Certain Tax Consequences. (i) In the event that any benefits paid or payable to the Executive or for his benefit pursuant to the terms of this Agreement or any other plan or arrangement in connection with, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”) would be subject to any Excise Tax, then the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against the Executive due to the Payments. (ii) Subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. 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, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B). (iii) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes. (iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.
Appears in 8 contracts
Sources: Employment Agreement (Duke Energy CORP), Employment Agreement (Psi Energy Inc), Employment Agreement (Cincinnati Gas & Electric Co)
Certain Tax Consequences. (i) In Notwithstanding anything to the contrary in this Agreement, in the event that counsel or independent accountants for a Protected REIT determine that there exists a material risk that any benefits paid or payable to the Executive or for his benefit pursuant to the terms of indemnification payments due under this Agreement or under any Ancillary Agreement would be treated as Nonqualifying Income upon the payment of such amounts to the relevant Indemnitee, the amount paid to the Indemnitee pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to the Indemnitee in such year without causing the Protected REIT to fail to meet the REIT Requirements for any tax year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the Protected REIT and taking into account any other plan or arrangement in connection withpayments to the Indemnitee (and any other relevant entity, or arising out ofincluding the Protected REIT) during such tax year that do not constitute Qualifying Income, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets which determination shall be (a “Payment” or “Payments”i) would be subject made by independent accountants to any Excise Tax, then the Executive will be entitled Indemnitee and (ii) submitted to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment and approved by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against the Executive due to the PaymentsIndemnitee’s outside tax counsel.
(ii) Subject If the amount that an Indemnifying Party would otherwise be obligated to pay to the provisions relevant Indemnitee for any tax year pursuant to this Agreement exceeds the amount payable for such tax year to such Indemnitee pursuant to the preceding sentence (such excess, the “Expense Amount”), then:
(A) The Indemnifying Party shall place the Expense Amount into an escrow account (the “Escrow Account”) using an escrow agent and agreement reasonably acceptable to the Indemnitee and shall not release any portion thereof to the Indemnitee, and the Indemnitee shall not be entitled to any such amount, unless and until the Indemnitee delivers to the Indemnifying Party, at the sole option of Section 5cthe relevant Protected REIT, (i) an opinion (an “Expense Amount Tax Opinion”) of the Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a letter (an “Expense Amount Accountant’s Letter”) from the Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to the Indemnitee without causing the Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to the Protected REIT indicating that the receipt of any Expense Amount hereunder will not cause the Protected REIT to fail to satisfy the REIT Requirements (a “REIT Qualification Ruling” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a “Release Document”). The escrow agreement shall also provide that (x) the amount in the Escrow Account shall be treated as the property of the Indemnifying Party or the applicable Affiliate of the Indemnifying Party, unless it is released from such Escrow Account to the Indemnitee, (y) all determinations income earned upon the amount in the Escrow Account shall be treated as the property of the Indemnifying Party or the applicable Affiliate of the Indemnifying Party and reported, as and to the extent required by applicable Law, by the escrow agent to the IRS, or any other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form) as income earned by the Indemnifying Party or the applicable Affiliate of the Indemnifying Party whether or not said income has been distributed during such tax year, and (z) the amount in the Escrow Account shall be made under this Section 5cinvested only as determined by the Indemnifying Party in its sole discretion;
(B) Pending the delivery of a Release Document by the Indemnitee to the Indemnifying Party, the Indemnitee shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement reasonably acceptable to the Indemnitee that (i) requires the Indemnifying Party to lend the Indemnitee immediately available cash proceeds in an amount equal to the Expense Amount, and (ii) provides for (A) a reasonable interest rate and reasonable covenants, taking into account the credit standing and profile of the Indemnitee or any guarantor of the Indemnitee, including whether and when a Gross-Up Payment is required and the amount Protected REIT, at the time of such Gross-Up Payment loan, and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within (B) a fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that year maturity with no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. All fees and expenses of the Accounting Firm shall be borne solely by the Company. periodic amortization;
(C) Any Gross-Up Payment, as determined amount held in escrow pursuant to this Section 5c, shall be paid by Cinergy to the Executive within 9.4 for five (5) days years shall be released from such escrow to be used as determined by the Indemnifying Party in its sole and absolute discretion;
(D) The Indemnitee shall bear all costs and expenses with respect to the escrow; and
(E) The Indemnifying Party shall cooperate in good faith with the Indemnitee (including amending this Section 9.4(h) at the reasonable request of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty Indemnitee) 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 Cinergy should have been made order to (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. 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, at the time that the amount of such reduction in Excise Tax is finally determined, i) maximize the portion of the Gross-Up Payment attributable to such reduction (plus payments that portion of the Gross-Up Payment attributable may be made to the Excise Tax and federalIndemnitee hereunder without causing the Protected REIT to fail to meet the REIT Requirements, state and local income and employment tax imposed on (ii) improve the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in Indemnitee’s chances of securing a reduction in Excise Tax and/or a federalfavorable REIT Qualification Ruling, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iii) The value of any non-cash benefits assist the Indemnitee in obtaining a favorable Expense Amount Tax Opinion or any deferred payment or benefit paid or payable a favorable Expense Amount Accountant’s Letter. Such cooperation shall include, for example, agreeing to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount make payments hereunder to a taxable REIT subsidiary of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality Indemnitee or an affiliate or designee of the Executive’s residence on Indemnitee. The Indemnitee shall reimburse the Date Indemnifying Party for all reasonable costs and expenses of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxessuch cooperation.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.
Appears in 6 contracts
Sources: Separation and Distribution Agreement (Aimco OP L.P.), Separation and Distribution Agreement (Aimco Properties L.P.), Separation and Distribution Agreement (Aimco OP L.P.)
Certain Tax Consequences. (i) In the event that the Executive becomes entitled to the payments and benefits described in this Section 5 (the "Severance Benefits"), if any benefits paid or payable of the Severance Benefits will be subject to any excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Corporation shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of an Excise Tax on the Severance Benefits and any federal, state and local income and employment tax and Excise Tax upon the payment provided for by this Section 5, shall be equal to the Severance Benefits. For purposes of determining whether any of the Severance Benefits will be subject to the Excise Tax and the amount of such Excise Tax,
(i) any other payments or for his benefit benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Employment Agreement or any other plan plan, arrangement or arrangement agreement with the Corporation, any Person whose actions result in connection witha Change in Control or any Person affiliated with the Corporation or such Person) shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, or arising out of, his employment with Cinergy or a change in ownership or effective control and all "excess parachute payments" within the meaning of Cinergy or Section 280G(b)(1) of a substantial portion of its assets (a “Payment” or “Payments”) would the Code shall be treated as subject to any the Excise Tax, then unless in the opinion of tax counsel selected by the Corporation's independent auditors and reasonably acceptable to the Executive will be entitled to receive an additional payment such other payments or benefits (a “Gross-Up Payment”in whole or in part) in an amount such that after payment do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Executive of all taxes (including any interest, penalties, additional taxCode, or similar items imposed with respect thereto and such excess parachute payments (in whole or in part) 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 as defined in Section 280G(b)(3) of the Code allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax,
(ii) the amount of the Severance Benefits that shall be treated as subject to the Excise Tax shall be equal to the lesser of
(1) the total amount of the Severance Benefits, or
(2) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (i), including above), and
(iii) the value of any Excise Tax imposed upon non-cash benefits or any deferred payment or benefit shall be determined by the Corporation's independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive retains an amount 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 upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required is to be made under this Section 5c, including whether and when a Gross-Up Payment is required state and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, local income taxes at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. All fees and expenses highest marginal rate of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty taxation 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred state and any such Underpayment shall be promptly paid by Cinergy to or for the benefit locality of the Executive's residence on the Date of Termination, net of the maximum reduction in federal income taxes which would be obtained from deduction of such state and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect theretolocal taxes. 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 's employment, the Executive shall repay to the CompanyCorporation, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (iii) The value including by reason of any non-cash benefits payment the existence or any deferred payment or benefit paid or payable to the Executive will amount of which cannot be determined in accordance with at the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount time of the Gross-Up Payment), the Executive will be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Corporation shall make an additional Gross-Up Payment is in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to be made and applicable state and local income taxes such excess) at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes time that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of such excess is finally determined. The Executive and the Corporation shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax that Cinergy has actually withheld from with respect to the Payment or Payments in accordance with lawSeverance Benefits.
Appears in 5 contracts
Sources: Employment Agreement (Cincinnati Gas & Electric Co), Employment Agreement (Cinergy Corp), Employment Agreement (Cinergy Corp)
Certain Tax Consequences. (i) In the event that the Executive becomes entitled to the payments and benefits described in this Section 5 (the "Severance Benefits"), if any benefits paid or payable of the Severance Benefits will be subject to any excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of an Excise Tax on the Severance Benefits and any federal, state and local income and employment tax and Excise Tax upon the payment provided for by this Section 5, shall be equal to the Severance Benefits. For purposes of determining whether any of the Severance Benefits will be subject to the Excise Tax and the amount of such Excise Tax,
(i) any other payments or for his benefit benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any Person whose actions result in connection witha Change in 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, or arising out of, his employment with Cinergy or a change in ownership or effective control and all "excess parachute payments" within the meaning of Cinergy or Section 280G(b)(1) of a substantial portion of its assets (a “Payment” or “Payments”) would the Code shall be treated as subject to any the Excise Tax, then unless in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to the Executive will be entitled to receive an additional payment such other payments or benefits (a “Gross-Up Payment”in whole or in part) in an amount such that after payment do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Executive of all taxes (including any interest, penalties, additional taxCode, or similar items imposed with respect thereto and such excess parachute payments (in whole or in part) 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 as defined in Section 280G(b)(3) of the Code allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax,
(ii) the amount of the Severance Benefits that shall be treated as subject to the Excise Tax shall be equal to the lesser of
(1) the total amount of the Severance Benefits, or
(2) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (i), including above), and
(iii) the value of any Excise Tax imposed upon non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive retains an amount 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 upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required is to be made under this Section 5c, including whether and when a Gross-Up Payment is required state and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, local income taxes at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. All fees and expenses highest marginal rate of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty taxation 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred state and any such Underpayment shall be promptly paid by Cinergy to or for the benefit locality of the Executive's residence on the Date of Termination, net of the maximum reduction in federal income taxes which would be obtained from deduction of such state and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect theretolocal taxes. 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 's employment, the Executive 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 attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (iii) The value including by reason of any non-cash benefits payment the existence or any deferred payment or benefit paid or payable to the Executive will amount of which cannot be determined in accordance with at the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount time of the Gross-Up Payment), the Executive will be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Company shall make an additional Gross-Up Payment is in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to be made and applicable state and local income taxes such excess) at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes time that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax that Cinergy has actually withheld from with respect to the Payment or Payments in accordance with lawSeverance Benefits.
Appears in 4 contracts
Sources: Employment Agreement (Cinergy Corp), Employment Agreement (Cinergy Corp), Employment Agreement (Cinergy Corp)
Certain Tax Consequences. (ia) In the event that If any payments or benefits paid or payable provided or to be paid or provided to the Executive or for his benefit pursuant to the terms of this Agreement or any other plan or arrangement otherwise in connection with, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets the Company (a “Payment” or “Payments”) would be subject to any excise tax (the “Excise Tax”) imposed by section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), then the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax such taxes imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against the Executive due to the Payments.
