Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision. (b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation). (c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. (e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 7 contracts
Samples: Change of Control Agreement (Equitable Resources Inc /Pa/), Change of Control Agreement (Equitable Resources Inc /Pa/), Change of Control Agreement (EQT Corp)
Tax gross-up. (a) Notwithstanding anything in this Agreement The following provisions shall apply with respect to the contrary, if it shall be determined that any payments, benefits and distributions due excise tax imposed under this Agreement and those which are otherwise payable or distributable to or for the benefit Section 4999 of the Employee relating to Internal Revenue Code as amended (the termination “Code”), (the “Excise Tax):
a. If any of the Employee’s employment payments or benefits received or to be received by Employee in connection with a change Change in Control or Employee’s termination of control of the Company, including a Change of Control employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation (i) paymentsarrangement of agreement with the Company, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration any person whose actions result in a Change on Control of the vesting of Company or any stock options person affiliated with the Company or other equity-based incentive award) such person (all such payments, benefits and distributions being referred to herein as the “Gross Total Payments”), would ) will be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment amount (a the “Gross-Up Payment”) in an amount such that the net amount retained by Employee after payment of (a) the payment by Excise Tax, if any, on the Employee of all taxes Total Payments and (including b) 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 Excise Tax imposed on and income tax due in respect of the Gross-Up Payment, shall equal the Employee retains an amount Total Payments. Such payment shall be made in a single lump sum within 10 days following the date of a determination that only such payment is required.
b. For purposes of determining whether any of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not Total payments will be subject to the Excise Tax if and the Gross amount of such Excise Tax, (i) any Total Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would shall be treated as “parachute payments” under (within the meaning of Section280G(b) (2) of the Code) unless, in the opinion of tax counsel selected by the Company and reasonably acceptable to Employee, such payments or benefits (in whole or in part) should not constitute parachute payments, including by reason of Section 280G (b) (4) (A) of the Code, then and all “excess parachute payments” (within the amounts payable to meeting of Section 280G(b) (1) of the Employee under this Agreement Code) shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the “Safe Harbor Cap”meaning of Section 280G(b) (4) (B) of the Code), and no Gross-Up Payment shall be made or are otherwise not subject to the Employee. The reduction of the amounts payable hereunderExcise Tax, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method ) the value of reduction is elected any noncash benefits or any deferred payment or benefit shall be determined by the Employee Company’s independent auditors in a manner consistent accordance with the principles of Section 409A 280G(d) (3) of the Code. For purposes of reducing determining the Gross Payments to amount of the Safe Harbor CapGross-Up payment, only amounts payable under this Agreement (and no other Gross Payments) Employee shall be reduced. If deemed to pay federal income and employment taxes at the reduction highest marginal rate of federal income and employment taxation in the amounts payable hereunder would not result calendar year in a reduction of which the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required to be made and state and local income and employment taxes at the amount highest marginal rate of taxation in the state and locality of Employee’s residence on the date of termination of employment (or such other time as hereinafter described), net of the maximum reduction in federal income or employment taxes which could be obtained from deduction of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company state and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Companylocal taxes. In the event that the Accounting Firm Excise Tax is serving as accountant or auditor for subsequently determined to be less than the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required amount taken into account hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of termination of Employee’s employment (or such other time as is hereinafter described), Employee shall repay to the initial determination by Company, at the Accounting Firm hereundertime that the amount of such reduction in Excise Tax is finally determined, it is possible that the portion of the Gross-Up Payments which will not have been made by Payment attributable to such reduction plus interest on the Company should have been made amount of such repayment at the applicable federal rate, as defined in Section 1274(b) (“Underpayment”), consistent with 2) (B) of the calculations required to be made hereunderCode. In the event that the Company exhausts its remedies pursuant Excise Tax is determined to Section 10(cexceed the amount taken into account hereunder at the time of the termination of Employee’s employment (or such other time as is hereinafter described) and the Employee thereafter is required to make a payment (including by reason of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing payment the existence or amount of a tax liability, by which cannot be determined at the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company time of the Gross-Up Payment. Such notification ), the Company shall be given as soon as practicable but no later than ten (10) business days after the Employee is informed make an additional Gross-Up Payment in writing respect of such claim and shall apprise excess (plus any interest at the Company of the nature of such claim and the date on which such claim is requested to be paid. The applicable federal rate, penalties or additions payable by Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If excess) at the Company notifies the Employee in writing prior to the expiration of such period time that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the excess is finally determined. Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify shall each reasonably cooperate with the Employee other in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on connection with any administrative or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing judicial proceedings concerning the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted liability for Excise Tax with respect to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Total payments.
Appears in 4 contracts
Samples: Employment Agreement (Magellan Health Services Inc), Employment Agreement (Magellan Health Services Inc), Employment Agreement (Magellan Health Services Inc)
Tax gross-up. (a) Notwithstanding anything If due to a Change in this Agreement to the contraryControl, if it shall be determined that any payments, benefits and distributions due benefit payable under this Agreement and those which are otherwise payable results in an excise tax, pursuant to Section 4999 of the Internal Revenue Code or distributable to similar state law, the Company shall pay to, or for the benefit of of, the Employee an amount sufficient to pay (i) the excise tax owed and payable by the Employee, including, subject to the Employee’s good-faith efforts to comply with applicable law and regulations relating to the termination timely filing (including extensions for filing) of the Employee’s employment in connection with relevant tax returns and the payment of the taxes when due, any interest and penalties thereon, (ii) any federal, state, local, and Medicare taxes owed and payable by the Employee, as a change of control result of the Company’s payment to Employee of the amount of such excise tax, including a Change of Control any interest and penalties thereon, and (whether paid or payable or distributed or distributable pursuant iii) any additional taxes, interest and penalties that are related to the terms of this Agreement or otherwise, including without limitation payments provided under (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under of this sentence, as is necessary to ensure that the CodeEmployee retains an amount, resulting from the acceleration after payment of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (and all such excise taxother taxes, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% the amount of the portion of Employee’s Change in Control Benefit. Further, if the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable amount paid to the Employee under this Agreement shall be reduced (but not below zeroSection 6(d) is later determined to the maximum amount that could be paid have resulted in, either, an overpayment to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting FirmOverpayment”) which shall provide detailed supporting calculations both or in an underpayment to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment Employee, as applicable, shall take the following actions:
(1) in the case of any income taxes or Excise Taxan Underpayment, 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 to, or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; providedof, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, ;
(2) in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claiman Overpayment, the Employee shall:
(i) give , at the Company any information reasonably requested by direction and expense of the Company relating to such claim;
(ii) Company, take such action in connection with contesting such claim steps as reasonably necessary (including the Company shall reasonably request in writing from time to timefiling of tax returns and claims for refund), includingfollow reasonable instructions from, without limitationand procedures established by, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;
(iii) , and otherwise reasonably cooperate with the Company in good faith in order effectively to contest correct such claim; and
(iv) permit the Company to participate in any proceedings relating to such claimOverpayment; provided, however, that that:
(a) Employee shall be obligated to return to the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest for an amount no greater than the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an net after-tax basis, for any income taxes portion of the Overpayment that the Employee has retained or Excise Tax (including interest and penalties with respect thereto) imposed has recovered as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year refund from the applicable taxing authority, and
(b) this provision shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses interpreted in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on manner consistent with the foregoing provisions intent of this Section 106(d), 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 which intent is to make the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmlesswhole, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension the application of the statute excise tax, it being understood that the correction of limitations relating an Overpayment may result in the Employee’s repayment to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee Company of an amount advanced by which is less than the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paidOverpayment.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 4 contracts
Samples: Employment Agreement (Pab Bankshares Inc), Employment Agreement (Pab Bankshares Inc), Employment Agreement (Pab Bankshares Inc)
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due All payments whatsoever under this Agreement and those the Notes and any payments with respect to a Guaranteed Obligation (together a “Relevant Tax Payment”) will be made by the Company or the Parent Guarantor, as applicable, in Euros or Dollars, as applicable, free and clear of, and without liability for withholding or deduction for or on account of, any present or future Taxes of whatever nature imposed or levied on such payments made to any holder of Notes by or on behalf of any jurisdiction (other than the jurisdiction in which are such holder is resident for tax purposes) (a) in which the Company or the Parent Guarantor, as applicable, is incorporated, organised, managed or controlled or otherwise payable resides for tax purposes or distributable to (b) where a branch or office through which the Company or the Parent Guarantor, as applicable, is acting for purposes of this Agreement is located or from or through which the benefit Company or Parent Guarantor, as applicable, is making any payment (or any political subdivision or taxing authority of or in such jurisdiction) ((a) and (b) together, a “Taxing Jurisdiction”), unless the Employee relating withholding or deduction of such Tax is required by law or by the interpretation or administration of law.
(b) If any deduction or withholding for any Tax of a Taxing Jurisdiction shall at any time be required in respect of a Relevant Tax Payment, the Company or the Parent Guarantor, as applicable, will pay to the termination relevant Taxing Jurisdiction the full amount required to be withheld, deducted or otherwise paid before penalties attach thereto or interest accrues thereon and pay to each holder of a Note such additional amounts as may be necessary in order that the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether net amounts paid or payable or distributed or distributable to such holder pursuant to the terms of this Agreement or otherwisethe Notes after such deduction, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options withholding or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee including, without limitation, any required deduction or withholding of all taxes (including any interest Tax on or penalties imposed with respect to such taxesadditional amount), shall be not less than the amounts then due and payable to such holder under the terms of this Agreement or the Notes before the assessment of such Tax, provided that no payment of any additional amounts shall be required to be made:
(i) for or on account of any Tax that would not have been imposed but for the existence of any present or former connection between such holder (or a fiduciary, settlor, beneficiary, affiliate of, member of, shareholder of, or possessor of a power over, such holder, if such holder is an estate, trust, partnership or corporation or any Person (other than the holder) to whom the Notes or any amount payable thereon is attributable for the purposes of such Tax) and the Taxing Jurisdiction, other than the mere holding of the relevant Note or the receipt of payments thereunder or in respect thereof or the exercise of remedies in respect thereof, including, without limitation, any income taxes such holder (and any interest and penalties imposed or such other Person described in the above parenthetical) being or having been a citizen or resident thereof, or being or having been present or engaged in trade or business therein or having or having had an establishment, office, fixed base or branch therein, provided that this exclusion shall not apply with respect thereto) and Excise to a Tax that would not have been imposed but for the Company or the Parent Guarantor, as applicable, after the date of the Closing, opening an office in, moving an office to, reincorporating in, or changing the Taxing Jurisdiction from or through which payments on account of this Agreement or the Gross-Up PaymentNotes are made to, the Employee retains an amount Taxing Jurisdiction imposing the relevant Tax;
(ii) for or on account of the Gross-Up Payment equal to the Excise any Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to have been imposed but for the Excise Tax if the Gross Payments were reduced delay or failure by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced such holder (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected following a written request by the Employee Company, Parent Guarantor or their legal counsel) in a manner consistent the filing with Section 409A the relevant Taxing Jurisdiction of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement Forms (and no other Gross Paymentsas defined below) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations that are required to be made under this Section 10and may validly be filed by such holder to avoid or reduce such Taxes (including for such purpose any extensions, including, whether and when a Gross-Up Payment is refilings or renewals of filings that may from time to time be required and by the relevant Taxing Jurisdiction) and/or in the delay or failure by such holder to take such other reasonably requested actions in order to mitigate the amount of any such Gross-Up PaymentTax, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event provided that the Accounting Firm is serving filing of such Forms (as accountant defined below) and/or the taking of such other actions would not (in such holder’s reasonable judgment) impose any unreasonable burden (in time, resources or auditor for the individualotherwise) on such holder or result in any confidential or proprietary income tax return information being revealed, entity either directly or group effecting the Change of Controlindirectly, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees any Person and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not such delay or failure could have been made lawfully avoided by the Company should have been made (“Underpayment”)such holder, consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, provided further, that all the submission of the HMRC Documents (as defined below) shall not constitute the imposition of any such amounts unreasonable burden or constitute the disclosure of any confidential or proprietary income tax return information for the purpose hereof, and provided further, that such holder shall be paid by deemed to have satisfied the end requirements of this clause (b)(ii) upon the good faith completion and submission of such Forms (as defined below) (including extensions, refilings or renewals of filings), or taking of such actions, as may be specified in a written request of the Employee’s taxable year next following Parent Guarantor or its legal counsel no later than 60 days after receipt by such holder of such written request (accompanied by copies of such Forms (as defined below) and related instructions, if any, all in the Employee’s taxable year in which the Employee remits the related taxes orEnglish language or with an English translation thereof) provided, however, that in the case of a tax audit written request from the Parent Guarantor or litigation addressing the existence its legal counsel that an application be made for an extension or amount renewal of a tax liability, by direction from Her Majesty’s Revenue & Customs (“HMRC”) made pursuant to an HMRC Form US Company 2002 or similar form (“HMRC Documents”) such holder shall be deemed to have satisfied the end requirements of this clause (b)(ii) upon the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result good faith submission of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
application to HMRC not less than six (c6) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee is informed in writing of such claim and shall apprise the Company of the nature of such claim and months prior to the date on which such claim direction is requested to be paid. The Employee shall not pay such claim prior expire (subject to the expiration Obligor’s compliance with the requirement below to provide at least 9 months but no more than 12 months prior written notice) provided further that such holder shall be deemed to have satisfied the requirements of the 30-day period following the date on which it gives such notice to this clause (b)(ii) upon providing the Company (or with such shorter period ending on the date any payment holder’s valid HMRC DT Treaty Passport Scheme reference number and Taxing Jurisdiction in Schedule A of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 Companythis Agreement;
(iii) cooperate with the Company in good faith in order effectively to contest such claim; andfor or on account of any estate, inheritance, gift, sale, excise, transfer, personal property or similar tax assessment or other governmental charge;
(iv) permit to any holder of a Note that is registered in the Company to participate name of a nominee if under the law of the relevant Taxing Jurisdiction (or the current regulatory interpretation of such law) securities held in any proceedings relating the name of a nominee do not qualify for an exemption from the relevant Tax which would otherwise have applied and an Obligor shall have given timely notice of such law or interpretation to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses holder;
(including additional interest and penaltiesv) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes Tax imposed under FATCA;
(vi) if on the date on which the payment falls due the payment could have been made to the relevant holder without such deduction or Excise Tax (including interest and penalties with respect thereto) imposed withholding if the relevant holder had been a Qualifying Holder, but on that date such relevant holder is not or has ceased to be a Qualifying Holder other than as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day change after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined it became a holder under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, Agreement (or in the case of a Purchaser, the date of this Agreement) in any law or tax audit treaty or litigation addressing any published practice or published concession of any relevant taxing authority;
(vii) the existence relevant holder is a Qualifying Holder solely by virtue of limb (c) of the definition of Qualifying Holder and (A) an officer of HMRC has given (and not revoked) a direction (a “Direction”) under section 931 of the ITA which relates to the payment and that holder has received from the Obligor making the payment a certified copy of that Direction, and (B) the payment could have been made to the holder without any withholding or amount deduction if that Direction had not been made; or
(viii) any combination of clauses (i), (ii), (iii), (iv), (v), (vi), and (vii) above. and provided further that in no event shall the Company or the Parent Guarantor, as applicable, be obligated to pay such additional amounts to any holder of a Note not resident in the United States of America or any other jurisdiction in which an original Purchaser is resident for tax liability, by purposes on the end date of the Employee’s taxable year following the Employee’s taxable year Closing in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end excess of the Employee’s taxable year following amounts that the Employee’s taxable year in which Company or the audit is completed or there is Parent Guarantor, as applicable, would be obligated to pay if such holder had been a final and nonappealable settlement or other resolution resident of the litigation)United States of America or such other jurisdiction, as applicable, for the purposes of, and eligible for the benefits of, any double taxation treaty from time to time in effect between the United States of America or such other Purchaser jurisdictions, as applicable, and the relevant Taxing Jurisdiction.
Appears in 4 contracts
Samples: Note Purchase Agreement (Colliers International Group Inc.), Note Purchase Agreement (Colliers International Group Inc.), Note Purchase Agreement (Colliers International Group Inc.)
Tax gross-up. (a) Notwithstanding anything in this Agreement The following provisions shall apply with respect to the contrary, if it shall be determined that any payments, benefits and distributions due excise tax imposed under this Agreement and those which are otherwise payable or distributable to or for the benefit Section 4999 of the Employee relating to Internal Revenue Code as amended (the termination "Code"), (the "Excise Tax"):
(i) If any of the Employee’s employment payments or benefits received or to be received by Executive in connection with a change Change in Control or Executive's termination of control of the Company, including a Change of Control employment (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation (i) paymentsarrangement or agreement with the Company, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration any person whose actions result in a Change in Control of the vesting of Company or any stock options person affiliated with the Company or other equity-based incentive awardsuch person (the "Total Payments")) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would will be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee Executive an additional payment amount (a “the "Gross-Up Payment”") in an amount such that the net amount retained by Executive after payment of (a) the payment by Excise Tax, if any, on the Employee of all taxes Total Payments and (including b) 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 Excise Tax imposed on and income tax due in respect of the Gross-Up Payment, shall equal the Employee retains an Total Payments. Such payment shall be made in a single lump sum within 10 days following the date a determination that only such payment is required.
(ii) For purposes of determining whether any of the Total Payments will be subject to Excise Tax and the amount of the Gross-Up Payment equal to the such Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a)Tax, if it (i) any Total Payments shall be determined that treated as "parachute payments" (within the Employee is entitled meaning of Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company and reasonably acceptable to a Gross-Up PaymentExecutive, but that such payments or benefits (in whole or in part) should not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Gross Payments would not Code, and all "excess parachute payments" (within the meaning of Section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax if unless, in the Gross Payments were reduced by an amount that is equal to opinion of such tax counsel, such excess parachute payments (in whole or less than 10% in part) represent reasonable compensation for services actually rendered (within the meaning of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G 280G(b)(4)(B) of the Code), then the amounts payable to the Employee under this Agreement shall be reduced (but or are otherwise not below zero) to the maximum amount that could be paid to the Employee without giving rise subject to the Excise Tax (the “Safe Harbor Cap”)Tax, and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method ) the value of reduction is elected any noncash benefits or any deferred payment or benefit shall be determined by the Employee Company's independent auditors in a manner consistent accordance with the principles of Section 409A 280G(d)(3) of the Code. For purposes of reducing determining the Gross Payments to amount of the Safe Harbor CapGross-Up Payment, only amounts payable under this Agreement (and no other Gross Payments) Executive shall be reduced. If deemed to pay federal income and employment taxes at the reduction highest marginal rate of federal income and employment taxation in the amounts payable hereunder would not result calendar year in a reduction of which the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required to be made and state and local income and employment taxes at the amount highest marginal rate of taxation in the state and locality of Executive's residence on the date of termination of employment (or such other time as hereinafter described), net of the maximum reduction in federal income or employment taxes which could be obtained from deduction of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company state and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Companylocal taxes. In the event that the Accounting Firm Excise Tax is serving as accountant or auditor for subsequently determined to be less than the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required amount taken into account hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it termination of Executive's employment (or such other time as is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”hereinafter described), consistent with Executive shall repay to the calculations required to be made hereunder. In Company, at the event time that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year reduction in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remittedExcise Tax is finally determined, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company portion of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect Payment attributable to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 reduction plus interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to repayment at the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee shall be entitled to settle or contestapplicable federal rate, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided defined in Section 1274(b)(2)(B) of the Code. Notwithstanding In the foregoing provisions of this subsection 10(e), all such amounts payable by event that the Company shall be paid by Excise Tax is determined to exceed the end amount taken into account hereunder at the time of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case termination of a tax audit Executive's employment (or litigation addressing such other time as is hereinafter described) (including by reason of any payment the existence or amount of a tax liability, by which cannot be determined at the end time of the Employee’s taxable year following Gross-Up Payment), the Employee’s taxable year Company shall make an additional Gross-Up Payment in which respect of such excess (plus any interest at the taxes applicable federal rate, penalties or additions payable by Executive with respect to such excess) at the time that are the subject amount of audit such excess is finally determined. Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or litigation are remitted judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Total Payments.
Appears in 3 contracts
Samples: Employment Agreement (Magellan Health Services Inc), Employment Agreement (Magellan Health Services Inc), Employment Agreement (Magellan Health Services Inc)
Tax gross-up. (a) Notwithstanding anything in this Agreement to The parties acknowledge and agree that Nightlife shall consult with Parent and its tax advisors regarding whether the contrary, if it shall be determined that any payments, benefits Cash Payment and distributions the principal amount due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseAmended and Restated Note (collectively, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would ) should be subject to the excise tax imposed by Section 4999 of the Code reported as income for 2012 or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision2013.
(b) Subject to If following such consultation with Parent and its tax advisors set forth in subparagraph 7(a) above, and after taking into account such consultation, Nightlife determines that all or a portion of the provisions of this Section 10Payments is properly reportable for 2012, Nightlife shall report all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses portion of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, Payments as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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 determine2012; provided, however, that if it is determined that all or any portion of the Company directs Payments is not properly reportable for 2012 pursuant to a final determination within the Employee meaning of Section 1313(a) of the Code (as defined in the Asset Contribution Agreement) (and/or an equivalent provision applicable in a relevant jurisdiction), then:
i. any portion of the Payments determined not to pay such claim and xxx be properly reportable in 2012 shall be shall be treated as a “Future Payment” for a refundpurposes of Section 2.8(a)(iv) of the Asset Contribution Agreement, the Company shall advance the amount of such payment to the Employeeand
ii. any penalty, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise Tax (including interest or penalties similar amount with respect thereto) imposed , together with reasonable expenses incurred by Nightlife with respect to such advance or with respect final determination, shall be paid by Parent to any imputed income with respect to such advance; and further provided that any extension Nightlife on a grossed up basis utilizing a reasonable analogous application of the statute principles of limitations relating to payment of taxes for the taxable year Section 2.8(a)(iv) of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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 authorityAsset Contribution Agreement.
(dc) IfIf following such consultation with Parent and its tax advisors set forth in subparagraph 7(a) above, and after taking into account such consultation, Nightlife determines that all or a portion of the receipt by Payments are not properly reportable for 2012 and Nightlife reports all or such portion of the Employee Payments as income for 2013, such Payments or portion thereof determined to be income for 2013 (i) shall be deemed a “Future Payment” for purposes of an amount advanced by Section 2.8(a)(iv) of the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee Asset Contribution Agreement and shall (be subject to the Company’s complying gross-up formula contained in the last sentence of Section 2.8(a)(iv) of the Asset Contribution Agreement (the “Formula”); and (ii) if so calculated in accordance with the requirements Formula, shall constitute an obligation of Section 10Parent to make a payment as so determined to Nightlife (“2013 Future Payment”) pay to the Company rather than the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto)the Payments. Nevertheless, on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, as a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior material inducement to the expiration of 30 days after such determinationparties to enter into this letter agreement, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the Payments are deemed a “Future Payment”, Nightlife shall receive the Payments in 2013 as set forth in this letter agreement and, on or before January 10, 2014, Parent shall pay or cause to be paid to Nightlife an amount equal to the excess of (A) the amount of the estimated payments exceeds 2013 Future Payment over (B) the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand Payments in cash by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail wire transfer to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable account designated by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Nightlife.
