Treatment of Certain Payments. (a) So long as each of the Company and each entity that is treated as a single entity with the Company for purposes of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) qualifies as a corporation described in either Section 280G(b)(5)(A)(i) or Section 280G(b)(5)(A)(ii)(I) of the Code, the Company shall use customary, reasonable and good faith efforts to avoid all, or any portion, of any payments or benefits provided under this Agreement or otherwise, either alone or together with other payments or benefits that Executive receives or is entitled to receive from the Company or any of its Affiliates (“Payments”), from constituting an “excess parachute payment” within the meaning of Section 280G of the Code, including by seeking a vote of stockholders of the Company or any other applicable entity in a manner and form that is intended to comply with the stockholder approval procedures set forth in Section 280G(b)(5)(B) of the Code (the “280G Stockholder Approval Procedure”). (b) In the event that the 280G Stockholder Approval Procedure is not available to the Company, anything in this Agreement to the contrary notwithstanding, in the event that the Accounting Firm (as defined below) shall determine that receipt of all Payments would subject Executive to the excise tax under Section 4999 of the Code, the Accounting Firm shall determine whether to reduce any of the Payments paid or payable pursuant to the Agreement (the “Agreement Payments”) so that the Parachute Value (as defined below) of all Payments, in the aggregate, equals the Safe Harbor Amount (as defined below). The Agreement Payments shall be so reduced only if the Accounting Firm determines that Executive would have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced. If the Accounting Firm determines that Executive would not have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced, Executive shall receive all Agreement Payments to which Executive is entitled hereunder. (c) If the Accounting Firm determines that aggregate Agreement Payments should be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, the Company shall promptly give Executive notice to that effect and a copy of the detailed calculation thereof. All determinations made by the Accounting Firm under this Section 8 shall be binding upon the Company and its Affiliates and Executive and shall be made as soon as reasonably practicable and in no event later than 15 days following the Date of Termination. For purposes of reducing the Agreement Payments so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, only amounts payable under the Agreement (and no other Payments) shall be reduced. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing the payments and benefits under the following sections in the following order: (i) cash payments that may not be valued under Treas. Reg. § l.280G-l, Q&A-24(c) (“24(c)”), (ii) equity-based payments that may not be valued under 24(c), (iii) cash payments that may be valued under 24(c), (iv) equity-based payments that may be valued under 24(c) and (v) other types of benefits. With respect to each category of the foregoing, such reduction shall occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and next with respect to payments that are deferred compensation, in each case, beginning with payments or benefits that are to be paid the farthest in time from the determination of the Accounting Firm. All reasonable fees and expenses of the Accounting Firm shall be borne solely by the Company. (d) 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 amounts will have been paid or distributed by the Company to or for the benefit of Executive pursuant to this Agreement which should not have been so paid or distributed (each, an “Overpayment”) or that additional amounts that will have not been paid or distributed by the Company to or for the benefit of Executive pursuant to this Agreement could have been so paid or distributed (each, an “Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or Executive that the Accounting Firm believes has a high probability of success determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of Executive shall be repaid by Executive to the Company (as applicable) together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no such repayment shall be required if and to the extent such deemed repayment would not either reduce the amount on which Executive is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. (e) To the extent requested by Executive, the Company shall cooperate with Executive in good faith in valuing, and the Accounting Firm shall take into account the value of, services provided or to be provided by Executive (including Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant, before, on or after the date of a change in ownership or control of the Company (within the meaning of Q&A-2(b) of the final regulations under Section 280G of the Code), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the final regulations under Section 280G of the Code in accordance with Q&A-5(a) of the final regulations under Section 280G of the Code. (f) The following terms shall have the following meanings for purposes of this Section 8:
Appears in 1 contract
Samples: Employment Agreement (Westrock Coffee Holdings, LLC)
Treatment of Certain Payments. (a) So long as each of the Company and each entity that is treated as a single entity with the Company for purposes of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) qualifies as a corporation described in either Section 280G(b)(5)(A)(i) or Section 280G(b)(5)(A)(ii)(I) of the Code, the Company shall use customary, reasonable and good faith efforts to avoid all, or any portion, of any payments or benefits provided under this Agreement or otherwise, either alone or together with other payments or benefits that Executive receives or is entitled to receive from the Company or any of its Affiliates (“Payments”), from constituting an “excess parachute payment” within the meaning of Section 280G of the Code, including by seeking a vote of stockholders of the Company or any other applicable entity in a manner and form that is intended to comply with the stockholder approval procedures set forth in Section 280G(b)(5)(B) of the Code (the “280G Stockholder Approval Procedure”).