(iib) Subject An initial determination as to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required pursuant to this Agreement and the amount of such Gross-Up Payment and will be made at the assumptions to be utilized in arriving at such Company’s expense by an accounting firm selected by the Company. The accounting firm will provide its determination, shall be made by the Accounting Firm, which shall provide together with detailed supporting calculations both and documentation, to the Company and the Executive within fifteen (15) business 10 days after the Date of the receipt of notice from the Executive that there has been a PaymentTermination, or such earlier other time as is requested by the CompanyCompany or by the Executive. If the Accounting Firm accounting firm determines that no Excise Tax is payable by the ExecutiveExecutive with respect to a Payment or Payments, it shall, at the same time as it makes such determination, will furnish the Executive with an opinion reasonably acceptable to the Executive to that he has substantial authority not to report any Excise Tax on his federal income tax returneffect. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any The Gross-Up Payment, as determined pursuant to this Section 5cif any, shall will be paid by Cinergy the Company to the Executive within five (5) thirty business days of the receipt of the Accounting Firmaccounting firm’s determination. Any Within 10 days after the accounting firm delivers its determination by the Accounting Firm shall be binding upon Cinergy and the Executive. 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for will have the right to dispute the determination. The existence of a dispute will not in any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. 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 way affect the Executive’s employment, the Executive shall repay right to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of receive the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iii) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3determination. If there is no dispute, the determination will be binding, final, and conclusive upon the Company and the Executive. If there is a dispute, the Company and the Executive will together select a second accounting firm, which will review the determination and the Executive’s basis for the dispute and then will render its own determination, which will be binding, final, and conclusive on the Company and on the Executive. The Company will bear all costs associated with that determination, unless the determination is not greater than the initial determination, in which case all such costs will be borne by the Executive.
(c) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.
(ivd) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firmaccounting firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy the Company will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy the Company has actually withheld from the Payment or Payments in accordance with law.
Appears in 3 contracts
Sources: Employment Agreement (Tower Group, Inc.), Employment Agreement (Tower Group, Inc.), Employment Agreement (Tower Group, Inc.)
Certain Tax Consequences. (i) In Whether or not the event that any benefits paid or payable Executive becomes entitled to the payments and benefits described in Section 4 hereof, if any of the payments or benefits received or to be received by the Executive in connection with a change in ownership or for his benefit control of the Company (as defined in section 280G of the Code (a “Statutory Change in Control”)) or the Executive’s Termination of Employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any person whose actions result in connection witha Statutory Change in Control or any person affiliated with the Company or such person) (collectively, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a the “Payment” or “PaymentsSeverance Benefits”) would will be subject to any excise tax (the “Excise Tax”) imposed under section 4999 of the Code, then then, subject to Section 6(c), the Company shall pay to the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against (the Executive due “Excise Tax Payment”). For purposes of determining whether any of the Severance Benefits will be subject to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required Excise Tax and the amount of such Gross-Up Payment and Excise Tax:
(a) all of the assumptions to be utilized in arriving at such determination, Severance Benefits shall be made treated as “parachute payments” within the meaning of Code section 280G(b)(2), and all “excess parachute payments” within the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Accounting Firm, which shall provide detailed supporting calculations both Company’s independent auditors and reasonably acceptable to the Company and the Executive within fifteen Executive, such other payments or benefits (15in whole or in part) business days do not constitute parachute payments, including by reason of the receipt of notice from the Executive that there has been a PaymentCode section 280G(b)(4)(A), or such earlier time excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code section 280G(b)(4)(B), in excess of the “Base Amount” as is requested defined in Code section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax; and
(b) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty independent auditors 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 Cinergy should have been made (“Underpayment”), consistent accordance with the calculations required to be made hereunder. In the event principles of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred Code section 280G(d)(3) and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto(4). 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 Termination of Employment of the Executive’s employment, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determineddetermined (the “Reduced Excise Tax”), the difference of the Excise Tax Payment and the Reduced Excise Tax. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the Termination of Employment of the Executive (including by reason of any payment the existence or amount of which could not be determined at the time of the Excise Tax Payment), the Company shall make an additional Excise Tax payment in respect of such excess (plus any interest or penalties payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Severance Benefits.
(c) Notwithstanding any contrary provision of this Agreement, the Severance Benefits shall be reduced to the extent necessary so that no portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable Severance Benefits shall be subject to the Excise Tax and Taxes, but only if the sum of (A) the net amount of such Severance Benefits, without reduction (but after imposition of the total amount of taxes under federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deductionlaw) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iiiB) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax Payment in respect of such excess plus any interest or penalties payable by the Executive with respect to such excess (but after imposition of the total amount of taxes under federal, state and local law applicable to such additional payment) exceeds the net amount of such Severance Benefits, as so reduced (and after the imposition of the total amount of taxes under federal, state and local law on such amounts or benefits). Any reduction pursuant to this paragraph shall be made by agreement of the parties first from payments and benefits that Cinergy has actually withheld are exempt from the Payment or Payments in accordance with law.Code Section 409A, and only thereafter from benefits that are subject to Code Section 409A.
Appears in 2 contracts
Sources: Change in Control Agreement (Usec Inc), Change in Control Agreement (Usec Inc)
Certain Tax Consequences. (i) In Whether or not the event that any benefits paid or payable Executive becomes entitled to the payments and benefits described in Section 4 hereof, if any of the payments or benefits received or to be received by the Executive in connection with a change in ownership or for his benefit control of the Company (as defined in section 280G of the Code (a “Statutory Change in Control”)) or the Executive’s Termination of Employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any person whose actions result in connection witha Statutory Change in Control or any person affiliated with the Company or such person) (collectively, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a the “Payment” or “PaymentsSeverance Benefits”) would will be subject to any excise tax (the “Excise Tax”) imposed under section 4999 of the Code, then then, subject to Section 6(c), the Company shall pay to the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against (the Executive due Excise Tax Payment”). For purposes of determining whether any of the Severance Benefits will be subject to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required Excise Tax and the amount of such Gross-Up Payment and Excise Tax:
(a) all of the assumptions to be utilized in arriving at such determination, Severance Benefits shall be made treated as “parachute payments” within the meaning of Code section 280G(b)(2), and all “excess parachute payments” within the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Accounting Firm, which shall provide detailed supporting calculations both Company’s independent auditors and reasonably acceptable to the Company and the Executive within fifteen Executive, such other payments or benefits (15in whole or in part) business days do not constitute parachute payments, including by reason of the receipt of notice from the Executive that there has been a PaymentCode section 280G(b)(4)(A), or such earlier time excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code section 280G(b)(4)(B), in excess of the “Base Amount” as is requested defined in Code section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax; and
(b) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty independent auditors 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 Cinergy should have been made (“Underpayment”), consistent accordance with the calculations required to be made hereunder. In the event principles of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred Code section 280G(d)(3) and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto(4). 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 Termination of Employment of the Executive’s employment, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determineddetermined (the “Reduced Excise Tax”), the difference of the Excise Tax Payment and the Reduced Excise Tax. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the Termination of Employment of the Executive (including by reason of any payment the existence or amount of which could not be determined at the time of the Excise Tax Payment), the Company shall make an additional Excise Tax payment in respect of such excess (plus any interest or penalties payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Severance Benefits.
(c) Notwithstanding any contrary provision of this Agreement, the Severance Benefits shall be reduced to the extent necessary so that no portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable Severance Benefits shall be subject to the Excise Tax and Taxes, but only if the sum of (A) the net amount of such Severance Benefits, without reduction (but after imposition of the total amount of taxes under federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deductionlaw) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iiiB) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from Payment in respect of such excess plus any interest or penalties payable by the Payment or Payments in accordance Executive with law.respect to such excess (but after imposition of the total amount of taxes under federal, state and local law applicable to such additional
Appears in 2 contracts
Sources: Change in Control Agreement (Usec Inc), Change in Control Agreement (Usec Inc)
Certain Tax Consequences. (i) In the event that the Executive becomes entitled to the payments and benefits described in this Section 5 (the "Severance Benefits"), if any benefits paid or payable of the Severance Benefits will be subject to any excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Corporation shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of an Excise Tax on the Severance Benefits and any federal, state and local income and employment tax and Excise Tax upon the payment provided for by this Section 5, shall be equal to the Severance Benefits. For purposes of determining whether any of the Severance Benefits will be subject to the Excise Tax and the amount of such Excise Tax,
(i) any other payments or for his benefit benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Corporation, any Person whose actions result in connection witha Change in Control or any Person affiliated with the Corporation or such Person) shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, or arising out of, his employment with Cinergy or a change in ownership or effective control and all "excess parachute payments" within the meaning of Cinergy or Section 280G(b)(1) of a substantial portion of its assets (a “Payment” or “Payments”) would the Code shall be treated as subject to any the Excise Tax, then unless in the opinion of tax counsel selected by the Corporation's independent auditors and reasonably acceptable to the Executive will be entitled to receive an additional payment such other payments or benefits (a “Gross-Up Payment”in whole or in part) in an amount such that after payment do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Executive of all taxes (including any interest, penalties, additional taxCode, or similar items imposed with respect thereto and such excess parachute payments (in whole or in part) 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 as defined in Section 280G(b)(3) of the Code allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax,
(ii) the amount of the Severance Benefits that shall be treated as subject to the Excise Tax shall be equal to the lesser of
(1) the total amount of the Severance Benefits, or
(2) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (i), including above), and
(iii) the value of any Excise Tax imposed upon non-cash benefits or any deferred payment or benefit shall be determined by the Corporation's independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive retains an amount 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 upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required is to be made under this Section 5c, including whether and when a Gross-Up Payment is required state and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, local income taxes at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. All fees and expenses highest marginal rate of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty taxation 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred state and any such Underpayment shall be promptly paid by Cinergy to or for the benefit locality of the Executive's residence on the Date of Termination, net of the maximum reduction in federal income taxes which would be obtained from deduction of such state and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect theretolocal taxes. 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 's employment, the Executive shall repay to the CompanyCorporation, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (iii) The value including by reason of any non-cash benefits payment the existence or any deferred payment or benefit paid or payable to the Executive will amount of which cannot be determined in accordance with at the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount time of the Gross-Up Payment), the Executive will be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Corporation shall make an additional Gross-Up Payment is in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to be made and applicable state and local income taxes such excess) at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes time that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of such excess is finally determined. The Executive and the Corporation shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax that Cinergy has actually withheld from with respect to the Payment or Payments in accordance with lawSeverance Benefits.
