Exhibit 10.15
EMPLOYMENT
AGREEMENT
THIS AGREEMENT by and among
Freescale Semiconductor, Inc. (the “ Company ”),
Freescale Holdings GP, Ltd. (the “ GP ”), and
Sandeep Chennakeshu (the “ Executive ”) dated as
of the 1st day of December, 2006 supersedes and replaces, in its
entirety, the employment agreement by and between the Executive and
the Company dated May 12, 2006.
WHEREAS, the Company, Freescale
Holdings, L.P. (the “ Parent ”), and Freescale
Acquisition Corporation, an indirect wholly owned subsidiary of the
Parent (“ Merger Sub ”) entered into an
Agreement and Plan of Merger, dated as of September 15, 2006,
(the “ Merger Agreement ”) pursuant to which
Merger Sub will be merged with and into the Company (the “
Merger ”) and, as a result of which, the Company will
be an indirect subsidiary of the Parent;
WHEREAS, in connection with the
Merger, the Board of Directors of the Company (the “
Board ”) and the Board of Directors of the GP, the
managing general partner of Parent (the “ Parent Board
”) have determined that it is in the best interests of the
Company and its parents and ultimate owners for the Executive to
continue to serve as the Company’s Senior Vice President and
General Manager of the Wireless & Mobile Systems Group
(“ WMSG ”), on the terms and conditions set
forth in this Agreement;
WHEREAS, the Executive desires to
accept such service, subject to the terms and provisions of this
Agreement.
NOW, THEREFORE, in consideration of
the premises and mutual covenants contained herein and for other
good and valuable consideration, the receipt of which is mutually
acknowledged, the Company and the Executive (individually a “
Party ” and together the “ Parties
”) agree as follows:
1. Effective Date . The
“ Effective Date ” shall mean the Effective Time
(as defined in the Merger Agreement).
2. Employment Period . The
Company hereby agrees to continue to employ the Executive, and the
Executive hereby agrees to continue to be employed by the Company,
subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending at least 90 days
after the Company or the Executive delivers a written Notice of
Termination, as defined below, to the other Party that the
employment period shall terminate (the period of such employment to
be called the “ Employment Period ”).
3. Terms of Employment .
(a) Position and Duties . (i) During the
Employment Period, the Executive shall continue to serve as a
Senior Vice President of the Company and General Manager of the
WMSG, with such duties and responsibilities as are commensurate
with such position, and shall report to the Chairman and Chief
Executive Officer of the Company. The Executive’s principal
location of employment shall be at the principal headquarters of
the Company; provided, however, that the Executive may be required
under reasonable business
circumstances to travel outside of the
applicable principal location of employment in connection with
performing his duties under this Agreement. As used in this
Agreement, the term “ affiliate ” of an entity
shall include any entity controlled by, controlling, or under
common control with such entity.
(ii) The Executive agrees that
during the Employment Period, he shall devote all of his business
time, energies and talents to serving as the Company’s Senior
Vice President and General Manager of the WMSG, and perform his
duties conscientiously and faithfully subject to the lawful
directions of the boards, and in accordance with each of the
Company’s corporate governance and ethics guidelines,
conflict of interests policies, and codes of conduct (collectively,
the “ Company Policies ”). During the Employment
Period, it shall not be a violation of this Agreement for the
Executive, subject to the requirements of Section 10, to
(A) serve on corporate, civic or charitable boards or
committees; provided, that, without the written approval of the
Parent Board, which shall not be unreasonably withheld, the
Executive shall not serve on more than one such corporate board,
(B) deliver lectures or fulfill speaking engagements and
(C) manage personal investments, so long as such activities do
not interfere with the performance of the Executive’s
responsibilities under this Agreement, or violate any Company
Policies. The Executive acknowledges that he has been provided
copies of the existing Company Policies.
(b) Compensation .