(b) In the event that the 280G Stockholder Approval Procedure is not available to the Company, anything in this Agreement to the contrary notwithstanding, in the event that the Accounting Firm (as defined below) shall determine that receipt of all Payments would subject Executive to the excise tax under Section 4999 of the Code, the Accounting Firm shall determine whether to reduce any of the Payments paid or payable pursuant to the Agreement (the “Agreement Payments”) so that the Parachute Value (as defined below) of all Payments, in the aggregate, equals the Safe Harbor Amount (as defined below). The Agreement Payments shall be so reduced only if the Accounting Firm determines that Executive would have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced. If the Accounting Firm determines that Executive would not have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced, Executive shall receive all Agreement Payments to which Executive is entitled hereunder.
(c) If the Accounting Firm determines that aggregate Agreement Payments should be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, the Company shall promptly give Executive notice to that effect and a copy of the detailed calculation thereof. All determinations made by the Accounting Firm under this Section 8 shall be binding upon the Company and its Affiliates and Executive and shall be made as soon as reasonably practicable and in no event later than 15 days following the Date of Termination. For purposes of reducing the Agreement Payments so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, only amounts payable under the Agreement (and no other Payments) shall be reduced. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing the payments and benefits under the following sections in the following order: (i) cash payments that may not be valued under Treas. Reg. § l.280G-l1.280G-1, Q&A-24(c) (“24(c)”), (ii) equity-equity based payments that may not be valued under 24(c), (iii) cash payments that may be valued under 24(c), (iv) equity-based payments that may be valued under 24(c) and (v) other types of benefits. With respect to each category of the foregoing, such reduction shall occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and next with respect to payments that are deferred compensation, in each case, beginning with payments or benefits that are to be paid the farthest in time from the determination of the Accounting Firm. All reasonable fees and expenses of the Accounting Firm shall be borne solely by the Company.
(d) 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 amounts will have been paid or distributed by the Company to or for the benefit of Executive pursuant to this Agreement which should not have been so paid or distributed (each, an “Overpayment”) or that additional amounts that will have not been paid or distributed by the Company to or for the benefit of Executive pursuant to this Agreement could have been so paid or distributed (each, an “Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or Executive that the Accounting Firm believes has a high probability of success determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of Executive shall be repaid by Executive to the Company (as applicable) together with interest at the applicable federal rate provided for in Section 7872(f)(27872(0(2) of the Code; provided, however, that no such repayment shall be required if and to the extent such deemed repayment would not either reduce the amount on which Executive is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive together with interest at the applicable federal rate provided for in Section 7872(f)(27872{0(2) of the Code.
(e) To the extent requested by Executive, the Company shall cooperate with Executive in good faith in valuing, and the Accounting Firm shall take into account the value of, services provided or to be provided by Executive (including Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant, before, on or after the date of a change in ownership or control of the Company (within the meaning of Q&A-2(b) of the final regulations under Section 280G of the Code), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 Q&A 40 to Q&A-44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the final regulations under Section 280G of the Code in accordance with Q&A-5(a) of the final regulations under Section 280G of the Code.
(f) The following terms shall have the following meanings for purposes of this Section 8:
Appears in 1 contract
Samples: Employment Agreement (Westrock Coffee Holdings, LLC)
Treatment of Certain Payments. (a) So long as each of the Company and each entity that is treated as a single entity with the Company for purposes of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) qualifies as a corporation described in either Section 280G(b)(5)(A)(i) or Section 280G(b)(5)(A)(ii)(I) of the Code, the Company shall use customary, reasonable and good faith efforts to avoid all, or any portion, of any payments or benefits provided under this Agreement or otherwise, either alone or together with other payments or benefits that Executive receives or is entitled to receive from the Company or any of its Affiliates (“Payments”), from constituting an “excess parachute payment” within the meaning of Section 280G of the Code, including by seeking a vote of stockholders of the Company or any other applicable entity in a manner and form that is intended to comply with the stockholder approval procedures set forth in Section 280G(b)(5)(B) of the Code (the “280G Stockholder Approval Procedure”).
