SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report under Section 13 or
X 15(d) of the Securities Exchange Act
of 1934 for the quarterly period
ended March 31, 1998
or
Transition Report under Section 13
or 15(d) of the Securities Exchange
Act of 1934 for the transition
period from ________ to ___________
Commission File Number 33-32341-D
WORLDPORT COMMUNICATIONS, INC.
(Name of Small Business Registrant as Specified in its Charter)
Delaware 84-1127336
(State or other jurisdiction of (IRS Employer ID Number)
incorporation of organization)
1701 Barrett Lakes Blvd.,
Suite 180, Kennesaw, Georgia 30144
(Address of principal executive (Zip Code)
offices)
(770) 792-8735
Registrant's telephone number
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES [ X ] NO [ ]
As of May 7, 1998, the Registrant had 17,983,333 shares of Common Stock par
value $0.0001 outstanding.
Transitional Small Business Disclosure Format
(Check one):
Yes [ ] No [ X ]
WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 1998 and December 31, 1997 . . . . . . . . . . . . 3
Condensed Consolidated Statements of Operations
for the Three Months Ended March 31,
1998 and 1997 . . . . . . . . . . . . . . . . .. . . . . . . 4
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1998 and 1997 . . . . . . 5
Notes to Condensed Consolidated Financial Statements . . . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 15
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . 15
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . 16
Item 4. Submission of Matters to a Vote of Security Holders . . . . . 16
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 16
SIGNATURE 18
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS
March 31, December 31,
1998 1997
(Unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash $ 6,487,958 $ 179,271
Accounts receivable, net of allowance for doubtful accounts
of $20,846 and $14,610 respectively 471,751 368,848
Prepaid expenses and other current assets 189,957 67,438
Total current assets 7,149,666 615,557
PROPERTY AND EQUIPMENT, net 4,790,774 5,031,858
OTHER ASSETS:
Goodwill, net 6,125,974 6,292,411
Other assets, net 2,069,951 1,257,451
TOTAL ASSETS $ 20,136,365 $ 13,197,277
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 781,927 $1,391,519
Accrued expenses 1,603,726 1,292,261
Short-term note payable 500,000 500,000
Current portion of notes payable related parties 175,000 540,000
Current portion of obligations under capital leases 1,263,548 936,992
Other current liabilities 19,843 97,527
Total current liabilities 4,344,044 4,758,299
NOTES PAYABLE RELATED PARTIES, net of current portion - 1,191,250
LONG-TERM OBLIGATIONS UNDER CAPITAL LEASES, net of current portion 2,642,755 3,005,894
OTHER LONG-TERM LIABILITIES 43,955 86,584
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Undesignated preferred stock, $0.0001 par value, 6,250,000 shares
authorized, no shares issued and outstanding -
Series A preferred stock, $0.0001 par value, 750,000 shares
authorized, 493,889 and 493,889 shares issued and outstanding in
1998 and 1997, respectively 49 49
Series B preferred stock, $0.0001 par value, 3,000,000 shares
authorized, 2,112,106 and no shares issued and outstanding in
1998 and 1997, respectively 211 -
Common stock, $0.0001 par value, 65,000,000 shares authorized,
17,383,333 and 16,033,333 shares issued and outstanding, in
1998 and 1997, respectively 1,738 1,603
Additional paid-in capital 21,150,298 7,953,631
Amounts due from stockholders (1,215,000) -
Cumulative translation adjustment (4,100) -
Accumulated deficit (6,827,585) (3,800,033)
Total stockholders' equity 13,105,611 4,155,250
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,136,365 $ 13,197,277
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<TABLE>
WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
REVENUES $ 948,188 $ -
COST OF SERVICES 890,811 -
Gross margin 57,377 -
OPERATING EXPENSES:
Selling, general and
Administrative expenses 2,255,170 288,970
Depreciation and amortization 631,226 -
Operating loss (2,829,019) (288,970)
OTHER INCOME (EXPENSE):
Interest income - 29,959
Interest expense (176,308) (3,283)
(176,308) 26,676
LOSS BEFORE PROVISION
FOR INCOME TAXES (3,005,327) (262,294)
PROVISION FOR INCOME TAXES - -
NET LOSS $ (3,005,327) $ (262,294)
COMPREHENSIVE LOSS $ (3,009,427) $ (262,294)
NET LOSS PER SHARE,
BASIC AND DILUTED $ (0.17) $
(0.03)
SHARES USED IN NET LOSS PER SHARE
CALCULATION, BASIC AND DILUTED 17,174,445 9,580,608
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<TABLE>
WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
_
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,005,327) $ (262,294)
Adjustments to reconcile net loss to net cash
Used by operating activities -
Depreciation and amortization 631,226 -
Compensation charge 335,125
Increase in accounts receivable (102,903) -
Increase in prepaid expenses and other assets (271,376) (13,800)
(Decrease) increase in accounts payable and accrued
expenses and other liabilities (658,598)
68,442
Other -
(4,100)
Net cash used by operating activities (3,075,953) (207,652)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in connection with acquisitions (161,851) -
Change in notes receivable - 800,000
Capital expenditures (136,646) -
Net cash (used) provided by investing activities (298,497) 800,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable related parties (365,000) -
Payments on obligations under capital leases (36,583) -
Proceeds from issuance of preferred stock -
10,084,720
Proceeds from issuance of common stock, net of offering expenses 12,250
-
Net cash provided by financing activities 9,683,137 12,250
NET INCREASE IN CASH 6,308,687 604,598
CASH, beginning of the period 179,271 1,552,829
CASH, end of the period $ 6,487,958 $ 2,157,427
CASH PAID DURING THE PERIOD FOR INTEREST $ 144,692 $ 26,989
CASH PAID DURING THE PERIOD FOR TAXES $ - $ -
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Conversion of note payable for 1,680,000 shares of common stock $ - $ 420,000
Conversion of notes payable related parties and accrued interest for
230,627 shares of Series B preferred stock $ 1,236,165 $ -
Issuance of 1,000,000 shares of common stock for notes receivable $ 1,215,000 $ -
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Basis of Presentation
WorldPort Communications, Inc. and subsidiaries (the "COMPANY") is a
global, facilities-based telecommunications services provider offering a
full range of voice and value-added services to carriers and corporate
customers worldwide. The Company is focusing on expanding its network
infrastructure in the United States and in major markets in Europe, Asia-
Pacific and Latin America.
The accompanying condensed consolidated financial statements have been
prepared by the Company without audit pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted in this Form 10-QSB pursuant to such rules and
regulations; however, management believes that the disclosures herein are
adequate to make the information presented not misleading. The financial
statements and notes thereto included in this Form 10-QSB should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended December 31,
1997.
In the opinion of the Company's management, the accompanying condensed
consolidated financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the
Company's financial position as of March 31, 1998, and the results of
operations for the three months ended March 31, 1998 and 1997 and cash
flows for the three months ended March 31, 1998 and 1997. The results of
operations for the three months ended March 31, 1998 and 1997 are not
necessarily indicative of the operating results for the full years.
Financial Condition
The Company is subject to various risks in connection with the operation of
its business including, among other things, (i) changes in external
competitive market factors, (ii) termination of certain operating
agreements or inability to enter into additional operating agreements,
(iii) inability to satisfy anticipated working capital or other cash
requirements, (iv) changes in or developments under domestic or foreign
laws, regulations, licensing requirements or telecommunications standards,
(v) changes in the availability of transmission facilities, (vi) changes in
the Company's business strategy or an inability to execute its strategy due
to unanticipated changes in the market, (vii) various competitive factors
that may prevent the Company from competing successfully in the
marketplace, (viii) the Company's lack of liquidity and its ability to
raise additional capital, (ix) loss of services of key executive officers
and (x) loss of a customer which provides significant revenues to the
Company. During 1997, the Company's first year of operations as an
international telecommunications services provider, the Company incurred
losses of approximately $3.5 million and expects to continue to incur
operating losses in the near future. Funding of the Company's current and
future operating losses and expansion of the Company will require
substantial continuing capital investment. The Company's strategy is to
fund these cash requirements through debt facilities or additional equity
financing. Although the Company has been able to arrange debt facilities
or equity financing to date, there can be no assurance that sufficient debt
or equity financing will continue to be available in the future or that it
will be available on terms acceptable to the Company. Failure to obtain
sufficient capital could materially affect the Company's acquisition and
operating strategies. The Company expects that future financings will
include debt and/or equity placements; however, no assurance can be given
that the Company will be able to obtain additional financing on reasonable
terms, if at all. During 1998, the Company has raised approximately $12.4
million in connection with the sale of its Series B Convertible Preferred
Stock, $900,000 in connection with the sale of its common stock (see Note
4) and was successful in increasing its existing lease financing facility
to provide up to $13,000,000 in infrastructure financing. The Company has
also converted approximately $1.2 million in notes payable to related
parties into its Series B Convertible Preferred Stock. In addition,
during the first quarter of 1998, the Company retained the services of a
major New York-based investment banker to assist the Company in raising
additional capital through debt and/or equity offerings. The Company has
currently made none of its scheduled payments on its $500,000 debt
obligation to Value Partners, Ltd. ("VALUE PARTNERS"). As of May 12, 1998,
Value Partners has not demanded payment. The Company is currently
negotiating with Value Partners to restructure this obligation on more
favorable terms to the Company; however, no assurance can be given that the
Company will be able to restructure this obligation.
Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
New Accounting Pronouncements
The Company adopted SFAS No. 128, "Earnings Per Share", in 1997 and all
prior years presented in the accompanying consolidated financial statements
have been restated in accordance with SFAS No. 128. For all periods
presented, basic and diluted earnings per share are the same as any
dilutive securities had an antidilutive effect on earnings per share.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". SFAS No. 130 requires the presentation of comprehensive income in
an entity's financial statements. Comprehensive income represents all
changes in equity of an entity during the reporting period, including net
income and charges directly to equity which are excluded from net income
(such as additional minimum pension liability changes, currency translation
adjustments, unrealized gains and losses on available for sale securities,
etc.). The Company adopted SFAS No. 130 during 1998 and the primary impact
on its financial statements relates to foreign currency translation
adjustments in connection with certain acquisitions (see Note 2).
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information". SFAS No. 131 requires the
reporting of profit and loss, specific revenue and expense items and assets
for reportable segments. It also requires the reconciliation of total
segment revenues, total segment profit or loss, total segment assets and
other amounts disclosed for segments to the corresponding amounts in the
general purpose financial statements. The Company will adopt SFAS No. 131
during the year ended December 31, 1998 and has not yet determined what
additional disclosures may be required in connection with adopting SFAS No.
131.
Year 2000 Issue
The Year 2000 issue exists because many computer systems and applications
currently use two-digit fields to designate a year. As the century date
change occurs, date-sensitive systems will recognize the year 2000 as 1900
or not at all. The inability to recognize or properly treat the Year 2000
may cause systems to process critical financial and operational information
incorrectly. The Company's management has assessed the impact of the Year
2000 issue on the Company's computer hardware and software systems. Based
on this assessment, management currently believes that the costs of
resolving the Year 2000 issues will not be material to the Company's
results of operations or financial condition.
(2) ACQUISITIONS
In February 1998, the Company commenced operations in The Netherlands
through the acquisition of all of the outstanding stock of MathComp B.V.
("MATHCOMP"). The Company changed the name of MathComp to WorldPort
Communications Europe, B.V. ("WORLDPORT EUROPE"). In connection with this
acquisition, the Company issued 150,000 shares of the Company's common
stock and was obligated to pay $250,000 in cash within 45 days of the
closing of the acquisition. As of May 12, 1998, the Company has not paid
the $250,000 cash payment. The former shareholder of MathComp is eligible
to earn an additional 2,350,000 shares of the Company's common stock
contingent upon the attainment of certain future revenue and gross margin
requirements during the first and second quarters of 1999. In connection
with the acquisition, the Company entered into a three-year employment
agreement with the former shareholder of MathComp for an annual salary of
approximately $90,000.
In April 1998, the Company acquired the telecommunications assets and
operations of InterContinental Exchange, Inc. ("ICX"), a licensed provider
of international telecommunications services headquartered in the San
Francisco Bay area, in exchange for 400,000 shares of the Company's common
stock (of which 200,000 shares will be held pursuant to an escrow agreement
for a period of eighteen months following the closing subject to the
attainment of certain future revenue requirements and to indemnify the
Company for certain representations and warranties). In addition, the
Company entered into two-year employment agreements with three employees of
ICX providing for annual salaries of $84,000 and issued options to purchase
an aggregate of 120,000 shares of common stock at exercise prices ranging
from $7.00 to $10.00 per share with a vesting period of one to two years.
(3) COMMITMENTS AND CONTINGENCIES
During the first quarter of 1998, the Company entered into employment
agreements with seven executives of the Company providing for annual
salaries ranging from $125,000 to $300,000, with additional provisions for
discretionary bonuses based upon performance. In connection with these
agreements, the Company issued options to purchase 1,400,000 shares of
common stock to these executives at exercise prices ranging from $1.00 to
$4.50 per share. Such options vest over a two to three year period. At
the time of grant, these options were recorded in accordance with APB No.
25. Additionally, the Company granted to an executive a total of 200,000
shares of common stock which resulted in a compensation charge of
approximately $268,000 based on the fair value of the stock granted.
On March 31, 1998, the Company amended its employment agreements with two
executives who were previously granted a total of 1,000,000 shares of
common stock. As a result of these amendments, the executives will
purchase the 1,000,000 shares of common stock at $1.34 per share which is
the fair value of the stock at that date. In connection with the purchase
of these shares, the executives executed 24-month non-recourse promissory
notes in the aggregate amount of $1,340,000 reduced by $125,000 in deferred
salary payments due to the executives at March 31,1998.
(4) STOCKHOLDERS' EQUITY
During the first quarter of 1998, the Company initiated a private placement
offering of its par value $0.0001 Series B Convertible Preferred Stock (the
"SERIES B PREFERRED STOCK OFFERING") at $5.36 per share. The Series B
Convertible Preferred Stock is convertible into shares of the Company's
common stock at any time at the option of the holder at a rate of 4 shares
of common stock for each share of preferred stock. Holders of Series B
Convertible Preferred Stock have voting rights equal to 40 votes per share
on all matters submitted to a vote of the stockholders of the Company. As
of May 12, 1998, the Company has received approximately $12.4 million in
proceeds from the sale of the Series B Convertible Preferred Stock, of
which approximately $10.1 million was received as of March 31, 1998, and
has converted approximately $1.2 million of Bridge Notes and accrued
interest into the Series B Convertible Preferred Stock in exchange for an
aggregate of 2,539,345 shares of the Company's Series B Convertible
Preferred Stock.
In May 1998, the Company sold 180,000 shares of its common stock at a price
of $5.00 per share to an accredited investor in a private placement
transaction.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NOTE ON "FORWARD-LOOKING" STATEMENTS
The information set forth in Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A") contains certain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995, including, among others (i) expected
changes in the Company's revenues and profitability (ii) prospective business
opportunities and (iii) the Company's strategy for expanding its business.
Forward-looking statements are statements other than historical information or
statements of current condition. Some forward-looking statements may be
identified by use of terms such as "believes", "anticipates", "intends" or
"expects". These forward-looking statements relate to the plans, objectives and
expectations of WorldPort Communications, Inc. and subsidiaries (the "COMPANY")
for future operations. Although the Company believes that its expectations with
respect to the forward-looking statements are based upon reasonable assumptions
within the bounds of its knowledge of its business and operations, in light of
the risks and uncertainties inherent in all future projections, the inclusion of
forward-looking statements in this report should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved.
The Company's revenues and results of operations could differ materially from
those projected in the forward-looking statements as a result of numerous
factors, including, but not limited to, the following: (i) changes in external
competitive market factors, (ii) termination of certain operating agreements or
inability to enter into additional operating agreements, (iii) inability to
satisfy anticipated working capital or other cash requirements, (iv) changes in
or developments under domestic or foreign laws, regulations, licensing
requirements or telecommunications standards, (v) changes in the availability of
transmission facilities, (vi) changes in the Company's business strategy or an
inability to execute its strategy due to unanticipated changes in the market,
(vii) various competitive factors that may prevent the Company from competing
successfully in the marketplace, (viii) the Company's lack of liquidity and its
ability to raise additional capital, (ix) loss of services of key executive
officers and (x) loss of a customer which provides significant revenues to the
Company. In light of these risks and uncertainties, there can be no assurance
that actual results, performance or achievements of the Company will not differ
materially from any future results, performance or achievements expressed or
implied by such forward-looking statements. The foregoing review of important
factors should not be construed as exhaustive. The Company undertakes no
obligation to release publicly the results of any future revisions it may make
to forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with the Condensed
Consolidated Financial Statements and Notes thereto included under Item 1 of
this Form 10-QSB. In addition, reference should be made to the Financial
Statements and Notes thereto and related Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997.
