EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 11th day of November, 2004 by and between Fusion Telecommunications
International, Inc., a Delaware corporation (hereinafter called the "Company"),
and Xxxxxxx Xxxxx (hereinafter called the "Executive").
RECITALS
A. The Board of Directors of the Company (the "Board") desires to
assure the Company of the Executive's continued employment as President and
Chief Operating Officer and to compensate him therefor.
B. The Board has determined that this Agreement will reinforce
and encourage the Executive's continued attention and dedication to the Company.
C. The Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties agree as follows:
1. EMPLOYMENT.
1.1 EMPLOYMENT AND TERM. The Company hereby agrees to
employ the Executive and the Executive hereby agrees to serve the Company, on
the terms and conditions set forth herein, for the period commencing on the date
hereof and expiring on January 31, 2007 (the "Initial Term") unless sooner
terminated as hereinafter set forth; provided, however, that commencing on
January 1, 2007 the Initial Term of this Agreement shall automatically be
extended for one additional year unless at least ninety (90) days prior to such
date, the Company shall have delivered to the Executive or the Executive shall
have delivered to the Company written notice that the term of the Executive's
employment hereunder will not be extended.
1.2 DUTIES OF EXECUTIVE. The Executive shall serve as the
President and Chief Operating Officer of the Company and shall have powers and
authority superior to any other officer or employee of the Company or of any
subsidiary of the Company other than the Company's Chief Executive Officer (the
"CEO"). Subject to the preceding sentence, during the term of Employment, the
Executive shall diligently perform all services as may be reasonably assigned to
him by the CEO, and shall exercise such power and authority as may from time to
time be delegated to him by the CEO. The Executive shall be required to report
solely to, and shall be subject solely to the supervision and direction of the
CEO and no other person or group shall be given authority to supervise or direct
Executive in the performance of his duties. In addition, the Executive shall
regularly consult with the Chairman of the Board with respect to the Company's
business and affairs. The Executive shall devote substantially all his working
time and attention to the business and affairs of the Company (excluding any
vacation and sick leave to which the Executive is entitled), render such
services to the best of his ability, and use his reasonable best efforts to
promote the interests of the Company. It shall not be a violation of this
Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement.
1.3 PLACE OF PERFORMANCE. In connection with his
employment by the Company, the Executive shall be based at the Company's
principal executive offices except for travel reasonably necessary in connection
with the Company's business.
2. COMPENSATION.
2.1 BASE SALARY. Commencing on the effective date of this
Agreement, the Executive shall receive a base salary at the annual rate of not
less than $250,000 (the "Base Salary") during the term of this Agreement, with
such Base Salary payable in installments consistent with the Company's normal
payroll schedule, subject to applicable withholding and other taxes. The Base
Salary shall also be reviewed, every six months, for merit increases and may, by
action and in the discretion of the Compensation and Nominating Committee
established by the Board, be increased at any time or from time to time. The
Base Salary shall also be increased at any time and from time to time as shall
be substantially consistent with increases in base salary awarded in the
ordinary course of business to other key executives of the Company and its
subsidiaries. The Base Salary, if increased, shall not thereafter be decreased
for any reason.
2.2 INCENTIVE COMPENSATION. The Executive shall be
entitled to receive such bonus payments or incentive compensation as may be
determined at any time or from time to time by the Board (or any authorized
committee thereof) in its discretion. Such potential bonus payments and/or
incentive compensation shall be considered at least annually by the Board or
committee. In no event shall Executive's annual bonus be less than 25% of
Executive's annual salary then in effect. In the event that the Company achieves
positive Earnings Before Income Tax, Depreciation and Amortization ("EBITDA")
for two successive fiscal quarters, Executive will be immediately paid a one
time bonus equal to 50% of his annual salary then in effect. Thereafter, the
Compensation Committee shall review Executive's bonus at least annually;
provided , however that for each successive fiscal year that the Company
achieves positive EBITDA, the Executive's minimum annual bonus will not be less
than 50% of his annual salary then in effect. In addition to the bonus discussed
immediately above, the Executive shall be entitled to a one-time bonus of
$25,000 in the event that the Company consummates an initial public offering of
its securities, which $25,000 payment shall be in addition to the minimum bonus
otherwise discussed immediately above.
2.3 STOCK OPTION.
(a) The Executive shall be entitled to
participate in all stock option plans (the "Plans") in effect during the term of
this Agreement.
(b) The Company hereby agrees that all
existing stock options held by the Executive are hereby amended to provided for
a three year vesting schedule, as opposed to the four year vesting schedule now
in effect.