(b) In the event that the 280G Stockholder Approval Procedure is not available to the Company, anything Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that (i) any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Accounting Firm Company (as defined belowor any of its affiliated entities) shall determine that receipt or any entity which effectuates a Change in Control (or any of all Payments its affiliated entities) to or for your benefit (whether pursuant to the terms of this Agreement or otherwise) (the “Payments”) would be subject Executive to the excise tax under imposed by Section 4999 of the Code, the Accounting Firm shall determine whether to reduce any of the Payments paid or payable pursuant to the Agreement Code (the “Excise Tax”), and (ii) the reduction of the amounts payable to you, whether under this Agreement Paymentsor otherwise, to the maximum amount that could be paid to you without giving rise to the Excise Tax (the “Safe Harbor Cap”) so that would provide you with a greater after tax amount than if such amounts were not reduced, then the Parachute Value amounts payable to you under this Agreement shall be reduced (as defined belowbut not below zero) of all Payments, in the aggregate, equals to the Safe Harbor Amount (as defined below). The Agreement Payments shall be so reduced only if the Accounting Firm determines that Executive would have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced. If the Accounting Firm determines that Executive would not have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced, Executive shall receive all Agreement Payments to which Executive is entitled hereunder.
(c) If the Accounting Firm determines that aggregate Agreement Payments should be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, the Company shall promptly give Executive notice to that effect and a copy of the detailed calculation thereof. All determinations made by the Accounting Firm under this Section 8 shall be binding upon the Company and its Affiliates and Executive and shall be made as soon as reasonably practicable and in no event later than 15 days following the Date of Termination. For purposes of reducing the Agreement Payments so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, only amounts payable under the Agreement (and no other Payments) shall be reducedCap. The reduction of the amounts payable hereunderto you, if applicable, shall be made by reducing first cash severance, followed by equity vestings, etc.
(b) All determinations required to be made under this Section 6 shall be made by the payments public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and benefits under you within fifteen (15) business days of the following sections receipt of notice from the Company or the Executive that there has been a Payment, or such earlier time as is requested by the Company. Notwithstanding the foregoing, in the following order: event (i) cash payments the Board of Directors of the Company (the “Board”) shall determine prior to the Change in Control that may not be valued the Accounting Firm is precluded from performing such services under Treas. Reg. § l.280G-l, Q&A-24(c) (“24(c)”), applicable auditor independence rules or (ii) equity-based payments the Audit Committee of the Board determines that may it does not be valued under 24(c), want the Accounting Firm to perform such services because of auditor independence concerns or (iii) cash payments that may be valued under 24(c), (iv) equity-based payments that may be valued under 24(c) and (v) other types of benefits. With respect to each category of the foregoing, such reduction shall occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and next with respect to payments that are deferred compensation, in each case, beginning with payments or benefits that are to be paid the farthest in time from the determination of the Accounting FirmFirm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Board shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). If payments are reduced to the Safe Harbor Cap, the Accounting Firm shall provide a reasonable opinion to you that he or she is not required to report any Excise Tax on his or her federal income tax return. All reasonable fees fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Accounting Firm shall be borne solely by the Company. If the Accounting Firm determines that no Excise Tax is payable by you, it shall furnish you with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on your applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish you with a written opinion to such effect. The determination by the Accounting Firm shall be binding upon the Company and you (except as provided in paragraph (c) below).