Overview
The Company is a global facilities-based telecommunications services provider
offering a full range of voice and value-added services to carriers and
corporate customers worldwide. The Company is focusing on expanding its network
infrastructure in targeted geographic regions where privatization and
liberalization enable it to gain early market entry and achieve rapid growth.
The Company is developing a global telecommunications network consisting of (i)
switches, enhanced services platforms, leased circuits and other
telecommunications equipment (On-Net) and (ii) carrier services agreements,
access and termination agreements, interconnection agreements and other
facilities-sharing agreements (Off-Net). Together, these telecommunications
assets and agreements comprise the Company's global network. The Company's
customers utilize a combination of local access numbers and codes and domestic
and international toll-free numbers to access the Company's network. The
Company is continuing to expand its network through (i) the purchase and
installation of equipment for existing and new markets, (ii) additional
interconnection, access and termination agreements with other carriers and
service providers in the U.S. and internationally and (iii) additional
acquisitions of international telecommunications assets, operations and service
providers.
During 1997 and the first quarter of 1998, the Company primarily provided
calling card and other enhanced services products from its facility in Omaha,
Nebraska. As the Company expands its global network and enters into new
international service agreements, the Company intends to provide long distance
services primarily to carriers, corporate customers and to distributors,
marketers and resellers of telecommunications services.
Recent Developments
During 1998, the Company has:
Committed to purchase 12 indefeasible rights of use ("IRUS") for STM-1 (155
Mb/s) capacity on four state-of-the-art undersea fiber optic cables under
development by Global Crossing, Ltd., including 5 STM-1s (5 x 155 Mb/s) on
Atlantic Crossing 1 ("AC-1"), a state-of-the-art, transatlantic fiber optic
cable which is scheduled to commence service in mid-1998. The Company has
committed to purchase 3 STM-1s (3 x 155 Mb/s) on Mid-Atlantic Crossing
("MAC"); 3 STM-1s (3 x 155 Mb/s) on Pan-American Crossing ("PAC"); and 1 STM-
1 (1 x 155 Mb/s) on Pacific Crossing 1 ("PC-1"). These undersea cables are
expected to provide the Company with high bandwidth transmission capacity
linking the U.S., the Caribbean, Latin America and Asia.
Entered into a Memorandum of Understanding to acquire EnerTel N.V., one of
the major alternative telecommunications services providers in The
Netherlands. EnerTel operates a fiber optic backbone network throughout The
Netherlands, and it holds interconnection agreements with almost all of The
Netherlands' regional and international telecom operators as well as with
Cable and Wireless in the U.K., Belgacom in Belgium and Deutsche Telekom in
Germany. Through these assets, EnerTel is expected to bring the Company
competitive network access to the entire Dutch business community and to 5.5
million households.
Through its wholly owned subsidiary, WorldPort Communications Europe, B.V.
("WORLDPORT EUROPE"), entered into an interconnection agreement with PTT
Telecom, the national telephone company of The Netherlands. This agreement
will enable the Company to physically connect its network with the network of
PTT Telecom, and to originate and terminate traffic throughout The
Netherlands via the PTT Telecom network.
Acquired an International Simple Resale license in the United Kingdom that
will permit the Company to deploy network infrastructure and commence the
marketing of international long distance voice, data and multimedia services
in the U.K. Additionally, the Company has applied for an International
Facilities License which is expected to enable it to own international
network facilities such as transatlantic fiber optic cable capacity,
switching equipment and leased lines that land in the United Kingdom.
Entered into a nationwide access and termination agreement with Westinghouse
Communications, providing the Company with favorable origination and
termination rates in the United States and selected international markets.
Acquired the assets and operations of InterContinental Exchange, Inc.
("ICX"). ICX is a California-based provider of international long distance
services primarily to customers in the U.S., Asia-Pacific and Latin America.
ICX presently serves approximately 8,000 customers in Japan, Singapore,
India, Netherlands Antilles, South Africa, Lebanon, The Netherlands, Germany,
Venezuela and the United States, including distributors and international
sales agents.
Received proceeds of approximately $13.3 million in connection with the sale
of its Series B Convertible Preferred Stock and common stock.
Acquisitions
In February 1998, the Company commenced operations in The Netherlands through
the acquisition of all of the outstanding stock of MathComp B.V. ("MATHCOMP").
The Company changed the name of MathComp to WorldPort Communications Europe,
B.V. ("WORLDPORT EUROPE") (the "WORLDPORT EUROPE ACQUISITION"). In connection
with this acquisition, the Company issued 150,000 shares of the Company's common
stock and was obligated to pay $250,000 in cash within 45 days of the closing of
the acquisition. As of May 12, 1998, the Company has not paid the $250,000 cash
payment. The former shareholder of MathComp is eligible to earn an additional
2,350,000 shares of the Company's common stock contingent upon the attainment of
certain future revenue and gross margin requirements during the first and second
quarters of 1999. In connection with the acquisition, the Company entered into
a three-year employment agreement with the former shareholder of MathComp for an
annual salary of approximately $90,000.
In April 1998, the Company acquired the telecommunications assets and operations
of ICX, a licensed provider of international telecommunications services
headquartered in the San Francisco Bay area in exchange for 400,000 shares of
the Company's common stock (of which 200,000 shares will be held pursuant to an
escrow agreement for a period of eighteen months following the closing subject
to the attainment of certain future revenue requirements and to indemnify the
Company for certain representations and warranties). In addition, the Company
entered into two-year employment agreements with three employees of ICX
providing for annual salaries of $84,000 and issued options to purchase an
aggregate of 120,000 shares of common stock at exercise prices ranging from
$7.00 to $10.00 per share with a vesting period of one to two years.
Results of Operations
Prior to its acquisition of the assets and ongoing operations of Telenational
Communications Limited Partnership ("TNC") in June 1997 (the "TNC ACQUISITION")
and the Wallace Wade Company ("WWC") in July 1997 (the "WWC ACQUISITION"), the
Company was a development stage company that had not generated revenues other
than interest income since inception. During the three months ended March 31,
1998 and 1997, the Company incurred losses of $(3,005,327) and $(262,294),
respectively. Included in the losses incurred during 1998 are the operating
results of TNC and WWC subsequent to the closing of the TNC Acquisition and the
WWC Acquisition. WWC's operating revenues and expenses did not have a material
impact on the operating revenues and expenses of the Company in 1998. Prior to
the TNC Acquisition, TNC had experienced a history of operating losses and cash
flow deficiencies. Subsequent to the closing of the TNC Acquisition, revenues
from the operations declined, primarily as a result of the Company's shift in
focus toward higher-margin product lines in new international markets.
To address and remedy these historical operating losses and to increase the
competitiveness, revenues and gross margins of the assets and operations
acquired in the TNC Acquisition, since the acquisition, the Company has sought
to (i) institute new financial controls, (ii) enhance the technical capabilities
of its switching center, calling card platform and operator services center in
Omaha, (iii) negotiate more favorable carrier vendor contracts, (iv) recruit
additional qualified operational and technical management for its Omaha
facility, (v) develop new calling card distribution channels in ethnic markets
in the U.S. and in new international markets and (vi) develop new products and
services such as multi-lingual operator services targeted at carrier customers.
While the Company believes these cost-reduction and revenue-enhancing
initiatives will have a positive impact on its future operating results, the
Company anticipates that it will continue to incur operating losses and cash
flow deficiencies for the foreseeable future. See "LIQUIDITY AND CAPITAL
RESOURCES".
Revenues
Revenues increased to $948,188 from $0 for the three months ended March 31, 1998
and 1997, respectively. The increase in revenues was due solely to the
inclusion of the results of operations of the TNC assets subsequent to the
closing of the TNC Acquisition in June 1997. The acquisition of WorldPort
Europe did not have an impact on revenues as WorldPort Europe is in the process
of completing the installation and testing of its network.
Gross Margin
Gross margin increased to $57,377 from $0 for the three months ended March 31,
1998 and 1997, respectively. The increase in gross margin was due to the
inclusion of the results of operations of the TNC assets subsequent to the
closing of the TNC Acquisition in June 1997 offset by the costs of testing the
network of WorldPort Europe.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to $2,255,170 from
$288,970 for the three months ended March 31, 1998 and 1997, respectively. The
increase was due primarily to (i) increased business development and acquisition
activity, (ii) the relocation of the Company's corporate offices from Houston,
Texas to Kennesaw, Georgia, (iii) the expansion of the Company's executive
management team, (iv) certain non-recurring compensation charges associated with
the granting of restricted stock and certain options to certain members of the
Company's management team and (v) the inclusion of the selling, general and
administrative expenses associated with the operation of the TNC assets
subsequent to the closing of the TNC Acquisition in June 1997.
Depreciation and Amortization
Depreciation and amortization expense increased to $631,226 from $0 for the
three months ended March 31, 1998 and 1997, respectively. The increase was due
to (i) depreciation of the assets acquired in connection with the TNC
Acquisition, (ii) amortization of goodwill and other intangible assets
associated with the TNC Acquisition, the WWC Acquisition and the WorldPort
Europe Acquisition and (iii) depreciation of additional switching and peripheral
equipment acquired during 1997 and 1998.
Interest Expense
Interest expense increased to $176,308 from $3,283 for the three months ended
March 31, 1998 and 1997, respectively. The increase in interest expense is due
to (i) the debt assumed by the Company in connection with the TNC Acquisition,
(ii) the acquisition of switching equipment subject to capital lease and (iii)
borrowings for working capital purposes pursuant to certain short-term
promissory notes. See "LIQUIDITY AND CAPITAL RESOURCES".
Liquidity and Capital Resources
The Company is an emerging international telecommunications services provider
which is executing a global business plan which requires substantial capital.
The Company has operated at a loss since its inception and expects to continue
to incur operating losses in the near future. Funding of the current and future
operating losses and expansion of the Company will require substantial
continuing capital investment. The Company's strategy is to fund these cash
requirements through debt facilities or additional equity financing. Although
the Company has been able to arrange debt facilities and equity financing to
date, there can be no assurance that sufficient debt or equity financing will
continue to be available in the future or that it will be available on terms
acceptable to the Company. Substantial additional debt or equity financing may
be needed for the Company to achieve its short-term and long-term business
objectives. Failure to obtain sufficient capital could materially affect the
Company's acquisition and operating strategies. The Company expects that future
financing will include debt and/or equity placements; however, no assurance can
be given that the Company will be able to obtain additional financing on
reasonable terms, if at all.
As of March 31, 1998, the Company has a working capital surplus of $2,805,622
compared to a working capital deficit of $4,142,742 at December 31, 1997. The
working capital surplus at March 31, 1998 is due to the proceeds received from
the issuance of 2,112,106 shares of the Company's Series B Convertible Preferred
Stock offset by (i) the payment of certain liabilities assumed in conjunction
with the TNC Acquisition and the WorldPort Europe Acquisition, the majority of
which were trade payables and short-term debt obligations, (ii) the issuance of
a note payable in connection with the WWC Acquisition, (iii) the acquisition of
additional switching and peripheral equipment, the majority of which is being
financed pursuant to a lease, (iv) borrowings pursuant to certain short-term
promissory notes and (v) the operating losses of the Company. Trade receivables
increased to $471,751 at March 31, 1998 from $368,848 at December 31, 1997.
Operations used $3,075,953 during the three months ended March 31, 1998 compared
to $207,652 during the three months ended March 31, 1997 due primarily to the
(i) operating losses (ii) increased business development and acquis6ition
activity, (iii) relocation of the Company's corporate offices and (iv) expansion
of the Company's executive management team.
Investing activities used $298,497 during the three months ended March 31, 1998
compared to providing $800,000 during the three months ended March 31, 1997.
Investing activities during the three months ended March 31, 1998 consisted
primarily of cash paid in connection with the WorldPort Europe Acquisition and
increased capital spending. Investing activities during the three months ended
March 31, 1997 consisted of the collection of a note receivable from Global Star
International, Inc.
Financing activities generated $9,683,137 during the three months ended March
31, 1998 compared to $12,250 during the three months ended March 31, 1997.
Financing activities during the three months ended March 31, 1998 consisted
primarily of proceeds from the issuance of 2,112,106 shares of the Company's
Series B Convertible Preferred Stock offset by repayment of certain short-term
notes payable.
In addition to trade payables and vendor obligations assumed in connection with
the TNC Acquisition, the Company assumed a secured promissory note payable to
Value Partners, Ltd. ("VALUE PARTNERS") which was payable in installments of
$100,000 per month plus accrued interest at a rate of 14% per annum beginning
September 1, 1997. The note is secured by all of the assets acquired by the
Company in connection with the TNC Acquisition. The Company has made none of
the scheduled payments on this note and as of May 12, 1998, Value Partners has
not demanded payment on the note. The Company is currently negotiating with
Value Partners to restructure this obligation on more favorable terms to the
Company; however, no assurance can be given that the Company will be able to
restructure this obligation.
In September 1997, the Company entered into an arrangement with Maroon Bells
Capital Partners, Inc. ("MBCP") whereby MBCP would arrange for the Company to
borrow from MBCP and certain of its affiliated entities pursuant to certain
promissory notes (the "BRIDGE NOTES"). The Bridge Notes bore interest at 10%
per annum, matured on December 31, 1997 and were convertible into equity in the
Company on terms to be negotiated in good faith. As of December 31, 1997, the
Company had $1,556,250 in Bridge Notes outstanding. During the first quarter of
1998, approximately $1.2 million of the Bridge Notes and accrued interest were
converted into equity in the Company. The remaining portion of the Bridge Notes
were repaid in cash.
During the first quarter of 1998, the Company initiated a private placement
offering of its Series B Convertible Preferred Stock (the "SERIES B PREFERRED
STOCK OFFERING") at $5.36 per share. The Series B Convertible Preferred Stock
is convertible into shares of the Company's common stock at any time at the
option of the holder at a rate of 4 shares of common stock for each share of
preferred stock. Holders of Series B Convertible Preferred Stock have voting
rights equal to 40 votes per share on all matters submitted to a vote of the
stockholders of the Company. As of May 12, 1998, the Company has received
approximately $12.4 million in proceeds from the sale of the Series B
Convertible Preferred Stock and has converted approximately $1.2 million of
notes payable and accrued interest into the Series B Convertible Preferred
Stock.
As described in "RECENT DEVELOPMENTS", the Company has entered into a number of
agreements, contracts and other business relationships which will require the
Company to expend capital resources. The Company is also currently involved in
discussions with respect to potential transactions which could include
acquisitions requiring the issuance of Company securities or other significant
obligations; however, there can be no assurance that the Company will be
successful in consummating any of these potential transactions. While the
impact on the Company's requirements for working capital and capital
expenditures of each of the items described in "RECENT DEVELOPMENTS" cannot be
specifically determined at this time due to variables associated with the scope
and timing of implementation of these contracts and agreements, the Company
estimates that it will require approximately $350 million in additional funding
during 1998 to satisfy its obligations related to the items described in "RECENT
DEVELOPMENTS" as well as other potential transactions contemplated by the
Company.
During 1998, the Company has received approximately $12.4 million in proceeds
from the sale of its Series B Convertible Preferred Stock and $900,000 from the
sale of its common stock. In addition, the Company successfully increased its
lease financing facility to $13 million for the purchase of additional
infrastructure equipment. These proceeds and financial resources, while
significant, will be insufficient to enable the Company to meet its obligations
pursuant to the business relationships into which it has entered. Further, the
Company does not currently generate positive cash flow and will not do so until
it has completed a significant portion of its global network development and has
implemented its sales and marketing strategy. As such, the Company will be
required to seek additional financing in order to implement its business plan
and to meet its obligations pursuant to the business relationships into which it
has entered. Accordingly, the Company has recently signed an advisory agreement
with a Wall Street investment-banking firm, pursuant to which the investment
banker intends to advise the Company with regard to future financing options;
however, there can be no assurance that the Company will be able to obtain the
additional financing it requires on reasonable terms, if at all.
Year 2000 Issue
The Year 2000 issue exists because many computer systems and applications
currently use two-digit fields to designate a year. As the century date change
occurs, date-sensitive systems will recognize the year 2000 as 1900 or not at
all. The inability to recognize or properly treat the Year 2000 may cause
systems to process critical financial and operational information incorrectly.
The Company's management has assessed the impact of the Year 2000 issue on the
Company's computer hardware and software systems. Based on this assessment,
management currently believes that the costs of resolving the Year 2000 issues
will not be material to the Company's results of operations or financial
condition.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is involved in various lawsuits or claims arising
from the normal course of business. In the opinion of management, none of these
lawsuits or claims will have a material adverse effect on the financial
statements or results of operations of the Company.