Appears in 3 contracts
Samples: Asset Contribution Agreement, Asset Contribution Agreement (SFX Entertainment, INC), Asset Contribution Agreement (SFX Entertainment, INC)
Tax gross-up. Notwithstanding any other provisions of this Agreement, in the event that (ai) Notwithstanding anything in this Agreement to any payment or distribution by the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable Company to or for the Executive’s benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation (i) paymentsarrangement or agreement with the Company, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under any person whose actions result in a Change in Control or any person affiliated with the Code, resulting from the acceleration of the vesting of any stock options Company or other equity-based incentive awardsuch person) (all such paymentspayments and distributions, including the severance payments and benefits and distributions being referred to herein as provided for in Section 9 hereof (the “Gross Severance Payments”), being hereinafter called (“Total Payments”) would be subject (in whole or part) to the excise tax imposed by under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision enacted under the Code or any interest or penalties are incurred by the Employee Executive with respect to the such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”)) and (ii) the amount of such Total Payments subject to such Excise Tax exceeds $50,000, then the Company shall pay to the Employee Executive an additional cash payment (a the “Tax Gross-Up”) so that after receipt of such Tax Gross-Up, the payment of any additional federal, state and local income taxes on such Tax Gross-Up Payment”) in an amount such that after and the payment by the Employee of all taxes (including any interest or penalties imposed with respect to Excise Taxes, Executive shall receive such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment, the Employee retains an net amount of the Gross-Up Payment Total Payments equal to the amount that Executive would have received if no Excise Tax imposed on was due. If the Gross Payments. Notwithstanding the foregoing provisions amount of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Total Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Codedoes not exceed $50,000, then the amounts payable to Tax-Gross-Up shall not be paid and the Employee under this Agreement Severance Payments shall be reduced (but not below if necessary, to zero) to the maximum amount extent necessary so that could be paid to no portion of the Employee without giving rise Total Payments is subject to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionTax.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 3 contracts
Samples: Employment Agreement (Health Net Inc), Employment Agreement (Health Net Inc), Employment Agreement (Health Net Inc)
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, including the Additional Payment, and (ii) deemed amounts under the Internal Revenue Code of 1986, as amended (the “Code”), resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e)within five days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or 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 the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon not later than the first tenth (10th) day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company entitled and shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the date specified for payment termination of the initial estimateEmployee’s employment. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess shall constitute a loan by the Company to the Company Employee, payable on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).this
Appears in 3 contracts
Samples: Change of Control Agreement (Equitable Resources Inc /Pa/), Change of Control Agreement (Equitable Resources Inc /Pa/), Change of Control Agreement (Equitable Resources Inc /Pa/)
Tax gross-up. Notwithstanding any other provisions of this Agreement, in the event that (ai) Notwithstanding anything in this Agreement to any payment or distribution by the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable Company to or for the Executive’s benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation (i) paymentsarrangement or agreement with the Company, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under any person whose actions result in a Change in Control or any person affiliated with the Code, resulting from the acceleration of the vesting of any stock options Company or other equity-based incentive awardsuch person) (all such paymentspayments and distributions, including the severance payments and benefits and distributions being referred to herein as provided for in Section 9 hereof (the “Gross Severance Payments”), being hereinafter called (“Total Payments”) would be subject (in whole or part) to the excise tax imposed by under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision enacted under the Code or any interest or penalties (to the extent permitted under Treasury Regulation Section 1.409A-3(i)(1)(v)) are incurred by the Employee Executive with respect to the such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”)) and (ii) the amount of such Total Payments subject to such Excise Tax exceeds $50,000, then the Company shall pay to the Employee Executive an additional cash payment (a the “Tax Gross-Up”) so that after receipt of such Tax Gross-Up, the payment of any additional federal, state and local income taxes on such Tax Gross-Up Payment”) in an amount such that after and the payment by the Employee of all taxes (including any interest or penalties imposed with respect to Excise Taxes, Executive shall receive such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment, the Employee retains an net amount of the Gross-Up Payment Total Payments equal to the amount that Executive would have received if no Excise Tax imposed on was due. If the Gross Payments. Notwithstanding the foregoing provisions amount of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Total Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Codedoes not exceed $50,000, then the amounts payable to Tax-Gross-Up shall not be paid and the Employee under this Agreement Severance Payments shall be reduced (but not below if necessary, to zero) to the maximum amount extent necessary so that could be paid to no portion of the Employee without giving rise Total Payments is subject to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionTax.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 2 contracts
Samples: Employment Agreement, Employment Agreement (Health Net Inc)
Tax gross-up. (a) Notwithstanding anything in this Agreement herein to the contrary, if it shall be is determined by the Company on or prior to the date the applicable payments and/or benefits are paid or thereafter by the Internal Revenue Service (the "IRS") pursuant to an IRS audit of the Executive's federal income tax return(s) (an "Audit"), that any payments, benefits and distributions due payment or benefit provided to the Executive under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest or penalties are incurred by the Employee with respect to the such excise tax (such excise tax, together with any such interest and penaltiesor penalties thereon, are hereinafter collectively is herein referred to as the “"Excise Tax”"), then the Company shall pay (either directly to the Employee IRS as tax withholdings or to the Executive as a reimbursement of any amount of taxes, interest and penalties paid by the Executive to the IRS) both the Excise Tax and an additional cash payment (a “"Gross-Up Payment”") in an amount such that after will place the Executive in the same after-tax economic position that the Executive would have enjoyed if the payment by or benefit had not been subject to the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an Tax. The amount of the Gross-Up Payment equal to shall be calculated by the Company's regular independent auditors based on the amount of the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made determined by the Company should have been made (“Underpayment”), consistent with or the calculations required to be made hereunderIRS. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine If the amount of the Underpayment that has occurred and any such Underpayment shall be paid Excise Tax determined by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid IRS is greater than an amount previously determined by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remittedCompany, the end of Company's auditors shall recalculate the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company amount of the Gross-Up Payment. Such notification The Executive shall be given as soon as practicable but no later than ten (10) business days after the Employee is informed in writing of such claim and shall apprise promptly notify the Company of the nature of such claim and the date on which such claim any IRS assertion during an Audit that an Excise Tax is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes due with respect to such claim is due). If any payment or benefit, but the Company notifies the Employee in writing prior Executive shall be under no obligation to the expiration of such period that it desires to contest such claim, the Employee 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 defend against such claim by an attorney reasonably selected by the IRS unless the Company requests, in writing, that the Executive undertake the defense of such IRS claim on behalf of the Company and at the Company;
(iii) 's sole expense. In such event, the Company may elect to control the conduct to a final determination through counsel of it own choosing and at its sole expense, of any audit, administrative or judicial proceeding involving an asserted liability relating to the Excise Tax, and the Executive shall not settle, compromise or concede such asserted Excise Tax and the Executive shall cooperate with the Company in good faith in order effectively to contest such claim; and
(iv) permit the Company to participate in each phase of 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 2 contracts
Samples: Employment Agreement (Sothebys Holdings Inc), Employment Agreement (Sothebys Holdings Inc)
Tax gross-up. (a) Notwithstanding anything in this Agreement If any payment or benefit to which the contrary, if it shall be determined that any payments, benefits and distributions due Employee is entitled under this Agreement and those which are or otherwise payable from SPSS or distributable to or for any of its affiliates constitutes a "parachute payment" within the benefit meaning of section 280G of the Code and if, as a result thereof, the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be is subject to the excise a tax imposed by Section under section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “an "Excise Tax”"), then the Company SPSS shall pay to the Employee an additional payment amount (a “Grossthe "Make-Up Whole Payment”") in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment which shall be equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions sum of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zeroi) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred Excise Tax, plus (ii) all income, excise and other applicable taxes imposed on the Employee under the laws of any such Underpayment Federal, state or local government or taxing authority by reason of the payments required under Sections 8(a)(i) and 8(a)(ii). The Make-Whole Payment shall be paid by within 15 days after the Company to or for Employee notifies SPSS in writing that he has remitted the benefit applicable taxes but in no event later than the last day of the Employee on the thirtieth (30th) day calendar year following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in applicable taxes. The determination of whether the case Employee is entitled to a Make-Whole Payment pursuant to this Section 8 and the amount thereof shall be made by an accounting firm selected by SPSS and the determination of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of such accounting firm shall be final and binding upon both SPSS and the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(cb) The Employee shall notify the Company SPSS in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Grossresult in an Excise Tax that would otherwise have required a Make-Up PaymentWhole Payment pursuant to Section 8(a). Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee is informed in writing of such claim and shall apprise the Company SPSS of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim Excise Tax prior to the expiration of the thirty (30-) day period following the date on which it gives such notice to the Company SPSS (or such shorter period ending on the date that any payment of taxes the Excise Tax is due) (the "Consideration Period"). SPSS may take either of the following actions with respect to such claim is due). the claim:
(i) If SPSS does not desire to contest the Company claim, SPSS shall notify the Employee in writing and shall pay to the Employee a Make-Whole Payment, which Make-Whole Payment shall be paid within 15 days after the Employee notifies SPSS in writing that he has remitted the applicable taxes, but in no event later than the last day of the calendar year following the year in which the Employee remits the applicable taxes.
(ii) If SPSS desires to contest the claim, SPSS shall inform the Employee in writing prior to the expiration end of such period the Consideration Period that it desires to contest such claim, claim and the Employee shall:
(iA) give the Company SPSS any information reasonably requested by the Company SPSS relating to such claim;
(iiB) take such action in connection with contesting such claim as the Company SPSS 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 CompanySPSS;
(iiiC) cooperate with the Company SPSS in good faith in order to effectively to contest such claim; and
(ivD) permit the Company SPSS to participate in any proceedings relating to such claim; provided, however, that the Company SPSS shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest. If SPSS does not prevail in its contest for of the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax claim (including interest and penalties with respect thereto) imposed whether as a result of settlement or otherwise) such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be is required to be repaid and the amount of such advance shall offsetpay an Excise Tax, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company SPSS shall pay to the Employee on such day an estimatea Make-Whole Payment, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company Make-Whole Payment shall be paid by within 5 days after the end Employee notifies SPSS in writing that he has remitted the applicable taxes, but in no event later than the last day of the Employee’s taxable calendar year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)applicable taxes.
Appears in 2 contracts
Samples: Employment Agreement (SPSS Inc), Employment Agreement (SPSS Inc)
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the The Company shall pay make all payments to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii)it without any Tax Deduction, unless an alternative method of reduction a Tax Deduction is elected required by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionlaw.
(b) Subject to The Company shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the provisions rate or the basis of this Section 10a Tax Deduction) notify the Administrative Agent accordingly. Similarly, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, Lender (or its Funding Agent) shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by notify the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees Master Servicer and expenses Administrative Agent on becoming so aware in respect of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment payable to that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Lender.
(c) The Employee shall notify If a Tax Deduction is required by law to be made by the Company, the amount of the payment due from the Company in writing shall be increased to an amount which (after making any Tax Deduction) leaves the recipient of any claim by the Internal Revenue Service that, if successful, would require such payment with an amount equal to the payment which would have been received by it if no Tax Deduction had been required.
(d) Each Lender that is not incorporated under the Company laws of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after United States of America or a State thereof or the Employee is informed in writing District 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee Columbia shall:
(i) give deliver to the Master Servicer, the Company, the Administrative Agent, the Collateral Agent and the related Funding Agent two duly completed copies of United States Internal Revenue Service Form W-8ECI, W-8BEN or W-8IMY, or successor applicable form and such other forms, certificates and documentation as may be necessary or appropriate to establish, in each case, that it is entitled to receive payments from the Company any information reasonably requested by without a deduction for U.S. federal withholding tax or with a deduction at a reduced rate. In the Company relating to case of a Lender that provides an Internal Revenue Service Form W-8BEN, such claim;
Lender shall either (i) claim the benefit of a treaty that provides for a complete exemption from United States withholding tax for payments of interest or (ii) take such action claim the benefit of the U.S. “portfolio interest exemption” by also providing a certification that is not a “bank” making a loan under this Agreement in connection with contesting such claim as the Company shall reasonably request in writing from time ordinary course of its business within the meaning of Section 881(c)(3)(A) of the Code or a person related 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 a manner described in order effectively to contest such claim; and
(ivSections 871(h)(3)(B), 881(c)(3)(B) 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 penaltiesor 881(c)(3)(C) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following Code. If a Lender that provides an Internal Revenue Service Form W-8BEN is unable to claim a complete exemption from the taxable year United States withholding tax because of a change in which law after the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of date such Lender became a party to this Supplement, such Lender will be treated as satisfying the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions requirements of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee shall be entitled to settle or contest11.2(d), as the case may be;
(ii) deliver to the Master Servicer, the Company, the Collateral Agent, the Administrative Agent and the related Funding Agent two further copies of any other issue raised such form or certification (A) on or before the date that any such form or certification expires or becomes obsolete, (B) after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Company, the Collateral Agent, the Administrative Agent or the related Funding Agent and (C) at the reasonable request of the Master Servicer, the Company, the Collateral Agent or the related Funding Agent; and
(iii) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Internal Revenue Service Company, the Collateral Agent, the Administrative Agent or the related Funding Agent; unless any other taxing authority.
change in treaty, law or regulation has occurred prior to, and is in effect on, the date on which any such delivery would otherwise be required which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender (dor its Funding Agent) If, after the receipt by the Employee of an amount advanced by so advises the Company and the related Funding Agent. Each Lender shall certify to the Company, the Collateral Agent, the Administrative Agent and the related Funding Agent at the time it first becomes a Lender, and thereafter to the extent provided by law, (i) all such forms are true and complete, (ii) that it is entitled to receive payments under this Agreement and the other Transaction Documents without, or at a reduced rate of, withholding of any United States federal income taxes and (iii) that it is entitled to an exemption from United States backup withholding tax. Each Person that shall become a Lender or a Participant pursuant to Section 1036.17 shall, upon the Employee becomes entitled effectiveness of the related transfer, be required to receive any refund with respect to such claim, the Employee shall (subject provide to the Company’s complying with , the requirements Collateral Agent, the Administrative Agent, the Master Servicer and the related Funding Agent all of Section 10) pay the forms and statements required pursuant to this Section; provided that in the case of a Participant such Participant shall furnish all such required forms and statements to the Lender from which the related participation shall have been purchased and such Lender shall provide such forms to the Company with a duly executed Form W-8IMY and withholding statement. If the amount of such refund (together with any interest paid Company, the Administrative Agent or credited thereon after taxes applicable theretothe Collateral Agent has not received the forms set forth in Section 11.2(d), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that shall withhold taxes from such payment at the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final applicable statutory rate and shall not be required obliged to be repaid and the amount of make increased payments under Section 11.2 until such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paidforms or other documents are delivered.
(e) The payments provided for in this Each Lender that is a United States Person within the meaning of Section 10 shall be made upon the first day following the six-month anniversary 7701(a)(30) of the termination Code shall deliver to the Master Servicer, the Company, the Collateral Agent and the related Funding Agent two duly completed copies of the Employee’s employment; providedUnited States Internal Revenue Service Form W-9 or any successor applicable form.
(f) The Company is not required to make any payment under Section 11.2(c) to the extent such payment would be due as the result of the relevant Funding Agent, howeverLender or Participant not providing the forms required by Section 11.2(d)(i), that if or 11.2(d)(ii) unless the amounts failure to provide such forms is a result of such payments cannot be finally determined on a change after the date it became a Lender or before such daya Participant under this Agreement in (or in the interpretation, administration or application of) any Requirement of Law or any published practice or concession of any relevant Taxation Authority.
(g) If the Company is required to make a Tax Deduction, the Company shall pay to make that Tax Deduction and any payment required in connection with that Tax Deduction within the Employee on such day an estimate, as determined time allowed and in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments required by law.
(together h) Within thirty (30) days after making either a Tax Deduction or any payment required in connection with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been dueTax Deduction, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted deliver to each Funding Agent evidence reasonably satisfactory to the taxing authority Lender entitled to that payment that the Tax Deduction has been made or (or where as a result of such audit or litigation no taxes are remitted, applicable) any appropriate payment paid to the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)relevant Taxation Authority.
Appears in 2 contracts
Samples: European Receivables Loan Agreement, European Receivables Loan Agreement (Huntsman CORP)
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) paymentsIn the event that any payment or benefit made or provided to you under this Letter Agreement or under any other Company Arrangement (a “Payment”) is determined to constitute a Parachute Payment, benefits and distributions pursuant to Section 3 as such term is defined in section 280G(b)(2) of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to you, prior to the Employee time any excise tax imposed by section 4999 of the Code (“Excise Tax”) is payable with respect to such Payment, an additional payment amount (a the “Gross-Up Payment”) in an amount such that which, after the payment by the Employee imposition of all income and excise taxes thereon (including any interest or penalties and assuming all federal, state and other income taxes are imposed with respect to such taxesat the highest marginal rate), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment is equal to the Excise Tax imposed on the Gross Paymentssuch Payment. Notwithstanding the foregoing provisions The determination of this Section 10(a)whether any Payment constitutes a Parachute Payment and, if it shall be determined that so, the Employee is entitled amount to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to you and the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction time of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced payment pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment11(c), shall be made by a nationally nationally-recognized independent accounting firm designated by the Company (the “Accounting FirmAuditor”) which shall provide detailed supporting calculations both to the Company selected and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor paid for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, Payment shall be paid by the Company to you no later than ten calendar days after the Employee as provided in Section 10(e)receipt of the Auditor’s determination. Any determination by the Accounting Firm shall Auditor shall, subject to the provisions of Section 11(c)(ii) and (iii) below, be binding upon the Company and the Employee. you.
(ii) As a result of the uncertainty in the application of Section sections 280G and 4999 of the Code Code, or other circumstances, at the time of the initial determination by the Accounting Firm Auditor hereunder, it is possible that the Gross-Up Payments which Payment made will not have been made by an amount more than the Company should have paid pursuant to Section 11(c)(i) (the “Overpayment”) or that the Gross-Up Payment made will have been made an amount less than the Company should have paid pursuant to Section 11(c)(i) (the “Underpayment”), consistent with the calculations required to be made hereunder. In the event that there is a final determination by the Internal Revenue Service, or a final determination by a court of competent jurisdiction, with respect to your liability under section 4999 of the Code such that an Overpayment has been made, then to the extent permitted by applicable law, you agree to return to the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that you recover. In the event that there is a final determination by the Internal Revenue Service, or a final determination by a court of competent jurisdiction with respect to your liability under section 4999 of the Code such that an Underpayment that has occurred and arises under this Letter Agreement, then any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)you.
(ciii) The Employee shall You agree to notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Paymentresult in a determination that an Overpayment or an Underpayment had occurred. Such notification shall be given as soon as practicable but no later than ten (10) 10 business days after the Employee is you are informed in writing of such claim and shall apprise the Company of the nature of such claim. In the case of a claim and that would result in an Underpayment, such notice shall include the date on which such claim is requested to be paid. The Employee You shall not pay such claim prior to the expiration of the 30-30 calendar day period following the date on which it gives 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 the Employee you in writing prior to the expiration of such period that it desires to contest such claim, the Employee you shall:
(iA) give the Company any information reasonably requested by the Company relating to such claim;
(iiB) 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;
(iiiC) cooperate with the Company in good faith in order effectively to contest such claim; and
(ivD) permit the Company to participate in any proceedings proceeding relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including including, without limitation, attorneys fees, additional interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefitcontest. Without limitation on the foregoing provisions of this Section 1011(c), the Company shall have the right control all proceedings taken in connection with such contest andcontest, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee shall you will 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 2 contracts
Samples: Employment Agreement (Safari Holding Corp), Employment Agreement (Safari Holding Corp)
Tax gross-up. AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT/XXXXXX — Page 15
(a) Notwithstanding anything in If, as a result of payments provided for under or pursuant to this Agreement to together with all other payments in the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable nature of compensation provided to or for the benefit of the Employee relating to the termination of the Employee’s employment Executive under any other agreement in connection with a change Change of control Control, Executive becomes subject to taxes of any state, local or federal taxing authority that would not have been imposed on such payments but for the Company, including occurrence of a Change of Control (whether paid Control, including any excise tax under Section 4999 of the Code an any successor or payable comparable provision, then, in addition to any other benefits provided under or distributed or distributable pursuant to the terms of this Agreement or otherwise, Company (including without limitation (iany successor to Company) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to Executive at the Employee an additional payment (a “Gross-Up Payment”) in time any such payments are made under or pursuant to this or the other agreements, an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax amount of any such taxes imposed or to be imposed on Executive (the Gross Payments. Notwithstanding amount of any such payment, the foregoing provisions of this Section 10(a“Parachute Tax Reimbursement”); provided, if it that such Parachute Tax Reimbursement shall in no event be determined that paid later than the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% end of the portion of calendar year following the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee calendar year in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionwhich such taxes are imposed upon Executive.
(b) Subject In addition, Company (including any successor to Company) shall “gross up” such Parachute Tax Reimbursement by paying to Executive at same time an additional amount equal to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the aggregate amount of any additional taxes (whether income taxes, excise taxes, special taxes, employment taxes or otherwise) that are or will be payable by Executive as a result of the Parachute Tax Reimbursement being paid or payable to Executive and/or as a result of the additional amounts paid or payable to Executive pursuant to this sentence, such Grossthat after payment of such additional taxes Executive shall have been paid on a net after-Up Payment, tax basis an amount equal to the Parachute Tax Reimbursement.
(c) The amount of any Parachute Tax Reimbursement and of any such gross-up amounts shall be made determined by a nationally recognized accounting firm designated selected by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Paymentwith all such cost borne by Company), or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individualwhose determination, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10absent manifest error, shall be paid by the Company to the Employee treated as provided in Section 10(e). Any conclusive and binding absent a binding determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible governmental taxing authority that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the greater amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Executive.
Appears in 2 contracts
Samples: Executive Employment Agreement (Ennis, Inc.), Executive Employment Agreement (Ennis, Inc.)
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary notwithstanding, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation ) (a "Payment") (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “"Excise Tax”)") or (ii) is made pursuant to a Change of Control, then the Company Employee shall pay be entitled to the Employee receive an additional payment (a “"Gross-Up Payment”") in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Payment and Gross-Up Payment, the Employee retains an amount of equal to (x) the Payment plus (y) the Excise Tax (if any) imposed upon the Payment and the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 1010(c), all determinations required to be made under this Section 10, including, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “"Accounting Firm”") which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of in Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e)within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“"Underpayment”"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or 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 the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or 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. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 1010(c), 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 the Employee to pay the tax claimed and sue xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and sue xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s 's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 1010(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s 's complying with the requirements of Section 10) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 1010(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 hereof shall be made upon not later than the first tenth (10th) day following the six-month anniversary of the termination of the Employee’s 's employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, Employee of the minimum amount of such payments to which the Employee is clearly entitled. The Company entitled and shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section section 1274(b)(2)(B) of the Code) on as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the date specified for payment termination of the initial estimateEmployee's employment. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess shall constitute a loan by the Company to the Company Employee, payable on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 2 contracts
Samples: Change of Control Agreement (Equitable Resources Inc /Pa/), Change of Control Agreement (Equitable Resources Inc /Pa/)
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the The Company shall pay make all payments to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii)it without any Tax Deduction, unless an alternative method of reduction a Tax Deduction is elected required by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionlaw.
(b) Subject to The Company shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the provisions rate or the basis of this Section 10a Tax Deduction) notify the Administrative Agent accordingly. Similarly, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, Lender (or its Funding Agent) shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by notify the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees Master Servicer and expenses Administrative Agent on becoming so aware in respect of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment payable to that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Lender.
(c) The Employee shall notify If a Tax Deduction is required by law to be made by the Company, the amount of the payment due from the Company in writing shall be increased to an amount which (after making any Tax Deduction) leaves the recipient of any claim by the Internal Revenue Service that, if successful, would require such payment with an amount equal to the payment which would have been received by it if no Tax Deduction had been required.
(d) Each Lender that is not incorporated under the Company laws of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after United States or a State thereof or the Employee is informed in writing District 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee Columbia shall:
(i) give deliver to the Master Servicer, the Company, the Administrative Agent, the Collateral Agent and the related Funding Agent two (2) duly completed copies of United States Internal Revenue Service Form W-8ECI, W-8BEN, W-8BEN-E or W-8IMY, or successor applicable form and such other forms, certificates and documentation as may be necessary or appropriate to establish, in each case, that it is entitled to receive payments from the Company any information reasonably requested without a deduction for U.S. federal withholding tax or with a deduction at a reduced rate. In the case of a Lender that provides an Internal Revenue Service Form W-8BEN or W-8BEN-E, such Lender shall either (A) claim the benefit of a treaty that provides for a complete exemption from United States withholding tax for payments of interest or (B) claim the benefit of the U.S. “portfolio interest exemption” by also providing a certification that is not a “bank” making a loan under this Agreement in the ordinary course of its business within the meaning of Section 881(c)(3)(A) of the Code or a Person related to the Company relating to such claimin a manner described in Sections 871(h)(3)(B), 881(c)(3)(B) or 881(c)(3)(C) of the Code;
(ii) take such action in connection with contesting such claim as deliver to the Company shall reasonably request in writing from time to timeMaster Servicer, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;, the Collateral Agent, the Administrative Agent and the related Funding Agent two further copies of any such form or certification (A) on or before the date that any such form or certification expires or becomes obsolete, (B) after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Company, the Collateral Agent, the Administrative Agent or the related Funding Agent and (C) at the reasonable request of the Master Servicer, the Company, the Collateral Agent or the related Funding Agent; and
(iii) cooperate obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Company, the Collateral Agent, the Administrative Agent or the related Funding Agent; unless any change in treaty, law or regulation has occurred prior to, and is in effect on, the date on which any such delivery would otherwise be required which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender (or its Funding Agent) so advises the Company and the related Funding Agent. Each Lender shall certify to the Company, the Collateral Agent, the Administrative Agent and the related Funding Agent at the time it first becomes a Lender, and thereafter to the extent provided by law, (i) all such forms are true and complete, (ii) that it is entitled to receive payments under this Agreement and the other Transaction Documents without, or at a reduced rate of, withholding of any United States federal income taxes and (iii) that it is entitled to an exemption from United States backup withholding tax. Each Person that shall become a Lender or a Participant pursuant to Section 37.17 shall, upon the effectiveness of the related transfer, be required to provide to the Company, the Collateral Agent, the Administrative Agent, the Master Servicer and the related Funding Agent all of the forms and statements required pursuant to this Section; provided that in good faith in order effectively the case of a Participant such Participant shall furnish all such required forms and statements to contest the Lender from which the related participation shall have been purchased and such claim; and
(iv) permit Lender shall provide such forms to the Company to participate with a duly executed Form W-8IMY and withholding statement. If the Company, the Administrative Agent or the Collateral Agent has not received the forms set forth 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 1011.2(d), 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of withhold taxes from such payment to at the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final statutory rate and shall not be required obliged to be repaid and the amount of make increased payments under Section 11.2 until such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paidforms or other documents are delivered.
(e) The payments provided for in this Each Lender that is a United States Person within the meaning of Section 10 shall be made upon the first day following the six-month anniversary 7701(a)(30) of the termination Code shall deliver to the Master Servicer, the Company, the Administrative Agent, the Collateral Agent and the related Funding Agent two (2) duly completed copies of the Employee’s employment; providedUnited States Internal Revenue Service Form W-9 or any successor applicable form.
(f) If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, howeveras applicable), that if such Lender shall deliver to the amounts of such payments cannot be finally determined on or before such dayCompany, the Company shall pay to Funding Agent and the Employee on Administrative Agent at the time or times prescribed by law and at such day an estimate, as determined in good faith time or times reasonably requested by the EmployeeCompany, of the minimum amount of Funding Agent or the Administrative Agent such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments documentation prescribed by applicable law (together with interest at 120% of the rate provided in including as prescribed by Section 1274(b)(2)(B1471(b)(3)(C)(i) of the Code) on and such additional documentation reasonably requested by the thirtieth Company, the Funding Agent or the Administrative Agent as may be necessary for the Company, the Funding Agent and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (30th) day f), “FATCA” shall include any amendments made to FATCA after the date specified for of this Agreement.
(g) The Company is not required to make any payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess under Section 11.2(c) to the Company extent such payment would be due as the result of (i) the relevant Funding Agent, Lender or Participant not providing the forms required by Section 11.2(d)(i), 11.2(d)(ii), 11.2(e) or 11.2(f) unless the failure to provide such forms is a result of a change after the date it became a Lender or a Participant under this Agreement in (or in the interpretation, administration or application of) any Requirement of Law or any published practice or concession of any relevant Taxation Authority, (ii) a law in effect on the fifth date on which such Lender becomes a party hereto or changes its lending office, except in each case to the extent that, pursuant to Section 11.2(c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, or (5thiii) business day after calculation of the correct amount and demand by FATCA.
(h) If the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail is required to pay when due the amounts described in this Section 10make a Tax Deduction, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by make that Tax Deduction and any payment required in connection with that Tax Deduction within the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, time allowed and in the case of minimum amount required by law.
(i) Within thirty (30) days after making either a tax audit Tax Deduction or litigation addressing any payment required in connection with that Tax Deduction, the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted Company shall deliver to each Funding Agent evidence reasonably satisfactory to the taxing authority Lender entitled to that payment that the Tax Deduction has been made or (or where as a result of such audit or litigation no taxes are remitted, applicable) any appropriate payment paid to the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)relevant Taxation Authority.
Appears in 2 contracts
Samples: u.s. Receivables Loan Agreement, u.s. Servicing Agreement, u.s. Receivables Purchase Agreement (Huntsman International LLC), u.s. Receivables Loan Agreement (Huntsman International LLC)
Tax gross-up. (a) Notwithstanding anything If any of the payments provided for in this Agreement to (the contrary, if it shall be determined that “Contract Payments”) or any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit portion of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control Total Payments (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (ias defined below) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would will be subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise taxCode, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company or the Bank shall pay to the Employee Executive, no later than the fifth day following the earlier of the date on which such payment is made and the Termination Date, an additional payment amount (a the “Gross-Up Payment”) in an amount such that after the payment net amount retained by the Employee Executive, after deduction of all taxes (including any interest or penalties imposed with respect to Excise Tax on the Contract Payments and such taxes), including, without limitation, any income taxes (other Total Payments and any interest federal and penalties imposed with respect thereto) state and local income, employment and other taxes and Excise Tax imposed on upon the payment provided for by this subsection, shall be equal to the Contract Payments and such other Total Payments.
(b) For purposes of determining whether any payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with an event described in Section 280(G)(b)(2)(A)(i) of the Code (hereinafter, a “Section 280 Event”), or the Executive’s termination of employment pursuant to the terms of any plan, arrangement or agreement with the Company or the Bank, their successors, any person whose actions result in a Section 280 Event or any person affiliated with the Company or the Bank or such person (together with the Contract Payments, the “Total Payments”), shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code except to the extent that, in the opinion of tax counsel selected by the Company’s independent auditors and acceptable to the Executive, the Total Payments do not constitute parachute payments, (ii) all “excess parachute payments” within the meaning of Section 280G(b)(1) shall be treated as subject to the Excise Tax except to the extent that, in the opinion of such tax counsel, such excess parachute payments represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4)(B) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company’s or Bank’s independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Employee retains an Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Termination Date, net of the maximum reduction in federal income taxes which could be obtained from deductions of such state and local taxes.