Appears in 2 contracts
Sources: Employment Agreement (Cinergy Corp), Employment Agreement (Cinergy Corp)
Certain Tax Consequences. (i) In Whether or not the event that any benefits paid or payable Executive becomes entitled to the payments and benefits described in this Section 5, if any of the payments or benefits received or to be received by the Executive in connection with a change in ownership or for his benefit control of the Company (a “Statutory Change in Control”), as defined in section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or the Executive’s termination of employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any person whose actions result in connection witha Statutory Change in Control or any person affiliated with the Company or such person) (collectively, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a the “Payment” or “PaymentsSeverance Benefits”) would will be subject to any excise tax (the “Excise Tax”) imposed under section 4999 of the Internal Revenue Code of 1986, then as amended (the “Code”), the Company shall pay to the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against (the Executive due “Excise Tax Payment”). For purposes of determining whether any of the Severance Benefits will be subject to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required Excise Tax and the amount of such Gross-Up Payment and Excise Tax:
(i) all of the assumptions to be utilized in arriving at such determination, Severance Benefits shall be made treated as “parachute payments” within the meaning of Code section 280G(b)(2), and all “excess parachute payments” within the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Accounting Firm, which shall provide detailed supporting calculations both Company’s independent auditors and reasonably acceptable to the Company and the Executive within fifteen Executive, such other payments or benefits (15in whole or in part) business days do not constitute parachute payments, including by reason of the receipt of notice from the Executive that there has been a PaymentCode section 280G(b)(4)(A), or such earlier time excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code section 280G(b)(4)(B), in excess of the “Base Amount” as is requested defined in Code section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax; and
(ii) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty independent auditors 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 Cinergy should have been made (“Underpayment”), consistent accordance with the calculations required to be made hereunder. In the event principles of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred Code section 280G(d)(3) and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto(4). 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, at the time that the amount of such reduction in Excise Tax is finally determineddetermined (the “Reduced Excise Tax”), the portion difference of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax Payment and federalthe Reduced Excise Tax. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive’s employment (including by reason of any payment the existence or amount of which could not be determined at the time of the Excise Tax Payment), state and local income and employment tax imposed on the Gross-Up Payment being repaid Company shall make an additional Excise Tax payment in respect of such excess (plus any interest or penalties payable by the Executive with respect to such excess) at the extent time that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at excess is finally determined. The Executive and the rate provided Company shall each reasonably cooperate with the other in Code Section 1274(b)(2)(B).
(iii) The value connection with any administrative or judicial proceedings concerning the existence or amount of any non-cash benefits or any deferred payment or benefit paid or payable liability for Excise Tax with respect to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxesSeverance Benefits.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.
Appears in 2 contracts
Sources: Employment Agreement (Usec Inc), Employment Agreement (Usec Inc)
Certain Tax Consequences. (i) In the event that the Executive becomes entitled to the payments and benefits described in this Section 5 (the "Severance Benefits"), if any benefits paid or payable of the Severance Benefits will be subject to any excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of an Excise Tax on the Severance Benefits and any federal, state and local income and employment tax and Excise Tax upon the payment provided for by this Section 5, shall be equal to the Severance Benefits. For purposes of determining whether any of the Severance Benefits will be subject to the Excise Tax and the amount of such Excise Tax,
(i) any other payments or for his benefit benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Employment Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any Person whose actions result in connection witha Change in 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, or arising out of, his employment with Cinergy or a change in ownership or effective control and all "excess parachute payments" within the meaning of Cinergy or Section 280G(b)(1) of a substantial portion of its assets (a “Payment” or “Payments”) would the Code shall be treated as subject to any the Excise Tax, then unless in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to the Executive will be entitled to receive an additional payment such other payments or benefits (a “Gross-Up Payment”in whole or in part) in an amount such that after payment do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Executive of all taxes (including any interest, penalties, additional taxCode, or similar items imposed with respect thereto and such excess parachute payments (in whole or in part) 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 as defined in Section 280G(b)(3) of the Code allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax,
(ii) the amount of the Severance Benefits that shall be treated as subject to the Excise Tax shall be equal to the lesser of
(1) the total amount of the Severance Benefits, or
(2) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (i), including above), and
(iii) the value of any Excise Tax imposed upon non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive retains an amount 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 upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required is to be made under this Section 5c, including whether and when a Gross-Up Payment is required state and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, local income taxes at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. All fees and expenses highest marginal rate of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty taxation 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred state and any such Underpayment shall be promptly paid by Cinergy to or for the benefit locality of the Executive's residence on the Date of Termination, net of the maximum reduction in federal income taxes which would be obtained from deduction of such state and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect theretolocal taxes. 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 's employment, the Executive 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 attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (iii) The value including by reason of any non-cash benefits payment the existence or any deferred payment or benefit paid or payable to the Executive will amount of which cannot be determined in accordance with at the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount time of the Gross-Up Payment), the Executive will be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Company shall make an additional Gross-Up Payment is in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to be made and applicable state and local income taxes such excess) at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes time that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax that Cinergy has actually withheld from with respect to the Payment or Payments in accordance with lawSeverance Benefits.
Appears in 2 contracts
Sources: Employment Agreement (Cinergy Corp), Employment Agreement (Cinergy Corp)
Certain Tax Consequences. (i) In the event that any If payments or benefits paid received or payable to be received by the Executive or for his benefit pursuant to the terms of this Agreement or any other plan or arrangement in connection with, with or arising out of, his employment with Cinergy or contingent on a change in ownership or effective control of Cinergy the Company, within the meaning of Section 280G of the Code (or any successor provision thereto), whether or not in connection with the Executive’s termination of a substantial portion of its assets employment, and whether or not pursuant to this Agreement (a “Payment” or collectively, the “Payments”) would (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to any the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payments shall be reduced to the Executive will Reduced Amount (as defined below). The “Reduced Amount” shall be entitled to receive an additional payment either (a “Gross-Up Payment”x) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount largest portion of the Gross-Up Payment equal Payments that would result in no portion of the Payments being subject to the Excise Tax imposed upon or assessable against (y) the Executive due largest portion, up to and including all, of the Payments, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Executive’s receipt, on an after-tax basis, of the greater amount of the Payments notwithstanding that all or some portion of the Payments may be subject to the PaymentsExcise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payments equal the Reduced Amount, such reduction shall occur in the following order: reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits. In the event that acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of Executive’s stock awards.
(ii) Subject The accounting firm engaged by the Company for general audit purposes as of the day prior to the provisions effective date of Section 5cthe change in ownership or control of the Company shall perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the change in ownership or control of the Company resulting in the Payments, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made under this Section 5c, including whether and when a Gross-Up Payment is required and hereunder.
(iii) The accounting firm engaged to make the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which determinations hereunder shall provide its calculations, together with detailed supporting calculations both documentation, to the Company and the Executive within fifteen (15) business calendar days of after the receipt of notice from date on which Executive’s right to the Executive Payments is triggered (if requested at that there has been a Payment, time by the Company or Executive) or such earlier other time as is requested by the CompanyCompany or the Executive. If the Accounting Firm accounting firm determines that no Excise Tax is payable by with respect to the ExecutivePayments, either before or after the application of the Reduced Amount, it shall, at the same time as it makes such determination, shall furnish to Company and the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy reasonably acceptable to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. 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, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iii) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an no Excise Tax will be imposed on any Payment or with respect to such Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount . Any good faith determinations of the Excise Tax that Cinergy has actually withheld from accounting firm made hereunder shall be final, binding and conclusive upon the Payment or Payments in accordance with lawCompany and the Executive.
Appears in 1 contract
Sources: Employment Agreement (Rue21, Inc.)
Certain Tax Consequences. (a) Tax Consequences under Section 280G.
(i) In Whether or not the event that any benefits paid or payable Executive becomes entitled to the payments and benefits described in this Section 6, if any of the payments or benefits received or to be received by the Executive in connection with a change in ownership or for his benefit control of the Company, as defined in section 280G of the Code (a "Statutory Change in Control"), or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any person whose actions result in connection witha Statutory Change in Control or any person affiliated with the Company or such person) (collectively, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”the "Severance Benefits") would will be subject to any excise tax (the "Excise Tax") imposed under section 4999 of the Code after giving effect to Section 6(a)(iii), then the Company shall pay to the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against Tax, plus any amount necessary to "gross up" the Executive due for additional taxes resulting from the payments to the PaymentsExecutive by the Company under this Section 6(a)(i) (the "Excise Tax Payment"). Each Excise Tax Payment shall be made not less than five (5) business days prior to the due date for payment of the Excise Tax.
(ii) Subject Notwithstanding the foregoing, if it shall be determined that the Executive would be entitled to an Excise Tax Payment, but that if the Severance Benefits could be reduced by an amount necessary such that the receipt of the Company Payments would not give rise to any Excise Tax (the "Reduced Benefits") and the Reduced Benefits would not be less than ninety percent (90%) of the Severance Benefits before such reduction, then no Excise Tax Payment shall be made to the provisions Executive and the Severance Benefits, in the aggregate, shall be reduced to the Reduced Benefits. To determine the Reduced Benefits, payments shall be reduced in the following order (1) acceleration of Section 5cvesting of any stock options for which the exercise price exceeds the then fair market value, all determinations required (2) any cash severance based on a multiple of Base Salary or Bonus, (3) any other cash amounts payable to the Executive, (4) any benefits valued as parachute payments; and (5) acceleration of vesting of any equity not covered by (1) above, unless the Executive elects another method of reduction by written notice to the Company prior to the change of ownership or effective control.
(iii) For purposes of determining whether any of the Severance Benefits will be made under this Section 5c, including whether and when a Gross-Up Payment is required subject to the Excise Tax and the amount of such Gross-Up Payment and Excise Tax:
(A) all of the assumptions to be utilized in arriving at such determination, Severance Benefits shall be made treated as "parachute payments" within the meaning of Code section 280G(b)(2) if the aggregate present value (determined as provided in Code Section 280G(d)(4)) of such Severance Benefits equals or exceeds three times the Executive's "Base Amount" (within the meaning of Code Section 280G(b)(3)), and all "excess parachute payments" within the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise Tax, unless the Executive receives a written opinion from a nationally recognized law or accounting firm ("280G Advisers") selected by the Accounting FirmCompensation Committee or the Board, which shall provide detailed supporting calculations both and reasonably acceptable to the Company and the Executive within fifteen Executive, that such other payments or benefits (15in whole or in part) business days do not constitute parachute payments, including by reason of the receipt of notice from the Executive that there has been a PaymentCode section 280G(b)(4)(A), or such earlier time excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code section 280G(b)(4)(B), in excess of the "Base Amount" as is requested defined in Code section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax; and
(B) the value of any non-cash benefits or any deferred payment or benefit shall be determined by a certified public accountant or appraisal company of recognized national standing forming part of or selected by the Company. If the Accounting Firm determines that no Excise Tax is payable by 280G Advisers and reasonably acceptable to the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. 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 Cinergy should have been made (“Underpayment”), consistent accordance with the calculations required to be made hereunder. In the event principles of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred Code section 280G(d)(3) and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. (4).