(dc) If it is established pursuant to a final determination of a court or the Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that Payments have been made to, or provided for the benefit of, you by the Company, which are in excess of the limitations provided in this Section 6 (hereinafter referred to as an “Excess Payment”), such Excess Payment shall be deemed for all purposes to be a loan to you made on the date you received the Excess Payment and you shall repay the Excess Payment to the Company on demand, together with interest on the Excess Payment at the applicable federal rate (as defined in Section 1274(d) of the Code) from the date of your receipt of such Excess Payment until the date of such repayment. 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 hereunderdetermination, it is possible that amounts Payments which will not have been paid or distributed made by the Company to or for the benefit of Executive pursuant to this Agreement which should not have been so paid or distributed made (each, an “Overpayment”) or that additional amounts that will have not been paid or distributed by the Company to or for the benefit of Executive pursuant to this Agreement could have been so paid or distributed (each, an “Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereundercalculations required to be made under this Section 6. In the event that it is determined (i) by the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or Executive that the Accounting Firm believes has a high probability of success determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of Executive shall be repaid by Executive to the Company (as applicable) which shall include the position taken by the Company, or together with interest at its consolidated group, on its federal income tax return) or the applicable federal rate provided for in Section 7872(f)(2IRS or (ii) of the Code; providedpursuant to a determination by a court, however, that no such repayment shall be required if and to the extent such deemed repayment would not either reduce the amount on which Executive is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any the Company shall pay an amount equal to such Underpayment shall be promptly paid by the Company to or for the benefit you within ten (10) days of Executive such determination together with interest on such amount at the applicable federal rate provided for in Section 7872(f)(2) of from the Code.
(e) To the extent requested by Executive, the Company shall cooperate with Executive in good faith in valuing, and the Accounting Firm shall take into account the value of, services provided or date such amount would have been paid to be provided by Executive (including Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant, before, on or after you until the date of a change payment. You shall cooperate, to the extent your expenses are reimbursed by the Company, with any reasonable requests by the Company in ownership connection with any contests or control disputes with the Internal Revenue Service in connection with the Excise Tax or the determination of the Company (within the meaning of Q&A-2(b) of the final regulations under Section 280G of the Code), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the final regulations under Section 280G of the Code in accordance with Q&A-5(a) of the final regulations under Section 280G of the CodeExcess Payment.
(f) The following terms shall have the following meanings for purposes of this Section 8:
Appears in 1 contract
Treatment of Certain Payments. (a) So long as each of the Company and each entity that is treated as a single entity with the Company for purposes of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) qualifies as a corporation described in either Section 280G(b)(5)(A)(i) or Section 280G(b)(5)(A)(ii)(I) of the Code, the Company shall use customary, reasonable and good faith efforts to avoid all, or any portion, of any payments or benefits provided under this Agreement or otherwise, either alone or together with other payments or benefits that Executive receives or is entitled to receive from the Company or any of its Affiliates (“Payments”), from constituting an “excess parachute payment” within the meaning of Section 280G of the Code, including by seeking a vote of stockholders of the Company or any other applicable entity in a manner and form that is intended to comply with the stockholder approval procedures set forth in Section 280G(b)(5)(B) of the Code (the “280G Stockholder Approval Procedure”).
(b) In the event that the 280G Stockholder Approval Procedure is not available to the Company, anything a. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that (i) any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity which effectuates a Change in Control (or any of its affiliated entities) to or for your benefit (whether pursuant to the terms of this Agreement or otherwise) (the “Payments”) would be subject to the excise tax imposed by section 4999 of the Code (the “Excise Tax”), and (ii) the reduction of the amounts payable to you, whether under this Agreement or otherwise, to the maximum amount that could be paid to you without giving rise to the Excise Tax (the “Safe Harbor Cap”) would provide you with a greater after tax amount than if such amounts were not reduced, then the Payments shall be reduced (but not below zero) to the Safe Harbor Cap. Any such reduction shall occur in the following order: (A) by eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the fair market value (and if there is more than one option award so outstanding, then the acceleration of the vesting of the most “under water” option shall be reduced first, and so-on); (B) by reducing the severance payment hereunder and any other cash payments not subject to section 409A of the Code; (C) by reducing any benefit continuation payments (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); (D), by reducing any cash payments that are subject to section 409A of the Code (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); (E) by reducing the payments of any restricted stock, restricted stock units, performance awards or similar equity-based awards that have been awarded to you by the Company that are subject to performance-based vesting (and if there be more than one such award held by you, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); (F) by reducing the payments of any restricted stock, restricted stock units, performance awards or similar equity-based awards that have been awarded to you by the Company that are subject to time-based vesting (and if there be more than one such award held by you, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); and (G) by reducing the acceleration of vesting of any stock options that are not described in (A), above.