(c) Notwithstanding the preceding
clause (b), the Option shall become immediately exercisable as to 100% of the
shares of Common Stock not otherwise vested upon any termination of Executive's
employment pursuant to Section 4.5 hereof, it being agreed that the Company
shall cooperate in good faith to afford the Executive the right to exercise the
Option in full immediately prior to any "Change in Control" (as hereinafter
defined). In the event that Executive is terminated pursuant to Section 4.5,
Executive shall have the greater of (i) five years after termination, or (ii)
the remaining term of the option, in order to exercise his options.
(d) The Company shall take all action
reasonably requested by the Executive to permit any "cashless" exercise of the
Option that is permitted under the Plan.
(e) Upon proper exercise of an Option,
the Executive shall be deemed for all purposes the owner of the shares of Common
Stock that are purchasable upon such exercise.
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(f) The provisions of the Plan shall
not be adversely modified as to the Executive without the Executive's prior
written consent.
3. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
3.1 EXPENSE REIMBURSEMENT. During the term of Executive's
employment hereunder, the Company, upon the submission of reasonable supporting
documentation by the Executive, shall reimburse the Executive for all reasonable
expenses actually paid or incurred by the Executive in the course of and
pursuant to the business of the Company, including expenses for travel and
entertainment.
3.2 INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Initial Term, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable to
other key executives of the Company and its subsidiaries, in each case
comparable to those currently in effect or as subsequently amended. Such plans,
practices, policies and programs, in the aggregate, shall provide the Executive
with compensation, benefits and reward opportunities at least as favorable as
the most favorable of such compensation, benefits and reward opportunities
provided at any time hereafter with respect to other key executives.
3.3 WELFARE BENEFIT PLANS. During the Initial Term, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its subsidiaries
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs), at least as favorable as the most
favorable of such plans, practices, policies and programs in effect at any time
hereafter with respect to other key executives.
3.4 WORKING FACILITIES. During the term of Executive's
employment hereunder, the Company shall furnish the Executive with an office, a
secretary and such other facilities and services suitable to his position and
adequate for the performance of his duties hereunder.
3.5 VACATION. During the Initial Term, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its subsidiaries as in
effect at any time hereafter with respect to other key executives of the Company
and its subsidiaries; PROVIDED, HOWEVER, that in no event shall Executive be
entitled to fewer than five weeks paid vacation per year.
4. TERMINATION.
4.1 TERMINATION FOR CAUSE. Notwithstanding anything
contained to the contrary in this Agreement, this Agreement may be terminated by
the Company for Cause. As used in this Agreement, "Cause" shall only mean (i) an
act or acts of personal dishonesty taken by the Executive and intended to result
in substantial personal enrichment of the Executive at the expense of the
Company, (ii) subject to the following sentences, repeated violation by the
Executive of the Executive's material obligations under this Agreement which are
demonstrably willful and deliberate on the Executive's part and which are not
remedied in a reasonable period of time after receipt of written notice from the
Company, or (iii) the conviction of the Executive for any criminal act which is
a felony. Upon any determination by the Company's Board of Directors that Cause
exists under clauses (i) and (ii) of the preceding sentence, the Company shall
cause a special meeting of the Board to be called and held at a time mutually
convenient to the Board and Executive, but in no event later than ten (10)
business days after Executive's receipt of the notice contemplated by clauses
(i) and (ii). Executive shall have the right to appear before such special
meeting of the Board with legal counsel of his choosing to refute any
determination of Cause specified in such notice, and any termination of
Executive's employment by reason of such Cause determination shall not be
effective until Executive is afforded such opportunity to appear. Any
termination for Cause pursuant to clause (i) or (iii) of the first sentence of
this Section 4.1 shall be made in writing to Executive, which notice shall set
forth in detail all acts or omissions upon which the Company is relying for
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such termination. Upon any termination pursuant to this Section 4.1, the
Executive shall be entitled to be paid his Base Salary to the date of
termination and the Company shall have no further liability hereunder (other
than for reimbursement for reasonable business expenses incurred prior to the
date of termination).
4.2 DISABILITY. Notwithstanding anything contained in
this Agreement to the contrary, the Company, by written notice to the Executive,
shall at all times have the right to terminate this Agreement, and the
Executive's employment hereunder, if the Executive shall, as the result of
mental or physical incapacity, illness or disability, fail to perform his duties
and responsibilities provided for herein for a period of more than one hundred
twenty (120) consecutive days in any 12-month period. Upon any termination
pursuant to this Section 4.2, the Executive shall be entitled to be paid his
Base Salary for the remaining term of the Agreement. In the event that the
Agreement has less than six months remaining at such time, Executive shall be
entitled to a payment equal to six months of his Base Salary. In addition,
Executive shall be entitled to reimbursement for all business expenses incurred
prior to his disability.