On April 17, 1998, the Company was served with a summons and complaint from MC
Liquidating Corporation f/k/a MIDCOM Communications, Inc. ("MIDCOM"). Both the
Company and Telenational Communications, Inc., its wholly-owned subsidiary are
named as defendants, as are Telenational Communications Limited Partnership, the
entity from which the Company acquired the TNC operations in June 1997 ("TCLP")
and Edmund Blankenau, a principal of TCLP and a director of the Company. In its
complaint, filed on April 8, 1998 in the U.S. Bankruptcy Court for the Eastern
District of Michigan, Southern Division, MIDCOM seeks payment of over $600,000
for services allegedly provided to TCLP and the Company, together with other
damages, attorney fees and costs. The Company is attempting to negotiate an
extension to its time to respond to this complaint.
On April 13, 1998, John Dalton, a director and the former President and Chief
Executive Officer of the Company ("Dalton") filed a complaint in the District
Court of Harris County Texas against the Company, MBCP, Paul A. Moore, the
Chairman of the Company's Board of Directors and the Company's Chief Executive
Officer, Phillip S. Magiera, a director and the Chief Financial Officer and
Secretary of the Company, Dan Wickersham, the President and Chief Operating
Officer of the Company and Theodore H. Swindells, a principal of MBCP
(collectively, the "Defendants"). Dalton's employment as President and Chief
Executive Officer of the Company was terminated effective April 6, 1998. The
complaint alleges, among other things, breach of contract, tortious interference
and breach of fiduciary duties in connection with the Company and the
termination of Dalton's employment. Dalton is seeking unspecified damages from
the Defendants as well as attorneys fees, expenses and interest.
The Company believes that the allegations in the complaint are without merit and
the Defendants, including the Company, intend to vigorously defend the action.
Further, the Company has notified Dalton of its intention to seek rescission of
the WWC Acquisition and the cancellation of all shares of the Company's capital
stock previously issued to Dalton, since the Company believes that the WWC
Acquisition was induced by fraud. The Company has sent to Dalton a Demand for
Arbitration pursuant to the Merger Agreement executed by. Dalton, WWC, the
Company and WorldPort Acquisition, Inc. and the Employment Agreement between
Dalton and the Company, as provided by such agreements.
ITEM 2. CHANGES IN SECURITIES
The following securities have been issued or sold without registration under the
Securities Act of 1933, as amended, (the "SECURITIES ACT") during the three
months ended March 31, 1998. The sales described below were to "accredited
investors" as defined in Regulation D promulgated under the Securities Act and
were exempt under Section 4(2) of the Securities Act:
During the first quarter of 1998, the Company initiated a private placement
offering of its Series B Convertible Preferred Stock (the "SERIES B PREFERRED
STOCK OFFERING") at $5.36 per share. The Series B Convertible Preferred Stock
is convertible into shares of the Company's common stock at any time at the
option of the holder at a rate of 4 shares of common stock for each share of
preferred stock. Holders of Series B Convertible Preferred Stock have voting
rights equal to 40 votes per share on all matters submitted to a vote of the
stockholders of the Company. No public market exists for the Company's Series B
Convertible Preferred Stock and none is expected to develop as a result of the
Series B Preferred Stock Offering. As of May 12, 1998, the Company has received
approximately $12.4 million in proceeds from the sale of the Series B
Convertible Preferred Stock and has converted approximately $1.2 million of
notes payable and accrued interest into the Series B Convertible Preferred Stock
in exchange for an aggregate of 2,539,345 shares of the Company's Series B
Convertible Preferred Stock. The Company is continuing to offer its Series B
Convertible Preferred Stock to accredited investors.
In May 1998, the Company sold 180,000 shares of its common stock at a price of
$5.00 per share to an accredited investor in a private placement transaction.
In connection with the WorldPort Europe Acquisition in February 1998, the
Company issued 150,000 shares of the Company's common stock to the seller.
Additionally, in connection with the acquisition of the assets and operations of
IX in April 1998, the company issued 400,000 shares of its common stock to ICX
(of which 200,000 shares will be held pursuant to an escrow agreement for a
period of eighteen months following the closing subject to the attainment of
certain future revenue requirements and to indemnify the Company for certain
representations and warranties.)
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company has made none of the scheduled payments on its note to Value
Partners. As of May 12, 1998, Value Partners has not demanded payment on the
note. The Company is currently negotiating with Value Partners to restructure
this obligation on more favorable terms to the Company; however, no assurance
can be given that the Company will be able to restructure this obligation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
Exhibit No. Description
4.1 Certificate of Designation,
Preferences and Rights of Series B
Convertible Preferred Stock of the
Company dated March 6, 1998.
10.1 Employment Agreement by and between
Phillip S. Magiera and the Company
dated January 1, 1998.
10.1(a) Amendment No. 1, dated as of March
31, 1998, to the Employment Agreement
by and between Phillip S. Magiera and
the Company dated January 1, 1998.
10.2 Employment Agreement by and between
Paul A. Moore and the Company dated
January 1, 1998.
10.2(a) Amendment No. 1, dated as of March
31, 1998, to the Employment Agreement
by and between Paul A. Moore and the
Company dated January 1, 1998.
10.3 Employment Agreement by and between
Bahman Zolfagharpour and WorldPort
Communications Europe dated
February 4, 1998.
10.4 Employment Agreement by and between
Daniel G. Lazarek and the Company
dated February 16, 1998.
10.5 Employment Agreement by and between
Daniel M. Wickersham and the Company
dated February 18, 1998.
10.6 Employment Agreement by and between
Jim Hendrickson and the Company dated
February 27, 1998.
10.7 Employment Agreement by and between
James M. Sever and the Company dated
February 27, 1998.
10.8 Employment Agreement by and between
Donald C. Wright and the Company
dated February 27, 1998.
10.9 Employment Agreement by and between
Thomas J. Bruner and the Company
dated March 23, 1998.
10.10 Employment Agreement by and between
Christopher Canfield and the Company
dated March 23, 1998.
Exhibit No. Description
10.11 Sale and Transfer of Shares in the
Capital of MathComp B. V. dated
February 13, 1998.
27.1 Financial Data Schedule
Reports on Form 8-K
No Current Reports on Form 8-K were filed during the period covered by this
Report.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WORLDPORT COMMUNICATIONS, INC.
Date: May 14, 1998 By: /s/ Phillip S. Magiera
Phillip S. Magiera
Chief Financial Officer and Secretary
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
WORLDPORT COMMUNICATIONS, INC.
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
WorldPort Communications, Inc., a Corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of Section 103 thereof, and
pursuant to Section 151 thereof, DOES HEREBY CERTIFY:
1. That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation") and under the provisions of Section 151 of
the General Corporation Law of the State of Delaware, on March 3, 1998, the
Board of Directors adopted the following resolution creating a series of
preferred stock, $0.0001 par value per share ("Preferred Stock"), designated
as Series B Convertible Preferred Stock:
"RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the
Corporation's Certificate of Incorporation, a series of Preferred Stock
of the Corporation be, and it hereby is, authorized and created, and
that the designation and amount thereof and the voting powers,
preferences and relative, participating, optional or other special
rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as follows:
Section 1. Designation: Series, Amount and Ranking. The shares of
the series of Preferred Stock established hereby shall be designated
"Series B Convertible Preferred Stock" (such shares being hereafter
called the "Series B Preferred Stock"), and the number of shares
constituting such series shall be 3,000,000 which shares shall have a
par value of $0.0001 per share and a stated value of $5.36 per share
(the "Stated Value"). The Series B Preferred Stock shall rank on a
parity with the shares of Series A Preferred Stock and prior to the
Corporation's Common Stock, as to the payment of dividends and
distribution of assets upon liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary.
Section 2. Dividends and Distributions.
(a) The Corporation shall not declare or pay or set apart for
payment any dividends or make any other distributions on, or make
any payment on account of the purchase, redemption or other
retirement of any other class of stock or series thereof of the
Corporation ranking, as to dividends or as to distributions in the
event of a liquidation, dissolution or winding up of the
Corporation, junior to the Series B Preferred Stock, including the
Corporation's Common Stock, (collectively, "Junior Stock") unless,
prior to the payment of such dividends or other payments the
Corporation first declares and pays a dividend equal to 7% of the
Stated Value (the "Series B Preferred Dividends") to the holders of
shares of the Series B Preferred Stock. Notwithstanding anything
to the contrary contained herein, the foregoing shall not apply to
(i) any dividend payable solely in any shares of any Junior Stock;
or (ii) the acquisition of shares of any Junior Stock either (A)
pursuant to any employee incentive or benefit plan or arrangement
(including any employment agreement) of the Corporation or of any
subsidiary of the Corporation heretofore or hereafter adopted or
(B) in exchange solely for shares of any other Junior Stock. The
Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire any shares of capital stock of the
Corporation unless the Corporation could, pursuant to this
paragraph, purchase such shares at such time and in such manner.
(b) Series B Preferred Dividends shall be paid in cash on or
prior to the date dividends are paid on the corporation's Common
Stock (the "Dividend Payment Date"). The Series B Preferred
Dividends are not cumulative and no interest shall accrue with
respect to the Series B Preferred Stock.
(c) Series B Preferred Dividends shall be payable to holders
of record as they appear on the books of the Corporation or any
transfer agent on a Series B Dividend Payment Date.
(d) No Series B Dividends shall be declared or paid or set
apart for payment unless dividends have been or contemporaneously
are declared or paid or set apart for payment on the Series A
Preferred Stock or any other series of stock ranking on a parity
with the Series B Preferred Stock as to dividends (collectively,
"Parity Stock").
Section 3. Voting Rights.
(a) Each holder of record of Series B Preferred Stock shall
be entitled to vote on all matters submitted to a vote of the
stockholders of the corporation, voting together with the holders
of Common Stock as a single class. Each holder of record of each
share of Series B Preferred Stock shall be entitled to that forty
(40) votes per share of Series B Preferred Stock.
(b) At all times during which at least 1,000,000 shares of
Series B Preferred Stock are outstanding, the corporation will not,
without the approval of holders of at least a majority of the
shares of Series B Preferred Stock then outstanding, voting
together as a class, (A) issue any securities which will, with
respect to dividend rights or rights on liquidation, winding up and
dissolution, rank senior to the Series B Preferred Stock, or any
obligation or security convertible into or evidencing the right to
purchase any securities senior to the Series B Preferred Stock; (B)
alter, amend or repeal any provision of the Certificate of
Incorporation of the corporation (including any such alteration,
amendment or repeal effected by any merger or consolidation), if
such amendment, alteration or repeal would alter or change the
powers, preferences or special rights with respect to the shares of
Series B Preferred Stock in a manner adverse to the holders
thereof; or (C) alter, amend or modify this Section 3.
Section 4. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary (a "Liquidation"),
before any distribution or payment shall be made to the holders of
any Junior Stock, the holders of Series B Preferred Stock shall be
entitled to be paid out of the assets of the Corporation an amount
per share of Series B Preferred Stock equal to the sum of $5.36
plus all declared but unpaid Series B Preferred Dividends (the
"Liquidation Preference"). After the payment of the full
Liquidation Preference, the holders of the Series B Preferred Stock
shall not be entitled to any further participation in any
distribution of assets of the Corporation.
(b) Neither the merger or consolidation of the Corporation
with or into any other corporation, nor the merger or consolidation
of any other corporation with or into the Corporation, nor the
sale, lease, exchange or other transfer of all of or any portion of
the assets of the Corporation, shall be deemed to be a Liquidation
for purposes of this Section 4.
(c) If upon any Liquidation the Liquidation Preference is not
paid in full to all holders of Series B Preferred Stock, the
holders of Series B Preferred Stock shall share ratably in any such
distribution with all holders of Series A Preferred Stock or shares
of other preferred stock ranking on a parity with the shares of
Series B Preferred Stock as to the distribution of assets, in
proportion to the full distributable amounts to which holders of
all such parity shares are entitled upon such distribution of
assets.
Section 5. Conversion.
(a) Optional Conversion. Subject to and in compliance with
the provisions of this Section 5, any shares of Series B Preferred
Stock may, at the option of the holder and without any payment of
consideration, be converted at any time into fully-paid and
nonassessable shares of Common Stock.
In the event that a holder of Series B Preferred Stock desires
to convert its Series B Preferred Stock into shares of Common
Stock, such holder shall surrender the certificate of certificates
therefor, duly endorsed, at the office of the Corporation or any
transfer agent for the Series B Preferred Stock, and shall give
written notice to the Corporation at such office that such holder
elects to convert the same. Such notice shall state the number of
shares of Series B Preferred Stock being converted. Thereupon, the
Corporation shall promptly issue and deliver at such office to such
holder a certificate or certificates for the number of shares of
Common Stock to which such holder is entitled and shall promptly
pay in cash or, to the extent sufficient funds are not then legally
available therefor, in Common Stock (at the Common Stock's fair
market value determined by the Board of Directors as of the date of
such conversion), any declared but unpaid Series B Preferred
Dividends on the shares of Series B Preferred Stock being
converted. Such conversion shall be deemed to have been made at
the close of business on the date of such surrender of the
certificates representing the shares of Series B Preferred Stock to
be converted, and the person entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder of such shares of Common Stock on
such date.
(b) Mandatory Conversion. Upon the conversion of at least
70% of the Series B Preferred Stock originally issued by the
Corporation, each outstanding share of Series B Preferred Stock
shall, without any action on the part of the Corporation or the
holders of Series B Preferred Stock, be automatically converted
into shares of Common Stock. All such outstanding shares of Series
B Preferred Stock shall be deemed converted effective upon the date
on which at least 70% of the originally issued Series B Preferred
Stock is converted, and thereafter each certificate for Series B
Preferred Stock outstanding shall be deemed to represent the number
of shares of Common Stock into which it has been converted.
Nevertheless, each holder of Series B Preferred Stock shall
thereafter surrender its certificates for shares of Series B
Preferred Stock for conversion in accordance with Section 5(a)
above.
(c) Conversion Rate. The number of shares of Common Stock to
which a holder of Series B Preferred Stock shall be entitled upon
conversion (whether optional or mandatory) shall be the product
obtained by multiplying the "Series B Preferred Stock Conversion
Rate" then in effect (determined as provided in Section 5(d)) by
the number of shares of Series B Preferred Stock being converted.
The conversion rate in effect at any time for conversion of the
Series B Preferred Stock (the "Series B Preferred Stock Conversion
Rate") shall be the quotient obtained by dividing $5.36 by the
"Series B Preferred Stock Conversion Price."
(d) Conversion Price. The conversion price (the "Series B
Preferred Stock Conversion Price") for the Series B Preferred Stock
shall initially be $1.34. The Series B Preferred Stock Conversion
Price shall be adjusted from time to time in accordance with this
Section 5. All references to the Series B Preferred Stock
Conversion Price herein shall mean the such conversion price as so
adjusted from time to time.
(e) Series B Preferred Stock No Longer Outstanding. Upon
conversion, of shares of Series B Preferred Stock, such shares
shall no longer be deemed to be outstanding and all rights of the
holders thereof as Series B Preferred Stockholders of the
Corporation shall cease.
(f) Adjustments for Stock Splits and Dividends. In the event
the Corporation shall, at any time or from time to time while any
of the shares of Series B Preferred Stock are outstanding, (i) pay
a dividend or make a distribution with respect to Common Stock in
shares of Common Stock, (ii) subdivide or split its outstanding
shares of Common Stock into a larger number of shares, or (iii)
combine its outstanding shares of Common Stock into a smaller
number of shares, in each case whether by reclassification of
shares, recapitalization of the Corporation or otherwise, the
Series B Preferred Stock Conversion Price in effect immediately
prior thereto shall be adjusted by multiplying the Series B
Preferred Stock Conversion Price by a fraction, the numerator of
which is the number of shares of Common Stock outstanding
immediately before such event, and the denominator of which is the
number of shares of Common Stock outstanding immediately after such
event. Such adjustment shall become effective at the opening of
business on the Business Day next following the record date for
determination of stockholders entitled to receive such dividend or
distribution in the case of a dividend or distribution, and shall
become effective immediately after the effective date in case of a
subdivision, split, combination or reclassification; and any shares
of Common Stock issuable in payment of a dividend shall be deemed
to have been issued immediately prior to the close of business on
the record date for such dividend.
(g) Adjustments for Merger, etc. If there shall occur a
merger or consolidation of the Corporation with or into another
entity, any merger or consolidation of another entity into the
Corporation (other than a merger or consolidation that does not
result in any conversion, exchange or cancellation of outstanding
shares of Common Stock), any sale or transfer of all or
substantially all of the assets of the Corporation or any
compulsory share exchange that results in the conversion or
exchange of the Common Stock into, or the right to receive, other
securities or other property (whether of the Corporation or any
other entity), then the Series B Preferred Stock will thereafter no
longer be convertible into shares of Common Stock, but instead will
be convertible into the kind and amount of securities or other
property which the holder of such shares of Series B Preferred
Stock would have owned immediately after such merger,
consolidation, sale or share exchange if such shares of Series B
Preferred Stock had been converted into shares of Common Stock
immediately before the effective time of such merger,
consolidation, sale or share exchange. If this paragraph (g)
applies, then no adjustment in respect of the same merger,
consolidation, sale or share exchange shall be made pursuant to the
other provisions of this Section. In the event that at any time,
as a result of an adjustment made pursuant to this paragraph (g),
the Series B Preferred Stock shall become subject to conversion
into any securities other than shares of Common Stock, thereafter
the number of such other securities so issuable upon conversion of
the shares of Series B Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions contained in this
Section 5.
