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On December 1, 2016, Parker Hannifin Corporation and CLARCOR Inc. announced that the companies have entered into a definitive agreement under which Parker will acquire CLARCOR for approximately $4.3 billion in cash, including the assumption of net debt. The transaction has been unanimously approved by the board of directors of each company. Upon closing of the transaction, expected to be completed by or during the first quarter of Parker’s fiscal year 2018, CLARCOR will be combined with Parker’s Filtration Group to form a leading and diverse global filtration business. Bass, Berry & Sims has served CLARCOR as primary corporate and securities counsel for 10 years and served as lead counsel on this transaction. Read more here.

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Securities Law Exchange BlogSecurities Law Exchange blog offers insight on the latest legal and regulatory developments affecting publicly traded companies. It focuses on a wide variety of topics including regulation and reporting updates, public company advisory topics, IPO readiness and exchange updates including IPO announcements, M&A trends and deal news.

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Section 409A Transition Relief Ends December 31, 2012

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October 19, 2012

Companies should review their existing severance arrangements, change in control arrangements, employment agreements and other nonqualified deferred compensation arrangements to determine if a correction is required under Section 409A of the Internal Revenue Code. 

In 2010, the Internal Revenue Service (IRS) issued Notice 2010-6 which provided a correction program for certain document failures under Section 409A. While this was welcome guidance for practitioners, the IRS unfortunately took an unexpected position regarding the interaction between the payment of severance pay (and other nonqualified deferred compensation) and the executive's related execution of a release of claims. The IRS' position is that commencement of the payment of severance pay (and other nonqualified deferred compensation) cannot be conditioned upon the executive's return of a release. As a result, a common provision in many arrangements which provides that the executive's severance pay will commence within a period following the executive's termination date (e.g., 60 days), but not before the executive has executed a release of claims, would result in a document failure under Section 409A. 

Unfortunately, this guidance was provided following most companies' review and revision of their existing arrangements for final regulations under Section 409A. As a result, arrangements which already were amended for Section 409A may need to be reviewed again to ensure this language is corrected. The IRS provided an extended transition period for companies to correct their arrangements, which is set to expire on December 31, 2012. As a result, companies should act quickly to inventory their existing arrangements and ensure that the relevant provisions are amended or to determine that such arrangements meet an exception from Section 409A. Additionally, companies that terminated employees this year or are contemplating terminating an employee should reach out to counsel to ensure that all corrective measures are taken to avoid an unintended Section 409A violation.


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