4.3 DEATH. In the event of the death of the Executive
during the term of his employment hereunder, the Company shall pay to the estate
of the deceased Executive an amount equal to the Base Salary for the remaining
term of this Agreement. In the event that the Agreement has less than six months
remaining at such time, Executive shall be entitled to a payment equal to six
months of his Base Salary. In addition, Executive shall be entitled to
reimbursement for all business expenses incurred prior to his death.
4.4 OPTIONAL TERMINATION Notwithstanding anything
contained in this Agreement to the contrary, the Executive, by giving thirty
days notice to the Company, shall one year after the date of this Agreement,
have the right to terminate this Agreement at his sole discretion. Upon any
termination pursuant to this Section 4.4, the Execution shall be entitled to be
paid his Base Salary to the date of termination and the Company shall have no
further liability hereunder (other than for reimbursement for reasonable
business expenses incurred prior to the date of termination), unless the
Executive and the Company agree to a different arrangement.
4.5 TERMINATION WITHOUT CAUSE. At any time the Company
shall have the right to terminate Executive's employment hereunder by written
notice to Executive; provided, however, that the Company shall (i) pay to
Executive any unpaid Base Salary accrued through the effective date of
termination specified in such notice, and any pro-rata bonus that would be
payable had Executive completed a full year of employment, and (ii) pay to the
Executive in a lump sum, in cash within 30 days after the date of employment
termination, an amount equal to 150% of his Base Salary then in effect and 150%
of his highest annual bonus for the three years preceding Executive's
termination. The Company shall be deemed to have terminated the Executive's
employment pursuant to this Section 4.4 if such employment is terminated (i) by
the Company without Cause, or (ii) by the Executive voluntarily for "Good
Reason." For purposes of this Agreement, "Good Reason" means
(a) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 1.2 of this Agreement, or any other
action by the Company which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(b) any failure by the Company to comply with
any of the provisions of Section 2, Section 3, or Section 16 of this Agreement,
other than an isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
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(c) the Company's requiring the Executive to be
based at any office or location more than 25 miles from Grand Central Station in
New York, New York, except for travel reasonably required in the performance of
the Executive's responsibilities;
(d) any change in the designation of the
particular executive that the Executive is obligated to report to under Section
1.2 hereof;
(e) in the event of any change in the current
CEO where the Executive is not first offered the position as CEO on terms that
are at least as favorable as those in place (at such time) for Executive as
President and Chief Operating Officer;
(f) any purported termination by the Company of
the Executive's employment otherwise than as expressly permitted by this
Agreement;
(g) any failure by the Company to comply with
and satisfy Section 10(c) of this Agreement; or
(h) any termination by the Executive for any
reason during the three-month period following the effective date of any "Change
in Control".
For purposes of this Section 4.5, any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
5. CHANGE IN CONTROL. For purposes of this Agreement, a "Change
in Control" shall mean:
(a) The acquisition (other than by or from the Company),
at any time after the date hereof, by any person, entity or "group", within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934
(the "Exchange Act"), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 30% or more of either the then
outstanding shares of common stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote generally in the election of
directors; or
(b) All or any of the fourteen (14) individuals who, as
of the date hereof, constitute the Board (as of the date hereof the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company, as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
shall be, for purposes of this Agreement, considered as though such person were
a member of the Incumbent Board; or
(c) Approval by the shareholders of the Company of (A) a
reorganization, merger or consolidation with respect to which persons who were
the shareholders of the Company immediately prior to such reorganization, merger
or consolidation do not, immediately thereafter, own more than 75% of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company's then outstanding voting
securities, (B) a liquidation or dissolution of the Company, or (C) the sale of
all or substantially all of the assets of the Company, unless the approved
reorganization, merger, consolidation, liquidation, dissolution or sale is
subsequently abandoned.
(d) The approval by the Board of the sale, distribution
and/or other transfer or action (and/or series of sales, distributions and/or
other transfers or actions from time to time or over a period of time), that
results in the Company's ownership of less than 50% of the Company's current
assets.
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6. RESTRICTIVE COVENANTS.
