Loan to Company

[Chaz]

Agreement provides that in the event of employee's termination of employment, company (private) has the right to purchase company stock acquired by employee. If the right to repurchase violates a loan covenant or other agreement, the company has the right to make the payment in the form of a five year demand note in favor of the employee, accelerating upon a liquidity event occurring.

Is this problematic under Section 409A (as possibly disguised deferred comp) or am I crazy and this is totally outside the scope of deferred compensation? Thanks.

[Steelerfan]

Doesn't there have to a compensatory arrangement, such as the chance to receive an increase in the value of the stock? I don't see that here.