<PAGE>
As filed with the Securities and Exchange Commission on February 11, 2000.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
SKYLYNX COMMUNICATIONS, INC.
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(Name of small business issuer in its Charter)
Delaware 84-1360029
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(State or other (Primary Standard IRS Employer
jurisdiction of Industrial Identification Number
of incorporation Classification Code
or organization Number
RESTRICTED STOCK AWARDS UNDER EMPLOYMENT AGREEMENTS
---------------------------------------------------
(Full title of the plans)
600 South Cherry Street, Suite 400, Denver, Colorado 80246
(303) 316-0400
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(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Jeffery Mathias, President
600 South Cherry Street, Suite 400,
Denver, Colorado 80246
(303) 316-0400
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(Name, address, including zip code, and telephone number of agent for service
of process)
Copies to:
Clifford L. Neuman, Esq.
Neuman & Drennen, LLC
1507 Pine Street
Boulder, Colorado 80302
(303) 449-2100
Approximate date of commencement of proposed sale to public:
As soon as practicable after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
<PAGE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Each Maximum Maximum
Class of Amount to Offering Aggregate Amount of
of Securities be Price per Offering Registration
to be Registered Registered Share(1) Price(1) Fee
- ----------------- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Common Stock, 621,355 $3.13 $1,944,841 $513.44
$.001 par value,
issued under
Employment
Agreements
Total $1,944,841 $513.44
</TABLE>
(1) Estimated solely for purposes of calculating the amount of the
registration fee, pursuant to Rule 457(h) under the Securities Act of 1933, as
amended (the "Act"). The offering price per share and aggregate offering
price are based on the average of the bid and ask closing price of
Registrant's Common Stock within the five business days prior to February 9,
2000 as reported on OTC Electronic Bulletin Board.
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
<PAGE>
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by SkyLynx Communications, Inc., a
Delaware corporation (the "Company" or the "Registrant") with the Securities
and Exchange Commission ("Commission") are incorporated into this Registration
Statement:
(a) The contents of the Company's Registration Statement on Form 10-
SB/A-4 filed with the Commission on December 16, 1998;
(b) A description of the Company's Common Stock, which is contained in
the Form 10-SB/A-4 Registration Statement filed by the Company with the
Commission on December 16, 1998, as amended through the date hereof;
(c) The Company's latest Annual Report on Form 10-KSB, SEC File No. 000-
24687, as filed with the Commission on April 15, 1999;
(d) The Company's latest Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1999, as filed with the Commission on November 19, 1999;
(e) The Company's Current Report on Form 8-K dated December 31, 1998, as
filed with the Commission on January 6, 1999;
(f) The Company's Current Report on Form 8-K dated February 2, 1999, as
filed with the Commission on February 16, 1999;
(g) The Company's Current Report on Form 8-K/A dated March 24, 1999, as
filed with the Commission on April 7, 1999;
(h) The Company's Current Report on Form 8-K dated March 24, 1999, as
filed with the Commission on April 7, 1999;
(i) The Company's Current Report on Form 8-K/A dated February 2, 1999,
as filed with the Commission on April 19, 1999;
(j) The Company's Current Report on Form 8-K/A dated February 2, 1999,
as filed with the Commission on April 19, 1999;
(k) The Company's Current Report on Form 8-K dated April 28, 1999, as
filed with the Commission on May 12, 1999;
(l) The Company's Current Report on Form 8-K dated April 29, 1999, as
filed with the Commission on May 14, 1999;
(m) The Company's Current Report on Form 8-K dated May 7, 1999, as filed
with the Commission on May 21, 1999;
(n) The Company's Current Report on Form 8-K/A dated March 24, 1999, as
filed with the Commission on June 4, 1999;
(o) The Company's Current Report on Form 8-K/A dated February 2, 1999,
as filed with the Commission on July 2, 1999;
(p) The Company's Current Report on Form 8-K/A dated April 28, 1999, as
filed with the Commission on July 13, 1999;
(q) The Company's Current Report on Form 8-K/A dated April 29, 1999, as
filed with the Commission on July 13, 1999;
(r) The Company's Current Report on Form 8-K/A dated April 28, 1999, as
filed with the Commission on July 21, 1999;
(s) The Company's Current Report on Form 8-K dated July 16, 1999, as
filed with the Commission on July 26, 1999;
(t) The Company's Current Report on Form 8-K dated July 27, 1999, as
filed with the Commission on July 28, 1999;
(u) The Company's Current Report on Form 8-K/A dated July 27, 1999, as
filed with the Commission on July 29, 1999;
(v) The Company's Current Report on Form 8-K dated July 29, 1999, as
filed with the Commission on August 10, 1999;
(w) The Company's Current Report on Form 8-K/A dated July 29, 1999, as
filed with the Commission on October 12, 1999;
(x) The Company's Current Report on Form 8-K/A dated July 29, 1999, as
filed with the Commission on October 12, 1999;
The Company's Current Report on Form 8-K dated December 14, 1999, as
filed with the Commission on December 20, 1999;
(y) The Company's Current Report on Form 8-K dated December 14, 1999, as
filed with the Commission on December 20, 1999; and
(z) All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to
the filing of a post effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a
part of this registration statement from the date of the filing of such
reports and documents.
<PAGE>
<PAGE>
PROSPECTUS
SKYLYNX COMMUNICATIONS, INC.
621,355 Shares Common Stock
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This is an offering of shares of the common stock of SkyLynx
Communications, Inc. which are being offered by persons who were issued shares
of our common stock. These persons are referred to in this Prospectus as
"Selling Securityholders." All of the shares of common stock to be sold by
the Selling Securityholders were issued to them as stock awards under their
employment contracts. All of the Selling Securityholders are executive
officers of the Company. See the sections entitled "Selling Securityholders"
and "Description of Securities."
Selling Securityholders may sell shares covered by this Prospectus at
prices relating to prevailing market prices or at negotiable prices. Our
common stock is currently traded over-the-counter and traded on the OTC
Electronic Bulletin Board under the symbol "SKYK." On February 4, 2000, the
last reported bid and asked prices of our common stock were $3.00 and $3.13,
respectively.
We will not receive any proceeds from the resale of the common stock.
For information regarding fees and expenses we may pay in connection with the
registration of the common stock covered by this Prospectus, see the section
entitled "Selling Securityholders."
Investing in our common stock involves a high degree of risk. You should
read the "Risk Factors" beginning on Page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this Prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
The Date of This Prospectus is February __, 2000.
<PAGE>
<PAGE>
Prospectus Summary
This summary highlights important information about our business and
about the offerings. Because it is a summary, it does not contain all the
information you should consider before investing in our securities. Please
read the entire prospectus.
About our Company
Please note that throughout this Prospectus the words "we," "our" or "us"
refers to SkyLynx Communications, Inc. and not to any of the Selling
Securityholders.
We provide Internet connection and other Internet-related services to
small and medium-sized businesses and residential customers. Since January
1999, we have acquired eight Internet service providers serving customers in
areas of Florida, Arizona, California, Washington, Oregon and Nevada. We
currently have approximately 30,000 subscribers to our services. We have
recently executed letters of intent to acquire two additional Internet service
providers in the states of California and Washington. If completed, these
acquisitions would add an estimated 8,500 subscribers to our subscriber base.
These acquisitions are subject to the execution of definitive agreements and
other customary closing conditions. Our plan is to acquire additional
Internet service providers in select markets in the United States, and to
integrate these businesses into a central network that provides Internet
connection and advanced Internet services to small and medium-sized
businesses.
On December 14, 1999, we changed our state of incorporation from Colorado
to Delaware by completing a merger of SkyLynx Communications, Inc., a Colorado
corporation, with an into SkyLynx Communications, Inc., a Delaware
corporation. As a result of the redomestication, the new Delaware corporation
succeeded to all the properties, assets and liabilities of the Colorado
corporation and automatically assumed all reporting obligations under the
Securities Exchange Act of 1934, relative rights and preferences of the
holders of our various classes and series of outstanding common stock and
preferred stock.
Our executive officers are located at 600 South Cherry Street, Suite 400,
Denver, Colorado 80246, and our telephone number is (303) 316-0400. Our world
wide web address is: http://www.skyk.com. Information contained in our web
site is not part of this prospectus.
Recent Developments
In January, 2000, there were significant developments in two items of
litigation in which the Company has been involved. In one, the Company was
granted summary judgment on all issues in bankruptcy litigation involving
Cable Corporation of America, doing business as Paradise Cable Corporation,
which had been pending in the Bankruptcy Court for the Middle District of
Florida, Tampa Division. Our opponent in that case has filed an appeal from
the order.
In another matter, we were able to achieve a final settlement in the
pending litigation involving our company, and certain of our officers and
affiliates, against Network Systems Technology and certain of their officers
and affiliates.
In February, 2000, we entered into a definitive agreement with an
investor for the purchase of 5,500 shares of our series F convertible
preferred stock, having a stated value of $1,000 per share. The agreement
provides for an initial closing with the investor and a second closing with
additional investors thereafter, pursuant to which up to an aggregate of
20,000 shares of our Series F Convertible Preferred Stock, including the 5,500
shares issued in the initial closing, may be sold. The initial closing was
completed on February 2, 2000 which entailed the sale of 5,500 shares of
Series F Preferred Stock for $5,500,000. The second closing is subject to
customary closing conditions, including the execution of the definitive
agreement by the additional investors.
In November, 1999, the Company completed a bridge financing in which it
sold $1,950,000 in convertible promissory notes. The convertible promissory
notes automatically converted into (i) 1,950 shares of Series F Convertible
Preferred Stock and (ii) warrants exercisable for three (3) years to purchase
an additional 749,666 shares of our Common Stock at an exercise price of $1.50
per share.
About the Offering
This is an offering of shares of our common stock by persons who were
issued shares of our common stock.
We refer to these persons as "Selling Securityholders" in this
Prospectus. We are registering the common stock covered by this Prospectus in
order to fulfill the obligations we have under agreements with the Selling
Securityholders.
<PAGE>
<PAGE>
RISK FACTORS
An investment in our securities is speculative and involves a high degree
of risk. Please carefully consider the following risk factors, as well as the
possibility of the loss of your entire investment, before deciding to invest
in our securities.
Our Shares of Common Stock Represent a Highly Speculative Investment
We have been operating at a loss since our formation, and you cannot
assume that our plans will either materialize or prove successful. There is no
assurance that our operations will become profitable. In the event our plans
are unsuccessful, you may lose all or a substantial part of your investment.
Our Strategy to Acquire Internet Service Providers May Not Be Successful
Our success will depend upon our ability to acquire local Internet
service providers and integrate these acquired businesses into a comprehensive
network. In addition, we must acquire a sufficient number of Internet service
providers to operate efficiently and profitably. We believe that competition
from other companies seeking to acquire and consolidate Internet service
providers is significant and that acquisition prices will rise with the growth
in demand for these companies in the future. We may not be able to afford
these higher prices. Any increase in acquisition prices could also increase
the amount of goodwill and other intangibles associated with the purchase
price we may pay for these companies. Between December 31, 1998 and July 29,
1999, we acquired eight Internet service providers. Prior to their
acquisition by us, the businesses we acquired were operated as independent
entities. We cannot assure you that we will be able to integrate the
operations of these businesses successfully into our operations or to
institute the necessary systems and procedures, including accounting and
financial reporting systems, to manage the combined business on a profitable
basis. Our management group has been assembled only recently, and it may not
be able to manage successfully the combined business to implement effectively
our operating strategy and acquisition program.
Any acquisitions we make may result in potentially dilutive issuances of
our securities, or our incurrence of additional debt. Further, acquisitions
involve a number of special risks, including failure of the acquired
businesses to achieve expected results, diversion of management's attention,
failure to retain key personnel of the acquired businesses and risks
associated with unanticipated events or liabilities. In addition, the
businesses that we have already acquired or other businesses that we may
acquire in the future may not achieve anticipated revenues and earnings. Our
inability to acquire additional Internet service providers, high costs
associated with any acquisitions we make or our failure to successfully
integrate and operate any companies we have acquired or may acquire in the
future could have a material adverse effect on our business, financial
condition or results of operations. We cannot be sure that we will have
enough capital to finance our business strategy. We have obtained only
limited funds to date from the issuance of our capital stock. We will
continue to require substantial additional funds for capital expenditures and
related expenses in pursuit of our business strategy, including the
acquisition of additional Internet service providers and the continued build-
out and deployment of our Internet networks. The timing and amount of this
spending is difficult to predict accurately and will depend upon many factors.
At this time, we have signed definite agreements to purchase two (2) internet
service providers, which are subject to certain closing conditions, including
without limitation, the Company's receipt of additional financing. There can
be no assurance that any commitments can be obtained on terms acceptable to
us, or at all. We may seek additional funds through public offerings or
private placements of our equity securities. These public offerings or
private placements will not require the prior approval of our shareholders.