b. All determinations required to be made under this Section 3 shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and you within fifteen (15) business days of the receipt of notice from the Company or you that there has been a Payment, or such earlier time as is requested by the Company. Notwithstanding the foregoing, in the event (i) the Board of Directors of the Company (the “Board”) shall determine prior to the Change in Control that the Accounting Firm is precluded from performing such services under applicable auditor independence rules or (ii) the Audit Committee of the Board determines that it does not want the Accounting Firm to perform such services because of auditor independence concerns or (iii) the Accounting Firm is serving as defined below) accountant or auditor for the individual, entity or group effecting the Change in Control, the Board shall determine that receipt of all Payments would subject Executive appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). If payments are reduced to the excise tax under Section 4999 of the CodeSafe Harbor Cap, the Accounting Firm shall determine whether provide a reasonable opinion to reduce you that you are not required to report any Excise Tax on your federal income tax return. All fees, costs and expenses (including, but not limited to, the costs of the Payments paid or payable pursuant to the Agreement (the “Agreement Payments”) so that the Parachute Value (as defined belowretaining experts) of all Payments, in the aggregate, equals the Safe Harbor Amount (as defined below). The Agreement Payments shall be so reduced only if the Accounting Firm determines that Executive would have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if shall be borne by the Agreement Payments were so reducedCompany. If the Accounting Firm determines that Executive would no Excise Tax is payable by you, it shall furnish you with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on your applicable federal income tax return will not have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced, Executive shall receive all Agreement Payments to which Executive is entitled hereunder.
(c) If the Accounting Firm determines that aggregate Agreement Payments should be reduced so that the Parachute Value of all Payments, result in the aggregate, equals the Safe Harbor Amount, the Company shall promptly give Executive notice to that effect and imposition of a copy of the detailed calculation thereofnegligence or similar penalty. All determinations made The determination by the Accounting Firm under this Section 8 shall be binding upon the Company and its Affiliates you (except as provided in paragraph (c) below).
c. If it is established pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and Executive and shall be conclusively resolved, that Payments have been made as soon as reasonably practicable and to, or provided for the benefit of, you by the Company, which are in no event later than 15 days following the Date of Termination. For purposes of reducing the Agreement Payments so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, only amounts payable under the Agreement (and no other Payments) shall be reduced. The reduction excess of the amounts payable hereunder, if applicable, shall be made by reducing the payments and benefits under the following sections limitations provided in the following order: this Section 3 (i) cash payments that may not be valued under Treas. Reg. § l.280G-l, Q&A-24(c) (hereinafter referred to as an “24(c)Excess Payment”), such Excess Payment shall be deemed for all purposes to be a loan to you made on the date you received the Excess Payment and you shall repay the Excess Payment to the Company on demand, together with interest on the Excess Payment at the applicable federal rate (iias defined in section 1274(d) equity-based payments that may not be valued under 24(c), (iii) cash payments that may be valued under 24(c), (iv) equity-based payments that may be valued under 24(c) and (v) other types of benefits. With respect to each category of the foregoing, such reduction shall occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and next with respect to payments that are deferred compensation, in each case, beginning with payments or benefits that are to be paid the farthest in time Code) from the determination date of your receipt of such Excess Payment until the Accounting Firmdate of such repayment. All reasonable fees and expenses of the Accounting Firm shall be borne solely by the Company.
