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EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of this 25th day of June 1999, by and
between WorldPort Communications, Inc., a Delaware corporation (the "Company")
and Xxxx Xxxxxxx (the "Executive").
WHEREAS, the Executive desires to be an employee of the Company, and
the Company desires to secure the services of the Executive for the period and
upon the terms and conditions hereinafter set forth, and the Executive is
willing to accept his employment with the Company upon the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and promises
contained herein, the parties agree as follows:
1. EMPLOYMENT AND DUTIES. The Company hereby agrees to employ
the Executive and the Executive hereby accepts such employment, on the terms
and conditions hereinafter set forth, effective as of the Starting Date (as
defined below). The Executive shall serve as Chief Executive Officer of the
Company, and in such additional capacities as may reasonably be assigned from
time to time by the Board of Directors of the Company, and shall perform all
duties incident to such position and such additional capacities as may be given
to him from time to time by the Board of Directors of the Company. In his
capacity as Chief Executive Officer, the Executive shall have the duties
assigned to the President pursuant to the Company's Bylaws and shall report
directly to the Board of Directors of the Company. The Executive shall devote
substantially all of his working time, efforts and skill to the fulfillment of
his employment duties hereunder. In connection with the Executive's employment
by the Company, the Executive shall be based in the Chicago, Illinois area
except for required travel on Company business and except as otherwise agreed
between the Executive and the Company.
2. TERM. Subject to the provisions for termination as
hereinafter set forth, this Agreement shall be in effect for a period of three
(3) years (the "Term") from a starting date which is mutually acceptable to the
Company and the Executive but which in no case is later than June 21, 1999 (the
"Starting Date"); provided, however, that the Term shall automatically be
extended on a day by day basis effective on and after the second anniversary of
the Starting Date (so that it shall always then have a one year term) until
such date as either the Company or the Executive shall have terminated such
automatic extension provisions by giving written notice to the other.
3. COMPENSATION. In full consideration for the services rendered
by the Executive hereunder, the Company shall provide to the Executive:
(a) An annual base salary equal to five hundred
thousand dollars ($500,000), payable in accordance with the
Company's customary payroll practices. The base salary shall
be reviewed annually as of the end of each calendar year
during the Term by the Compensation Committee of the
Company's Board of Directors (the "Committee"). Each annual
review shall be completed within 60 days after the last day
of the year. Based upon such reviews, the Committee may
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increase, but shall not decrease, the base salary.
(b) An annual cash bonus, the amount of which
shall be determined and paid at the discretion of the Board
of Directors of the Company in light of the Company meeting
business plan targets established by the Board of Directors;
provided, however, that in no event shall such annual cash
bonus be less than three hundred fifty thousand dollars
($350,000) per year; $100,000 of which during the first year
shall be payable within 30 days after Executive's permanent
residence relocation to the Chicago, Illinois area.
4. STOCK OPTIONS. On or promptly following the Starting Date, the
Company shall issue to the Executive options to acquire an aggregate of 825,000
shares of the Company's common stock, par value $.0001 per share. The options
shall be subject to the provisions set forth on Exhibit A attached hereto.
5. ADDITIONAL BENEFITS. The Executive shall be entitled to
participate in all benefit programs as are from time to time established and
maintained for the benefit of the Company's employees generally, subject to the
provisions of such plans and programs. Notwithstanding anything in the
foregoing sentence to the contrary, the Executive shall be entitled to at least
four (4) weeks of vacation each year during the Term. In addition, the
Executive shall be entitled to such perquisites of employment as are generally
provided to senior executives of the Company, subject to the discretion of the
Board of Directors of the Company. The Company shall reimburse the Executive
for reasonable business expenses incurred by the Executive in the performance
of his duties under this Agreement, including expenses for entertainment,
travel and similar items, upon presentation by the Executive from time to time
of an itemized account of such expenditures and compliance by the Executive
with any Company policies regarding such expenses.
6. NON-DISCLOSURE. Except as may be required by law, the
Executive will not at any time after the date of this Agreement, divulge,
furnish or make accessible, or otherwise transfer to anyone (other than in the
regular course of business of the Company) who is not an employee of the
Company, without the consent of the Board of Directors of the Company, any
knowledge or information which has not been publicly disclosed by the Company
or otherwise is not generally known to other persons engaged in businesses
similar to that conducted by the Company ("Confidential Information"), with
respect to any (i) confidential or secret processes, improvements, plans,
material, devices or ideas or other know-how, whether patentable or not, (ii)
confidential or secret engineering, development or research work, (iii)
financial, economic and pricing information, or (iv) other confidential or
secret aspects of the Company's business (including, without limitation,
information relating to operating methods or processes, marketing or business
plans, sales techniques, service records, customer lists, supplier lists and
pricing arrangements with customers or suppliers). The provisions of this
Section 6 shall survive the termination of this Agreement.