We have entered into a definite agreement as of February 2, 2000, to sell up
to 20,000 shares of its series F Preferred Stock, at a price of $1,000 per
share. Effective November 15, 1999, we executed certain notes, note and
warrant agreements, as well as warrants, in connection with a bridge financing
in the total amount of $1,950,000. In connection with that transaction, the
Company issued certain warrants to purchase shares of the Company Common
Stock, which if fully exercised, would be issuable for up to 845,000 shares of
the Company's Common Stock, depending upon when we close the transactions
covered by the Series F Convertible Preferred Stock Purchase Agreement. If we
raise additional funds by issuing equity or debt securities, further dilution
to our shareholders could occur. Additionally, we may grant registration
rights to investors purchasing equity or debt securities. Debt financing, if
available, may involve pledging some or all of our assets and may contain
restrictive covenants with respect to raising future capital and other
financial and operational matters. If we are unable to obtain necessary
additional capital, we may be required to reduce our operations, which would
have a material adverse effect on our business, financial condition and
results of operations.
We Have a Limited Operating History
Our Company was incorporated in 1996 under the laws of the State of
Colorado and from our inception until March 1998, we conducted no operations
and generated no significant revenue. Our Company was redomesticated by way
of a merger into a company organized under the laws of the State of Delaware
in December 14, 1999.
Our operations are subject to all of the risks inherent in a start-up or
development phase business enterprise. These risks include the absence of a
substantial operating history, shortage of cash, under-capitalization and lack
of experience in our chosen industry. We expect to encounter various
problems, expenses, complications and delays in connection with the
development of our business. The profit potential of our business model is
unproven and there can be no assurance that our services will achieve
commercial acceptance.
Our Success Is Dependent upon Pricing of Our Services and Obtaining Customers
Because we provide commercial Internet subscription services, our success
depends upon the willingness of subscribers to pay the installation costs and
monthly fees of our services. We cannot predict whether demand for our
services will materialize at the prices we expect to charge or whether the
market will accept prices we may set. Our failure to achieve or sustain
desired pricing levels or to obtain a sufficient number of subscribers for our
services could have a material adverse effect on our business, financial
condition or results of operations. Our ability to attract subscribers and
generate future revenues will be dependent on a number of factors, many of
which are beyond our control. We can provide no assurance that we will be
able to increase our subscriber base. Because of these variables, we are
unable to accurately forecast our revenues.
We Have a History of Operating Losses, Depletion of Working Capital and
Financial Instability
Since our inception, we have experienced significant net losses and have
accumulated significant deficits. We expect these losses and deficits to
continue for an undetermined period of time. Since the commencement of our
operations, we have earned only limited operating revenues. There can be no
assurance that we will be able to achieve profitable operations or sustained
revenues.
We May Suffer Losses as a Result of Pending Lawsuits
We are presently involved in a few lawsuits. If some or all of these
matters are determined adversely to our interests, we may be required to issue
additional shares of our common stock and/or pay money damages. Even if we
prevail in all of the matters, the cost of the litigation could be
substantial. In addition, our management may have to devote a substantial
amount of time to these lawsuits. Accordingly, our pending litigation could
have a material adverse effect on our business, financial condition and
results of operations.
We Rely on Key Employees Whose Absence Could Adversely Affect Our Ability to
Execute Our Business Strategy
Our future success will depend in large part on our ability to attract,
motivate and retain highly qualified employees. Competition for these
employees is intense and the process of locating technical and management
personnel with the combination of skills and attributes required to execute
our business strategy is often lengthy. Once these employees are hired, there
can still be intense competition for their services from other businesses,
including other start-up or Internet-related businesses. If we are successful
in implementing our business strategy, additional strain will be placed on our
managerial, operating, financial and other resources. In addition, we are
highly dependent upon the experience, abilities and continued efforts of our
senior management, especially Jeffery A. Mathias, our President and Chief
Executive Officer. We do not presently maintain "key man" life insurance with
respect to the members of our senior management. Our inability to attract key
personnel or the loss of the services of one or more of the key members of our
senior management, including Mr. Mathias, could have a material adverse effect
on our business, financial condition or results of operations.
Competition Could Adversely Affect Our Revenues
The market for the provision of Internet services to businesses is
extremely competitive, and we expect that competition will intensify in the
future. In addition to other Internet service providers, we may face
competition from businesses in other industries seeking to provide Internet
connection and Internet-related services. Virtually all of our competitors
and potential competitors have substantially greater financial, technical and
marketing resources, larger subscriber bases, longer operating histories and
greater name recognition than we have. In addition, these competitors may
have more established relationships with advertisers and content and
application providers than we do. These competitors may be able to undertake
more extensive marketing campaigns, adopt more aggressive pricing policies and
devote substantially more resources to developing Internet services than we
can. We can provide no assurance that we will be able to compete successfully
against our current or future competitors.
Further, in response to competition, we may make pricing, service or
marketing decisions that could have a material adverse effect on our business,
financial condition or results of operations.
We May Incur Expenses or Suffer a Loss of Business If Our Network Fails
Our success will depend in part upon our ability to support a complex
network infrastructure and avoid damage from fires, earthquakes, floods, power
losses, telecommunications failures and similar events. The occurrence of a
natural disaster or other unanticipated problems at our network operations
center or at any of our regional operating locations could cause interruptions
in our services. Any damage or failure that causes interruptions in our
operations could have a material adverse effect on our business, financial
condition or results of operations.
We May Lose Customers If We Are Unable to Respond to Technological Change in
the Industry
The market for business Internet service is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. The emerging nature of these products and services and
their rapid evolution will require that we continually improve the
performance, features and reliability of our system, particularly in response
to our competition. We can provide no assurance that we will be successful in
responding quickly, cost effectively or sufficiently to these developments.
In addition, we may be required to make substantial expenditures in order to
adapt to new Internet technologies or standards. These expenditures could
have a material adverse effect on our business, financial condition or results
of operations.
We Are Highly Dependant on the Acceptance and Growth of the Internet
Acceptance of our services is substantially dependent upon the widespread
adoption of the Internet for commerce, entertainment and communications. As
is typical in rapidly developing markets, demand for and market acceptance of
Internet products and services are subject to a high level of uncertainty. In
addition, issues concerning the commercial use of the Internet remain
unresolved and may affect the growth of Internet use, especially in the
markets that we will target. Despite growing interest in the commercial
possibilities for the Internet, we believe that many businesses and
individuals have been deterred from purchasing Internet access services for a
number of reasons including:
* inconsistent quality of service;
* limited availability of cost effective, high-speed service;
* difficulty in integrating business applications on the Internet; and
* inadequate protection of the confidentiality of stored data and
information moving across the Internet.
The adoption of the Internet for commerce and communications,
particularly by those enterprises that have historically relied upon
alternative means of commerce and communication, generally requires
understanding and acceptance of a new way of conducting business and
exchanging information. In particular, enterprises that have already invested
substantial resources in other means of conducting commerce and exchanging
information, or in relationships with other Internet service providers, may be
reluctant and slow to adopt a new strategy that may make their existing
personnel, infrastructure or Internet service provider relationship obsolete.
Failure of the Internet market to develop or unexpectedly slow development of
the Internet market may have a material adverse affect on our business,
financial condition or results of operations.
We may lose customers or incur significant expenses as a result of
security breaches of our network. Despite our implementation of security
measures, our networks may be vulnerable to unauthorized access, computer
viruses and other disruptive problems. Internet service providers and online
service providers have in the past experienced, and may in the future
experience, interruptions in service as a result of the accidental or
intentional actions of Internet users, current and former employees or others.
A person gaining unauthorized access to our network may be able to view and
download confidential information stored on our systems or the systems of our
subscribers. We could be found liable to our subscribers for unauthorized
access and we may lose potential subscribers if they perceive our system to be
unsafe. Although we have implemented industry standard security measures,
similar measures have been circumvented in the past, and we can provide no
assurance that measures we implement will not be circumvented in the future.
Eliminating computer viruses and alleviating other security problems may
require interruptions, delays or cessation of our services, which could have a
material adverse effect on our business, financial condition or results of
operations.
We May Incur Liability Related to Our Network Technology or the Information or
Content on Our Network
We may face liability under federal, state or foreign laws for
defamation, copyright, trademark or patent infringement, negligence, obscenity
or other claims related to the information or data on our network or the
technology used in our network. This potential liability may require us to
expend substantial resources or discontinue some of our services. Although we
carry general liability insurance, our insurance may not cover or fully
indemnify us for all liability that we may incur. Any imposition of liability
that is not covered by insurance or is in excess of insurance coverage could
have a material adverse effect on our business, financial condition or results
of operations.
Future Sales of Additional Shares of Our Common Stock into the Market May
Depress the Market Price of Our Common Stock
We have issued common stock, options and warrants to purchase our common
stock, and preferred stock which is convertible into our common stock. In the
future, we may issue additional common stock, options, warrants, preferred
stock or other securities exercisable to purchase or convertible into our
common stock. Sales of these shares of our common stock or the market's
perception that these sales could occur may cause the market price of our
common stock to fall. These sales also might make it more difficult for us to
sell equity or equity-related securities in the future at a time and price
that we deem appropriate or to use equity as consideration for future
acquisitions.
Issuance of Preferred Stock May Adversely Affect Holders of Our Common Stock
Our Board of Directors has the authority, without any further vote or
action by our shareholders, to issue up to 50,000,000 shares of preferred
stock. The issuance of preferred stock by our Board of Directors could
adversely affect the rights of the holders of our common stock. An issuance
of preferred stock could result in a class of outstanding securities that
would have preferences with respect to voting rights and dividends and in
liquidation over the common stock, and could, upon conversion or otherwise,
have all of the rights of our common stock. Our Board of Directors' authority
to issue preferred stock could discourage potential takeover attempts and
could delay or prevent a change in control through merger, tender offer, proxy
contest or otherwise by making these attempts more difficult or more costly to
achieve.
We May Incur Expenses as a Result of the Year 2000 Problem
We incurred only minor operational expenses as a result of the Year 2000
problem. "Year 2000 problems" were thought to exist because many computer
programs, embedded systems and components were designed to refer to a year by
the last two digits of the year, such as "99" for "1999." Any of our computer
programs that have date sensitive software have either been replaced or
upgraded to correctly recognize "00" as "2000" and not "1900."
A detailed post-Year 2000 turnover examination of our network and systems has
determined that all known issues regarding Year 2000 have been repaired,
upgraded, or have been eliminated by new Year 2000 compliant software.
Nominal operational costs for additional technical staffing were incurred
to monitor Year 2000 issues in our internal networks and systems and to
monitor customer systems as appropriate.
The Events Described in Forward-looking Statements We Make in this Prospectus
May Not Occur
This prospectus contains forward-looking statements as that term is
defined in the federal securities laws. Generally, these statements relate to
business plans or strategies, projected or anticipated benefits or other
consequences of our plans or strategies, projected or anticipated benefits
from acquisitions made or to be made by us, or projections involving
anticipated revenues, earnings or other aspects of our operating results. The
words "may," "will," "expect," "believe," "anticipate," "project," "plan,"
"intend," "estimate," "continue," their opposites and similar expressions are
intended to identify forward-looking statements. We caution readers that
these statements are not guarantees of future performance or events and are
subject to a number of uncertainties, risks and other influences, many of
which are beyond our control, that may influence the accuracy of the
statements and the projections upon which the statements are based, including
but not limited to the factors discussed in the risk factors described above.
Any one or more of these uncertainties, risks and other influences could
materially affect our results of operations and whether forward-looking
statements made by us ultimately prove to be accurate. Our actual results,
performance and achievements could differ materially from those expressed or
implied in these forward-looking statements. We undertake no obligation to
publicly update or revise any forward-looking statements, whether from new
information, future events or otherwise.
We may not be able to Manage our Growth if we are Successful
If we are successful and are able to grow the Company profitably, that
growth could create certain additional risks. Growth can place additional
burden on our management resources and financial controls. In addition, it
will require us to continue to implement and refine our operating, financial
and information management systems and to train, motivate and manage our
employees. Our ability to attract and retain qualified people will have a
significant effect on our ability to establish and maintain our position in
the market, and our failure to do so could have a material adverse effect on
our results of operations.
The Public Trading Market for our Common Stock is Illiquid and Highly Sporadic
While there currently exists in the over-the-counter market a limited and
sporadic public trading market for our common stock, we cannot be sure that
the market will improve in the future. As a result, the investors in our
stock may not be able to liquidate their investment without considerable
delay, if at all. If a more active market does develop, the price of our
stock may be highly volatile. The over-the-counter markets for securities
such as ours historically have experienced extreme price and volume
fluctuations during certain periods. These broad market fluctuations and
other factors, such as new product developments and trends in the Company's
industry and the investment markets generally, as well as economic conditions
and quarterly variations in the Company's results of operations, may also
adversely affect the market price of our common stock.
<PAGE>
<PAGE>
ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
You may read and copy any document we file at the Commission's Public
Reference Rooms in Washington, D.C., New York, New York, and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the Public Reference Rooms. You can also obtain copies of our
Commission filings by going to the Commission's website at http://www.sec.gov.
We have filed with the Commission a Registration Statement on Form S-8 to
register the shares of our common stock to be sold by the Selling
Securityholders. This Prospectus is part of that Registration Statement and,
as permitted by the Commission's rules, does not contain all of the
information set forth in the Registration Statement. For further information
with respect to us or our common stock, you may refer to the Registration
Statement and to the exhibits filed as part of the Registration Statement.
