 4999 of the Code, it is possible that the amount of the Gross-Up Payment determined by the Accounting Firm to be due to (or on behalf of) you was lower than the amount actually due ("Underpayment"). In the event that the Company exhausts its remedies pursuant to Paragraph 2(iii) and you thereafter are required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of you.
(iii) You shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of any Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after you are is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. You shall not pay such claim prior to the expiration of the thirty day period following the date on which you give such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies you in writing prior to the expiration of such period that it desires to contest such claim, you shall (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order to effectively contest such claim and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold you the 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 such representation and payment of against all costs and expenses. Without limitation on the foregoing provisions of this Paragraph 2(iii), the Company shall control all proceedings taken expenses incurred in connection with obtaining such 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 such claim and may, at its sole option, either direct you to pay the tax claimed and sue for a refund or contest in confirming the right to claim in any permissible manner, and you agrees to prosecute such 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; provided, further, that if the Company directs you to pay such claim and sue for a refund, the Company shall advance the amount of such payment to you, on an interest-free basis, and shall indemnify and hold you harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; provided, further, that if you are required to extend the statute of limitations to enable the Company to contest such claim, you may limit this extension solely to such 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 you 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 authoritycredit.
(iv) If, after the receipt by you of an amount paid or advanced by the Company pursuant to this Paragraph 2, you become entitled to receive any refund with respect to a Gross-Up Payment, you shall (subject to the Company's complying with the requirements of Paragraph 2(iii)) promptly pay to the Company the amount of such refund received (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by you of an amount advanced by the Company pursuant to Paragraph 2(iii), a determination is made that you shall not be entitled to any refund with respect to such claim and the Company does not notify you in writing of its intent to contest such denial of refund prior to the expiration of thirty days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of the Gross-Up Payment required to be paid.
Appears in 1 contract
Samples: Employment Agreement (Health Management Associates Inc)
