Common use of Best Net Clause in Contracts

Best Net. (a) It is the object of this paragraph to provide for the maximum after-tax income to Executive with respect to any payment, benefit or distribution to or for the benefit of Executive, whether paid or payable or distributed or distributable or provided pursuant to this Agreement or any other plan, arrangement or agreement, that would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (“Code”) or any similar federal, state or local tax that may hereafter be imposed (a “Payment”) (Section 4999 of the Code or any similar federal, state or local tax are collectively referred to as the “Excise Tax”). Accordingly, before any Payments are made, a determination will be made as to which of two alternatives will maximize such Executive’s after-tax proceeds, and the Company must notify Executive in writing of such determination. The first alternative is the payment in full of all Payments potentially subject to the Excise Tax. The second alternative is the payment of only a part of Executive’s Payments so that Executive receives the largest payment and benefits possible without causing the Excise Tax to be payable by Executive. This second alternative is referred to in this paragraph as “Limited Payment”. The Executive’s Payments shall be paid only to the extent permitted under the alternative determined to maximize Executive’s after-tax proceeds, and Executive shall have no rights to any greater payments on his or her Payments. If Limited Payment applies, Payments shall be reduced in a manner that would not result in Executive incurring an additional tax under Section 409A. (b) Accordingly, Payments not constituting nonqualified deferred compensation under Section 409A shall be reduced first, in this order but only to the extent that doing so avoids the Excise Tax (e.g., accelerated vesting or payment provisions in any LTIP Award will be ignored to the extent that such provisions would not trigger the Excise Tax): (i) Payment of the severance amounts under Section 3.3(f) hereof to the extent such payments do not constitute deferred compensation under Section 409A. (ii) LTIP Awards the vesting of which is subject to the satisfaction of one or more performance conditions (“Performance-Based Awards”), but excluding such LTI Awards subject to Section 409A. (iii) LTIP Awards the vesting of which is subject to the satisfaction of a service condition (“Service-Based Awards”), but excluding such LTIP Awards subject to Section 409A. (iv) Awards of stock options and stock appreciation rights under any LTIP. (c) Then, if the foregoing reductions are insufficient, Payments constituting deferred compensation under Section 409A shall be reduced, in this order: (i) Payment of the severance amounts under Section 3.3(f) hereof to the extent such payments constitute deferred compensation under Section 409A. (ii) Performance-Based Awards subject to Section 409A. (iii) Service-Based Awards subject to Section 409A. (d) In the event of conflict between the order of reduction under this Agreement and the order provided by any other Company document governing a Payment, then the order under this Agreement shall control. (e) All determinations required to be made under this Section 3.6 shall be made by Company’s external auditor (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive within ten (10) business days of the termination of employment giving rise to benefits under the Plan, or such earlier time as is requested by the Company. All fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Accounting Firm shall be borne by the Company. In the event the Accounting Firm determines that the Payments shall be reduced, it shall furnish Executive with a written opinion to such effect. The determination by the Accounting Firm shall be binding upon the Company and Executive.