(c) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive’s employment, the Executive shall repay to the Company or the Bank at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment equal attributable to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of such reduction (plus the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior Payment attributable to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending Excise Tax and federal and state and local income tax imposed on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably requested Gross-Up Payment being repaid by the Company relating to Executive if such claim;
(ii) take such action repayment results in connection with contesting such claim as the Company shall reasonably request a reduction 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including and/or a federal and state and local income tax deduction) plus interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest repayment at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding In the foregoing provisions of this subsection 10(e), all such amounts payable by event that the Company shall be paid by Excise Tax is determined to exceed the end amount taken into account hereunder at the time of the Employeetermination of the Executive’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case employment (including by reasons of a tax audit or litigation addressing any payment the existence or amount of a tax liability, by which cannot be determined at the end time of the Employee’s taxable year following Gross-Up Payment), the Employee’s taxable year Company or the Bank shall make an additional Gross-Up Payment in which respect of such excess (plus any interest payable with respect to such excess) at the taxes time that are the subject amount of audit or litigation are remitted such excess is fully determined.
(d) For purposes of this Section 5, any reference to the taxing authority (Executive shall be deemed to include the Executive’s surviving spouse, estate, and/or beneficiaries with respect to payments or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)adjustments provided by this Section 5.
Appears in 2 contracts
Samples: Employment Agreement (Coast Financial Holdings Inc), Employment Agreement (Coast Financial Holdings Inc)
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary notwithstanding, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), a "Payment") would be subject to the excise tax imposed by Section section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “"Excise Tax”"), then the Company Employee shall pay be entitled to the Employee receive an additional payment (a “"Gross-Up Payment”") in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on upon the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 1010(c), all determinations required to be made under this Section 10, including, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “"Accounting Firm”") which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of in Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e)within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“"Underpayment”"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or 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 the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or 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. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 1010(c), 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 the Employee to pay the tax claimed and sue xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and sue xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s 's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 1010(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s 's complying with the requirements of Section 10) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 1010(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 hereof shall be made upon not later than the first tenth (10th) day following the six-month anniversary of the termination of the Employee’s 's employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, Employee of the minimum amount of such payments to which the Employee is clearly entitled. The Company entitled and shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section section 1274(b)(2)(B) of the Code) on as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the date specified for payment termination of the initial estimateEmployee's employment. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess shall constitute a loan by the Company to the Company Employee, payable on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 2 contracts
Samples: Change of Control Agreement (Equitable Resources Inc /Pa/), Change of Control Agreement (Equitable Resources Inc /Pa/)
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, including the Additional Payment, and (ii) deemed amounts under the Internal Revenue Code of 1986, as amended (the “Code”), resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e)within five days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or 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 the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon not later than the first tenth (10th) day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company entitled and shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the date specified for payment termination of the initial estimateEmployee’s employment. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess shall constitute a loan by the Company to the Company Employee, payable on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 2 contracts
Samples: Change of Control Agreement (Equitable Resources Inc /Pa/), Change of Control Agreement (Equitable Resources Inc /Pa/)
Tax gross-up. (a) Notwithstanding anything Unless otherwise expressly provided in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwisethe Debentures, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred payments made by the Employee Corporation, Depository, a Depository Participant or a financial intermediary having an account with any Depository Participant making such payment (the “Payor”) under or with respect to the excise Debentures (including for greater certainty and without limitation, the delivery of Common Shares or other property in connection with the exercise of a conversion of Debentures), to a holder will be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge including penalties, interest and other liabilities related thereto imposed or levied by or on behalf of the Government of Canada or of any province or territory thereof or by any authority or agency therein or thereof having power to tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise TaxCanadian Taxes”), then unless there is an obligation on the Company shall pay Payor to withhold or deduct Canadian Taxes by law or by the interpretation or administration thereof. Notwithstanding anything to the Employee contrary contained herein or in any Debenture, if the Payor is so required to withhold or deduct any amount for or on account of Canadian Taxes from any payment made under or with respect to the Debentures, the Corporation will pay on behalf of each holder as additional interest such additional amounts (“Additional Amounts”) as may be necessary so that the net amount received by each holder after such withholding or deduction (and after deducting any Canadian Taxes on such Additional Amounts) will not be less than the amount the holder would have received if such Canadian Taxes had not been withheld or deducted. However, no Additional Amounts will be payable with respect to a payment made to a holder (such holder, an additional payment (a “Gross-Up PaymentExcluded Holder”) in an amount respect of the beneficial owner thereof which is subject to such that after the payment Canadian Taxes by reason of such holder being a resident, domicile or national of, or engaged in business or maintaining a permanent establishment or other presence in, or otherwise having some present or former connection with Canada or any province or territory thereof otherwise than by the Employee mere holding of all taxes (including any interest Debentures or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount receipt of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionthereunder.
(b) Subject The Corporation will make payment of all Additional Amounts to each Payor and each Payor will:
(i) make such withholding or deduction;
(ii) remit the full amount deducted or withheld to the provisions relevant authority in accordance with applicable law; and
(iii) provide to the holders of this Section 10, all determinations required to be made under this Section 10, including, whether Debentures copies of tax receipts and when a Gross-Up Payment is required and the amount of other documents evidencing such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated payment by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been Corporation in a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)timely fashion.
(c) The Employee shall notify Corporation will indemnify and hold harmless each holder (other than an Excluded Holder), and, within 10 Business Days upon a written request in respect thereof, reimburse each such holder for the Company in writing of any claim by the Internal Revenue Service thatamount, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date excluding any payment of taxes with respect to such claim is due). If Additional Amounts by the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claimCorporation, the Employee shallof:
(i) give any Canadian Taxes so levied or imposed and paid by such holder as a result of payments made under or with respect to the Company any information reasonably requested by the Company relating to such claimDebentures;
(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to timeany liability (including penalties, including, without limitation, accepting legal representation interest and expenses) arising therefrom or with respect to such claim by an attorney reasonably selected by the Company;thereto; and
(iii) cooperate with the Company in good faith in order effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise Tax (including interest or penalties with respect thereto) Canadian Taxes imposed with respect to any reimbursement under clause (i) or (ii) in this paragraph, but excluding any such advance Canadian Taxes on such holder’s net income and such indemnity will survive the termination or discharge of this Indenture and the payment of all amounts under or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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 authorityDebenture indefinitely.
(d) IfWherever in this Indenture there is mentioned, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10in any context, the Employee becomes entitled to receive payment of principal (and premium, if any), interest or any refund other amount payable under or with respect to a Debenture, such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance mention shall be forgiven on deemed to include mention of the date such determination becomes final and shall not be required to be repaid and the amount payment of such advance shall offset, Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for If Canadian Taxes are or were required to be withheld or deducted in respect of amounts payable or paid by any Payor from any payment to be made or made hereunder pursuant to applicable law or by the interpretation or administration thereof, such Payor shall provide the Corporation with notice in writing that such withholding or deduction is or was required and certifying all of the facts and circumstances supporting the conclusion that such withholding or deduction is or was required. Such certificate shall constitute prima facie evidence of the Corporation’s obligation to pay the Additional Amounts required under Section 2.16(b).
(f) If Canadian Taxes are required to be withheld or deducted from any payment made hereunder pursuant to applicable law or by the interpretation or administration thereof and the Corporation is required to pay Additional Amounts to a holder pursuant to this Section 10 2.16, or indemnify a holder under Section 2.16(c), the holder shall be made upon use its commercially reasonable efforts to cooperate with the first day following Corporation in taking any action to dispute, object to or appeal the six-month anniversary liability of the termination holder for Canadian Taxes or in claiming a refund of amounts remitted as Canadian Taxes (or any objection or appeal in connection therewith) (collectively, “Tax Proceedings”). Without limiting the generality of the Employee’s employment; providedforegoing:
(i) The holder agrees that the Corporation shall, howeverat its own expense, that if have the amounts right to initiate and conduct and have carriage and control of such payments cannot be finally determined the Tax Proceedings and where necessary for the purposes of the Tax Act in the name of, and on or before such daybehalf of, the Company holder.
(ii) The holder shall pay use its commercially reasonable efforts to do all acts and sign all documents that may be necessary or desirable in order to initiate or conduct the Employee Tax Proceedings where such Tax Proceedings need to be initiated or conducted in the name of, or on behalf of, the holder.
(iii) If the holder receives a refund of any amount with respect to Canadian Taxes (including interest, on such day an estimaterefund, as determined in good faith by the Employee, of the minimum amount of such payments to if any) for which the Employee is clearly entitled. The Company Corporation grossed up the holder, the holder shall forthwith pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of any such refund (including interest, on such refund, if any less any applicable withholding tax), to such extent, to the estimated payments exceeds Corporation and hereby assigns the amount subsequently determined right to have been dueany such refund, to such extent, to the Corporation. For certainty, the Employee holder shall repay such excess provide any information regarding itself and/or its beneficial owners to the Company on Corporation as may be desirable or necessary to permit the fifth (5th) business day after calculation Corporation to comply with its withholding obligations and advance any Tax Proceedings. To the extent the holder incurs any reasonable expense or liability in connection with its activities pursuant to this Section 2.16(e), the Corporation shall reimburse and indemnify the holder within two Business Days of request by the holder. The Corporation shall not disclose any information provided herein without the express written consent of the correct amount holder, and demand by the Company (together with interest at 120% of the rate shall not use any information provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 102.16 for any purpose other than in connection with the Tax Proceedings.
(g) In order to assist the Corporation in complying with this Section 2.16, the Trustees will request from the Depository and provide to the date Corporation within two Business Days of payment at each record date, a rate equal to 120% list of Depository participants who hold Debentures as of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)record date.
Appears in 2 contracts
Samples: Convertible Debenture Indenture (Energy Fuels Inc), Convertible Debenture Indenture (Energy Fuels Inc)
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement or in any other agreement between the Company and the Executive or in any stock option or other benefit plan to the contrarycontrary notwithstanding, if and except as set forth below, in the event that it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation (i) payments, benefits and distributions pursuant regard to any additional payments required under this Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award10) (all such payments, benefits and distributions being referred to herein as a “Gross PaymentsPayment”), ) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee Executive with respect to the such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company Executive shall pay be entitled to the Employee receive an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee Executive 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 Excise Tax imposed on upon the Gross-Up Payment, the Employee Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on upon the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all All determinations required to be made under this Section 10, including, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up PaymentPayment and the assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized certified public accounting firm designated to be selected by the Company (the “Accounting Firm”) ), which shall provide detailed supporting calculations both to the Company and the Employee Executive within fifteen (15) business days after of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee Executive as provided soon as administratively practicable following the Company’s receipt of the Accounting Firm’s detailed calculations as described in this Section 10(e10(b), but in no event later than the last day of the calendar year immediately following the calendar year in which the Executive first remits the Payment to which the Gross-Up Payment relates. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. Executive.
(c) As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunderCode, it is possible that the amount of the Gross-Up Payments which will not have been made Payment determined by the Company should have been made Accounting Firm to be due to (or on behalf of) the Executive was lower than the amount actually due (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c10(d) and the Employee Executive thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment plus any interest and penalties incurred as a result of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Executive.
(cd) The Employee Executive 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 the any Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business thirty calendar days after the Employee Executive 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. The Employee Executive shall not pay such claim prior to the expiration of the 30thirty-day period following the date on which it he gives 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 the Employee Executive in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall:
Executive 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;
Company and reasonably acceptable to the Executive, (iii) cooperate with the Company in good faith in order to effectively to contest such claim; and
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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, for any income taxes or Excise Tax or income or employment tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee Executive 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, howeverfurther, that if the Company directs the Employee Executive to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the EmployeeExecutive, on an interest-free basis, and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, from any income taxes or Excise Tax or income or employment 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; and further provided provided, further, that any extension of if the Executive is required to extend the statute of limitations relating to payment of taxes for enable the taxable year of Company to contest such claim, the Employee with respect to which such contested amount is claimed to be due is limited Executive may limit this extension solely to such contested amount. Furthermore, the 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 the Employee Executive 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 2 contracts
Samples: Employment Agreement (LVB Acquisition, Inc.), Employment Agreement (Biomet Inc)
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary notwithstanding, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation ) (a "Payment") (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “"Excise Tax”)") or (ii) is made pursuant to a Change In Control, then the Company Employee shall pay be entitled to the Employee receive an additional payment (a “"Gross-Up Payment”") in an amount such that after the payment by the Employee 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 Excise Tax imposed on the payment and Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to (x) the Payment plus (y) the Excise Tax (if any) imposed on upon the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Payment and Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 1010(c), all determinations required to be made under this Section 10, including, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “"Accounting Firm”") which shall provide detailed supporting calculations both to the Company and the Employee Executive within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of in Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e)Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the EmployeeExecutive. As a result of the uncertainty in the application of Section section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“"Underpayment”"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee Executive thereafter is required to make a payment of any income taxes or 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 the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Executive.
(c) The Employee Executive 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee Executive 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. The Employee Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee Executive in writing prior to the expiration of such period that it desires to contest such claim, the Employee Executive 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, for any income taxes or 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. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 1010(c), 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 the Employee Executive to pay the tax claimed and sue xxx for a refund or contest the claim in any permissible manner, and the Employee Executive 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, however, that if the Company directs the Employee Executive to pay such claim and sue xxx for a refund, the Company shall advance the amount of such payment to the EmployeeExecutive, on an interest-free basis, and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, from any income taxes or 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s 's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee Executive 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.
(d) If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to Section 1010(c), the Employee Executive becomes entitled to receive any refund with respect to such claim, the Employee Executive shall (subject to the Company’s 's complying with the requirements of Section 10) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to Section 1010(c), a determination is made that the Employee Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 hereof shall be made upon not later than the first tenth (10th) day following the six-month anniversary of the termination of the Employee’s Executive's employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee Executive on such day an estimate, as determined in good faith by the Employee, Executive of the minimum amount of such payments to which the Employee Executive is clearly entitled. The Company entitled and shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section section 1274(b)(2)(B) of the Code) on as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the date specified for payment termination of the initial estimateExecutive's employment. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess shall constitute a loan by the Company to the Company Executive, payable on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee Executive shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 2 contracts
Samples: Change of Control Agreement (Equitable Resources Inc /Pa/), Change of Control Agreement (Equitable Resources Inc /Pa/)
Tax gross-up. (a) Notwithstanding anything If any of the payments provided for in this Agreement to (the contrary, if it shall be determined that “Contract Payments”) or any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit portion of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control Total Payments (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (ias defined below) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would will be subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise taxCode, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company or the Bank shall pay to the Employee Executive, no later than the fifth day following the earlier of the date on which such payment is made and the Termination Date, an additional payment amount (a the “Gross-Up Payment”) in an amount such that after the payment net amount retained by the Employee Executive, after deduction of all taxes (including any interest or penalties imposed with respect to Excise Tax on the Contract Payments and such taxes), including, without limitation, any income taxes (other Total Payments and any interest federal and penalties imposed with respect thereto) state and local income, employment and other taxes and Excise Tax imposed on upon the payment provided for by this subsection, shall be equal to the Contract Payments and such other Total Payments.
(b) For purposes of determining whether any payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with an event described in Section 280(G)(b)(2)(A)(i) of the Code (hereinafter, a “Section 280 Event”), or the Executive’s termination of employment pursuant to the terms of any plan, arrangement or agreement with the Company or the Bank, their successors, any person whose actions result in a Section 280 Event or any person affiliated with the Company or the Bank or such person (together with the Contract Payments, the “Total Payments”), shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code except to the extent that, in the opinion of tax counsel selected by the Company’s independent auditors and acceptable to the Executive, the Total Payments do not constitute parachute payments, (ii) all “excess parachute payments” within the meaning of Section 280G(b)(l) shall be treated as subject to the Excise Tax except to the extent that, in the opinion of such tax counsel, such excess parachute payments represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4)(B) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company’s or Bank’s independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Employee retains an Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Termination Date, net of the maximum reduction in federal income taxes which could be obtained from deductions of such state and local taxes.
(c) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive’s employment, the Executive shall repay to the Company or the Bank at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment equal attributable to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of such reduction (plus the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior Payment attributable to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending Excise Tax and federal and state and local income tax imposed on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably requested Gross-Up Payment being repaid by the Company relating to Executive if such claim;
(ii) take such action repayment results in connection with contesting such claim as the Company shall reasonably request a reduction 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including and/or a federal and state and local income tax deduction) plus interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest repayment at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding In the foregoing provisions of this subsection 10(e), all such amounts payable by event that the Company shall be paid by Excise Tax is determined to exceed the end amount taken into account hereunder at the time of the Employeetermination of the Executive’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case employment (including by reasons of a tax audit or litigation addressing any payment the existence or amount of a tax liability, by which cannot be determined at the end time of the Employee’s taxable year following Gross-Up Payment), the Employee’s taxable year Company or the Bank shall make an additional Gross-Up Payment in which respect of such excess (plus any interest payable with respect to such excess) at the taxes time that are the subject amount of audit or litigation are remitted such excess is fully determined.
(d) For purposes of this Section 5, any reference to the taxing authority (Executive shall be deemed to include the Executive’s surviving spouse, estate, and/or beneficiaries with respect to payments or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)adjustments provided by this Section 5.
Appears in 2 contracts
Samples: Employment Agreement (Coast Financial Holdings Inc), Employment Agreement (Coast Financial Holdings Inc)
Tax gross-up. (a) Notwithstanding anything in this Agreement All payments to be made by the contrary, if it Borrower to any Lender under the Finance Documents shall be determined that any payments, benefits made free and distributions due under this Agreement clear of and those which are otherwise payable without deduction for or distributable on account of Tax (other than a FATCA Deduction) unless the Borrower is required to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with make such a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be payment subject to the excise tax imposed by Section 4999 deduction or withholding of Tax (other than a FATCA Deduction), in which case the Code or any interest or penalties are incurred sum payable by the Employee with Borrower (in respect of which such deduction or withholding is required to be made) shall be increased to the excise tax (extent necessary to ensure that such excise tax, together with Lender receives a sum net of any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee of all taxes (including any interest deduction or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment withholding equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if sum which it shall would have received had no such deduction or withholding been made or required to be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionmade.
(b) Subject to If the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter Borrower is required to make a payment of any income taxes or Excise Tax, tax deduction (other than a FATCA Deduction) the Accounting Firm Borrower shall determine the amount of the Underpayment make that has occurred tax deduction and any such Underpayment shall be paid by payment required in connection with that tax deduction within the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, time allowed and in the case of a tax audit or litigation addressing the existence or minimum amount of a tax liability, required by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)law.
(c) The Employee shall notify Borrower is not required to make an increased payment under clause 8.1
(a) to a Lender, if the Company tax deduction in writing question is in respect of any claim Tax imposed by the Internal Revenue Service thatUnited Kingdom or the United States of America or any taxing authority of or in the United States of America and, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee is informed in writing of such claim and shall apprise the Company of the nature of such claim and on the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is falls due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably requested by Borrower is able to demonstrate that the Company relating payment could have been made to such claimthat Lender without the tax deduction had that Lender complied with its obligations under clause 8.1(e) below;
(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time Tax would not have been levied or imposed but for that Lender’s failure to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;perform its obligations under clause 8.1(d) below; or
(iii) cooperate with the Company such Tax would not have been levied or imposed but for that Lender changing its Facility Office from that specified in good faith in order effectively clause 32.2 (Addresses) other than a change made pursuant to contest such claim; and
clause 12 (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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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 authorityMitigation).
(d) If, after Each Lender shall deliver to the receipt Agent for transmission to the Borrower (and/or such other persons as the Borrower designates) two copies (or such other number as may be specified by the Employee Borrower in order to comply with then applicable requirements of an amount advanced by U.S. law) of duly executed U.S. Internal Revenue Service Forms W 8BEN, W 8ECI, W 8IMY or any successor to any such form (and, where any Lender is claiming exemption from U.S. federal income and withholding tax under Section 871(h) or 881(c) of the Company pursuant U.S. Tax Code a statement that it is not a person described in Section 881(c)(3) of the U.S. Tax Code) but only so long as that Lender remains lawfully able to Section 10do so, and/or such other forms, certificates and documentation upon request of the Employee becomes Borrower as may be necessary or appropriate to establish, in each case, that it is entitled to receive any refund payments under the Finance Documents without a tax deduction for U.S. federal income or withholding tax or with respect to such claima tax deduction at a reduced rate (in each case, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, other than a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the CodeFATCA Deduction). In A Lender shall deliver the event the Company should fail to pay when due the amounts forms, certificates and documentation described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).clause 8.1
Appears in 2 contracts
Samples: Standby Letter of Credit Facility (HCC Insurance Holdings Inc/De/), Standby Letter of Credit Facility (HCC Insurance Holdings Inc/De/)
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary ------------ notwithstanding and except as provided in Section 5.1(c) or as set forth in paragraph (b) of this Section 5.2, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation (i) payments, benefits and distributions pursuant regard to any additional payments required under this Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award5.2) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), a "Subject Payment") would be subject ------- ------- to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the such excise tax (such excise tax, together with any such interest and penalties, are being hereinafter collectively referred to as the “"Excise Tax”"), then the Company following provisions ------ --- shall pay be applicable:
(a) The Employee shall be entitled to the Employee receive an additional payment (a “"Gross-Up up Payment”") in an amount such that after the payment by the Employee of all -------- ------- taxes (including any interest or penalties imposed with respect to such taxes), including, including without limitation, limitation any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up up Payment, the Employee retains an amount of the Gross-Up up Payment equal to the Excise Tax imposed on upon the Gross Subject Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments .
(b) would not be subject give rise to the any Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the CodeTax, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up up Payment shall be made to the Employee. The reduction of Employee and the amounts payable hereunderSubject Payments, if applicablein the aggregate, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments reduced to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionReduced Amount.
(bc) Subject to the provisions of this Section 10, all All determinations required to be made under this Section 105.2, including, including whether and when a Gross-Up up Payment is required and the amount of such Gross-Up Paymentup Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized Xxxxxx Xxxxxxxx LLP or such other 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 the Employee within fifteen (15) business days after of the receipt of notice from the Employee that there has been a Subject Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Controlany Acquiring Person, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 2 contracts
Samples: Key Employee Retention Agreement (Lumonics Inc), Key Employee Retention Agreement (Lumonics Inc)
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Internal Revenue Code of 1986, as amended (the “Code”), resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e)within five days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or 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 the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon not later than the first tenth (10th) day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company entitled and shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the date specified for payment termination of the initial estimateEmployee’s employment. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess shall constitute a loan by the Company to the Company Employee, payable on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 2 contracts
Samples: Change of Control Agreement (Equitable Resources Inc /Pa/), Change of Control Agreement (Equitable Resources Inc /Pa/)
Tax gross-up. (a) Notwithstanding anything in this Agreement If any payment or benefit to which the contrary, if it shall be determined that any payments, benefits and distributions due Employee is entitled under this Agreement and those which are or otherwise payable from SPSS or distributable to or for any of its affiliates constitutes a “parachute payment” within the benefit meaning of section 280G of the Code and if, as a result thereof, the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be is subject to the excise a tax imposed by Section under section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the an “Excise Tax”), then the Company SPSS shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no GrossMake-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Whole Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both be equal to the Company and the Employee within fifteen sum of (15i) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred Excise Tax, plus (ii) all income, excise and other applicable taxes imposed on the Employee under the laws of any such Underpayment Federal, state or local government or taxing authority by reason of the payments required under Sections 8(a)(i) and 8(a)(ii). The Make-Whole Payment shall be paid by within 15 days after the Company to or for Employee notifies SPSS in writing that he has remitted the benefit applicable taxes but in no event later than the last day of the Employee on the thirtieth (30th) day calendar year following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in applicable taxes. The determination of whether the case Employee is entitled to a Make-Whole Payment pursuant to this Section 8 and the amount thereof shall be made by an accounting firm selected by SPSS and the determination of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of such accounting firm shall be final and binding upon both SPSS and the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(cb) The Employee shall notify the Company SPSS in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Grossresult in an Excise Tax that would otherwise have required a Make-Up PaymentWhole Payment pursuant to Section 8(a). Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee is informed in writing of such claim and shall apprise the Company SPSS of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim Excise Tax prior to the expiration of the thirty (30-) day period following the date on which it he gives such notice to the Company SPSS (or such shorter period ending on the date that any payment of taxes the Excise Tax is due) (the “Consideration Period”). SPSS may take either of the following actions with respect to such claim is due). the claim:
(i) If SPSS does not desire to contest the Company claim, SPSS shall notify the Employee in writing and shall pay to the Employee a Make-Whole Payment, which Make-Whole Payment shall be paid within 15 days after the Employee notifies SPSS in writing that he has remitted the applicable taxes, but in no event later than the last day of the calendar year following the year in which the Employee remits the applicable taxes.
(ii) If SPSS desires to contest the claim, SPSS shall inform the Employee in writing prior to the expiration end of such period the Consideration Period that it desires to contest such claim, claim and the Employee shall:
(iA) give the Company SPSS any information reasonably requested by the Company SPSS relating to such claim;
(iiB) take such action in connection with contesting such claim as the Company SPSS 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 CompanySPSS;
(iiiC) cooperate with the Company SPSS in good faith in order to effectively to contest such claim; and
(ivD) permit the Company SPSS to participate in any proceedings relating to such claim; provided, however, that the Company SPSS shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest. If SPSS does not prevail in its contest for of the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax claim (including interest and penalties with respect thereto) imposed whether as a result of settlement or otherwise) such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be is required to be repaid and the amount of such advance shall offsetpay an Excise Tax, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company SPSS shall pay to the Employee on such day an estimatea Make-Whole Payment, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company Make-Whole Payment shall be paid by within 5 days after the end Employee notifies SPSS in writing that he has remitted the applicable taxes, but in no event later than the last day of the Employee’s taxable calendar year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)applicable taxes.
Appears in 2 contracts
Samples: Employment Agreement (SPSS Inc), Employment Agreement (SPSS Inc)
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary notwithstanding, if in the event it shall be determined that any paymentspayment or distribution made, benefits and distributions due under this Agreement and those which are otherwise payable or distributable benefit provided, by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation (i) payments, benefits and distributions pursuant regard to any additional payments required under this Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award5.6) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), a "Payment") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended and then in effect (the "Code") (or any similar excise tax) or any interest or penalties are incurred by the Employee Executive with respect to the such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “"Excise Tax”"), then the Company Executive shall pay be entitled to the Employee receive an additional payment (a “"Gross-Up Payment”") in an amount such that after the payment by the Employee Executive of all Federal, state, local or other taxes (including any interest or penalties imposed with respect to any such taxes), including, without limitation, any such income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up Payment, the Employee Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on upon the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(bi) Subject to the provisions of paragraph (ii) of this Section 105.6, all determinations required to be made under this Section 105.6, including, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up PaymentPayment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized accounting firm designated by the Company Coopers & Xxxxxxx (the “"Accounting Firm”) "), which shall provide detailed supporting calculations both to the Company and the Employee Executive within fifteen (15) business 20 calendar days after of the receipt of written notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Controlchange in control, the Executive shall have the right by written notice to the Company shall to appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the CompanyCompany and shall be paid by the Company upon demand of the Executive as incurred or billed by the Accounting Firm. Any Gross-Up Payment, as determined pursuant to this Section 105.6, shall be paid by the Company to the Employee as provided in Section 10(e)Executive within five days of the receipt of the Accounting Firm's determination. Any determination by If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall be binding upon furnish the Company Executive with an unqualified written opinion in form and substance satisfactory to the EmployeeExecutive that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“"Underpayment”"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to described in paragraph (ii) of this Section 10(c) 5.6 and the Employee Executive thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination Executive within five days of the amount; provided, further, that all such amounts receipt of the Accounting Firm's determination. All determinations made by the Accounting Firm in connection with any Gross-Up Payment or Underpayment shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of binding upon the litigation)Company and the Executive.
