Section 280G Vote Clause Samples

Section 280G Vote. (a) Prior to the Closing Date, the Company shall use reasonable best efforts to obtain from each person who is, with respect to the Company, a “disqualified individual” (as defined in Section 280G(c) of the Code) a waiver of any payments or benefits that might otherwise reasonably result in the payment or provision of “parachute payments” (as defined in Section 280G(b)(2) of the Code), such that after giving effect to all waivers, neither the Company nor any Company Subsidiary has made or provided, or is required to make or provide, any such payments or benefits (the payments and benefits waived (which, for the avoidance of doubt, shall be, with respect to any individual, the amounts in excess of 299% of such individual’s “base amount” (as defined in Section 280G(b)(3) of the Code)) shall be collectively referred to as the “Section 280G Waived Payments”).

Section 280G Vote. The Company shall promptly, and in any case prior to the Closing, seek approval, in a manner that complies with Section 280G(b)(5)(B) of the Code and the Treasury Regulations promulgated thereunder, of the right of any “disqualified individual” (as defined in Section 280G(c) of the Code) to receive or retain any payments that could, in the absence of such approval, constitute “excess parachute payments” (as defined in Section 280G(b)(1) of the Code). Prior to seeking such approval, the Company shall solicit and use its commercially reasonable efforts to obtain waivers from the intended recipients of such payments in which case, unless approved to the extent required by and in the manner that complies with Section 280G(b)(5)(B) of the Code and the Treasury Regulations promulgated thereunder, neither Purchaser, the Company nor any of their respective Affiliates shall make such waived payments. Within a reasonable period of time prior to seeking any waiver or approval but in any event at least three (3) Business Days prior to seeking such waiver or approval, the Company shall deliver to Purchaser drafts of all waivers, consents, disclosures, calculations and other documents prepared in connection with the actions described in this Section 5.12 for Purchaser’s review and comment. The Company will cause the final versions of such documents to reflect Purchaser’s reasonable comments. Prior to the Closing, the Company shall deliver to Purchaser evidence that a vote of the Company’s stockholders was solicited in all material respects in accordance with the foregoing provisions of this Section 5.12 and that either (a) the requisite number of stockholder votes was obtained with respect to the applicable “parachute payments” (the “280G Approval”) or (b) that the 280G Approval was not obtained, and, as a consequence, the applicable “parachute payments” shall not be made or provided. To the extent that, prior to the Closing, Purchaser or its Affiliates enter into or negotiate a compensation arrangement with any individual who has been identified by the Company as a “disqualified individual” under Section 280G, Purchaser shall notify the Company of such arrangement so that the Company may consider it in connection with the Company Section 280G analysis.

Section 280G Vote. (a) Prior to the Closing Date, the Company shall use commercially reasonable efforts obtain from each “disqualified individual” (as defined in Section 280G(c) of the Code) a waiver of all payments or other benefits that were disclosed on Schedule 5.19(b)(xi), or that any member of the Company Group is otherwise obligated to pay or provide, that could, in whole or in part, not be deductible under Section 280G of the Code or subject to an excise Tax under Section 4999 of the Code as a result of the transactions contemplated by this Agreement, such

Section 280G Vote. CFC shall submit for approval, and use its best efforts to obtain approval, by its shareholders such amounts of any payments to employees as would be required to eliminate any excess parachute under Section 280G of the Internal Revenue Code assuming the provisions of Section 280G(b)(5)(A)(i) are not applicable, which amounts shall be paid only if approved by the CFC shareholders in a manner meeting the requirements of Section 280G(b)(5)(B) of the Internal Revenue Code and the rules and regulations promulgated thereunder including Prop. Reg. Sec. 1,280G-1 Q/A 7.

