Article 20. Parachute Limitations
If any Participant is a “disqualified individual” (as defined in Section 280G(c) of the Code), then, notwithstanding any other provision of the Option Plan or of any other agreement, contract, or understanding heretofore or hereafter entered into by such Participant with the Company or any company within the Group (an Other Agreement), and notwithstanding any formal or informal plan or other arrangement for the direct or indirect provision of compensation to the Participant (including groups or classes of Participants or beneficiaries of which the Participant is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Participant (a Benefit Arrangement), any right of the Participant to any exercise, vesting, payment, or benefit under the Option Plan shall be reduced or eliminated:
(a) to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for the Participant under the Option Plan, all Other Agreements, and all Benefit Arrangements, would cause any exercise, vesting, payment, or benefit to the Participant under the Option Plan to be considered a “parachute payment” within the meaning of Section 280G(b)(2) of the Code as then in effect (a Parachute Payment); and
(b) if, as a result of receiving such Parachute Payment, the aggregate after-tax amounts received by the Participant from the Company under the Option Plan, all Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax amount that could be received by the Participant without causing any such payment or benefit to be considered a Parachute Payment.
Except as required by Section 409A of the Code or to the extent that Section 409A of the Code permits discretion, the Board shall have the right, in the Board’s sole discretion, to designate those rights, payments, or benefits that should be reduced or eliminated so as to avoid having such rights, payments, or benefits be considered a Parachute Payment; provided, however, to the extent any payment or benefit constitutes deferred compensation under Section 409A of the Code, in order to comply with Section 409A of the Code, the Board shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of Options (with the vesting to occur furthest in the future being reduced first), then by reducing or eliminating any other remaining Parachute Payments.
Article 21. Section 409A
| 21.1 | The Option Plan and Options granted thereunder are intended to be exempt from Section 409A of the Code, and, accordingly, to the maximum extent permitted, the Option Plan will be interpreted and administered to be exempt from Section 409A of the Code. Notwithstanding any provision of the Option Plan to the contrary, to the extent required to avoid accelerated taxation and tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Option Plan during the six (6)-month period immediately following the Participant’s “separation from service” (as defined for purposes of Section 409A of the Code) will instead be paid on the first payroll date after the six (6)-month anniversary of the Participant’s separation from service (or the Participant’s death, if earlier). |
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