Tax Adjustment Payment Clause Samples
A Tax Adjustment Payment clause requires one party to compensate the other if changes in tax laws or interpretations result in increased tax liabilities related to the agreement. For example, if a new tax is imposed or an existing exemption is removed, the affected party can claim additional payments to cover the extra tax costs incurred. This clause ensures that neither party is unfairly disadvantaged by unforeseen tax changes, thereby allocating the risk of tax law fluctuations and maintaining the intended financial balance of the contract.
Tax Adjustment Payment. In the event that the Executive becomes entitled to Severance Benefits or any other payment or benefit under this Agreement, or under any other agreement with or plan of the Company (in the aggregate, the "Total Payments"), whether or not the Executive has terminated employment with the Company, if all or any part of the Total Payments will be subject to the tax imposed by Section 4999 of the Code (or any similar tax that may hereafter be imposed) (the "Excise Tax"), the Total Payments shall be reduced (but not below zero) such that the value of the Total Payments shall be one dollar ($1) less than the maximum amount of payments which the Executive may receive without becoming subject to the tax imposed by Section 4999 of the Code; provided, however, that the foregoing limitation shall not apply in the event that it is determined that the Total Payments on an after-tax basis (i.e., after payment of federal, state, and local income taxes, penalties, interest, and Excise Tax) if such limitation is not applied would exceed the after-tax benefits to the Executive if such limitation is applied. The Executive shall bear the expense of any and all Excise Taxes due on any payments that are deemed to be “excess parachute payments” under Section 280G of the Code.
Tax Adjustment Payment. If the total payments to be paid to the Executive under Section 3(c) or (d), as applicable, along with any other payments to the Executive result in the Executive being subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, the Company shall pay the Executive such additional cash compensation to put him or her in the same after-tax situation (taking into account all income, excise, and payroll taxes) as if no such excise tax had been applicable (the “Tax Adjustment Payment”). The Tax Adjustment Payment shall be paid as soon as practicable following the Executive’s termination of employment. The determination of the excise tax and the additional cash compensation (if any) required hereunder will be made by the Company’s independent outside auditors. Notwithstanding the foregoing, the Company’s obligation to pay any Tax Adjustment Payment shall be conditioned upon the Executive Employment Agreement — Addison Executive’s agreement to structure any payments due to him or her under this Agreement in a manner that will eliminate or reduce the excise tax that is payable; provided that the Executive is under no obligation to agree to any such restructuring requested by the Company that would trigger any material adverse tax consequences to the Executive or would materially reduce the value of the payments otherwise due to him or her.
Tax Adjustment Payment. Within thirty (30) days after the Executive exercises a previously granted stock option to purchase 220,000 shares of Company common stock at a price of $5.25 per share and within thirty (30) days after the Executive notifies the Company of the subsequent sale or transfer of such underlying shares, the Company shall make payment to the Executive in the amount necessary to pay any taxes due upon exercise of such option and upon the subsequent sale or transfer thereof (the "Tax Payment Amount"). In addition, the Company shall pay to the Executive at the time of payment of the Tax Payment Amount, the amount necessary to pay Federal and state income tax with respect to the Executive's receipt of the Tax Payment Amount using the highest marginal individual rate (the "Gross-Up Amount").