(cii) The Employee Executive shall notify the Company in writing of any claim asserted in writing by the Internal Revenue Service to the Executive that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no not later than ten (10) business 60 days after the Employee Executive 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. The Employee Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives 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 the Employee Executive in writing prior to the expiration of such period that it desires to contest such claim, the Employee shallExecutive shall at the Company's expense:
(ia) give the Company any information reasonably requested by the Company relating to such claim;,
(iib) 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;,
(iiic) cooperate with the Company in good faith in order effectively to contest such claim; , and
(ivd) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly as incurred all costs and expenses (including additional interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, for any income taxes or Excise Tax or any Federal, state, local or other income or other tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 105.6, 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 the Employee Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee Executive 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, however, that if the Company directs the Employee Executive to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the EmployeeExecutive, on an interest-free basis, basis and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, from any income taxes or Excise Tax or Federal, state, local or other income or other 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s 's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee Executive 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.
(diii) If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to paragraph (ii) of this Section 105.6, the Employee Executive becomes entitled to receive any refund with respect to such claim, the Employee Executive shall (subject to the Company’s 's complying with the requirements of paragraph (ii) of this Section 105.6) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the upon receipt of such refundthereof. If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to paragraph (ii) of this Section 105.6, a determination is made that the Employee Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined Executive is subject to have been dueany Federal, the Employee shall repay such excess state, local or other income taxes or any interest or penalties relating thereto with respect to the Company on the fifth (5th) business day after calculation Executive's receipt of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive any non-cash consideration from the Company an from any transaction or event between the Company and the Executive (such income taxes, together with any such interest and penalties, are hereinafter referred to as the "Income Tax"), the Company shall lend the amount representing of such Income Tax to the Executive, subject to any applicable bank loan restrictions or public indenture restrictions. Such loan shall bear interest on any unpaid or untimely paid amounts at the lowest interest rate at which the Company borrows funds, shall be due and payable 10 years from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e)loan, all such amounts payable by the Company and shall be paid evidenced by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes ora full recourse, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)unsecured promissory note.
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in this Agreement to Conditional on and with effect from the contraryEffectiveness of the Merger, if it shall be determined that any paymentsdeduction or withholding for any present or future taxes, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options assessments or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 governmental charges of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up PaymentSwitzerland, the Employee retains an amount Hellenic Republic, The Netherlands, the Republic of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunderCyprus or, if applicable, shall be made by reducing first any other jurisdiction, (including any political subdivision or taxing authority thereof or therein) in which the payments under Sections 3(a)(i) and (ii), unless an alternative method Cypriot Guarantor changes its jurisdiction of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Paymentincorporation to, shall at any time be made required by a nationally recognized accounting firm designated by the Company such jurisdictions (the “Accounting Firm”or any such political subdivision or taxing authority thereof or therein) which shall provide detailed supporting calculations both in respect of any amounts to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company Cypriot Guarantor relating to principal of or interest on the guarantees provided by the Cypriot Guarantor hereby, the Cypriot Guarantor shall pay, as additional interest to the Employee Holders of the Outstanding Notes or any other Security guaranteed hereby, such additional amounts, as provided may be necessary in Section 10(e). Any determination by order that the Accounting Firm net amounts paid to such Holder, after such deduction or withholding, shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all less than such amounts shall as such Holder would otherwise be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted entitled to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings relating to such claimreceive; provided, however, that such amounts in respect of any deduction or withholding for any present or future taxes, assessments or other governmental charges of the Company shall bear and pay directly all costs and expenses Hellenic Republic or The Netherlands (including additional interest any political subdivision or taxing authority thereof or therein) shall be payable only to Holders (i) that are not resident in the Hellenic Republic for purposes of its tax and penaltiesthat do not have a Greek Tax Registration Number (AFM), (ii) incurred that are not resident in connection with such contest The Netherlands for the period commencing upon purposes of its tax and (iii) if applicable, that are not resident for tax purposes and are not registered with the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for authorities in any income taxes other applicable jurisdiction (political subdivision or Excise Tax (including interest and penalties with respect theretotaxing authority thereof or therein) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs Cypriot Guarantor is or becomes incorporated; and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, howeverfurther, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and Cypriot Guarantor shall not be required to be repaid and the amount make any payment of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided additional amounts for in this Section 10 shall be made upon the first day following the six-month anniversary or on account of the termination exceptions listed in paragraphs (1) to (9) (both inclusive) of Section 1301 of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Base Indenture.
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the The Company shall pay make all payments to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii)it without any Tax Deduction, unless an alternative method of reduction a Tax Deduction is elected required by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionlaw.
(b) Subject to The Company shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the provisions rate or the basis of this Section 10a Tax Deduction) notify the Administrative Agent accordingly. Similarly, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, Lender (or its Funding Agent) shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by notify the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees Master Servicer and expenses Administrative Agent on becoming so aware in respect of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment payable to that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Lender.
(c) The Employee shall notify If a Tax Deduction is required by law to be made by the Company, the amount of the payment due from the Company in writing shall be increased to an amount which (after making any Tax Deduction) leaves the recipient of any claim by the Internal Revenue Service that, if successful, would require such payment with an amount equal to the payment which would have been received by it if no Tax Deduction had been required.
(d) Each Lender that is not incorporated under the Company laws of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after United States or a State thereof or the Employee is informed in writing District 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee Columbia shall:
(i) give deliver to the Master Servicer, the Company, the Administrative Agent, the Collateral Agent and the related Funding Agent two (2) duly completed copies of United States Internal Revenue Service Form W-8ECI, W-8BEN, W-8BEN-E or W-8IMY, or successor applicable form and such other forms, certificates and documentation as may be necessary or appropriate to establish, in each case, that it is entitled to receive payments from the Company any information reasonably requested without a deduction for U.S. federal withholding tax or with a deduction at a reduced rate. In the case of a Lender that provides an Internal Revenue Service Form W-8BEN or W-8BEN-E, such Lender shall either (A) claim the benefit of a treaty that provides for a complete exemption from United States withholding tax for payments of interest or (B) claim the benefit of the U.S. “portfolio interest exemption” by also providing a certification that is not a “bank” making a loan under this Agreement in the ordinary course of its business within the meaning of Section 881(c)(3)(A) of the Code or a Person related to the Company relating to such claimin a manner described in Sections 871(h)(3)(B), 881(c)(3)(B) or 881(c)(3)(C) of the Code;
(ii) take such action in connection with contesting such claim as deliver to the Company shall reasonably request in writing from time to timeMaster Servicer, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;, the Collateral Agent, the Administrative Agent and the related Funding Agent two further copies of any such form or certification (A) on or before the date that any such form or certification expires or becomes obsolete, (B) after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Company, the Collateral Agent, the Administrative Agent or the related Funding Agent and (C) at the reasonable request of the Master Servicer, the Company, the Collateral Agent or the related Funding Agent; and
(iii) cooperate obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Company, the Collateral Agent, the Administrative Agent or the related Funding Agent; unless any change in treaty, law or regulation has occurred prior to, and is in effect on, the date on which any such delivery would otherwise be required which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender (or its Funding Agent) so advises the Company and the related Funding Agent. Each Lender shall certify to the Company, the Collateral Agent, the Administrative Agent and the related Funding Agent at the time it first becomes a Lender, and thereafter to the extent provided by law, (i) all such forms are true and complete, (ii) that it is entitled to receive payments under this Agreement and the other Transaction Documents without, or at a reduced rate of, withholding of any United States federal income taxes and (iii) that it is entitled to an exemption from United States backup withholding tax. Each Person that shall become a Lender or a Participant pursuant to Section 37.17 shall, upon the effectiveness of the related transfer, be required to provide to the Company, the Collateral Agent, the Administrative Agent, the Master Servicer and the related Funding Agent all of the forms and statements required pursuant to this Section; provided that in good faith in order effectively the case of a Participant such Participant shall furnish all such required forms and statements to contest the Lender from which the related participation shall have been purchased and such claim; and
(iv) permit Lender shall provide such forms to the Company to participate with a duly executed Form W-8IMY and withholding statement. If the Company, the Administrative Agent or the Collateral Agent has not received the forms set forth 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 1011.2(d), 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of withhold taxes from such payment to at the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final statutory rate and shall not be required obliged to be repaid and the amount of make increased payments under Section 11.2 until such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paidforms or other documents are delivered.
(e) The payments provided for in this Each Lender that is a United States Person within the meaning of Section 10 shall be made upon the first day following the six-month anniversary 7701(a)(30) of the termination Code shall deliver to the Master Servicer, the Company, the Administrative Agent, the Collateral Agent and the related Funding Agent two (2) duly completed copies of the Employee’s employment; providedUnited States Internal Revenue Service Form W-9 or any successor applicable form.
(f) If a payment made to a Lender under any LoanTransaction Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, howeveras applicable), that if such Lender shall deliver to the amounts of such payments cannot be finally determined on or before such dayCompany, the Company shall pay to Funding Agent and the Employee on Administrative Agent at the time or times prescribed by law and at such day an estimate, as determined in good faith time or times reasonably requested by the EmployeeCompany, of the minimum amount of Funding Agent or the Administrative Agent such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments documentation prescribed by applicable law (together with interest at 120% of the rate provided in including as prescribed by Section 1274(b)(2)(B1471(b)(3)(C)(i) of the Code) on and such additional documentation reasonably requested by the thirtieth Company, the Funding Agent or the Administrative Agent as may be necessary for the Company, the Funding Agent and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (30th) day f), “FATCA” shall include any amendments made to FATCA after the date specified for of this Agreement.
(g) The Company is not required to make any payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess under Section 11.2(c) to the Company extent such payment would be due as the result of (i) the relevant Funding Agent, Lender or Participant not providing the forms required by Section 11.2(d)(i), 11.2(d)(ii), 11.2(e) or 11.2(f) unless the failure to provide such forms is a result of a change after the date it became a Lender or a Participant under this Agreement in (or in the interpretation, administration or application of) any Requirement of Law or any published practice or concession of any relevant Taxation Authority, (ii) a law in effect on the fifth date on which such Lender becomes a party hereto or changes its lending office, except in each case to the extent that, pursuant to Section 11.2(c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, or (5thiii) business day after calculation of the correct amount and demand by FATCA.
(h) If the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail is required to pay when due the amounts described in this Section 10make a Tax Deduction, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by make that Tax Deduction and any payment required in connection with that Tax Deduction within the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, time allowed and in the case of minimum amount required by law.
(i) Within thirty (30) days after making either a tax audit Tax Deduction or litigation addressing any payment required in connection with that Tax Deduction, the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted Company shall deliver to each Funding Agent evidence reasonably satisfactory to the taxing authority Lender entitled to that payment that the Tax Deduction has been made or (or where as a result of such audit or litigation no taxes are remitted, applicable) any appropriate payment paid to the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)relevant Taxation Authority.
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary ------------- notwithstanding, if in the event it shall be determined that any paymentspayment or distribution made, benefits and distributions due under this Agreement and those which are otherwise payable or distributable benefit provided, by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation regard to any additional payments required under this Section 9 (ia 'Payment') payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended and then in effect (the 'Code') (or any similar excise tax) or any interest or penalties are incurred by the Employee Executive with respect to the such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “('Excise Tax”'), then the Company Executive shall pay be entitled to the Employee receive an additional payment (a “'Gross-Up Payment”') in an amount such that after the payment by the Employee Executive of all Federal, state, local or other taxes (including any interest or penalties imposed with respect to any such taxes), including, without limitation, any such income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up Payment, the Employee Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on upon the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a An Executive may receive Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but Section 9 whether or not below zero) to the maximum amount that could be paid to Executive actually receives other payments or benefits under the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionAgreement.
(bi) Subject to the provisions of paragraph (ii) of this Section 109, all determinations required to be made under this Section 109, including, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up PaymentPayment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized accounting firm designated by the Company Coopers & Xxxxxxx (the “"Accounting Firm”') which shall provide detailed supporting calculations both to the Company and the Employee Executive within fifteen (15) business 20 calendar days after of the receipt of written notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall have the right by written notice to the Company shall to appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the CompanyCompany and shall be paid by the Company upon demand of the Executive as incurred or billed by the Accounting Firm. Any Gross-Up Payment, as determined pursuant to this Section 109, shall be paid by the Company to the Employee as provided in Section 10(e)Executive within five days of the receipt of the Accounting Firm's determination. Any determination by If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall be binding upon furnish the Company Executive with an unqualified written opinion in form and substance satisfactory to the EmployeeExecutive that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“'Underpayment”'), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to described in paragraph (ii) of this Section 10(c) 9 and the Employee Executive thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination Executive within five days of the amount; provided, further, that all such amounts receipt of the Accounting Firm's determination. All determinations made by the Accounting Firm in connection with any Gross-Up Payment or Underpayment shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of binding upon the litigation)Company and the Executive.
(cii) The Employee Executive shall notify the Company in writing of any claim asserted in writing by the Internal Revenue Service to the Executive that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no not later than ten (10) business 60 days after the Employee Executive 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. The Employee Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives 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 the Employee Executive in writing prior to the expiration of such period that it desires to contest such claim, the Employee shallExecutive shall at the Company's expense:
(i) a. give the Company any information reasonably requested by the Company relating to such claim;.
(ii) b. 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) c. cooperate with the Company in good faith in order effectively to contest such claim; , and
(iv) d. permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly as incurred all costs and expenses (including additional interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, for any income taxes or Excise Tax or any Federal, state, local or other income or other tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 109, 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 the Employee Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee Executive 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, however, that if the Company directs the Employee Executive to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, Executive on an interest-free basis, basis and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, from any income taxes or Excise Tax or Federal, state, local or other income or other 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; and further provided that any extension of the statute status of limitations relating to payment of taxes for the taxable year of the Employee Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s 's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee Executive 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.
(diii) If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to paragraph (ii) of this Section 109, the Employee Executive becomes entitled to receive any refund with respect to such claim, the Employee Executive shall (subject to the Company’s 's complying with the requirements of paragraph (ii) of this Section 10) 9 promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the upon receipt of such refundthereof. If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to paragraph (ii) of this Section 109, a determination is made that the Employee Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary ------------ notwithstanding and except as provided in Section 5.1(c) or as set forth in paragraph (b) of this Section 5.2, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation (i) payments, benefits and distributions pursuant regard to any additional payments required under this Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award5.2) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), a "Subject Payment") would be subject ------- ------- to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the such excise tax (such excise tax, together with any such interest and penalties, are being hereinafter collectively referred to as the “"Excise Tax”"), then the Company following provisions ------ --- shall pay be applicable:
(a) The Employee shall be entitled to the Employee receive an additional payment (a “"Gross-Up up Payment”") in an amount such that after the payment by the Employee of all -------- ------- taxes (including any interest or penalties imposed with respect to such taxes), including, including without limitation, limitation any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up up Payment, the Employee retains an amount of the Gross-Up up Payment equal to the Excise Tax imposed on upon the Gross Subject Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments .
(b) would not be subject give rise to the any Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the CodeTax, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up up Payment shall be made to the Employee. The reduction of Employee and the amounts payable hereunderSubject Payments, if applicablein the aggregate, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments reduced to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionReduced Amount.
(bc) Subject to the provisions of this Section 10, all All determinations required to be made under this Section 105.2, including, including whether and when a Gross-Up up Payment is required and the amount of such Gross-Up Paymentup Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized Xxxxxx Xxxxxxxx LLP or such other 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 the Employee within fifteen (15) business days after of the receipt of notice from the Employee that there has been a Subject Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Controlany Acquiring Person, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in this Agreement In the event that the aggregate of all payments or benefits made or provided to the contrary, if it shall be determined that any payments, benefits and distributions due Executive under this Agreement Section 5 and those which are otherwise payable or distributable under all other plans and programs of NFP (the “Aggregate Payment”) is determined to or for the benefit constitute a Parachute Payment, as such term is defined in Section 280G(b)(2) of the Employee relating Internal Revenue Code, NFP shall pay to the termination of the Employee’s employment in connection with a change of control of the CompanyExecutive, including a Change of Control (whether paid or payable or distributed or distributable pursuant prior to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of time any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee of all taxes (including any interest or penalties imposed is payable with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Aggregate Payment, an additional amount which, after the Employee retains an amount imposition of the Gross-Up Payment all income and excise taxes thereon, is equal to the Excise Tax imposed on the Gross PaymentsAggregate Payment. The determination of whether the Aggregate Payment constitutes a Parachute Payment and, if so, the amount to be paid to the Executive and the time of payment pursuant to this Section 5(g) shall be made by KPMG or another independent auditor (the “Auditor”) jointly selected by NFP and the Executive and paid by NFP. The Auditor shall be a nationally recognized United States public accounting firm which has not, during the two years preceding the date of its selection, acted in any way on behalf of NFP or any affiliate thereof. Notwithstanding the foregoing provisions of this Section 10(a)foregoing, if it shall be determined in the event that the Employee is entitled to a Gross-Up Payment, but Auditor determines that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that Aggregate Payment is equal to or less than 10110% of the portion product of (i) three multiplied by (ii) the Executive’s Base Amount, as such term is defined in Section 280G(b)(3) of the Gross Payments that would be treated as “parachute payments” Internal Revenue Code and the regulations issued under Section 280G of the CodeInternal Revenue Code (particularly Q. 34 of such regulations), then the amounts payable to the Employee under this Agreement shall Aggregate Payment will be reduced (but not below zero) to by the maximum minimum amount that could be paid to as will result in no portion of the Employee without giving rise Aggregate Payment being subject to the Excise Tax (Tax; provided that the “Safe Harbor Cap”), and no Gross-Up Payment payments and/or benefits to be eliminated in effecting such reduction shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected identified by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionExecutive.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Samples: Employment Agreement (National Financial Partners Corp)
Tax gross-up. AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT/AHMAD — Page 15
(a) Notwithstanding anything in If, as a result of payments provided for under or pursuant to this Agreement to together with all other payments in the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable nature of compensation provided to or for the benefit of the Employee relating to the termination of the Employee’s employment Executive under any other agreement in connection with a change Change of control Control, Executive becomes subject to taxes of any state, local or federal taxing authority that would not have been imposed on such payments but for the Company, including occurrence of a Change of Control (whether paid Control, including any excise tax under Section 4999 of the Code an any successor or payable comparable provision, then, in addition to any other benefits provided under or distributed or distributable pursuant to the terms of this Agreement or otherwise, Company (including without limitation (iany successor to Company) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to Executive at the Employee an additional payment (a “Gross-Up Payment”) in time any such payments are made under or pursuant to this or the other agreements, an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax amount of any such taxes imposed or to be imposed on Executive (the Gross Payments. Notwithstanding amount of any such payment, the foregoing provisions of this Section 10(a“Parachute Tax Reimbursement”); provided, if it that such Parachute Tax Reimbursement shall in no event be determined that paid later than the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% end of the portion of calendar year following the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee calendar year in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionwhich such taxes are imposed upon Executive.
(b) Subject In addition, Company (including any successor to Company) shall “gross up” such Parachute Tax Reimbursement by paying to Executive at same time an additional amount equal to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the aggregate amount of any additional taxes (whether income taxes, excise taxes, special taxes, employment taxes or otherwise) that are or will be payable by Executive as a result of the Parachute Tax Reimbursement being paid or payable to Executive and/or as a result of the additional amounts paid or payable to Executive pursuant to this sentence, such Grossthat after payment of such additional taxes Executive shall have been paid on a net after-Up Payment, tax basis an amount equal to the Parachute Tax Reimbursement.
(c) The amount of any Parachute Tax Reimbursement and of any such gross-up amounts shall be made determined by a nationally recognized accounting firm designated selected by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Paymentwith all such cost borne by Company), or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individualwhose determination, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10absent manifest error, shall be paid by the Company to the Employee treated as provided in Section 10(e). Any conclusive and binding absent a binding determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible governmental taxing authority that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the greater amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Executive.
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in Although the parties intend for this Agreement Merger to qualify as a tax-free reorganization under the provisions of Section 368(a) of the Code, if for any reason any portion of the Merger Consideration is taxable to any of the SHAREHOLDERS (such Taxes are referred to as the "Merger Tax"), TRC shall pay an additional amount (the "Additional Amount") to the contrarySHAREHOLDERS so that, if it shall be determined that after payment of any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable Taxes attributable to or for the benefit receipt of the Employee relating Additional Amount, the SHAREHOLDER has a net amount equal to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation sum of: (i) paymentsthe amount of the Merger Tax; (ii) any interest and penalties due with respect of the Merger Tax; (iii) any reasonable costs incurred in contesting the Merger Tax or the interest and penalties thereon; (iv) any reasonable costs incurred by the SHAREHOLDER in collecting the Additional Amount; and (v), benefits if a SHAREHOLDER pays an item described in clauses (i) through (iv) prior to the receipt of the Additional Amount, then an interest amount computed at the rate of 8% per annum on such payment from the date of the payment until the SHAREHOLDER received the Additional Amount. TRC has the exclusive right in its sole discretion to contest the Merger Tax and distributions pursuant the interest and penalties thereon on behalf of any SHAREHOLDER. Notwithstanding the foregoing, TRC shall not be responsible for paying any costs incurred by any SHAREHOLDER in contesting the Merger Tax and the interest and penalties thereon unless (i) such SHAREHOLDER issued TRC prior written notice of such SHAREHOLDER'S intent to Section 3 contest the Merger Tax and the interest and penalties thereon (within 30 days of this Agreement, such SHAREHOLDER'S receipt of a taxing authority's notice contesting the tax treatment of the Merger) and (ii) deemed amounts under TRC did not issue such SHAREHOLDER a written notice within 30 days of receiving such SHAREHOLDER'S notice that TRC will contest the Code, resulting from Merger Tax and the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed thereon on the Gross-Up Payment, the Employee retains an amount behalf of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionsuch SHAREHOLDER.
(b) Subject The provisions of Section 11.5(a) shall not apply to the provisions extent the Merger Tax is solely attributable to a specific action (i) of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company TEXONA (the “Accounting Firm”or any affiliates) which shall provide detailed supporting calculations both prior to the Company and the Employee within fifteen Effective Time or (15ii) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)SHAREHOLDER at any time.
(c) The Employee Additional Amount under Section 11.5(a) shall notify be payable in TRC Common Stock (that is registered for issuance or resale with the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company Securities and Exchange Commission and listed on NASDAQ as of the Gross-Up Paymentdate such TRC Common Stock is issued) within 120 days after written notice from a SHAREHOLDER that an Additional Amount is due under Section 11.5(a). Such notification For this purpose, the shares of TRC Common Stock to be issued shall be given as soon as practicable but no later than ten (10) business days after valued on the Employee is informed in writing of such claim and shall apprise the Company basis of the nature arithmetic average of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim closing sales prices of a share of TRC Common Stock, as reported by NASDAQ Automated Quotations System, for the ten consecutive trading days ending at least five trading days prior to the expiration date the SHAREHOLDER requests TRC to issue the Additional Amount pursuant to a notice under Section 12.2. Any fractional shares due as a portion of the 30-day period following the date on which it gives such notice Additional Amount shall be rounded to the Company (or such shorter period ending on the date any payment nearest whole share of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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 authorityTRC Common Stock.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in this Agreement to In the contrary, if it shall be determined event that any paymentspayment or distribution made, benefits and distributions due under this Agreement and those which are otherwise payable or distributable benefit provided, by the Company or any of its affiliates to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control Executive (whether paid or payable or distributed or distributable distributable) pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration program or arrangement of the vesting Company or any of its affiliates but determined without regard to any stock options or other equity-based incentive award) additional payments required under this Section 11 (all such payments, benefits and distributions being referred to herein as collectively the “Gross Payments”), ) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended and then in effect (the “Code”) (or any similar excise tax) or any interest or penalties are incurred by the Employee Executive with respect to the such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company Executive shall pay be entitled to the Employee receive an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee Executive of all Federal, state, local or other taxes (including any interest or penalties imposed with respect to any such taxes), including, without limitation, any such income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up Payment, the Employee Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on upon the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a The Executive may receive Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but Section 11 whether or not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the Executive actually receives other payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable or benefits under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionAgreement.
(b) Subject to the provisions of subsection (c) of this Section 1011, all determinations required to be made under this Section 1011, including, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up PaymentPayment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized independent accounting firm designated by mutually agreeable to the Company and the Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee Executive within fifteen (15) business 20 calendar days after of the receipt of written notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the CompanyCompany and shall be paid by the Company upon demand of the Executive as incurred or billed by the Accounting Firm. Any Gross-Up Payment, as determined pursuant to this Section 1011, shall be paid by the Company to the Employee as provided in Section 10(e)Executive within five days of the receipt of the Accounting Firm’s determination. Any determination by If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall be binding upon furnish the Company Executive with an unqualified written opinion in form and substance satisfactory to the EmployeeExecutive that failure to report the Excise Tax on the Executive’s applicable federal income tax return would not result in the imposition of a negligence or similar penalty. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to described in subsection (c) of this Section 10(c) 11 and the Employee Executive thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination Executive within five days of the amount; provided, further, that all such amounts receipt of the Accounting Firm’s determination. All determinations made by the Accounting Firm in connection with any Gross-Up Payment or Underpayment shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of binding upon the litigation)Company and the Executive.
(c) The Employee Executive shall notify the Company in writing of any claim asserted in writing by the Internal Revenue Service to the Executive that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no not later than ten (10) business 60 days after the Employee Executive 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. The Employee Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives 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 the Employee Executive in writing prior to the expiration of such period that it desires to contest such claim, the Employee shallExecutive shall at the Company’s expense:
(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 effectively to 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 as incurred all costs and expenses (including additional interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, for any income taxes or Excise Tax or any Federal, state, local or other income or other tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 1011, 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 the Employee Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee Executive 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, however, that if the Company directs the Employee Executive to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, Executive on an interest-free basis, basis and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, from any income taxes or Excise Tax or Federal, state, local or other income or other 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee Executive 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.
(d) If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to subsection (c) of this Section 1011, the Employee Executive becomes entitled to receive any refund with respect to such claim, the Employee Executive shall (subject to the Company’s complying with the requirements of subsection (c) of this Section 1011) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the upon receipt of such refundthereof. If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to subsection (c) of this Section 1011, a determination is made that the Employee Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary ------------ notwithstanding and except as provided in Section 5.1(c) or as set forth in paragraph (b) of this Section 5.2, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation (i) payments, benefits and distributions pursuant regard to any additional payments required under this Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award5.2) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), a "Subject Payment") ------- -------- would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the such excise tax (such excise tax, together with any such interest and penalties, are being hereinafter collectively referred to as the “"Excise Tax”"), then the Company following ------ --- provisions shall pay be applicable:
(a) The Employee shall be entitled to the Employee receive an additional payment (a “"Gross-Up up Payment”") in an amount such that after the payment by the Employee of --------- -------- all taxes (including any interest or penalties imposed with respect to such taxes), including, including without limitation, limitation any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up up Payment, the Employee retains an amount of the Gross-Up up Payment equal to the Excise Tax imposed on upon the Gross Subject Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments .
(b) would not be subject give rise to the any Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the CodeTax, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up up Payment shall be made to the Employee. The reduction of Employee and the amounts payable hereunderSubject Payments, if applicablein the aggregate, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments reduced to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionReduced Amount.