(d) 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 hereunderdetermination, it is possible that amounts Payments which will not have been paid or distributed made by the Company to or for the benefit of Executive pursuant to this Agreement which should not have been so paid or distributed made (each, an “Overpayment”) or that additional amounts that will have not been paid or distributed by the Company to or for the benefit of Executive pursuant to this Agreement could have been so paid or distributed (each, an “Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereundercalculations required to be made under this Section 3. In the event that it is determined (i) by the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or Executive that the Accounting Firm believes has a high probability of success determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of Executive shall be repaid by Executive to the Company (as applicable) which shall include the position taken by the Company, or together with interest at its consolidated group, on its federal income tax return) or the applicable federal rate provided for in Section 7872(f)(2IRS or (ii) of the Code; providedpursuant to a determination by a court, however, that no such repayment shall be required if and to the extent such deemed repayment would not either reduce the amount on which Executive is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any the Company shall pay an amount equal to such Underpayment shall be promptly paid by the Company to or for the benefit you within ten (10) days of Executive such determination together with interest on such amount at the applicable federal rate provided for in Section 7872(f)(2) of from the Code.
(e) To the extent requested by Executive, the Company shall cooperate with Executive in good faith in valuing, and the Accounting Firm shall take into account the value of, services provided or date such amount would have been paid to be provided by Executive (including Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant, before, on or after you until the date of a change payment. You shall cooperate, to the extent your expenses are reimbursed by the Company, with any reasonable requests by the Company in ownership connection with any contests or control disputes with the Internal Revenue Service in connection with the Excise Tax or the determination of the Company (within the meaning of Q&A-2(b) of the final regulations under Section 280G of the Code), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the final regulations under Section 280G of the Code in accordance with Q&A-5(a) of the final regulations under Section 280G of the CodeExcess Payment.
(f) The following terms shall have the following meanings for purposes of this Section 8:
Appears in 1 contract
Samples: Change in Control Agreement (RR Donnelley & Sons Co)
Treatment of Certain Payments. (a) So long as each of the Company and each entity that is treated as a single entity with the Company for purposes of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) qualifies as a corporation described in either Section 280G(b)(5)(A)(i) or Section 280G(b)(5)(A)(ii)(I) of the Code, the Company shall use customary, reasonable and good faith efforts to avoid all, or any portion, of any payments or benefits provided under this Agreement or otherwise, either alone or together with other payments or benefits that Executive receives or is entitled to receive from the Company or any of its Affiliates (“Payments”), from constituting an “excess parachute payment” within the meaning of Section 280G of the Code, including by seeking a vote of stockholders of the Company or any other applicable entity in a manner and form that is intended to comply with the stockholder approval procedures set forth in Section 280G(b)(5)(B) of the Code (the “280G Stockholder Approval Procedure”).
(b) In the event that the 280G Stockholder Approval Procedure is not available to the Company, anything Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that (i) any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Accounting Firm Company (as defined belowor any of its affiliated entities) shall determine that receipt or any entity which effectuates a Change in Control (or any of all Payments its affiliated entities) to or for your benefit (whether pursuant to the terms of this Agreement or otherwise) (the “Payments”) would be subject Executive to the excise tax under imposed by Section 4999 of the Code, the Accounting Firm shall determine whether to reduce any of the Payments paid or payable pursuant to the Agreement Code (the “Excise Tax”), and (ii) the reduction of the amounts payable to you, whether under this Agreement Paymentsor otherwise, to the maximum amount that could be paid to you without giving rise to the Excise Tax (the “Safe Harbor Cap”) so that would provide you with a greater after tax amount than if such amounts were not reduced, then the Parachute Value amounts payable to you under this Agreement shall be reduced (as defined belowbut not below zero) of all Payments, in the aggregate, equals to the Safe Harbor Amount (as defined below). The Agreement Payments shall be so reduced only if the Accounting Firm determines that Executive would have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced. If the Accounting Firm determines that Executive would not have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced, Executive shall receive all Agreement Payments to which Executive is entitled hereunder.
(c) If the Accounting Firm determines that aggregate Agreement Payments should be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, the Company shall promptly give Executive notice to that effect and a copy of the detailed calculation thereof. All determinations made by the Accounting Firm under this Section 8 shall be binding upon the Company and its Affiliates and Executive and shall be made as soon as reasonably practicable and in no event later than 15 days following the Date of Termination. For purposes of reducing the Agreement Payments so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, only amounts payable under the Agreement (and no other Payments) shall be reducedCap. The reduction of the amounts payable hereunderto you, if applicable, shall be made by reducing first cash severance, followed by equity vestings, etc.
