Common use of Payment Following a Change in Control Clause in Contracts

Payment Following a Change in Control. (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Employer to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with or arising out of, the Executive’s employment with the Employer or a change in ownership or effective control of the Employer or a substantial portion of its assets (a “Payment”), would be nondeductible by the Employer for Federal income tax purposes under the rules set forth in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), as in effect on the Effective Date (the “Effective Date Section 280G Rules”), then the aggregate present value of amounts payable or distributable to or for the benefit of the Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as “Agreement Payments”) shall be reduced to the Reduced Amount. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments and that would not cause any Payment to be nondeductible by the Employer under the Effective Date Section 280G Rules. Anything to the contrary notwithstanding, if the Reduced Amount is zero and it is determined further that any Payment which is not an Agreement Payment under the Effective Date Section 280G Rules would nevertheless be nondeductible by the Employer under the Effective Date Section 280G Rules, then the aggregate present value of Payments which are not Agreement Payments shall also be reduced (but not below zero) to an amount expressed in present value which maximizes the aggregate present value of Payments without causing any Payment to be nondeductible by the Employer under the Effective Date Section 280G Rules. For purposes of this Section 12.7(a), present value shall be determined in accordance with Section 280G(d)(4) of the Code and the Treasury Regulations promulgated thereunder, under the Effective Date Section 280G Rules. The Executive shall determine which and how much of the Payments shall be eliminated or reduced consistent with the requirements of this Section 12.7(a), provided that, if the Executive does not make such determination within ten business days of the receipt of the calculations made by the Accounting Firm (as defined below), the Employer shall elect which and how much of the Payments shall be eliminated or reduced consistent with the requirements of this Section 12.7(a) and shall notify the Executive promptly of such election. Within five business days thereafter, or at such later time as such amounts otherwise would be payable under this Agreement, the Employer shall pay to or distribute to or for the benefit of the Executive such amounts as are then due to the Executive under this Agreement. (b) If after any reduction pursuant to paragraph (a) of this Section 12.7, it shall be determined that any Payment would be subject to the excise tax imposed by Section 4999 of the Code as in effect at the time such Payment is to be made, or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Employer shall make a payment to the Executive (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment, the Executive retains (or has had paid to the Internal Revenue Service on his behalf) an amount of the Gross-Up Payment equal to the sum of (i) the Excise Tax imposed upon the Payments and (ii) the product of any deductions disallowed because of the inclusion of the Gross-Up Payment in the Executive’s adjusted gross income and the highest applicable marginal rate of federal income taxation for the calendar year in which the Gross-Up Payment is to be made. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to (x) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Gross-Up Payment is to be made, and (y) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (c) Any initial determinations required pursuant to this Agreement shall be made at the Employer’s expense by the Employer’s regular outside auditors (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation, to the Employer and the Executive within ten days of the Termination Date, if applicable, or promptly upon request by the Employer or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm determines that there is a Reduced Amount or that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that supports its Determination[s]. Within ten days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the “Dispute”). The Reduced Amount, if any, and the Gross-Up Payment, if any, as determined pursuant to this Section 12.7(b) shall be paid by the Employer to the Executive, within ten days of the receipt of the Accounting Firm’s determination notwithstanding the existence of any Dispute, or in the case of the Reduced Amount, such later dates as the Payments comprising the Reduced Amounts otherwise would have been payable pursuant to this Agreement. If there is no Dispute, the Determination shall be binding, final and conclusive upon the Employer and the Executive subject to the application of clause (iii) below. The Employer and the Executive shall resolve any Dispute in accordance with the terms of this Agreement. Notwithstanding the foregoing, in no event shall payment of the Gross-Up Payment occur later than the end of the Executive’s taxable year following the Executive’s taxable year in which the Executive pays the taxes giving rise to the Gross-Up Payment. (d) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, the Employer and the Executive acknowledge that it is possible that a Gross-Up Payment (or a portion