You can review a copy of the Registration Statement and its exhibits at the
public reference room maintained by the Commission and on the Commission's
website as described above.
FORWARD-LOOKING STATEMENTS
This prospectus contains statements that plan for or anticipate the
future. Forward-looking statements include statements about the future of our
industry, statements about our future business plans and strategies, and most
other statements that are not historical in nature. In this prospectus,
forward-looking statements are generally identified by the words "anticipate,"
"plan," "believe," "expect," "estimate," and the like. Although we believe
that any forward-looking statements we make in this prospectus are reasonable,
because forward-looking statements involve future risks and uncertainties,
there are factors that could cause actual results to differ materially from
those expressed or implied. For example, a few of the uncertainties that
could affect the accuracy of forward-looking statements, besides the specific
factors identified above in the Risk Factors section of this prospectus,
include:
* changes in general economic and business conditions affecting our
industry;
* changes in our business strategies; and
* the level of demand for our products.
In light of the significant uncertainties inherent in the forward-looking
statements made in this prospectus, particularly in view of our early stage of
operations, the inclusion of this information should not be regarded as a
representation by us or any other person that our objectives and plans will be
achieved.
<PAGE>
SELLING SECURITYHOLDERS
The Selling Securityholders are offering to sell 621,355 shares of our
common stock covered by this prospectus. All of the Selling Securityholders
are executive officers of the Company and received their shares of common
stock as stock awards under their employment agreements.
The following table lists the Selling Securityholders eligible to sell
shares of common stock under this Prospectus, the number of shares
beneficially owned by each Selling Securityholder prior to this Offering, and
the maximum number of shares each Selling Securityholder may sell under this
Prospectus. We will not receive any of the proceeds from the sale of our
common stock by the Selling Securityholders. The number of shares owned by
each Selling Securityholder after the Offering will depend upon the number of
shares actually sold by each Selling Securityholder.
<TABLE>
<CAPTION>
Number of
Number of Shares Maximum Shares
Beneficially Number of Beneficially
Owned Prior to be Sold Owned After
to Offering(1) in Offering Offering Percent
------------------ ----------- ------------ -------
<S> <C> <C> <C>
Jeffery A. Mathias 1,320,601 325,000 1,211,400 6.0%
James E. Maurer 778,948 75,000 847,000 4.3%
David H. Roberts 599,559 121,355 680,000 3.0%
Ned Abell 464,800 50,000 644,800 2.6%
Jenny J. Kim 390,155 50,000 507,500 2.2%
----------
621,355
</TABLE>
____________________
(1) The number of shares indicated includes shares acquired directly from us
at the time of hire by the Selling Shareholders as well as shares which are
issuable upon the exercise of currently vested options or options which will
vest over a period of 60 days from the date of filing of this Prospectus by
the Selling Securityholders.
(2) Mr. Mathias is our President and Chief Executive Offider. Under the
terms of his employment agreement, he received an initial stock award of
325,000 shares. In addition, Mr. Mathias has been granted options to purchase
a total of 1,211,400 shares of our common stock at a weighted average exercise
price of $1.98 per share, of which 215,799 options are subject to future
vesting.
(3) Mr. Maurer is our Chief Financial Officer. Under the terms of his
employment agreement, he received a stock award of 75,000 shares. In
addition, Mr. Maurer has been granted options to purchase a total of 847,000
shares of our common stock at a weighted average exercise price of $2.00 per
share, of which 143,052 options are subject to future vesting.
(4) Mr. Roberts serves our Vice President of Business Development. Under a
former consulting agreement and his current employment agreement, he received
stock grants totaling 121,355 shares of our common stock. In addition, he has
been granted options to purchase a total of 680,000 shares of our common stock
at a weighted average exercise price of $2.24 per share, of which 201,796
options are subject to future vesting.
(5) Mr. Abell is our Vice President of Mergers and Acquisitions. Under his
employment agreement, he received an initial stock grant of 50,000 shares. In
addition, he has been granted options to purchase a total of 644,800 shares of
our common stock at a weighted average exercise price of $3.10 per share, of
which 230,000 options are subject to future vesting.
(6) Ms. Kim is our Vice President of Legal Affairs and General Counsel.
Under her employment agreement, she received an initial stock award of 50,000
shares. In addition, she has been granted options to purchase a total of
507,500 shares of common stock at a weighted average exercise price of $2.54
per share, of which 167,345 options are subject to future vesting.
If the Selling Securityholders sell all of the shares of common stock
covered by this Prospectus and do not acquire any additional shares, none of
the Selling Securityholders would own any shares of our common stock after the
completion of this Offering.
We will pay all expenses to register the shares, except that the Selling
Securityholders will generally pay any underwriting and brokerage discounts,
fees and commissions, specified attorneys' fees and other expenses to the
extent applicable to them.
We have agreed to indemnify the Selling Securityholders and certain
affiliated parties against specified liabilities, including liabilities under
the Securities Act of 1933, as amended, in connection with this Offering. The
Selling Securityholders have agreed to indemnify us and our directors and
officers, as well as any persons controlling our Company, against certain
liabilities, including liabilities under the Securities Act. Insofar as
indemnification for liabilities under the Securities Act may be permitted to
our directors or officers, or persons controlling our Company, we have been
advised that in the opinion of the SEC this kind of indemnification is against
public policy as expressed in the Securities Act of 1933, as amended, and is,
therefore, unenforceable.
USE OF PROCEEDS
We will not receive any proceeds when Selling Securityholders sell shares
of common stock under this Prospectus.
PLAN OF DISTRIBUTION
Selling Securityholders may sell their shares of common stock either
directly or through a broker-dealer or other agent at prices related to
prevailing market prices or at negotiated prices, in one or more of the
following kinds of transactions:
* Transactions in the over-the-counter market;
* Transactions on a stock exchange that lists our common stock, or
transactions negotiated between Selling Securityholders and
purchasers, or otherwise.
Broker-dealers or agents may purchase shares directly from a Selling
Securityholder or sell shares to someone else on behalf of a Selling
Securityholder. Broker-dealers may charge commissions to both Selling
Securityholders selling common stock and purchasers buying shares sold by a
Selling Securityholder. If a broker buys shares directly from a Selling
Securityholder, the broker may resell the shares through another broker, and
the other broker may receive compensation from the Selling Securityholder for
the resale.
To the extent required by laws, regulations or agreements we have made,
we will use our best efforts to file a Prospectus supplement during the time
the Selling Securityholders are offering or selling shares covered by this
Prospectus in order to add or correct important information about the plan of
distribution for the shares.
In addition to any other applicable laws or regulations, Selling
Securityholders must comply with regulations relating to distributions by
Selling Securityholders, including Regulation M under the Securities Exchange
Act of 1934, as amended.
Some states may require that registration, exemption from registration or
notification requirements be met before Selling Shareholders may sell their
common stock. Some states may also require Selling Securityholders to sell
their common stock only through broker-dealers.
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 150,000,000 shares of common
stock, par value $.001 per share and 50,000,000 shares of preferred stock, par
value $.01 per share. The following summary of provisions applicable to our
common stock and preferred stock is subject to, and qualified in its entirety
by, our Certificate of Incorporation and Bylaws and by the provisions of
applicable law.
Common Stock
As of February 8, 2000, 15,563,752 shares of our common stock were
outstanding and held of record by 373 holders of record.
Each holder of shares of common stock is entitled to one vote for each
share held on all matters submitted to a vote of holders of common stock. The
common stock does not have cumulative voting rights, which means that holders
of more than 50% of the shares of common stock are able to elect all of our
directors and, in this event, the holders of the remaining shares would not be
able to elect any directors. Each share of common stock is entitled to
participate equally in dividends, if, as and when declared by our Board of
Directors, and in the distribution of assets in the event of liquidation,
subject in all cases to any prior rights of outstanding shares of preferred
stock. We have never declared or paid cash dividends on our common stock and
it is our present intention not to pay any cash dividends to holders of common
stock but to reinvest our earnings, if any. The shares of common stock have no
preemptive, conversion or other subscription rights and there are no
redemption or sinking fund provisions applicable to the common stock. The
outstanding shares of common stock are, and all shares of common stock offered
by this prospectus will be, upon issuance and sale, duly authorized, validly
issued, fully paid and nonassessable. Our Board of Directors has the
authority, without further shareholder approval, to issue up to all of the
100,000,000 shares of Common Stock authorized by our charter. The issuance of
common stock could, among other things and under some circumstances, have the
effect of delaying, deferring or preventing a change of control without any
action by our shareholders.
Preferred Stock
Our Board of Directors may, without shareholder approval and subject to
the rights of the holders of our existing preferred stock, establish and issue
shares of one or more classes of preferred stock having the designations,
number of shares, dividend rates, liquidation preferences, redemption
provisions, sinking fund provisions, conversion rights, voting rights and
other rights, preferences and limitations that our Board may determine. The
Board may authorize the issuance of preferred stock with voting, conversion
and economic rights senior to the common stock so that the issuance of
preferred stock could adversely affect the market value of the common stock.
The creation of one or more series of preferred stock may adversely affect the
voting power or other rights of the holders of common stock. The issuance of
preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes could, among other things and under
some circumstances, have the effect of delaying, deferring or preventing a
change in control without any action by shareholders.
As of February 8, 2000, our authorized and outstanding preferred stock
consisted of the following:
* 379,941 shares of series A convertible preferred stock;
* 696,419 shares of series C convertible preferred stock;
* 4,440 shares of series D convertible preferred stock; and
* 7,450 shares of series F convertible preferred stock, as of February
8, 2000.
Each series of preferred stock ranks prior to the common stock and equally
with each other series of preferred stock.
Series A Convertible Preferred Stock
Each share of our series A convertible preferred stock is convertible
voluntarily by the holder into one share of our common stock, subject to
adjustments, after the earlier of one year following the date of issue or upon
the effective date of a registration statement covering the conversion shares.
Unless earlier converted by their holder, all of the shares of our series A
convertible preferred stock will automatically convert into shares of common
stock on the third anniversary of the date of issuance of the series A
convertible preferred stock, or sooner in some circumstances.
Holders of the series A convertible preferred stock are entitled to
receive payment of dividends at the annual rate of 10% of the stated value of
$4.00 per share. Dividends on the series A convertible preferred stock are
cumulative. Holders of the series A convertible preferred stock are also
entitled to participate, pro rata, in dividends paid on the outstanding shares
of common stock.
The outstanding shares of series A convertible preferred stock have a
liquidation preference equal to $4.00 per share. Holders of series A
convertible preferred stock are not entitled to demand, and we are not
required or entitled to effect, the redemption of any of the shares of series
A convertible preferred stock.
Holders of series A convertible preferred stock are entitled to vote with
the holders of shares of common stock as a single class on all matters
presented for a vote to our stockholders. Each holder of series A convertible
preferred stock may cast one vote for each share of common stock into which
the holder's shares of series A convertible preferred stock may be converted.
Series C Convertible Preferred Stock
Each share of our series C convertible preferred stock is convertible
voluntarily by the holder into one share of our common stock, subject to
adjustments. Unless sooner converted by their holders, all of the shares of
our series C convertible preferred stock will automatically convert into
shares of common stock on the third anniversary of the date of issuance of the
series C convertible preferred stock.
Holders of the series C convertible preferred stock are entitled to
receive payment of dividends at the annual rate of 10% of the stated value of
$4.00 per share. Dividends on the series C convertible preferred stock are
cumulative and are payable in the form of additional shares of series C
convertible preferred stock. Holders of the series C convertible preferred
stock are also entitled to participate, pro rata, in any dividends paid on the
outstanding shares of common stock.
The outstanding shares of series C convertible preferred stock have a
liquidation preference equal to $4.00 per share. Holders of series C
convertible preferred stock are not entitled to demand, and we are not
required to effect, the redemption of any of the shares of series C
convertible preferred stock.
Holders of series C convertible preferred stock are entitled to vote with
the holders of shares of common stock as a single class on all matters
presented for a vote to our stockholders. Each holder of series C convertible
preferred stock may cast one vote for each share of common stock into which
the holder's shares of series C convertible preferred stock may be converted.
Series D Convertible Preferred Stock
Each share of our series D convertible preferred stock is convertible
voluntarily by the holder into 333 shares of our common stock, subject to
certain adjustments. Unless sooner converted by their holders, all of the
shares of our series D convertible preferred stock will automatically convert
into shares of common stock three years after the date of issuance of the
series D convertible preferred stock, which date may be extended under some
circumstances. Notwithstanding the foregoing, the shares of series D
convertible preferred stock will not convert into shares of common stock to
the extent that the aggregate number of shares of common stock beneficially
owned by a holder of series D convertible preferred stock and its affiliates
following conversion would exceed 4.99% of the outstanding shares of our
common stock.
Holders of the series D convertible preferred stock are entitled to
receive payment of dividends at the annual rate of 5% of the liquidation
preference of $1,000 per share. Dividends on the series D convertible
preferred stock are cumulative and are payable in shares of common stock or
cash, at the option of the holders of the shares of series D convertible
preferred stock, except that dividends on the series D convertible preferred
stock are payable only upon any conversion of the series D convertible
preferred stock into shares of common stock or upon the redemption of the
series D convertible preferred stock.
