Section 4999 Gross-Up Payment Clause Samples
The Section 4999 Gross-Up Payment clause requires an employer to compensate an employee for any excise taxes imposed under Section 4999 of the Internal Revenue Code, which typically arise from "golden parachute" payments made in connection with a change in control. In practice, if the employee becomes subject to these additional taxes due to severance or other change-in-control benefits, the employer will make an additional payment to cover both the excise tax and any income taxes resulting from the gross-up itself. This clause ensures that the employee receives the full intended benefit of their severance or change-in-control payments without being financially penalized by the excise tax, thereby allocating the risk and cost of such taxes to the employer.
Section 4999 Gross-Up Payment. In the event it shall be determined that any payments and benefits called for under the Agreement and any Amendments thereto, together with any other payments and benefits (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Agreement (a “Payment”) would be subject to the excise tax imposed under Section 4999 of the Code, or any successor statute, or any interest or penalties are incurred by the Officer with respect to such excise tax (collectively, the “Excise Tax”), then the Officer shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Officer of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Officer retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the payments.