Section 409a Clause Example from Business Contracts

Section 409a. It is intended that this Agreement be drafted and administered in compliance with (i) Section 409A of the Code, including, but not limited to, any future amendments to Section 409A of the Code, and any other Internal Revenue Service or other governmental rulings or interpretations ("IRS Guidance") issued pursuant to Section 409A of the Code or (ii) an applicable exemption. So as not to subject the Executive to payment of any additional interest or tax under Section 409A of the Code, if payment o...r provision of any amount or benefit hereunder that is subject to Section 409A of the Code at the time specified herein would subject such amount or benefit to any additional tax under Section 409A of the Code, the Company shall use its best to efforts to ensure that payment or provision of such amount or benefit shall be postponed to the earliest commencement date on which the payment or provision of such amount or benefit could be made without incurring such additional tax. In addition, to the extent that any IRS Guidance issued under Section 409A of the Code would result in the Executive being subject to the payment of any additional interest or tax under Section 409A of the Code, the Company agrees to use its best efforts to amend this Agreement in order to avoid the imposition on Executive of any such additional interest or tax under Section 409A of the Code, which amendment shall have the minimum economic effect necessary and be reasonably determined in good faith by the Company. For purposes of Section 409A of the Code, each installment payment of any severance pursuant to this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a "separation from service" under Section 409A. Notwithstanding the foregoing, (i) any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible, (ii) Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible, (iii) nothing contained herein shall be construed as a representation, guarantee or other undertaking on the part of the Company that any payment made pursuant to this Agreement (including, without limitation, the Bonus or any severance amount), is or will be found to comply with the requirements of Section 409A of the Code or any other regulations or guidance issued thereunder (including the IRS Guidance), and (iv) in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A. Notwithstanding any other provision of this Agreement, if any payment or benefit provided to Executive in connection with his termination of employment is determined to constitute "nonqualified deferred compensation" within the meaning of Section 409A and Executive is determined to be a "specified employee" as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the Date of Termination or, if earlier, on Executive's death (the "Specified Employee Payment Date"). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to Executive in a lump sum on the Specified Employee Payment Date and, thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. Notwithstanding any other provision of this Agreement, to the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following: 11 (a) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (b) any reimbursement of an eligible expense shall be paid to Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and (c) any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit. View More