(h) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of Series B Preferred Stock. All
shares of Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series B Preferred Stock by a
holder thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of any fractional share,
the Corporation shall, in lieu of issuing any fractional share, pay
cash equal to the product of such fraction multiplied by the Common
Stock's fair market value (as determined by the Board) on the date
of conversion.
(i) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the shares of the Series B
Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all
outstanding shares of the Series B Preferred Stock. If at any time
the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding
shares of the Series B Preferred Stock, the Corporation will take
such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such
purpose.
(j) Payment of Taxes. The Corporation will pay all taxes
(other than taxes based upon income) and other governmental charges
that may be imposed with respect to the issue or delivery of shares
of Common Stock upon conversion of shares of Series B Preferred
Stock, excluding any tax or other charge imposed in connection with
any transfer involved in the issue and delivery of shares of Common
Stock in a name other than that in which the shares of Series B
Preferred Stock so converted were registered.
Section 7. Notices.
Any notice required by the provisions hereof shall be in
writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed
telex or facsimile, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage
prepaid, or (iv) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with
written verification of receipt. All notices shall be addressed to
the Corporation at its principle office and to each holder of
record at the address of such holder appearing on the books of the
Corporation.
* * *
IN WITNESS WHEREOF, WorldPort Communications, Inc. has caused this
Certificate of Designations, Preferences and Rights to be duly executed by
its Chairman and Chief Executive Officer and attested by its Secretary, this
___ day of March, 1998.
WORLDPORT COMMUNICATIONS, INC.
By:
Paul A. Moore
Chairman and Chief Executive Officer
ATTEST:
Phillip S. Magiera, Secretary
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of January 1, 1998 by and between WorldPort Communications, Inc. a Delaware
Corporation ("WorldPort" or the "Company"), and Mr. Phillip S. Magiera
(hereinafter referred to as the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to have the benefit of the Executive's
efforts and services;
WHEREAS, the Executive is willing to commit himself to serve the
Company, on the terms and conditions herein provided; and
WHEREAS, in order to effect the foregoing, the Company and the Executive
wish to enter into an employment agreement on the terms and conditions set
forth below.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
1. DEFINITIONS.
Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
(a) "ACCRUED BENEFITS" shall mean the amount payable not
later than ten (10) days following an applicable Termination Date, which
shall be equal to the sum of the following amounts:
(i) All salary earned or accrued through the Termination
Date;
(ii) Reimbursement for any and all monies advanced in
connection with the Executive's employment for reasonable and
necessary expenses incurred by the Executive through the
Termination Date;
(iii) Any and all other cash benefits previously
earned through the Termination Date and deferred at the election of
the Executive or pursuant to any deferred compensation plans then
in effect;
(iv) All other payments and benefits to which the
Executive may be entitled under the terms of any benefit plan of
the Company or otherwise, including, but not limited to, any bonus
declared by the Board, any compensation for earned, but unused,
vacation days, and any unpaid automobile allowance.
(b) "AFFILIATE" shall have the same meaning as given to that
term in Rule 12b-2 of Regulation 12B promulgated under the Securities
Exchange Act of 1934, as amended.
(c) "BOARD" shall mean the Board of Directors of the Company
(d) "DISABILITY" shall mean a physical or mental condition
whereby the Executive is unable to perform on a full-time, continuous
basis the customary duties of the Executive under this Agreement.
(e) "NOTICE OF TERMINATION" shall mean the notice described
in Section 9 hereof;
(f) "TERMINATION DATE" shall mean, except as otherwise
provided in Section 8 hereof,
(i) The Executive's date of death;
(ii) Thirty (30) days after the delivery of the Notice of
Termination terminating the Executive's employment on account of
Disability pursuant to Subsection 8(b) hereof, unless the Executive
returns on a full-time basis to the performance of Executive's
duties prior to the expiration of such period;
(iii) Thirty (30) days after the delivery of the
Notice of Termination if the Executive's employment is terminated
by the Executive voluntarily; and
(iv) Fifteen (15) days after the delivery of the Notice
of Termination if the Executive's employment is terminated by the
Company for any reason other than death or Disability.
2. EMPLOYMENT.
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.
3. TERM.
The Company's employment of the Executive under the provisions of this
Agreement shall commence on the date hereof and end on the second anniversary
of the Closing, unless further extended or sooner terminated as hereinafter
provided. On the second anniversary of the Closing and on the last day of
January of each year thereafter, the term of the Executive's employment
shall, unless sooner terminated as hereinafter provided, be automatically
extended for an additional one year period from the date thereof unless, at
least thirty (30) days before 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 beyond its existing duration.
4. POSITIONS AND DUTIES.
The Executive shall serve as Chief Financial Officer of WorldPort
Communications, Inc. and in such additional capacities as may be reasonably
assigned to the Executive by the Board. In his capacity as Chief Financial
Officer of the Company, the Executive shall have such duties,
responsibilities and authority as are usual and customary for executives who
hold the same or a substantially similar position with companies of
comparable size in the same industry as the Company. In connection with any
capacities, the Executive shall have such duties, responsibilities and
authority as may from time to time be reasonably assigned to the Executive by
the Board. The Executive shall devote substantially all the Executive's
working time and efforts to the business and affairs of the Company.
5. PLACE OF PERFORMANCE.
In connection with the Executive's employment by the Company, the
Executive shall be based in Boston, Massachusetts except for required travel
on Company business, and except as otherwise agreed-to between the Executive
and the Company.
6. COMPENSATION AND RELATED MATTERS.
(a) Commencing on the date hereof, and during Executive's
employment, the Company shall pay to the Executive an annual salary of
$240,000 per annum payable at a rate of $16,666 per month for the first
12 months ($19,166 for the second 12 months) and $3,333 per month, in
accrual, for the first 12 months ($3,833 for the second 12 months) for
the purchase of shares in the Company, at a share price of $2.00, up to
a maximum of 108,000 shares. The Board, in its sole discretion, may
increase the annual salary of the Executive based upon satisfactory
performance and the Executive's salary may be increased from time to
time in accordance with normal business practices of the Company at the
full discretion of the Board.
(b) During the Executive's employment, the Executive shall
receive an annual performance bonus equal to 50% of the Executive's
monthly salary.
(c) During the Executive's employment hereunder, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in performing services
hereunder, including all business, travel, and living expenses while
away from home on business or at the request of and in the service of
the Company, provided that such expenses are incurred and accounted for
in accordance with the Company's policies and procedures.
(d) The Executive shall be entitled to the number of vacation
days in each calendar year, and to compensation for earned but unused
vacation days, determined in accordance with the Company's vacation plan
or policy. The Executive shall also be entitled to all paid holidays
provided by the Company to its other executives.
(e) The Executive shall be entitled to such other benefits,
including, but not limited to, medical insurance, life insurance, and
disability insurance determined in accordance with the Company's benefit
plan or policy.
(f) Commencing on the date hereof, the Executive shall be granted
500,000 (five hundred thousand) shares of the Company's common stock
under the Company's Long Term Incentive Plan.
(g) During the Executive's employment, the Executive shall receive a
monthly car allowance of $400.
7. OFFICES.
The Executive agrees to serve without additional compensation, if
elected or appointed thereto, as a member of the Board or as a member of the
board of directors of any subsidiary of the Company; provided, however, that
the Executive is indemnified for serving in any and all such capacities to
the fullest extent provided by applicable law.
8. TERMINATION
(a) As a result of death: If the Executive shall die during
the term of this Agreement, the Executive's employment shall terminate
on the Executive's date of death, and the Executive's surviving spouse,
or the Executive's estate if the Executive dies without a surviving
spouse, shall be entitled to the Executive's Accrued Benefits as of the
Termination Date.
(b) As a result of Disability: If, as a result of the
Executive's Disability, the Executive shall have been unable to perform
the Executive's duties hereunder on a full-time, continuous basis for
two (2) consecutive months or for an aggregate of three (3) months
within any twelve (12) month period and if within thirty (30) days after
the Company provides the Executive with a Termination Notice, the
Executive shall not have returned to the performance of the Executive's
duties on a full-time basis, the Company may terminate the Executive's
employment, subject to Section 9 hereof. During the term of the
Executive's Disability prior to termination, the Executive shall
continue to receive all salary and benefits payable under Section 6
hereof, including participation in all employee benefit plans, programs,
and arrangements in which the Executive was entitled to participate
immediately prior to the Disability; provided, however, that the
Executive's continued participation is permitted under the terms and
provisions of such plans, programs, and arrangements. In the event that
the Executive's participation in any such plan, program, or arrangement
is barred as the result of such Disability, the Executive shall be
entitled to receive an amount equal to the contributions, payments,
credits, or allocations which would have been paid by the Company to the
Executive, to the Executive's account, or on the Executive's behalf
under any such plan, program, or arrangement. In the event the
Executive's employment is terminated on account of the Executive's
Disability in accordance with this Section 8, the Executive shall
receive the Executive's Accrued Benefits as of the Termination Date and
shall remain eligible for all benefits provided by any long-term
disability program of the Company in effect at the time of such
termination. The payment of the Accrued Benefits by the Company to the
Executive shall be in addition to, and not in lieu of, any benefits
payable by reason of the Executive's Disability to the extent provided
under any long-term disability program of the Company in effect at the
time of the Executive's termination, or under any disability insurance
policy, or otherwise.
(c) Termination Without Cause: Either party to this Agreement
may terminate the Executive's employment hereunder without cause at any
time upon notice to the other party, and upon any such termination, the
Executive shall be entitled to receive his Accrued Benefits. In the
event that the Company terminates the Executive's employment pursuant to
this Subsection 8(c), the Executive shall receive from the Company on
the Termination Date a lump-sum cash payment (the "Severance Payment"),
as severance, in an amount equal to one hundred percent (100%) of the
greater of (i) the Executive's annual salary at the time of such
termination, or (ii) the Executive's annual salary, as set forth in
Subsection 6(a) hereof.
(d) Termination as a result of cause. The Company may terminate
the Executive for cause, upon the occurrence of any one or more of the
following acts or omissions:
(i) The determination in a binding and final judgment, order,
or decree by a court or administrative agency of competent
jurisdiction, that the Executive has engaged in fraudulent conduct,
and the determination by the Board, in its sole discretion, that
such fraudulent conduct has a significant adverse impact on the
Company;
(ii) The conviction of the Executive on a felony or
misdemeanor involving moral turpitude (as evidenced by a binding
and final judgment, order, or decree of a court of competent
jurisdiction) and the determination by the Board, in its sole
discretion, that such conviction has a significant adverse impact
on the Company;
(iii) The refusal by the Executive to perform the
Executive's duties or responsibilities (unless significantly
changed without the Executive's consent) and after notice from the
Company to the Executive, the Executive's continuing refusal to
perform his duties or responsibilities during the 48-hour period
following the giving of such notice;
(iv) The performance by the Executive of his duties or
responsibilities in a manner constituting gross negligence (unless
such duties or responsibilities have been significantly changed
without the Executive's consent).
(v) In the event of termination for cause, as set forth above,
the Executive will be entitled to receive his Accrued Benefits, but
will not be entitled to the Severance Payment, except as otherwise
provided by Delaware law.
9. TERMINATION NOTICE.
Any termination by the Company or the Executive of the Executive's
employment hereunder shall be communicated by written Notice of Termination
to the Executive, if such Notice of Termination is delivered by the Company,
and to the Company, if such Notice of Termination is delivered by the
Executive. The Notice of Termination shall indicate the specific termination
provision in this Agreement relied upon and shall set forth the Termination
Date.
10. NONDISCLOSURE OF PROPRIETARY INFORMATION.
Recognizing that the Company is presently engaged, and may hereafter
continue to be engaged, in the research and development of processes, the
manufacturing of products, or the performance of services, which involve
experimental and inventive work and that the success of its business depends
upon the protection of such processes, products, and services by patent,
copyright, or secrecy and that the Executive has had, or during the course of
Executive's engagement as an employee or consultant may have, access to
Proprietary Information, as hereinafter defined, of the Company and that the
Executive has furnished, or during the course of the Executive's engagement
may furnish, Proprietary Information to the Company, the Executive agrees
that:
(a) "Proprietary Information" shall mean any and all methods,
inventions, improvements or discoveries, whether or not patentable or
copyrightable, and any other information of a secret, proprietary,
confidential, or generally undisclosed nature relating to the Company,
its products, customers, processes, and services, including information
relating to testing research, development, manufacturing, marketing, and
selling, disclosed to the Executive or otherwise made known to the
Executive as a consequence of or through the Executive's engagement by
the Company (including information originated by the Executive) in any
technological area previously developed by the Company or developed,
engaged in, or researched, by the Company during the term of the
Executive's engagement, including, but not limited to, trade secrets,
processes, products, formulae, apparatus, techniques, know-how,
marketing plans, data, improvements, strategies, forecasts, customer
lists, and technical requirements of customers, unless such information
is in the public domain to such an extent as to be readily available to
the Company's competitors.
(b) The Executive acknowledges that the Company has exclusive
property rights to all Proprietary Information, and the Executive hereby
assigns all rights that the Executive might otherwise possess in any
Proprietary Information to the Company. Except as required in the
performance of the Executive's duties to the Company, the Executive will
not at any time during or after the term of the Executive's engagement,
which term shall include any time in which the Executive may be retained
by the Company as a consultant, directly or indirectly use, communicate,
disclose, or disseminate any Proprietary Information.
(c) All documents, records, notebooks, notes, memoranda, and
similar repositories of, or containing, Proprietary Information made or
compiled by the Executive at any time or made available to the Executive
prior to or during the term of Executive's engagement by the Company,
including any and all copies thereof, shall be the property of the
Company, shall be held by the Executive in trust solely for the benefit
of the Company, and shall be delivered to the Company by the Executive
on the termination of the Executive's engagement or at any other time on
the request of the Company.
(d) The Executive will not assert any rights under any
inventions, copyrights, discoveries, concepts, or ideas, or improvements
thereof, or know-how related thereto, as having been made or acquired by
the Executive prior to the Executive's being engaged by the Company or
during the term of the Executive's engagement if based on or otherwise
related to Proprietary Information.
11. ASSIGNMENT OF INVENTIONS.
(a) For purposes of this Section 11, the term "Inventions"
shall mean discoveries, concepts, and ideas, whether patentable or
copyrightable or not, including, but not limited to, improvements, know-
how, data, processes, methods, formulae, and techniques, as well as
improvements thereof, or know-how related thereto, concerning any past,
present, or prospective activities of the Company, which the Executive
makes, discovers, or conceives (whether or not during the hours of the
Executive's engagement or with the use of the Company's facilities,
materials, or personnel), either solely or jointly with others during
the Executive's engagement by the Company or any Affiliate of the
Company and, if based on or related to Proprietary Information, at any
time after termination of such engagement. All Inventions shall be the
sole property of the Company, and the Executive agrees to perform the
provisions of this Section 11 with respect thereto without the payment
by the Company of any royalty or any consideration therefor, other than
the regular compensation paid to the Executive in his capacity of as an
employee or consultant.
(b) The Executive shall maintain written notebooks in which
the Executive shall set forth, on a current basis, information as to the
Inventions, describing in detail the procedures employed and the results
achieved, as well as information as to any studies or research projects
undertaken on the Company's behalf. The written notebooks shall at all
times be the property of the Company and shall be surrendered to the
Company upon termination of the Executive's engagement or, upon request
of the Company, at any time prior thereto.
(c) The Executive shall apply, at the Company's request and
expense, for United States and foreign letters patent or copyrights,
either in the Executive's name or otherwise as the Company shall desire.
(d) The Executive hereby assigns to the Company all of the
Executive's rights to the Inventions and to applications for United
States and/or foreign letters patent or copyrights and to United States
and/or foreign letters patent or copyrights granted in respect of the
Inventions.
(e) The Executive shall acknowledge and deliver promptly to
the Company, without charge to the Company, but at its expense, such
written instruments (including applications and assignments) and do such
other acts, such as giving testimony in support of the Executive's
inventorship, as may be necessary in the opinion of the Company to
obtain, maintain, extend, reissue, and enforce United States and/or
foreign letters patent and copyrights relating to the Inventions and to
vest the entire right and title thereto in the Company or its nominee.