7. REMEDIES. The Executive acknowledges that irreparable damage
would result to the Company if the provisions of Section 6 were breached by the
Executive, and the Company would not have an adequate remedy at law for such a
breach or threatened breach. In the event of such a breach or threatened
breach, the Executive agrees that the Company, may, notwithstanding anything to
the contrary herein contained, and in addition to the other remedies which may
be available to it, enjoin the Executive, together with all those persons
associated with him, from the
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breach or threatened breach of such covenants.
8. TERMINATION OF AGREEMENT. The Company and the Executive
hereby agree that:
(a) The Company may at any time terminate this
Agreement for Cause. For purposes hereof, Cause shall mean
(i) aiding or abetting a competitor; (ii) that the Executive
has been convicted of a felony involving theft or moral
turpitude, or (iii) that the Executive has engaged in conduct
that constitutes willful gross neglect or willful gross
misconduct with respect to employment duties, resulting in
the case of (ii) or (iii) in material economic harm to the
Company. Notwithstanding the foregoing, the Company may not
terminate the Executive's employment for Cause unless (i) a
determination that Cause exists is made and approved by a
majority of the Company's Board of Directors, (ii) the
Executive is given at least ten (10) days' written notice of
the Board meeting called to make such determination, and
(iii) the Executive and his legal counsel are given the
opportunity to address such meeting. Upon termination of this
Agreement pursuant to this Section 8(a), all unvested stock
options received by the Executive (whether pursuant to this
Agreement or otherwise) shall automatically terminate and be
cancelled and the Company shall have no further obligations
to the Executive under this Agreement.
(b) This Agreement shall automatically terminate
upon the Executive's death. If the Company determines in good
faith that the Disability of the Executive has occurred
(pursuant to the definition of "Disability" set forth below),
it may give to the Executive written notice of its intention
to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate
effective upon receipt by the Executive of such notice given
at any time after a period of one hundred twenty (120)
consecutive days of Disability ("Disability Effective Date").
For purposes of this Agreement, "Disability" means the
Executive's inability to substantially perform his duties
hereunder, with reasonable accommodation, as evidenced by a
certificate signed either by a physician mutually acceptable
to the Company and the Executive or if the Company and the
Executive cannot agree upon a physician, by a physician
selected by the Company. Until the Disability Effective Date,
the Executive shall be entitled to all compensation and
benefits provided for under Sections 3 through 5 hereof. In
addition, the Executive or his estate (as applicable) shall
be entitled to the disability benefits or death benefits
available to other senior executives of the Company. Upon the
termination of this Agreement pursuant to this Section 8(b),
the stock options granted to the Executive pursuant to
Section 4 above shall, to the extent the closing price for
the Common Stock has achieved the levels required by Exhibit
A, but notwithstanding the anniversary-based vesting
provisions set forth in Exhibit A, automatically vest on a
pro rata basis as if all such options were to have vested
equally over the Term on a monthly basis at the end of each
full month of the Executive's employment hereunder. No
options shall vest until the closing price for the Common
Stock has achieved the levels required by Exhibit A, if any.
(c) (i) During the Term, the Executive's employment
hereunder may be terminated by the Company without Cause or
by the Executive for Good Reason.
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For purposes of this Agreement, "Good Reason" shall mean (1)
the assignment to the Executive of any duties inconsistent in
any material respect with the Executive's position (including
status, offices, titles and reporting relationships),
authority, duties or responsibilities as contemplated by
Section 1 of this Agreement, or any other action by the
Company which results in a significant diminution in such
position, authority, duties or responsibilities, excluding
any isolated and inadvertent action not taken in bad faith
and which is remedied by the company within ten (10) days
after receipt of a notice thereof given by the Executive; (2)
any failure by the Company to comply with any of the
provisions of Sections 3 through 5 of this Agreement other
than an isolated and inadvertent failure not taken in bad
faith and which is remedied by the Company within ten (10)
days after receipt of notice thereof given by the Executive;
(3) the Executive being required to relocate to a principal
place of employment more than seventy-five (75) miles from
Chicago, Illinois; (4) failure by the company to obtain the
assumption in writing of its obligations under this Agreement
by any successor to all or substantially all of the assets of
the Company within 15 calendar days after the closing of such
transaction; or (5) any purported termination by the Company
of the Executive's employment otherwise than as expressly
permitted by this Agreement.