thereof) will be paid that should not have been paid (an “Excess Payment”) or that either a reduction in the Payments to the Reduced Amount will be made that should not have been made or that a Gross-Up Payment (or a portion thereof) that should have been paid will not have been paid (in each case an “Underpayment”). An Underpayment shall be deemed to have occurred (i) upon notice (formal or informal) to the Executive from any governmental taxing authority that the Executive’s tax liability (whether in respect of the Executive’s current taxable year or in respect of any prior taxable year) may be increased by reason of the imposition of the Excise Tax on a Payment or Payments with respect to which the Employer has failed to make a sufficient Gross-Up Payment, (ii) upon a determination by a court, (iii) by reason of determination by the Employer (which shall include the position taken by the Employer, together with its consolidated group, on its federal income tax return) or (iv) upon the resolution of the Dispute to the Executive’s satisfaction. If an Underpayment occurs, the Executive shall promptly notify the Employer and the Employer shall promptly, but in any event, at least five days prior to the date on which the applicable government taxing authority has requested payment, pay to the Executive an additional Gross-Up Payment equal to the amount of the Underpayment attributable to an underpayment of the Gross-Up Payment plus any interest and penalties (other than interest and penalties imposed by reason of the Executive’s failure to file timely a tax return or pay taxes shown to be due on the Executive’s return) imposed on the Underpayment, and pay to the Executive any Underpayment that is attributable to any reduction in Payments that was not required pursuant to Section 12.7(a) hereto. An Excess Payment shall be deemed to have occurred upon a “Final Determination” (as hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or Payments (or portion thereof) with respect to which the Executive had previously received a Gross-Up Payment. A “Final Determination” shall be deemed to have occurred when the Executive has received from the applicable government taxing authority a refund of taxes or other reduction in the Executive’s tax liability by reason of the Excise Payment and upon either (x) the date a determination is made by, or an agreement is entered into with, the applicable governmental taxing authority which finally and conclusively binds the Executive and such taxing authority, or in the event that a claim is brought before a court of competent jurisdiction, the date upon which a final determination has been made by such court and either all appeals have been taken and finally resolved or the time for all appeals has expired or (y) the statute of limitations with respect to the Executive’s applicable tax return has expired. If an Excess Payment is determined to have been made, the Executive shall pay to the Employer on demand (but not less than ten days after the determination of such Excess Payment and written notice has been delivered to the Executive) the amount of the Excess Payment. The Employer’s obligation to pay the Executive an Underpayment, and the Executive’s obligation to pay the Employer an Excess Payment, shall expire 30 days following the expiration of the applicable statute of limitations with respect to the Parachute Payment. (e) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Determination, an Excise Tax will be imposed on any Payment or Payments, the Employer shall pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that the Employer has actually withheld from the Payment or Payments or the Gross Up Payment.

Payment Following a Change in Control. (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Employer to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with or arising out of, the Executive’s employment with the Employer or a change in ownership or effective control of the Employer or a substantial portion of its assets (a “Payment”), would be nondeductible by the Employer for Federal income tax purposes under the rules set forth in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), as in effect on the Effective Date (the “Effective Date Section 280G Rules”), then the aggregate present value of amounts payable or distributable to or for the benefit of the Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as “Agreement Payments”) shall be reduced to the Reduced Amount. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments and that would not cause any Payment to be nondeductible by the Employer under the Effective Date Section 280G Rules. Anything to the contrary notwithstanding, if the Reduced Amount is zero and it is determined further that any Payment which is not an Agreement Payment under the Effective Date Section 280G Rules would nevertheless be nondeductible by the Employer under the Effective Date Section 280G Rules, then the aggregate present value of Payments which are not Agreement Payments shall also be reduced (but not below zero) to an amount expressed in present value which maximizes the aggregate present value of Payments without causing any Payment to be nondeductible by the Employer under the Effective Date Section 280G Rules. For purposes of this Section 12.7(a), present value shall be determined in accordance with Section 280G(d)(4) of the Code and the Treasury Regulations promulgated thereunder, under the Effective