Code Section 4999 Excise Tax Sample Clauses
The Code Section 4999 Excise Tax clause addresses the potential imposition of an excise tax on certain payments made to employees, typically in connection with a change in control or severance arrangements. This clause outlines how the company and the employee will handle any excise tax liability that arises if the employee receives "parachute payments" exceeding IRS thresholds, which can trigger a 20% excise tax under Section 4999 of the Internal Revenue Code. Its core function is to clarify responsibility for the tax and to ensure both parties understand the financial implications of such payments, thereby preventing disputes and unexpected tax burdens.
Code Section 4999 Excise Tax. (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that (i) any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity which effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of the Executive (whether pursuant to the terms of this Agreement or otherwise) (the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), and (ii) the reduction of the amounts payable to the Executive under this Agreement to the maximum amount that could be paid to the Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”) would provide the Executive with a greater after-tax amount than if such amounts were not reduced, then the amounts payable to the Executive under this Agreement shall be reduced (but not below zero) to the Safe Harbor Cap. The reduction of the amounts payable hereunder, if applicable, shall be made to the extent necessary in the following order: (i) the acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of the stock subject to the award and of other equity awards, provided that such stock options and of other equity awards are not permitted to be valued under Treasury Regulation Section 1.280G-1 Q/A — 24(c); (ii) the payments under Section 3(a); (iii) the acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of the stock subject to the award and other equity awards, provided that such stock options and other equity awards are permitted to be valued under Treasury Regulation Section 1.280G-1 Q/A — 24(c); (iv) the payments and benefits under Section 3(b); (v) the payments and benefits under Section 3(c); and (v) the acceleration of vesting of all other stock options and equity awards. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a greater after-tax result to the Executive, no amounts payable under this Agreement shall be reduced pursuant to this provision.
Code Section 4999 Excise Tax. Notwithstanding any provision of this Agreement to the contrary, if any payments or benefits to which Executive becomes entitled, whether pursuant to the terms of or by reason of this Agreement or any other plan, arrangement, agreement, policy or program (including without limitation any restricted stock, stock option, stock appreciation right or similar right, or the lapse or termination of any restriction on the vesting or exercisability of any of the foregoing) with the Company, any successor to the Company or to all or a part of the business or assets of the Company (whether direct or indirect, by purchase, merger, consolidation, spin off, or otherwise and regardless of whether such payment is made by or on behalf of the Company or such successor) or any person whose actions result in a change of control or any person affiliated with the Company or such persons (in the aggregate, “Total Payments”), constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (“Code”), and but for this Section 8, would be subject to the excise tax imposed by Section 4999 of the Code, then Executive will be entitled to receive either (a) the full amount of the Total Payments or (b) a portion of the Total Payments having a value equal to $1 less than three (3) times such individual’s “base amount” (as such term is defined in Section 280G(b)(3)(A) of the Code, the “Safe Harbor Cap”), whichever of (a) and (b), after taking into account applicable federal, state, and local income and employment taxes and the excise tax imposed by Section 4999 of the Code (the “Excise Tax”) or any successor provision of the Code or any similar state or local tax, results in the receipt by the Executive on an after-tax basis, of the greatest portion of the Total Payments. All determinations required to be made under this Section 8 shall be made by the accountant or tax counsel or other similar expert advisor selected by the Executive (such advisor, the “Tax Advisor”), which shall, if requested, provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Company or the Executive that there has been Total Payments, or such earlier time as is requested by the Company or the Executive, and if requested, a written opinion. All fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Tax Advisor shall be borne by the Comp...