(iv) 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 employmenthereunder, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determineddetermined (the "Reduced Excise Tax"), an amount (the "Gross-Up Repayment") equal to the sum of (A) the difference of the Excise Tax Payment and the Reduced Excise Tax plus (B) an amount representing the difference between (1) the amount paid by the Company to the Executive to "gross up" the Executive for taxes on payments made by the Company to the Executive in respect of the Excise Tax and (2) the amount which should have been paid to the Executive by the Company to "gross up" the Executive for taxes on payments made by the Company to the Executive in respect of the Reduced Excise Tax; provided, however, that in no event shall the Gross-Up Repayment exceed the actual aggregate cash refunds of, or cash reductions in, taxes paid by the Executive by virtue of paying the Gross-Up Repayment; and provided, further, that if such refunds or reductions are realized from time to time, the portion Executive shall make a repayment to the Company at the time of each such realization equal to the excess of the Gross-Up Payment attributable Repayment due after giving effect to such reduction (plus that portion of realization over the Gross-Up Payment attributable Repayment due immediately prior to giving effect to such realization. The Executive shall (1) take such actions with respect to taxes and tax returns as the Company may from time to time request in order to obtain such refunds and reductions, including, without limitation, by taking positions on tax returns and filing amended tax returns, (2) provide the Company with copies of all tax returns filed by the Executive which reflect such refunds or reductions or are otherwise requested by the Company in order to determine the Executive's compliance with the immediately preceding clause (1), (3) permit the Company to participate in any proceedings relating to such refunds and reductions and (4) take all such other actions as may be reasonably requested by the Company from time to time in connection with the realization of such refunds or reductions, including, without limitation, borrowing money from the Company (on terms and conditions reasonably satisfactory to the Excise Tax Executive and federalthe Company, state and local income and employment including, without limitation, having the Company make the Executive whole, on an after-tax imposed on basis, for any interest costs) so that the Gross-Up Payment being repaid payments made from time to time by the Executive to the Company hereunder maximize (to the extent reasonably possible) such refunds and reductions, the aggregate amount of such payments by the Executive not to exceed the Gross-Up Repayment (computed without regard to the provisos to the first sentence of this Section 6(a)(iv)); provided, however, that such repayment results the Company shall bear and directly pay, or shall promptly reimburse the Executive for, all costs and expenses (including any additional penalties and interest) incurred by the Executive in a reduction connection with any actions taken or omitted by the Executive in accordance with instructions from the Company pursuant to this sentence, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax and/or or income tax (including any additional penalties and interest) imposed as a federalresult of the Company's payment of such costs and expenses. In the event that the Excise Tax is subsequently determined to exceed the amount taken into account hereunder (including by reason of any payment the existence or amount of which could not be determined at the time of the Excise Tax Payment), state the Company shall make an additional Excise Tax Payment in respect of such excess (together with any interest or local income or employment tax deductionpenalties payable by the Executive with respect to such excess) plus interest on at the time that the amount of such repayment at excess if finally determined, plus any additional taxes resulting from the rate provided payment to the Executive by the Company for such excess and the interest and penalties thereon. The Executive and the Company shall each reasonably cooperate with the other in Code Section 1274(b)(2)(B)connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Severance Benefits.
(iiiv) The value Executive shall give the Company written notice of any non-cash benefits determination by the Executive, or any deferred payment claim by any taxing authority, that he owes Excise Tax on any Severance Benefit. Such notice shall be given as soon as practicable but no later than ten (10) business days after the Executive makes such determination or benefit paid or payable is informed of such claim, and shall, to the extent Executive will be determined in accordance with has or may reasonably obtain such information, apprise the principles Company of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of such Excise Tax and the Gross-Up Payment, date on which it is required to be paid. If the Company gives the Executive will be deemed to pay federal income taxes written notice at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.
least thirty (iv30) Notwithstanding anything contained in this Agreement days prior to the contrarydue date for payment of such Excise Tax, in or within ten (10) business days of having received the event thatforegoing notice from the Executive (whichever is later), according that it disagrees with or wishes to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, contest the amount of the Excise Tax, the Company and the Executive shall consult with each other and their respective tax advisors regarding the amount and payment of any Excise Tax. In the event there is a contest with any taxing authority regarding the amount of the Excise Tax, the Company shall bear and pay directly all costs and expenses (including additional interest, penalties and legal fees) incurred in connection with any such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, to the extent not otherwise paid hereunder, on (x) the Excise Tax that Cinergy has actually withheld from Payment (including any interest and penalties with respect thereto) and (y) the Payment or Payments in accordance with lawCompany's payment of the Executive's costs and expenses hereunder.
Appears in 1 contract
Certain Tax Consequences. (i) In Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any benefits payment or distribution by the Company to or for the benefit of the Consultant (whether paid or payable to the Executive or for his benefit distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any other plan or arrangement in connection with, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets additional payments required under this Section 7.09) (a “"Payment” or “Payments”") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Consultant with respect to such excise tax (such excise tax, together with any such interest and penalties are hereinafter collectively referred to as the "Excise Tax"), then the Executive will Consultant shall be entitled to receive an additional payment (a “an "Excise Gross-Up Payment”") in an amount such that after payment by the Executive Consultant of all taxes (including any interest, penalties, additional tax, or similar items interest and penalties imposed with respect thereto and the Excise Taxto such taxes), including including, without limitation, any income taxes (and interest and penalties imposed with respect thereto), and Excise Tax imposed upon on the Excise Gross-Up Payment, the Executive Consultant retains an amount of the Excise Gross-Up Payment equal to the Excise Tax imposed upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all . All determinations required to be made under this Section 5c7.09, including whether and when a an Excise Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting FirmCompany's accounting firm, which shall provide detailed supporting calculations both to the Company and to the Executive Consultant within fifteen (15) business days of the receipt of notice from the Executive Consultant that there has been a Payment, or such earlier time as is requested by the Company. If In the Accounting Firm determines event that no Excise Tax the accounting firm is payable by serving as accountant or auditor for the Executiveindividual, it shallentity or group effecting the change of control, at the same time as it makes such determination, furnish Consultant shall appoint another nationally recognized accounting firm to make the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax returndeterminations required hereunder. All fees and expenses of the Accounting Firm accounting firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5c7.09, shall be paid by Cinergy the Company to the Executive Consultant within five (5) days of the receipt of the Accounting Firm’s accounting firm's determination. Any determination by the Accounting Firm accounting firm shall be binding upon Cinergy the Company and the Executive. 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. 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, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B)Consultant.
(iii) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.
Appears in 1 contract
Certain Tax Consequences. (i) In the event that any benefits paid or payable to the Executive or for his her benefit pursuant to the terms of this Agreement or any other plan or arrangement in connection with, or arising out of, his her employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”) would be subject to any Excise Tax, then the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he she has substantial authority not to report any Excise Tax on his her federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. 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, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iii) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.
Appears in 1 contract
Certain Tax Consequences. (i) In the event that any benefits paid or payable to the Executive or for his benefit pursuant to the terms of this Agreement or any other plan or arrangement in connection with, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”) would be subject to any Excise Tax, then the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. In the event that the Excise Tax is subsequently determined Executive becomes entitled to be less than the amount taken into account hereunder at payments and benefits described in this Section 5 (the time of termination "Severance Benefits"), if any of the Executive’s employmentSeverance Benefits will be subject to any excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Executive Company shall repay pay to the Company, at Executive an additional amount (the time that the amount of such reduction in Excise Tax is finally determined, the portion of the "Gross-Up Payment attributable to Payment") such reduction (plus that portion the net amount retained by the Executive, after deduction of the Gross-Up Payment attributable to the an Excise Tax on the Severance Benefits and any federal, state and local income and employment tax imposed on and Excise Tax upon the Gross-Up Payment being repaid payment provided for by the Executive this Section 5, shall be equal to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iii) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4)Severance Benefits. For purposes of determining whether any of the Severance Benefits will be subject to the Excise Tax and the amount of such Excise Tax,
(i) any other payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Employment Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in 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) of the Code shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to the Executive such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Code, or such excess parachute payments (in whole or in part) 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 as defined in Section 280G(b)(3) of the Code allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, (ii) the amount of the Gross-Up Payment, Severance Benefits that shall be treated as subject to the Executive will Excise Tax shall be deemed equal to pay federal income taxes at the highest marginal rate of federal income taxation in lesser of
(1) the calendar year in which the Gross-Up Payment is to be made and applicable state and local income taxes at the highest marginal rate of taxation in the state and locality total amount of the Executive’s residence on the Date of TerminationSeverance Benefits, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.or
(iv2) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of excess parachute payments within the Excise Tax that Cinergy has actually withheld from meaning of Section 280G(b)(1) of the Payment or Payments in accordance with law.Code (after applying clause (i), above), and
Appears in 1 contract
Sources: Employment Agreement (Cinergy Corp)
Certain Tax Consequences. (i) In Whether or not the event that any benefits paid or payable Executive becomes entitled to the payments and benefits described in Section 4 or Section 6 hereof, if any of the payments or benefits received or to be received by the Executive in connection with a change in ownership or for his benefit control of the Company (as defined in section 280G of the Code (a “Statutory Change in Control”)) or the Executive’s Termination of Employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any person whose actions result in connection witha Statutory Change in Control or any person affiliated with the Company or such person) (collectively, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a the “Payment” or “PaymentsSeverance Benefits”) would will be subject to any excise tax (the “Excise Tax”) imposed under section 4999 of the Code, then then, subject to Section 8(c), the Company shall pay to the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against (the Excise Tax Payment”); provided, however, that (i) the Executive due to the Payments.
shall have made a timely request for such Excise Tax Payment and (ii) Subject no part of the Excise Tax Payment shall be made after the last day of the Executive’s taxable year following the taxable year in which the applicable excise taxes shall have been paid by the Executive. For purposes of determining whether any of the Severance Benefits will be subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required Excise Tax and the amount of such Gross-Up Payment and Excise Tax:
(a) all of the assumptions to be utilized in arriving at such determination, Severance Benefits shall be made treated as “parachute payments” within the meaning of Code section 280G(b)(2), and all “excess parachute payments” within the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Accounting Firm, which shall provide detailed supporting calculations both Company’s independent auditors and reasonably acceptable to the Company and the Executive within fifteen Executive, such other payments or benefits (15in whole or in part) business days do not constitute parachute payments, including by reason of the receipt of notice from the Executive that there has been a PaymentCode section 280G(b)(4)(A), or such earlier time excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code section 280G(b)(4)(B), in excess of the “Base Amount” as is requested defined in Code section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax; and
(b) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty independent auditors 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 Cinergy should have been made (“Underpayment”), consistent accordance with the calculations required to be made hereunder. In the event principles of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred Code section 280G(d)(3) and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto(4). 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 Termination of Employment of the Executive’s employment, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determineddetermined (the “Reduced Excise Tax”), the portion difference of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax Payment and federalthe Reduced Excise Tax. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the Termination of Employment of the Executive (including by reason of any payment the existence or amount of which could not be determined at the time of the Excise Tax Payment), state and local income and employment tax imposed on the Gross-Up Payment being repaid Company shall make an additional Excise Tax payment in respect of such excess (plus any interest or penalties payable by the Executive with respect to such excess) at the extent time that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iii) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 excess is to be made and applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.finally
Appears in 1 contract
Sources: Executive Severance and Change in Control Agreement (USA Mobility, Inc)
Certain Tax Consequences. (i) In the event that the Executive becomes entitled to the payments and benefits described in this Section 5 (the "Severance Benefits"), if any benefits paid or payable of the Severance Benefits will be subject to any excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall pay to the Executive an additional amount (the "Gross-up Payment") such that the net amount retained by the Executive, after deduction of an Excise Tax on the Severance Benefits and any federal, state, and local income and employment tax and Excise Tax upon the payment provided for by this Section 5, shall be equal to the Severance Benefits. For purposes of determining whether any of the Severance Benefits will be subject to the Excise Tax and the amount of such Excise Tax;
(i) any other payments or for his benefit benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any Person whose actions result in connection witha Change in Control or any Person affiliated with the Company or such Person) shall be treated as "parachute payments" within the meaning of Code Section 280G(b)(2), or arising out of, his employment with Cinergy or a change in ownership or effective control and all "excess parachute payments" within the meaning of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”Code Section 280G(b)(1) would shall be treated as subject to any the Excise Tax, then unless in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to the Executive will be entitled to receive an additional payment such other payments or benefits (a “Gross-Up Payment”in whole or in part) in an amount such that after payment do not constitute parachute payments, including by the Executive reason of all taxes (including any interest, penalties, additional taxCode Section 280G(b)(4)(A), or similar items imposed with respect thereto and such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code Section 280G(b)(4)(B) of the Code, in excess of the "Base Amount" as defined in Code Section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax), including any :
(ii) the amount of the Severance Benefits that shall be treated as subject to the Excise Tax imposed upon shall be equal to the lesser of:
(1) the total amount of the Severance Benefits; or
(2) the amount of excess parachute payments within the meaning of Code Section 280G(b)(1) (after applying clause (i) above; and
(iii) 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 Code Section 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive retains an amount 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 upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required is to be made under this Section 5c, including whether and when a Gross-Up Payment is required state and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, local income taxes at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. All fees and expenses highest marginal rate of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty taxation 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred state and any such Underpayment shall be promptly paid by Cinergy to or for the benefit locality of the Executive's residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect theretolocal taxes. 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 's employment, the Executive 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 attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (iii) The value including by reason of any non-cash benefits payment the existence or any deferred payment or benefit paid or payable to the Executive will amount of which cannot be determined in accordance with at the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount time of the Gross-Up Payment), the Executive will be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Company shall make an additional Gross-Up Payment is in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to be made and applicable state and local income taxes such excess) at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes time that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax that Cinergy has actually withheld from with respect to the Payment or Payments in accordance with lawSeverance Benefits.