(ii) during the Term, the Executive's employment
may be terminated by the Executive within ninety (90) days
immediately following a Change in Control if the Executive
determines in his sole discretion that he can no longer
effectively perform the duties of his position. For purposes
of the foregoing sentence, a "Change in Control" will be
deemed to have occurred: (a) when any person (as that term is
used in Section 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended, but excluding any employee benefit
plan of the Company, or any person organized, appointed or
established by the Company for or pursuant to the terms of
any such plan), other than The Heico Companies LLC or any
strategic investor with whom the Company has had or is
currently having discussions regarding an investment in or
purchase of or merger with the Company, or any affiliate
thereof, has acquired, (including any increase in percentage
ownership due to conversions of outstanding stock) either
directly or indirectly, beneficial ownership of securities
representing thirty-five percent (35%) or more of the total
votes that could be cast by the holders of all of the
Company's outstanding securities entitled to vote in
elections of members of the Company's Board (the "Voting
Stock"); (b) if, during any period of two consecutive years
(not including any period prior to the Starting Date),
individuals who at the beginning of such period constitute
the Board (and any new Board member, whose election by the
Board or nomination for election by the Company's
stockholders was approved by a vote of a majority of the
Board members then still in office who either were Board
members at the beginning of the period of whose election or
nomination for election was so approved), cease for any
reason to constitute a majority of the Board members then
constituting the Board; (c) when a reorganization, merger or
consolidation of the Company is consummated, in each case,
unless, immediately following such reorganization, merger or
consolidation, (A) more than 60% of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
and the combined voting power of the then outstanding
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voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners
of the Voting Stock outstanding immediately prior to such
reorganization, merger or consolidation, and (B) at least
one-half of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation were members of the Board at the time of the
execution of the initial agreement providing for such
reorganization, merger or consolidation; (d) when the
shareholders of the Company approve (or if shareholder
approval is not necessary, upon the consummation of) (A) a
complete liquidation or dissolution of the Company, or (B)
the sale or other disposition of all or substantially all of
the assets of the Company, other than to any corporation with
respect to which, immediately following such sale or other
disposition, (1) a majority of, the then outstanding shares
of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities
who were the beneficial owners of the Voting Stock
outstanding immediately prior to such sale or other
disposition of assets, and (2) at least one-half of the
members of the board of directors of such corporation were
members of the Board at the time of the execution of the
initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company.
(iii) If the Executive's employment is terminated
pursuant to clause (i) of this Section 8(c), the Company
shall pay the Executive a lump sum in cash within thirty (30)
days after the date of termination, equal to the aggregate of
the following amounts: (1) the Executive's base salary, as of
the date of termination, through the end of the Term
(determined without regard to the termination thereof
pursuant to Section 8), (2) the guaranteed bonus for the year
in which the date of termination occurs, or, if greater, the
Executive's most recent annual bonus, multiplied by the
number of years (including daily proration for any partial
year) between the January 1 of the year in which the
termination occurs and the end of the Term (determined
without regard to the termination thereof pursuant to Section
8); and (3) those other obligations and benefits accrued or
earned (including any earned but unpaid bonuses) by the
Executive as of the date of termination. In addition, all
stock options granted to the Executive pursuant to Section 4
above shall, to the extent the closing price for the Common
Stock has achieved the levels required by Exhibit A, but
notwithstanding the anniversary-based vesting provisions set
forth in Exhibit A, vest in full. No options shall vest until
the closing price for the Common Stock has achieved the
levels required by Exhibit A, if any.
(iv) If the Executive's employment is terminated
pursuant to clause (ii) of this Section 8(c), the Company
shall pay the Executive a lump sum in cash within thirty (30)
days after the date of termination, equal to the aggregate of
the following amounts: (1) the Executive's base salary, as of
the date of termination, for the lesser of (x) one-year
period and (y) the balance of the Term (determined without
regard to the termination thereof pursuant to Section 8), (2)
the guaranteed bonus for the year in which the date of
termination occurs, and (3) those other obligations and
benefits
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accrued or earned (including any earned but unpaid bonuses)
by the Executive as of the date of termination. In addition,
all stock options granted to the Executive pursuant to
Section 4 above shall, to the extent the closing price for
the Common Stock has achieved the levels required by Exhibit
A, but notwithstanding the anniversary-based vesting
provisions set forth in Exhibit A, vest in full. No options
shall vest until the closing price for the Common Stock has
achieved the levels required by Exhibit A, if any.