(bc) Subject to the provisions of this Section 10, all All determinations required to be made under this Section 105.2, including, including whether and when a Gross-Up up Payment is required and the amount of such Gross-Up Paymentup Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized Xxxxxx Xxxxxxxx LLP or such other 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 the Employee within fifteen (15) business days after of the receipt of notice from the Employee that there has been a Subject Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Controlany Acquiring Person, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (ai) Notwithstanding anything in this Agreement In the event that the Executive becomes entitled to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment payments in connection with a change Change in Control or his termination of control employment (the "Payments"), if any of the CompanyPayments will be subject to the tax imposed by Section 4999 of the Code (or any similar tax that may hereafter be imposed) (the "Excise Tax"), including the Company shall pay to Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by him, after deduction of any Excise Tax on the Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this paragraph, shall be equal to the Payments. For purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, (a) any other payments or benefits received or to be received by Executive in connection with a Change of Control or his termination of employment (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany plan, including without limitation arrangement or agreement with the Company or any person whose actions result in a Change of Control or any person affiliated with the Company or such person) shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company's independent auditors, and consented to in writing by the Executive, which consent shall not be unreasonably withheld, such other payments or benefits (iin whole or in part) do not constitute parachute payments, benefits and distributions pursuant or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered before the date of the change within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax, (b) the amount of the Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (1) the total amount of the Payments or (2) the amount of excess parachute payments within the meaning of Section 3 of this Agreement280G(b)(1) (after applying clause (a), above), and (iic) deemed amounts under the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code, resulting from . For purposes of determining the acceleration amount of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an Executive shall be deemed to pay federal, state and local income taxes at the highest marginal rate of federal, state and local income taxation in the calendar year in which the Gross-Up Payment is to be made. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of Executive's employment, he shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-Up Payment equal attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross PaymentsGross-Up Payment being repaid by Executive if such repayment results in a reduction in Excise Tax and/or a federal, state and local tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code, applied by treating the period between initial payment of the Gross-Up Payment and the repayment in respect thereof as the term of the debt instrument referred to in section 1274(d)(1)(A) of the Code. Notwithstanding In the foregoing provisions event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of this Section 10(a), if it shall the termination of Executive's employment (including by reason of any payment the existence or amount of which cannot be determined that at the Employee is entitled to a time of the Gross-Up Payment), but the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest payable with respect to such excess) at the time that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that of such excess is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no finally determined. A Gross-Up Payment shall be made to not later than the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Paymentfifth day, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon thereafter as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings relating to such claim; providedxxxxx xxxxx practicable, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be date Executive becomes subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employmentexcise tax; provided, however, that if the amounts of such payments payment cannot be finally determined on or before such day, the Company shall pay to the Employee Executive on such day an estimate, as determined in good faith by the EmployeeCompany, of the minimum amount of such payments to which the Employee is clearly entitled. The Company and shall pay the remainder of such payments payment (together with interest at 120% of the rate provided in under Section 1274(b)(2)(B) of the Code) on as soon as the amount can be determined but no later than the thirtieth (30th) day after the date specified for Executive becomes subject to the payment of the initial estimateexcise tax. In the event that the amount of the estimated payments payment exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to shall constitute a loan by the Company to Executive, payable on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Samples: Executive Employment Agreement (Long Island Lighting Co)
Tax gross-up. (a) Notwithstanding anything in this Agreement The following provisions shall apply with respect to the contrary, if it shall be determined that any payments, benefits and distributions due excise tax imposed under this Agreement and those which are otherwise payable or distributable to or for the benefit Section 4999 of the Employee relating to Internal Revenue Code as amended (the termination “Code”), (the “Excise Tax):
a. If any of the Employee’s employment payments or benefits received or to be received by Employee in connection with a change Change in Control or Employee’s termination of control of the Company, including a Change of Control employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation (i) paymentsarrangement of agreement with the Employer, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration any person whose actions result in a Change on Control of the vesting of Employer or any stock options person affiliated with the Employer or other equity-based incentive award) such person (all such payments, benefits and distributions being referred to herein as the “Gross Total Payments”), would ) will be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company Employer shall pay to the Employee an additional payment amount (a the “Gross-Up Payment”) in an amount such that the net amount retained by Employee after payment of (a) the payment by Excise Tax, if any, on the Employee of all taxes Total Payments and (including b) 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 Excise Tax imposed on and income tax due in respect of the Gross-Up Payment, shall equal the Employee retains an amount Total Payments. Such payment shall be made in a single lump sum within 10 days following the date of a determination that only such payment is required.
b. For purposes of determining whether any of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not Total payments will be subject to the Excise Tax if and the Gross amount of such Excise Tax, (i) any Total Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would shall be treated as “parachute payments” under (within the meaning of Section280G(b) (2) of the Code) unless, in the opinion of tax counsel selected by the Employer and reasonably acceptable to Employee, such payments or benefits (in whole or in part) should not constitute parachute payments, including by reason of Section 280G (b) (4) (A) of the Code, then and all “excess parachute payments” (within the amounts payable to meeting of Section 280G(b) (1) of the Employee under this Agreement Code) shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the “Safe Harbor Cap”meaning of Section 280G(b) (4) (B) of the Code), and no Gross-Up Payment shall be made or are otherwise not subject to the Employee. The reduction of the amounts payable hereunderExcise Tax, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method ) the value of reduction is elected any non-cash benefits or any deferred payment or benefit shall be determined by the Employee Employer’s independent auditors in a manner consistent accordance with the principles of Section 409A 280G(d) (3) of the Code. For purposes of reducing determining the Gross Payments to amount of the Safe Harbor CapGross-Up payment, only amounts payable under this Agreement (and no other Gross Payments) Employee shall be reduced. If deemed to pay federal income and employment taxes at the reduction highest marginal rate of federal income and employment taxation in the amounts payable hereunder would not result calendar year in a reduction of which the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required to be made and state and local income and employment taxes at the amount highest marginal rate of taxation in the state and locality of Employee’s residence on the date of termination of employment (or such other time as hereinafter described), net of the maximum reduction in federal income or employment taxes which could be obtained from deduction of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company state and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Companylocal taxes. In the event that the Accounting Firm Excise Tax is serving as accountant or auditor for subsequently determined to be less than the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required amount taken into account hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of termination of Employee’s employment (or such other time as is hereinafter described), Employee shall repay to the initial determination by Employer, at the Accounting Firm hereundertime that the amount of such reduction in Excise Tax is finally determined, it is possible that the portion of the Gross-Up Payments which will not have been made by Payment attributable to such reduction plus interest on the Company should have been made amount of such repayment at the applicable federal rate, as defined in Section 1274(b) (“Underpayment”), consistent with 2) (B) of the calculations required to be made hereunderCode. In the event that the Company exhausts its remedies pursuant Excise Tax is determined to Section 10(cexceed the amount taken into account hereunder at the time of the termination of Employee’s employment (or such other time as is hereinafter described) and the Employee thereafter is required to make a payment (including by reason of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing payment the existence or amount of a tax liability, by which cannot be determined at the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company time of the Gross-Up Payment. Such notification ), the Employer shall be given as soon as practicable but no later than ten (10) business days after the Employee is informed make an additional Gross-Up Payment in writing respect of such claim and shall apprise excess (plus any interest at the Company of the nature of such claim and the date on which such claim is requested to be paid. The applicable federal rate, penalties or additions payable by Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If excess) at the Company notifies the Employee in writing prior to the expiration of such period time that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the excess is finally determined. Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee Employer 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying each reasonably cooperate with the requirements of Section 10) pay to the Company the amount of such refund (together other in connection with any interest paid administrative or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing judicial proceedings concerning the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted liability for Excise Tax with respect to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Total payments.
Appears in 1 contract
Samples: Employment Agreement (Magellan Health Services Inc)
Tax gross-up. (a) Notwithstanding anything in this Agreement to In the contrary, if it shall be determined event that any paymentspayment or distribution made, benefits and distributions due under this Agreement and those which are otherwise payable or distributable benefit provided, by the Company or any of its affiliates to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control Executive (whether paid or payable or distributed or distributable distributable) pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration program or arrangement of the vesting Company or any of its affiliates but determined without regard to any stock options or other equity-based incentive awardadditional payments required under this Section 11 (collectively the "Payments") (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended and then in effect (the "Code") (or any similar excise tax) or any interest or penalties are incurred by the Employee Executive with respect to the such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “"Excise Tax”"), then the Company Executive shall pay be entitled to the Employee receive an additional payment (a “"Gross-Up Payment”") in an amount such that after the payment by the Employee Executive of all Federal, state, local or other taxes (including any interest or penalties imposed with respect to any such taxes), including, without limitation, any such income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up Payment, the Employee Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on upon the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a The Executive may receive Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but Section 11 whether or not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the Executive actually receives other payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable or benefits under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionAgreement.
(b) Subject to the provisions of subsection (c) of this Section 1011, all determinations required to be made under this Section 1011, including, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up PaymentPayment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized independent accounting firm designated by mutually agreeable to the Company and the Executive (the “"Accounting Firm”") which shall provide detailed supporting calculations both to the Company and the Employee Executive within fifteen (15) business 20 calendar days after of the receipt of written notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the CompanyCompany and shall be paid by the Company upon demand of the Executive as incurred or billed by the Accounting Firm. Any Gross-Up Payment, as determined pursuant to this Section 1011, shall be paid by the Company to the Employee as provided in Section 10(e)Executive within five days of the receipt of the Accounting Firm's determination. Any determination by If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall be binding upon furnish the Company Executive with an unqualified written opinion in form and substance satisfactory to the EmployeeExecutive that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“"Underpayment”"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to described in subsection (c) of this Section 10(c) 11 and the Employee Executive thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination Executive within five days of the amount; provided, further, that all such amounts receipt of the Accounting Firm's determination. All determinations made by the Accounting Firm in connection with any Gross- Up Payment or Underpayment shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of binding upon the litigation)Company and the Executive.
(c) The Employee Executive shall notify the Company in writing of any claim asserted in writing by the Internal Revenue Service to the Executive that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no not later than ten (10) business 60 days after the Employee Executive 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. The Employee Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives 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 the Employee Executive in writing prior to the expiration of such period that it desires to contest such claim, the Employee shallExecutive shall at the Company's expense:
(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 effectively to 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 as incurred all costs and expenses (including additional interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, for any income taxes or Excise Tax or any Federal, state, local or other income or other tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 1011, 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 the Employee Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee Executive 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, however, that if the Company directs the Employee Executive to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, Executive on an interest-free basis, basis and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, from any income taxes or Excise Tax or Federal, state, local or other income or other 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s 's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee Executive 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.
(d) If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to subsection (c) of this Section 1011, the Employee Executive becomes entitled to receive any refund with respect to such claim, the Employee Executive shall (subject to the Company’s 's complying with the requirements of subsection (c) of this Section 1011) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the upon receipt of such refundthereof. If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to subsection (c) of this Section 1011, a determination is made that the Employee Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrarycontrary herein, if it shall be determined that any payments, benefits and distributions due (i) MEDINET redomiciles or assigns its rights or obligations under this Agreement and those which are outside of Japan, (ii) as a result of such redomiciliation or assignment, MEDINET (or its assignee) is required by Applicable Law to withhold taxes, or such redomiciliation or assignment results in the imposition of Indirect Taxes that were not otherwise applicable, from or in respect of any amount payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of under this Agreement, and (iiiii) deemed amounts under such withholding taxes or Indirect Taxes exceed the Codeamount of withholding taxes or Indirect Taxes that would have been applicable but for such redomiciliation or assignment, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with then any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under Histogenics pursuant to this Agreement shall be reduced (but not below zero) increased to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of take into account such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income withholding taxes or Excise TaxIndirect Taxes as may be necessary so that, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee after making all required withholdings (including withholdings on the thirtieth (30thadditional amounts payable) day following the final determination of the amount; provided, further, that all and/or paying such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee shall be entitled to settle or contestIndirect Taxes, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of Histogenics receives an amount advanced by equal to the Company sum it would have received had no such increased withholding been made and no such Indirect Taxes had been imposed. The obligation to pay additional amounts pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee preceding sentence shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determinationapply, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offsethowever, to the extent thereofsuch increased withholding tax or Indirect Taxes would not have been imposed but for the assignment by Histogenics of its rights or obligations under this Agreement or the redomiciliation of Histogenics outside of the United States, to the amount extent such assignment or redomiciliation occurs after the redomiciliation or assignment by MEDINET described in the first sentence of Gross-Up Payment this Section 5.10(b). To the extent Histogenics receives additional amounts and its Affiliates, taken as a whole, actually realize an overall reduction in cash taxes otherwise due (determined on a with and without basis and taking into account only the taxes required to be paid.
(ewithheld under Applicable Law from any Payments made to Histogenics’ Affiliates) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of a foreign tax credit or a tax refund attributable to withholding taxes in respect of which Histogenics received additional amounts pursuant to this Section 5.10(b) (such audit reduction, a “Tax Benefit”), Histogenics shall ****. The foregoing sentence shall not be construed to require Histogenics to make available its tax returns to MEDINET. Furthermore, Histogenics and its Affiliates agree not to take any action ****. Solely for purposes of this Section 5.10(b), a Party’s “domicile” shall include its jurisdiction of incorporation or litigation no taxes are remitted, the end tax residence and a “redomiciliation” shall include a reincorporation or other action resulting in a change in tax residence of the Employee’s taxable year following applicable Party or its assignee. GDSVF&H\ ****Certain information has been omitted and filed separately with the Employee’s taxable year in which Commission. Confidential treatment has been requested with respect to the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).omitted portions. US-DOCS\97178923.5
Appears in 1 contract
Samples: License and Commercialization Agreement (Histogenics Corp)
Tax gross-up. (a) Notwithstanding anything If due to a Change in this Agreement to the contraryControl, if it shall be determined that any payments, benefits and distributions due benefit payable under this Agreement and those which are otherwise payable results in an excise tax, pursuant to Section 4999 of the Internal Revenue Code or distributable to similar state law, the Bank shall pay to, or for the benefit of of, the Employee an amount sufficient to pay (i) the excise tax owed and payable by the Employee, including, subject to the Employee’s good-faith efforts to comply with applicable law and regulations relating to the termination timely filing (including extensions for filing) of the Employee’s employment in connection with a change of control relevant tax returns and the payment of the Companytaxes when due, any interest and penalties thereon, (ii) any federal, state, local, and Medicare taxes owed and payable by the Employee, as a result of the Bank’s payment to Employee of the amount of such excise tax, including a Change of Control any interest and penalties thereon, and (whether paid or payable or distributed or distributable pursuant iii) any additional taxes, interest and penalties that are related to the terms of this Agreement or otherwise, including without limitation payments provided under (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under of this sentence, as is necessary to ensure that the CodeEmployee retains an amount, resulting from the acceleration after payment of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (and all such excise taxother taxes, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% the amount of the portion of Employee’s Change in Control Benefit. Further, if the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable amount paid to the Employee under this Agreement shall be reduced (but not below zeroSection 6(d) is later determined to the maximum amount that could be paid have resulted in, either, an overpayment to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting FirmOverpayment”) which shall provide detailed supporting calculations both or in an underpayment to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) Bank and the Employee thereafter is required to make a payment Employee, as applicable, shall take the following actions:
(1) in the case of any income taxes or Excise Taxan Underpayment, 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 Bank to, or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; providedof, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, ;
(2) in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claiman Overpayment, the Employee shall:
(i) give , at the Company any information reasonably requested by direction and expense of the Company relating to such claim;
(ii) Bank, take such action in connection with contesting such claim steps as reasonably necessary (including the Company shall filing of tax returns and claims for refund), follow reasonable instructions from, and procedures established by, the Bank, and otherwise 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 effectively Bank to contest correct such claim; and
(iv) permit the Company to participate in any proceedings relating to such claimOverpayment; provided, however, that that:
(a) Employee shall be obligated to return to the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest for Bank an amount no greater than the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an net after-tax basis, for any income taxes portion of the Overpayment that the Employee has retained or Excise Tax (including interest and penalties with respect thereto) imposed has recovered as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year refund from the applicable taxing authority, and
(b) this provision shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses interpreted in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on manner consistent with the foregoing provisions intent of this Section 106(d), 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 which intent is to make the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmlesswhole, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension the application of the statute excise tax, it being understood that the correction of limitations relating an Overpayment may result in the Employee’s repayment to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee Bank of an amount advanced by which is less than the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paidOverpayment.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in this Agreement The following provisions shall apply with respect to the contrary, if it shall be determined that any payments, benefits and distributions due excise tax imposed under this Agreement and those which are otherwise payable or distributable to or for the benefit Section 4999 of the Employee relating to Internal Revenue Code as amended (the termination "Code"), (the "Excise Tax"):
(i) If any of the Employee’s employment payments or benefits received or to be received by Executive in connection with a change Change in Control or Executive's termination of control of the Company, including a Change of Control employment (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation (i) paymentsarrangement or agreement with the Company, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration any person whose actions result in a Change in Control of the vesting of Company or any stock options person affiliated with the Company or other equity-based incentive awardsuch person (the "Total Payments")) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would will be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee Executive an additional payment amount (a “the "Gross-Up Payment”") in an amount such that the net amount retained by Executive after payment of (a) the payment by Excise Tax, if any, on the Employee of all taxes Total Payments and (including b) 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 Excise Tax imposed on and income tax due in respect of the Gross-Up Payment, shall equal the Employee retains an Total Payments. Such payment shall be made in a single lump sum within 10 days following the date a determination that only such payment is required.
(ii) For purposes of determining whether any of the Total Payments will be subject to Excise Tax and the amount of the Gross-Up Payment equal to the such Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a)Tax, if it (i) any Total Payments shall be determined that treated as "parachute payments" (within the Employee is entitled meaning of Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company and reasonably acceptable to a Gross-Up PaymentExecutive, but that such payments or benefits (in whole or in part) should not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Gross Payments would not be Code, and all "excess parachute payments" EMPLOYMENT AGREEMENT Steven J. Shulman (within the meaning of Section 280G(b)(1) of txx Xxxx) xxxxx xx treated as subject to the Excise Tax if unless, in the Gross Payments were reduced by an amount that is equal to opinion of such tax counsel, such excess parachute payments (in whole or less than 10% in part) represent reasonable compensation for services actually rendered (within the meaning of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G 280G(b)(4)(B) of the Code), then the amounts payable to the Employee under this Agreement shall be reduced (but or are otherwise not below zero) to the maximum amount that could be paid to the Employee without giving rise subject to the Excise Tax (the “Safe Harbor Cap”)Tax, and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method ) the value of reduction is elected any noncash benefits or any deferred payment or benefit shall be determined by the Employee Company's independent auditors in a manner consistent accordance with the principles of Section 409A 280G(d)(3) of the Code. For purposes of reducing determining the Gross Payments to amount of the Safe Harbor CapGross-Up Payment, only amounts payable under this Agreement (and no other Gross Payments) Executive shall be reduced. If deemed to pay federal income and employment taxes at the reduction highest marginal rate of federal income and employment taxation in the amounts payable hereunder would not result calendar year in a reduction of which the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required to be made and state and local income and employment taxes at the amount highest marginal rate of taxation in the state and locality of Executive's residence on the date of termination of employment (or such other time as hereinafter described), net of the maximum reduction in federal income or employment taxes which could be obtained from deduction of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company state and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Companylocal taxes. In the event that the Accounting Firm Excise Tax is serving as accountant or auditor for subsequently determined to be less than the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required amount taken into account hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it termination of Executive's employment (or such other time as is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”hereinafter described), consistent with Executive shall repay to the calculations required to be made hereunder. In Company, at the event time that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year reduction in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remittedExcise Tax is finally determined, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company portion of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect Payment attributable to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 reduction plus interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to repayment at the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee shall be entitled to settle or contestapplicable federal rate, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided defined in Section 1274(b)(2)(B) of the Code. Notwithstanding In the foregoing provisions of this subsection 10(e), all such amounts payable by event that the Company shall be paid by Excise Tax is determined to exceed the end amount taken into account hereunder at the time of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case termination of a tax audit Executive's employment (or litigation addressing such other time as is hereinafter described) (including by reason of any payment the existence or amount of a tax liability, by which cannot be determined at the end time of the Employee’s taxable year following Gross-Up Payment), the Employee’s taxable year Company shall make an additional Gross-Up Payment in which respect of such excess (plus any interest at the taxes applicable federal rate, penalties or additions payable by Executive with respect to such excess) at the time that are the subject amount of audit such excess is finally determined. Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or litigation are remitted judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Total Payments.
Appears in 1 contract
Samples: Employment Agreement (Magellan Health Services Inc)
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the The Company shall pay make all payments to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii)it without any Tax Deduction, unless an alternative method of reduction a Tax Deduction is elected required by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionlaw.
(b) Subject to The Company shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the provisions rate or the basis of this Section 10a Tax Deduction) notify the Administrative Agent accordingly. Similarly, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, Lender (or its Funding Agent) shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by notify the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees Master Servicer and expenses Administrative Agent on becoming so aware in respect of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment payable to that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Lender.
(c) The Employee shall notify If a Tax Deduction is required by law to be made by the Company, the amount of the payment due from the Company in writing shall be increased to an amount which (after making any Tax Deduction) leaves the recipient of any claim by the Internal Revenue Service that, if successful, would require such payment with an amount equal to the payment which would have been received by it if no Tax Deduction had been required.
(d) Each Lender that is not incorporated under the Company laws of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after United States or a State thereof or the Employee is informed in writing District 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee Columbia shall:
(i) give deliver to the Master Servicer, the Company, the Administrative Agent, the Collateral Agent and the related Funding Agent two (2) duly completed copies of United States Internal Revenue Service Form W-8ECI, W-8BEN or W-8IMY, or successor applicable form and such other forms, certificates and documentation as may be necessary or appropriate to establish, in each case, that it is entitled to receive payments from the Company any information reasonably requested without a deduction for U.S. federal withholding tax or with a deduction at a reduced rate. In the case of a Lender that provides an Internal Revenue Service Form W-8BEN, such Lender shall either (i) claim the benefit of a treaty that provides for a complete exemption from United States withholding tax for payments of interest or (ii) claim the benefit of the U.S. “portfolio interest exemption” by also providing a certification that is not a “bank” making a loan under this Agreement in the ordinary course of its business within the meaning of Section 881(c)(3)(A) of the Code or a Person related to the Company relating to such claimin a manner described in Sections 871(h)(3)(B), 881(c)(3)(B) or 881(c)(3)(C) of the Code;
(ii) take such action in connection with contesting such claim as deliver to the Company shall reasonably request in writing from time to timeMaster Servicer, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;, the Collateral Agent, the Administrative Agent and the related Funding Agent two further copies of any such form or certification (A) on or before the date that any such form or certification expires or becomes obsolete, (B) after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Company, the Collateral Agent, the Administrative Agent or the related Funding Agent and (C) at the reasonable request of the Master Servicer, the Company, the Collateral Agent or the related Funding Agent; and
(iii) cooperate obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Company, the Collateral Agent, the Administrative Agent or the related Funding Agent; unless any change in treaty, law or regulation has occurred prior to, and is in effect on, the date on which any such delivery would otherwise be required which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender (or its Funding Agent) so advises the Company and the related Funding Agent. Each Lender shall certify to the Company, the Collateral Agent, the Administrative Agent and the related Funding Agent at the time it first becomes a Lender, and thereafter to the extent provided by law, (i) all such forms are true and complete, (ii) that it is entitled to receive payments under this Agreement and the other Transaction Documents without, or at a reduced rate of, withholding of any United States federal income taxes and (iii) that it is entitled to an exemption from United States backup withholding tax. Each Person that shall become a Lender or a Participant pursuant to Section 37.17 shall, upon the effectiveness of the related transfer, be required to provide to the Company, the Collateral Agent, the Administrative Agent, the Master Servicer and the related Funding Agent all of the forms and statements required pursuant to this Section; provided that in good faith in order effectively the case of a Participant such Participant shall furnish all such required forms and statements to contest the Lender from which the related participation shall have been purchased and such claim; and
(iv) permit Lender shall provide such forms to the Company to participate with a duly executed Form W-8IMY and withholding statement. If the Company, the Administrative Agent or the Collateral Agent has not received the forms set forth 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 1011.2(d), 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of withhold taxes from such payment to at the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final statutory rate and shall not be required obliged to be repaid and the amount of make increased payments under Section 11.2 until such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paidforms or other documents are delivered.
(e) The payments provided for in this Each Lender that is a United States Person within the meaning of Section 10 shall be made upon the first day following the six-month anniversary 7701(a)(30) of the termination Code shall deliver to the Master Servicer, the Company, the Administrative Agent, the Collateral Agent and the related Funding Agent two (2) duly completed copies of the Employee’s employment; providedUnited States Internal Revenue Service Form W-9 or any successor applicable form.
(f) If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, howeveras applicable), that if such Lender shall deliver to the amounts of such payments cannot be finally determined on or before such dayCompany, the Company shall pay to Funding Agent and the Employee on Administrative Agent at the time or times prescribed by law and at such day an estimate, as determined in good faith time or times reasonably requested by the EmployeeCompany, of the minimum amount of Funding Agent or the Administrative Agent such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments documentation prescribed by applicable law (together with interest at 120% of the rate provided in including as prescribed by Section 1274(b)(2)(B1471(b)(3)(C)(i) of the Code) on and such additional documentation reasonably requested by the thirtieth Company, the Funding Agent or the Administrative Agent as may be necessary for the Company, the Funding Agent and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (30th) day f), “FATCA” shall include any amendments made to FATCA after the date specified for of this Agreement.
(g) The Company is not required to make any payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess under Section 11.2(c) to the Company extent such payment would be due as the result of (i) the relevant Funding Agent, Lender or Participant not providing the forms required by Section 11.2(d)(i), 11.2(d)(ii), 11.2(e) or 11.2(f) unless the failure to provide such forms is a result of a change after the date it became a Lender or a Participant under this Agreement in (or in the interpretation, administration or application of) any Requirement of Law or any published practice or concession of any relevant Taxation Authority, (ii) a law in effect on the fifth date on which such Lender changes its lending office, except in each case to the extent that, pursuant to Section 11.2(c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, or (5thiii) business day after calculation of the correct amount and demand by FATCA.
(h) If the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail is required to pay when due the amounts described in this Section 10make a Tax Deduction, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by make that Tax Deduction and any payment required in connection with that Tax Deduction within the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, time allowed and in the case of minimum amount required by law.
(i) Within thirty (30) days after making either a tax audit Tax Deduction or litigation addressing any payment required in connection with that Tax Deduction, the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted Company shall deliver to each Funding Agent evidence reasonably satisfactory to the taxing authority Lender entitled to that payment that the Tax Deduction has been made or (or where as a result of such audit or litigation no taxes are remitted, applicable) any appropriate payment paid to the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)relevant Taxation Authority.