(i) Base Salary . During the
Employment Period, the Executive shall receive an annualized base
salary (“ Annual Base Salary ”) of not less than
$700,000, payable pursuant to the Company’s normal payroll
practices. During the Employment Period, the current Annual Base
Salary shall be reviewed for increase at such time, and in the same
manner, as the salaries of senior officers of the Company are
reviewed generally; provided that the Executive’s first such
review shall occur no earlier than January 2007.
(ii) Annual Bonus . For each
fiscal year of the Company completed during the Employment Period,
the Executive shall be eligible to receive an annual cash bonus
(“ Annual Bonus ”) based upon performance
targets that are established by the Compensation and Leadership
Committee of the Parent Board (the “ Committee
”); provided that, the Executive’s target Annual Bonus
shall be equal to $500,000 (the “ Target Bonus
”). The business performance factor of the Executive’s
Target Bonus for fiscal year 2006 will be based upon two sets of
metrics: the WMSG targets will represent 25% of the business
performance factor, and the Company targets will represent the
other 75% of the business performance factor. The Executive’s
Target Bonus for calendar year 2006 shall be prorated based on the
portion of such year the Executive is employed with the Company
beginning on May 12, 2006.
(iii) Long-Term Incentive
Awards . In connection with the Merger, the Executive shall be
granted a 0.4% profits interest in the Parent subject in all
respects to
2
the terms and conditions of the
Freescale Holdings L.P. Award Agreement attached hereto as Annex
A (the “ Award Agreement ”), the Freescale
Holdings L.P. 2006 Interest Plan (the “ Interest Plan
”) and the Investors Agreement (as defined in the Interest
Plan). The foregoing grant shall vest in equal annual installments
over four (4) years. The Executive shall be eligible to
participate in any long-term incentive plans or programs
established by the Company for its senior officers generally, at
levels commensurate with the benefits provided to other senior
officers and with adjustments appropriate for his position as a
Senior Vice President of the Company. Any awards made under this
Section shall be referred to in this Agreement as the “
Equity Awards .”
(iv) Signing Bonus . The
Executive acknowledges that the Company has paid the Executive a
signing bonus in the gross amount of $1,000,000 (One Million
Dollars). If the Executive’s employment ends prior to
May 31, 2007 for Cause or due to voluntary termination without
Good Reason, the Executive agrees to repay to the Company the
entire Signing Bonus (less the amount withheld by the Company for
taxes and other Federal withholding requirements at the time of
payment of the bonus). Such payment will be made within 60 days of
the termination of employment.
(v) Benefits . During the
Employment Period, the Executive shall be eligible for
participation in the welfare, retirement, perquisite and fringe
benefit (including relocation, financial planning, and automobile),
and other benefit plans, practices, policies and programs, as may
be in effect from time to time, for senior officers of the Company
generally; provided, that, any severance payments or benefits to be
received under any severance benefit plans, practices, policies and
programs shall be offset and reduced by any severance benefits or
payments received under this Agreement.
(vi) Expenses . During the
Employment Period, the Executive shall be eligible for prompt
reimbursement for business expenses reasonably incurred by the
Executive in accordance with the policies of the Company as may be
in effect from time to time for senior officers
generally.
(vii) Vacation . During the
Employment Period, the Executive shall be eligible for paid
vacation in accordance with the policies of the Company as may be
in effect from time to time for senior officers
generally.
(c) Other Entities . The
Executive agrees to serve upon request, without additional
compensation, as an officer and director for each of the
Company’s subsidiaries, partnerships, joint ventures, limited
liability companies and other entities, which, in each case, are
affiliates, including entities in which the Company has a
significant investment (collectively, the Company and such
entities, called the “ Affiliated Group ”), as
determined by the Company.