Date Section 280G Rules. The Executive shall determine which and how much of the Payments shall be eliminated or reduced consistent with the requirements of this Section 12.7(a), provided that, if the Executive does not make such determination within ten business days of the receipt of the calculations made by the Accounting Firm (as defined below)Firm, the Employer shall elect which and how much of the Payments shall be eliminated or reduced consistent with the requirements of this Section 12.7(a) and shall notify the Executive promptly of such election. Within five business days thereafter, or at such later time as such amounts otherwise would be payable under this Agreement, the Employer shall pay to or distribute to or for the benefit of the Executive such amounts as are then due to the Executive under this Agreement. (b) If after any reduction pursuant to paragraph (a) of this Section 12.7, it shall be determined that any Payment would be subject to the excise tax imposed by Section 4999 of the Code as in effect at the time such Payment is to be made, or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Employer shall make a payment to the Executive (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment, the Executive retains (or has had paid to the Internal Revenue Service on his behalf) an amount of the Gross-Up Payment equal to the sum of (i) the Excise Tax imposed upon the Payments and (ii) the product of any deductions disallowed because of the inclusion of the Gross-Up Payment in the Executive’s adjusted gross income and the highest applicable marginal rate of federal income taxation for the calendar year in which the Gross-Up Payment is to be made. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to (x) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Gross-Up Payment is to be made, and (y) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (c) Any initial determinations required pursuant to this Agreement shall be made at the Employer’s expense by the Employer’s regular outside auditors (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation, to the Employer and the Executive within ten days of the Termination Date, if applicable, or promptly upon request by the Employer or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm determines that there is a Reduced Amount or that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that supports its Determination[s]. Within ten days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the “Dispute”). The Reduced Amount, if any, and the Gross-Up Payment, if any, as determined pursuant to this Section 12.7(b) shall be paid by the Employer to the Executive, within ten days of the receipt of the Accounting Firm’s determination notwithstanding the existence of any Dispute, or in the case of the Reduced Amount, such later dates as the Payments comprising the Reduced Amounts otherwise would have been payable pursuant to this Agreement. If there is no Dispute, the Determination shall be binding, final and conclusive upon the Employer and the Executive subject to the application of clause (iii) below. The Employer and the Executive shall resolve any Dispute in accordance with the terms of this Agreement. Notwithstanding the foregoing, in no event shall payment of the Gross-Up Payment occur later than the end of the Executive’s taxable year following the Executive’s taxable year in which the Executive pays the taxes giving rise to the Gross-Up Payment. (d) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, the Employer and the Executive acknowledge that it is possible that a Gross-Up Payment (or a portion thereof) will be paid that should not have been paid (an “Excess Payment”) or that either a reduction in the Payments to the Reduced Amount will be made that should not have been made or that a Gross-Up Payment (or a portion thereof) that should have been paid will not have been paid (in each case an “Underpayment”). An Underpayment shall be deemed to have occurred (i) upon notice (formal or informal) to the Executive from any governmental taxing authority that the Executive’s tax liability (whether in respect of the Executive’s current taxable year or in respect of any prior taxable year) may be increased by reason of the imposition of the Excise Tax on a Payment or Payments with respect to which the Employer has failed to make a sufficient Gross-Up Payment, (ii) upon a determination by a court, (iii) by reason of determination by the Employer (which shall include the position taken by the Employer, together with its consolidated group, on its federal income tax return) or (iv) upon the resolution of the Dispute to the Executive’s satisfaction. If an Underpayment occurs, the Executive shall promptly notify the Employer and the Employer shall promptly, but in any event, at least five days prior to the date on which the applicable government taxing authority has requested payment, pay to the Executive an additional Gross-Up Payment equal to the amount of the Underpayment attributable to an underpayment of the Gross-Up Payment plus any interest and penalties (other than interest and penalties imposed by reason of the Executive’s failure to file timely a tax return or pay taxes shown to be due on the Executive’s return) imposed on the Underpayment, and pay to the Executive any Underpayment that is attributable to any reduction in Payments that was not required pursuant to Section 12.7(a) hereto. An Excess Payment shall be