The Executive acknowledges and agrees that any copyright developed or
conceived of by the Executive during the term of the Executive's
employment which is related to the business of the Company shall be a
"work for hire" under the copyright law of the United States and other
applicable jurisdictions.
(f) The Executive represents that the Executive's performance
of all of the terms of this Agreement and as an employee of or
consultant to the Company does not and will not breach any trust
existing prior to the Executive's employment by the Company. The
Executive agrees not to enter into any agreement, either written or
oral, in conflict herewith and represents and agrees that the Executive
has not brought and will not bring with the Executive to the Company or
use in the performance of the Executive's responsibilities at the
Company any materials or documents of a former employer which are not
generally available to the public, unless the Executive has obtained
written authorization from the former employer for their possession and
use, and the Executive has provided a copy of such written authorization
to the Company.
(g) No provision of this Section 11 shall be deemed to limit
the restrictions applicable to the Executive under Section 10 hereof.
12. SHOP RIGHTS.
The Company shall also have the royalty-free right to use in its
business, and to make, use, and sell products, processes, and/or services
derived from any inventions, discoveries, concepts, and ideas, whether or not
patentable, including, but not limited to, processes, methods, formulas, and
techniques, as well as improvements thereof or know-how related thereto,
concerning any past, present, or prospective activities of the Company, which
are not within the scope of Inventions as defined in Section 11 hereof, but
which are conceived or made by the Executive during the period that the
Executive is engaged by the Company with the use or assistance of the
Company's facilities, materials, or personnel.
13. NON-COMPETE.
The Executive hereby agrees that during the Executive's employment, and
for a period of six months from the termination thereof, the Executive will
not, without the written consent of the Company:
(a) Within any jurisdiction or marketing area in which the
Company or any subsidiary thereof is doing business, own, manage,
operate, or control any Business, provided, however, that for purposes
of this Subsection 13(a), ownership of securities of not in excess of
five percent (5%) of any class of securities of a public company shall
not be considered as owning, managing, operating, or controlling any
Business; or
(b) Within any jurisdiction or marketing area in which the
Company or any subsidiary thereof is doing business, act as, or become
employed as, an officer, director, employee, consultant or agent of any
Business; or
(c) Solicit any Business for, or sell any products that are
in competition with the Company's products to, any company, which is a
customer or client of the Company or any of its subsidiaries as of the
Termination Date; or
(d) Solicit the employment of, or hire, any full time
employee employed by the Company or its subsidiaries as of the
Termination Date.
The term "Business," as used in this Section 13, shall mean any
person or entity which is an international facilities-based
telecommunications carrier or any of the services which are necessarily
provided by an international facilities-based telecommunications carrier
to its customers.
14. REMEDIES AND JURISDICTION.
(a) The Executive hereby acknowledges and agrees that a
breach of the agreements contained in Section 13 of this Agreement will
cause irreparable harm and damage to the Company, that the remedy at law
for the breach or threatened breach of the agreements set forth in
Section 13 of this Agreement will be inadequate, and that, in addition
to all other remedies available to the Company for such breach or
threatened breach (including, without limitation, the right to recover
damages), the Company shall be entitled to injunctive relief for any
breach or threatened breach of the agreements contained in Section 13 of
this Agreement.
(b) All claims, disputes and other matters in question
between the parties arising under this Agreement, except those
pertaining to Section 13 hereof, shall, unless otherwise provided
herein, be decided by arbitration in the State of Delaware in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association (including such procedures governing
selection of the specific arbitrator or arbitrators), unless the parties
otherwise agree. The Company shall pay the costs of any such
arbitration. The award by the arbitrator or arbitrators shall be final,
and judgment may be entered upon it in accordance with applicable law in
any state or federal court having proper jurisdiction.
15. INDEMNIFICATION.
The Company agrees to indemnify and hold the Executive harmless from and
against any and all losses, liabilities, or costs (including, but not limited
to, reasonable attorney's fees), which the Executive may sustain, incur, or
assume as a result of, or relative to, any allegation, claim, civil or
criminal action, proceeding, charge, or prosecution, which may be alleged,
made, instituted, or maintained against the Executive or the Company, jointly
or severally, arising out of or based upon the Executive's employment with
the Company, to the fullest extent permitted by applicable law including, but
not limited to, any injury to person(s) or damage to property or business by
reason of any cause whatsoever, regardless of whether any such injury or
damage is caused by negligence on the part of the Executive. THIS INDEMNITY
PROVISION IS INTENDED TO INDEMNIFY THE EXECUTIVE (A) AGAINST THE CONSEQUENCES
OF HIS OWN NEGLIGENCE OR FAULT, REGARDLESS OF WHETHER THE EXECUTIVE IS SOLELY
NEGLIGENT OR CONTRIBUTORILY, PARTIALLY, JOINTLY, COMPARATIVELY, OR
CONCURRENTLY NEGLIGENT WITH ANY OTHER PERSON, AND (B) AGAINST ANY LIABILITY
OF THE EXECUTIVE BASED ON APPLICABLE DOCTRINE OF STRICT LIABILITY. Not
withstanding the foregoing, the Company will not, however, indemnify the
Executive for any claims, liabilities, losses, damages or expenses that
result solely from bad faith, gross negligence or willful misconduct by the
Executive.
16. ATTORNEYS' FEES.
The Company shall reimburse the Executive for any and all costs incurred
by the Executive in connection with any legal proceedings in connection with
the Executive's rights or obligations under this Agreement, including
reasonable attorneys' fees, together with interest thereon as provided by
applicable law.
17. SUCCESSORS.
This Agreement and all rights of the Executive hereunder shall inure to
the benefit of and be enforceable by the Executive's personal or legal
representatives, estate, executors, administrators, heirs, or beneficiaries.
In the event of the Executive's death, all amounts payable to the Executive
under this Agreement shall be paid to the Executive's surviving spouse, if
the Executive dies without a surviving spouse, to the Executive's estate.
This Agreement shall inure to the benefit of, be binding upon, and be
enforceable by or against, any successor, surviving or resulting corporation,
or other entity or any assignee of the Company to which all or substantially
all of the business and assets of the Company is transferred whether by
merger, consolidation, exchange, assignment, sale, lease, or other
disposition or action.
18. ENFORCEMENT.
The provisions of this Agreement shall be regarded as divisible, and if
any of such provisions or any part hereof is declared invalid or
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or the parts hereof and
the applicability thereof shall not be affected thereby.
19. AMENDMENT OR TERMINATION.
This Agreement may not be amended or terminated during its term, except
by written instrument executed by both the Company and the Executive.
20. SURVIVABILITY.
The provisions of Sections 10, 11, 12, 13 and 15 hereof and the
provisions hereof relating to the payment of the Accrued Benefits and the
Severance Payment shall survive the termination of this Agreement.
21. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement between the Executive and
the Company with respect to the subject matter hereof and supersedes all
prior oral or written agreements, negotiations, commitments, and
understandings with respect thereto.
22. GOVERNING LAW; VENUE.
This Agreement and the respective rights and obligations of the
Executive and the Company hereunder shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
the provisions, principles, or policies thereof relating to choice of law or
conflict of laws.
23. NOTICE.
Notices given pursuant to this Agreement shall be in writing and shall
be deemed given when received, and if mailed, shall be mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, if to the Company, to:
WorldPort Communications, Inc.
9601 Katy Freeway, Suite 200
Houston, TX 77024
Tel: (713) 461-4999
with a copy to corporate counsel for the Company to:
McDermott, Will & Emory
Attn: Ellen Kollar
227 West Monroe St.
Chicago, IL 60605
312-984-6486
or to such other address as the Company shall have given to the Executive or,
if to the Executive, to:
Phillip S. Magiera
1 Colonial Road
Dover, MA 02030
508-785-2807
or to such other address as the Executive shall have given to the Company.
24. NO WAIVER.
No waiver by either party at any time of any breach by the other party
of, or any failure by the other party to comply with, any condition or
provision of this Agreement to be performed by the other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
time or at any prior or subsequent time.
25. HEADINGS.
The headings herein contained are for reference only and shall not
affect the meaning or interpretation of any provision of this Agreement.
26. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer, and the Executive has executed this
Agreement, on the date and year first above written.
THE COMPANY:
WORLDPORT COMMUNICATIONS, INC.
/s/ Paul A. Moore
Paul A. Moore
Chairman and Chief Executive Officer
EXECUTIVE:
/s/ Phillip Magiera
Phillip Magiera
AMENDMENT TO
EMPLOYMENT AGREEMENT
This Amendment (the "Amendment") is made and entered into as of the 31st
day of March, 1998 by and between WorldPort Communications, Inc., a Delaware
corporation ("WorldPort" or the "Company") and Mr. Phillip S. Magiera
("Executive") and amends that certain Employment Agreement dated as of January
1, 1998 between the Company and Executive (the "Employment Agreement").
WHEREAS, the parties desire to amend Section 6(f) of the Employment
Agreement;
WHEREAS, all capitalized terms used by not defined herein shall have the
meanings given in the Employment Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Section 6(f) of the Employment Agreement is hereby amended and
restated to read in its entirety as follows:
"(f) The Company shall issue to the Executive an aggregate of 500,000
shares (the "Shares") of the Company's Common Stock, par value $.0001
per share, in exchange for $1.33 per share. The Executive shall pay
$50,000 of the purchase price to the Company in cash and the remaining
$615,000 shall be paid to the Company by delivery by the Executive of a
promissory note. The promissory note shall accrue interest at an annual
rate of 11%, mature on January 1, 2000 and provide for monthly payments
of principal and accrued interest. The promissory note shall be secured
by a pledge to the Company of the Shares purchased by the Executive
hereby."
2. Except as otherwise amended hereby, all terms and provisions of the
Employment Agreement shall continue in full force and effect as stated therein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
WORLDPORT COMMUNICATIONS, INC.
By:
Name:
Title:
Phillip S. Magiera
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
January 1, 1998 by and between WorldPort Communications, Inc. a Delaware
Corporation ("WorldPort" or the "Company"), and Mr. Paul A. Moore (hereinafter
referred to as the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to have the benefit of the Executive's efforts
and services;
WHEREAS, the Executive is willing to commit himself to serve the Company,
on the terms and conditions herein provided; and
WHEREAS, in order to effect the foregoing, the Company and the Executive
wish to enter into an employment agreement on the terms and conditions set forth
below.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
1. DEFINITIONS.
Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
(a) "ACCRUED BENEFITS" shall mean the amount payable not later
than ten (10) days following an applicable Termination Date, which shall be
equal to the sum of the following amounts:
(i) All salary earned or accrued through the Termination
Date;
(ii) Reimbursement for any and all monies advanced in
connection with the Executive's employment for reasonable and
necessary expenses incurred by the Executive through the Termination
Date;
(iii) Any and all other cash benefits previously earned
through the Termination Date and deferred at the election of the
Executive or pursuant to any deferred compensation plans then in
effect;
(iv) All other payments and benefits to which the Executive
may be entitled under the terms of any benefit plan of the Company or
otherwise, including, but not limited to, any bonus declared by the
Board, any compensation for earned, but unused, vacation days, and any
unpaid automobile allowance.
(b) "AFFILIATE" shall have the same meaning as given to that
term in Rule 12b-2 of Regulation 12B promulgated under the Securities
Exchange Act of 1934, as amended.
(c) "BOARD" shall mean the Board of Directors of the Company
(d) "DISABILITY" shall mean a physical or mental condition
whereby the Executive is unable to perform on a full-time, continuous basis
the customary duties of the Executive under this Agreement.
(e) "NOTICE OF TERMINATION" shall mean the notice described in
Section 9 hereof;
(f) "TERMINATION DATE" shall mean, except as otherwise provided
in Section 8 hereof,
(i) The Executive's date of death;
(ii) Thirty (30) days after the delivery of the Notice of
Termination terminating the Executive's employment on account of
Disability pursuant to Subsection 8(b) hereof, unless the Executive
returns on a full-time basis to the performance of Executive's duties
prior to the expiration of such period;
(iii) Thirty (30) days after the delivery of the Notice
of Termination if the Executive's employment is terminated by the
Executive voluntarily; and
(iv) Fifteen (15) days after the delivery of the Notice of
Termination if the Executive's employment is terminated by the Company
for any reason other than death or Disability.
2. EMPLOYMENT.
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.
3. TERM.
The Company's employment of the Executive under the provisions of this
Agreement shall commence on the date hereof and end on the second anniversary of
the Closing, unless further extended or sooner terminated as hereinafter
provided. On the second anniversary of the Closing and on the last day of
January of each year thereafter, the term of the Executive's employment shall,
unless sooner terminated as hereinafter provided, be automatically extended for
an additional one year period from the date thereof unless, at least thirty (30)
days before 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 beyond its existing
duration.
4. POSITIONS AND DUTIES.
The Executive shall serve as Chairman and Chief Executive Officer of
WorldPort Communications, Inc. and in such additional capacities as may be
reasonably assigned to the Executive by the Board. In his capacity as Chairman
and Chief Executive Officer of the Company, the Executive shall have such
duties, responsibilities and authority as are usual and customary for executives
who hold the same or a substantially similar position with companies of
comparable size in the same industry as the Company. In connection with any
capacities, the Executive shall have such duties, responsibilities and authority
as may from time to time be reasonably assigned to the Executive by the Board.
The Executive shall devote substantially all the Executive's working time and
efforts to the business and affairs of the Company.
5. PLACE OF PERFORMANCE.
In connection with the Executive's employment by the Company, the Executive
shall be based in Chicago, Illinois except for required travel on Company
business, and except as otherwise agreed-to between the Executive and the
Company.
6. COMPENSATION AND RELATED MATTERS.
(a) Commencing on the date hereof, and during Executive's
employment, the Company shall pay to the Executive an annual salary of
$300,000 per annum payable at a rate of $16,666 per month for the first 12
months ($19,166 for the second 12 months) and $8,333 per month, in accrual,
for the first 12 months ($9,583 for the second 12 months) for the purchase
of shares in the Company, at a share price of $2.00, up to a maximum of
108,000 shares. The Board, in its sole discretion, may increase the annual
salary of the Executive based upon satisfactory performance and the
Executive's salary may be increased from time to time in accordance with
normal business practices of the Company at the full discretion of the
Board.
(b) During the Executive's employment, the Executive shall
receive an annual performance bonus equal to 50% of the Executive's monthly
salary.
(c) During the Executive's employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in performing services hereunder,
including all business, travel, and living expenses while away from home on
business or at the request of and in the service of the Company, provided
that such expenses are incurred and accounted for in accordance with the
Company's policies and procedures.
(d) The Executive shall be entitled to the number of vacation
days in each calendar year, and to compensation for earned but unused
vacation days, determined in accordance with the Company's vacation plan or
policy. The Executive shall also be entitled to all paid holidays provided
by the Company to its other executives.
(e) The Executive shall be entitled to such other benefits,
including, but not limited to, medical insurance, life insurance, and
disability insurance determined in accordance with the Company's benefit
plan or policy.
(f) Commencing on the date hereof, the Executive shall be granted
500,000 (five hundred thousand) shares of the Company's common stock under
the Company's Long Term Incentive Plan.
(g) During the Executive's employment, the Executive shall receive a
monthly car allowance of $400.
7. OFFICES.
The Executive agrees to serve without additional compensation, if elected
or appointed thereto, as a member of the Board or as a member of the board of
directors of any subsidiary of the Company; provided, however, that the
Executive is indemnified for serving in any and all such capacities to the
fullest extent provided by applicable law.
8. TERMINATION
(a) As a result of death: If the Executive shall die during the
term of this Agreement, the Executive's employment shall terminate on the
Executive's date of death, and the Executive's surviving spouse, or the
Executive's estate if the Executive dies without a surviving spouse, shall
be entitled to the Executive's Accrued Benefits as of the Termination Date.
(b) As a result of Disability: If, as a result of the
Executive's Disability, the Executive shall have been unable to perform the
Executive's duties hereunder on a full-time, continuous basis for two (2)
consecutive months or for an aggregate of three (3) months within any
twelve (12) month period and if within thirty (30) days after the Company
provides the Executive with a Termination Notice, the Executive shall not
have returned to the performance of the Executive's duties on a full-time
basis, the Company may terminate the Executive's employment, subject to
Section 9 hereof. During the term of the Executive's Disability prior to
termination, the Executive shall continue to receive all salary and
benefits payable under Section 6 hereof, including participation in all
employee benefit plans, programs, and arrangements in which the Executive
was entitled to participate immediately prior to the Disability; provided,
however, that the Executive's continued participation is permitted under
the terms and provisions of such plans, programs, and arrangements. In the
event that the Executive's participation in any such plan, program, or
arrangement is barred as the result of such Disability, the Executive shall
be entitled to receive an amount equal to the contributions, payments,
credits, or allocations which would have been paid by the Company to the
Executive, to the Executive's account, or on the Executive's behalf under
any such plan, program, or arrangement. In the event the Executive's
employment is terminated on account of the Executive's Disability in
accordance with this Section 8, the Executive shall receive the Executive's
Accrued Benefits as of the Termination Date and shall remain eligible for
all benefits provided by any long-term disability program of the Company in
effect at the time of such termination. The payment of the Accrued
Benefits by the Company to the Executive shall be in addition to, and not
in lieu of, any benefits payable by reason of the Executive's Disability to
the extent provided under any long-term disability program of the Company
in effect at the time of the Executive's termination, or under any
disability insurance policy, or otherwise.