Appears in 1 contract
Sources: Employment Agreement (Cinergy Corp)
Certain Tax Consequences. (i) In the event that any benefits Severance Benefits paid or payable to the Executive or for his benefit pursuant to the terms of this Agreement or any other plan or arrangement otherwise in connection with, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets assets, (a “"Payment” " or “"Payments”") would be subject to any Excise Tax, then the Executive will be entitled to receive an additional payment (a “"Gross-Up Payment”") in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against the Executive due to the Payments.
(ii) Subject An initial determination as to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required pursuant to this Agreement and the amount of such that Gross-Up Payment will be made at Cinergy's expense by an Accounting Firm selected by the Executive and the assumptions reasonably acceptable to be utilized in arriving at such Cinergy. The Accounting Firm will provide its determination, shall be made by the Accounting Firm, which shall provide together with detailed supporting calculations both and documentation, to the Company Cinergy and the Executive within fifteen (15) business 10 days after the Date of the receipt of notice from the Executive that there has been a PaymentTermination, or such earlier other time as is requested by Cinergy or by the Company. If Executive, and if the Accounting Firm determines that no Excise Tax is payable by the ExecutiveExecutive with respect to a Payment or Payments, it shall, at the same time as it makes such determination, will furnish the Executive with an opinion reasonably acceptable to the Executive that he has substantial authority not to report any no Excise Tax on his federal income tax returnwill be imposed with respect to any such Payment or Payments. All fees and expenses of Within ten days after the Accounting Firm shall be borne solely by delivers its determination to the CompanyExecutive, the Executive will have the right to dispute the determination. Any The Gross-Up Payment, if any, as determined pursuant to this Section 5c, shall Subsection 5c will be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s 's determination. Any The existence of a dispute will not in any way affect the Executive's right to receive the Gross-Up Payment in accordance with the determination. If there is no dispute, the determination by the Accounting Firm shall will be binding binding, final, and conclusive upon Cinergy and the Executive. As If there is a result of dispute, then Cinergy and the uncertainty in Executive will together select a second Accounting Firm, which will review the application of Section 4999 of determination and the Code at Executive's basis for the time of dispute and then will render its own determination, which will be binding, final, and conclusive on Cinergy and on the Executive. Cinergy will bear all costs associated with that determination, unless the determination is not greater than the initial determination determination, in which case all such costs will be borne by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. 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, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iii) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections paragraphs 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s 's residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s 's determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.
Appears in 1 contract
Certain Tax Consequences. (i) In the event that the Executive becomes entitled to the payments and benefits described in this Section 5 (the "Severance Benefits"), if any benefits paid or payable of the Severance Benefits will be subject to any excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of an Excise Tax on the Severance Benefits and any federal, state and local income and employment tax and Excise Tax upon the payment provided for by this Section 5, shall be equal to the Severance Benefits. For purposes of determining whether any of the Severance Benefits will be subject to the Excise Tax and the amount of such Excise Tax,
(i) any other payments or for his benefit benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Employment Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any Person whose actions result in connection witha Change in 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, or arising out of, his employment with Cinergy or a change in ownership or effective control and all "excess parachute payments" within the meaning of Cinergy or Section 280G(b)(1) of a substantial portion of its assets (a “Payment” or “Payments”) would the Code shall be treated as subject to any the Excise Tax, then unless in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to the Executive will be entitled to receive an additional payment such other payments or benefits (a “Gross-Up Payment”in whole or in part) in an amount such that after payment do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Executive of all taxes (including any interest, penalties, additional taxCode, or similar items imposed with respect thereto and such excess parachute payments (in whole or in part) 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 as defined in Section 280G(b)(3) of the Code allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax,
(ii) the amount of the Severance Benefits that shall be treated as subject to the Excise Tax shall be equal to the lesser of
(1) the total amount of the Severance Benefits, or
(2) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (i), including above), and Exhibit 10-d
(iii) the value of any Excise Tax imposed upon non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive retains an amount 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 upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required is to be made under this Section 5c, including whether and when a Gross-Up Payment is required state and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, local income taxes at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. All fees and expenses highest marginal rate of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty taxation 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred state and any such Underpayment shall be promptly paid by Cinergy to or for the benefit locality of the Executive's residence on the Date of Termination, net of the maximum reduction in federal income taxes which would be obtained from deduction of such state and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect theretolocal taxes. 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 's employment, the Executive 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 attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (iii) The value including by reason of any non-cash benefits payment the existence or any deferred payment or benefit paid or payable to the Executive will amount of which cannot be determined in accordance with at the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount time of the Gross-Up Payment), the Executive will be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Company shall make an additional Gross-Up Payment is in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to be made and applicable state and local income taxes such excess) at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes time that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax that Cinergy has actually withheld from with respect to the Payment or Payments in accordance with lawSeverance Benefits.
Appears in 1 contract
Sources: Employment Agreement (Cinergy Corp)
Certain Tax Consequences. (ia) In the event that any benefits paid or payable The Lender shall provide to the Executive or for his benefit pursuant to the terms of this Agreement or any other plan or arrangement in connection with, or arising out of, his employment Borrower tax gross-up payments with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”) would be subject respect to any Excise Tax, then the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment taxes incurred by the Executive of all taxes (including him on any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount forgiveness/cancellation of the Gross-Up Payment equal to Indebtedness as described in Sections 1 and/or 5 above, as the Excise Tax imposed upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5ccase may be, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines so that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. All fees and expenses of the Accounting Firm taxes shall be borne solely by the Company. Any Gross-Borrower (the "Tax Gross Up Payment, as determined pursuant to "). The intent of this Section 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. 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 provision is possible that Gross-Up Payments which will not have been made by Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. 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, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federalall Federal, state and local income and employment tax imposed on taxes, the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax Payment under Section 6(b) below and any other taxes (including any penalties and interest thereon) incurred by borrower on any forgiveness/ cancellation of the Indebtedness as described in Sections 1 and/or a federal, state or local income or employment tax deduction) plus interest on 5 above and any additional taxes resulting from the amount payment of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iii) The value of any non-cash benefits or any deferred payment or benefit taxes by Lender shall also be paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4)by Lender. For purposes of determining the amount of the Gross-Tax Gross Up Payment, the Executive will be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the Payment for any calendar year in which the Gross-Up Payment is forgiveness/cancellation of the Indebtedness occurs, Borrower shall be deemed to be made and applicable pay Federal, state and local income taxes at the highest marginal rate of taxation in the state and locality such calendar year. The amount of the Executive’s residence on the Date of Terminationsuch Tax Gross Up Payment for any calendar year shall be determined by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contraryCPA, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, or in the event that▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is unable or unwilling to make such computation, according such computation shall be made by such other certified public accountant as is selected by Lender and is reasonably acceptable to Borrower, no later than 30 days after the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount date of the Excise forgiveness/cancellation of the Indebtedness occurs and shall be paid by Lender to Borrower in one lump sum within 30 days of such determination
(b) If any (a) forgiveness/cancellation of Indebtedness described in Sections 1 or 5 of this Agreement or (b) Tax that Cinergy has actually withheld from Gross Up Payment described in Section 6 (a) of this Agreement received or to be received by the Payment Borrower in connection with a change in ownership or Payments control of the Lender (a "Statutory Change in accordance with lawControl"), described in section 280G(b)(2)(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and defined in Proposed Treas. Reg.
Appears in 1 contract
Certain Tax Consequences. (i) In Whether or not the event that any benefits paid or payable Executive becomes entitled to the payments and benefits described in this Section 5, if any of the payments or benefits received or to be received by the Executive in connection with a change in ownership or for his benefit control of the Company (a "Statutory Change in Control"), as defined in section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any person whose actions result in connection witha Statutory Change in Control or any person affiliated with the Company or such person) (collectively, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”the "Severance Benefits") would will be subject to any excise tax (the "Excise Tax") imposed under section 4999 of the Internal Revenue Code of 1986, then as amended (the "Code"), the Company shall pay to the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against (the Executive due Excise Tax Payment"). For purposes of determining whether any of the Severance Benefits will be subject to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required Excise Tax and the amount of such Gross-Up Payment and Excise Tax:
(i) all of the assumptions to be utilized in arriving at such determination, Severance Benefits shall be made treated as "parachute payments" within the meaning of Code section 280G(b)(2), and all "excess parachute payments" within the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Accounting Firm, which shall provide detailed supporting calculations both Company's independent auditors and reasonably acceptable to the Company and the Executive within fifteen Executive, such other payments or benefits (15in whole or in part) business days do not constitute parachute payments, including by reason of the receipt of notice from the Executive that there has been a PaymentCode section 280G(b)(4)(A), or such earlier time excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code section 280G(b)(4)(B), in excess of the "Base Amount" as is requested defined in Code section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax; and
(ii) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty 's independent auditors 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 Cinergy should have been made (“Underpayment”), consistent accordance with the calculations required to be made hereunder. In the event principles of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred Code section 280G(d)(3) and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto(4). 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 's employment, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determineddetermined (the "Reduced Excise Tax"), the portion difference of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax Payment and federalthe Reduced Excise Tax. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (including by reason of any payment the existence or amount of which could not be determined at the time of the Excise Tax Payment), state and local income and employment tax imposed on the Gross-Up Payment being repaid Company shall make an additional Excise Tax payment in respect of such excess (plus any interest or penalties payable by the Executive with respect to such excess) at the extent time that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at excess is finally determined. The Executive and the rate provided Company shall each reasonably cooperate with the other in Code Section 1274(b)(2)(B).
(iii) The value connection with any administrative or judicial proceedings concerning the existence or amount of any non-cash benefits or any deferred payment or benefit paid or payable liability for Excise Tax with respect to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxesSeverance Benefits.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.