deemed to have occurred upon a “Final Determination” (as hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or Payments (or portion thereof) with respect to which the Executive had previously received a Gross-Up Payment. A “Final Determination” shall be deemed to have occurred when the Executive has received from the applicable government taxing authority a refund of taxes or other reduction in the Executive’s tax liability by reason of the Excise Payment and upon either (x) the date a determination is made by, or an agreement is entered into with, the applicable governmental taxing authority which finally and conclusively binds the Executive and such taxing authority, or in the event that a claim is brought before a court of competent jurisdiction, the date upon which a final determination has been made by such court and either all appeals have been taken and finally resolved or the time for all appeals has expired or (y) the statute of limitations with respect to the Executive’s applicable tax return has expired. If an Excess Payment is determined to have been made, the Executive shall pay to the Employer on demand (but not less than ten days after the determination of such Excess Payment and written notice has been delivered to the Executive) the amount of the Excess Payment. The Employer’s obligation to pay the Executive an Underpayment, and the Executive’s obligation to pay the Employer an Excess Payment, shall expire 30 days following the expiration of the applicable statute of limitations with respect to the Parachute Payment. (e) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Determination, an Excise Tax will be imposed on any Payment or Payments, the Employer shall pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that the Employer has actually withheld from the Payment or Payments or the Gross Up Payment.

Payment Following a Change in Control. (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Employer to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with or arising out of, the Executive’s employment with the Employer or a change in ownership or effective control of the Employer or a substantial portion of its assets (a “Payment”), would be nondeductible by the Employer for Federal income tax purposes under the rules set forth in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), as in effect on the Effective Date (the “Effective Date Section 280G Rules”), then the aggregate present value of amounts payable or distributable to or for the benefit of the Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as “Agreement Payments”) shall be reduced to the Reduced Amount. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments and that would not cause any Payment to be nondeductible by the Employer under the Effective Date Section 280G Rules. Anything to the contrary notwithstanding, if the Reduced Amount is zero and it is determined further that any Payment which is not an Agreement Payment under the Effective Date Section 280G Rules would nevertheless be nondeductible by the Employer under the Effective Date Section 280G Rules, then the aggregate present value of Payments which are not Agreement Payments shall also be reduced (but not below zero) to an amount expressed in present value which maximizes the aggregate present value of Payments without causing any Payment to be nondeductible by the Employer under the Effective Date Section 280G Rules. For purposes of this Section 12.7(a), present value shall be determined in accordance with Section 280G(d)(4) of the Code and the Treasury Regulations promulgated thereunder, under the Effective Date Section 280G Rules. The Executive shall determine which and how much of the Payments shall be eliminated or reduced consistent with the requirements of this Section 12.7(a), provided that, if the Executive does not make such determination within ten business days of the receipt of the calculations made by the Accounting Firm (as defined below), the Employer shall elect which and how much of the Payments shall be eliminated or reduced consistent with the requirements of this Section 12.7(a) and shall notify the Executive promptly of such election. Within five business days thereafter, or at such later time as such amounts otherwise would be payable under this Agreement, the Employer shall pay to or distribute to or for the benefit of the Executive such amounts as are then due to the Executive under this Agreement. (b) If after any reduction pursuant to paragraph (a) of this Section 12.7, it shall be determined that any Payment would be subject to the excise tax imposed by Section 4999 of the Code as in effect at the time such Payment is to be made, or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Employer shall make a payment to the Executive (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment, the Executive retains (or has had paid to the Internal Revenue Service on his behalf) an amount of the Gross-Up Payment equal to the sum of (i) the Excise Tax imposed upon the Payments and (ii) the product of any deductions disallowed because of the inclusion of the Gross-Up Payment in the Executive’s adjusted gross income and the highest applicable marginal rate of federal income taxation for the calendar year in which the Gross-Up Payment is to be made. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to (x) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Gross-Up Payment is to be made, and (y) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (c) Any initial determinations required pursuant to this Agreement shall be made at the Employer’s expense by the Employer’s regular outside auditors (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation, to the Employer and the Executive within ten days of the Termination Date, if applicable, or promptly upon request by the Employer or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm determines that there is a Reduced Amount or that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that supports its Determination[s]. Within ten days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the “Dispute”). The Reduced Amount, if any, and the Gross-Up Payment, if any, as determined pursuant to this Section 12.7(b) shall be paid by the Employer to the Executive, within ten days of the receipt of the Accounting Firm’s determination notwithstanding the existence of any Dispute, or in the case of the Reduced Amount, such later dates as the Payments comprising the Reduced Amounts otherwise would have been payable pursuant to this Agreement. If there is no Dispute, the Determination shall be binding, final and conclusive upon the Employer and the Executive subject to the application of clause (iii) below. The Employer and the Executive shall resolve any Dispute in accordance with the terms of this Agreement. Notwithstanding the foregoing, in no event shall payment of the Gross-Up Payment occur later than the end of the Executive’s taxable year following the Executive’s taxable year in which the Executive pays the taxes giving rise to the Gross-Up Payment. (d) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, the Employer and the Executive acknowledge that it is possible that a Gross-Up Payment (or a portion thereof) will be paid that should not have been paid (an “Excess Payment”) or that either a reduction in the Payments to the Reduced Amount will be made that should not have been made or that a Gross-Up Payment (or a portion thereof) that should have been paid will not have been paid (in each case an “Underpayment”). An Underpayment shall be deemed to have occurred (i) upon notice (formal or informal) to the Executive from any governmental taxing authority that the Executive’s tax liability (whether in respect of the Executive’s current taxable year or in respect of any prior taxable year) may be increased by reason of the imposition of the Excise Tax on a Payment or Payments with respect to which the Employer has failed to make a sufficient Gross-Up Payment, (ii) upon a determination by a court, (iii) by reason of determination by the Employer (which shall include the position taken by the Employer, together with its consolidated group, on its federal income tax return) or (iv) upon the resolution of the Dispute to the Executive’s satisfaction. If an Underpayment occurs, the Executive shall promptly notify the Employer and the Employer shall promptly, but in any event, at least five days prior to the date on which the applicable government taxing authority has requested payment, pay to the Executive an additional Gross-Up Payment equal to the amount of the Underpayment attributable to an underpayment of the Gross-Up Payment plus any interest and penalties (other than interest and penalties imposed by reason of the Executive’s failure to file timely a tax return or pay taxes shown to be due on the Executive’s return) imposed on the Underpayment, and pay to the Executive any Underpayment that is attributable to any reduction in Payments that was not required pursuant to Section 12.7(a) hereto. An Excess Payment shall be deemed to have occurred upon a “Final Determination” (as hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or Payments (or portion thereof) with respect to which the Executive had previously received a Gross-Up Payment. A “Final Determination” shall be deemed to have occurred when the Executive has received from the applicable government taxing authority a refund of taxes or other reduction in the Executive’s tax liability by reason of the Excise Payment and upon either (x) the date a determination is made by, or an agreement is entered into with, the applicable governmental taxing authority which finally and conclusively binds the Executive and such taxing authority, or in the event that a claim is brought before a court of competent jurisdiction, the date upon which a final determination has been made by such court and either all appeals have been taken and finally resolved or the time for all appeals has expired or (y) the statute of limitations with respect to the Executive’s applicable tax return has expired. If an Excess Payment is determined to have been made, the Executive shall pay to the Employer on demand (but not less than ten days after the determination of such Excess Payment and written notice has been delivered to the Executive) the amount of the Excess Payment. The Employer’s obligation to pay the Executive an Underpayment, and the Executive’s obligation to pay the Employer an Excess Payment, shall expire 30 days following the expiration of the applicable statute of limitations with respect to the Parachute Payment. (e) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Determination, an Excise Tax will be imposed on any Payment or Payments, the Employer shall pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that the Employer has actually withheld from the Payment or Payments or the Gross Up Payment.