4. Termination of Employment
. (a) Death or Disability . The Executive’s
employment shall terminate automatically upon the Executive’s
death during the Employment Period. If the Company determines in
good faith that the Disability of the Executive has occurred during
the Employment Period (pursuant to the definition of Disability set
forth below),
3
it may provide the Executive with written notice
in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive’s employment. In such
event, the Executive’s employment with the Company shall
terminate effective on the 30th day after receipt of such notice by
the Executive (the “ Disability Effective Date
”); provided that, within the 30-day period after such
receipt, the Executive shall not have returned to full time
performance of the Executive’s duties. For purposes of this
Agreement, “ Disability ” shall mean the
inability of the Executive to perform his duties with the Company
on a full-time basis for 180 consecutive days or for 180
intermittent days in any one-year period as a result of incapacity
due to mental or physical illness which is determined to be total
and permanent by a licensed physician selected by the Company or
its insurers and reasonably acceptable to the Executive or the
Executive’s legal representative. If the Parties cannot agree
on a licensed physician, each Party shall select a licensed
physician and the two physicians shall select a third who shall be
the approved licensed physician for this purpose.
(b) Cause . The Company may
terminate the Executive’s employment during the Employment
Period with or without Cause. For purposes of this Agreement,
“ Cause ” shall mean:
(i) the Executive’s willful
and continued failure to substantially perform his duties under
this Agreement, other than any such failure resulting from
incapacity due to physical or mental illness, which failure has
continued for a period of at least 30 days following delivery to
the Executive of a written demand by the Parent Board for
substantial performance specifying the manner in which the
Executive has failed to substantially perform; or
(ii) the Executive’s willful
engagement in malfeasance, fraud, dishonesty or misconduct (other
than dishonesty or misconduct that has no detrimental impact on the
Company’s reputation or business);
(iii) the Executive’s
conviction of, or plea of guilty or nolo contendere to, a felony or
misdemeanor (other than a misdemeanor traffic offense);
or
(iv) the Executive’s material
breach of Section 3(a) or Section 10 of this
Agreement.
(c) Good Reason . The
Executive’s employment may be terminated by the Executive for
Good Reason if (x) an event or circumstance set forth in the
clauses of this Section 4(c) below shall have occurred and the
Executive provides the Company with written notice thereof within
30 days after the Executive has knowledge of the occurrence or
existence of such event or circumstance, which notice shall
specifically identify the event or circumstance that the Executive
believes constitutes Good Reason, (y) the Company fails to
correct the circumstance or event so identified within 30 days
after the receipt of such notice, and (z) the Executive
resigns within 60 days after the date of delivery of the notice
referred to in clause (x) above. For purposes of this
Agreement, “ Good Reason ” shall mean, in the
absence of the Executive’s written consent or in consequence
of a prior termination or a Notice of Termination of the
Executive’s employment, the occurrence of any of the
following:
(i) a reduction by the Company in
the Executive’s Annual Base Salary or a reduction in the
Executive’s Target Bonus; or
4
(ii) a material reduction in the
aggregate level of employee benefits made available to the
Executive when compared to the benefits made available to the
Executive at any time during the Employment Period, unless such
reduction is applicable to senior officers of the Company
generally; or
(iii) a material diminution in the
Executive’s duties or responsibilities (other than as a
result of the Executive’s physical or mental incapacity which
impairs his ability to materially perform his duties or
responsibilities as confirmed by a doctor reasonably acceptable to
the Executive or his representative and such diminution lasts only
for so long as such doctor determines such incapacity impairs the
Executive’s ability to materially perform his duties or
responsibilities) as a Senior Vice President of the Company and
General Manager of the WMSG; provided, however, that in no event
will there be deemed to be a Good Reason with respect to the
Executive on account of a lateral change to the Executive’s
duties that does not affect the Executive’s reporting
relationships; or
(iv) a material change in the
Executive’s reporting relationship that is inconsistent with
the terms of the first sentence of Section 3(a)(i);
or
(v) the Company requiring the
Executive’s principal location of employment to be at any
office or location more than 35 miles from the principal
headquarters of the Company (other than to the extent agreed to or
requested by the Executive) on the Effective Date; or
(vi) a failure of the Company to
comply with Section 11(b).
(d) Voluntary Termination .
The Executive may voluntarily terminate his employment without Good
Reason (other than due to death, Disability or retirement), and
such termination shall not be deemed to be a breach of this
Agreement.