Appears in 1 contract
Tax gross-up. Any and all payments by the Guarantor hereunder, and any amounts on account of interest or deemed interest, shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on net income or franchise taxes of the Bank by the jurisdiction in which such person is organized or has its principal office (aall such non-excluded taxes, levies, imposts, deductions, charges withholdings and liabilities, collectively or individually, “Taxes”). If the Guarantor shall be required to deduct any Taxes from or in respect of any sum payable hereunder to the Bank, (i) the sum payable shall be increased by the amount (an “additional amount”) necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Paragraph 1) the Bank shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) the Guarantor shall make such deductions and (iii) the Guarantor shall pay the full amount deducted to the relevant governmental authority in accordance with applicable law. Notwithstanding anything in this Agreement any other provision hereof to the contrary, if it the Bank assigns this Guaranty to any other Person prior to the occurrence of an Event of Default, then in no event shall the Guarantor be determined that responsible for the payment of any payments, benefits and distributions due Taxes or other sums under this Agreement and those which are otherwise payable or distributable to or for the benefit Paragraph 1 in excess of the Employee relating amount that the Guarantor would otherwise be responsible for if the Bank had not assigned this Guaranty. In addition, the Guarantor agrees to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional relevant governmental authority in accordance with applicable law any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment (a “Gross-Up Payment”) in an amount such that after made hereunder or from the payment by the Employee of all taxes (including any interest execution, delivery or penalties imposed registration of, or otherwise with respect to, this Guaranty (“Other Taxes”). The Guarantor shall deliver to the Bank official receipts, if any, in respect of any Taxes or Other Taxes payable hereunder promptly after payment of such taxes), Taxes or Other Taxes or other evidence of payment reasonably acceptable to the Agent. The Guarantor hereby indemnifies and agrees to hold the Bank harmless from and against Taxes and Other Taxes (including, without limitation, any income taxes (Taxes and any interest and penalties imposed with respect thereto) and Excise Tax Other Taxes imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only any amounts payable under this Agreement (and no other Gross PaymentsParagraph 1) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, includingpaid by such person, whether and when a Gross-Up Payment is required and the amount of or not such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, Taxes or such earlier time as requested by the CompanyOther Taxes were correctly or legally asserted. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, Such indemnification shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than within ten (10) business days after the Employee is informed in writing of such claim and shall apprise the Company of the nature of such claim and from the date on which any such claim is requested to be paid. The Employee shall not pay such claim prior to person makes written demand therefore specifying in reasonable detail the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear nature and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes Taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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 authorityOther Taxes.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything If any of the payments provided for in this Agreement to (the contrary, if it shall be determined that “Contract Payments”) or any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit portion of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control Total Payments (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (ias defined below) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would will be subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise taxCode, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company or the Bank shall pay to the Employee Executive, no later than the fifth day following the earlier of the date on which such payment is made and the Termination Date, an additional payment amount (a the “Gross-Up Payment”) in an amount such that after the payment net amount retained by the Employee Executive, after deduction of all taxes (including any interest or penalties imposed with respect to Excise Tax on the Contract Payments and such taxes), including, without limitation, any income taxes (other Total Payments and any interest federal and penalties imposed with respect thereto) state and local income, employment and other taxes and Excise Tax imposed on upon the payment provided for by this subsection, shall be equal to the Contract Payments and such other Total Payments.
(b) For purposes of determining whether any payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with an event described in Section 280(G)(b)(2)(A)(i) of the Code (hereinafter, a “Section 280 Event”), or the Executive’s termination of employment pursuant to the terms of any plan, arrangement or agreement with the Company or the Bank, their successors, any person whose actions result in a Section 280 Event or any person affiliated with the Company or the Bank or such person (together with the Contract Payments, the “Total Payments”), shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code except to the extent that, in the opinion of tax counsel selected by the Company’s independent auditors and acceptable to the Executive, the Total Payments do not constitute parachute payments, (ii) all “excess parachute payments” within the meaning of Section 280G(b)(l) shall be treated as subject to the Excise Tax except to the extent that, in the opinion of such tax counsel, such excess parachute payments represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4)(B) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company’s or Bank’s independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Employee retains an amount Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Termination Date, including, whether and when a Gross-Up Payment is required and net of the amount maximum reduction in federal income taxes which could be obtained from deductions of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company state and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)local taxes.
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Samples: Employment Agreement
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary notwithstanding, if in the event it shall be determined that any paymentspayment or distribution made, benefits and distributions due under this Agreement and those which are otherwise payable or distributable benefit provided, by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation regard to any additional payments required under this Section 9 (ia Payment') payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended and then in effect (the 'Code') (or any similar excise tax) or any interest or penalties are incurred by the Employee Executive with respect to the such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “('Excise Tax”'), then the Company Executive shall pay be entitled to the Employee receive an additional payment (a “'Gross-Up Payment”') in an amount such that after the payment by the Employee Executive of all Federal, state, local or other taxes (including any interest or penalties imposed with respect to any such taxes), including, without limitation, any such income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up Payment, the Employee Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on upon the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a An Executive may receive Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but Section 9 whether or not below zero) to the maximum amount that could be paid to Executive actually receives other payments or benefits under the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionAgreement.
(bi) Subject to the provisions of paragraph (ii) of this Section 109, all determinations required to be made under this Section 109, including, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up PaymentPayment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized accounting firm designated by the Company PricewaterhouseCoopers (the “"Accounting Firm”') which shall provide detailed supporting calculations both to the Company and the Employee Executive within fifteen (15) business 20 calendar days after of the receipt of written notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall have the right by written notice to the Company shall to appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the CompanyCompany and shall be paid by the Company upon demand of the Executive as incurred or billed by the Accounting Firm. Any Gross-Up Payment, as determined pursuant to this Section 109, shall be paid by the Company to the Employee as provided in Section 10(e)Executive within five days of the receipt of the Accounting Firm's determination. Any determination by If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall be binding upon furnish the Company Executive with an unqualified written opinion in form and substance satisfactory to the EmployeeExecutive that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“'Underpayment”'), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to described in paragraph (ii) of this Section 10(c) 9 and the Employee Executive thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination Executive within five days of the amount; provided, further, that all such amounts receipt of the Accounting Firm's determination. All determinations made by the Accounting Firm in connection with any Gross-Up Payment or Underpayment shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of binding upon the litigation)Company and the Executive.
(cii) The Employee Executive shall notify the Company in writing of any claim asserted in writing by the Internal Revenue Service to the Executive that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no not later than ten (10) business 60 days after the Employee Executive 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. The Employee Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives 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 the Employee Executive in writing prior to the expiration of such period that it desires to contest such claim, the Employee shallExecutive shall at the Company's expense:
(i) a. give the Company any information reasonably requested by the Company relating to such claim;.
(ii) b. 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) c. cooperate with the Company in good faith in order effectively to contest such claim; , and
(iv) d. permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly as incurred all costs and expenses (including additional interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, for any income taxes or Excise Tax or any Federal, state, local or other income or other tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 109, 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 the Employee Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee Executive 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, however, that if the Company directs the Employee Executive to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, Executive on an interest-free basis, basis and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, from any income taxes or Excise Tax or Federal, state, local or other income or other 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.)
(diii) If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to paragraph (ii) of this Section 109, the Employee Executive becomes entitled to receive any refund with respect to such claim, the Employee Executive shall (subject to the Company’s 's complying with the requirements of paragraph (ii) of this Section 10) 9 promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the upon receipt of such refundthereof. If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to paragraph (ii) of this Section 109, a determination is made that the Employee Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary ------------ notwithstanding and except as provided in Section 5.1(c) or as set forth in paragraph (b) of this Section 5.2, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation (i) payments, benefits and distributions pursuant regard to any additional payments required under this Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award5.2) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), a "Subject Payment") would be subject ------- -------- to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the such excise tax (such excise tax, together with any such interest and penalties, are being hereinafter collectively referred to as the “"Excise Tax”"), then the Company following provisions ------ shall pay be applicable:
(a) The Employee shall be entitled to the Employee receive an additional payment (a “"Gross-Up up Payment”") in an amount such that after the payment by the Employee of all --------- -------- taxes (including any interest or penalties imposed with respect to such taxes), including, including without limitation, limitation any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up up Payment, the Employee retains an amount of the Gross-Up up Payment equal to the Excise Tax imposed on upon the Gross Subject Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments .
(b) would not be subject give rise to the any Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the CodeTax, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up up Payment shall be made to the Employee. The reduction of Employee and the amounts payable hereunderSubject Payments, if applicablein the aggregate, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments reduced to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionReduced Amount.
(bc) Subject to the provisions of this Section 10, all All determinations required to be made under this Section 105.2, including, including whether and when a Gross-Up up Payment is required and the amount of such Gross-Up Paymentup Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized Xxxxxx Xxxxxxxx LLP or such other 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 the Employee within fifteen (15) business days after of the receipt of notice from the Employee that there has been a Subject Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Controlany Acquiring Person, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in this Agreement The following provisions shall apply with respect to the contrary, if it shall be determined that any payments, benefits and distributions due excise tax imposed under this Agreement and those which are otherwise payable or distributable to or for the benefit Section 4999 of the Employee relating to Internal Revenue Code as amended (the termination “Code”), (the “Excise Tax”):
(i) If any of the Employee’s employment payments or benefits received or to be received by Executive in connection with a change Change in Control or Executive’s termination of control of the Company, including a Change of Control employment (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation (i) paymentsarrangement or agreement with the Company, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration any person whose actions result in a Change in Control of the vesting of Company or any stock options person affiliated with the Company or other equity-based incentive award) such person (all such payments, benefits and distributions being referred to herein as the “Gross Total Payments”), would ) will be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee Executive an additional payment amount (a the “Gross-Up Payment”) in an amount such that the net amount retained by Executive after payment of (a) the payment by Excise Tax, if any, on the Employee of all taxes Total Payments and (including b) 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 Excise Tax imposed on and income tax due in respect of the Gross-Up Payment, shall equal the Employee retains an amount Total Payments. Such payment shall be made in a single lump sum within 10 days following the date a determination that only such payment is required (subject to Section 11).
(ii) For purposes of determining whether any of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Total Payments would not will be subject to the Excise Tax if and the Gross amount of such Excise Tax, (i) any Total Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would shall be treated as “parachute payments” under (within the meaning of Section 280G 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company and reasonably acceptable to Executive, such payments or benefits (in whole or in part) should not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Code, then and all “excess parachute payments” (within the amounts payable to meaning of Section 280G(b)(1) of the Employee under this Agreement Code) shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the “Safe Harbor Cap”meaning of Section 280G(b)(4)(B) of the Code), and no Gross-Up Payment shall be made or are otherwise not subject to the Employee. The reduction of the amounts payable hereunderExcise Tax, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method ) the value of reduction is elected any non-cash benefits or any deferred payment or benefit shall be determined by the Employee Company’s independent auditors in a manner consistent accordance with the principles of Section 409A 280G(d)(3) of the Code. For purposes of reducing determining the Gross Payments to amount of the Safe Harbor CapGross-Up Payment, only amounts payable under this Agreement (and no other Gross Payments) Executive shall be reduced. If deemed to pay federal income and employment taxes at the reduction highest marginal rate of federal income and employment taxation in the amounts payable hereunder would not result calendar year in a reduction of which the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required to be made and state and local income and employment taxes at the amount highest marginal rate of taxation in the state and locality of Executive’s residence on the date of termination of employment (or such other time as hereinafter described), net of the maximum reduction in federal income or employment taxes which could be obtained from deduction of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company state and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Companylocal taxes. In the event that the Accounting Firm Excise Tax is serving as accountant or auditor for subsequently determined to be less than the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required amount taken into account hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it termination of Executive’s employment (or such other time as is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”hereinafter described), consistent with Executive shall repay to the calculations required to be made hereunder. In Company, at the event time that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year reduction in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remittedExcise Tax is finally determined, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company portion of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect Payment attributable to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 reduction plus interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to repayment at the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee shall be entitled to settle or contestapplicable federal rate, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided defined in Section 1274(b)(2)(B) of the Code. Notwithstanding In the foregoing provisions of this subsection 10(e), all such amounts payable by event that the Company shall be paid by Excise Tax is determined to exceed the end amount taken into account hereunder at the time of the Employeetermination of Executive’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case employment (or such other time as is hereinafter described) (including by reason of a tax audit or litigation addressing any payment the existence or amount of a tax liability, by which cannot be determined at the end time of the Employee’s taxable year following Gross-Up Payment), the Employee’s taxable year Company shall make an additional Gross-Up Payment in which respect of such excess (plus any interest at the taxes applicable federal rate, penalties or additions payable by Executive with respect to such excess) at the time that are the subject amount of audit such excess is finally determined. Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or litigation are remitted judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Total Payments.
Appears in 1 contract
Samples: Employment Agreement (Magellan Health Services Inc)
Tax gross-up. 15.1 All sums payable under this agreement shall be paid free and clear of all deductions or withholdings unless the deduction or withholding is required by law. Notwithstanding anything to the contrary in this agreement, any compensatory amounts payable pursuant to or as contemplated by this agreement with respect to the sale of the U.S. Target shall be remitted to the applicable payor for payment to the applicable person through regular payroll procedures of the U.S. Target or its Subsidiaries, as applicable.
15.2 If the payer is required by law to make a deduction or withholding in respect of any sum payable to the recipient under this agreement, other than (i) the Consideration payable, (ii) any amounts representing interest, or (iii) any compensatory amounts (and to the extent any such amount is deducted or withheld, such amounts shall be deemed for all purposes of this agreement to have been paid and delivered to the person in respect of which such deduction or withholding was made), the payer shall, at the same time as the sum which is the subject of the deduction or withholding is payable, make a payment to the recipient of such additional amount as shall be required to ensure that the amount received by the recipient will equal the full amount that would have been received by it had no such deduction or withholding been required to be made, provided that if a party shall have transferred (for the avoidance of doubt, by whatever means, including by way of a declaration of trust or anything that amounts in substance to a transfer) the benefit in whole or in part of this agreement or shall have changed its tax residence or the permanent establishment to which the rights under this agreement are allocated then the liability of the party making such payment under this clause 15.2 shall be limited to that (if any) which it would have been had no such transfer or change taken place.
15.3 If any payment made under this agreement pursuant to an indemnity, compensation or reimbursement provision will be or has been subject to Tax (or would have been subject to Tax but for the availability of a Relief) the payer shall on demand pay to the recipient the amount (after taking into account Tax payable in respect of the amount or Tax which would have been payable but for the availability of such Relief) that will ensure that the recipient receives and retains a net sum equal to the sum it would have received had the payment not been subject to Tax (ignoring for this purpose the availability of any Relief in respect of such Tax) provided that if a party shall have transferred (for the avoidance of doubt, by whatever means, including by way of a declaration of trust or anything that amounts in substance to a transfer) the benefit in whole or in part of this agreement or shall have changed its tax residence or the permanent establishment to which the rights under this agreement are allocated then the liability of the party making such payment under this clause 15.3 shall be limited to that (if any) which it would have been had no such transfer or change taken place.
15.4 Clause 15.3 shall not apply:
(a) Notwithstanding anything in this Agreement to Tax attributable to a payment being properly treated as an adjustment to the contrary, if it shall be determined that any payments, benefits and distributions due Consideration under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.agreement; or
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether if and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds indemnity, compensation or reimbursement payment has already been adjusted to take account of the Tax that is or will be charged on receipt or relief that is or will be available in respect of the matter giving rise to the payment.
15.5 To the extent that any deduction, withholding or Tax in respect of which an additional amount subsequently determined to have has been duepaid under clause 15.2 or clause 15.3 results in the recipient obtaining a Relief, the Employee recipient shall repay such excess pay to the Company on payor, within 10 Business Days of obtaining and utilising the fifth (5th) business day after calculation benefit of the correct Relief, an amount and demand by equal to the Company (together with interest at 120% lesser of the rate provided in Section 1274(b)(2)(B) of benefit from utilising the Code). In Relief and the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid additional sum paid under clause 15.2 or untimely paid amounts from the due date, clause 15.3 (as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigationapplicable).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary notwithstanding, if in the event it shall be determined that any paymentspayment or distribution made, benefits and distributions due under this Agreement and those which are otherwise payable or distributable benefit provided, by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation regard to any additional payments required under this Section 9 (ia 'Payment') payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended and then in effect (the 'Code') (or any similar excise tax) or any interest or penalties are incurred by the Employee Executive with respect to the such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “('Excise Tax”'), then the Company Executive shall pay be entitled to the Employee receive an additional payment (a “'Gross-Up Payment”') in an amount such that after the payment by the Employee Executive of all Federal, state, local or other taxes (including any interest or penalties imposed with respect to any such taxes), including, without limitation, any such income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up Payment, the Employee Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on upon the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a An Executive may receive Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but Section 9 whether or not below zero) to the maximum amount that could be paid to Executive actually receives other payments or benefits under the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionAgreement.
(bi) Subject to the provisions of paragraph (ii) of this Section 109, all determinations required to be made under this Section 109, including, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up PaymentPayment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized accounting firm designated by the Company PricewaterhouseCoopers (the “"Accounting Firm”") which shall provide detailed supporting calculations both to the Company and the Employee Executive within fifteen (15) business 20 calendar days after of the receipt of written notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall have the right by written notice to the Company shall to appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the CompanyCompany and shall be paid by the Company upon demand of the Executive as incurred or billed by the Accounting Firm. Any Gross-Up Payment, as determined pursuant to this Section 109, shall be paid by the Company to the Employee as provided in Section 10(e)Executive within five days of the receipt of the Accounting Firm's determination. Any determination by If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall be binding upon furnish the Company Executive with an unqualified written opinion in form and substance satisfactory to the EmployeeExecutive that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“'Underpayment”'), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to described in paragraph (ii) of this Section 10(c) 9 and the Employee Executive thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination Executive within five days of the amount; provided, further, that all such amounts receipt of the Accounting Firm's determination. All determinations made by the Accounting Firm in connection with any Gross-Up Payment or Underpayment shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of binding upon the litigation)Company and the Executive.
(cii) The Employee Executive shall notify the Company in writing of any claim asserted in writing by the Internal Revenue Service to the Executive that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no not later than ten (10) business 60 days after the Employee Executive 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. The Employee Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives 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 the Employee Executive in writing prior to the expiration of such period that it desires to contest such claim, the Employee shallExecutive shall at the Company's expense:
(i) a. give the Company any information reasonably requested by the Company relating to such claim;.
(ii) b. 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) c. cooperate with the Company in good faith in order effectively to contest such claim; , and
(iv) d. permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly as incurred all costs and expenses (including additional interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, for any income taxes or Excise Tax or any Federal, state, local or other income or other tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 109, 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 the Employee Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee Executive 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, however, that if the Company directs the Employee Executive to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, Executive on an interest-free basis, basis and shall indemnify and hold the Employee Executive harmless, on an after-tax basis, from any income taxes or Excise Tax or Federal, state, local or other income or other 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s 's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee Executive 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.
(diii) If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to paragraph (ii) of this Section 109, the Employee Executive becomes entitled to receive any refund with respect to such claim, the Employee Executive shall (subject to the Company’s 's complying with the requirements of paragraph (ii) of this Section 10) 9 promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the upon receipt of such refundthereof. If, after the receipt by the Employee Executive of an amount advanced by the Company pursuant to paragraph (ii) of this Section 109, a determination is made that the Employee Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall be offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in this Agreement The following provisions shall apply with respect to the contrary, if it shall be determined that any payments, benefits and distributions due excise tax imposed under this Agreement and those which are otherwise payable or distributable to or for the benefit Section 4999 of the Employee relating to Internal Revenue Code as amended (the termination "Code"), (the "Excise Tax"): EMPLOYMENT AGREEMENT Rene Lerer
(i) If any of the Employee’s employment payments or benefits recxxxxx xx xo be received by Executive in connection with a change Change in Control or Executive's termination of control of the Company, including a Change of Control employment (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation (i) paymentsarrangement or agreement with the Company, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration any person whose actions result in a Change in Control of the vesting of Company or any stock options person affiliated with the Company or other equity-based incentive awardsuch person (the "Total Payments")) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would will be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee Executive an additional payment amount (a “the "Gross-Up Payment”") in an amount such that the net amount retained by Executive after payment of (a) the payment by Excise Tax, if any, on the Employee of all taxes Total Payments and (including b) 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 Excise Tax imposed on and income tax due in respect of the Gross-Up Payment, shall equal the Employee retains an Total Payments. Such payment shall be made in a single lump sum within 10 days following the date a determination that only such payment is required.
(ii) For purposes of determining whether any of the Total Payments will be subject to Excise Tax and the amount of the Gross-Up Payment equal to the such Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a)Tax, if it (i) any Total Payments shall be determined that treated as "parachute payments" (within the Employee is entitled meaning of Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company and reasonably acceptable to a Gross-Up PaymentExecutive, but that such payments or benefits (in whole or in part) should not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Gross Payments would not Code, and all "excess parachute payments" (within the meaning of Section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax if unless, in the Gross Payments were reduced by an amount that is equal to opinion of such tax counsel, such excess parachute payments (in whole or less than 10% in part) represent reasonable compensation for services actually rendered (within the meaning of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G 280G(b)(4)(B) of the Code), then the amounts payable to the Employee under this Agreement shall be reduced (but or are otherwise not below zero) to the maximum amount that could be paid to the Employee without giving rise subject to the Excise Tax (the “Safe Harbor Cap”)Tax, and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method ) the value of reduction is elected any noncash benefits or any deferred payment or benefit shall be determined by the Employee Company's independent auditors in a manner consistent accordance with the principles of Section 409A 280G(d)(3) of the Code. For purposes of reducing determining the Gross Payments to amount of the Safe Harbor CapGross-Up Payment, only amounts payable under this Agreement (and no other Gross Payments) Executive shall be reduced. If deemed to pay federal income and employment taxes at the reduction highest marginal rate of federal income and employment taxation in the amounts payable hereunder would not result calendar year in a reduction of which the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required to be made and state and local income and employment taxes at the amount highest marginal rate of taxation in the state and locality of Executive's residence on the date of termination of employment (or such other time as hereinafter described), net of the maximum reduction in federal income or employment taxes which could be obtained from deduction of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company state and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Companylocal taxes. In the event that the Accounting Firm Excise Tax is serving as accountant or auditor for subsequently determined to be less than the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required amount taken into account hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it termination of Executive's employment (or such other time as is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”hereinafter described), consistent with Executive shall repay to the calculations required to be made hereunder. In Company, at the event time that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year reduction in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remittedExcise Tax is finally determined, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company portion of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect Payment attributable to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 reduction plus interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to repayment at the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee shall be entitled to settle or contestapplicable federal rate, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided defined in Section 1274(b)(2)(B) of the Code. Notwithstanding In the foregoing provisions of this subsection 10(e), all such amounts payable by event that the Company shall be paid by Excise Tax is determined to exceed the end amount taken into account hereunder at the time of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case termination of a tax audit Executive's employment (or litigation addressing such other time as is hereinafter described) (including by reason of any payment the existence or amount of a tax liability, by which cannot be determined at the end time of the Employee’s taxable year following Gross-Up Payment), the Employee’s taxable year Company shall make an additional Gross-Up Payment in which respect of such excess (plus any interest at the taxes applicable federal rate, penalties or additions payable by Executive with respect to such excess) at the time that are the subject amount of audit such excess is finally determined. Executive and the Company shall each reasonably cooperate with the other in connection with any EMPLOYMENT AGREEMENT Rene Lerer administrative or litigation are remitted judicial proceedings concerning the xxxxxxxxx or amount of liability for Excise Tax with respect to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Total Payments.
Appears in 1 contract
Samples: Employment Agreement (Magellan Health Services Inc)
Tax gross-up. (ai) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that If any payments, payments or other benefits and distributions due under this Agreement and those which are otherwise payable or distributable any other payments or benefits received or to or for the benefit of the Employee relating to the termination of the Employee’s employment be received by Executive in connection with or as a change result of control a Change in Control of the CompanyEmployer, including a Change or Executive's termination of Control (employment, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation arrangement or agreement with the Employer, or any person affiliated with the Employer (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross "Change in Control Payments”"), would will be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code or any interest or penalties are incurred by the Employee with respect to the excise tax of 1986, as amended (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “"Code," references to which shall be understood to include any successor statute and references to the applicable regulations under the Code as promulgated from time to time), or any comparable provision of state law or any similar tax that may hereafter be imposed ("Excise Tax”"), then the Company Employer shall pay to at the Employee an times hereinafter specified in this Section 9(f) additional payment amounts (each a “"Gross-Up Payment”") in an amount such that the net amount retained by Executive, after withholding or payment of any Excise Tax on the payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (Change in Control Payments and any interest federal, state and penalties imposed with respect thereto) local income tax and Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of upon the Gross-Up Payment shall be equal to the Excise Tax imposed on the Gross Change in Control Payments. Notwithstanding the foregoing provisions of this Section 10(a9(f), if it shall be determined that the Employee Executive is entitled to a Gross-Up Payment, but that the Gross Change in Control Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that could be paid to Executive such that the receipt of Change in Control Payments would not give rise to any Excise Tax, then no Gross- Up Payment shall be made to Executive and the Change in Control Payments, in the aggregate, shall be reduced to an amount such that the receipt of Change in Control Payments would not give rise to any Excise Tax.
(ii) For purposes of determining whether any of the Change in Control Payments will be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up PaymentExcise Tax, (i) all Change in Control Payments shall be made by a nationally recognized accounting firm designated treated as "parachute payments" within the meaning of Section 28OG(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 28OG(b)(1) shall be treated as subject to the Excise Tax except to the extent that (in the opinion of tax counsel selected by the Company (Employer's independent auditors and reasonably acceptable to Executive, which opinion shall be rendered at the “Accounting Firm”Employer's sole expense and shall be reasonably acceptable to Executive and which opinion shall, once accepted by Executive, be binding on all parties) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Paymentsuch Change in Control Payments do not constitute parachute payments, or such earlier time excess parachute payments are reduced pursuant to 28OG(b)(4)(B) of the Code, (ii) the counsel referred to in clause (i) of this sentence shall be entitled to request and rely, as requested to factual matters regarding the determinations called for therein, upon appraisals and valuations by experts acceptable to the Employer and Executive (and prepared at the Employer's expense) and (c) the value of any non-cash benefits or any deferred or contingent payment or benefit shall be determined by the Company. In Employer's independent auditors in accordance with the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change principles of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder Section 28OG(d)(3) and (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses 4) of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Code.
(ciii) The Employee shall notify For purposes of determining the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company amount of the Gross-Up Payment. Such notification , Executive shall be given as soon as practicable deemed to pay federal income taxes at his highest marginal rate of federal income taxation on the Date of Termination, and state and local income taxes at his highest marginal rate of taxation in the applicable states and localities on the Date of Termination, net of the maximum reduction in federal income taxes that could be obtained from deduction of such state and local taxes.
(iv) In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder at the time of termination of Executive's employment, Executive shall repay to the Employer, promptly after the amount of such reduction in Excise Tax is finally determined, but no later than ten (10) business thirty days after his receipt of notice from the Employee is informed Employer in writing of such claim and shall apprise reasonable detail requesting the Company same, the portion of the nature Gross-Up Payment attributable to such reduction, plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the Gross-Up Payment being repaid by him if such claim repayment results in a reduction in Excise Tax and/or a federal and state and local income tax deduction) and interest from the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of his receipt of the 30-day period following the date Change in Control Payments on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest repayment at 120% of the rate provided in Section 1274(b)(2)(B) of the CodeCode (the "Applicable Rate"). For purposes of this Agreement, the final determination of any Excise Tax shall be deemed to have occurred at the audit level unless the Employer shall have elected to contest or requested that Executive contest the matter (with which Executive shall cooperate, and Executive agrees to notify the Employer promptly in the event of any audit of his applicable tax returns by any authority) on in which case the thirtieth final determination shall be the final decision by the appropriate governmental authority.
