Common use of Section 280G Provisions Clause in Contracts

Section 280G Provisions. Notwithstanding anything contained in this Agreement to the contrary, to the extent that any payment, benefit or distribution of any type to or for Executive by the Company, or any subsidiary or affiliate of the Company, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (including, without limitation, any accelerated vesting of stock options or restricted stock granted prior to the Merger) as a result of the Merger (collectively, the "Total Payments") is or will be subject to the excise tax ("Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), (or any successor to such Section), the Company shall pay to Executive, at the time Executive pays any Excise Tax with respect to any of such Total Payments (which may be at the time the Company withholds Excise Tax from any payments or at the time he files his annual federal income tax return for a year in which Excise Tax is due or payable), an additional amount (a "Gross-Up Payment") which is, after the imposition of all income, employment, excise and other taxes, penalties and interest thereon, equal to the sum of (i) the Excise Tax on such Total Payments plus (ii) any penalty and interest assessments associated with such Excise Tax. The initial determination of whether any portion of the Total Payments is subject to an Excise Tax and, if so, the amount and time of the Gross-Up Payment pursuant to this Section 14 shall be made by the Company. For purposes of determining whether any payments, benefits or amounts will be subject to the Excise Tax and the amount of any such Excise Tax, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made. Furthermore, the computation of the Gross-Up Payment shall assume (and adjust for the fact) that (i) there is a loss of miscellaneous itemized deductions under Section 67 of the Code (or analogous federal or state provisions) on account of the Gross-Up Payment and (ii) a loss of itemized deductions under Section 68 of the Code (or analogous federal or state provisions) on account of the Gross-Up Payment. The computation of the Gross-Up Payment shall take into account any reduction in the Gross-Up Payment due to the Executive's share of the hospital insurance portion of FICA and any state withholding taxes (other than any state withholding tax for income tax liability). The computation of the state and local income taxes applicable to the Gross-Up Payment shall be based on the highest marginal rate of taxation in the state and locality of Executive's residence on the date the Gross-Up Payment is made, and shall take into account the maximum reduction in federal income taxes that could be obtained from the deduction of such state and local taxes. The parties shall cooperate with each other in connection with any reporting, proceeding or claim relating to the existence or amount of any liability for Excise Tax, including, but not limited to, Executive preparing and filing his federal income tax returns in a manner consistent with Company's determination that an Excise Tax is due or payable as a result of the Total Payments. All reasonable third party expenses relating to any such proceeding or claim (including attorneys' fees and other reasonable out of pocket expenses incurred by the Executive in connection therewith) shall be paid by the Company promptly upon demand by Executive, and any such payments shall be subject to a Gross-Up Payment under this Section 14 in the event that Executive is subject to Excise Tax on it. In the event that the Excise Tax is subsequently determined to be less than the amount initially determined by the Company, the Gross-Up Payment shall be redetermined at the time that the amount of such reduction is Excise Tax is finally determined, and Executive shall promptly repay to the Company the portion of the Gross-Up Payment equal to the difference between the Gross-Up Payment as originally determined and the Gross-Up Payment as finally determined. In the event that the Excise Tax is finally determined to exceed the amount originally determined (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Gross-Up Payments shall be redetermined at the time that the amount of such excess is finally determined, and the Company shall make an additional Gross-Up Payment equal to the difference between the Gross-Up Payment as originally determined and the Gross-Up Payment as finally determined. For purposes of the Section 14, the amount of the Excise Tax and the amount of the Gross-Up Payment shall be deemed to be "finally determined" upon the earlier of (a) the rendering of a decision by the Internal Revenue Service or a court of competent jurisdiction, from which decision no further right of appeal exists or (b) the expiration of the statutory period for the assessment and collection of the Excise Tax.