Health Net 2007 Annual Report Download - page 171

payment of any additional federal, state and local income taxes on such Tax Gross-Up amount and the payment of any Excise Taxes,
Executive shall receive such net amount of Total Payments equal to the amount that Executive would have received if no Excise Tax
was due. If the amount of Total Payments subject to the Excise Tax does not exceed $50,000, then the Tax-Gross-Up shall not be paid
and the Severance Payments shall be reduced (if necessary, to zero) to the extent necessary so that no portion of the Total Payments is
subject to the Excise Tax.
B. Accounting Firm Determination. All determinations required to be made under this Section 11, including whether and
when a Tax Gross-Up is required and the amount of such Tax Gross-Up and the assumptions to be utilized in arriving at such
determination, shall be made by the public accounting firm that, immediately prior to the Change in Control, was the Company’s
independent auditor (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and
Executive within fifteen (15) business days of the receipt of notice from Executive that Executive has received Total Payments, or
such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the
Company. Any Tax Gross-Up, as determined pursuant to this Section 11, shall be paid by the Company to Executive within five
(5) days of the receipt of the Accounting Firm’s determination, but in no event later than the end of Executive’s taxable year next
following Executive’s taxable year in which Executive pays the Excise Tax. If the Accounting Firm determines that no Excise Tax is
payable by Executive, then the Accounting Firm shall furnish to Executive a written opinion that failure to report the Excise Tax on
Executive’s applicable federal income tax return would not result in the imposition of any tax assessment or a negligence or similar
penalty. As a result of any uncertainty in the application of Section 4999 of the Code at the time of the determination by the
Accounting Firm hereunder, it is possible that Tax Gross-Up which will not have been made by the Company should have been made
(“Underpayment”), or that amount of the Tax Gross-Up will exceed the amount required under Section 11(A) (“Overpayment”). In
the event that the Accounting Firm shall determine that an Underpayment or Overpayment has occurred, either Executive or the
Company, as applicable, shall promptly reimburse the other for the amount of such Underpayment or Overpayment that has occurred.
C. Notifications. Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Tax Gross-Up. Such notification shall be given as soon as practicable
but no later than ten (10) business days after Executive is informed in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid. Executive and the Company shall each reasonably
cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability
for Excise Tax with respect to Total Payments.
D. Payment Calculator. At the time that payments are made under this Section 11, the Company shall provide Executive
with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations
including, without limitation, any opinions or other advice the Company has received from tax counsel, the Accounting Firm or other
advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
- 10 -