(e) Notice of Termination .
Any termination by the Company for Cause or without Cause, or by
the Executive for Good Reason, shall be communicated by Notice of
Termination to the other Party hereto given in accordance with
Section 12(b) of this Agreement. For purposes of this
Agreement, a “ Notice of Termination ” means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, where applicable,
(ii) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision
so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such
5
notice, specifies the termination date (which
date shall be not more than thirty days after the giving of such
notice). The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company, respectively, hereunder
or preclude the Executive or the Company, respectively, from
asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights
hereunder.
(f) Date of Termination .
“ Date of Termination ” means (i) if the
Executive’s employment is terminated by the Company for Cause
or by the Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein within 30
days of such notice, as the case may be, (ii) if the
Executive’s employment is terminated by the Company other
than for Cause, the 90th day after the Notice of Termination is
given, or in the case of Disability, or if the Executive
voluntarily resigns without Good Reason, the date on which the
terminating Party notifies the other Party of such termination,
(iii) if the Executive’s employment is terminated by
reason of death, the date of death of the Executive, or
(iv) if the Executive’s employment is terminated by the
Company due to Disability, the Disability Effective
Date.
(g) Resignation from All
Positions . Notwithstanding any other provision of this
Agreement, upon the termination of the Executive’s employment
for any reason, unless otherwise requested by the Company, the
Executive shall immediately resign as of the Date of Termination
from all positions that he holds or has ever held with the Company
and any other member of the Affiliated Group (and with any other
entities with respect to which the Company has requested the
Executive to perform services), including, without limitation, all
boards of directors of any member of the Affiliated Group. The
Executive hereby agrees to execute any and all documentation to
effectuate such resignations upon request by the Company, but he
shall be treated for all purposes as having so resigned upon
termination of his employment, regardless of when or whether he
executes any such documentation.
5. Obligations of the Company
upon Termination . (a) Good Reason; Other Than for
Cause . Subject to Section 6, if, during the Employment
Period, (1) the Company shall terminate the Executive’s
employment other than for Cause, death or Disability or
(2) the Executive shall terminate employment for Good
Reason:
(i) the Company shall pay to the
Executive in a lump sum in cash within 30 days (except as
specifically provided in Section 5(a)(i)(A)(3)) after the Date
of Termination or, if later, as soon as practicable following the
earliest date on which such payment would avoid imposition of
penalties under Section 409A of the Internal Revenue Code of
1986, as amended (the “ Code ”), the aggregate
of the following amounts:
A. the sum of (1) the
Executive’s accrued but unpaid Annual Base Salary and any
accrued but unused vacation pay through the Date of Termination,
(2) the Executive’s business expenses that are
reimbursable pursuant to Section 3(b)(vii) but have not been
reimbursed by the Company as of the Date of Termination,
(3) the Executive’s Annual Bonus for the fiscal year
immediately
6
preceding the fiscal year in which
the Date of Termination occurs if such bonus has been determined
but not paid as of the Date of Termination (at the time such Annual
Bonus would otherwise have been paid), and (4) the product of
the Executive’s Target Bonus for the fiscal year in which the
Date of Termination occurs multiplied by a fraction, the numerator
of which is the number of days in such year through the Date of
Termination and the denominator of which is 365 (collectively, the
“ Obligations ”); and
B. the amount equal to the product
of (x) two and (y) the sum of (I) the
Executive’s Annual Base Salary and (II) the Target Bonus;
and
(ii) for two years after the
Executive’s Date of Termination, the Company shall continue
medical and life insurance benefits to the Executive (and, if
applicable, to any dependents of the Executive who received such
benefits under his coverage prior to the Date of Termination) at
least equal to those that would have been provided to the Executive
(and to any such dependent) in accordance with the plans, programs,
practices and policies of the Company if the Executive’s
employment had not been terminated; provided, that the Executive
continues to make all required contributions; and
(iii) to the extent not theretofore
paid or provided, the Company shall timely pay or provide to the
Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement (other
than any severance plan, program, policy or practice or contract or
agreement) of the Company and its affiliates (such amounts and
benefits, the “ Other Benefits ”) in accordance
with the terms and normal procedures of each such plan, program,
policy or practice, based on accrued benefits through the Date of
Termination.
