Common use of Application of Section 409A of the Code Clause in Contracts

Application of Section 409A of the Code. The parties intend that this Agreement and the payments made hereunder will be exempt from, or comply with, the requirements of Section 409A of the Code and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”), and this Agreement will be interpreted and applied to the greatest extent possible in a manner that is consistent with the requirements for avoiding taxes or penalties under Section 409A. In no event, however, will the Company be liable for any additional tax, interest, or penalty that may be imposed on Executive by Section 409A or damages for failing to comply with Section 409A. Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under Section 6 above that constitute “deferred compensation” within the meaning of Section 409A will not commence in connection with Executive’s termination of employment unless and until Executive has also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h)), unless the Company reasonably determines that such amounts may be provided to Executive without causing Executive to incur the additional 20% tax under Section 409A. The parties intend that each installment of the Separation Benefits or the CIC Separation Benefits, as applicable, is a separate “payment” for purposes of Section 409A. For the avoidance of doubt, the parties intend that the Separation Benefits or the CIC Separation Benefits, as applicable, satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4) and 1.409A-1(b)(9). However, if the Company determines that the Separation Benefits or the CIC Separation Benefits, as applicable, constitute “deferred compensation” under Section 409A and Executive is, as of the separation from service, a “specified employee” of the Company or any successor entity thereto, as such term is defined in Section 409A, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of the payment of the Separation Benefits or the CIC Separation Benefits, as applicable, will be delayed until the earlier to occur of: (i) the date that is six months and one day after Executive’s separation from service, or (ii) the date of Executive’s death (such applicable date, the “Specified Employee Initial Payment Date”), and the Company (or the successor entity thereto, as applicable) will (A) pay to Executive a lump sum amount equal to the sum of the Separation Benefits payments or the CIC Separation Benefits payments, as applicable, that Executive would otherwise have received through the Specified Employee Initial Payment Date if the commencement of the payment of the Separation Benefits or the CIC Separation Benefits, as applicable, had not been so delayed pursuant to this Section, and (B) commence paying the balance of the Separation Benefits or the CIC Separation Benefits, as applicable, in accordance with the applicable payment schedules set forth in this Agreement.