(30thv) day after the date specified for payment of the initial estimate. In the event that the Excise Tax is finally determined to exceed the amount taken into account hereunder at the time of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth termination of Executive's employment (5th) business day after calculation including by reason of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by which cannot be determined at the end time of the Employee’s taxable year following Gross-Up Payment), the Employee’s taxable year Employer shall make an additional Gross-Up Payment, computed as provided in which this Section 9(f), in respect of the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result sum of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year excess amount plus any interest payable by Executive to any tax authority with respect to such excess amount as an additional Change in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Control Payment.
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the The Company shall pay make all payments to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii)it without any Tax Deduction, unless an alternative method of reduction a Tax Deduction is elected required by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionlaw.
(b) Subject to The Company shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the provisions rate or the basis of this Section 10a Tax Deduction) notify the Administrative Agent accordingly. Similarly, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, Lender (or its Funding Agent) shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by notify the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees Master Servicer and expenses Administrative Agent on becoming so aware in respect of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment payable to that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Lender.
(c) The Employee shall notify If a Tax Deduction is required by law to be made by the Company, the amount of the payment due from the Company in writing shall be increased to an amount which (after making any Tax Deduction) leaves the recipient of any claim by the Internal Revenue Service that, if successful, would require such payment with an amount equal to the payment which would have been received by it if no Tax Deduction had been required.
(d) Each Lender that is not incorporated under the Company laws of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after United States or a State thereof or the Employee is informed in writing District 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee Columbia shall:
(i) give deliver to the Master Servicer, the Company, the Administrative Agent, the Collateral Agent and the related Funding Agent two (2) duly completed copies of United States Internal Revenue Service Form W-8ECI, W-8BEN or W-8IMY, or successor applicable form and such other forms, certificates and documentation as may be necessary or appropriate to establish, in each case, that it is entitled to receive payments from the Company any information reasonably requested without a deduction for U.S. federal withholding tax or with a deduction at a reduced rate. In the case of a Lender that provides an Internal Revenue Service Form W-8BEN, such Lender shall either (i) claim the benefit of a treaty that provides for a complete exemption from United States withholding tax for payments of interest or (ii) claim the benefit of the U.S. “portfolio interest exemption” by also providing a certification that is not a “bank” making a loan under this Agreement in the ordinary course of its business within the meaning of Section 881(c)(3)(A) of the Code or a Person related to the Company relating to such claimin a manner described in Sections 871(h)(3)(B), 881(c)(3)(B) or 881(c)(3)(C) of the Code;
(ii) take such action in connection with contesting such claim as deliver to the Company shall reasonably request in writing from time to timeMaster Servicer, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;, the Collateral Agent, the Administrative Agent and the related Funding Agent two further copies of any such form or certification (A) on or before the date that any such form or certification expires or becomes obsolete, (B) after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Company, the Collateral Agent, the Administrative Agent or the related Funding Agent and (C) at the reasonable request of the Master Servicer, the Company, the Collateral Agent or the related Funding Agent; and
(iii) cooperate obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Company, the Collateral Agent, the Administrative Agent or the related Funding Agent; unless any change in treaty, law or regulation has occurred prior to, and is in effect on, the date on which any such delivery would otherwise be required which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender (or its Funding Agent) so advises the Company and the related Funding Agent. Each Lender shall certify to the Company, the Collateral Agent, the Administrative Agent and the related Funding Agent at the time it first becomes a Lender, and thereafter to the extent provided by law, (i) all such forms are true and complete, (ii) that it is entitled to receive payments under this Agreement and the other Transaction Documents without, or at a reduced rate of, withholding of any United States federal income taxes and (iii) that it is entitled to an exemption from United States backup withholding tax. Each Person that shall become a Lender or a Participant pursuant to Section 37.17 shall, upon the effectiveness of the related transfer, be required to provide to the Company, the Collateral Agent, the Administrative Agent, the Master Servicer and the related Funding Agent all of the forms and statements required pursuant to this Section; provided that in good faith in order effectively the case of a Participant such Participant shall furnish all such required forms and statements to contest the Lender from which the related participation shall have been purchased and such claim; and
(iv) permit Lender shall provide such forms to the Company to participate with a duly executed Form W-8IMY and withholding statement. If the Company, the Administrative Agent or the Collateral Agent has not received the forms set forth 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 1011.2(d), 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of withhold taxes from such payment to at the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final statutory rate and shall not be required obliged to be repaid and the amount of make increased payments under Section 11.2 until such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paidforms or other documents are delivered.
(e) The payments provided for in this Each Lender that is a United States Person within the meaning of Section 10 shall be made upon the first day following the six-month anniversary 7701(a)(30) of the termination Code shall deliver to the Master Servicer, the Company, the Collateral Agent and the related Funding Agent two (2) duly completed copies of the Employee’s employment; providedUnited States Internal Revenue Service Form W-9 or any successor applicable form.
(f) The Company is not required to make any payment under Section 11.2(c) to the extent such payment would be due as the result of the relevant Funding Agent, howeverLender or Participant not providing the forms required by Section 11.2(d)(i), that if or 11.2(d)(ii) unless the amounts failure to provide such forms is a result of such payments cannot be finally determined on a change after the date it became a Lender or before such daya Participant under this Agreement in (or in the interpretation, administration or application of) any Requirement of Law or any published practice or concession of any relevant Taxation Authority.
(g) If the Company is required to make a Tax Deduction, the Company shall pay to make that Tax Deduction and any payment required in connection with that Tax Deduction within the Employee on such day an estimate, as determined time allowed and in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments required by law.
(together h) Within thirty (30) days after making either a Tax Deduction or any payment required in connection with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been dueTax Deduction, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted deliver to each Funding Agent evidence reasonably satisfactory to the taxing authority Lender entitled to that payment that the Tax Deduction has been made or (or where as a result of such audit or litigation no taxes are remitted, applicable) any appropriate payment paid to the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)relevant Taxation Authority.
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the The Company shall pay make all payments to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii)it without any Tax Deduction, unless an alternative method of reduction a Tax Deduction is elected required by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionlaw.
(b) Subject to The Company shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the provisions rate or the basis of this Section 10a Tax Deduction) notify the Administrative Agent accordingly. Similarly, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, Lender (or its Funding Agent) shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by notify the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees Master Servicer and expenses Administrative Agent on becoming so aware in respect of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment payable to that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Lender.
(c) The Employee shall notify If a Tax Deduction is required by law to be made by the Company, the amount of the payment due from the Company in writing shall be increased to an amount which (after making any Tax Deduction) leaves the recipient of any claim by the Internal Revenue Service that, if successful, would require such payment with an amount equal to the payment which would have been received by it if no Tax Deduction had been required.
(d) Each Lender that is not incorporated under the Company laws of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after United States or a State thereof or the Employee is informed in writing District 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee Columbia shall:
(i) give deliver to the Master Servicer, the Company, the Administrative Agent, the Collateral Agent and the related Funding Agent two (2) duly completed copies of United States Internal Revenue Service Form W-8ECI, W-8BEN, W-8BEN-E or W-8IMY, or successor applicable form and such other forms, certificates and documentation as may be necessary or appropriate to establish, in each case, that it is entitled to receive payments from the Company any information reasonably requested without a deduction for U.S. federal withholding tax or with a deduction at a reduced rate. In the case of a Lender that provides an Internal Revenue Service Form W-8BEN or W-8BEN-E, such Lender shall either (A) claim the benefit of a treaty that provides for a complete exemption from United States withholding tax for payments of interest or (B) claim the benefit of the U.S. “portfolio interest exemption” by also providing a certification that is not a “bank” making a loan under this Agreement in the ordinary course of its business within the meaning of Section 881(c)(3)(A) of the Code or a Person related to the Company relating to such claimin a manner described in Sections 871(h)(3)(B), 881(c)(3)(B) or 881(c)(3)(C) of the Code;
(ii) take such action in connection with contesting such claim as deliver to the Company shall reasonably request in writing from time to timeMaster Servicer, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;, the Collateral Agent, the Administrative Agent and the related Funding Agent two further copies of any such form or certification (A) on or before the date that any such form or certification expires or becomes obsolete, (B) after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Company, the Collateral Agent, the Administrative Agent or the related Funding Agent and (C) at the reasonable request of the Master Servicer, the Company, the Collateral Agent or the related Funding Agent; and
(iii) cooperate obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Company, the Collateral Agent, the Administrative Agent or the related Funding Agent; unless any change in treaty, law or regulation has occurred prior to, and is in effect on, the date on which any such delivery would otherwise be required which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender (or its Funding Agent) so advises the Company and the related Funding Agent. Each Lender shall certify to the Company, the Collateral Agent, the Administrative Agent and the related Funding Agent at the time it first becomes a Lender, and thereafter to the extent provided by law, (i) all such forms are true and complete, (ii) that it is entitled to receive payments under this Agreement and the other Transaction Documents without, or at a reduced rate of, withholding of any United States federal income taxes and (iii) that it is entitled to an exemption from United States backup withholding tax. Each Person that shall become a Lender or a Participant pursuant to Section 37.17 shall, upon the effectiveness of the related transfer, be required to provide to the Company, the Collateral Agent, the Administrative Agent, the Master Servicer and the related Funding Agent all of the forms and statements required pursuant to this Section; provided that in good faith in order effectively the case of a Participant such Participant shall furnish all such required forms and statements to contest the Lender from which the related participation shall have been purchased and such claim; and
(iv) permit Lender shall provide such forms to the Company to participate with a duly executed Form W-8IMY and withholding statement. If the Company, the Administrative Agent or the Collateral Agent has not received the forms set forth 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 1011.2(d), 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of withhold taxes from such payment to at the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final statutory rate and shall not be required obliged to be repaid and the amount of make increased payments under Section 11.2 until such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paidforms or other documents are delivered.
(e) The payments provided for in this Each Lender that is a United States Person within the meaning of Section 10 shall be made upon the first day following the six-month anniversary 7701(a)(30) of the termination Code shall deliver to the Master Servicer, the Company, the Administrative Agent, the Collateral Agent and the related Funding Agent two (2) duly completed copies of the Employee’s employment; providedUnited States Internal Revenue Service Form W-9 or any successor applicable form.
(f) If a payment made to a Lender under any Transaction Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, howeveras applicable), that if such Lender shall deliver to the amounts of such payments cannot be finally determined on or before such dayCompany, the Company shall pay to Funding Agent and the Employee on Administrative Agent at the time or times prescribed by law and at such day an estimate, as determined in good faith time or times reasonably requested by the EmployeeCompany, of the minimum amount of Funding Agent or the Administrative Agent such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments documentation prescribed by applicable law (together with interest at 120% of the rate provided in including as prescribed by Section 1274(b)(2)(B1471(b)(3)(C)(i) of the Code) on and such additional documentation reasonably requested by the thirtieth Company, the Funding Agent or the Administrative Agent as may be necessary for the Company, the Funding Agent and the Administrative Agent to comply with their obligations under FATCA and to determine that such Xxxxxx has complied with such Xxxxxx’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (30th) day f), “FATCA” shall include any amendments made to FATCA after the date specified for of this Agreement.
(g) The Company is not required to make any payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess under Section 11.2(c) to the Company extent such payment would be due as the result of (i) the relevant Funding Agent, Lender or Participant not providing the forms required by Section 11.2(d)(i), 11.2(d)(ii), 11.2(e) or 11.2(f) unless the failure to provide such forms is a result of a change after the date it became a Lender or a Participant under this Agreement in (or in the interpretation, administration or application of) any Requirement of Law or any published practice or concession of any relevant Taxation Authority, (ii) a law in effect on the fifth date on which such Lender becomes a party hereto or changes its lending office, except in each case to the extent that, pursuant to Section 11.2(c), amounts with respect to such Taxes were payable either to such Xxxxxx’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, or (5thiii) business day after calculation of the correct amount and demand by FATCA.
(h) If the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail is required to pay when due the amounts described in this Section 10make a Tax Deduction, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by make that Tax Deduction and any payment required in connection with that Tax Deduction within the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, time allowed and in the case of minimum amount required by law.
(i) Within thirty (30) days after making either a tax audit Tax Deduction or litigation addressing any payment required in connection with that Tax Deduction, the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted Company shall deliver to each Funding Agent evidence reasonably satisfactory to the taxing authority Lender entitled to that payment that the Tax Deduction has been made or (or where as a result of such audit or litigation no taxes are remitted, applicable) any appropriate payment paid to the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)relevant Taxation Authority.
Appears in 1 contract
Samples: u.s. Receivables Loan Agreement (Huntsman International LLC)
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary ------------ notwithstanding and except as provided in Section 5.1(c) or as set forth in paragraph (b) of this Section 5.2, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation (i) payments, benefits and distributions pursuant regard to any additional payments required under this Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award5.2) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), a "Subject Payment") would be subject ------- -------- to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the such excise tax (such excise tax, together with any such interest and penalties, are being hereinafter collectively referred to as the “"Excise Tax”"), then the Company following provisions ------ --- shall pay be applicable:
(a) The Employee shall be entitled to the Employee receive an additional payment (a “"Gross-Up up Payment”") in an amount such that after the payment by the Employee of all -------- ------- taxes (including any interest or penalties imposed with respect to such taxes), including, including without limitation, limitation any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up up Payment, the Employee retains an amount of the Gross-Up up Payment equal to the Excise Tax imposed on upon the Gross Subject Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments .
(b) would not be subject give rise to the any Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the CodeTax, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up up Payment shall be made to the Employee. The reduction of Employee and the amounts payable hereunderSubject Payments, if applicablein the aggregate, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments reduced to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionReduced Amount.
(bc) Subject to the provisions of this Section 10, all All determinations required to be made under this Section 105.2, including, including whether and when a Gross-Up up Payment is required and the amount of such Gross-Up Paymentup Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized Xxxxxx Xxxxxxxx LLP or such other 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 the Employee within fifteen (15) business days after of the receipt of notice from the Employee that there has been a Subject Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Controlany Acquiring Person, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary ------------ notwithstanding and except as provided in Section 5.1(c) or as set forth in paragraph (b) of this Section 5.2, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation (i) payments, benefits and distributions pursuant regard to any additional payments required under this Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award5.2) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), a "Subject Payment") would be subject ------- -------- to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the such excise tax (such excise tax, together with any such interest and penalties, are being hereinafter collectively referred to as the “"Excise Tax”"), then the Company following provisions ------ --- shall pay be applicable:
(a) The Employee shall be entitled to the Employee receive an additional payment (a “"Gross-Up up Payment”") in an amount such that after the payment by the Employee of all --------- -------- taxes (including any interest or penalties imposed with respect to such taxes), including, including without limitation, limitation any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up up Payment, the Employee retains an amount of the Gross-Up up Payment equal to the Excise Tax imposed on upon the Gross Subject Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments .
(b) would not be subject give rise to the any Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the CodeTax, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up up Payment shall be made to the Employee. The reduction of Employee and the amounts payable hereunderSubject Payments, if applicablein the aggregate, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments reduced to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionReduced Amount.
(bc) Subject to the provisions of this Section 10, all All determinations required to be made under this Section 105.2, including, including whether and when a Gross-Up up Payment is required and the amount of such Gross-Up Paymentup Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized Xxxxxx Xxxxxxxx LLP or such other 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 the Employee within fifteen (15) business days after of the receipt of notice from the Employee that there has been a Subject Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Controlany Acquiring Person, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in any other provision of this Agreement or any other plan, arrangement or agreement to the contrary, if it shall any of the payments or benefits provided or to be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable provided by the Company or distributable its affiliates to the Employee or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable benefit pursuant to the terms of this Agreement or otherwise, including without limitation otherwise (i“Covered Payments”) payments, benefits and distributions pursuant to constitute parachute payments (“Parachute Payments”) within the meaning of Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration 280G of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits Code and distributions being referred to herein as “Gross Payments”), would will be subject to the excise tax imposed by under Section 4999 of the Code (or any successor provision thereto) or any interest or penalties are incurred by the Employee with respect to the such excise tax (such excise taxcollectively, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee, no later than the time the Excise Tax is required to be paid by the Employee or withheld by the Company, an additional payment amount (a the “Gross-Up up Payment”) in an amount such that after equal to the payment sum of the Excise Tax payable by the Employee, plus the amount necessary to put the Employee of in the same after-tax position (taking into account any and all applicable federal, state, local and foreign income, employment and excise taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, the Excise Tax and any income and employment taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined ) that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax have been in if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” Employee had not incurred any tax liability under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A 4999 of the Code. For purposes The determination of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up up Payment is required will be required, and of the amount of such Gross-Up up Payment, shall initially be made (at the Company’s expense) by a nationally recognized registered public accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both reasonably acceptable to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier prior to the time as requested by the Company. In the event that the Accounting Firm Excise Tax is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm required to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to Employee or withheld by the Company, and shall be made applying the assumptions that the Employee as provided will pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in Section 10(e)which the Gross-up Payment is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of Executive’s residence at the time. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result In light of the uncertainty in the application of Section applying Sections 280G and 4999 of the Code at the time of the initial determination by the Accounting Firm hereunderCode, if it is possible subsequently determined that the Gross-Up Payments which will up Payment is not sufficient to put the Employee in the same after-tax position (taking into account any and all applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax and such taxes imposed on the Gross-up Payment)) that the Employee would have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and in if the Employee thereafter is required to make a payment of any income taxes or had not incurred the Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by then the Company shall promptly pay to or for the benefit of the Employee on such additional amounts necessary to put the thirtieth (30th) day following Employee in the final determination same after-tax position that the Employee would have been in if the Excise Tax had not been imposed. In the event that a written ruling of the amount; provided, further, that all such amounts shall be paid Internal Revenue Service (“IRS”) is obtained by the end or on behalf of the Employee’s taxable year next following Company or the Employee’s taxable year in , which provides that the Employee remits is not required to pay, or is entitled to a refund with respect to, all or a portion of the related taxes orExcise Tax, then the Employee shall reimburse the Company in an amount equal to the case Gross-up Payment, less any amounts which remain payable by or are not refunded to the Employee, within thirty (30) days of a tax audit the date of the IRS determination or litigation addressing the date the Employee receives the refund, as applicable. The Employee and the Company shall reasonably cooperate with each other in connection with any administrative or judicial proceedings concerning the existence or amount of a tax liabilityliability for the Excise Tax; provided that, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee shall notify if the Company in writing of any decides to contest a claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior IRS relating to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claimExcise Tax, the Employee 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 effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that then the Company shall bear and pay directly or indirectly all costs and expenses (including any additional interest and penaltiespenalties and any legal and accounting fees and expenses) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death action and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or 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. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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 authorityaction.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).”
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything in this Agreement The Company shall attempt to satisfy Section 280G(b)(5) of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder to the contrary, if it shall be determined extent such Code Section is applicable. In the event that any payments, benefits and distributions due the shareholder approval requirements under this Agreement and those which are otherwise payable or distributable to or for the benefit Section 280G(b)(5) of the Employee relating to code and the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control regulations thereunder are not satisfied or any other amounts (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation arrangement or agreement with the company, any person whose actions result in a change of ownership covered by Code Section 280G(b)(2) or any person affiliated with the company or such person) as a result of a Change of Control, (i) payments, benefits and distributions pursuant to Section 3 of this Agreementcollectively the "Company Payments"), and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would Company Payments will be subject to the excise tax (the "Excise Tax") imposed by Section 4999 of the Code or (and any interest or penalties are incurred by the Employee with respect to the excise similar tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”that may hereafter be imposed), then the Company shall have to pay to the Employee Employee, an additional payment amount (a “the "Gross-Up up Payment”") in an amount such that after the payment net amount retained by the Employee Employee, after 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 Company Payments and any interest federal, state and penalties imposed with respect thereto) local income tax and Excise Tax imposed on upon the Gross-Up Paymentup Payment provided for by this Section II.F.1., but before deduction for any federal, state or local income tax on the Company Payments, shall be equal to the Company Payments.
(b) Prior to any change in ownership (as defined under Section 280(G) of the Code), the Employee retains and the Company shall select an amount independent certified public accountant or qualified tax counsel (the "Tax Professional") to determine whether any of the Company Payments and Gross-Up Payment equal to up Payments (collectively, the Excise Tax imposed on the Gross "Total Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not ") will be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such GrossExcise Tax taking into account all provisions of the Code, including but not limited to exemptions contained in Section 280(G) such as those for payments of reasonable compensation for services actually rendered. In addition, the Tax Professional shall determine the value of any non-Up Paymentcash benefits or any deferred payment or benefit for purposes of determining the amount, shall if any, of the Excise Tax. It the Employee and the Company are unable to mutually determine appropriate Tax Professional, the decision will be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent accordance with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(carbitration procedures in this Agreement.
(c) and the Employee thereafter is required to make a payment For purposes of any income taxes or Excise Tax, the Accounting Firm shall determine determining the amount of the Underpayment that has occurred Gross-up Payment, the Employee shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-up Payment is to be made and any state and local income taxes at the highest marginal rate of taxation in the state and locality of the Employee's residence for the calendar year in which the Company Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such Underpayment state and local taxes if paid in such year.
(d) The Gross-up Payment shall be paid by not later than the Company to or for the benefit of the Employee on the thirtieth fifteenth (30th15th) day following the final determination of the amount; provided, further, that all such amounts shall be paid amount of the Excise Tax by the end Tax Professionals or under the arbitration procedures.
(e) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time the Gross-up Payment is made, Employee shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined (but, if previously paid to the taxing authorities, not prior to the time the amount of such reduction is refunded to Employee or otherwise realized as a benefit by Employee) the portion of the Employee’s taxable year next following Gross-up Payment that would not have been paid if such Excise Tax had been applied to initially calculating the Employee’s taxable year Gross-up Payment, plus interest on the amount of such repayment at the rate provided in which Section 2375(b)(2)(B) of the Employee remits Code. In the related taxes or, in event that the case Excise Tax is determined to exceed the amount taken into account hereunder at the time the Gross-up Payment is made (including by reason of a tax audit or litigation addressing any payment the existence or amount of a tax liability, by which cannot be determined at the end time of the Employee’s taxable year following Gross-up Payment), the Employee’s taxable year Company shall make an additional Gross-up Payment and shall indemnify and hold Employee harmless in which respect of such excess (plus any interest and penalties payable with respect to such excess) at the taxes time that are the subject amount of audit such excess is finally determined. The Gross-up Payment provided for above shall be paid on the 15th day (or litigation are remitted such earlier date as the Excise Tax becomes due and payable to the taxing authority authorities) after it has been determined that the Total Payments (or where as a result any other portion thereof) are subject to the Excise Tax; provided, however, that if the amount of such audit Gross-up Payment or litigation no taxes are remittedportion thereof cannot be finally determined on or before such day, the end Company shall pay to Employee on such day an estimate, as determined by the Tax Professionals, of the Employee’s taxable year following minimum amount of such payments and shall pay the Employee’s taxable year remain of such payments (together with interest at the rate provided in which the audit is completed or there is a final and nonappealable settlement or other resolution Section 1274(b)(2)(B) of the litigationCode).
, as soon as the amount thereof can be determined. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to Employee, payable on the fifth day after demand by the Company (ctogether with interest at the rate provided in Section 1274(b)(2)(B) The of the Code). If more than one Gross-up Payment is made, the amount of each Gross-up Payment shall be computed so as not to duplicate any prior Gross-up Payment. Employee 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 the Gross-Up up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives 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 company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall:
(i1) 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Samples: Employment Non Competition and Proprietary Rights Agreement (Universal Access Inc)
Tax gross-up. The following provisions shall apply with respect to any excise tax imposed under Section 4999 of the Internal Revenue Code as amended (athe “Code”), (the “Excise Tax):
a. For the three (3) Notwithstanding anything in this Agreement to year period beginning on the contrarydate hereof and ending on July 31, 2012, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the payments or benefits received or to be received by Employee relating to the termination of the Employee’s employment in connection with a change Change in Control or Employee’s termination of control of the Company, including a Change of Control employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation (i) paymentsarrangement of agreement with the Employer, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration any person whose actions result in a Change on Control of the vesting of Employer or any stock options person affiliated with the Employer or other equity-based incentive award) such person (all such payments, benefits and distributions being referred to herein as the “Gross Total Payments”), would ) will be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company Employer shall pay to the Employee an additional payment amount (a the “Gross-Up Payment”) in an amount such that the net amount retained by Employee after payment of (a) the payment by Excise Tax, if any, on the Employee of all taxes Total Payments and (including b) 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 Excise Tax imposed on and income tax due in respect of the Gross-Up Payment, shall equal the Employee retains an amount Total Payments. Such payment shall be made in a single lump sum within 10 days following the date of a determination that only such payment is required.
b. For purposes of determining whether any of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not Total payments will be subject to the Excise Tax if and the Gross amount of such Excise Tax, (i) any Total Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would shall be treated as “parachute payments” under (within the meaning of Section280G(b) (2) of the Code) unless, in the opinion of tax counsel selected by the Employer and reasonably acceptable to Employee, such payments or benefits (in whole or in part) should not constitute parachute payments, including by reason of Section 280G (b) (4) (A) of the Code, then and all “excess parachute payments” (within the amounts payable to meeting of Section 280G(b) (1) of the Employee under this Agreement Code) shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the “Safe Harbor Cap”meaning of Section 280G(b) (4) (B) of the Code), and no Gross-Up Payment shall be made or are otherwise not subject to the Employee. The reduction of the amounts payable hereunderExcise Tax, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method ) the value of reduction is elected any non-cash benefits or any deferred payment or benefit shall be determined by the Employee Employer’s independent auditors in a manner consistent accordance with the principles of Section 409A 280G(d) (3) of the Code. For purposes of reducing determining the Gross Payments to amount of the Safe Harbor CapGross-Up payment, only amounts payable under this Agreement (and no other Gross Payments) Employee shall be reduced. If deemed to pay federal income and employment taxes at the reduction highest marginal rate of federal income and employment taxation in the amounts payable hereunder would not result calendar year in a reduction of which the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required to be made and state and local income and employment taxes at the amount highest marginal rate of taxation in the state and locality of Employee’s residence on the date of termination of employment (or such other time as hereinafter described), net of the maximum reduction in federal income or employment taxes which could be obtained from deduction of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company state and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Companylocal taxes. In the event that the Accounting Firm Excise Tax is serving as accountant or auditor for subsequently determined to be less than the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required amount taken into account hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of termination of Employee’s employment (or such other time as is hereinafter described), Employee shall repay to the initial determination by Employer, at the Accounting Firm hereundertime that the amount of such reduction in Excise Tax is finally determined, it is possible that the portion of the Gross-Up Payments which will not have been made by Payment attributable to such reduction plus interest on the Company should have been made amount of such repayment at the applicable federal rate, as defined in Section 1274(b) (“Underpayment”), consistent with 2) (B) of the calculations required to be made hereunderCode. In the event that the Company exhausts its remedies pursuant Excise Tax is determined to Section 10(cexceed the amount taken into account hereunder at the time of the termination of Employee’s employment (or such other time as is hereinafter described) and the Employee thereafter is required to make a payment (including by reason of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing payment the existence or amount of a tax liability, by which cannot be determined at the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company time of the Gross-Up Payment. Such notification ), the Employer shall be given as soon as practicable but no later than ten (10) business days after the Employee is informed make an additional Gross-Up Payment in writing respect of such claim and shall apprise excess (plus any interest at the Company of the nature of such claim and the date on which such claim is requested to be paid. The applicable federal rate, penalties or additions payable by Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If excess) at the Company notifies the Employee in writing prior to the expiration of such period time that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the excess is finally determined. Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee Employer 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying each reasonably cooperate with the requirements of Section 10) pay to the Company the amount of such refund (together other in connection with any interest paid administrative or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing judicial proceedings concerning the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted liability for Excise Tax with respect to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Total payments.