Appears in 1 contract
Sources: Employment Agreement (Usec Inc)
Certain Tax Consequences. (i) In the event that any benefits paid or payable to the Executive or for his benefit pursuant to the terms of this Agreement or any other plan or arrangement in connection with, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”) would be subject to any Excise Tax, then the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his For U.S. federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. 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, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iii) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at tax purposes, FHP and SpinCo agree to treat (i) any payment required by this Agreement (other than payments with respect to interest accruing after the highest marginal rate of taxation in the state and locality Effective Time or payments required under any of the Executive’s residence on Ancillary Agreements) as either a contribution by FHP to SpinCo or a distribution by SpinCo to FHP, as the Date case may be, occurring immediately prior to the Effective Time or as a payment of Terminationan assumed or retained Liability, net and (ii) any payment of interest as taxable or deductible, as the maximum reduction case may be, to the party entitled under this Agreement to retain such payment or required under this Agreement to make such payment, in federal income taxes that would be obtained from deduction of those state and local taxeseither case except as otherwise required by applicable Law.
(ivii) Notwithstanding anything contained to the contrary in this Agreement to the contraryAgreement, in the event that, according that counsel or independent accountants for a Protected REIT determine that there exists a material risk that any indemnification payments due under this Agreement or under any Ancillary Agreement would be treated as Nonqualifying Income upon the payment of such amounts to the Accounting Firmrelevant Indemnitee, the amount paid to the Indemnitee pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to the Indemnitee in such year without causing the Protected REIT to fail to meet the REIT Requirements for any tax year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the Protected REIT and taking into account any other payments to the Indemnitee (and any other relevant entity, including the Protected REIT) during such tax year that do not constitute Qualifying Income, which determination shall be (i) made by independent accountants to the Indemnitee and (ii) submitted to and approved by the Indemnitee’s determination, outside tax counsel.
(iii) If the amount that an Excise Tax will Indemnifying Party would otherwise be imposed on any Payment or Payments, Cinergy will obligated to pay to the applicable government taxing authorities as Excise Tax withholdingrelevant Indemnitee for any tax year pursuant to this Agreement exceeds the amount payable for such tax year to such Indemnitee pursuant to the preceding sentence (such excess, the amount “Expense Amount”), then:
(A) The Indemnifying Party shall place the Expense Amount into an escrow account (the “Escrow Account”) using an escrow agent and agreement reasonably acceptable to the Indemnitee and shall not release any portion thereof to the Indemnitee, and the Indemnitee shall not be entitled to any such amount, unless and until the Indemnitee delivers to the Indemnifying Party, at the sole option of the Excise relevant Protected REIT, (i) an opinion (an “Expense Amount Tax Opinion”) of the Protected REIT’s tax counsel to the effect that Cinergy has actually withheld such amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a letter (an “Expense Amount Accountant’s Letter”) from the Payment Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to the Indemnitee without causing the Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or Payments (iii) a private letter ruling issued by the IRS to the Protected REIT indicating that the receipt of any Expense Amount hereunder will not cause the Protected REIT to fail to satisfy the REIT Requirements (a “REIT Qualification Ruling” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a “Release Document”). The escrow agreement shall also provide that (x) the amount in accordance the Escrow Account shall be treated as the property of the Indemnifying Party or the applicable Affiliate of the Indemnifying Party, unless it is released from such Escrow Account to the Indemnitee, (y) all income earned upon the amount in the Escrow Account shall be treated as the property of the Indemnifying Party or the applicable Affiliate of the Indemnifying Party and reported, as and to the extent required by applicable Law, by the escrow agent to the IRS, or any other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form) as income earned by the Indemnifying Party or the applicable Affiliate of the Indemnifying Party whether or not said income has been distributed during such tax year, and (z) the amount in the Escrow Account shall be invested only as determined by the Indemnifying Party in its sole discretion;
(B) Pending the delivery of a Release Document by the Indemnitee to the Indemnifying Party, the Indemnitee shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement reasonably acceptable to the Indemnitee that (i) requires the Indemnifying Party to lend the Indemnitee immediately available cash proceeds in an amount equal to the Expense Amount, and (ii) provides for (A) a reasonable interest rate and reasonable covenants, taking into account the credit standing and profile of the Indemnitee or any guarantor of the Indemnitee, including the Protected REIT, at the time of such loan, and (B) a fifteen (15) year maturity with lawno periodic amortization;
(C) Any amount held in escrow pursuant to this Section 9.4 for five (5) years shall be released from such escrow to be used as determined by the Indemnifying Party in its sole and absolute discretion;
(D) The Indemnitee shall bear all costs and expenses with respect to the escrow; and
(E) The Indemnifying Party shall cooperate in good faith with the Indemnitee (including amending this Section 9.4(h) at the reasonable request of the Indemnitee) in order to (i) maximize the portion of the payments that may be made to the Indemnitee hereunder without causing the Protected REIT to fail to meet the REIT Requirements, (ii) improve the Indemnitee’s chances of securing a favorable REIT Qualification Ruling, or (iii) assist the Indemnitee in obtaining a favorable Expense Amount Tax Opinion or a favorable Expense Amount Accountant’s Letter. Such cooperation shall include, for example, agreeing to make payments hereunder to a taxable REIT subsidiary of the Indemnitee or an affiliate or designee of the Indemnitee. The Indemnitee shall reimburse the Indemnifying Party for all reasonable costs and expenses of such cooperation.
Appears in 1 contract
Sources: Separation and Distribution Agreement (Freehold Properties, Inc.)
Certain Tax Consequences. (i) In Whether or not the event that any benefits paid or payable Executive becomes entitled to the payments and benefits described in Section 4 or Section 6 hereof, if any of the payments or benefits received or to be received by the Executive in connection with a change in ownership or for his benefit control of the Company (as defined in section 280G of the Code (a “Statutory Change in Control”)) or the Executive’s Termination of Employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any person whose actions result in connection witha Statutory Change in Control or any person affiliated with the Company or such person) (collectively, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a the “Payment” or “PaymentsSeverance Benefits”) would will be subject to any excise tax (the “Excise Tax”) imposed under section 4999 of the Code, then then, subject to Section 8(c), the Company shall pay to the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against (the Excise Tax Payment”); provided, however, that (i) the Executive due to the Payments.
shall have made a timely request for such Excise Tax Payment and (ii) Subject no part of the Excise Tax Payment shall be made after the last day of the Executive’s taxable year following the taxable year in which the applicable excise taxes shall have been paid by the Executive. For purposes of determining whether any of the Severance Benefits will be subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required Excise Tax and the amount of such Gross-Up Payment and Excise Tax:
(a) all of the assumptions to be utilized in arriving at such determination, Severance Benefits shall be made treated as “parachute payments” within the meaning of Code section 280G(b)(2), and all “excess parachute payments” within the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Accounting Firm, which shall provide detailed supporting calculations both Company’s independent auditors and reasonably acceptable to the Company and the Executive within fifteen Executive, such other payments or benefits (15in whole or in part) business days do not constitute parachute payments, including by reason of the receipt of notice from the Executive that there has been a PaymentCode section 280G(b)(4)(A), or such earlier time excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code section 280G(b)(4)(B), in excess of the “Base Amount” as is requested defined in Code section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax; and
(b) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty independent auditors 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 Cinergy should have been made (“Underpayment”), consistent accordance with the calculations required to be made hereunder. In the event principles of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred Code section 280G(d)(3) and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto(4). 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 Termination of Employment of the Executive’s employment, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determineddetermined (the “Reduced Excise Tax”), the difference of the Excise Tax Payment and the Reduced Excise Tax. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the Termination of Employment of the Executive (including by reason of any payment the existence or amount of which could not be determined at the time of the Excise Tax Payment), the Company shall make an additional Excise Tax payment in respect of such excess (plus any interest or penalties payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Severance Benefits.
(c) Notwithstanding any contrary provision of this Agreement, the Severance Benefits shall be reduced to the extent necessary so that no portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable Severance Benefits shall be subject to the Excise Tax and Taxes, but only if the sum of (A) the net amount of such Severance Benefits, without reduction (but after imposition of the total amount of taxes under federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deductionlaw) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iiiB) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from Payment in respect of such excess plus any interest or penalties payable by the Payment Executive with respect to such excess (but after imposition of the total amount of taxes under federal, state and local law applicable to such additional payment) exceeds the net amount of such Severance Benefits, as so reduced (and after the imposition of the total amount of taxes under federal, state and local law on such amounts or Payments in accordance with lawbenefits).
Appears in 1 contract
Sources: Executive Severance and Change in Control Agreement (USA Mobility, Inc)
Certain Tax Consequences. (i) In the event that any compensation and/or benefits paid or payable to the Executive or for his benefit pursuant to the terms of this Agreement or any other plan or arrangement in connection with, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”) would be subject to any Excise Tax, then the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. 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, then, unless otherwise treated as an impermissible loan under applicable law, the Executive 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 attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iii) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.
Appears in 1 contract
Certain Tax Consequences. (i) In the event that the Executive becomes entitled to the payments and benefits described in this Section 5 (the "Severance Benefits"), if any benefits paid or payable of the Severance Benefits will be subject to any excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of an Excise Tax on the Severance Benefits and any federal, state and local income and employment tax and Excise Tax upon the payment provided for by this Section 5, shall be equal to the Severance Benefits. For purposes of determining whether any of the Severance Benefits will be subject to the Excise Tax and the amount of such Excise Tax,
(i) any other payments or for his benefit benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Employment Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any Person whose actions result in connection witha Change in 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, or arising out of, his employment with Cinergy or a change in ownership or effective control and all "excess parachute payments" within the meaning of Cinergy or Section 280G(b)(1) of a substantial portion of its assets (a “Payment” or “Payments”) would the Code shall be treated as subject to any the Excise Tax, then unless in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to the Executive will be entitled to receive an additional payment such other payments or benefits (a “Gross-Up Payment”in whole or in part) in an amount such that after payment do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Executive of all taxes (including any interest, penalties, additional taxCode, or similar items imposed with respect thereto and such excess parachute payments (in whole or in part) 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 as defined in Section 280G(b)(3) of the Code allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax,
(ii) the amount of the Severance Benefits that shall be treated as subject to the Excise Tax shall be equal to the lesser of Exhibit 10-a
(1) the total amount of the Severance Benefits, or
(2) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (i), including above), and
(iii) the value of any Excise Tax imposed upon non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive retains an amount 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 upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required is to be made under this Section 5c, including whether and when a Gross-Up Payment is required state and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, local income taxes at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. All fees and expenses highest marginal rate of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty taxation 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred state and any such Underpayment shall be promptly paid by Cinergy to or for the benefit locality of the Executive's residence on the Date of Termination, net of the maximum reduction in federal income taxes which would be obtained from deduction of such state and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect theretolocal taxes. 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 's employment, the Executive 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 attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (iii) The value including by reason of any non-cash benefits payment the existence or any deferred payment or benefit paid or payable to the Executive will amount of which cannot be determined in accordance with at the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount time of the Gross-Up Payment), the Executive will be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Company shall make an additional Gross-Up Payment is in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to be made and applicable state and local income taxes such excess) at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes time that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax that Cinergy has actually withheld from with respect to the Payment or Payments in accordance with lawSeverance Benefits.