(c) Termination Without Cause: Either party to this Agreement
may terminate the Executive's employment hereunder without cause at any
time upon notice to the other party, and upon any such termination, the
Executive shall be entitled to receive his Accrued Benefits. In the event
that the Company terminates the Executive's employment pursuant to this
Subsection 8(c), the Executive shall receive from the Company on the
Termination Date a lump-sum cash payment (the "Severance Payment"), as
severance, in an amount equal to one hundred percent (100%) of the greater
of (i) the Executive's annual salary at the time of such termination, or
(ii) the Executive's annual salary, as set forth in Subsection 6(a) hereof.
(d) Termination as a result of cause. The Company may terminate the
Executive for cause, upon the occurrence of any one or more of the
following acts or omissions:
(i) The determination in a binding and final judgment, order, or
decree by a court or administrative agency of competent jurisdiction,
that the Executive has engaged in fraudulent conduct, and the
determination by the Board, in its sole discretion, that such
fraudulent conduct has a significant adverse impact on the Company;
(ii) The conviction of the Executive on a felony or misdemeanor
involving moral turpitude (as evidenced by a binding and final
judgment, order, or decree of a court of competent jurisdiction) and
the determination by the Board, in its sole discretion, that such
conviction has a significant adverse impact on the Company;
(iii) The refusal by the Executive to perform the
Executive's duties or responsibilities (unless significantly changed
without the Executive's consent) and after notice from the Company to
the Executive, the Executive's continuing refusal to perform his
duties or responsibilities during the 48-hour period following the
giving of such notice;
(iv) The performance by the Executive of his duties or
responsibilities in a manner constituting gross negligence (unless
such duties or responsibilities have been significantly changed
without the Executive's consent).
(v) In the event of termination for cause, as set forth above,
the Executive will be entitled to receive his Accrued Benefits, but
will not be entitled to the Severance Payment, except as otherwise
provided by Delaware law.
9. TERMINATION NOTICE.
Any termination by the Company or the Executive of the Executive's
employment hereunder shall be communicated by written Notice of Termination to
the Executive, if such Notice of Termination is delivered by the Company, and to
the Company, if such Notice of Termination is delivered by the Executive. The
Notice of Termination shall indicate the specific termination provision in this
Agreement relied upon and shall set forth the Termination Date.
10. NONDISCLOSURE OF PROPRIETARY INFORMATION.
Recognizing that the Company is presently engaged, and may hereafter
continue to be engaged, in the research and development of processes, the
manufacturing of products, or the performance of services, which involve
experimental and inventive work and that the success of its business depends
upon the protection of such processes, products, and services by patent,
copyright, or secrecy and that the Executive has had, or during the course of
Executive's engagement as an employee or consultant may have, access to
Proprietary Information, as hereinafter defined, of the Company and that the
Executive has furnished, or during the course of the Executive's engagement may
furnish, Proprietary Information to the Company, the Executive agrees that:
(a) "Proprietary Information" shall mean any and all methods,
inventions, improvements or discoveries, whether or not patentable or
copyrightable, and any other information of a secret, proprietary,
confidential, or generally undisclosed nature relating to the Company, its
products, customers, processes, and services, including information
relating to testing research, development, manufacturing, marketing, and
selling, disclosed to the Executive or otherwise made known to the
Executive as a consequence of or through the Executive's engagement by the
Company (including information originated by the Executive) in any
technological area previously developed by the Company or developed,
engaged in, or researched, by the Company during the term of the
Executive's engagement, including, but not limited to, trade secrets,
processes, products, formulae, apparatus, techniques, know-how, marketing
plans, data, improvements, strategies, forecasts, customer lists, and
technical requirements of customers, unless such information is in the
public domain to such an extent as to be readily available to the
Company's competitors.
(b) The Executive acknowledges that the Company has exclusive
property rights to all Proprietary Information, and the Executive hereby
assigns all rights that the Executive might otherwise possess in any
Proprietary Information to the Company. Except as required in the
performance of the Executive's duties to the Company, the Executive will
not at any time during or after the term of the Executive's engagement,
which term shall include any time in which the Executive may be retained by
the Company as a consultant, directly or indirectly use, communicate,
disclose, or disseminate any Proprietary Information.
(c) All documents, records, notebooks, notes, memoranda, and
similar repositories of, or containing, Proprietary Information made or
compiled by the Executive at any time or made available to the Executive
prior to or during the term of Executive's engagement by the Company,
including any and all copies thereof, shall be the property of the Company,
shall be held by the Executive in trust solely for the benefit of the
Company, and shall be delivered to the Company by the Executive on the
termination of the Executive's engagement or at any other time on the
request of the Company.
(d) The Executive will not assert any rights under any
inventions, copyrights, discoveries, concepts, or ideas, or improvements
thereof, or know-how related thereto, as having been made or acquired by
the Executive prior to the Executive's being engaged by the Company or
during the term of the Executive's engagement if based on or otherwise
related to Proprietary Information.
11. ASSIGNMENT OF INVENTIONS.
(a) For purposes of this Section 11, the term "Inventions" shall
mean discoveries, concepts, and ideas, whether patentable or copyrightable
or not, including, but not limited to, improvements, know-how, data,
processes, methods, formulae, and techniques, as well as improvements
thereof, or know-how related thereto, concerning any past, present, or
prospective activities of the Company, which the Executive makes,
discovers, or conceives (whether or not during the hours of the Executive's
engagement or with the use of the Company's facilities, materials, or
personnel), either solely or jointly with others during the Executive's
engagement by the Company or any Affiliate of the Company and, if based on
or related to Proprietary Information, at any time after termination of
such engagement. All Inventions shall be the sole property of the Company,
and the Executive agrees to perform the provisions of this Section 11 with
respect thereto without the payment by the Company of any royalty or any
consideration therefor, other than the regular compensation paid to the
Executive in his capacity of as an employee or consultant.
(b) The Executive shall maintain written notebooks in which the
Executive shall set forth, on a current basis, information as to the
Inventions, describing in detail the procedures employed and the results
achieved, as well as information as to any studies or research projects
undertaken on the Company's behalf. The written notebooks shall at all
times be the property of the Company and shall be surrendered to the
Company upon termination of the Executive's engagement or, upon request of
the Company, at any time prior thereto.
(c) The Executive shall apply, at the Company's request and
expense, for United States and foreign letters patent or copyrights, either
in the Executive's name or otherwise as the Company shall desire.
(d) The Executive hereby assigns to the Company all of the
Executive's rights to the Inventions and to applications for United States
and/or foreign letters patent or copyrights and to United States and/or
foreign letters patent or copyrights granted in respect of the Inventions.
(e) The Executive shall acknowledge and deliver promptly to the
Company, without charge to the Company, but at its expense, such written
instruments (including applications and assignments) and do such other
acts, such as giving testimony in support of the Executive's inventorship,
as may be necessary in the opinion of the Company to obtain, maintain,
extend, reissue, and enforce United States and/or foreign letters patent
and copyrights relating to the Inventions and to vest the entire right and
title thereto in the Company or its nominee. The Executive acknowledges and
agrees that any copyright developed or conceived of by the Executive during
the term of the Executive's employment which is related to the business of
the Company shall be a "work for hire" under the copyright law of the
United States and other applicable jurisdictions.
(f) The Executive represents that the Executive's performance of
all of the terms of this Agreement and as an employee of or consultant to
the Company does not and will not breach any trust existing prior to the
Executive's employment by the Company. The Executive agrees not to enter
into any agreement, either written or oral, in conflict herewith and
represents and agrees that the Executive has not brought and will not bring
with the Executive to the Company or use in the performance of the
Executive's responsibilities at the Company any materials or documents of a
former employer which are not generally available to the public, unless the
Executive has obtained written authorization from the former employer for
their possession and use, and the Executive has provided a copy of such
written authorization to the Company.
(g) No provision of this Section 11 shall be deemed to limit the
restrictions applicable to the Executive under Section 10 hereof.
12. SHOP RIGHTS.
The Company shall also have the royalty-free right to use in its business,
and to make, use, and sell products, processes, and/or services derived from any
inventions, discoveries, concepts, and ideas, whether or not patentable,
including, but not limited to, processes, methods, formulas, and techniques, as
well as improvements thereof or know-how related thereto, concerning any past,
present, or prospective activities of the Company, which are not within the
scope of Inventions as defined in Section 11 hereof, but which are conceived or
made by the Executive during the period that the Executive is engaged by the
Company with the use or assistance of the Company's facilities, materials, or
personnel.
13. NON-COMPETE.
The Executive hereby agrees that during the Executive's employment, and for
a period of six months from the termination thereof, the Executive will not,
without the written consent of the Company:
(a) Within any jurisdiction or marketing area in which the
Company or any subsidiary thereof is doing business, own, manage, operate,
or control any Business, provided, however, that for purposes of this
Subsection 13(a), ownership of securities of not in excess of five percent
(5%) of any class of securities of a public company shall not be considered
as owning, managing, operating, or controlling any Business; or
(b) Within any jurisdiction or marketing area in which the
Company or any subsidiary thereof is doing business, act as, or become
employed as, an officer, director, employee, consultant or agent of any
Business; or
(c) Solicit any Business for, or sell any products that are in
competition with the Company's products to, any company, which is a
customer or client of the Company or any of its subsidiaries as of the
Termination Date; or
(d) Solicit the employment of, or hire, any full time employee
employed by the Company or its subsidiaries as of the Termination Date.
The term "Business," as used in this Section 13, shall mean any person
or entity which is an international facilities-based telecommunications
carrier or any of the services which are necessarily provided by an
international facilities-based telecommunications carrier to its customers.
14. REMEDIES AND JURISDICTION.
(a) The Executive hereby acknowledges and agrees that a breach
of the agreements contained in Section 13 of this Agreement will cause
irreparable harm and damage to the Company, that the remedy at law for the
breach or threatened breach of the agreements set forth in Section 13 of
this Agreement will be inadequate, and that, in addition to all other
remedies available to the Company for such breach or threatened breach
(including, without limitation, the right to recover damages), the Company
shall be entitled to injunctive relief for any breach or threatened breach
of the agreements contained in Section 13 of this Agreement.
(b) All claims, disputes and other matters in question between
the parties arising under this Agreement, except those pertaining to
Section 13 hereof, shall, unless otherwise provided herein, be decided by
arbitration in the State of Delaware in accordance with the National Rules
for the Resolution of Employment Disputes of the American Arbitration
Association (including such procedures governing selection of the specific
arbitrator or arbitrators), unless the parties otherwise agree. The
Company shall pay the costs of any such arbitration. The award by the
arbitrator or arbitrators shall be final, and judgment may be entered upon
it in accordance with applicable law in any state or federal court having
proper jurisdiction.
15. INDEMNIFICATION.
The Company agrees to indemnify and hold the Executive harmless from and
against any and all losses, liabilities, or costs (including, but not limited
to, reasonable attorney's fees), which the Executive may sustain, incur, or
assume as a result of, or relative to, any allegation, claim, civil or criminal
action, proceeding, charge, or prosecution, which may be alleged, made,
instituted, or maintained against the Executive or the Company, jointly or
severally, arising out of or based upon the Executive's employment with the
Company, to the fullest extent permitted by applicable law including, but not
limited to, any injury to person(s) or damage to property or business by reason
of any cause whatsoever, regardless of whether any such injury or damage is
caused by negligence on the part of the Executive. THIS INDEMNITY PROVISION IS
INTENDED TO INDEMNIFY THE EXECUTIVE (A) AGAINST THE CONSEQUENCES OF HIS OWN
NEGLIGENCE OR FAULT, REGARDLESS OF WHETHER THE EXECUTIVE IS SOLELY NEGLIGENT OR
CONTRIBUTORILY, PARTIALLY, JOINTLY, COMPARATIVELY, OR CONCURRENTLY NEGLIGENT
WITH ANY OTHER PERSON, AND (B) AGAINST ANY LIABILITY OF THE EXECUTIVE BASED ON
APPLICABLE DOCTRINE OF STRICT LIABILITY. Not withstanding the foregoing, the
Company will not, however, indemnify the Executive for any claims, liabilities,
losses, damages or expenses that result solely from bad faith, gross negligence
or willful misconduct by the Executive.
16. ATTORNEYS' FEES.
The Company shall reimburse the Executive for any and all costs incurred by
the Executive in connection with any legal proceedings in connection with the
Executive's rights or obligations under this Agreement, including reasonable
attorneys' fees, together with interest thereon as provided by applicable law.
17. SUCCESSORS.
This Agreement and all rights of the Executive hereunder shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, estate, executors, administrators, heirs, or beneficiaries. In
the event of the Executive's death, all amounts payable to the Executive under
this Agreement shall be paid to the Executive's surviving spouse, if the
Executive dies without a surviving spouse, to the Executive's estate. This
Agreement shall inure to the benefit of, be binding upon, and be enforceable by
or against, any successor, surviving or resulting corporation, or other entity
or any assignee of the Company to which all or substantially all of the business
and assets of the Company is transferred whether by merger, consolidation,
exchange, assignment, sale, lease, or other disposition or action.
18. ENFORCEMENT.
The provisions of this Agreement shall be regarded as divisible, and if any
of such provisions or any part hereof is declared invalid or unenforceable by a
court of competent jurisdiction, the validity and enforceability of the
remainder of such provisions or the parts hereof and the applicability thereof
shall not be affected thereby.
19. AMENDMENT OR TERMINATION.
This Agreement may not be amended or terminated during its term, except by
written instrument executed by both the Company and the Executive.
20. SURVIVABILITY.
The provisions of Sections 10, 11, 12, 13 and 15 hereof and the provisions
hereof relating to the payment of the Accrued Benefits and the Severance Payment
shall survive the termination of this Agreement.
21. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement between the Executive and
the Company with respect to the subject matter hereof and supersedes all prior
oral or written agreements, negotiations, commitments, and understandings with
respect thereto.
22. GOVERNING LAW; VENUE.
This Agreement and the respective rights and obligations of the Executive
and the Company hereunder shall be governed by and construed in accordance with
the laws of the State of Delaware without giving effect to the provisions,
principles, or policies thereof relating to choice of law or conflict of laws.
23. NOTICE.
Notices given pursuant to this Agreement shall be in writing and shall be
deemed given when received, and if mailed, shall be mailed by United States
registered or certified mail, return receipt requested, postage prepaid, if to
the Company, to:
WorldPort Communications, Inc.
9601 Katy Freeway, Suite 200
Houston, TX 77024
Tel: (713) 461-4999
with a copy to corporate counsel for the Company to:
McDermott, Will & Emory
Attn: Ellen Kollar
227 West Monroe St.
Chicago, IL 60605
312-984-6486
or to such other address as the Company shall have given to the Executive or, if
to the Executive, to:
Paul A. Moore
500 Waukegan Road
Lake Forest, IL 60045
847-234-6955
or to such other address as the Executive shall have given to the Company.
24. NO WAIVER.
No waiver by either party at any time of any breach by the other party of,
or any failure by the other party to comply with, any condition or provision of
this Agreement to be performed by the other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same time or at any prior
or subsequent time.
25. HEADINGS.
The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
26. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and the Executive has executed this Agreement, on
the date and year first above written.
THE COMPANY:
WORLDPORT COMMUNICATIONS, INC.
/s/ Phillip S. Magiera
Phillip S. Magiera
Chief Financial Officer
EXECUTIVE:
/s/ Paul A. Moore
Paul A. Moore
AMENDMENT TO
EMPLOYMENT AGREEMENT
This Amendment (the "Amendment") is made and entered into as of the 31st
day of March, 1998 by and between WorldPort Communications, Inc., a Delaware
corporation ("WorldPort" or the "Company") and Mr. Paul A. Moore ("Executive")
and amends that certain Employment Agreement dated as of January 1, 1998 between
the Company and Executive (the "Employment Agreement").
WHEREAS, the parties desire to amend Section 6(f) of the Employment
Agreement;
WHEREAS, all capitalized terms used by not defined herein shall have the
meanings given in the Employment Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Section 6(f) of the Employment Agreement is hereby amended and
restated to read in its entirety as follows:
"(f) The Company shall issue to the Executive an aggregate of 500,000
shares (the "Shares") of the Company's Common Stock, par value $.0001
per share, in exchange for $1.33 per share. The Executive shall pay
$50,000 of the purchase price to the Company in cash and the remaining
$615,000 shall be paid to the Company by delivery by the Executive of a
promissory note. The promissory note shall accrue interest at an annual
rate of 11%, mature on January 1, 2000 and provide for monthly payments
of principal and accrued interest. The promissory note shall be secured
by a pledge to the Company of the Shares purchased by the Executive
hereby."
