Section 409a Clause Example from Business Contracts

Section 409a. The parties intend that any compensation, benefits and other amounts payable or provided to the Executive under this Agreement be paid or provided in compliance with Section 409A of the Internal Revenue Code of 1986 and all regulations, guidance, and other interpretative authority issued thereunder (collectively, "Section 409A") such that there will be no adverse tax consequences, interest or penalties for the Executive under Section 409A as a result of the payments and benefits so paid or provi...ded to him. The parties agree to modify this Agreement, or the timing (but not the amount) of the payment of the severance or other compensation, or both, to the extent necessary to comply with Section 409A. In addition, notwithstanding anything to the contrary contained in any other provision of this Agreement, the payments and benefits to be provided to the Executive under this Agreement shall be subject to the provisions set forth below. 5 a. Any payment subject to Section 409A that is triggered by a termination from employment shall be triggered by a "separation from service," as defined in the regulations issued under Section 409A. Each payment under this Agreement will be considered a "separate payment" and not one of a series of payments for purposes of Section 409A of the Code. It is intended that the payments to be made to the Executive under this Agreement upon a termination of employment shall be exempt from Section 409A as a "short-term deferral" under applicable Treasury regulations. In the event that such exemption does not apply, and any payment (or portion thereof) is not otherwise exempt from Section 409A, if the Executive is then a "specified employee" within the meaning of Section 409A(a)(2)(B) of the Code (as determined by the Company), then any such non-exempt payment otherwise due to the Executive during the first six months following the Executive's termination of employment will be held until and paid on the day following the expiration of such six-month period. All expenses eligible for reimbursement hereunder that are taxable to the Executive shall be paid to the Executive no earlier than in the seventh month after separation from service and no later than December 31 of the calendar year following the calendar year in which such expenses were incurred. The expenses incurred by the Executive in any calendar year that are eligible for reimbursement under this Agreement shall not affect the expenses incurred by the Executive in any other calendar year that are eligible for reimbursement hereunder. The Executive's right to receive any reimbursement hereunder shall not be subject to liquidation or exchange for any other benefit. View More