(iv) Notwithstanding anything herein
to the contrary, in the event the Company shall terminate the
Executive’s employment other than for Cause, death or
Disability, or the Executive shall terminate employment for Good
Reason, (provided that in no event will there be deemed to be Good
Reason solely by reason of the Company becoming privately held in
connection with the consummation of the transactions contemplated
by the Merger Agreement or on account of the Executive ceasing to
serve as an executive of a publicly held corporation), on or before
the second anniversary of the Effective Date, the Executive shall
be entitled to all payments and benefits then due under the
Company’s Senior Officer Change in Control Severance Plan to
the extent more favorable to the Executive than that otherwise
provided under this Section 5(a) (in which case Executive will
not be entitled to any payments or benefits under
Section 5(a)).
Except with respect to payments and
benefits under Sections 5(a)(i)(A)(l) and 5(a)(i)(A)(2), all
payments and benefits to be provided under this Section 5(a)
shall be subject to the Executive’s execution and
non-revocation of a release substantially in the form attached
hereto as Annex B.
7
(b) Cause; Other than for Good
Reason . If the Executive’s employment shall be
terminated for Cause or the Executive terminates his employment
without Good Reason during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other
than the obligation to pay or provide to the Executive an amount
equal to the amount set forth in clauses (1), (2), and (except in
the event of a termination by the Company for Cause) (3) of
Section 5(a)(i)(A) above, and the timely payment or provision
of the Other Benefits.
(c) Death . If the
Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive’s legal representatives under this Agreement, other
than the obligation to pay or provide to the Executive’s
beneficiaries the Obligations and the timely payment or provision
of the Other Benefits.
(d) Disability . If the
Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive, other than the obligation to pay or provide to the
Executive the Obligations and the timely payment or provision of
the Other Benefits, including any applicable disability
benefits.
6. Change in Control Benefits
. If at any time following a Change in Control (as defined below)
which occurs after the second anniversary of the Effective Date and
prior to the second anniversary of such Change in Control, the
Executive’s employment is terminated other than for Cause,
death or Disability or he resigns for Good Reason, the Executive is
entitled to receive the following benefits payable in a lump sum
within ten days following the Executive’s termination of
employment or, if later, as soon as practicable following the
earliest date on which such payment would avoid imposition of
penalties under Section 409A of the Code:
(a) The Obligations;
(b) three times the greater of
(i) the Executive’s highest Annual Base Salary during
the three years prior to the Change in Control and (ii) the
Executive’s Annual Base Salary on the Date of
Termination;
(c) the amount equal to three times
the highest Annual Bonus, including any bonus or portion thereof
that has been deferred (and annualized for any fiscal year
consisting of less than 12 months or during which the Executive was
employed for less than 12 months), that the Executive received
during the five fiscal years prior to the Date of Termination;
and
(d) health, medical, life and
long-term disability benefits for three years comparable to the
Executive’s benefits immediately prior to the Change in
Control, or if the Executive is unable to continue to participate
in the Company’s health, medical, life and long-term
disability plans, the Company will provided the Executive
comparable benefits on an after-tax basis. For purposes of
eligibility for retiree medical benefits pursuant to such plans,
the
8
Executive will be considered to have remained
employed until the earlier of three years after the Date of
Termination or the last day any Company employee may become
eligible for such retiree medical benefits and to have retired on
the last day of such period. The benefits will be no less favorable
than as in effect immediately prior to the Change in Control. The
Executive shall be eligible for COBRA benefits at the end of the
three-year period.