2. Except as otherwise amended hereby, all terms and provisions of the
Employment Agreement shall continue in full force and effect as stated therein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
WORLDPORT COMMUNICATIONS, INC.
By:
Name:
Title:
Paul A. Moore
EMPLOYMENT AGREEMENT
THE UNDERSIGNED:
1. The private company under Dutch law with restricted liability, MATHCOMP
B.V., also trading under the name of WORLDPORT COMMUNICATIONS EUROPE,
established at Voorburg, hereinafter to be referred as: "the Company",
and:
2. MR. BAHMAN ZOLFAGHARPOUR, born at 8 February 1944, residing at 's-
Gravenhage, the Netherlands, hereinafter to be referred to as "the
Managing Director";
WHEREAS:
- - MathComp B.V. has as its goal the supply of telecommunication services
and the importation and exportation of telecommunication equipment;
- - By shareholder's resolution dated 4 February 1998, the Managing Director
has been appointed as Managing Director of the Company as referred to in
Article 12 of its Articles of Association;
- - The Company wishes tot employ the managing Director and the Managing
Director has agreed tot accept the employment subject to the terms and
conditions as set forth below;
- - The Company and the Managing Director have agreed on concluding an
employment agreement upon such terms and conditions as set forth in this
agreement;
DECLARED TO HAVE AGREED AS FOLLOWS:
ARTICLE 1. DATE OF ENTRY, DURATION AND TERMINATION
1.1. The Managing Director shall be and is hereby appointed a managing
("statutair") director of the Company and will serve the Company for a
period of three years commencing on the date this agreement is accepted
by signing by both parties.
1.2. The company is entitled to terminate this employment agreement
immediately for an urgent reason as described in article 7: 678
Burgerlijk Wetboek ("Civil Code") by means of serving written notice
containing the urgent reason. In the event that the Company terminates
this agreement for an urgent reason it will not be obligated to pay the
Managing Director the balance of the base salary owed to him pursuant to
the original term of the employment agreement.
ARTICLE 2. POSITION, RIGHTS AND DUTIES
2.1. As a Managing Director of the Company, the Managing Director shall have
all rights and obligations which are granted to or imposed on him by the
Articles of Association of the Company and by law in general.
2.2. The Managing Director shall be charged with the day-to-day management and
the profitable growth of the Company and its subsidiaries. In this
position the Managing Director will report to the Board of Directors of
the Company and the Chief Executive Officer ("CEO") of Worldport
Communications, Inc. (the U.S. parent corporation of the Company.
2.3. The Managing Director undertakes to perform the duties attached to his
position to the best of his abilities and to perform such duties and
exercise such power authorities and discretions as the Articles of
Association delegate him.
2.4. The Managing Director will comply with all policies, instructions, rules
and regulations governing the personnel of the Company and as such are
issued by the Company from time to time.
ARTICLE 3. BASE SALARY
3.1. The Company shall pay the Managing Director a gross base salary of NLG
175.200,-- per annum including 8% holiday allowance to be paid in twelve
monthly instalments. The net salary will be paid by the end of each
calender month after deduction of applicable taxes and social security
premiums.
ARTICLE 4. EXPENSE ACCOUNT
4.1. The Company shall reimburse the Managing Director on a monthly basis for
out-of-pocket expenses incurred in the conduct of the Company, including
all business, telephone and travel expenses, upon receipts being sub-
mitted and approved by the CEO.
ARTICLE 5. VACATION DAYS
5.1. The Managing Director shall be entitled to 25 paid holiday days per
calendar year plus all Netherlands' public holidays.
5.2. The Managing Director will take up his vacation days in close
consultation with and after prior approval of the Company.
ARTICLE 6. HEALTH INSURANCE
6.1. The Managing Director shall be entitled during his employment to a
medical and disability insurance determined in accordance with the
Company's benefit plan or policy.
ARTICLE 7. ILLNESS
7.1. If the Managing Director is unable to perform his duties as result of
sickness or an accident he shall be obliged to notify the CEO of the fact
as soon as possible on the first following working day before 10.00 a.m.
7.2. In the event of incapacity to work due to sickness or an accident, the
Managing Director shall receive 70% of his fixed nett salary for a period
of 52 weeks.
ARTICLE 8. COURSES, WORKING HOURS AND OVERTIME
8.1. The Managing Director shall perform his duties on a full time basis.
8.2. At the request of the Company, the Managing Director shall be bound to
courses or programs held during or after the normal working hours, the
costs of which are for the account of the Company.
ARTICLE 9. ADDITIONAL ACTIVITIES
9.1. The Managing Director shall be prohibited without express written
permission from the Company, for the duration of employment:
a. from having any active part in any form whatsoever or acting as an
advisor to or,
b. directly or indirectly, for his own account or (in part) for those
third parties, or under the terms of employment with those third
parties acting for, or
c. having any financial interest, other than in the form of holding
securities which are Stock Exchange quoted, in
a company, or organization which (in part) is active, or could be, as a
competitor with the Company, in the same field as that for which the
activities shall be conducted by the Managing Director for the Company.
ARTICLE 10. NON-COMPETITION
10.1. During this employment agreement or during the period of two years after
termination of this employment agreement, the Managing Director can not
without the written consent of the Company be involved, in the broadest
sense of the word, thus to, but not limited to, being employed by or
performing services for in any business either directly or indirectly,
which is competitive to the business of the Company and - or its
affiliated companies.
10.2. The Managing Director shall therefore be prohibited from establishing a
business which is similar to, resembles or is related to that of the
Company, managing such a business, consisting in the management of such
business or having such a business manage, either directly or indirectly
as well as from having one or more financial interests or being active in
such business or for such business in any manner
whatsoever either for no gain or for share therein of whatever nature.
During the employment agreement and two years after the termination of
the employment agreement the Managing Director shall be prohibited from
visiting and/or taking contact with the business competitors and business
clients/customers of the Company and shall similarly be prohibited from
approaching these parties in any other manner for the purpose of compe-t-
ing with the Company.
ARTICLE 11. CONFIDENTIALITY
11.1. The Managing Director will, both during the term of this agreement and
after the employment has ended, observe absolute secrecy regarding all
his knowledge and/or information concerning the affairs, assets,
transactions, business relationships and/or other interests in the widest
sense, of the Company and his affiliated companies as well as relations
thereof.
11.2. On termination of the employment or at the Company's first request, the
Managing Director will immediately hand over to the Company all Company
property, including correspondence, files, contracts, contact information
(names, addresses, telecommunication numbers) notes, drawings, maps,
models, formulations and other documents in his keeping and all rights to
intellectual property including, but not limited to, products, services,
technologies and trade-names developed by the Managing Director during
his employment by the Company which relate to the aforementioned matters.
ARTICLE 12. FINE
12.1. Any infringement of the prohibitions set forth in articles 9, 10, or 11
will cause the Managing Director immediately to forfeit to the Company a
penalty - without having to be declared in default - of
NLG 25,000.-- for each infringement and NLG 2,500.-- for each day or part
of the day that this infringement continues without prejudice to the
right to claim full damages.
ARTICLE 13. APPLICABLE LAW
13.1. This contract will be governed either in its interpretation or execution
by Dutch law.
ARTICLE 14. GENERAL
14.1. If any article or paragraph of the agreement will be declared null and
void, this will not effect the validity of the rest of this agreement.
14.2. This agreement sets forth the entire understanding of the parties and
supersedes all previous oral or written representations between the
parties.
14.3. In order to become effective, alterations and additions to this agreement
must be in writing, endorsed by the Shareholders meeting.
THUS AGREED UPON AND SIGNED IN DUPLICATE AT .......
ON .......
MathComp B.V. Mr B. Zolfagharpour
February 16, 1998
Mr. Daniel G. Lazarek
8605 Shadybrook Drive
North Richland Hills, Texas 76180
Tel: 817-788-3044
Dear Dan:
Further to our discussions, we are please to provide you with the following
offer to become the Vice President of Global Sales and Marketing for WorldPort
Communications, Inc. We look forward to your positive response to this offer
and we look forward to having you as a member of the WorldPort team!
Terms of Employment:
Title: Vice President Global Sales and Marketing
Responsibilities: You will be responsible for WorldPort s global sales revenue
plan, direct sales plan, marketing targets plan and
strategy, product development, product portfolio, customer
account management, commission plan and sales team
management.
In addition, you will work with Dan Wickersham to develop,
implement and execute the Company s overall business
strategy.
Compensation: Base Salary: $150,000
Signing Bonus: $25,000
$12,500 to be paid on start date.
$12,500 to be paid within 45 days of start.
Performance Bonus: 50% of Base
To be paid quarterly based on objectives
to be agreed to with Dan Wickersham.
Car Allowance: $400 / month
Five Year Options to purchase:
300,000 shares
Options to purchase 75,000 shares will be issued and
vested upon the Start Date at a strike price equal to $1.00 per share.
Options to purchase 225,000 shares of common stock at
a price of $2.25 per share will vest in increments of 1/3, 1/3, 1/3 over a three
year period.
Upon a change of control of the Company, all options
shall vest immediately.
Benefits: You will receive a full health benefits package
of the same type held by all WorldPort executives.
Relocation: In the event that your relocation is required, the Company
will pay for your reasonable relocation expenses.
Start Date: March 16, 1998.
Dan, if you are in agreement with these terms, please place your signature in
the space provided below, and fax this letter back to me. We look forward to
working with you.
Sincerely,
Phillip S. Magiera
Chief Financial Officer
I hereby accept the above employment terms:
___________________________________ Date: __________________
Daniel G. Lazarek
February 18, 1998
Mr. Daniel M. Wickersham
380 Stonybrook Drive
Canton, Georgia 30115
Dear Dan:
Further to our discussions, we are pleased to provide you with the following
offer to become the President and Chief Operating Officer of WorldPort
Communications, Inc. We look forward to your positive response to this offer
and we look forward to having you as a member of the WorldPort team!
Terms of Employment:
Title: President and Chief Operating Officer
Responsibilities: You will be responsible for the development and execution of
WorldPort s overall strategy to grow an international
telecommunications carrier business. Included in this
responsibility will be the deployment and management of all
human resources, and the development of key relationships
and alliances such as those already under development with
Equant and Boeing.
Compensation: Base Salary: $175,000
Signing Bonus: $60,000
$30,000 to be paid on your Start Date.
$30,000 to be paid within 45 days of the Start Date.
Performance Bonus: 50% of Base Salary
To be paid semi-annually based on objectives
to be agreed to by the Board of Directors. Such
objectives will be established within 90 days of
the Start Date.
Car Allowance: $400 / month
Stock Grant: 200,000 shares
200,000 shares of WorldPort common
stock ( Stock ) will be issued upon the
start date at no cost.
Five Year Options to purchase:
400,000 shares
Options to purchase 100,000 shares of Stock
will vest and be issued upon the Start Date at a strike
price equal to $1.75 per share.
Options to purchase 150,000 shares of Stock at a price of
$3.00
per share will vest and be issued on the first anniversary of
the Start Date.
Options to purchase 150,000 shares of Stock at a price of
$4.50
per share will vest and be issued on the second anniversary of
the Start Date.
Upon a change of control of the Company, all options
shall vest immediately.
Benefits: You will receive a full health benefits package
of the same type held by all WorldPort executives.
Relocation: In the event that your relocation is required, the Company
will pay for your reasonable relocation expenses.
Start Date: March 2, 1998.
Termination: In the event that you are terminated without cause, you
shall receive a severance payment equal to 50% of your
annual salary.
Dan, if you are in agreement with these terms, please place your signature in
the space provided below, and fax this letter back to me. We look forward to
working with you.
Sincerely,
Phillip S. Magiera
Chief Financial Officer
I hereby accept the above employment terms:
___________________________________ Date: __________________
Daniel M. Wickersham
February 27, 1998
Mr. Jim Hendrickson
6266 Braidwood Run
Acworth, Georgia 30101
Tel: 770-424-5739
Dear Jim:
WorldPort is pleased to provide you with the following offer to become its Vice
President of Technology and Strategic Planning. We look forward to your
positive response to this offer and we look forward to having you as a member of
the WorldPort team!
Terms of Employment:
Title: Vice President of Technology & Strategic Planning
Reporting: You will report to the President and Chief Operating
Officer.
Responsibilities: You will be responsible for all aspect s of the Company s
corporate technology strategy, product development, office
automation and administrative systems, technology platforms,
business plan development, security and fraud control,
project planning, and project implementation.
Compensation: Base Salary: $125,000
Signing Bonus: $25,000
$12,500 to be paid on your Start Date.
$12,500 to be paid within 90 days of the Start Date.
Semi-Annual Performance Bonus: 50% of Base Salary
Based on objectives to be agreed to
by Dan Wickersham and the Board of Directors.
Such objectives will be established within
90 days of the Start Date.
Five Year Options to purchase: 150,000 shares
Options to purchase 150,000 shares of Stock
will vest and be issued 1/3, 1/3, 1/3 on the
first, second and third anniversary of the Start Date
at a strike price equal to $3.50 per share.
Upon a change of control of the Company, all options
shall vest immediately.
Benefits: You will receive a full health benefits package
of the same type held by all WorldPort executives.
Start Date: March 9, 1998.
Termination: In the event that you are terminated without cause, you
shall receive a severance payment equal to 50% of your
annual salary.
Jim, if you are in agreement with these terms, please place your signature in
the space provided below, and fax this letter back to me. We look forward to
working with you.
Sincerely,
Paul A. Moore
Chief Executive Officer
I hereby accept the above employment terms:
___________________________________ Date: __________________
Jim Hendrickson
February 27, 1998
Mr. James Sever
104 Sever Lane
West Newton, PA 15089
Dear Jim:
WorldPort is pleased to provide you with the following offer to become its
Senior Vice President of Network Operations. We look forward to your positive
response to this offer and we look forward to having you as a member of the
WorldPort team!
Terms of Employment:
Title: Senior Vice President of Network Operations
Reporting: You will report to the President and Chief Operating
Officer.
Responsibilities: You will be responsible for all aspects of the design,
development and operation of WorldPort s global
telecommunications network. In addition, you will be
responsible for the development of carrier and interconnect
agreements, billing operations, help desks, and data base
management.
Compensation: Base Salary: $150,000
Signing Bonus: $50,000
$25,000 to be paid on your Start Date.
$25,000 to be paid within 90 days of the Start Date.
Annual Performance Bonus: 50% of Base Salary
Based on objectives to be agreed to
by Dan Wickersham and the Board of Directors.
Such objectives will be established within
90 days of the Start Date.
Five Year Options to purchase: 400,000 shares
Options to purchase 100,000 shares of Stock
will vest and be issued 1/3, 1/3, 1/3 on the
first, second and third anniversary of the Start Date
at a strike price equal to $2.00 per share.
Options to purchase 300,000 shares of Stock
will vest and be issued 1/3, 1/3, 1/3 on the
first, second and third anniversary of the Start Date
at a strike price equal to $3.50 per share.
Upon a change of control of the Company, all options
shall vest immediately.
Benefits: You will receive a full health benefits package
of the same type held by all WorldPort executives.
Start Date: March 16, 1998.
Termination: In the event that you are terminated without cause, you
shall receive a severance payment equal to 50% of your
annual salary.
Jim, if you are in agreement with these terms, please place your signature in
the space provided below, and fax this letter back to me. We look forward to
working with you.
Sincerely,
Paul A. Moore
Chief Executive Officer
I hereby accept the above employment terms:
___________________________________ Date: __________________
James Sever
February 27, 1998
Mr. Donald C. Wright
4008 Iron Hill Lane
Woodstock, GA 30189
Tel: 770-516-5047
Dear Don:
WorldPort is pleased to provide you with the following offer to become its Vice
President of Finance. We look forward to your positive response to this offer
and we look forward to having you as a member of the WorldPort team!
Terms of Employment:
Title: Vice President of Finance
Reporting: You will report to the Chief Financial Officer.
Responsibilities: You will be responsible for all aspect s of the Company s
financial and human resources administration, including
personnel managment, policies and procedures; purchasing;
contract preparation; FCC & other regulatory filings; cost
containment; acquisition analysis; margin analysis;
collections; accounting; tax administration; bi-lateral
trade accounting agreements; budgeting and SEC reporting.
Compensation: Base Salary: $125,000
Signing Bonus: $25,000
$12,500 to be paid on your Start Date.
$12,500 to be paid within 90 days of the Start Date.
Annual Performance Bonus: 50% of Base Salary
Based on objectives to be agreed to
by the CFO and the Board of Directors.
