AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED
AND RESTATED
THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into
as of the 16th day of March, 2006 by and between Fusion Telecommunications
International, Inc., a Delaware corporation (hereinafter called the "Company"),
and Xxxxxxx Xxxxx (hereinafter called the "Executive").
Recitals
A. The
Employee and the Company entered into an employment agreement on November 11,
2004 providing for Employee’s employment with the Company as President and Chief
Operating Officer (“2004 Agreement”).
B. The
Board
of Directors of the Company (the "Board") desires to amend the 2004 Agreement
to
assure the Executive’s continued employment as Chief Executive Officer and to
compensate him therefore.
C. The
Board
has determined that this Agreement will reinforce and encourage the Executive's
continued attention and dedication to the Company.
D. 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
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 September 30, 2008 (the "Initial
Term") unless sooner terminated as hereinafter set forth; provided, however,
that com-men-cing on September 8, 2008 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 Chief Executive 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. The Executive shall be required
to
report solely to, and shall be subject solely to the supervision and direction
of the Board of Directors 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 employ-ment 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 $350,000 (the "Base Salary")
beginning as of December 31, 2005 and during the term of this Agreement, with
such Base Salary payable in installments consistent with the Company's normal
payroll sched-ule, sub-ject 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.
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 options granted to Executive will have a three
year vesting schedule.
(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.
(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 Execu-tive's employ-ment here-under, the Company, upon the
sub-mis-sion of reasonable supporting docu-menta-tion by the Executive, shall
xxxx-xxxxx the Executive for all reason-able 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 con-trary 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 such termina-tion. 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
Exe-cutive shall, as the result of mental or physical incapacity, illness or
disability, fail to perform his duties and respon-sibilities 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, 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 Com-pany shall have the right to terminate Executive's employ-ment
here-under 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 spe-cified 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 200% of his Base Salary
then
in effect and 200% 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
dimi-nution in such position, authority, duties or responsi-bilities, 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;
(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;
(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 six-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 mean-ing 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 outstand-ing 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 twelve (12) 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 share-holders, 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 ini-tial 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 share-holders of the
Company immediately prior to such reorganiza-tion, 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 out-standing voting securi-ties, (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.
6. Sale
of Company Bonus.
In the
event that the Company or substantially all of the assets of the Company are
sold,whether for cash or securities or a combination thereof ( the
“Consideration”) then the Executive shall be entitled to a bonus, , equal to the
following: (i) under $100 million purchase price, the Executive shall not be
entitled to a bonus hereunder; (ii) between $100 million and $199,999,999
purchase price, the Executive shall be entitled to a bonus equal to 2% of the
Consideration price; (iii) between $200 million and $299,999,999 purchase price,
the Executive shall be entitled to a bonus (“Sale of the Company Bonus”) equal
to 3% of the Consideration; (iv) between $3 million and $399,999,999, the
Executive shall be entitled to a bonus equal to 4% of the Consideration or
(v)
over $400 million purchase price, the Executive shall be entitled to 5% of
the
Consideration. To the extent possible, the Company shall pay the Sale of the
Company Bonus in cash. If the Company is unable to pay the Sale of the Company
Bonus in cash, than the Company may pay the sale of the Company Bonus in
Consideration or a combination of cash and Consideration.
7. Restrictive
Covenants.
7.1 Nondisclosure.
During
his employment and for twelve (12) months thereafter, Executive shall not
divulge, com-muni-cate, use to the detriment of the Company or for the benefit
of any other person or persons, or misuse in any way, any Confiden-tial
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 fidu-ciary 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.
7.2 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, corpo-ration, 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.
7.3 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, partner-ship, 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, and is receiving compensation during the time of the non
compete. The Company shall have the right in its sole discretion to waive the
non-compete.
7.4 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 7.1, 7.2 or 7.3 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 juris-diction 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.
8. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York.
9. 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:
|
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 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.
10. 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 busi-ness
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 per-form it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as herein-before defined and any
successor to its business and/or assets which assumes and agrees to perform
this
Agreement by operation of law or otherwise.
11. 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
remain-ing 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.
12. 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.
13. Damages.
Nothing
contained herein shall be con-strued to prevent the Company or the Executive
from seeking and recover-ing 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.
14. 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
represen-tative) any rights or remedies under or by reason of this
Agreement.
15. 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
rea-sonably 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 16 of this Agreement), plus in each case interest
at
the applicable Federal rate provided for in Section 7872(f)(2) of the
Code.
16. Certain
Reduction of Payments by the Company.
(d) Anything
in this Agreement to the con-trary 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 dis-tributed or distributable
pursuant to the terms of this Agreement or otherwise (a "Payment"), would be
nondeduc-tible 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 distribu-tions 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 Pay-ment
to be nondeductible by the Company because of Section 280G of the Code. Anything
to the contrary notwithstand-ing, if the Reduced Amount is zero and it is
determined fur-ther 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 be-cause 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 16 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 cal-culations 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 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 determi-nation by the Accounting Firm shall be binding upon the Com-pany
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 busi-ness 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 require-ments of this Section
15 and shall notify the Executive promptly of such election. Within five
business days there-after, 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 16 shall be
borne by the Company.
(f) As
a
result of the uncertainty in the applica-tion of Section 280G of the Code at
the
time of the initial determina-tion by the Accounting Firm hereunder, it is
possi-ble 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 ("Under-payment"), in each case,
consistent with the calcula-tions 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 appli-cable 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 Em-ployee 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 control-ling pre-cedent 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.
17. 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.
18. 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.
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
|