If after one year following the issuance of the series D convertible
preferred stock, our common stock is trading for less than $3.00 per share, we
may redeem all or a portion of the series D convertible preferred stock
outstanding at a price per share equal to 120% of the liquidation preference
of $1,000 plus any accrued and unpaid dividends. Holders of the series D
convertible preferred stock may decline to have their shares included in the
redemption.
Except for the class voting rights discussed below and as otherwise
required by applicable law, the holders of series D convertible preferred
stock have no voting rights on matters submitted to our stockholders for a
vote. The class voting rights of the holders of series D convertible
preferred stock require that the Company receive the affirmative vote of 75%
of the then outstanding shares of series D convertible preferred stock in
order to take specified actions with respect to our liquidation, make
specified changes to our Certificate of Incorporation or Bylaws or otherwise
affect the rights of the series D holders or take other actions as described
in the certificate of designation for the series D convertible preferred
stock.
We have granted registration rights to the holders of the series D
convertible preferred stock under a registration rights agreement requiring us
to prepare and file a registration statement so as to permit the public
offering and resale of the shares of common stock issuable to series D
convertible preferred stock holders upon conversion of their preferred stock
or exercise of their warrants.
Series F Convertible Preferred Stock
Each share of our series F convertible preferred stock is convertible
voluntarily by the holder into 1,000 shares of our common stock, subject to
adjustments. Unless sooner converted by their holders, all of the shares of
our series F convertible preferred stock will automatically convert into
shares of common stock three years after the date of issuance of the series F
convertible preferred stock, which date may be extended under some
circumstances.
Holders of the series F convertible preferred stock have a liquidation
preference of $1,000 per share. No dividends shall be payable on the series F
Preferred Stock in preference to the common stock or to any other classes or
series of stock issued by the Company.
Except with respect to transactions upon which the Series F Preferred
Stock shall be entitled to vote as a separate class and as otherwise required
by Delaware law, the holders of series F convertible preferred stock shall be
entitled to vote with the holders of shares of common stock as a single class
on all matters presented for a vote to the shareholders of the Company. In
each instance in which holders of Series F Preferred Stock cast their vote,
they will be entitled to cast a number of votes equal to the number of shares
of common stock into which the Series F Preferred Stock is convertible at the
time of the vote. Initially, each share of Series F Preferred Stock is
convertible into 1,000 shares of Common Stock.
Pursuant to the terms of the Certificate of Amendment to the Certificate
of Designations of Series F Convertible Preferred Stock, we are required to
obtain the affirmative vote of 75% of the then outstanding shares of Series F
Convertible Preferred Stock in order to take specified actions with respect to
(i) authorizing, creating, issuing or increasing the authorized or issued
amount of any class or series of stock, including but not limited to the
issuance of any more shares of previously authorized common stock or preferred
stock, raking prior to the Series F Convertible Preferred Stock, with respect
to the distribution of assets on liquidation, dissolution or winding up, (ii)
amend, alter or repeal the provisions of the Series F Convertible Preferred
Stock, (iii) make specified changes to our Certificate of Incorporation or
Bylaws or otherwise affect the rights of the Series F holders, or (iv) take
such other actions as described in the Certificate of Amendment to the
Certificate of Designations of Series F Convertible Preferred Stock.
We have granted registration rights to the holders of the series F
convertible preferred stock under a registration rights agreement requiring us
to prepare and file a registration statement so as to permit the public
offering and resale of shares of common stock issuable to series F convertible
preferred stockholders upon conversion of their preferred stock.
LEGAL MATTERS
The validity of the resale of the common stock offered hereby will be
passed upon for the Company by Neuman & Drennen, LLC of Boulder, Colorado.
Clifford L. Neuman, a partner in the firm of Neuman & Drennen, LLC, would be
deemed the beneficial owner of 30,000 shares of the Company's common stock,
owned of record by Ratna Enterprises, LLC, of which he is a manager.
EXPERTS
The audited financial statements of Skylynx Communications, Inc. as of
December 31, 1998, and of Net Asset, LLC, Simply Internet, Inc., CalWeb
Internet Services, Inc., and Inficad Computing and Design, LLC, incorporated
by reference in this registration statement, have been audited by Arthur
Andersen LLP, independent certified public accountants, as indicated in this
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
The financial statements of the Company for the period from inception
(July 29, 1997) to December 31, 1997, and the financial statements of
Interaccess Corporation included in the Company's current report on Form 8-K/A
dated February 2, 1999, which are incorporated by reference in this
registration statement, have been audited by Cordovano and Harvey, P.C.,
independent certified public accountants, and are included herein in reliance
upon the authority of said firm as experts in accounting and auditing.
You should rely only on the information contained in this document or
that we have referred you to. We have not authorized anyone to provide you
with information that is different. This Prospectus is not an offer to sell
common stock and is not soliciting an offer to buy common stock in any state
where the offer or sale is not permitted.
SkyLynx Communications, Inc.
Common Stock
621,355 Shares
February __, 2000
<PAGE>
<PAGE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation
to indemnify any of its directors or officers who was or is a party or is
threatened to be made a party to any third party proceeding by reason of the
fact that such person is or was a director or officer of the corporation
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe that such person's
conduct was unlawful. In a derivative action, i.e., one by or in the right of
a corporation, the corporation is permitted to indemnify any of its directors
or officers against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and
only to the extent that the court in which such action or suit was brought
shall determine upon application that such person is fairly and reasonably
entitled to indemnity for such expenses despite such adjudication of
liability.
Article VIII of the Company's currently effective Certificate of
Incorporation eliminates the personal liability of its directors for monetary
damages for breach of fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law or (iv) for any transaction from which
the director derived an improper personal benefit. In addition, as permitted
by Section 145 of the Delaware General Corporation Law, the Bylaws of the
Company provide that: (a) the Company is required to indemnify its directors
and officers and persons serving in such capacities in other business entities
(including, for example, subsidiaries of the Company) at the Company's request
(such directors, officers and other persons are collectively, "Covered
Persons"), to the fullest extent permitted by Delaware law, including those
circumstances in which indemnification would otherwise be discretionary; (b)
the Company is required to advance expenses, as incurred to such Covered
Persons in connection with defending a proceeding; (c) the indemnitee(s) of
the Company have the right to bring suit, and to be paid the expenses of
prosecuting such suit if successful, to enforce the rights to indemnification
under the Bylaws or to advancement of expenses under the Bylaws; (d) the
rights conferred in the Bylaws are not exclusive and the Company is authorized
to enter into indemnification agreements with such directors, officers and
employees; (e) the Company is required to maintain director and officer
liability insurance to the extent reasonably available; and (f) the Company
may not retroactively amend the Bylaws indemnification provision in a way that
is adverse to such Covered Persons.
The Company also maintains a limited amount of director and officer
insurance. The indemnification provision in the Bylaws, and the indemnity
agreements entered into between the Company and its officers or directors, may
be sufficiently broad to permit indemnification of the Company's officers and
directors for liability arising under the Securities Act of 1933, as amended
(the "1933 Act").
* * *
EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
EXHIBITS
Exhibit
Number Description
------- ------------
*4.1 Amended and Restated Certificate of Incorporation filed
with the Delaware Secretary of State on March 31, 1999
4.2 Amended Certificate of Designation filed with the Delaware
Secretary of State on January 28, 2000
4.3 Amended ByLaws by way of Written Consent of the Board of
Directors on June 30, 1999
4.4 ByLaws as adopted by the Board of Directors on November
30, 1999
5.1 Opinion of Neuman & Drennen, LLC
10.1 Amended and Restated Employment Agreement dated as of
April 20, 1999 between the Company and Jeffery A. Mathias
and Amended and Restated Employment Agreement dated August
23, 1999
10.2 Employment Agreement dated as of December 23, 1998 between
the Company and James E. Maurer and Amended and Restated
Employment Agreement, dated August 23, 1999
10.3 Employment Agreement dated as of January 7, 1999 between
the Company and David H. Roberts and Amended and Restated
Employment Agreement, dated August 23, 1999
10.4 Employment Agreement dated as of December 1, 1998 between
the Company and Ned Abell
10.5 Employment Agreement effective as of July 15, 1999 between
the Company and Jenny Kim
23.1 Consent of Neuman & Drennen, LLC
23.2 Consent of Cordovano and Harvey, P.C., Certified Public
Accountants
23.3 Consent of Arthur Andersen LLP, Independent Certified
Public Accountants
24.1 Power of Attorney; reference is made to signature page
* Incorporate by reference from the Company's Current Report on Form
8-K dated December 14, 1999, as filed with the Commission on December 20,
1999.
<PAGE>
<PAGE>
UNDERTAKINGS
1. The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offerings or sales are
being made, a post-effective amendment to this Registration Statement:
i. To include any prospectus required by Section 10(a)(3) of the
Securities Act;
ii. To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
(Section 230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
iii. To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(i) and (a) (ii) do not apply if the
registration statement is on Form S-3 or Form S-8 and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the issuer pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporate by reference in the
registration statement.
(b) That, for the purposes of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof; and
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
2. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
3. The undersigned Registrant hereby undertakes to deliver, or cause to
be delivered with the Prospectus, to each person to whom the Prospectus is
sent or given, the latest annual report to Securityholders that is
incorporated by reference in the Prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the Prospectus,
to deliver, or cause to be delivered to each person to whom the Prospectus is
sent or given, the latest quarterly report that is specifically incorporated
by reference in the Prospectus to provide such interim financial information.
4. Insofar as indemnification for liabilities arising under the Act may
be permitted to Directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such Director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, State of Colorado, on
February 11, 2000.
SKYLYNX COMMUNICATIONS, INC.
By: /s/ Jeffery A. Mathias
---------------------------------
Jeffery A. Mathias
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Jeffery A. Mathias his true and lawful
attorney-in-fact and agent, with full power of substitution and re-
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Position Date
--------- --------- ----
/s/ Jeffery A. Mathias President, Chief Executive 02/11/00
- ---------------------- Officer and Director -------------
Jeffery A. Mathias
/s/ James E. Maurer Director, Chief Financial Officer 02/11/00
- ------------------- Principal Financial and -------------
James E. Maurer Accounting Officer)
/s/ Frank P. Ragano Director 02/11/00
- ------------------- ------------
Frank P. Ragano
/s/ J. Samuel Ridley Director 02/11/00
- -------------------- ------------
J. Samuel Ridley
/s/ Robert Smith Director 02/11/00
- -------------------- -------------
Robert Smith
<PAGE>
AMENDED CERTIFICATE OF DESIGNATIONS OF
SERIES F CONVERTIBLE PREFERRED STOCK
OF
SKYLYNX COMMUNICATIONS, INC.
(Pursuant to Section 151(g) of the General Corporation Law of the State of
Delaware)
SkyLynx Communications, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), in
accordance with the provisions of Section 151(g) thereof:
HEREBY CERTIFIES THAT:
First: Pursuant to the authority conferred upon the Board of Directors
by the Amended and Restated Certificate of Incorporation of the Company (the
"Certificate"), the Board of Directors on December 29, 1999 adopted a
resolution creating a new series of 15,000 shares of preferred stock of the
Company (the "Preferred Stock") designated as "Series F Convertible Preferred
Stock:"
Second: No shares of Preferred Stock have been issued.
Third: Pursuant to the authority conferred upon the Board of Directors
by the Certificate, the Board of Directors on January 28, 2000 adopted the
following resolution increasing the number of shares Preferred Stock to 20,000
shares and amending the rights, preferences and restrictions of the Preferred
Stock in the manner set forth therein:
RESOLVED, that pursuant to the authority granted to the Board of
Directors by Article IV of the Certificate, the Certificate of Designations of
Series F Convertible Preferred Stock of the Company (the "Preferred Stock")
be, and it hereby is, amended to increase the number of authorized shares of
Preferred Stock to 20,000, which series of Preferred Stock shall rank on par
with the existing series of preferred stock and shall have, in addition to the
terms set forth in the Certificate, the rights, preferences and restrictions
set forth in the Certificate of Amendment to Certificate of Designations of
Series F Convertible Preferred Stock (the "Certificate of Designations"):
Rights, Preferences and Restrictions of Series F Preferred Stock.
1. Designation and Rank. The designation of such series of the
Preferred Stock shall be the Series F Convertible Preferred Stock, par value
$.01 per share (the "Series F Preferred Stock"). The maximum number of shares
of Series F Preferred Stock shall be twenty thousand (20,000) shares. The
Series F Preferred Stock shall have a liquidation preference of $1,000 per
share. The Series F Preferred Stock shall rank (i) prior to the common stock,
par value $.001 per share (the "Common Stock"), and to all other classes and
series of equity securities of the Company which by its terms does not rank
senior to the Series F Preferred Stock ("Junior Stock") and (ii) on parity
with the Series A, Series C and Series D Preferred Stock of the Company and
any other class and series of equity securities which by its terms shall rank
on parity with the Series F Preferred Stock. The Series F Preferred Stock
shall be subordinate to and rank junior to all indebtedness of the Company now
or hereafter outstanding.
2. Dividends. No dividends shall be payable on the Series F
Preferred Stock in preference to the Common Stock or to any other classes or
series of stock issued by the Company.