Such objectives will be established within
90 days of the Start Date.
Five Year Options to purchase: 150,000 shares
Options to purchase 150,000 shares of Stock
will vest and be issued 1/3, 1/3, 1/3 on the
first, second and third anniversary of the Start Date
at a strike price equal to $3.50 per share.
Upon a change of control of the Company, all options
shall vest immediately.
Benefits: You will receive a full health benefits package
of the same type held by all WorldPort executives.
Start Date: March 16, 1998.
Termination: In the event that you are terminated without cause, you
shall receive a severance payment equal to 50% of your
annual salary.
Don, if you are in agreement with these terms, please place your signature in
the space provided below, and fax this letter back to me. We look forward to
working with you.
Sincerely,
Paul A. Moore
Chief Executive Officer
I hereby accept the above employment terms:
___________________________________ Date: __________________
Donald C. Wright
March 23, 1998
Mr. Thomas J Bruner
3200 Danville Blvd.
Alamo, California
Dear Mr. Bruner:
In keeping with the terms of the asset purchase agreement between Worldport
Communications Inc. and Intercontinental Exchange Inc. we are pleased to provide
you the following offer of employment at WorldPort Communications, Inc:
EFFECTIVE DATE: Closing of the asset purchase agreement.
TERM OF OFFER: Two (2) years
TITLE: Your exact title will be determined as we progress toward
closing.
REPORTING RELATIONSHIP: Initially you will report to the COO of Worldport.
Subsequent to closing and final job determination you may
report to another senior executive.
COMPENSATION: Base Salary: $84,000 per year paid periodically according
to WorldPort Communications payroll practices.
Performance Incentive: The employee will receive stock
purchase options as follows:
30,000 options vesting after one year of employment, with an
exercise price of $7.00 per share;
30,000 options vesting after two years of employment, with
an exercise price of $10.00 per share;
Benefits: Standard Worldport Communications Benefits
Review: Your compensation will be reviewed at the end of
the first six months following closing of the asset purchase
agreement.
TERMINATION: During the term of your employment as defined above you will
be terminated by the company only for cause, disability or
death.
If you are terminated by the company for any reason other
than those stated above you will be paid a severance equal
to four (4) months base salary.
NON-COMPETE/
NON-SOLICITATION/
CONFIDENTIALITY As a condition of WorldPort entering into an employment
arrangement with you, and as a condition of continued
employment with WorldPort, you agree to execute a separate
agreement covering these aspects of your employment, and to
abide by its terms and conditions.
If these terms and conditions of employment are acceptable
to you, please indicate your acceptance of this offer by signing below.
I look forward to working with you.
Sincerely,
/s/ Phillip Magiera_ _
Mr. Phillip Magiera
Its: Chief Financial Officer
I hereby accept the above offer of employment and the associated terms:
/s/ Thomas J. Bruner _
Thomas J. Bruner
March 23, 1998
Mr. Christopher Canfield
3200 Danville Blvd.
Alamo, California
Dear Mr. Canfield:
In keeping with the terms of the asset purchase agreement between Worldport
Communications Inc. and Intercontinental Exchange Inc. we are pleased to
provide you the following offer of employment at WorldPort Communications, Inc:
EFFECTIVE DATE: Closing of the asset purchase agreement.
TERM OF OFFER: Two (2) years
TITLE: Your exact title will be determined as we progress
toward closing.
REPORTING RELATIONSHIP: Initially you will report to the COO of Worldport.
Subsequent to closing and final job determination
you may report to another senior executive.
COMPENSATION: Base Salary: $84,000 per year paid periodically
according to WorldPort Communications payroll
practices.
Performance Incentive: The employee will receive
stock purchase options as follows:
30,000 options vesting after one year of employment,
with an exercise price of $7.00 per share;
30,000 options vesting after two years of employment,
with an exercise price of $10.00 per share;
Benefits: Standard Worldport Communications Benefits
Review: Your compensation will be reviewed at the end
of the first six months following closing of the asset
purchase agreement.
TERMINATION: During the term of your employment as defined above you
will be terminated by the company only for cause,
disability or death.
If you are terminated by the company for any reason
other than those stated above you will be paid a
severance equal to four (4) months base salary.
NON-COMPETE/
NON-SOLICITATION/
CONFIDENTIALITY As a condition of WorldPort entering into an employment
arrangement with you, and as a condition of continued
employment with WorldPort, you agree to execute a
separate agreement covering these aspects of your
employment, and to abide by its terms and conditions.
If these terms and conditions of employment are acceptable to you, please
indicate your acceptance of this offer by signing below.
I look forward to working with you.
Sincerely,
/s/ Phillip Magiera
Mr. Phillip Magiera
Its: Chief Financial Officer
I hereby accept the above offer of employment and the associated terms:
/s/ Christopher Canfield
Christopher Canfield
SALE AND TRANSFER OF SHARES MA/ER/680514.kle/5
(MathComp B.V.)
On this day, the thirteenth of February -----------------
nineteen hundred and ninety-eight, appeared before me, --
Nelson Marie Joseph Damen, civil law notary in Amsterdam:
1. Ernst Hans Rozelaar, prospective civil law notary, residing in Amsterdam,
Stadionkade 121 III, born in Amsterdam on the tenth day of September nineteen
hundred and sixty-one, unmarried nor registered as a partner, holder of a
Dutch passport with number N28440156, ----
in the present matter acting as attorney-in-fact for:
BAHMAN ZOLFAGHARPOUR, businessman, domiciled at G.J. van Marrewijkplantsoen
9, 2552 JR Den Haag (The Hague), born in Esfahan, Persia, on the eighth day
of February nineteen hundred and forty-four, married, ------------
hereinafter also referred to as: "Seller"; -----------
2. Marije Stevenhaagen, prospective civil law notary, residing in De Bilt,
Hessenweg 8, born in Amsterdam on the ninth day of September nineteen hundred
and seventy-four, unmarried nor registered as a partner, holder of a Dutch
driver's license with number -------
3123304424, ------------------------------------------
in the present matter acting as attorney-in-fact for:
WORLDPORT COMMUNICATIONS INC., a corporation duly organized and existing
under the laws of the State of Delaware, United States of America, with
registered office at 9601 Katy Freeway, Suite 200, Houston, Texas 77024,
United States of America, ---------------------
hereinafter also referred to as: "Purchaser" or ------
"WorldPort"; -----------------------------------------
3. Ernst Hans Rozelaar, mentioned above, ----------------
in the present matter acting as attorney-in-fact for:
MATHCOMP B.V. (to be changed into: WorldPort ---------
Communications (Europe) B.V.), a private limited company duly organized and
existing under the laws of The Netherlands, with official seat at Voorburg,
The -----
Netherlands and having its place of business at G.J. van Marrewijkplantsoen
9, 2552 JR Den Haag (The Hague), filed with the Trade Register of the Chamber
of Commerce and Industry in Den Haag (The Hague) under number 27106919,
hereinafter also referred to as: "the Company" or "MathComp"._____________
The appearing parties stated that: ----------------------
- - Seller is the holder of all four hundred issued and outstanding shares in the
capital of the Company, each having a par value of one hundred Dutch Guilders
(NLG 100.-) numbered from 1 up to and including 400; --
- - Seller and Purchaser have agreed on the sale and transfer of said four hundred
shares, hereinafter referred to as "the Shares." ----------------------------
REPRESENTATIONS AND WARRANTIES OF SELLER ----------------
With respect to the Company and the Shares, the Seller represents and warrants
that: ---------------------------
A. Seller obtained the Shares as follows: ---------------
- three hundred fifty shares by virtue of a transfer by deed executed on the
fourth day of February nineteen hundred and ninety-eight before N.M.J.
Damen, civil law notary in Amsterdam; ---------------------------
- fifty shares by virtue of an issue by the Company by deed executed on the
twelfth day of February nineteen hundred and ninety-eight before N.M.J.
Damen, civil law notary in Amsterdam. ---------------------------
B. The Company was incorporated by a notarial deed executed before W.R.
Avenarius, civil law notary in Rijswijk, Zuid-Holland, The Netherlands, on
the third day of November nineteen hundred and eighty-three, the draft of
which deed received the ministerial certificate of no-objection on the
fourteenth day of October nineteen hundred and eighty-three under number
B.V. --
263.369. ---------------------------------------------
On the fourth day of February nineteen hundred and ninety-eight, the Seller
as sole shareholder of the Company, adopted a resolution to amend the
articles of association completely. ------------------------------
C. a. The authorized capital of the Company amounts to one hundred seventy-five
thousand Dutch Guilders ------
(NLG 175,000.-) and is divided into one thousand seven hundred fifty
shares, each having a par value of one hundred Dutch Guilders (NLG 100.-)
of which currently four hundred shares have been issued and fully paid
up. ------------------------------------
b. No depository receipts for shares in the capital of the Company have been
issued with the cooperation of the Company, nor, to the best of Seller's
knowledge, are there any persons having the same legal rights as a holder
of depository receipts for shares issued with the cooperation of a
company. ----------------
c. No resolutions have been adopted for a further issue of shares, including
the granting of any rights to subscribe for shares, nor has any dividend
been declared that has not been paid. ------------------
No third party is entitled to profits or to the results of liquidation of
the Company. ------------
D. Neither Seller, nor any previous holder of the Shares, has granted to any
third party any rights to obtain the Shares. -----------------------------
E. a. The Company has no subsidiaries and/or other interests or shareholdings.
b. The Company does not participate as a general or limited partner in any
general or limited partnership. ----------------------------------------
c. The Company is not a party to any excessively burdensome or long-term
contract that is not generally customary for the business of the Company.
The Company is not a party to any agreement pursuant to which the sale and
transfer of the Shares could be modified or terminated by the other
contracting party. --------------------------------------------
e. The Company has always complied, completely and in a timely fashion, with
all of its tax and social insurance obligations.
No supplementary or retrospective assessments will be imposed in this
respect. -----------------------
f. The Company has properly complied with all of its obligations arising by
law, statute, contract or in any other manner, expressly including any
reporting obligations of any type whatsoever; and the Company is not
involved as either plaintiff or defendant in any actual or threatened
proceedings or disputes of any nature whatsoever (civil, criminal,
administrative, tax, arbitral or bindend advies), except for ordinary
collection proceedings. ------------------
G. a. The annual accounts of the Company for the year nineteen hundred and
ninety-six and previous years have, to the extent required, been duly
filed at the office of the Trade Register in which the Company is registe-
red. ---------------------------------------
b. The annual accounts for the year nineteen hundred and ninety-seven have
not yet been adopted or approved. ---------------------------------------
./.
c. The balance sheet and the profit and loss account of the Company as at the
thirty-first day of December nineteen hundred and ninety-seven, have been pre-
pared in compliance with all applicable legal provisions, and in compliance with
generally accepted principles. ---------------------------------------
They give a consistent, clear and accurate view of the scope and
composition of the Company's worth. -
Adequate provision has been made for all of the Company's liabilities,
whether or not contingent, and there are no debts (including in particular
debts to former shareholders) or liabilities, including guarantees and
other third-party security interests other than as set forth in the
abovementioned balance sheet. -------------------------------
d. Since the effective date of the information referred to under c, above,
there has been no change in the condition, either financial or otherwise,
of the assets and liabilities of the Company, or in the Company's pros-
pects. ------------------------------
H. The Company is not indebted to the Seller or to any third party. -----------
I. No bankruptcy or moratorium on payments has been requested with respect to
the Company, nor has the Company been declared bankrupt or granted a morato-
rium.
SALE ----------------------------------------------------
Seller hereby sells to Buyer, who purchases from Seller, the Shares. -------
The parties have agreed upon the following terms: -------
I. The consideration for the sale and purchase consists initially of one
hundred fifty thousand newly issued shares in the capital stock of
WorldPort -----------
Communications Inc. ("Stock"). ---------------------
II. A sum of two hundred fifty thousand United States Dollar (USD 250,000.-)
will be paid within forty-five days of the signing of this agreement. ----
III. Two million three hundred fifty thousand shares will be issued at Closing
into an Escrow account. -------
The Escrow account will be administered jointly and mutually by counsel to
WorldPort and counsel to ----
MathComp. ------------------------------------------
Shares will be released from the Escrow account only by mutual and
unanimous agreement in writing between such counsels, based on MathComp's
Average Monthly Revenue in the first three months of nineteen hundred and
ninety-nine. -----------------------------------
./.
Based on such revenues and gross margins, shares will be released from escrow as
according to the chart which is annexed to this deed. ---------------------
Seller's stock issued pursuant to this section shall be issued into a
subsequent escrow until the thirtieth day of June nineteen hundred and
ninety-nine. --
At such date, if the average monthly revenue and gross margin level for the
second quarter of nineteen hundred and ninety-nine is equal to or greater
than the average for the first quarter of nineteen hundred and ninety-nine,
all of the stock shall be released from escrow. -------------------
./.
If the average monthly revenue and gross margin for the second quarter of
nineteen hundred and ninety-nine is less than the average for the first quarter
of nineteen hundred and ninety-nine, then the amount of stock released to Seller
shall be reduced according to the afore-mentioned chart which is annexed to this
deed. -----------------------------------------
IV. All of the Stock issued to Seller pursuant to this agreement shall be Rule
144 restricted stock according to the laws of the United States Securities
and Exchange Commission. -------------------------------
TERMS AND CONDITIONS ------------------------------------
With respect to this sale and purchase, Seller and Purchaser have further agreed
as follows: ---------------
ARTICLE 1. ----------------------------------------------
Seller shall transfer the Shares to Purchaser. ----------
The right to receive the Shares shall be: ---------------
a. unconditional, and not subject to reduction, rescission or any type of
nullification; ------------------------
b. free of all charges, including attachments, liens and in rem rights (beperkte
rechten). --------------------
ARTICLE 2. ----------------------------------------------
Seller warrants to Purchaser the accuracy of all of the representations and
warranties set forth under A through I, above. ------------------------------
Seller further warrrants to Purchaser that in so doing he has provided, and has
not left out or concealed, any and all information and data that Seller could
reasonably be expected to provide to Purchaser in order for Purchaser to obtain
an accurate impression of the nature and content of what is being purchased and
the purchase price therefor.
ARTICLE 3. ----------------------------------------------
As of the date hereof, the Shares shall be held for the account of Purchaser and
at his sole risk. --------------
ARTICLE 4. ----------------------------------------------
The costs related to this deed and its performance shall be borne by the
Purchaser. ------------------------------
ARTICLE 5. ----------------------------------------------
This agreement and the performance thereof shall be governed by the laws of The
Netherlands. ----------------
ARTICLE 6. ----------------------------------------------
Any dispute arising out of or related to this agreement or other agreements
resulting therefrom, as well as any dispute concerning the breach of any of the
representations and warranties made by either party shall be settled
by an expert appointed by mutual agreement of the parties or, failing such
agreement, by the judge of the Cantonal Court in the district in which the
Company has its official seat. ------------------------------------------
ARTICLE 7. ----------------------------------------------
For purposes of the performance of this agreement, including the tax aspects
thereof, the parties elect domicile at the office of the custodian of this
deed. -----
RESTRICTIONS ON TRANSFERABILITY -------------------------
With respect to the transfer of the Shares reflected herein, the right of first
refusal provided for in the articles of association can be dispensed with, since
the Seller is holder of all shares in the capital of the Company. -----------
TRANSFER; RELEASE AND DISCHARGE -------------------------
In performance of the purchase agreement entered into between them, Seller
hereby transfers the Shares to Purchaser, who accepts them. -----------------
Seller acknowledges receipt of the consideration, for which Purchaser is
released and discharged. -------------
ACKNOWLEDGEMENT -----------------------------------------
The Company acknowledges the transfer of the Shares and undertakes to indicate
the transaction in the shareholders register, as required by law. -----------
POWERS OF ATTORNEY --------------------------------------
./.
Afore-mentioned powers of attorney, which have sufficiently been proven to me,
civil law notary, appear from two private deeds, which will be attached to this
deed. -----
Wherefrom this deed, executed in Amsterdam in the form to be kept under a civil
law notary's custody on the date stated at the top of the deed at five hours
fifty minutes post meridiem. ------------------------------------------
After the contents of this deed were briefly summed up for the appearing
parties, they declared to have noted the contents of this deed and not to
require a full reading thereof. ------------------------------------------------
After it had been read in outline, this deed was then signed by the appearing
parties, who are known to me, civil law notary, and by me, civil law notary. --
(Signed): E.H. Rozelaar, M. Stevenhaagen, N.M.J. Damen, notaris. --------------
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 6,487,958
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<RECEIVABLES> 471,751
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0
260
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<TOTAL-LIABILITY-AND-EQUITY> 20,136,365
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<TOTAL-REVENUES> 948,188
<CGS> 890,811
<TOTAL-COSTS> 3,777,207
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