409A Service recipient stock

[Guest RJW]

One requirement for a stock option to fall outside of 409A is that the option be on "service recipient stock." The Final Regs indicate that service recipient stock does not include stock subject to a put or call right if the price paid pursuant to such right is based on other than FMV. Can this requirement be satisfied if an option provides the employer with a call right in the event of an employee's termination for cause and provides for a repurchase price at the lesser of FMV or the amount the employee paid for the stock at exercise? I realize this repurchase right is not at FMV but the "for cause" repurchase right basically triggers a forfeiture by the employee and I guess I don't understand what the rationale for this penalty feature causing an option to be subject to 409A.

On a side note, if an option is subject is subject to 409A, isn't almost impossible to comply with 409A. Wouldn't you have to indicate that an exercise must only occur on a 409A permissible payment event?