January 28, 2021
280G Best-Net Agreement
As you know, Sportsman’s Warehouse Holding, Inc. (the “Company”) has entered into that certain definitive Agreement and Plan of Merger, dated December 21, 2020 (“Transaction Agreement”), by and between the Company, Great Outdoors Group, LLC (the “Buyer”) and Phoenix Merger Sub I, Inc., pursuant to which the Company will be acquired by Buyer (the “Transaction”). You are a party to a Severance Agreement with the Company dated April 2, 2019 (your “Severance Agreement”). Should the Transaction close, it (and certain other transactions in connection with, or deemed in connection with, the Transaction) could cause the Company to make certain payments to you that, depending on the circumstances, could constitute “parachute payments” under Section 280G of the U.S. Internal Revenue Code (the “Code”). In that event, such payments could trigger certain negative tax consequences for you.
By executing this letter agreement, you and the Company agree as follows:
Possible Cut-Back. Notwithstanding anything to the contrary contained in your Severance Agreement or any other agreement between you and the Company or any other document or agreement (whether written or oral), to the extent that any payments and benefits provided to you, or for your benefit, under your Severance Agreement or any other Company plan or agreement (such payments or benefits are collectively referred to as the “Benefits”) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986 (the “Code”), the Benefits shall be reduced (but not below zero) if and to the extent that a reduction in the Benefits would result in you retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if you received all of the Benefits (such reduced amount is referred to hereinafter as the “Limited Benefit Amount”). Unless you have given prior written notice specifying a different order to the Company to effectuate the Limited Benefit Amount, any such notice consistent with the requirements of Section 409A of the Code to avoid the imputation of any tax, penalty or interest thereunder, to the extent that a reduction in Benefits is required pursuant to the foregoing the Company shall reduce or eliminate amounts which are payable first from any cash severance, then from any payment in respect of an equity award that is not covered by Treas. Reg. Section 1.280G-1 Q/A-24(b) or (c), then from any payment in respect of an equity award that is covered