(b) All determinations required to be made under this Section 4 shall be made by the payments public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and benefits under you within fifteen (15) business days of the following sections receipt of notice from the Company or the Executive that there has been a Payment, or such earlier time as is requested by the Company. Notwithstanding the foregoing, in the following order: event (i) cash payments the Board of Directors of the Company (the “Board”) shall determine prior to the Change in Control that may not be valued the Accounting Firm is precluded from performing such services under Treas. Reg. § l.280G-l, Q&A-24(c) (“24(c)”), applicable auditor independence rules or (ii) equity-based payments the Audit Committee of the Board determines that may it does not be valued under 24(c), want the Accounting Firm to perform such services because of auditor independence concerns or (iii) cash payments that may be valued under 24(c), (iv) equity-based payments that may be valued under 24(c) and (v) other types of benefits. With respect to each category of the foregoing, such reduction shall occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and next with respect to payments that are deferred compensation, in each case, beginning with payments or benefits that are to be paid the farthest in time from the determination of the Accounting FirmFirm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Board shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). If payments are reduced to the Safe Harbor Cap, the Accounting Firm shall provide a reasonable opinion to you that he or she is not required to report any Excise Tax on his or her federal income tax return. All reasonable fees fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Accounting Firm shall be borne solely by the Company. If the Accounting Firm determines that no Excise Tax is payable by you, it shall furnish you with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on your applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish you with a written opinion to such effect. The determination by the Accounting Firm shall be binding upon the Company and you (except as provided in paragraph (c) below).
(dc) If it is established pursuant to a final determination of a court or the Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that Payments have been made to, or provided for the benefit of, you by the Company, which are in excess of the limitations provided in this Section 4 (hereinafter referred to as an “Excess Payment”), such Excess Payment shall be deemed for all purposes to be a loan to you made on the date you received the Excess Payment and you shall repay the Excess Payment to the Company on demand, together with interest on the Excess Payment at the applicable federal rate (as defined in Section 1274(d) of the Code) from the date of your receipt of such Excess Payment until the date of such repayment. 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 hereunderdetermination, it is possible that amounts Payments which will not have been paid or distributed made by the Company to or for the benefit of Executive pursuant to this Agreement which should not have been so paid or distributed made (each, an “Overpayment”) or that additional amounts that will have not been paid or distributed by the Company to or for the benefit of Executive pursuant to this Agreement could have been so paid or distributed (each, an “Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereundercalculations required to be made under this Section 4. In the event that it is determined (i) by the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or Executive that the Accounting Firm believes has a high probability of success determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of Executive shall be repaid by Executive to the Company (as applicable) which shall include the position taken by the Company, or together with interest at its consolidated group, on its federal income tax return) or the applicable federal rate provided for in Section 7872(f)(2IRS or (ii) of the Code; providedpursuant to a determination by a court, however, that no such repayment shall be required if and to the extent such deemed repayment would not either reduce the amount on which Executive is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any the Company shall pay an amount equal to such Underpayment shall be promptly paid by the Company to or for the benefit you within ten (10) days of Executive such determination together with interest on such amount at the applicable federal rate provided for in Section 7872(f)(2) of from the Code.
(e) To the extent requested by Executive, the Company shall cooperate with Executive in good faith in valuing, and the Accounting Firm shall take into account the value of, services provided or date such amount would have been paid to be provided by Executive (including Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant, before, on or after you until the date of a change payment. You shall cooperate, to the extent your expenses are reimbursed by the Company, with any reasonable requests by the Company in ownership connection with any contests or control disputes with the Internal Revenue Service in connection with the Excise Tax or the determination of the Company (within the meaning of Q&A-2(b) of the final regulations under Section 280G of the Code), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the final regulations under Section 280G of the Code in accordance with Q&A-5(a) of the final regulations under Section 280G of the CodeExcess Payment.
(f) The following terms shall have the following meanings for purposes of this Section 8:
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