Section 409a Clause Example from Business Contracts

Section 409a. Notwithstanding anything to the contrary in this Agreement, no payments contemplated by this Agreement will be paid during the six-month period following Employee's termination of employment unless the Company determines, in its good faith judgment, that paying such amounts at the time or times indicated in this Section 20 would not cause Employee to incur an additional tax under Section 409A of the Internal Revenue Code of 1986, as amended (the "Code") and related Department of Treasury guidanc...e (including such Department of Treasury guidance as may be issued after this Agreement's effective date) (in which case such amounts shall be paid at the time or times indicated in this Section 20). If the payment of any amounts are delayed as a result of the previous sentence, on the first day following the end of the six-month period, the Company will pay Employee a lump-sum amount equal to the cumulative amounts that would have otherwise been previously paid to Employee under this Agreement during such six month period. Thereafter, payments will resume in accordance with this Agreement. Additionally, in the event that following this Agreement's effective date the Company reasonably determines that any compensation or benefits payable under this Agreement may be subject to Section 409A of the Code, the Company and Employee shall work together to adopt such amendments to this Agreement or adopt other policies or procedures (including amendments, policies and procedures with retroactive effect), or take any other commercially reasonable actions necessary or appropriate to (x) exempt compensation and benefits payable under this Agreement from Section 409A of the Code and/or preserve the intended tax treatment of compensation and benefits provided with respect to this Agreement or (y) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance. Any amount payable under this Agreement on termination of employment that is deemed deferred compensation subject to Section 409A of the Code shall not be payable upon Employee's "separation from service" with the Company within the meaning of Section 409A of the Code and the Department of Treasury regulations and other guidance promulgated thereunder. 11 With respect to expenses eligible for reimbursement or any in-kind benefits to be paid or provided under the terms of this Agreement, (i) the amount of such expenses eligible for reimbursement in any taxable year or in-kind benefits provided during any tax year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in another taxable year, (ii) any reimbursements of such expenses shall be made no later than the end of the calendar year following the calendar year in which the related expenses were incurred and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for any other benefit. View More