"Become a party to sale agreement" as payment trigger?

I'm reviewing an existing document that so obviously does not comply with 409A that I feel like I have to be missing something.

1. "Becoming a party to an agreement" providing for the sale of all or substantially all the company's assets is not a permissible payment trigger, right? Doesn't it have to be the actual transaction? The regs read that way... 

2. Also, is amending a retention bonus agreement to extend the retention/payment date by 2 years permissible?  No, unless the bonus is increased by at least 125%, correct?

Somebody tell me what I'm missing here!

1. Agree, unless the agreement is exempt from 409A and a 409A-compliant payment event is not needed.

2. Agree, and so does the 409A Handbook. Cannot do a two-year delay without a 25% increase. Could also follow the 1 year/5 year subsequent deferral rules without a 25% increase, but obviously not for a two-year deferral.

Thank you EBECatty.

If a retention bonus agreement originally provided that if employee remained employed until Dec 31 2019 he would receive a bonus paid within the next 10 days, and it was amended in 2019 to change that date to Dec 31 2021 with no increase in the bonus, is there any way to fix that now?  

On ‎12‎/‎11‎/‎2020 at 12:36 PM, kmhaab said:

"Becoming a party to an agreement" providing for the sale of all or substantially all the company's assets is not a permissible payment trigger, right? Doesn't it have to be the actual transaction? The regs read that way... 

Depending on rest of document and facts and circumstances, you could take the position that this was meant to say that payment would only be on an actual c-in-c, . I mean, once you're a party, you would have to breach to get out of it.

On ‎12‎/‎11‎/‎2020 at 2:36 PM, kmhaab said:

If a retention bonus agreement originally provided that if employee remained employed until Dec 31 2019 he would receive a bonus paid within the next 10 days, and it was amended in 2019 to change that date to Dec 31 2021 with no increase in the bonus, is there any way to fix that now?  

May be grasping at straws, but I would like at all of the facts and circumstances. Was there any disagreement about whether the amount was payable? Was there something else of benefit provided to the service provider? Was the company unable to pay without jeopardizing its existence as a going concern?