Section 409a Clause Example from Business Contracts

Section 409a. a. The intent of the parties is that payments and benefits under this Agreement comply with or otherwise be exempt from Section 409A of the Code and the regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted either to be exempt from or in compliance therewith. -5- b. For purposes of Section 409A of the Code, (i) the Employee may not, directly or indirectly, designate the calendar year of any payment; (ii) no accelera...tion of the time and form of payment of any nonqualified deferred compensation to the Employee or any portion thereof, shall be permitted; and (iii) each payment in a series of payments hereunder shall be deemed to be a separate payment for purposes of Section 409A. c. For purposes of Section 409A of the Code, your right to receive any installment payment pursuant to this Agreement will be treated as a right to receive a series of separate and distinct payments. d. To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Agreement may constitute nonqualified deferred compensation (within the meaning of Section 409A of the Code), (i) any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred by the Employee, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect. e. A Termination of Employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of "deferred compensation" (as such term is defined in Section 409A of the Code) upon or following Termination of Employment unless such Termination of Employment is also a "separation from service" from the Company within the meaning of Section 409A and Treasury Regulation 1.409A-1(h) and, for purposes of any such provision of this Agreement, references to a "Termination of Employment" or any similar term or phrase shall mean "separation from service." f. If any provision of this Agreement (or any award of compensation or benefits provided under this Agreement) would cause the Employee to incur any additional tax or interest under Section 409A of the Code, the Company shall reform such provision to comply with 409A and agrees to maintain, to the maximum extent practicable without violating 409A of the Code, the original intent and economic benefit to the Employee of the applicable provision; provided that nothing herein shall require the Company to provide the Employee with any gross-up for any tax, interest or penalty incurred by the Employee under Section 409A of the Code. Furthermore, notwithstanding anything herein to the contrary, no payment or benefit payable under this Agreement shall be required to be paid or provided in any calendar year if the payment of such payment or benefit would constitute an impermissible acceleration under Section 409A of the Code and the transition guidance thereunder and such payment shall instead be paid as soon as practicable in the next calendar year, without interest. g. Any reduction in payments and benefits made pursuant to the provisions of this Agreement will be determined by the Company in its sole discretion according with the following: (i) first, reductions will be made to amounts that do not constitute nonqualified deferred compensation (within the meaning of Section 409A of the Code); and (ii) second, reductions will be made to amounts that do constitute nonqualified deferred compensation based on the date that such amounts become payable, with the amount payable latest in time being reduced first. View More