Section 280G Vote. Prior to the Closing, the Company shall disclose and submit to its stockholders, in a manner that meets the requirements of Section 280G(b)(5) of the Code and the applicable rulings and final regulations thereunder, all payments and/or benefits that, in the absence of such stockholder approval, would constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code on account of the transactions contemplated under this Agreement (“Section 280G Payments”), such that the deduction of such payments and benefits will not be limited by the application of Section 280G of the Code in the event the requisite stockholder approval is obtained. The Company shall use its best efforts to obtain duly executed 280G Waivers from all individuals prior to the Company stockholders vote. The Company shall forward to the Purchaser prior to submission to the Company’s stockholders copies of all documents that will be submitted to the Company’s stockholders in connection with this Section 6.14. Prior to Closing, the Company shall deliver to the Purchaser executed copies of any such documents, a record of all shareholder disclosures made in connection with this Section 6.14, and the results of the shareholder vote. The parties acknowledge that for purposes of determining Section 280G Payments pursuant to this Section 6.14, Purchaser shall provide the Company information regarding any Purchaser Arrangements not later than ten (10) days prior to the Closing, and, notwithstanding the above, the Company will take into account such timely provided information when determining whether any Section 280G Payments exist. The parties acknowledge that to the extent that the Purchaser Arrangements are not timely and accurately provided by the Purchaser, the Company shall not have any liability with respect to its reliance on such information and shall not be in violation of this Section 6.14.

Section 280G Vote. Prior to the Closing, the Company shall (i) take all commercially reasonable actions necessary to obtain a waiver from any Person who (A) is a “disqualified individual” (within the meaning of Section 280G of the Code) and (B) has a right or potential right to any payments and/or benefits in connection with the transactions contemplated by this Agreement that could be deemed to constitute “excess parachute payments” pursuant to Section 280G of the Code, which waiver shall provide that, if the requisite stockholder approval under Section 280G(b)(5)(B) of the Code is not obtained, no payments or benefits that would separately or in the aggregate constitute “excess parachute payments” (within the meaning of Section 280G of the Code) with respect to such disqualified individual in the absence of such stockholder approval shall be payable to or retained by such disqualified individual to the extent such excess parachute payments would not be deductible by reason of the application of Section 280G of the Code or would result in the imposition of excise Taxes under Section 4999 of the Code upon such disqualified individual, (ii) deliver to the Company’s stockholders a disclosure statement in a form reasonably satisfactory to Buyer that satisfies the disclosure obligations under Section 280G(b)(5)(B) of the Code, and (iii) hold a vote of the Company’s stockholders that complies with the requirements of Section 280G of the Code to approve or disapprove such payments and/or benefits. Neither the Company nor any of the Company Subsidiaries shall make any such excess parachute payments that are waived and not so approved. The Company shall provide Buyer with a copy of the form of such waiver and such disclosure statement for its review and approval within a reasonable period (and in any event not less than two (2) Business Days) prior to delivery to each such disqualified individual and the Company’s stockholders, respectively.

Section 280G Vote. The Company shall promptly, and in any case prior to the Closing, seek approval, in a manner that complies with Section 280G(b)(5)(B) of the Code and the Treasury Regulations promulgated thereunder, of the right of any “disqualified individual” (as defined in Section 280G(c) of the Code) who has executed a waiver referenced below to receive or retain any payments that could reasonably be expected to, in the absence of such approval, constitute “excess parachute payments” (as defined in Section 280G(b)(1) of the Code). Prior to seeking such approval, the Company shall solicit and use its commercially reasonable efforts to obtain waivers from the intended recipients of such payments in which case, unless approved to the extent required by and in the manner that complies with Section 280G(b)(5)(B) of the Code and the Treasury Regulations

Section 280G Vote. Prior to Closing, the Company shall submit for approval to the Stockholders entitled to vote, meeting the requirements of Code Section 280G(b)(5)(B) and the applicable Treasury regulations thereunder, all Section 280G Payments, such that in the event of such approval the deduction of such payments and benefits will not be limited by the application of Code Section 280G and the applicable regulations thereunder. Any materials distributed to the Stockholders pursuant to this Section 5.12 shall be provided to Buyer at least five days prior to distribution to Stockholders and shall be subject to the prior review and approval of Buyer, which approval shall not be unreasonably withheld, delayed or conditioned. Prior to Closing, the Company shall deliver to Buyer written certification that either (a) the foregoing Stockholder vote was solicited in conformity with Code Section 280G(b)(5)(B) and the applicable Treasury regulations thereunder and the Stockholder approval was obtained with respect to any Section 280G Payments that were subject to such Stockholder vote, or (b) the Stockholder approval of the Section 280G Payments was not obtained and as a consequence, such payments and/or benefits shall not be made or provided to any affected individual.

Section 280G Vote