Notwithstanding the foregoing, if
the Company amends its current Senior Officer Change in Control
Severance Plan or adopts a Change in Control severance plan for
senior officers generally with more generous benefits than the
benefits outlined above, the Executive will be entitled to those
more generous benefits to the extent applicable in lieu of benefits
provided hereunder.
If the Executive is terminated by
the Company (other than for Cause) within the nine-month period
prior to a Change in Control, but subsequent to such time as
negotiations or discussions which ultimately lead to a Change in
Control have commenced, then the Executive shall be entitled to
receive the benefits listed in Sections 6(a) through
(f) above.
If the Executive becomes entitled to
payments under this Section 6, he will not be entitled to any
payments or benefits under Section 5.
7. Definition of Change in
Control. The term “ Change in Control ” as
used in this Agreement shall have the same meaning given to such
term under the Interest Plan.
8. Change in Control
.
(a) In the event of a Change in
Control at a time when the common stock of the Company or any of
its affiliates is not readily tradeable on an established
securities market or otherwise, within the meaning of
Section 280G(b)(5)(A)(ii) of the Code, the parties shall use
their best efforts to satisfy the “ shareholder approval
requirements ” of that section in a manner designed to
preserve the full economic benefit to the executive of any payments
or benefits otherwise due to the Executive.
(b) In the event of a Change in
Control other than at a time when the common stock of the Company
or any of its affiliates is not readily tradeable on an established
securities market or otherwise, within the meaning of
Section 280G(b)(5)(A)(ii) of the Code, and it shall be
determined that any payment or distribution by the Company to or
for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise (a “ Payment ”), would
constitute an “ excess parachute payment ”
within the meaning of Section 280G of the Code, the Company
shall pay the Executive an additional amount (the “
Gross-Up Payment ”) such that the net amount retained
by the Executive after deduction of any Excise Tax (as defined
below), and any federal, state and local income tax, employment tax
and Excise Tax imposed upon the Gross-Up Payment, shall be equal to
the Payment. The term “ Excise Tax ” means the
excise tax imposed under section 4999 of the Code, together with
any interest or penalties imposed with respect to such excise tax.
For purposes of
9
determining the amount of the Gross-Up Payment,
unless the Executive specifies that other rates apply, the
Executive shall be deemed to pay federal income tax and employment
taxes at the highest marginal rate of federal income and employment
taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the Executive’s
residence on the Executive’s Date of Termination, net of the
maximum reduction in federal income taxes that may be obtained from
the deduction of such state and local taxes.
(c) All determinations to be made
under this Section 8 shall be made by the Company’s
independent public accounting firm immediately prior to the Change
in Control or another independent public accounting firm selected
by the Company prior to the Change in Control (the “
Accounting Firm ”). The Accounting Firm shall provide
its determinations and any supporting calculations both to the
Company and the Executive within 20 days after the Change in
Control. Any such determination by the Accounting Firm shall be
binding upon the Company and the Executive.
(d) The Executive shall notify the
Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive
knows of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which the
Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company relating to such
claim,
(ii) take such action in connection
with contesting such claim as the Company shall reasonably request
in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii) cooperate with the Company in
good faith in order to contest such claim effectively,
and
(iv) permit the Company to
participate in any proceedings relating to such claim;
provided, however, that the Company
shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax, income tax or employment tax,
including interest and penalties, with respect thereto, imposed as
a result of
10
such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 8, the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearing and
conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such
contest to a termination before any administrative tribunal, in a
court of initial jurisdiction and in one or more appellate courts,
as the Company shall determine. If the Company directs the
Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax, income tax or
employment tax, including interest or penalties with respect
thereto, imposed with respect to such advance or with respect to
any imputed income with respect to such advance. Any extension of
the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested
amount is claimed to be due shall be limited solely to such
contested amount. The Company’s control of the contest shall
be limited to issues with respect to which a Gross-Up Payment would
be payable hereunder, and the Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(e) If, after the receipt by the
Executive of an amount advanced by the Company pursuant to this
Section, the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the
Company’s complying with the requirements of subsection
(c)) promptly pay to the