Appears in 1 contract
Samples: Employment Agreement (Magellan Health Services Inc)
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary notwithstanding, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation ) (a "PAYMENT") (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”)"EXCISE TAX") or (ii) is made pursuant to a Change of Control, then the Company Employee shall pay be entitled to the Employee receive an additional payment (a “Gross"GROSS-Up Payment”UP PAYMENT") in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Payment and Gross-Up Payment, the Employee retains an amount of equal to (x) the Payment plus (y) the Excise Tax (if any) imposed upon the Payment and the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 1010(c), all determinations required to be made under this Section 10, including, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”"ACCOUNTING FIRM") which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of in Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e)within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”"UNDERPAYMENT"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or 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 the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or 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. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 1010(c), 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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; providedPROVIDED, howeverHOWEVER, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s 's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 1010(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s 's complying with the requirements of Section 10) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 1010(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 hereof shall be made upon not later than the first tenth (10th) day following the six-month anniversary of the termination of the Employee’s 's employment; providedPROVIDED, howeverHOWEVER, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, Employee of the minimum amount of such payments to which the Employee is clearly entitled. The Company entitled and shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section section 1274(b)(2)(B) of the Code) on as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the date specified for payment termination of the initial estimateEmployee's employment. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess shall constitute a loan by the Company to the Company Employee, payable on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Samples: Change of Control Agreement (Equitable Resources Inc /Pa/)
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
Borrower or (b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise Tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed amounts such Chargor has to pay pursuant to its Guarantee) any other Chargor: (a) is required by any Requirement of Law to make a Tax Deduction from any sum paid or payable by it to the Issuer, or (b) is required by law to make any deduction or withholding from, or to make (except on account of tax on the overall net income with respect to such advance; and further provided of that party) any extension of the statute of limitations relating to payment of taxes or on account of Tax on or calculated by reference to the amount of, any sum received or receivable by the Issuer (including any sum deemed for the taxable year purposes of the Employee with respect to which such contested amount is claimed Tax to be due is limited solely to such contested amount. Furthermorereceived or receivable by the Issuer whether or not actually received or receivable) under this Agreement then, provided that, 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 the Employee shall be entitled to settle Tax or contest, other amount or (as the case may be) the amount so deducted, any other issue raised by the Internal Revenue Service withheld or any other taxing authority.
(d) If, after the receipt by the Employee of paid is attributable to an amount advanced by paid or payable under this Agreement:
11.2.1 the Company pursuant to Section 10Borrower or such other Chargor, as applicable, shall promptly notify the Cash Administrator, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim Borrower Security Trustee and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
Issuer (e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit Clause 11.2(a)) of any such requirement or litigation addressing any change in any such requirement as soon as it becomes aware of it;
11.2.2 the existence Borrower or such other Chargor, as applicable, shall pay any such Tax or other amount of a tax liabilitybefore the date on which penalties attach thereto, by such payment to be made (if the end liability to pay is imposed on the Borrower or such other Chargor, as applicable) for the Borrower’s or, as applicable, such other Chargor’s account, or (if that liability is imposed on the Issuer) on behalf and in the name of the Employee’s taxable year following Issuer;
11.2.3 the Employee’s taxable year sum payable in respect of which the taxes that are the subject of audit or litigation are remitted relevant Tax Deduction is required shall be increased to the taxing authority extent necessary to ensure (or where as a result unless prevented by any applicable law from so doing) that, after the making of such audit or litigation no taxes are remittedthat Tax Deduction, the end Issuer receives on the due date and retains (free from any liability in respect of any such Tax Deduction) a net sum equal to that which it would have received and so retained had no such Tax Deduction been required or made; and
11.2.4 as soon as practicable after paying any sum from which it is required by law to make any Tax Deduction, withholding or payment, and as soon as practicable after the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement due date of payment of any Tax or other resolution of amount which it is required by Clause 11.2.2 to pay, the litigation)Borrower or other Chargor, as applicable, shall deliver to the Issuer evidence reasonably satisfactory to the Issuer that the Tax Deduction has been made and that any appropriate payment has been made to the relevant Tax Authority or other authority.
Appears in 1 contract
Samples: Issuer/Borrower Facility Agreement (Shurgard Storage Centers Inc)
Tax gross-up. (a) Notwithstanding anything in this Agreement The following provisions shall apply with respect to the contrary, if it shall be determined that any payments, benefits and distributions due excise tax imposed under this Agreement and those which are otherwise payable or distributable to or for the benefit Section 4999 of the Employee relating to Internal Revenue Code as amended (the termination "Code"), (the "Excise Tax"):
(i) If any of the Employee’s employment payments or benefits received or to be received by Executive in connection with a change Change in Control or Executive's termination of control of the Company, including a Change of Control employment (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwiseany other plan, including without limitation (i) paymentsarrangement or agreement with the Company, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration any person whose actions result in a Change in Control of the vesting of Company or any stock options person affiliated with the Company or other equity-based incentive awardsuch person (the "Total Payments")) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would will be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee Executive an additional payment amount (a “the "Gross-Up Payment”") in an amount such that the net amount retained by Executive after payment of (a) the payment by Excise Tax, if any, on the Employee of all taxes Total Payments and (including b) 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 Excise Tax imposed on and income tax due in respect of the Gross-Up Payment, shall equal the Employee retains an Total Payments. Such payment shall be made in a single lump sum within 10 days following the date a determination that only such payment is required.
(ii) For purposes of determining whether any of the Total Payments will be subject to Excise Tax and the amount of the Gross-Up Payment equal to the such Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a)Tax, if it (i) any Total Payments shall be determined that treated as "parachute payments" (within the Employee is entitled meaning of Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company and reasonably acceptable to a Gross-Up PaymentExecutive, but that such payments or benefits (in whole or in part) should not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Gross Payments would not be Code, and all "excess parachute payments" EMPLOYMENT AGREEMENT Mark S. Demilio (within the meaning of Section 280G(b)(1) of the Xxxx) xxxxx xx treated as subject to the Excise Tax if unless, in the Gross Payments were reduced by an amount that is equal to opinion of such tax counsel, such excess parachute payments (in whole or less than 10% in part) represent reasonable compensation for services actually rendered (within the meaning of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G 280G(b)(4)(B) of the Code), then the amounts payable to the Employee under this Agreement shall be reduced (but or are otherwise not below zero) to the maximum amount that could be paid to the Employee without giving rise subject to the Excise Tax (the “Safe Harbor Cap”)Tax, and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method ) the value of reduction is elected any noncash benefits or any deferred payment or benefit shall be determined by the Employee Company's independent auditors in a manner consistent accordance with the principles of Section 409A 280G(d)(3) of the Code. For purposes of reducing determining the Gross Payments to amount of the Safe Harbor CapGross-Up Payment, only amounts payable under this Agreement (and no other Gross Payments) Executive shall be reduced. If deemed to pay federal income and employment taxes at the reduction highest marginal rate of federal income and employment taxation in the amounts payable hereunder would not result calendar year in a reduction of which the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required to be made and state and local income and employment taxes at the amount highest marginal rate of taxation in the state and locality of Executive's residence on the date of termination of employment (or such other time as hereinafter described), net of the maximum reduction in federal income or employment taxes which could be obtained from deduction of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company state and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Companylocal taxes. In the event that the Accounting Firm Excise Tax is serving as accountant or auditor for subsequently determined to be less than the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required amount taken into account hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it termination of Executive's employment (or such other time as is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”hereinafter described), consistent with Executive shall repay to the calculations required to be made hereunder. In Company, at the event time that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year reduction in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remittedExcise Tax is finally determined, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company portion of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect Payment attributable to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 reduction plus interest and penalties) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to repayment at the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee shall be entitled to settle or contestapplicable federal rate, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided defined in Section 1274(b)(2)(B) of the Code. Notwithstanding In the foregoing provisions of this subsection 10(e), all such amounts payable by event that the Company shall be paid by Excise Tax is determined to exceed the end amount taken into account hereunder at the time of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case termination of a tax audit Executive's employment (or litigation addressing such other time as is hereinafter described) (including by reason of any payment the existence or amount of a tax liability, by which cannot be determined at the end time of the Employee’s taxable year following Gross-Up Payment), the Employee’s taxable year Company shall make an additional Gross-Up Payment in which respect of such excess (plus any interest at the taxes applicable federal rate, penalties or additions payable by Executive with respect to such excess) at the time that are the subject amount of audit such excess is finally determined. Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or litigation are remitted judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Total Payments.
Appears in 1 contract
Samples: Employment Agreement (Magellan Health Services Inc)
Tax gross-up. (a) Notwithstanding anything in this Agreement herein to the contrary, if it shall be is determined by the Company on or prior to the date the applicable payments and/or benefits are paid or thereafter by the Internal Revenue Service (the “IRS”) pursuant to an IRS audit of the Executive’s federal income tax return(s) (an “Audit”), that any payments, benefits and distributions due payment or benefit provided to the Executive under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest or penalties are incurred by the Employee with respect to the such excise tax (such excise tax, together with any such interest and penaltiesor penalties thereon, are hereinafter collectively is herein referred to as the “Excise Tax”), then the Company shall pay (either directly to the Employee IRS as tax withholdings or to the Executive as a reimbursement of any amount of taxes, interest and penalties paid by the Executive to the IRS) both the Excise Tax and an additional cash payment (a “Gross-Up Payment”) in an amount such that after will place the Executive in the same after-tax economic position that the Executive would have enjoyed if the payment by or benefit had not been subject to the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an Tax. The amount of the Gross-Up Payment equal to shall be calculated by the Company’s regular independent auditors based on the amount of the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made determined by the Company should have been made (“Underpayment”)or the IRS, consistent with the calculations required to be made hereunder. In the event and assuming that the Company exhausts its remedies pursuant to Section 10(c) and Executive pays taxes in the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine highest marginal tax brackets. If the amount of the Underpayment that has occurred and any such Underpayment shall be paid Excise Tax determined by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid IRS is greater than an amount previously determined by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remittedCompany, the end of Company’s auditors shall recalculate the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company amount of the Gross-Up Payment. Such notification The Executive shall be given as soon as practicable but no later than ten (10) business days after the Employee is informed in writing of such claim and shall apprise promptly notify the Company of the nature of such claim and the date on which such claim any IRS assertion during an Audit that an Excise Tax is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes due with respect to such claim is due). If any payment or benefit, but the Company notifies the Employee in writing prior Executive shall be under no obligation to the expiration of such period that it desires to contest such claim, the Employee 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 defend against such claim by an attorney reasonably selected by the IRS unless the Company requests, in writing, that the Executive undertake the defense of such IRS claim on behalf of the Company and at the Company;
(iii) ’s sole expense. In such event, the Company may elect to control the conduct to a final determination through counsel of it own choosing and at its sole expense, of any audit, administrative or judicial proceeding involving an asserted liability relating to the Excise Tax, and the Executive shall not settle, compromise or concede such asserted Excise Tax and the Executive shall cooperate with the Company in good faith in order effectively to contest such claim; and
(iv) permit the Company to participate in each phase of 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. The Total Consideration shall be increased (ain cash only) Notwithstanding anything in this Agreement as much as shall be necessary so that after actual payment of all (and solely) New York City and State Taxes by the Company or any of its subsidiaries imposed by any Governmental Authority as a result of the Transaction the Stockholders of the Company receive an amount equal to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or sum they would have received had Parent purchased the stock of the Company directly from the stockholders of the Company for the benefit of same Total Consideration (the Employee relating to "GROSS UP AMOUNT"); provided that the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would foregoing shall be subject to the excise tax imposed by Section 4999 following: (a) the Gross Up Amount shall in no event exceed US $1,780,000 plus five percent (5%) of the Code or any interest or penalties are incurred amount by which the Employee with respect to the excise tax Fortent Americas Allocation (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”defined herein) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
exceeds US $40,000,000; (b) Subject to for both New York State Corporate Franchise Tax and for New York City General Corporation Tax purposes, the provisions Company will not file combined reports with the Acquired Companies in the year of this Section 10the sale of the Shares of the Acquired Companies and that accordingly, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required the Tax Returns that the Company will file with the State of New York and the amount City of such Gross-Up PaymentNew York will report the gain or loss on the sale of the Shares the Acquired Companies as gain or loss from the disposition of subsidiary capital; (c) as promptly as practicable following the Closing, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen stockholders shall cause the Company to liquidate for U.S. Tax purposes; (15d) business days after there has been a PaymentParent and the Company shall jointly control any Tax audit or other proceeding relating to Taxes which results in payment of the Gross Up Amount; (e) the Company and the stockholders shall provide to Parent such cooperation and information, as and to the extent reasonably requested, in connection with the foregoing; (f) neither the Company nor Parent may settle, compromise or pay any such earlier time as requested by excess Tax, without the Company. In prior written consent of the other party; and (g) in the event that the Accounting Firm Total Consideration is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where increased as a result of this Section, then from such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Gross Up Payment. Such notification Amount to be paid shall be given as soon as practicable but no later than ten (10) business days after deducted the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be Planning Expenses previously paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Buyers.
Appears in 1 contract
Samples: Share Purchase and Sale Agreement (Nice Systems LTD)
Tax gross-up. (a) Notwithstanding anything in this Agreement to In the contrary, if event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution of any type to or for the benefit of the Employee relating to Employee, by the termination of the Employee’s employment in connection with a change of Company, any Affiliate, any person who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of the Internal Revenue Code of 1986, including a Change as amended (the “Code”), and the regulations thereunder) or any Affiliate of Control (such person, whether paid or payable or distributed or distributable pursuant to any of the terms of this Agreement or otherwise, including without limitation otherwise (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Total Payments”), would is or will be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company Employee shall pay be entitled to the Employee receive an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, including any income taxes (and any interest and penalties tax, employment tax or Excise Tax, imposed with respect thereto) and Excise Tax imposed on upon the Gross-Gross Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on upon the Gross Total Payments. Notwithstanding the foregoing provisions of this Section 10(a)All mathematical determinations, if it shall be determined that the Employee is entitled and all determinations as to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% whether any of the portion of the Gross Total Payments that would be treated as are “parachute payments” under (within the meaning of Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations that are required to be made under this Section 10, including, including determinations as to whether and when a Gross-Up Payment is required and required, the amount of such Gross-Up PaymentPayment and amounts relevant to the last sentence of this Section, shall be made by a nationally recognized an independent accounting firm designated selected by the Company Employee from among the five (5) largest accounting firms in the United States (the “Accounting Firm”) ), which shall provide its determination (the “Determination”), together with detailed supporting calculations regarding the amount of any Gross-Up Payment and any other relevant matter, both to the Company and the Employee within fifteen by no later than ten (1510) business days after there has been a Paymentfollowing the Termination Date, if applicable, or such earlier time as is requested by the CompanyCompany or the Employee (if the Employee reasonably believes that any of the Total Payments may be subject to the Excise Tax). In the event that If the Accounting Firm determines that no Excise Tax is serving as accountant or auditor for payable by the individualEmployee, entity or group effecting it shall furnish the Change of Control, Employee and the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the with a written statement that such Accounting Firm hereunder)has concluded that no Excise Tax is payable (including the reasons therefor) and that the Employee has substantial authority not to report any Excise Tax on his or her federal income tax return. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any If a Gross-Up PaymentPayment is determined to be payable, as determined pursuant to this Section 10, it shall be paid by the Company to the Employee as provided in Section 10(e)within twenty (20) days after the Determination (and all accompanying calculations and other material supporting the Determination) is delivered to the Company by the Accounting Firm. Any determination by the Accounting Firm shall be binding upon the Company and the Employee, absent manifest error. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with or that Gross-Up Payments will have been made by the calculations required to be Company which should not have been made hereunder(“Overpayments”). In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Taxeither such event, the Accounting Firm shall determine the amount of the Underpayment or Overpayment that has occurred and any occurred. In the case of an Underpayment, the amount of such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in . In the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claiman Overpayment, the Employee shall:
(i) give , at the Company any information reasonably requested by direction and expense of the Company relating to such claim;
(ii) Company, take such action in connection with contesting such claim steps as are reasonably necessary (including the Company shall reasonably request in writing from time to timefiling of returns and claims for refund), includingfollow reasonable instructions from, without limitationand procedures established by, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;
(iii) , and otherwise reasonably cooperate with the Company in good faith in order effectively to contest correct such claim; and
(iv) permit the Company to participate in any proceedings relating to such claim; Overpayment, provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penaltiesi) incurred in connection with such contest for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect in any event be obligated to return to the Company an amount greater than the net after-tax portion of paid costs the Overpayment that he or she has retained or has recovered as a refund from the applicable taxing authorities and expenses (ii) this provision shall be interpreted in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 manner consistent with the taxing authority in respect intent of such claim and maySection, at its sole option, either direct which is to make the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmlesswhole, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension the application of the statute Excise Tax, it being understood that the correction of limitations relating to payment of taxes for the taxable year of an Overpayment may result in the Employee with respect repaying to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from which is less than the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation)Overpayment.
Appears in 1 contract
Samples: Change in Control Agreement (Brandywine Realty Trust)
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary notwithstanding, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation ) (a "Payment") (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “"Excise Tax”)") or (ii) is made pursuant to a Change of Control, then the Company Employee shall pay be entitled to the Employee receive an additional payment (a “"Gross-Up Payment”") in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Payment and Gross-Up Payment, the Employee retains an amount of equal to (x) the Payment plus (y) the Excise Tax (if any) imposed upon the Payment and the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 1010(c), all determinations required to be made under this Section 10, including, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”"ACCOUNTING FIRM") which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of in Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e)within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”"UNDERPAYMENT"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or 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 the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or 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. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 1010(c), 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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; providedPROVIDED, howeverHOWEVER, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s 's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 1010(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s 's complying with the requirements of Section 10) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 1010(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 hereof shall be made upon not later than the first tenth (10th) day following the six-month anniversary of the termination of the Employee’s 's employment; providedPROVIDED, howeverHOWEVER, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, Employee of the minimum amount of such payments to which the Employee is clearly entitled. The Company entitled and shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section section 1274(b)(2)(B) of the Code) on as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the date specified for payment termination of the initial estimateEmployee's employment. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess shall constitute a loan by the Company to the Company Employee, payable on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Samples: Change of Control Agreement (Equitable Resources Inc /Pa/)
Tax gross-up. (a) Notwithstanding anything in this Agreement All payments by the Company must be made free and clear of and without deduction for any and all present or future taxes, levies, imposts. deductions, charges or withholdings, and all liabilities with respect thereto.
(b) If any Party is required by law to the contrary, if it shall be determined that deduct any payments, benefits and distributions due under this Agreement and those which are otherwise non-excluded taxes from any sum payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation by such Party (i) payments, benefits the amount payable will be increased as may be necessary so that after the Party and distributions pursuant the Lender have made all required deductions (including deductions applicable to additional sums payable under this Section 3 of this Agreement16.1(b)) the Lender receives an amount equal to the sum it would have received had no such deductions been made, and (ii) deemed amounts under the CodeParty will pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. The Company will indemnify the Lender for and hold it harmless against the full amount of taxes of any kind imposed by any jurisdiction, resulting imposed on or paid by Lender and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 10 (ten) Trading Days from the acceleration date the Lender makes written demand therefor.
(c) A payment shall not be increased under paragraph (b) above by reason of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee Swiss Withholding Tax with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a)Lender, if it shall be determined that an Event of Default has not occurred or is continuing and the Employee is entitled to a GrossNon-Up Payment, but that the Gross Payments Bank Rules would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionhave been violated if.
(bi) Subject such Lender, in relation to which the provisions of this Section 10Company makes the payment, all determinations required was a Qualifying Bank but on that date that Lender is not or has ceased to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time Qualifying Bank other than as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of any change of law after the uncertainty date it became a Lender under the Agreement;
(ii) such Lender, in relation to which the application of Section 4999 Company makes the payment, would be considered as one (1) creditor only for the purposes of the Code at Non-Bank Rules but on that date that Lender is not or has ceased to be classified as one creditor only for the time purposes of the initial determination by Non-Bank Rules other than as a result of any change of law after the Accounting Firm hereunderdate it became a Lender under the Agreement; or
(iii) such Lender, it is possible that Gross-Up Payments in relation to which will not have been made by the Company should makes the payment, had complied with its obligations in accordance with Section 18.2; or
(iv) the Lenders would have been made (“Underpayment”), consistent complied with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to their obligations in accordance with Section 10(c) 18.2 and the Employee thereafter is required Lender, in relation to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits Swiss Company makes the related taxes orpayment, in the case of became a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where Lender as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements breach of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid18.2.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Samples: Convertible Term Loan Facility Agreement (Wisekey International Holding S.A.)
Tax gross-up. (a) Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable or distributable to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including without limitation (i) payments, benefits and distributions pursuant to Section 3 of this Agreement, including the Additional Payment, and (ii) deemed amounts under the Internal Revenue Code of 1986, as amended (the “Code”), resulting from the acceleration of the vesting of any stock options or other equity-based incentive award) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Employee an additional payment (a “Gross-Up Payment”) in an amount such that after the payment by the Employee 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 Excise Tax imposed on the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Gross Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments would not be subject to the Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of this Section 10, all determinations required to be made under this Section 10, including, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-–Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e)within five days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or 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 the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon not later than the first tenth (10th) day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company entitled and shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the date specified for payment termination of the initial estimateEmployee’s employment. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess shall constitute a loan by the Company to the Company Employee, payable on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).this
Appears in 1 contract
Samples: Change of Control Agreement (Equitable Resources Inc /Pa/)
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary ------------ notwithstanding and except as provided in Section 5.1(c) or as set forth in paragraph (b) of this Section 5.2, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation (i) payments, benefits and distributions pursuant regard to any additional payments required under this Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award5.2) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), a "Subject Payment") would be subject ------- ------- to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the such excise tax (such excise tax, together with any such interest and penalties, are being hereinafter collectively referred to as the “"Excise Tax”"), then the Company following provisions ------ --- shall pay be applicable:
(a) The Employee shall be entitled to the Employee receive an additional payment (a “"Gross-Up up Payment”") in an amount such that after the payment by the Employee of all -------- ------- taxes (including any interest or penalties imposed with respect to such taxes), including, including without limitation, limitation any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up up Payment, the Employee retains an amount of the Gross-Up up Payment equal to the Excise Tax imposed on upon the Gross Subject Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments .
(b) -8- would not be subject give rise to the any Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the CodeTax, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up up Payment shall be made to the Employee. The reduction of Employee and the amounts payable hereunderSubject Payments, if applicablein the aggregate, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments reduced to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionReduced Amount.
(bc) Subject to the provisions of this Section 10, all All determinations required to be made under this Section 105.2, including, including whether and when a Gross-Up up Payment is required and the amount of such Gross-Up Paymentup Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized Xxxxxx Xxxxxxxx LLP or such other 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 the Employee within fifteen (15) business days after of the receipt of notice from the Employee that there has been a Subject Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Controlany Acquiring Person, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Tax gross-up. (a) Notwithstanding anything Anything in this Agreement to the contrarycontrary ------------ notwithstanding and except as provided in Section 5.1(c) or as set forth in paragraph (b) of this Section 5.2, if in the event it shall be determined that any payments, benefits and distributions due under this Agreement and those which are otherwise payable payment or distributable distribution by the Company to or for the benefit of the Employee relating to the termination of the Employee’s employment in connection with a change of control of the Company, including a Change of Control (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including but determined without limitation (i) payments, benefits and distributions pursuant regard to any additional payments required under this Section 3 of this Agreement, and (ii) deemed amounts under the Code, resulting from the acceleration of the vesting of any stock options or other equity-based incentive award5.2) (all such payments, benefits and distributions being referred to herein as “Gross Payments”), a "Subject Payment") would be subject --------------- to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to the such excise tax (such excise tax, together with any such interest and penalties, are being hereinafter collectively referred to as the “"Excise Tax”"), then the Company following provisions ---------- shall pay be applicable:
(a) The Employee shall be entitled to the Employee receive an additional payment (a “"Gross-Up up Payment”") in an amount such that after the payment by the Employee of all ----------------- taxes (including any interest or penalties imposed with respect to such taxes), including, including without limitation, limitation any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on upon the Gross-Up up Payment, the Employee retains an amount of the Gross-Up up Payment equal to the Excise Tax imposed on upon the Gross Subject Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Gross Payments .
(b) would not be subject give rise to the any Excise Tax if the Gross Payments were reduced by an amount that is equal to or less than 10% of the portion of the Gross Payments that would be treated as “parachute payments” under Section 280G of the CodeTax, then the amounts payable to the Employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to the Employee without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up up Payment shall be made to the Employee. The reduction of Employee and the amounts payable hereunderSubject Payments, if applicablein the aggregate, shall be made by reducing first the payments under Sections 3(a)(i) and (ii), unless an alternative method of reduction is elected by the Employee in a manner consistent with Section 409A of the Code. For purposes of reducing the Gross Payments reduced to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Gross Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Gross Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provisionReduced Amount.
(bc) Subject to the provisions of this Section 10, all All determinations required to be made under this Section 105.2, including, including whether and when a Gross-Up up Payment is required and the amount of such Gross-Up Paymentup Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized Xxxxxx Xxxxxxxx LLP or such other 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 the Employee within fifteen (15) business days after of the receipt of notice from the Employee that there has been a Subject Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Controlany Acquiring Person, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee as provided in Section 10(e). Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any income taxes or Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Employee on the thirtieth (30th) day following the final determination of the amount; provided, further, that all such amounts shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee 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. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee 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 effectively to 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 for the period commencing upon the Effective Date and ending upon the Employee’s death and shall indemnify and hold the Employee harmless, on an after-tax basis, for any income taxes or Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Such costs and expenses incurred within a particular year shall be paid no later than the end of the Employee’s taxable year following the taxable year in which the costs and expenses were incurred. The amount of costs and expenses incurred in one taxable year of the Employee shall not affect the amount of paid costs and expenses in a different taxable year and such payment shall not be subject to liquidation or exchange for another benefit. Without limitation on the foregoing provisions of this Section 10, 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 the Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Employee 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, however, that if the Company directs the Employee to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any income taxes or Excise 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; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Employee 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.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 10) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), on the thirtieth (30th) day following the receipt of such refund. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven on the date such determination becomes final and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The payments provided for in this Section 10 shall be made upon the first day following the six-month anniversary of the termination of the Employee’s employment; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in good faith by the Employee, of the minimum amount of such payments to which the Employee is clearly entitled. The Company shall pay the remainder of such payments (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) on the thirtieth (30th) day after the date specified for payment of the initial estimate. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, the Employee shall repay such excess to the Company on the fifth (5th) business day after calculation of the correct amount and demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event the Company should fail to pay when due the amounts described in this Section 10, the Employee shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this Section 10, to the date of payment at a rate equal to 120% of the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this subsection 10(e), all such amounts payable by the Company shall be paid by the end of the Employee’s taxable year next following the Employee’s taxable year in which the Employee remits the related taxes or, in the case of a tax audit or litigation addressing the existence or amount of a tax liability, by the end of the Employee’s taxable year following the Employee’s taxable year in which the taxes that are the subject of audit or litigation are remitted to the taxing authority (or where as a result of such audit or litigation no taxes are remitted, the end of the Employee’s taxable year following the Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).
Appears in 1 contract
Samples: Key Employee Retention Agreement (General Scanning Inc \Ma\)
