Section 409a Certain Excise Taxes Clause Samples
The Section 409A; Certain Excise Taxes clause addresses compliance with Internal Revenue Code Section 409A, which governs the taxation of nonqualified deferred compensation plans. This clause typically requires that any compensation arrangements, such as severance or deferred bonuses, are structured to avoid triggering additional taxes and penalties under Section 409A. It may also specify which party is responsible for any excise taxes or penalties that arise if the arrangements fail to comply. The core function of this clause is to ensure that compensation agreements are tax-compliant and to allocate responsibility for any adverse tax consequences, thereby protecting both parties from unexpected tax liabilities.
Section 409a Certain Excise Taxes. 7.1 In-kind Benefits and Reimbursements. Notwithstanding anything to the contrary in this Agreement or in any Company policy with respect to such payments, in-kind benefits and reimbursements provided under this Agreement during any tax year of Executive shall not affect in-kind benefits or reimbursements to be provided in any other tax year of Executive and are not subject to liquidation or exchange for another benefit. Notwithstanding anything to the contrary in this Agreement, reimbursement requests must be timely submitted by Executive and, if timely submitted, reimbursement payments shall be made to Executive as soon as administratively practicable following such submission in accordance with the Company’s policies regarding reimbursements, but in no event later than the last day of Executive’s taxable year following the taxable year in which the expense was incurred. This Section shall only apply to in-kind benefits and reimbursements that would result in taxable compensation income to Executive.
Section 409a Certain Excise Taxes of the Employment Agreement; any amounts not paid on their scheduled payment dates pursuant to that provision shall be paid to Executive in a single lump sum payment on the first payroll date occurring after July 15, 2020 (the “Delayed Payment Date”). Notwithstanding the other provisions of Section 6.5 and Section 6.6 of the Employment Agreement, the Company shall have the right to cease or terminate the Severance Payment in the event Executive breaches, in the Company’s sole discretion, any covenant contained in Section 3 herein and/or in Section 5 of the Employment Agreement; and
Section 409a Certain Excise Taxes