3. Voting Rights.
(a) Class Voting Rights. The Series F Preferred Stock shall
have the following class voting rights (in addition to the voting rights set
forth in Section 3(b) herein). So long as any shares of the Series F
Preferred Stock remain outstanding, the Company shall not, without the
affirmative vote or consent of the holders of at least three-quarters of the
shares of the Series F Preferred Stock outstanding at the time, given in
person or by proxy, either in writing or at a meeting, in which the holders of
the Series F Preferred Stock vote separately as class: (i) authorize, create,
issue or increase the authorized or issued amount of any class or series of
stock, including but not limited to the issuance of any more shares of
previously authorized Common Stock or Preferred Stock, ranking prior to the
Series F Preferred Stock, with respect to the distribution of assets on
liquidation, dissolution or winding up; (ii) amend, alter or repeal the
provisions of the Series F Preferred Stock, whether by merger, consolidation
or otherwise, so as to adversely affect any right, preference, privilege or
voting power of the Series F Preferred Stock; provided, however, that any
creation and issuance of another series of parity or Junior Stock shall not be
deemed to adversely affect such rights, preferences, privileges or voting
powers; (iii) repurchase, redeem or pay dividends on, shares of the Company's
Junior Stock; (iv) amend the Certificate or Bylaws of the Company so as to
adversely affect any right, preference, privilege or voting power of the
Series F Preferred Stock; provided, however, that any creation and issuance of
another series of parity or Junior Stock shall not be deemed to adversely
affect such rights, preferences privileges or voting powers; (v) effect any
distribution with respect to Junior Stock; or (vi) reclassify the Company's
outstanding securities.
(b) General Voting Rights. Except with respect to
transactions upon which the Series F Preferred Stock shall be entitled to vote
separately as a class pursuant to Section 3(a) above and except as otherwise
required by Delaware law, the Series F Preferred Stock shall be entitled to
vote with the holders of shares of Common Stock as a single class on all
matters presented for a vote to the shareholders of the Company. The number
of votes per share of Series F Preferred Stock which can be cast shall be
adjusted at such time or times as the Conversion Price is adjusted so that the
number of votes per share of Series F Preferred Stock which may be cast shall
always be equal to the full number of shares of Common Stock into which each
share of Series F Preferred Stock may be converted when voting with the
holders of Common Stock as a single class.
4. Liquidation Preference.
(a) In the event of the liquidation, dissolution or winding up
of the affairs of the Company, whether voluntary or involuntary, after payment
or provision for payment of the debts and other liabilities of the Company,
the holders of shares of the Series F Preferred Stock then outstanding shall
be entitled to receive, out of the assets of the Company whether such assets
are capital or surplus of any nature, an amount equal to $1,000 per share of
the Series F Preferred Stock plus any accrued and unpaid dividends (the
"Liquidation Preference Amount") before any payment shall be made or any
assets distributed to the holders of the Common Stock or any other Junior
Stock. If the assets of the Company are not sufficient to pay in full the
Liquidation Preference Amount payable to the holders of outstanding shares of
the Series F Preferred Stock and any series of Preferred Stock or any other
class of stock on a parity, as to rights on liquidation, dissolution or
winding up, with the Series F Preferred Stock, then all of said assets will be
distributed among the holders of the Series F Preferred Stock and the other
classes of stock on a parity with the Series F Preferred Stock, if any,
ratably in accordance with the respective amounts that would be payable on
such shares if all amounts payable thereon were paid in full. The liquidation
payment with respect to each outstanding fractional share of Series F
Preferred Stock shall be equal to a ratably proportionate amount of the
liquidation payment with respect to each outstanding share of Series F
Preferred Stock. All payments for which this Section 4(a) provides shall be
in cash, property (valued at its fair market value as determined by the
Company's independent, outside accountant) or a combination thereof; provided,
however, that no cash shall be paid to holders of Junior Stock unless each
holder of the outstanding shares of Series F Preferred Stock has been paid in
cash the full Liquidation Preference Amount plus any accrued and unpaid
dividends to which such holder is entitled as provided herein. After payment
of the full Liquidation Preference Amount plus any accrued and unpaid
dividends to which each holder is entitled, such holders of shares of Series F
Preferred Stock will not be entitled to any further participation as such in
any distribution of the assets of the Company.
(b) A consolidation or merger of the Company with or into any
other corporation or corporations, or a sale of all or substantially all of
the assets of the Company, or the effectuation by the Company of a transaction
or series of transactions in which more than 50% of the voting shares of the
Company is disposed of or conveyed, shall not be deemed to be a liquidation,
dissolution, or winding up within the meaning of this Section 4. In the event
of the merger or consolidation of the Company with or into another
corporation, the Series F Preferred Stock shall maintain its relative powers,
designations and preferences provided for herein and no merger shall result
inconsistent therewith.
(c) Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, stating
a payment date and the place where the distributable amounts shall be payable,
shall be given by mail, postage prepaid, no less than 45 days prior to the
payment date stated therein, to the holders of record of the Series F
Preferred Stock at their respective addresses as the same shall appear on the
books of the Company.
5. Conversion. The holder of Series F Preferred Stock shall have
the following conversion rights (the "Conversion Rights"):
(a) Right to Convert. The holder of any shares of Series F
Preferred Stock may, at such holder's option, elect to convert (a "Voluntary
Conversion") all or any portion of the shares of Series F Preferred Stock held
by such person into a number of fully paid and nonassessable shares of Common
Stock (the "Conversion Rate") equal to the quotient of (i) the Liquidation
Preference Amount of the shares of Series F Preferred Stock being converted
divided by (ii) the Conversion Price (as defined in Section 5(d) herein) then
in effect as of the date of the delivery by such holder of its notice of
election to convert.
(b) Mechanics of Voluntary Conversion. The Voluntary
Conversion of Series F Preferred Stock shall be conducted in the following
manner:
(i) Holder's Delivery Requirements. To convert Series F
Preferred Stock into full shares of Common Stock on any date (the "Voluntary
Conversion Date"), the holder thereof shall (A) transmit by facsimile (or
otherwise delivering), for receipt on or prior to 11:59 p.m., California Time
on such date, a copy of a fully executed notice of conversion in the form
attached hereto as Exhibit I (the "Conversion Notice"), to the Company, and
(B) surrender to a common carrier for delivery to the Company as soon as
practicable following such date, the original certificates representing the
shares of Series F Preferred Stock being converted (or an indemnification
undertaking with respect to such shares in the case of their loss, theft or
destruction) (the "Preferred Stock Certificates") and the originally executed
Conversion Notice.
(ii) Company's Response. Upon receipt by the Company of a
facsimile copy of a Conversion Notice, the Company shall immediately send, via
facsimile, a confirmation of receipt of such Conversion Notice to such holder.
Upon receipt by the Company of the Preferred Stock Certificates to be
converted pursuant to a Conversion Notice, together with the originally
executed Conversion Notice, the Company or its designated transfer agent (the
"Transfer Agent") (as applicable) shall, on the next business day following
the date of receipt by the Company of both (or the second business day
following the date of receipt by the Company of both if received after 11:00
a.m. California Time), (A) issue and surrender to a common carrier for
overnight delivery to the address as specified in the Conversion Notice, a
certificate, registered in the name of the holder or its designee, for the
number of shares of Common Stock to which the holder shall be entitled, or (B)
credit such aggregate number of shares of Common Stock to which the holder
shall be entitled to the holder's or its designee's balance account with
American Securities Transfer & Trust, Inc. If the number of shares of
Preferred Stock represented by the Preferred Stock Certificate(s) submitted
for conversion is greater than the number of shares of Series F Preferred
Stock being converted, then the Company shall, as soon as practicable and in
no event later than two (2) business days after receipt of the Preferred Stock
Certificate(s) and at its own expense, issue and deliver to the holder a new
Preferred Stock Certificate representing the number of shares of Series F
Preferred Stock not converted.
(iii) Dispute Resolution. In the case of a dispute as to
the determination of the Conversion Price or the arithmetic calculation of the
number of shares of Common Stock to be issued upon conversion, the Company
shall promptly issue to the holder the number of shares of Common Stock that
is not disputed and shall submit the disputed determinations or arithmetic
calculations to the holder via facsimile as soon as possible, but in no event
later than two (2) business days after receipt of such holder's Conversion
Notice. If such holder and the Company are unable to agree upon the
determination of the Conversion Price or the arithmetic calculation of the
number of shares of Common Stock to be issued upon such conversion within one
(1) business day of such disputed determination or arithmetic calculation
being submitted to the holder, then the Company shall within one (1) business
day submit via facsimile (A) the disputed determination of the Conversion
Price to an independent, reputable investment bank or (B) the disputed
arithmetic calculation of the number of shares of Common Stock to be issued
upon such conversion to its independent, outside accountant. The Company
shall cause the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the
holder of the results no later than seventy-two (72) hours from the time it
receives the disputed determinations or calculations. Such investment bank's
or accountant's determination or calculation, as the case may be, shall be
binding upon all parties absent manifest error. The reasonable expenses of
such investment bank or accountant in making such determination shall be paid
by the Company, in the event the holder's calculation or determination was
correct, or by the holder, in the event the Company's calculation or
determination was correct, or equally by the Company and the holder in the
event that neither the Company's or the holder's calculation or determination
was correct. The period of time in which the Company is required to effect
conversions under this Certificate of Designations shall be tolled with
respect to the subject conversion pending resolution of any dispute by the
Company made in good faith and in accordance with this Section 5(b)(iii).
(iv) Record Holder. The person or persons entitled to
receive the shares of Common Stock issuable upon a conversion of the Series F
Preferred Stock shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on the Conversion Date.
(v) Company's Failure to Timely Convert. If within five
(5) business days of the Company's receipt of the Preferred Stock Certificates
to be converted and the Conversion Notice (the "Share Delivery Period") the
Company shall fail to issue a certificate to a holder or credit the holder's
balance account with American Securities Transfer & Trust, Inc. for the number
of shares of Common Stock to which such holder is entitled upon such holder's
conversion of the Series F Preferred Stock or to issue a new Preferred Stock
Certificate representing the number of shares of Series F Preferred Stock to
which such holder is entitled pursuant to Section 5(b)(ii) herein (a
"Conversion Failure"), in addition to all other available remedies which such
holder may pursue hereunder and under the Series F Convertible Stock Purchase
Agreement by and among the Company and the purchasers of Series F Preferred
Stock (the "Series F Stock Purchase Agreement") (including indemnification
pursuant to Article VIII thereof), the Company shall pay additional damages to
such holder on each date after such fifth (5th) business day that such
conversion is not timely effected in an amount equal 1% of the product of (A)
the sum of the number of shares of Common Stock not issued to the holder on a
timely basis pursuant to Section 5(b)(ii) herein and to which such holder is
entitled and, in the event the Company has failed to deliver a Preferred Stock
Certificate to the holder on a timely basis pursuant to Section 5(b)(ii)
herein, the number of shares of Common Stock issuable upon conversion of the
shares of Series F Preferred Stock represented by such Preferred Stock
Certificate, as of the last possible date which the Company could have issued
such Preferred Stock Certificate to such holder without violating
Section 5(b)(ii) and (B) the Closing Bid Price (as defined in Section 5(j)
herein) of the Common Stock on the last possible date which the Company could
have issued such Common Stock and such Preferred Stock Certificate, as the
case may be, to such holder without violating Section 5(b)(ii) herein and the
holder may after any time after such Share Delivery Period send the Company a
notice of revocation of conversion (the "Revocation Notice") revoking such
holder's Conversion Notice (and requesting a return of the applicable
Preferred Stock Certificates) by (A) transmitting by facsimile (or otherwise
delivering), for receipt on or prior to 11:59 p.m., California Time on such
date, a copy of an executed Revocation Notice and (B) sending by a common
carrier for delivery to the Company as soon as practicable following such
date, the originally executed Revocation Notice. If the holder has delivered
a Revocation Notice to the Company, then the Company's obligation to pay
additional damages to such holder (in accordance with the preceding sentence)
shall terminate. If the Company fails to pay the additional damages set forth
in this Section 5(b)(v) within five (5) business days of the date incurred,
then such payment shall bear interest at the rate of 2% per month (pro rated
for partial months) until such payments are made.
(c) Mandatory Conversion.
(i) Each share of Series F Preferred Stock outstanding on
the Mandatory Conversion Date (as defined below) shall, automatically and
without any action on the part of the holder thereof, convert into a number of
fully paid and nonassessable shares of Common Stock equal to the quotient of
(i) the Liquidation Preference Amount of the shares of Series F Preferred
Stock outstanding on the Mandatory Conversion Date divided by (ii) the
Conversion Price (as defined below) in effect on the Mandatory Conversion
Date.
