Common use of GROSS Clause in Contracts

GROSS. Up in connection with a Change of Control. In the event that, as a result of the payments to which he becomes entitled by reason of a Change of Control pursuant to the terms hereof or the terms of any other agreement (including but not limited to the accelerated vesting of stock options), Executive becomes subject to excise tax (the "EXCISE TAX") under Section 4999 of the Internal Revenue Code of 1986, as amended (the "CODE"), the Company shall pay to Executive as additional compensation an amount (the "GROSS-UP PAYMENT") equal to an amount which, after payment by Executive of all taxes (including any federal, state and local income tax and excise tax upon such amount) would allow the Executive to retain an amount equal to the Excise Tax, unless, if the reduction of the severance payments hereunder to Executive by no more than 5% would avoid the imposition of Excise Tax, then the Company shall so reduce such severance payments to Executive and no Gross-up Payment will be made. For purposes of determining whether Executive will be subject to the Excise Tax and the amount of such Excise Tax, the following criteria shall apply: (a) All determinations required to be made under this Section 4 shall be made by the Company's independent auditors (the "ACCOUNTING FIRM"), which shall provide detailed supporting calculations to both the Company and Executive within 15 business days after the Date of Termination or such earlier time as is requested by the Company provided that any determination that an Excise Tax is payable by Executive shall be made on the basis of substantial authority. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish Executive with a written opinion that Executive has substantial authority not to record any Excise Tax on his federal income tax return. Any determination by the Accounting Firm meeting the requirements of this Section 4(a) shall, subject to possible adjustment as set forth in Section 4(c) below, be binding upon the Company and Executive. (b) The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executive's residence on the date on which the Excise Tax is incurred, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (c) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional payment in respect of an amount equal to such excess at the time that the amount of such excess finally is determined. In the case of any payment that the Company is required to make to Executive pursuant to the preceding sentence (a "LATER PAYMENT"), the Company shall also pay to Executive an additional amount such that after payment by Executive of all of Executive's applicable Federal, state and local taxes, including any interest and penalties assessed by any taxing authority, on Later Payment, Executive will retain an amount equal to the Later Payment. Executive and the Company each shall reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax. Notwithstanding any provision of this Agreement to the contrary, Executive shall pay his ordinary federal, state and local income taxes to which he is subject as a result of the payments to which he becomes entitled by reason of a Change of Control pursuant to the terms hereof or the terms of any other agreement (including but not limited to the accelerated vesting of stock options).