Omnibus 409A Provision Sample Clauses
The Omnibus 409A Provision is a contractual clause designed to ensure that compensation arrangements comply with Section 409A of the Internal Revenue Code, which governs the taxation of nonqualified deferred compensation. This provision typically requires that any payments or benefits subject to 409A are structured and administered in a manner that avoids triggering additional taxes or penalties for the recipient. For example, it may specify the timing of payments or restrict certain modifications to deferred compensation plans. Its core practical function is to protect both employers and employees from unintended tax consequences by ensuring compliance with complex tax regulations.
Omnibus 409A Provision. This Agreement is intended to be exempt from treatment as deferred compensation under Section 409A of the Internal Revenue Code (the “Code”) and shall be construed and interpreted in accordance therewith. All rights to payments under this Agreement shall be treated as rights to receive a series of separate payments to the fullest extent permitted by Section 409A of the Code. Notwithstanding the preceding, the Company shall not be liable to ▇▇▇▇▇▇ or any other person if the Internal Revenue Service or any court or other authority having jurisdiction over such matter determines for any reason that any payment under this Agreement is subject to taxes, penalties or interest as a result of failing to comply with Section 409A of the Code. Notwithstanding any of the provisions of this Agreement, if ▇▇▇▇▇▇ is a “specified employee” (within the meaning of Section 409A of the Code), and any payments hereunder are not otherwise exempt from Section 409A of the Code, then, to the extent necessary to comply with Section 409A of the Code, no payments may be made hereunder before the date which is six months after the date of ▇▇▇▇▇▇’▇ “separation from service” within the meaning of Section 409A of the Code or, if earlier the date of ▇▇▇▇▇▇’▇ death. Because the amounts payable hereunder will be made in all events no later than the 15th day of the third month following the end of (i) the calendar year or (ii) the fiscal year of the Company in which ▇▇▇▇▇▇ terminates employment, whichever is later, then all amounts payable hereunder should be exempt from Section 409A of the Code as a short-term deferral. Consequently, this “specified employee” six-month delay provision will only be applicable if it is subsequently determined that the amounts to be paid pursuant to this Agreement are not exempt from Section 409A of the Code. For purposes hereof, termination of employment shall be read to mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services would be performed after such date or that the level of bona fide services ▇▇▇▇▇▇ would perform after that date (whether as an employee or an independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed over the immediately preceding 36-month period.
Omnibus 409A Provision