(ii) As used herein, a "Mandatory Conversion Date" shall
be the date which is three (3) years after the date of first issuance of any
shares of Series F Preferred Stock (the "Issuance Date"), provided that the
Mandatory Conversion Date shall be extended for any shares of Series F
Preferred Stock (i) pursuant to Section 3(n) of the Registration Rights
Agreement by and among the Company and the purchasers of Series F Preferred
Stock (the "Registration Rights Agreement"), which extension shall be one day
for each of the days in any Blackout Period (as defined in Section 3(n) of the
Registration Rights Agreement), (ii) until the shares of Common Stock to which
the holder is entitled upon a Mandatory Conversion are duly authorized and
available for issuance in connection with such Mandatory Conversion, (iii)
until the registration statement contemplated by the Registration Rights
Agreement (the "Registration Statement") registering such shares of Common
Stock has been declared effective by the Commission and is currently effective
as of the Mandatory Conversion Date and (iv) until such shares of Common Stock
are listed on the Over-The-Counter Bulletin Board (the "OTC Bulletin Board"),
the Nasdaq SmallCap Market, the Nasdaq National Market ("Nasdaq"), The New
York Stock Exchange, Inc. or the American Stock Exchange, Inc if such shares
of Common Stock are not already listed. The Mandatory Conversion Date and the
Voluntary Conversion Date collectively are referred to in this Certificate of
Designations as the "Conversion Date."
(iii) On the Mandatory Conversion Date, the outstanding
shares of Series F Preferred Stock shall be converted automatically without
any further action by the holders of such shares and whether or not the
Preferred Stock Certificates representing such shares are surrendered to the
Company or its transfer agent; provided, however, that the Company shall not
be obligated to issue certificates evidencing the shares of Common Stock
issuable upon conversion of any shares of Series F Preferred Stock unless the
Preferred Stock Certificates evidencing such shares of Series F Preferred
Stock are either delivered to the Company or the holder notifies the Company
that such Preferred Stock Certificates have been lost, stolen, or destroyed,
and executes an agreement satisfactory to the Company to indemnify the Company
from any loss incurred by it in connection therewith. Upon the occurrence of
the automatic conversion of the Series F Preferred Stock pursuant to this
Section 5, the holders of the Series F Preferred Stock shall surrender the
Preferred Stock Certificates representing the Series F Preferred Stock for
which the Mandatory Conversion Date has occurred to the Company and the
Company shall deliver the shares of Common Stock issuable upon such conversion
(in the same manner set forth in Section 5(b)(ii) herein) to the holder within
three (3) business days of the holder's delivery of the applicable Preferred
Stock Certificates.
(d) Conversion Price. The term "Conversion Price" shall mean,
with respect to any conversion of Series F Preferred Stock, $1.00 (as adjusted
herein).
(e) Adjustments of Conversion Price.
(i) Adjustments for Stock Splits and Combinations. If
the Company shall at any time or from time to time after the Issuance Date,
effect a stock split of the outstanding Common Stock, the applicable
Conversion Price in effect immediately prior to the stock split shall be
proportionately decreased. If the Company shall at any time or from time to
time after the Issuance Date, combine the outstanding shares of Common Stock,
the applicable Conversion Price in effect immediately prior to the combination
shall be proportionately increased. Any adjustments under this Section
5(e)(i) shall be effective at the close of business on the date the stock
split or combination occurs.
(ii) Adjustments for Certain Dividends and Distributions.
If the Company shall at any time or from time to time after the Issuance Date,
make or issue or set a record date for the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in shares
of Common Stock, then, and in each event, the applicable Conversion Price in
effect immediately prior to such event shall be decreased as of the time of
such issuance or, in the event such record date shall have been fixed, as of
the close of business on such record date, by multiplying, as applicable, the
applicable Conversion Price then in effect by a fraction:
(A) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date; and
(B) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding immediately prior to
the time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such dividend or
distribution.
(iii) Adjustment for Other Dividends and
Distributions. If the Company shall at any time or from time to time after
the Issuance Date, make or issue or set a record date for the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in other than shares of Common Stock, then, and in each event, an
appropriate revision to the applicable Conversion Price shall be made and
provision shall be made (by adjustments of the Conversion Price or otherwise)
so that the holders of Series F Preferred Stock shall receive upon conversions
thereof, in addition to the number of shares of Common Stock receivable
thereon, the number of securities of the Company which they would have
received had their Series F Preferred Stock been converted into Common Stock
on the date of such event and had thereafter, during the period from the date
of such event to and including the Conversion Date, retained such securities
(together with any distributions payable thereon during such period), giving
application to all adjustments called for during such period under this
Section 5(e)(iii) with respect to the rights of the holders or the Series F
Preferred Stock.
(iv) Adjustments for Reclassification, Exchange or
Substitution. If the Common Stock issuable upon conversion of the Series F
Preferred Stock at any time or from time to time after the Issuance Date shall
be changed to the same or different number of shares of any class or classes
of stock, whether by reclassification, exchange, substitution or otherwise
(other than by way of a stock split or combination of shares or stock
dividends provided for in Section 5(e)(i), (ii) and (iii) herein, or a
reorganization, merger, consolidation, or sale of assets provided for in
Section 5(e)(v) herein), then, and in each event, an appropriate revision to
the Conversion Price shall be made and provisions shall be made (by
adjustments of the Conversion Price or otherwise) so that the holder of each
share of Series F Preferred Stock shall have the right thereafter to convert
such share of Series F Preferred Stock into the kind and amount of shares of
stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common
Stock into which such share of Series F Preferred Stock might have been
converted immediately prior to such reclassification, exchange, substitution
or other change, all subject to further adjustment as provided herein.
(v) Adjustments for Reorganization, Merger, Consolidation
or Sales of Assets. If at any time or from time to time after the Issuance
Date there shall be a capital reorganization of the Company (other than by way
of a stock split or combination of shares or stock dividends or distributions
provided for in Section 5(e)(i), (ii) and (iii) herein, or a reclassification,
exchange or substitution of shares provided for in Section 5(e)(iv) herein),
or a merger or consolidation of the Company with or into another corporation,
or the sale of all or substantially all of the Company's properties or assets
to any other person (an ''Organic Change"), then as a part of such Organic
Change an appropriate revision to the Conversion Price shall be made and
provision shall be made (by adjustments of the Conversion Price or otherwise)
so that the holder of each share of Series F Preferred Stock shall have the
right thereafter to convert such share of Series F Preferred Stock into the
kind and amount of shares of stock and other securities or property of the
Company or any successor corporation resulting from Organic Change. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 5(e)(v) with respect to the rights of the holders
of the Series F Preferred Stock after the Organic Change to the end that the
provisions of this Section 5(e)(v) (including any adjustment in the applicable
Conversion Price then in effect and the number of shares of stock or other
securities deliverable upon conversion of the Series F Preferred Stock) shall
be applied after that event in as nearly an equivalent manner as may be
practicable.
(vi) Consideration for Stock. In case any shares of
Common Stock or any securities convertible into or exchangeable for, directly
or indirectly, Common Stock (''Convertible Securities"), other than the Series
F Preferred Stock, or any rights or warrants or options to purchase any such
Common Stock or Convertible Securities, shall be issued or sold:
(A) in connection with any merger or consolidation
in which the Company is the surviving corporation (other than any
consolidation or merger in which the previously outstanding shares of Common
Stock of the Company shall be changed to or exchanged for the stock or other
securities of another corporation), the amount of consideration therefore
shall be, deemed to be the fair value, as determined reasonably and in good
faith by the Board of Directors, of such portion of the assets and business of
the nonsurviving corporation as such Board of Directors may determine to be
attributable to such shares of Common Stock, Convertible Securities, rights or
warrants or options, as the case may be; or
(B) in the event of any consolidation or merger of
the Company in which the Company is not the surviving corporation or in which
the previously outstanding shares of Common Stock of the Company shall be
changed into or exchanged for the stock or other securities of another
corporation, or in the event of any sale of all or substantially all of the
assets of the Company for stock or other securities of any corporation, the
Company shall be deemed to have issued a number of shares of its Common Stock
for stock or securities or other property of the other corporation computed on
the basis of the actual exchange ratio on which the transaction was
predicated, and for a consideration equal to the fair market value on the date
of such transaction of all such stock or securities or other property of the
other corporation. If any such calculation results in adjustment of the
applicable Conversion Price, or the number of shares of Common Stock issuable
upon conversion of the Series F Preferred Stock, the determination of the
applicable Conversion Price or the number of shares of Common Stock issuable
upon conversion of the Series F Preferred Stock immediately prior to such
merger, consolidation or sale, shall be made after giving effect to such
adjustment of the number of shares of Common Stock issuable upon conversion of
the Series F Preferred Stock.
(vii) Issuance of Additional Common Stock or Convertible
Securities. If the Company, at any time while shares of Series F Preferred
Stock are outstanding, shall issue any shares of Common Stock or Convertible
Securities (otherwise than as provided in the foregoing subsections (i)
through (v) of this Section 5(e)), at a price per share less than the
Conversion Price then in effect (and less than the Closing Bid Price of the
Common Stock on such date) or without consideration, then the Conversion Price
upon each such issuance shall be adjusted to that price (rounded to the
nearest cent) determined by multiplying the Conversion Price then in effect by
a fraction:
(A) the numerator of which shall be equal to the sum
of (A) the number of shares of Common Stock outstanding immediately prior to
the issuance of such Common Stock plus (B) the number of shares of Common
Stock (rounded to the nearest whole share) which the aggregate consideration
for the total number of such Common Stock or Convertible Securities so issued
would purchase at a price per share equal to the average Closing Bid Price of
the Common Stock over the last five trading days; and
(B) the denominator of which shall be equal to the
number of shares of Common Stock outstanding immediately after the issuance of
such Common Stock or Convertible Securities.
The provisions of this Section 5(e)(vii) shall not apply under any of the
circumstances for which an adjustment is provided elsewhere in Section 5(e)(v)
herein. No adjustment of the Conversion Price shall be made under this
Section 5(e)(vii) in an amount less than $.01 per share, but any such lesser
adjustment shall be carried forward and shall be made at the time and together
with the next subsequent adjustment, if any, which together with any
adjustments so carried forward shall amount to $.01 per share or more,
provided that upon any adjustment of the Conversion Price as a result of any
dividend or distribution payable in Common Stock or the reclassification,
subdivision or combination of Common Stock into a greater or smaller number of
shares, the foregoing figure of $.01 per share (or such figure as last
adjusted) shall be adjusted (to the nearest one-half cent) in proportion to
the adjustment in the Conversion Price. For purposes of this
Section 5(e)(vii), the number of shares of Common Stock at any time
outstanding shall not include any shares thereof then directly or indirectly
owned or held by or for the account of the Company or any of its subsidiaries,
and shall be deemed to include all shares of Common Stock then issuable upon
conversion, exercise or exchange of any then outstanding Convertible
Securities or any other securities of the Company which are or may be at any
time convertible into or exchangeable for shares of Common Stock or
Convertible Securities.
(viii) Record Date. In case the Company shall take record
of the holders of its Common Stock or any other Preferred Stock for the
purpose of entitling them to subscribe for or purchase Common Stock or
Convertible Securities, then the date of the issue or sale of the shares of
Common Stock shall be deemed to be such record date.
(ix) Certain Issues Excepted. Anything herein to the
contrary notwithstanding, the Company shall not be required to make any
adjustment of the number of shares of Common Stock issuable upon conversion of
the Series F Preferred Stock upon the grant after the Issuance Date of, or the
exercise after the Issuance Date of, options or rights to purchase stock under
the Company's stock option plans as currently in effect.
(f) No Impairment. The Company shall not, by amendment of its
Certificate or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Company, but will at all
times in good faith, assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series F Preferred Stock against impairment.
(g) Certificates as to Adjustments. Upon occurrence of each
adjustment or readjustment of the Conversion Price or number of shares of
Common Stock issuable upon conversion of the Series F Preferred Stock pursuant
to this Section 5, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of such Series F Preferred Stock a certificate setting forth such
adjustment and readjustment, showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon written request
of the holder of such affected Series F Preferred Stock, at any time, furnish
or cause to be furnished to such holder a like certificate setting forth such
adjustments and readjustments, the applicable Conversion Price in effect at
the time, and the number of shares of Common Stock and the amount, if any, of
other securities or property which at the time would be received upon the
conversion of a share of such Series F Preferred Stock. Notwithstanding the
foregoing, the Company shall not be obligated to deliver a certificate unless
such certificate would reflect an increase or decrease of at least one percent
of such adjusted amount.
(h) Issue Taxes. The Company shall pay any and all issue and
other taxes, excluding federal, state or local income taxes, that may be
payable in respect of any issue or delivery of shares of Common Stock on
conversion of shares of Series F Preferred Stock pursuant thereto; provided,
however, that the Company shall not be obligated to pay any transfer taxes
resulting from any transfer requested by any holder in connection with any
such conversion.
(i) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
facsimile or three business days following being mailed by certified or
registered mail, postage prepaid, return-receipt requested, addressed to the
holder of record at its address appearing on the books of the Company. The
Company will give written notice to each holder of Series F Preferred Stock at
least twenty (20) days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders
of Common Stock or (C) for determining rights to vote with respect to any
Organic Change, dissolution, liquidation or winding-up, provided that in no
event shall such notice be provided to such holder prior to such information
being made known to the public. The Company will also give written notice to
each holder of Series F Preferred Stock at least twenty (20) days prior to the
date on which any Organic Change, dissolution, liquidation or winding-up will
take place, provided that in no event shall such notice be provided to such
holder prior to such information being made known to the public.
