Section 280G Cut-Back Clause Samples

Section 280G Cut-Back. Notwithstanding anything in this Agreement to the contrary, if any payments or benefits provided for in this Agreement, together with any other payments which the Executive has the right to receive from the Company, the Bank, Seller, Chicopee Savings Bank, or any corporation which is a member of an “affiliated group” (as defined in Code Section 1504(a), without regard to Code Section 1504(b)) of which Company, the Bank, Seller, or Chicopee Savings Bank is a member, would constitute an “excess parachute payment” (as defined in Code Section 280G(b)(2)), payments pursuant to this Agreement shall be reduced to the extent necessary to ensure that no portion of such payments will be subject to the excise tax imposed by Code Section 4999. Any determination required under this section 32 shall be made by the Bank and its tax advisors, whose determination shall be conclusive and binding upon the Executive.

Section 280G Cut-Back. Notwithstanding anything in this Agreement to the contrary, if the Cash Payment contained in Section 2 of this Agreement provided for in this Agreement, together with any other payments which the Executive has the right to receive from ESSA, ESSA Bank, and the Company, or any corporation which is a member of an “affiliated group” (as defined in IRC Section 1504(a), without regard to IRC Section 1504(b)) of which ESSA, ESSA Bank, and the Company is a member, would constitute an “excess parachute payment” (as defined in IRC Section 280G(b)(2)), payments pursuant to this Agreement shall be reduced to the extent necessary to ensure that no portion of such payments will be subject to the excise tax imposed by IRC Section 4999. Any determination required under this Section 6 shall be made by ESSA, ESSA Bank, and the Company and their respective tax advisors, whose determination shall be conclusive and binding upon the Executive.

Section 280G Cut-Back. Notwithstanding anything in this Agreement to the contrary, in no event shall any payments be made or benefits provided under this Agreement which, when combined with all other payments and benefits to the Executive, would render any such payment or benefit nondeductible under Section 280G of the Code or trigger an excise tax under Section 4999 of the Code. In such event, the payments and/or benefits to be provided under this Agreement shall be reduced to the maximum amount which can be deducted under Section 280G of the Code.

Section 280G Cut-Back. (a) Notwithstanding anything contained in this Agreement to the contrary, to the extent that the payments and benefits provided under this Agreement and benefits provided to, or for the benefit of, Executive under any other Company plan or agreement (cash payments or benefits are collectedly referred to as the “Payments”) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Code the Payments shall be reduced (but not below zero) if and to the extent necessary so that no Payment to be made or benefit to be provided to Executive shall be subject to the Excise Tax (such reduced amount is hereinafter referred to as the “Limited Payment Amount”). Unless Executive shall have given prior written notice specifying a different order to the Company, to effectuate the foregoing, the Company shall reduce or eliminate the Payments, by first reducing or eliminating the portion of the Payments payable in cash and then by reducing or eliminating non-cash payments. Any notice given by Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive’s right and entitlements to any benefits or compensation. (b) The determination of whether the Payments shall be reduced to the Limited Payment Amount pursuant to this Agreement and the amount of such Limited Payment Amount shall be made, at the Company’s expense, by an accounting firm selected by Executive which is one of the four largest accounting firms in the United States (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation to the Company and Executive within ten (10) days of the Termination Date, if applicable, or such other time as requested by the Company or by Executive (provided Executive reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm determines that no Excise Tax is payable by Executive with respect to the Payments, it shall furnish Executive with an opinion reasonably acceptable to Executive that no Excise Tax will be imposed with respect to any such Payments. The Determination shall be binding, final and conclusive upon the Company and Executive.

Section 280G Cut-Back. Notwithstanding anything in this Agreement to the contrary, in no event shall any payments be made or benefits provided under this Agreement, when combined with all other payments and benefits to the Executive, be allowed to render any such payment or benefit nondeductible under Section 280G of the Code or to trigger an excise tax under Section 4999 of the Code. In such event, the payments and/or benefits to be provided under this Agreement shall be reduced, but not below zero, such that the aggregate benefits to be provided to the Executive do not exceed 2.99 multiplied by the Executive’s “base amount” (as such term is defined in Section 280G of the Code). If any reduction is to be made under this Section 4, the Executive may specify by written notice which payments and benefits shall be reduced (i.e., the Executive may elect whether to have reductions made from either the Agreement Amount or Section 2 hereof).