6.1 NONDISCLOSURE. During his employment and for twelve
(12) months thereafter, Executive shall not divulge, communicate, use to the
detriment of the Company or for the benefit of any other person or persons, or
misuse in any way, any Confidential Information (as hereinafter defined)
pertaining to the business of the Company. Any Confidential Information or data
now or hereafter acquired by the Executive with respect to the business of the
Company shall be deemed a valuable, special and unique asset of the Company that
is received by the Executive in confidence and as a fiduciary, and Executive
shall remain a fiduciary to the Company with respect to all of such information.
For purposes of this Agreement, "Confidential Information" means all material
information about the Company's business disclosed to the Executive or known by
the Executive as a consequence of or through his employment by the Company
(including information conceived, originated, discovered or developed by the
Executive) after the date hereof, and not generally known.
6.2 NONSOLICITATION OF EMPLOYEES. While employed by the
Company and for a period of twelve (12) months thereafter, Executive shall not
directly or indirectly, for himself or for any other person, firm, corporation,
partnership, association or other entity, attempt to employ or enter into any
contractual arrangement with any employee or former employee of the Company,
unless such employee or former employee has not been employed by the Company for
a period in excess of six months.
6.3 COVENANT NOT TO COMPETE. Executive will not, at any
time, during the term of this Agreement, and for one (1) year thereafter, either
directly or indirectly, engage in, with or for any enterprise, institution,
whether or not for profit, business, or company, competitive with the business
(as identified herein) of Employer as such business may be conducted on the date
thereof, as a creditor, guarantor, or financial backer, stockholder, director,
officer, consultant, advisor, employee, member, or otherwise of or through any
corporation, partnership, association, sole proprietorship or other entity;
provided, that an investment by Employee, his spouse or his children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business. As used
in this Agreement, the business of Employer shall be deemed to include any
business which directly competes with the Company in the provision of
traditional voice services, VoIP services, private network services, Internet
access services and Internet based video conferencing services. The covenant not
to compete for one year after termination shall only be effective if the
Executive has received all compensation due to him pursuant to this Agreement.
The Company shall have the right in its sole discretion to waive the
non-compete.
6.4 INJUNCTION. It is recognized and hereby acknowledged
by the parties hereto that a breach by the Executive of any of the covenants
contained in Section 6.1, 6.2 or 6.3 of this Agreement will cause irreparable
harm and damage to the Company, the monetary amount of which may be virtually
impossible to ascertain. As a result, the Executive recognizes and hereby
acknowledges that the Company shall be entitled to an injunction from any court
of competent jurisdiction enjoining and restraining any violation of any or all
of the covenants contained in this Section 6 by the Executive or any of his
affiliates, associates, partners or agents, either directly or indirectly, and
that such right to injunction shall be cumulative and in addition to whatever
other remedies the Company may possess.
7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
8. NOTICES: Any notice required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been given when
delivered by hand or when deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
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If to the Company: Fusion Telecommunications Intl, Inc.
000 Xxxxxxxxx Xxxxxx - Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: CEO
If to the Executive: Xxxxxxx Xxxxx
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
WITH A COPY TO: Xxxxxxx, Savage, Kaplowitz, Wolf &
Marcus, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxxxx
or to such other addresses as either party hereto may from time to time give
notice of to the other in the aforesaid manner.
9. SUCCESSORS.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets which
assumes and agrees to perform this Agreement by operation of law or otherwise.
10. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.
11. WAIVERS. The waiver by either party hereto of a breach or
violation of any term or provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation.
12. DAMAGES. Nothing contained herein shall be construed to
prevent the Company or the Executive from seeking and recovering from the other
damages sustained by either or both of them as a result of its or his breach of
any term or provision of this Agreement.
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13. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
person (other than the parties hereto and, in the case of Executive, his heirs,
personal representative(s) and/or legal representative) any rights or remedies
under or by reason of this Agreement.
14. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement. The Company
agrees to pay, to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest (regardless
of the outcome thereof) by the Company or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to Section 15 of this
Agreement), plus in each case interest at the applicable Federal rate provided
for in Section 7872(f)(2) of the Code.