(j) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of the Series F Preferred Stock. In lieu of
any fractional shares to which the holder would otherwise be entitled, the
Company shall pay cash equal to the product of such fraction multiplied by the
average of the Closing Bid Prices of the Common Stock for the five consecutive
trading days immediately preceding on the Voluntary Conversion Date or
Mandatory Conversion Date, as applicable. The term "Closing Bid Price" shall
mean, for any security as of any trading day, the last closing bid price of
such security in the OTC Bulletin Board for such security as reported by
Bloomberg Financial Markets ("Bloomberg"), or on Nasdaq, if no closing bid
price is reported for such security by Bloomberg or on Nasdaq, the last
closing trade price of such security as reported by Bloomberg or on Nasdaq,
or, if no last closing trade price is reported for such security by Bloomberg
or on Nasdaq, the average of the bid prices of any market makers for such
security as reported in the "pink sheets" by the National Quotation Bureau,
Inc. or on Nasdaq. If the Closing Bid Price cannot be calculated for such
security on such date on any of the foregoing basis, the Closing Bid Price of
such security on such date shall be the fair market value as determined in
good faith by the Company.
(k) Reservation of Common Stock. The Company shall, so long
as any shares of Series F Preferred Stock are outstanding, reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Series F Preferred Stock, such
number of shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all of the Series F Preferred Stock then outstanding.
The initial number of shares of Common Stock reserved for conversions of the
Series F Preferred Stock and each increase in the number of shares so reserved
shall be allocated pro rata among the holders of the Series F Preferred Stock
based on the number of shares of Series F Preferred Stock held by each holder
at the time of issuance of the Series F Preferred Stock or increase in the
number of reserved shares, as the case may be. In the event a holder shall
sell or otherwise transfer any of such holder's shares of Series F Preferred
Stock, each transferee shall be allocated a pro rata portion of the number of
reserved shares of Common Stock reserved for such transferor. Any shares of
Common Stock reserved and which remain allocated to any person or entity which
does not hold any shares of Series F Preferred Stock shall be allocated to the
remaining holders of Series F Preferred Stock, pro rata based on the number of
shares of Series F Preferred Stock then held by such holder. The Company
shall, from time to time in accordance with the Delaware General Corporation
Law, as amended, increase the authorized number of shares of Common Stock if
at any time the unissued number of authorized shares shall not be sufficient
to satisfy the Company's obligations under this Section 5(k).
(l) Retirement of Series F Preferred Stock. Conversion of
Series F Preferred Stock shall be deemed to have been effected on the
applicable Voluntary Conversion Date or Mandatory Conversion Date. Upon
conversion of only a portion of the number of shares of Series F Preferred
Stock represented by a certificate surrendered for conversion, the Company
shall issue and deliver to such holder at the expense of the Company, a new
certificate covering the number of shares of Series F Preferred Stock
representing the unconverted portion of the certificate so surrendered as
required by Section 5(b)(ii) herein.
(m) Regulatory Compliance. If any shares of Common Stock to
be reserved for the purpose of conversion of Series F Preferred Stock require
registration or listing with or approval of any governmental authority, stock
exchange or other regulatory body under any federal or state law or regulation
or otherwise before such shares may be validly issued or delivered upon
conversion, the Company shall, at its sole cost and expense, in good faith and
as expeditiously as possible, endeavor to secure such registration, listing or
approval, as the case may be.
6. No Preemptive Rights. Except as provided in Section 5 herein,
no holder of the Series F Preferred Stock shall be entitled to rights to
subscribe for, purchase or receive any part of any new or additional shares of
any class, whether now or hereinafter authorized, or of bonds or debentures,
or other evidences of indebtedness convertible into or exchangeable for shares
of any class, but all such new or additional shares of any class, or any bond,
debentures or other evidences of indebtedness convertible into or exchangeable
for shares, may be issued and disposed of by the Board of directors on such
terms and for such consideration (to the extent permitted by law), and to such
person or persons as the Board of Directors in their absolute discretion may
deem advisable.
7. Vote to Change the Terms of or Issue Preferred Stock. The
affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting of the holders of not less than three-quarters of
the then outstanding shares of Series F Preferred Stock shall be required (a)
for any change to this Certificate of Designations which would amend, alter,
change or repeal any of the powers, designations, preferences and rights of
the Series F Preferred Stock or (b) for the issuance of shares of Series F
Preferred Stock other than pursuant to the Series F Stock Purchase Agreement.
8. Lost or Stolen Certificates. Upon receipt by the Company of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Preferred Stock Certificates representing the shares of
Series F Preferred Stock, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the holder to the Company and, in the case
of mutilation, upon surrender and cancellation of the Preferred Stock
Certificate(s), the Company shall execute and deliver new Preferred Stock
certificate(s) of like tenor and date; provided, however, the Company shall
not be obligated to re-issue Preferred Stock certificates if the holder
contemporaneously requests the Company to convert such shares of Series F
Preferred Stock into Common Stock.
9. Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Certificate of Designations
shall be cumulative and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including, a decree of
specific performance and/or other injunctive relief), no remedy contained
herein shall be deemed a waiver of compliance with the provisions giving rise
to such remedy and nothing herein shall limit a holder's right to pursue
actual damages for any failure by the Company to comply with the terms of this
Certificate of Designations. Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof)
shall be the amounts to be received by the holder thereof and shall not,
except as expressly provided herein, be subject to any other obligation of the
Company (or the performance thereof). The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the holders
of the Series F Preferred Stock and that the remedy at law for any such breach
may be inadequate. The Company therefore agrees that, in the event of any
such breach or threatened breach, the holders of the Series F Preferred Stock
shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.
10. Specific Shall Not Limit General; Construction. No specific
provision contained in this Certificate of Designations shall limit or modify
any more general provision contained herein. This Certificate of Designations
shall be deemed to be jointly drafted by the Company and all initial
purchasers of the Series F Preferred Stock and shall not be construed against
any person as the drafter hereof.
11. Failure or Indulgence Not Waiver. No failure or delay on the
part of a holder of Series F Preferred Stock in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege.
IN WITNESS WHEREOF, SkyLynx Communications, Inc. has caused this
Certificate of Designations to be executed this January 28, 2000.
SKYLYNX COMMUNICATIONS, INC.
By: /s/ James E. Maurer
-----------------------------
Name: James E. Maurer
Title: Chief Financial Officer
<PAGE>
<PAGE>
NOTICE
EXHIBIT I
SKYLYNX COMMUNICATIONS, INC.
CONVERSION NOTICE
Reference is made to the Amended and Restated Certificate of
Incorporation of SkyLynx Communications, Inc. for Series F Convertible
Preferred Stock (the "Amended and Restated Certificate"). In accordance with
and pursuant to the Amended and Restated Certificate, the undersigned hereby
elects to convert the number of shares of Series F Convertible Preferred
Stock, par value $.01 per share (the "Preferred Shares"), of SkyLynx
Communications, Inc., a Delaware corporation (the "Company"), indicated below
into shares of Common Stock, par value $.001 per share (the "Common Stock") of
the Company, by tendering the stock certificate(s) representing the share(s)
of Preferred Shares specified below as of the date specified below.
Date of Conversion:
--------------------------------
Number of Preferred Shares to be converted:
---------
Stock certificate no(s). of Preferred Shares to be converted:
----------
The Common Stock have been sold pursuant to the Registration Statement (as
defined in the Registration Rights Agreement): YES______ NO_____
Please confirm the following information:
Conversion Price:
----------------------------------
Number of shares of Common Stock
----------------------------------
to be issued:
Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the company in
the following name and to the following address:
Issue to:
-----------------------------------
-----------------------------------
Facsimile Number:
-----------------------------------
Authorization:
-----------------------------------
By:
--------------------------------
Title:
-----------------------------
Dated:
Account number:
(if electronic book entry transfer)
---------------------
Transaction Code Number
(if electronic book entry transfer)
---------------------
<PAGE>
ACTION BY UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS OF
SKYLYNX COMMUNICATIONS, INC.
The undersigned, constituting all of the members of the Board of
Directors of SkyLynx Communications, Inc., a Colorado corporation (the
"Company"), pursuant to Section 7-108-202 of the Colorado Business Corporation
Act, hereby adopt the following resolutions by unanimous written consent.
This consent is executed as of June 23, 1999, and shall be filed in the
Company's minute book.
Amended Bylaws
WHEREAS, the Bylaws of the Company may be amended by a majority of the
Board of Directors;
WHEREAS, the Section 1 of the Company's Bylaws currently states the
Company's former name of Allied Wireless, Inc. and
WHEREAS, the Company changed its name from Allied Wireless, Inc. to
SkyLynx Communications, Inc. by filing and Amendment to the Articles of
Incorporation with the Colorado Secretary of State on February 12, 1998;
WHEREAS, the Board believes that it is in the best interests of the
Company to amend the Bylaws to state the correct corporate name;
NOW, THEREFORE, BE IT RESOLVED, that Section 1 of the Company's Bylaws is
hereby amended in its entirety as follows:
Section 1. The Following paragraphs contain provisions for the
regulation and management of SkyLynx Communications, Inc., a
Colorado corporation.
RESOLVED FURTHER, that the Secretary of Company be, and he hereby is,
authorized and directed to execute a Certificate of Adoption of the Amended
Bylaws, to insert the Amended Bylaws as so certified in the Company's Minute
Book and to see that a copy of the Amended Bylaws, similarly certified, is
kept at the Company's principal office, as required by law.
RESOLVED FURTHER, that any and all actions previously taken by any of the
officers of the Company, on behalf of the Company, with respect to the
transactions contemplated by the foregoing resolutions are hereby ratified,
approved, and confirmed in all respects.
IN WITNESS WHEREOF, the undersigned members of the Board of Directors has
executed this written consent as of this 23rd day of June, 1999.
/s/ Jeffery A. Mathias
-------------------------------
Jeffery A. Mathias
/s/ Gary L. Brown
-------------------------------
Gary L. Brown
/s/ Frank P. Ragano
-------------------------------
Frank P. Ragano
<PAGE>
BYLAWS
OF
SKYLYNX COMMUNICATIONS, INC.
A DELAWARE CORPORATION
ARTICLE I CORPORATE OFFICES 1
1.1 Registered Office 1
1.2 Other Offices 1
ARTICLE II MEETINGS OF STOCKHOLDERS 1
2.1 Place of Meetings 1
2.2 Annual Meetings 1
2.3 Special Meetings 1
2.4 Notice of Stockholders' Meetings 2
2.5 Manner of Giving Notice; Affidavit of Notice 2
2.6 Quorum 2
2.7 Adjourned Meeting; Notice 3
2.8 Conduct of Business 3
2.9 Voting 3
2.10 Waiver of Notice 4
2.11 Stockholder Action by Written Consent
Without a Meeting 3
2.12 Record Date for Stockholder Notice; Voting;
Giving Consents 4
2.13 Proxies 4
2.14 List of Stockholders Entitled to Vote 5
ARTICLE III DIRECTORS 5
3.1 Powers 5
3.2 Number of Directors 5
3.3 Election, Qualification and Term of Office
of Directors 5
3.4 Resignation and Vacancies 5
3.5 Place of Meetings; Meetings by Telephone 6
3.6 Regular Meetings 7
3.7 Special Meetings; Notice 7
3.8 Quorum 7
3.9 Waiver of Notice 7
3.10 Board Action by Written Consent Without a Meeting 8
3.11 Fees and Compensation of Directors 8
3.12 Approval of Loans to Officers 8
3.13 Removal of Directors 8
ARTICLE IV COMMITTEES 8
4.1 Committees of Directors 8
4.2 Committee Minutes 9
4.3 Meetings and Action of Committees 9
ARTICLE V OFFICERS 9
5.1 Officers 9
5.2 Appointment of Officers 10
5.3 Subordinate Officers 10
5.4 Removal and Resignation of Officers 10
5.5 Vacancies in Offices 10
5.6 Chairman of the Board 10
5.7 President 10
5.8 Vice Presidents 11
5.9 Secretary 11
5.10 Chief Financial Officer 11
5.11 Chief Scientific Officer 12
5.12 Assistant Secretary 12
5.13 Assistant Treasurer 12
5.14 Representation of Shares of Other Corporations 12
5.15 Authority and Duties of Officers 12
ARTICLE VI INDEMNITY 13
6.1 Third Party Actions 13
6.2 Actions by or in the Right of the Corporation 13
6.3 Successful Defense 14
6.4 Determination of Conduct 14
6.5 Payment of Expenses in Advance 14
6.6 Indemnity Not Exclusive 14
6.7 Insurance Indemnification 14
6.8 The Corporation 15
6.9 Employee Benefit Plans 15
6.10 Indemnity Fund 15
6.11 Indemnification of Other Persons 15
6.12 Savings Clause 15
6.13 Continuation of Indemnification and Advancement
of Expenses 16
ARTICLE VII RECORDS AND REPORTS 16
7.1 Maintenance and Inspection of Records 16
7.2 Inspection by Directors 17
7.3 Annual Statement to Stockholders 17
ARTICLE VIII GENERAL MATTERS 17
8.1 Checks 17
8.2 Execution of Corporate Contracts and Instruments 17
8.3 Stock Certificates; Partly Paid Shares 17
8.4 Special Designation on Certificates 18
8.5 Lost Certificates 18
8.6 Construction; Definitions 18
8.7 Dividends 19
8.8 Fiscal Year 19
8.9 Seal 19
8.10 Transfer of Stock 19
8.11 Stock Transfer Agreements 19
8.12 Registered Stockholders 19
ARTICLE IX AMENDMENTS 19
<PAGE>
<PAGE>
BYLAWS
OF
SKYLYNX COMMUNICATIONS, INC.
