Section 409a Clause Example from Business Contracts

Section 409a. (a) This Agreement is not intended to constitute a "nonqualified deferred compensation plan" within the meaning of Section 409A. Notwithstanding the foregoing, if and to the extent that: (i) any payment or benefit is determined by the Company to constitute "non-qualified deferred compensation" subject to Section 409A; (ii) such payment or benefit under this Agreement or otherwise is provided to the Executive and the Executive is a "specified employee" (within the meaning of Section 409A and as d...etermined pursuant to procedures established by the Company); and (iii) such payment or benefit must be delayed for six months from the Executive's Date of Termination (or an earlier date) in order to comply with Section 409A(a)(2)(B)(i) of the Code and not cause the Executive to incur any additional tax under Section 409A, then the Company will delay making any such payment or providing such benefit until the expiration of such six month period. Any payment or benefit due upon a termination of the Executive's employment that represents a "deferral of compensation" within the meaning of Section 409A shall only be paid or provided to the Executive upon a "separation from service" (within the meaning of Treas. Reg. 1.409A-1(h)). If the Executive dies within six months following such separation from service, any such delayed payments or benefits shall not be further delayed, and shall be immediately payable to his estate in accordance with the applicable provisions of this Agreement. 14 (b) Notwithstanding anything to the contrary herein, any payment or benefit under Section 5 or otherwise that is exempt from Section 409A pursuant to Treas. Reg. 1.409A-1(b)(9)(v)(A), (B) or (C) shall be paid or provided to the Executive only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second taxable year of the Executive following the taxable year of the Executive in which the "separation from service" occurs; and provided further that such expenses are reimbursed no later than the last day of the third taxable year following the taxable year of the Executive in which the "separation from service" occurs. For purposes of this Section 20(b), the taxable year of the Executive's "separation from service" is the year determined in accordance with the Code. (c) Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other taxable year (except for any life-time or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Executive incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit. (d) For the purposes of this Agreement, each payment made pursuant to Section 5(b), 5(c)(iv) or 5(v) shall be deemed to be separate payments, and amounts payable under Section 5 shall be deemed not to be a "deferral of compensation" subject to Section 409A to the extent provided in the exceptions in Treas. Reg. Sections 1.409A-1(b)(4) ("short-term deferrals") and (b)(9) ("separation pay plans," including the exception under subparagraph (iii)) and other applicable provisions of Treas. Reg. Section 1.409A-1 through A-6. (e) For purposes of applying the provisions of Section 409A to this Agreement, each separately identified amount to which the Executive is entitled under this Agreement shall be treated as a separate payment within the meaning of Section 409A. In addition, any series of installment payments under this Agreement shall be treated as a right to a series of separate payments under Section 409A, including Treas. Reg. Section 1.409A-2(b)(2)(iii). View More