Appears in 1 contract
Sources: Employment Agreement (Cinergy Corp)
Certain Tax Consequences. (i) In the event that the Executive becomes entitled to the payments and benefits described in this Section 5 (the "Severance Benefits"), if any benefits paid or payable of the Severance Benefits will be subject to any excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of an Excise Tax on the Severance Benefits and any federal, state and local income and employment tax and Excise Tax upon the payment provided for by this Section 5, shall be equal to the Severance Benefits. For purposes of determining whether any of the Severance Benefits will be subject to the Excise Tax and the amount of such Excise Tax,
(i) any other payments or for his benefit benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Employment Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any Person whose actions result in connection witha Change in 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, or arising out of, his employment with Cinergy or a change in ownership or effective control and all "excess parachute payments" within the meaning of Cinergy or Section 280G(b)(1) of a substantial portion of its assets (a “Payment” or “Payments”) would the Code shall be treated as subject to any the Excise Tax, then unless in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to the Executive will be entitled to receive an additional payment such other payments or benefits (a “Gross-Up Payment”in whole or in part) in an amount such that after payment do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Executive of all taxes (including any interest, penalties, additional taxCode, or similar items imposed with respect thereto and such excess parachute payments (in whole or in part) 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 as defined in Section 280G(b)(3) of the Code allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax,
(ii) the amount of the Severance Benefits that shall be treated as subject to the Excise Tax shall be equal to the lesser of Exhibit 10-b
(1) the total amount of the Severance Benefits, or
(2) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (i), including above), and
(iii) the value of any Excise Tax imposed upon non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive retains an amount 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 upon or assessable against the Executive due to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required is to be made under this Section 5c, including whether and when a Gross-Up Payment is required state and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, local income taxes at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. All fees and expenses highest marginal rate of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty taxation 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 Cinergy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred state and any such Underpayment shall be promptly paid by Cinergy to or for the benefit locality of the Executive's residence on the Date of Termination, net of the maximum reduction in federal income taxes which would be obtained from deduction of such state and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect theretolocal taxes. 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 's employment, the Executive 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 attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (iii) The value including by reason of any non-cash benefits payment the existence or any deferred payment or benefit paid or payable to the Executive will amount of which cannot be determined in accordance with at the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount time of the Gross-Up Payment), the Executive will be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Company shall make an additional Gross-Up Payment is in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to be made and applicable state and local income taxes such excess) at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes time that would be obtained from deduction of those state and local taxes.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax that Cinergy has actually withheld from with respect to the Payment or Payments in accordance with lawSeverance Benefits.
Appears in 1 contract
Sources: Employment Agreement (Cinergy Corp)
Certain Tax Consequences. (i) In Whether or not the event that any benefits paid or payable Executive becomes entitled to the payments and benefits described in this Section 5, if any of the payments or benefits received or to be received by the Executive in connection with a change in ownership or for his benefit control of the Company (a "Statutory Change in Control"), as defined in section 280G of the Internal Revenue Code of 1986, as from time to time in effect (the "Code"), or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any person whose actions result in connection witha Statutory Change in Control or any person affiliated with the Company or such person) (collectively, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”the "Severance Benefits") would will be subject to any excise tax (the "Excise Tax") imposed under section 4999 of the Code, then the Company shall pay to the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against Tax, plus any amount necessary to "gross up" the Executive due for additional taxes resulting from the payments to the PaymentsExecutive by the Company under this Section 5(h)(i) (the "Excise Tax Payment").
(ii) Subject For purposes of determining whether any of the Severance Benefits will be subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required Excise Tax and the amount of such GrossExcise Tax:
(A) all of the Severance Benefits shall be treated as "parachute payments" within the meaning of Code section 280G(b)(2) if the aggregate present value (determined as provided in Code Section 280G(d)(4)) of such Severance Benefits equals or exceeds three times the Executive's "Base Amount" (within the meaning of Code Section 280G(b)(3)), and all "excess parachute payments" within the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise Tax, unless, in the opinion of Ropes & ▇▇▇▇ LLP or other tax counsel selected by Ropes & ▇▇▇▇ LLP and reasonably acceptable to the Executive or in the event Ropes & ▇▇▇▇ LLP is unable or unwilling to make such selection, by other tax counsel selected by the Company and reasonably acceptable to the Executive, such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Code section 280G(b)(4)(A), or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code section 280G(b)(4)(B), in excess of the "Base Amount" as defined in Code section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax; and
(B) the value of any non-Up Payment cash benefits or any deferred payment or benefit shall be determined by a certified public accountant selected by Ropes & ▇▇▇▇ LLP and reasonably acceptable to the assumptions Executive, or in the event that Ropes & ▇▇▇▇ LLP is unable or unwilling to be utilized in arriving at make such determinationselection, such selection shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to such other certified public accountant as is selected by the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by reasonably acceptable to the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. 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 Cinergy should have been made (“Underpayment”), consistent accordance with the calculations required to be made hereunder. In the event principles of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred Code section 280G(d)(3) and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. (4).
(iii) 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 employmenthereunder, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determineddetermined (the "Reduced Excise Tax"), an amount (the "Gross-Up Repayment") equal to the sum of (A) the difference of the Excise Tax Payment and the Reduced Excise Tax plus (B) an amount representing the difference between (1) the amount paid by the Company to the Executive to "gross up" the Executive for taxes on payments made by the Company to the Executive in respect of the Excise Tax and (2) the amount which should have been paid to the Executive by the Company to "gross up" the Executive for taxes on payments made by the Company to the Executive in respect of the Reduced Excise Tax; provided, however, that in no event shall the Gross-Up Repayment exceed the actual aggregate cash refunds of, or cash reductions in, taxes paid by the Executive by virtue of paying the Gross-Up Repayment; and provided, further, that if such refunds or reductions are realized from time to time, the portion Executive shall make a repayment to the Company at the time of each such realization equal to the excess of the Gross-Up Payment attributable Repayment due after giving effect to such reduction (plus that portion of realization over the Gross-Up Payment attributable Repayment due immediately prior to giving effect to such realization. The Executive shall (1) take such actions with respect to taxes and tax returns as the Company may from time to time reasonably request in order to obtain such refunds and reductions, including, without limitation, by taking reasonable positions on tax returns and filing amended tax returns, (2) provide the Company with copies of all tax returns filed by the Executive which reflect such refunds or reductions or are otherwise reasonably requested by the Company in order to determine the Executive's compliance with the immediately preceding clause (1), (3) permit the Company to participate in any proceedings relating to such refunds and reductions and (4) take all such other actions as may be reasonably requested by the Company from time to time in connection with the realization of such refunds or reductions, including, without limitation, borrowing money from the Company (on terms and conditions reasonably satisfactory to the Excise Tax Executive and federalthe Company, state and local income and employment including, without limitation, having the Company make the Executive whole, on an after-tax imposed on basis, for any interest costs) so that the Gross-Up Payment being repaid payments made from time to time by the Executive to the Company hereunder maximize (to the extent reasonably possible) such refunds and reductions, the aggregate amount of such payments by the Executive not to exceed the Gross-Up Repayment (computed without regard to the provisos to the first sentence of this Section 5(h)(iii)); provided, however, that such repayment results the Company shall bear and directly pay, or shall promptly reimburse the Executive for, all costs and expenses (including any additional penalties and interest) incurred by the Executive in a reduction connection with any actions taken or omitted by the Executive in accordance with instructions from the Company pursuant to this sentence, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax and/or or income tax (including any additional penalties and interest) imposed as a federalresult of the Company's payment of such costs and expenses. In the event that the Excise Tax is subsequently determined to exceed the amount taken into account hereunder (including by reason of any payment the existence or amount of which could not be determined at the time of the Excise Tax Payment), state the Company shall make an additional Excise Tax Payment in respect of such excess (together with any interest or local income or employment tax deductionpenalties payable by the Executive with respect to such excess) plus interest on at the time that the amount of such repayment at excess if finally determined, plus any additional taxes resulting from the rate provided in Code Section 1274(b)(2)(B).
(iii) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Executive will be determined in accordance by the Company for such excess and the interest and penalties thereon. The Executive and the Company shall each reasonably cooperate with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxesSeverance Benefits.
(iv) Notwithstanding anything contained in this Agreement As used herein, any reference to "Ropes & ▇▇▇▇ LLP" shall include any successor firm thereto.
(v) The Executive shall give the Company written notice of any determination by the Executive, or any claim by any taxing authority, that he owes Excise Tax on any Severance Benefit. Such notice shall be given as soon as practicable but no later than ten (10) business days after the Executive makes such determination or is informed of such claim, and shall, to the contraryextent the Executive has or may reasonably obtain such information, in apprise the event that, according Company of the amount of such Excise Tax and the date on which it is required to be paid. If the Company gives the Executive written notice at least thirty (30) days prior to the Accounting Firm’s determinationdue date for payment of such Excise Tax, an Excise Tax will be imposed on any Payment or Paymentswithin ten (10) business days of having received the foregoing notice from the Executive (whichever is later), Cinergy will pay that it disagrees with or wishes to the applicable government taxing authorities as Excise Tax withholding, contest the amount of the Excise Tax, the Company and the Executive shall consult with each other and their respective tax advisors regarding the amount and payment of any Excise Tax. In the event there is a contest with any taxing authority regarding the amount of the Excise Tax, the Company shall bear and pay directly all costs and expenses (including additional interest, penalties and legal fees) incurred in connection with any such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, to the extent not otherwise paid hereunder, on (x) the Excise Tax that Cinergy has actually withheld from Payment (including any interest and penalties with respect thereto) and (y) the Payment or Payments in accordance with lawCompany's payment of the Executive's costs and expenses hereunder.
Appears in 1 contract
Certain Tax Consequences. (i) In Whether or not the event that any benefits paid or payable Executive becomes entitled to the payments and benefits described in this Section 5, if any of the payments or benefits (including the payments(s) provided for by this section 5(e)) received or to be received by the Executive in connection with a change in ownership or for his benefit control of the Company (a "Statutory Change in Control"), as defined in section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any person whose actions result in connection witha Statutory Change in Control or any person affiliated with the Company or such person) (collectively, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”the "Severance Benefits") would will be subject to any excise tax (the "Excise Tax") imposed under section 4999 of the Code, then the Company shall pay to the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against (the Executive due "Excise Tax Payment"). For purposes of determining whether any of the Severance Benefits will be subject to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required Excise Tax and the amount of such Gross-Up Payment and Excise Tax:
(i) all of the assumptions to be utilized in arriving at such determination, Severance Benefits shall be made treated as "parachute payments" within the meaning of Code section 280G(b)(2), and all "excess parachute payments" within the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Accounting Firm, which shall provide detailed supporting calculations both Company's independent auditors and reasonably acceptable to the Company and the Executive within fifteen Executive, such other payments or benefits (15in whole or in part) business days do not constitute parachute payments, including by reason of the receipt of notice from the Executive that there has been a PaymentCode section 280G(b)(4)(A), or such earlier time excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code section 280G(b)(4)(B), in excess of the "Base Amount" as is requested defined in Code section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax; and
(ii) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty 's independent auditors 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 Cinergy should have been made (“Underpayment”), consistent accordance with the calculations required to be made hereunder. In the event principles of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred Code section 280G(d)(3) and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto(4). 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 's employment, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determineddetermined (the "Reduced Excise Tax"), the portion difference of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax Payment and federalthe Reduced Excise Tax. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (including by reason of any payment the existence or amount of which could not be determined at the time of the Excise Tax Payment), state and local income and employment tax imposed on the Gross-Up Company shall make an additional Excise Tax Payment being repaid in respect of such excess (plus any interest or penalties payable by the Executive with respect to such excess) at the extent time that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at excess is finally determined. The Executive and the rate provided Company shall each reasonably cooperate with the other in Code Section 1274(b)(2)(B).