(d) In the event of the termination by the
Executive of this Agreement for any reason (except as
otherwise provided in Section 8(c) above) all unvested stock
options received by the Executive (whether pursuant to this
Agreement or otherwise) shall automatically terminate and be
cancelled and the Company shall have no further obligations
to the Executive under this Agreement.
(e) Upon termination of this Agreement, or
earlier if requested by Company, the Executive or his
personal representative shall promptly deliver to the
Company, without retaining any copies, all books, memoranda,
plans, records and written data of every kind pertaining to
confidential information of the Company which are then in his
possession. Executive shall also promptly deliver to the
Company all of the Company's equipment or supplies which are
in his possession.
9. GOLDEN PARACHUTE EXCISE TAX.
(a) In the event that the Executive becomes
entitled to any payments or benefits (whether pursuant to the
terms of this Agreement or any other plan, program,
arrangement or agreement with the Company) (collectively, the
"Payments") that will be subject to the tax (the "Excise
Tax") imposed on "excess parachute payments" by Section 4999
of the Code, the Company shall pay the Executive, at least 30
days prior to the time payment of any such Excise Tax is due,
an additional amount (the "Gross-Up Payment") such that the
net amount retained by the Executive, after deduction of any
Excise Tax and any federal and state and local income tax
imposed on the Gross-Up Payment, shall be equal to the Excise
Tax imposed on the Payments. For purposes of determining
whether any of the Payments will be subject to the Excise Tax
and the amount of such Excise Tax, (A) the Payments shall be
treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments"
within the meaning of Section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax to the extent
recommended by tax counsel selected by the Company's
independent auditors, (B) the amount of the Payments which
shall be treated as subject to the Excise Tax shall be equal
to the lesser of (i) the total amount of the Payments or (ii)
the amount of excess parachute payments within the meaning of
Section 280G(b)(1) (after applying clause (A) above), and (C)
the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Company's independent
auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. For purposes of determining
the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income taxes at the highest marginal
rate of federal income taxation applicable to the Executive's
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taxable income 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 applicable to the
Executive's taxable income in the state and locality of the
Executive's residence on the date of termination, net of the
maximum reduction in federal income taxes which could be
obtained from deduction of such sate and local taxes. The
Executive shall notify the Company of any audit or review by
the Internal Revenue Service of the Executive's federal
income tax return for the year in which payment under this
Agreement is made within ten (10) days of the Executive's
receipt of notification of such audit or review. In addition,
the Executive shall also notify the Company of the final
resolution of such audit or review within ten (10) days of
such resolution.
10. ASSIGNMENT. This Agreement is personal in nature and may not
be assigned by the Executive other 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 heirs and legal representatives. This Agreement shall be
binding upon and inure to the benefit of the Company and its successors and
assigns. The Company shall require any successor (whether direct or indirect,
by purchase, merger, reorganization, consolidation, acquisition or property or
stock, liquidation, or otherwise) to all or substantially all of its assets, by
agreement in form and substance reasonably satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform this Agreement
if no such succession had taken place. As used in this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
11. NOTICE. All notices, requests, demands and other
communications given by any party hereto shall be in writing and shall be
deemed to be duly given if (i) personally delivered, (ii) mailed first class,
return receipt requested, (iii) sent via reputable overnight courier, or (iv)
transmitted via facsimile with confirmation of receipt, all addressed as
follows:
To the Company:
WorldPort Communications, Inc.
0000 Xxxxxxx Xxxxx Xxxx.
Xxxxxxxx, Xxxxxxx 00000
Facsimile: 000-000-0000
Attention: Chairman of the Board
To the Executive:
Xx. Xxxx Xxxxxxx
WorldPort Communications, Inc.
0000 Xxxxxxx Xxxxx Xxxx.
Xxxxxxxx, Xxxxxxx 00000
Facsimile: 000-000-0000
12. ENTIRE AGREEMENT. This instrument supersedes all prior
understandings and
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agreements of the parties hereto and contains the entire agreement of the
parties and may not be amended or changed, except by an agreement in writing
entered into by all parties hereto.