15. CERTAIN REDUCTION OF PAYMENTS BY THE COMPANY.
(d) Anything in this Agreement to the contrary
notwithstanding, in the event 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 be nondeductible by the Company for
Federal income tax purposes because of Section 280G of the Code, then the
aggregate present value of amounts payable or distributable to or for the
benefit of the Executive pursuant to this Agreement (such payments or
distributions pursuant to this Agreement are hereinafter referred to as
"Agreement Payments") shall be reduced to the Reduced Amount. The "Reduced
Amount" shall be an amount expressed in present value which maximizes the
aggregate present value of Agreement Payments without causing any Payment to be
nondeductible by the Company because of Section 280G of the Code. Anything to
the contrary notwithstanding, if the Reduced Amount is zero and it is determined
further that any Payment which is not an Agreement Payment would nevertheless be
nondeductible by the Company for Federal income tax purposes because of Section
280G of the Code, then the aggregate present value of Payments which are not
Agreement Payments shall also be reduced (but not below zero) to an amount
expressed in present value which maximizes the aggregate present value of
Payments without causing any Payment to be nondeductible by the Company because
of Section 280G of the Code. For purposes of this Section 16, present value
shall be determined in accordance with Section 280G(d)(4) of the Code. Any
amount which is not paid in the taxable year in which it was originally
scheduled to be paid as a result of the postponement thereof pursuant hereto
shall be payable in the next succeeding taxable year in which such payment will
not result in the disallowance of a deduction pursuant to either Section 162(m)
or 280G of the Code; provided, however, that all postponed payments shall be
placed in a Rabbi trust or similar vehicle for the benefit of the Executive in
such a way that the amounts so transferred are not taxable to such person or
deductible by the Company until payment from such vehicle to the Executive is
made. In the event a payment has been made to the Executive, but then disallowed
as a deduction by the Internal Revenue Service and return of the payment is
required into the trust, said payment to the Executive shall be treated as a
loan and said payment to the trust shall be treated as repayment of said loan.
The Company shall not pledge, hypothecate or otherwise encumber any amounts held
in the trust or other similar vehicle for the benefit of the Executive
hereunder.
(e) All determinations required to be made under
this Section 15 shall be made by Xxxxxxxxx, Xxxx & Company, P.C. or, at the
Executive's option, any other nationally or regionally recognized firm of
independent public accountants selected by the Executive and approved by the
Company, which approval shall not be unreasonably withheld or delayed (the
"Accounting Firm"), which shall provide (i) detailed supporting calculations
both to the Company and the Executive within twenty (20) business days of the
termination of Executive's employment or such earlier time as is requested by
the
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Company, and (ii) an opinion to the Executive that he has substantial authority
not to report any excise tax on his Federal income tax return with respect to
any Payments. Any such determination by the Accounting Firm shall be binding
upon the Company and the Executive. The Executive shall determine which and how
much of the Payments shall be eliminated or reduced consistent with the
requirements of this Section 15, provided that, if the Executive does not make
such determination within ten business days of the receipt of the calculations
made by the Accounting Firm, the Company shall elect which and how much of the
Payments shall be eliminated or reduced consistent with the requirements of this
Section 15 and shall notify the Executive promptly of such election. Within five
business days thereafter, the Company shall pay to or distribute to or for the
benefit of the Executive such amounts as are then due to the Executive under
this Agreement. All fees and expenses of the Accounting Firm incurred in
connection with the determinations contemplated by this Section 15 shall be
borne by the Company.
(f) As a result of the uncertainty in the
application of Section 280G of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Payments will have been
made by the Company which should not have been made ("Overpayment") or that
additional Payments which will not have been made by the Company could have been
made ("Underpayment"), in each case, consistent with the calculations required
to be made hereunder. In the event that the Accounting Firm, based upon the
assertion of a deficiency by the Internal Revenue Service against the Executive
which the Accounting Firm believes has a high probability of success, determines
that an Overpayment has been made, any such Overpayment paid or distributed by
the Company to or for the benefit of the Executive shall be treated for all
purposes as a loan ab initio to the Executive which the Executive shall repay to
the Company together with interest at the applicable federal rate provided for
in Section 7872(f)(2) of the Code; provided, however, that no such loan shall be
deemed to have been made and no amount shall be payable by the Employee to the
Company if and to the extent such deemed loan and payment would not either
reduce the amount on which the Executive is subject to tax under Section 1 and
Section 4999 of the Code or generate a refund of such taxes. In the event that
the Accounting Firm, based upon controlling precedent or other substantial
authority, determines that an Underpayment has occurred, any such Underpayment
shall be promptly paid by the Company to or for the benefit of the Executive
together with interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code.
16. REIMBURSEMENT OF LEGAL EXPENSES. The Company shall promptly
reimburse Executive for all reasonable legal fees incurred by Executive in
connection with the preparation, negotiation and execution of this Agreement and
ancillary documents.
17. INDEMNIFICATION. The Company agrees to promptly execute and
deliver to Executive an Indemnification Agreement in substantially the same form
as set forth on EXHIBIT A.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.
By:
-------------------------------------
Xxxxxx Xxxxxx
Treasurer
EXECUTIVE:
-------------------------------------
Xxxxxxx Xxxxx
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