(iii) The value connection with any administrative or judicial proceedings concerning the existence or amount of any non-cash benefits or any deferred payment or benefit paid or payable liability for Excise Tax with respect to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxesSeverance Benefits.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.
Appears in 1 contract
Sources: Employment Agreement (Usec Inc)
Certain Tax Consequences. (i) In Notwithstanding anything to the contrary in this Agreement, in the event that counsel or independent accountants for a Protected REIT determine that there exists a material risk that any benefits paid or payable to the Executive or for his benefit pursuant to the terms of indemnification payments due under this Agreement or under any other plan or arrangement in connection withAncillary Agreement (including, or arising out offor the avoidance of doubt, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”the Tax Matters Agreement) would be subject treated as Nonqualifying Income upon the payment of such amounts to the relevant Indemnitee, the amount paid to the Indemnitee pursuant to this Agreement in any Excise Taxtax year shall not exceed the maximum amount that can be paid to the Indemnitee in such year without causing the Protected REIT to fail to meet the REIT Requirements for any tax year, then determined as if the Executive will payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the Protected REIT and taking into account any other payments to the Indemnitee (and any other relevant entity, including the Protected REIT) during such tax year that do not constitute Qualifying Income, which determination shall be entitled (i) made by independent accountants to receive an additional payment the Indemnitee and (a “Gross-Up Payment”ii) in an amount such that after payment submitted to and approved by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against the Executive due to the PaymentsIndemnitee’s outside tax counsel.
(ii) Subject If the amount payable for any tax year pursuant to the provisions of Section 5cpreceding sentence is less than the amount which the relevant Indemnifying Party would otherwise be obligated to pay to the relevant Indemnitee pursuant to this Agreement (the “Expense Amount”), all determinations required then:
(A) The Indemnifying Party shall place the Expense Amount into an escrow account (the “Escrow Account”) using an escrow agent and agreement reasonably acceptable to be made under this Section 5cthe Indemnitee and shall not release any portion thereof to the Indemnitee, including whether and when a Gross-Up Payment is required and the Indemnitee shall not be entitled to any such amount, unless and until the Indemnitee delivers to the Indemnifying Party, at the sole option of the relevant Protected REIT, (i) an opinion (an “Expense Amount Tax Opinion”) of the Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a letter (an “Expense Amount Accountant’s Letter”) from the Protected REIT’s independent accountants indicating the maximum amount of such Gross-Up Payment and that can be paid at that time to the assumptions Indemnitee without causing the Protected REIT to be utilized in arriving at such determinationfail to meet the REIT Requirements for any relevant taxable year, shall be made or (iii) a private letter ruling issued by the Accounting Firm, which shall provide detailed supporting calculations both IRS to the Company and the Executive within fifteen (15) business days of Protected REIT indicating that the receipt of notice any Expense Amount hereunder will not cause the Protected REIT to fail to satisfy the REIT Requirements (a “REIT Qualification Ruling” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a “Release Document”). The escrow agreement shall also provide that (x) the amount in the Escrow Account shall be treated as the property of the Indemnifying Party or the applicable Affiliate of the Indemnifying Party, unless it is released from such Escrow Account to the Indemnitee, (y) all income earned upon the amount in the Escrow Account shall be treated as the property of the Indemnifying Party or the applicable Affiliate of the Indemnifying Party and reported, as and to the extent required by applicable Law, by the escrow agent to the IRS, or any other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form) as income earned by the Indemnifying Party or the applicable Affiliate of the Indemnifying Party whether or not said income has been distributed during such tax year, and (z) the amount in the Escrow Account shall be invested only as determined by the Indemnifying Party in its sole discretion;
(B) Pending the delivery of a Release Document by the Indemnitee to the Indemnifying Party, the Indemnitee shall have the right, but not the obligation, to borrow the Expense Amount from the Executive Escrow Account pursuant to a loan agreement reasonably acceptable to the Indemnitee that there has been (i) requires the Indemnifying Party to lend the Indemnitee immediately available cash proceeds in an amount equal to the Expense Amount, and (ii) provides for (A) a Paymentreasonable interest rate and reasonable covenants, taking into account the credit standing and profile of the Indemnitee or such earlier time as is requested by any guarantor of the Company. If Indemnitee, including the Accounting Firm determines that no Excise Tax is payable by the Executive, it shallProtected REIT, at the same time as it makes of such determinationloan, furnish the Executive and (B) a 15 year maturity with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. All fees and expenses of the Accounting Firm shall be borne solely by the Company. no periodic amortization;
(C) Any Gross-Up Payment, as determined amount held in escrow pursuant to this Section 5c, 9.4 for 15 years shall be paid released from such escrow to be used as determined by Cinergy the Indemnifying Party in its sole and absolute discretion;
(D) The Indemnitee shall bear all costs and expenses with respect to the Executive within five escrow; and
(5E) days The Indemnifying Party shall cooperate in good faith with the Indemnitee (including amending this Section 9.4(h) at the reasonable request of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty Indemnitee) 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 Cinergy should have been made order to (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. 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, at the time that the amount of such reduction in Excise Tax is finally determined, i) maximize the portion of the Gross-Up Payment attributable to such reduction (plus payments that portion of the Gross-Up Payment attributable may be made to the Excise Tax and federalIndemnitee hereunder without causing the Protected REIT to fail to meet the REIT Requirements, state and local income and employment tax imposed on (ii) improve the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in Indemnitee’s chances of securing a reduction in Excise Tax and/or a federalfavorable REIT Qualification Ruling, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).
(iii) The value of any non-cash benefits assist the Indemnitee in obtaining a favorable Expense Amount Tax Opinion or any deferred payment or benefit paid or payable a favorable Expense Amount Accountant’s Letter. Such cooperation shall include, for example, agreeing to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount make payments hereunder to a taxable REIT subsidiary of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality Indemnitee or an affiliate or designee of the Executive’s residence on Indemnitee. The Indemnitee shall reimburse the Date Indemnifying Party for all reasonable costs and expenses of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxessuch cooperation.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.
Appears in 1 contract
Certain Tax Consequences. (i) In Whether or not the event that any benefits paid or payable Executive becomes entitled to the payments and benefits described in Section 4 hereof, if any of the payments or benefits received or to be received by the Executive in connection with a change in ownership or for his benefit control of the Company (as defined in section 280G of the Code (a “Statutory Change in Control”)) or the Executive’s termination of employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any person whose actions result in connection witha Statutory Change in Control or any person affiliated with the Company or such person) (collectively, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a the “Payment” or “PaymentsSeverance Benefits”) would will be subject to any excise tax (the “Excise Tax”) imposed under section 4999 of the Code, then the Company shall pay to the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against (the Executive due Excise Tax Payment”). For purposes of determining whether any of the Severance Benefits will be subject to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required Excise Tax and the amount of such Gross-Up Payment and Excise Tax:
(a) all of the assumptions to be utilized in arriving at such determination, Severance Benefits shall be made treated as “parachute payments” within the meaning of Code section 280G(b)(2), and all “excess parachute payments” within the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Accounting Firm, which shall provide detailed supporting calculations both Company’s independent auditors and reasonably acceptable to the Company and the Executive within fifteen Executive, such other payments or benefits (15in whole or in part) business days do not constitute parachute payments, including by reason of the receipt of notice from the Executive that there has been a PaymentCode section 280G(b)(4)(A), or such earlier time excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code section 280G(b)(4)(B), in excess of the “Base Amount” as is requested defined in Code section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax; and
(b) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty independent auditors 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 Cinergy should have been made (“Underpayment”), consistent accordance with the calculations required to be made hereunder. In the event principles of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred Code section 280G(d)(3) and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto(4). 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, at the time that the amount of such reduction in Excise Tax is finally determineddetermined (the “Reduced Excise Tax”), the portion difference of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax Payment and federalthe Reduced Excise Tax. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive’s employment (including by reason of any payment the existence or amount of which could not be determined at the time of the Excise Tax Payment), state and local income and employment tax imposed on the Gross-Up Payment being repaid Company shall make an additional Excise Tax payment in respect of such excess (plus any interest or penalties payable by the Executive with respect to such excess) at the extent time that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at excess is finally determined. The Executive and the rate provided Company shall each reasonably cooperate with the other in Code Section 1274(b)(2)(B).
(iii) The value connection with any administrative or judicial proceedings concerning the existence or amount of any non-cash benefits or any deferred payment or benefit paid or payable liability for Excise Tax with respect to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxesSeverance Benefits.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.
Appears in 1 contract
Certain Tax Consequences. (i) In Whether or not the event that any benefits paid or payable Executive becomes entitled to the payments and benefits described in Section 4 hereof, if any of the payments or benefits received or to be received by the Executive in connection with a change in ownership or for his benefit control of the Company (as defined in section 280G of the Code (a "Statutory Change in Control")) or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan plan, arrangement or arrangement agreement with the Company, any person whose actions result in connection witha Statutory Change in Control or any person affiliated with the Company or such person) (collectively, or arising out of, his employment with Cinergy or a change in ownership or effective control of Cinergy or of a substantial portion of its assets (a “Payment” or “Payments”the "Severance Benefits") would will be subject to any excise tax (the "Excise Tax") imposed under section 4999 of the Code, then the Company shall pay to the Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against (the Executive due Excise Tax Payment"). For purposes of determining whether any of the Severance Benefits will be subject to the Payments.
(ii) Subject to the provisions of Section 5c, all determinations required to be made under this Section 5c, including whether and when a Gross-Up Payment is required Excise Tax and the amount of such Gross-Up Payment and Excise Tax:
(a) all of the assumptions to be utilized in arriving at such determination, Severance Benefits shall be made treated as "parachute payments" within the meaning of Code section 280G(b)(2), and all "excess parachute payments" within the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Accounting Firm, which shall provide detailed supporting calculations both Company's independent auditors and reasonably acceptable to the Company and the Executive within fifteen Executive, such other payments or benefits (15in whole or in part) business days do not constitute parachute payments, including by reason of the receipt of notice from the Executive that there has been a PaymentCode section 280G(b)(4)(A), or such earlier time excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code section 280G(b)(4)(B), in excess of the "Base Amount" as is requested defined in Code section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax; and
(b) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. 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 5c, shall be paid by Cinergy to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Cinergy and the Executive. As a result of the uncertainty 's independent auditors 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 Cinergy should have been made (“Underpayment”), consistent accordance with the calculations required to be made hereunder. In the event principles of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred Code section 280G(d)(3) and any such Underpayment shall be promptly paid by Cinergy to or for the benefit of the Executive, and Cinergy shall indemnify and hold harmless the Executive for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto(4). 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 's employment, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determineddetermined (the "Reduced Excise Tax"), the portion difference of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax Payment and federalthe Reduced Excise Tax. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (including by reason of any payment the existence or amount of which could not be determined at the time of the Excise Tax Payment), state and local income and employment tax imposed on the Gross-Up Payment being repaid Company shall make an additional Excise Tax payment in respect of such excess (plus any interest or penalties payable by the Executive with respect to such excess) at the extent time that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at excess is finally determined. The Executive and the rate provided Company shall each reasonably cooperate with the other in Code Section 1274(b)(2)(B).
(iii) The value connection with any administrative or judicial proceedings concerning the existence or amount of any non-cash benefits or any deferred payment or benefit paid or payable liability for Excise Tax with respect to the Executive will be determined in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive will 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 applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxesSeverance Benefits.
(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Cinergy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Cinergy has actually withheld from the Payment or Payments in accordance with law.
Appears in 1 contract