13. ARBITRATION. Any dispute or controversy between the Company
and the Executive, whether arising out of or relating to this Agreement, the
breach of this Agreement, or otherwise, shall be settled by arbitration
administered by the American Arbitration Association ("AAA") in accordance with
its Commercial Arbitration Rules then in effect and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Any arbitration shall be held before a single arbitrator who shall be
selected by the mutual agreement of the Company and the Executive, unless the
parties are unable to agree to an arbitrator, in which case, the arbitrator
will be selected under the procedures of the AAA. The arbitrator shall have the
authority to award any remedy or relief that a court of competent jurisdiction
could order or grant, including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency with this
arbitration provision, apply to any court having jurisdiction over such dispute
or controversy and seek interim provisional, injunctive or other equitable
relief until the arbitration award is rendered or the controversy is otherwise
resolved. Except as necessary in court proceedings to enforce this arbitration
provision or an award rendered hereunder, or to obtain interim relief, neither
a party nor an arbitrator may disclose the existence, content or results of any
arbitration hereunder without the prior written consent of the Company and the
Executive. The Company and the Executive acknowledge that this Agreement
evidences a transaction involving interstate commerce. Notwithstanding any
choice of law provision included in this Agreement, the United States Federal
Arbitration Act shall govern the interpretation and enforcement of this
arbitration provision. The arbitration proceeding shall be conducted in
Chicago, Illinois or such other location to which the parties may agree.
14. INDEMNIFICATION. The Company shall use its best efforts to
maintain, for the benefit of the Executive, director and officer liability
insurance in form at least as comprehensive as, and in an amount that is at
least equal to, that maintained by the Company on the Starting Date. In
addition, the Executive shall be indemnified by the Company against liability
as an officer and director of the Company and any subsidiary or affiliate of
the Company to the maximum extent permitted by applicable law. The Executive's
rights under this Section 14 shall continue so long as he may be subject to
such liability, whether or not this Agreement may have terminated prior
thereto.
15. SEVERABILITY. Each provision of this Agreement is intended to
be severable. In the event that any one or more of the provisions contained in
this Agreement shall for any reason be adjudicated to be invalid or
unenforceable in any competent jurisdiction, the same shall not affect the
validity and enforceability of any other provisions of this Agreement, but this
Agreement shall be construed in such jurisdiction as if such invalid or
unenforceable provision had never been contained therein.
16. APPLICABLE LAW. The Agreement shall be governed by, and
construed in accordance with, the law of the State of Illinois.
17. NON-WAIVER. Any party's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a waiver of such
provision or any other provision hereof.
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18. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
* * *
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IN WITNESS WHEREOF, the parties hereto have duly executed, or caused
this Agreement to be duly executed, as of the date first above written.
WORLDPORT COMMUNICATIONS, INC.
/s/ Xxxx Xxxxxxx By:
----------------------------- ----------------------------------
Xxxx Xxxxxxx Name:
----------------------------------
Title:
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EXHIBIT A
TERMS OF STOCK OPTIONS
Options to acquire an aggregate of 825,000 shares of WorldPort Communications,
Inc. common stock (the "Common Stock") shall be issued to the Executive
pursuant to Section 4 hereof. All options shall be non-qualified options and
shall be issued at 85% of the closing price for the Company's Common Stock on
May 28, 1999 as reported on the Nasdaq SmallCap. Market System.
The options will be granted in four separate tranches as follows:
(1) 300,000 shares. Vest as follows: (i) 17,187 on the first day of each month
beginning on July 1, 1999 for six months, (ii) 103,128 on the first anniversary
of grant date and (iii) 93,750 on second anniversary of grant date, provided
that the Executive is employed by the Company on such dates.
(2) 180,000 shares. Vest as follows (i) 112,500 on second anniversary of grant
date and (ii) 67,500 on third anniversary of grant date, provided that the
Executive is employed by the Company on such dates, and provided, however, that
no options shall vest unless and until the closing price for the Common Stock
as reported on the Nasdaq SmallCap Market System has been equal to at least
$15.00 for a period of at least 30 consecutive trading days.
(3) 180,000 shares. Vest as follows (i) 138,750 on third anniversary of grant
date and (ii) 41,250 on fourth anniversary of grant date, provided that the
Executive is employed by the Company on such dates, and provided, however, that
no options shall vest unless and until the closing price for the Common Stock
as reported on the Nasdaq SmallCap Market System has been equal to at least
$20.00 for a period of at least 30 consecutive trading days.
(4) 165,000 shares. Vest on fourth anniversary of grant date, provided that the
Executive is employed by the Company on such date, provided, however, that no
options shall vest unless and until the closing price for the Common Stock as
reported on the Nasdaq SmallCap Market System has been equal to at least $25.00
for a period of at least 30 consecutive trading days.
The stock options to be issued hereunder shall be issued pursuant to the
WorldPort Communications, Inc. Amended and Restated Long-Term Incentive Plan
and will be subject to the terms thereof.
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