Common use of Average Compensation Clause in Contracts

Average Compensation. For purposes of this Agreement, the term “Average Compensation” means the average of the Executive’s annual total compensation from the Company reportable on Form W-2 (i.e., base salary plus bonus amounts and all other taxable compensation) plus all elective deferrals made by the Executive to any nonqualified deferred compensation plan or qualified retirement plan maintained by the Company or an Affiliate, and any amount which is contributed or deferred by the Company at the election of the Executive and is not includible in gross income by reason of Code Section 125 or 132(f)(4) (such items, the “Pre-Tax Amounts”) with respect to each of the three (3) fiscal years of the Company preceding the fiscal year in which the Change in Control of the Company occurs (the “Averaging Period”); provided that (x) if the Executive was employed for two (but not three) entire fiscal years during the Averaging Period, then Average Compensation shall mean the average of the Executive’s annual total compensation from the Company reportable on Form W-2 plus the Pre-Tax Amounts with respect to those two years; (y) if the Executive was employed for only one entire fiscal year during the Averaging Period, then the Average Compensation shall be the Executive’s annual total compensation from the Company reportable on Form W-2 plus the Pre-Tax Amounts with respect to such entire fiscal year; and (z) if the Executive has not been employed for one entire fiscal year of the Company during the Averaging Period, then the Average Compensation shall be an amount equal to the highest amount of the Executive’s annual total compensation reportable on Form W-2 for any fiscal year plus the Pre-Tax Amounts for such fiscal year (which amount shall be annualized for any fiscal year in which Executive was employed for less than the entire fiscal year) during the period of his employment by the Company prior to the Change in Control of the Company (including the fiscal year in which the Change in Control of the Company occurs).