Section 280G Cut-Back. Notwithstanding anything in this Agreement to the contrary, if the CIC Agreement Amount provided for in this Agreement, together with any other payments which the Executive has the right to receive from Buyer, Buyer Bank, Seller, Seller Bank, or any corporation which is a member of an “affiliated group” (as defined in Code Section 1504(a), without regard to Code Section 1504(b)) of which Buyer, Buyer Bank, Seller, or Seller Bank is a member, would constitute an “excess parachute payment” (as defined in Code Section 280G(b)(2)), payments pursuant to this Agreement shall be reduced to the extent necessary to ensure that no portion of such payments will be subject to the excise tax imposed by Code Section 4999. It is hereby understood that the CIC Agreement Amount as determined under this Section 1.2 will be subject to further adjustment upon the consummation of the Merger. Any determination required under this Section 1.2 shall be made by Seller and Buyer and their respective tax advisors, whose determination shall be conclusive and binding upon the Executive.

Section 280G Cut-Back. The Parties intend for the Settlement Amount not to result in an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), provided that no guarantee or assurance of such treatment is provided to Executive. Notwithstanding the foregoing, if the Settlement Amount, together with any other payments, vesting, compensation or benefits to which the Executive has the right to receive from the Company or the Bank, or any other party, would constitute an “excess parachute payment” (as defined in Code Section 280G(b)(1)), the Parties shall cooperate in good faith (without increasing the amount payable to the Executive) to adjust the Restrictive Covenants and/or the Executive’s other responsibilities, and/or to take other actions (which may include reducing parachute payments due to the Executive) to mitigate the impact of the excise tax under Code Section 4999. Notwithstanding the foregoing or anything contained in this Agreement to the contrary, Executive acknowledges and agrees that Executive is responsible for all taxes, interest and penalties that are imposed on the Settlement Amount and on any other compensation, payments, benefits and vesting received by, provided to, or to be received by or provided to, Executive (including, without limitation, all taxes under Code Section 4999), and is not entitled to any gross-up or indemnity with respect to any such taxes.

Section 280G Cut-Back. (a) If (i) the aggregate of all payments, benefits, entitlements or distributions in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement, any Company Arrangement or otherwise (including, without limitation, any payment, benefit, entitlement or distribution paid or provided by the person or entity effecting the change in control) if received by Executive in full and valued under Section 280G of the Code, constitute “parachute payments” as such term is defined in and under Section 280G of the Code (collectively, “280G Benefits”), and if (ii) such aggregate would, if reduced by all federal, state and local taxes applicable thereto, including the excise tax imposed pursuant to Section 4999 of the Code, be less than the amount that Executive would receive, after all taxes, if the Executive received aggregate 280G Benefits equal (as valued under Section 280G of the Code) to only three times the Executive’s “base amount”, as defined in and under Section 280G of the Code, less $1.00, then (iii) cash 280G Benefits shall (to the extent that the reduction of such cash 280G Benefits can achieve the intended result) be reduced or eliminated to the extent necessary so that the 280G Benefits received by the Executive will not constitute parachute payments. The determinations with respect to this Section 5(a) shall be made by an independent auditor (the “Auditor”) paid by the Company. The Auditor shall be the Company’s regular independent auditor unless the Executive reasonably objects to the use of that firm, in which event the Auditor shall be a nationally recognized United States public accounting firm chosen by the parties. (b) It is possible that after the determinations and selections made pursuant to Section 5(a) the Executive will receive 280G Benefits that are, in the aggregate, either more or less than the amount provided under Section 5(a) (hereafter referred to as an “Excess Payment” or “Underpayment”, respectively). If it is established, pursuant to a final determination of a court or an Internal Revenue Service proceeding that has been finally and conclusively resolved, that an Excess Payment has been made, the Executive shall promptly repay the Excess Payment to the Company, together with interest on the Excess Payment at the applicable federal rate (as defined in and under Section 1274(d) of the Code) from the date of the Executive’s rec...

Section 280G Cut-Back. Notwithstanding anything in this Agreement to the contrary, if the Employment Agreement Amount provided for in this Agreement, together with any other payments which the Executive has the right to receive from Buyer, Seller, Seller Bank, or any corporation which is a member of an “affiliated group” (as defined in Code Section 1504(a), without regard to Code Section 1504(b)) of which Buyer, Seller, or Seller Bank is a member, would constitute an “excess parachute payment” (as defined in Code Section 280G(b)(2)), payments pursuant to this Agreement shall be reduced to the extent necessary to ensure that no portion of such payments will be subject to the excise tax imposed by Code Section 4999. It is hereby understood, as of the date of this Agreement, that the Employment Agreement Amount as determined under this Section 1.2 would be approximately $666,271 and that this amount will be subject to further adjustment until the consummation of the Merger. Any determination required under this Section 1.2 shall be made by Buyer and its tax advisors, whose determination shall be conclusive and binding upon the Executive, Seller, and Seller Bank.