A DELAWARE CORPORATION
ARTICLE I
CORPORATE OFFICES
1.1 Registered Office.
The registered office of the corporation shall be in the City of
Dover, County of Kent, State of Delaware. The name of the registered agent of
the corporation at such location is Incorporating Services, Ltd.
1.2 Other Offices.
The board of directors may at any time establish other offices at
any place or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 Place of Meetings.
Meetings of stockholders shall be held at any place, within or
outside the State of Delaware, designated by the board of directors. In the
absence of any such designation, stockholders' meetings shall be held at the
registered office of the corporation.
2.2 Annual Meetings.
The annual meeting of stockholders shall be held each year on a
date and at a time designated by the board of directors. At the meeting,
directors shall be elected and any other proper business may be transacted.
2.3 Special Meetings.
A special meeting of the stockholders may be called at any time by
the board of directors, or by the chairman of the board, or by the president,
or by one or more stockholders holding shares in the aggregate entitled to
cast not less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than
the board of directors, the request shall be in writing, specifying the time
of such meeting and the general nature of the business proposed to be
transacted, and shall be delivered personally or sent by registered mail or by
telegraphic or other facsimile transmission to the chairman of the board, the
president or the secretary of the corporation. No business may be transacted
at such special meeting otherwise than specified in such notice. The officer
receiving the request shall cause notice to be promptly given to the
stockholders entitled to vote, in accordance with the provisions of Sections
2.4 and 2.5 of this Article II, that a meeting will be held at the time
requested by the person or persons who called the meeting, not less than
thirty-five (35) nor more than sixty (60) days after the receipt of the
request. If the notice is not given within twenty (20) days after the receipt
of the request, the person or persons requesting the meeting may give the
notice. Nothing contained in this paragraph of this Section 2.3 shall be
construed as limiting, fixing, or affecting the time when a meeting of
stockholders called by action of the board of directors may be held.
2.4 Notice of Stockholders' Meetings.
All notices of meetings of stockholders shall be in writing and
shall be sent or otherwise given in accordance with Section 2.5 of these
bylaws not less than ten (10) nor more than sixty (60) days before the date of
the meeting to each stockholder entitled to vote at such meeting. The notice
shall specify the place, date, and hour of the meeting, and in the case of a
special meeting, the purpose or purposes for which the meeting is called.
2.5 Manner of Giving Notice; Affidavit of Notice.
Written notice of any meeting of stockholders, if mailed, is given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation.
An affidavit of the secretary or an assistant secretary or of the transfer
agent of the corporation that the notice has been given shall, in the absence
of fraud, be prima facie evidence of the facts stated therein.
2.6 Quorum.
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then either (i) the chairman of the meeting or
(ii) the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum is
present or represented. At such adjourned meeting at which a quorum is
present or represented, any business may be transacted that might have been
transacted at the meeting as originally noticed.
2.7 Adjourned Meeting; Notice.
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the corporation may transact
any business that might have been transacted at the original meeting. If the
adjournment is for more than thirty (30) days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
2.8 Conduct of Business.
The chairman of any meeting of stockholders shall determine the
order of business and the procedure at the meeting, including such regulation
of the manner of voting and the conduct of business.
2.9 Voting.
The stockholders entitled to vote at any meeting of stockholders
shall be determined in accordance with the provisions of Section 2.12 of these
bylaws, subject to the provisions of Sections 217 and 218 of the General
Corporation Law of Delaware (relating to voting rights of fiduciaries,
pledgors and joint owners of stock and to voting trusts and other voting
agreements).
Except as provided in the last paragraph of this Section 2.9, or as
may be otherwise provided in the certificate of incorporation, each
stockholder shall be entitled to one vote for each share of capital stock held
by such stockholder.
At a stockholders' meeting at which directors are to be elected,
each stockholder shall be entitled to cumulate votes (i.e., cast for any
candidate a number of votes greater than the number of votes which such
stockholder normally is entitled to cast) if the candidates' names have been
properly placed in nomination (in accordance with these bylaws) prior to
commencement of the voting and the stockholder requesting cumulative voting or
any other stockholder voting at the meeting in person or by proxy has given
notice prior to commencement of the voting of the stockholders' intention to
cumulate votes. If cumulative voting is properly requested, each holder of
stock, or of any class or classes or of a series or series thereof, who elects
to cumulate votes shall be entitled to as many votes as equals the number of
votes which (absent this provision as to cumulative voting) he would be
entitled to cast for the election of directors with respect to his shares of
stock multiplied by the number of directors to be elected by him, and he may
cast all of such votes for a single director or may distribute them among the
number to be voted for, or for any two or more of them, as he may see fit.
2.10 Waiver of Notice.
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any
written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
2.11 Stockholder Action by Written Consent Without a Meeting.
Unless otherwise provided in the certificate of incorporation, any
action required by this article to be taken at any annual or special meeting
of stockholders of the corporation, or any action that may be taken at any
annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice, and without a vote if a consent in writing,
setting forth the action so taken, is signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. If the action which is
consented to is such as would have required the filing of a certificate under
any section of the General Corporation Law of Delaware if such action had been
voted on by stockholders at a meeting thereof, then the certificate filed
under such section shall state, in lieu of any statement required by such
section concerning any vote of stockholders, that written notice and written
consent have been given as provided in Section 228 of the General Corporation
Law of Delaware.
2.12 Record Date for Stockholder Notice; Voting; Giving Consents.
In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day
on which the meeting is held.
(ii) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no
prior action by the board of directors is necessary, shall be the day on which
the first written consent is expressed.
(iii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the board
of directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at
a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for
the adjourned meeting.
2.13 Proxies.
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting
may authorize another person or persons to act for him by a written proxy,
signed by the stockholder and filed with the secretary of the corporation, but
no such proxy shall be voted or acted upon after three (3) years from its
date, unless the proxy provides for a longer period. A proxy shall be deemed
signed if the stockholder's name is placed on the proxy (whether by manual
signature, typewriting, telegraphic transmission or otherwise) by the
stockholder or the stockholder's attorney-in-fact. The revocability of a
proxy that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(c) of the General Corporation Law of Delaware.
2.14 List of Stockholders Entitled to Vote.
The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. Such list shall presumptively
determine the identify of the stockholders entitled to vote at the meeting and
the number of shares held by each of them.
ARTICLE III
DIRECTORS
3.1 Powers.
Subject to the provisions of the General Corporation Law of Delaware
and any limitation in the certificate of incorporation or these bylaws
relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the direction
of the board of directors.
3.2 Number of Directors.
The board of directors shall consist of not less than one (1) and
not more than ten (10) persons until changed by a proper amendment of this
Section 3.2.
3.3 Election, Qualification and Term of Office of Directors.
Except as provided in Section 3.4 of these bylaws, directors shall
be elected at each annual meeting of stockholders to hold office until the
next annual meeting. Directors need not be stockholders unless so required by
the certificate of incorporation or these bylaws, wherein other qualifications
for directors may be prescribed. Each director, including a director elected
to fill a vacancy, shall hold office until his successor is elected and
qualified or until his earlier resignation or removal.
Elections of directors need not be by written ballot.
3.4 Resignation and Vacancies.
Any director may resign at any time upon written notice to the
attention of the secretary of the corporation. When one or more directors so
resigns and the resignation is effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have
power to fill such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective, and each director so
chosen shall hold office as provided in this section in the filling of other
vacancies.
Unless otherwise provided in the certificate of incorporation or
these bylaws:
(i) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions
of the certificate of incorporation, vacancies and newly created directorships
of such class or classes or series may be filled by a majority of the
directors elected by such class or classes or series thereof then in office,
or by a sole remaining director so elected.
If at any time, by reason of death or resignation or other cause,
the corporation should have no directors in office, then any officer or any
stockholder or any executor, administrator, trust or guardian of a
stockholder, or other fiduciary entrusted with like responsibility for the
person or estate of a stockholder, may call a special meeting of stockholders
in accordance with the provisions of the certificate of incorporation or these
bylaws, or may apply to the Court of Chancery for a decree summarily ordering
an election as provided in Section 211 of the General Corporation Law of
Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten percent (10%) of the total number of the shares at the
time outstanding having the right to vote for such directors, summarily order
an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office as aforesaid, which election shall be governed by the provisions of
Section 211 of the General Corporation Law of Delaware as far as applicable.
3.5 Place of Meetings; Meetings by Telephone.
The board of directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the board of directors, or any committee designated
by the board of directors, may participate in a meeting of the board of
directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
3.6 Regular Meetings.
Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
3.7 Special Meetings; Notice.
Special meetings of the board of directors for any purpose or
purposes may be called at any time by the chairman of the board, the
president, any vice president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
facsimile, charges prepaid, addressed to each director at that director's
address as it is shown on the records of the corporation. If the notice is
mailed, it shall be deposited in the United States mail at least four (4) days
before the time of the holding of the meeting. If the notice is delivered
personally or by telephone or by facsimile, it shall be delivered personally
or by telephone or to the facsimile telephone number at least forty-eight (48)
hours before the time of the holding of the meeting. Any oral notice given
personally or by telephone may be communicated either to the director or to a
person at the office of the director who the person giving the notice has
reason to believe will promptly communicate it to the director. The notice
need not specify the purpose or the place of the meeting, if the meeting is to
be held at the principal executive office of the corporation.
3.8 Quorum.
At all meetings of the board of directors, a majority of the
authorized number of directors shall constitute a quorum for the transaction
of business and the act of a majority of the directors present at any meeting
at which there is a quorum shall be the act of the board of directors, except
as may be otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum is present.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 Waiver of Notice.
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor other purpose of, any
regular or special meeting of the directors, or members of a committee of
directors, need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
3.10 Board Action by Written Consent Without a Meeting.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of
the board of directors, or of any committee thereof, may be taken without a
meeting if all members of the board or committee, as the case may be, consent
thereto in writing and the writing or writings are filed with the minutes of
proceedings of the board or committee.
3.11 Fees and Compensation of Directors.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, the board of directors shall have the authority to fix the
compensation of directors.
3.12 Approval of Loans to Officers.
The corporation may lend money to, or guarantee any obligation of,
or otherwise assist any officer or other employee of the corporation or of its
subsidiaries, including any officer or employee who is a director of the
corporation or its subsidiaries, whenever, in the judgment of the directors,
such loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute.
3.13 Removal of Directors.
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of
directors may be removed, with or without cause, by the holders of a majority
of the shares then entitled to vote at an election of directors; provided,
however, that, so long as shareholders of the corporation are entitled to
cumulative voting, if less than the entire board is to be removed, no director
may be removed without cause if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the
entire board of directors.
ARTICLE IV
COMMITTEES
4.1 Committees of Directors.
The board of directors may, by resolution passed by a majority of
the whole board, designate one or more committees, with each committee to
consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any
such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the board of directors or in the bylaws of the
corporation, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to
all papers that may require it; but no such committee shall have the power or
authority to (i) amend the certificate of incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of
directors as provided in Section 151(a) of the General Corporation Law of
Delaware, fix the designation and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such
shares for, shares of any other class or classes or any other series of the
same or any other class or classes of stock of the corporation or fix the
number of shares of any series of stock or authorize the increase or decrease
of the shares of any series), (ii) adopt an agreement of merger or
consolidation under Sections 251 or 252 of the General Corporation Law of
Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets,
(iv) recommend to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or (v) amend the bylaws of the corporation; and,
unless the board resolution establishing the committee, the bylaws or the
certificate of incorporation expressly so provide, no such committee shall
have the power or authority to declare a dividend, to authorize the issuance
of stock, or to adopt a certificate of ownership and merger pursuant to
Section 253 of the General Corporation Law of Delaware.
4.2 Committee Minutes.
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
4.3 Meetings and Action of Committees.
Meetings and actions of committees shall be governed by, and held
and taken in accordance with, the provisions of Article III of these bylaws,
Section 3.5 (place of meetings and meetings by telephone), Section 3.6
(regular meetings), Section 3.7 (special meetings and notice), Section 3.8
(quorum), Section 3.9 (waiver of notice), and Section 3.10 (action without a
meeting), with such changes in the context of those bylaws as are necessary to
substitute the committee and its members for the board of directors and its
members; provided, however, that the time of regular meetings of committees
may be determined either by resolution of the board of directors or by
resolution of the committee, that special meetings of committees may also be
called by resolution of the board of directors and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of
directors may adopt rules for the government of any committee not inconsistent
with the provisions of these bylaws.
ARTICLE V
OFFICERS
5.1 Officers.
The officers of the corporation shall be a president, a secretary,
and a chief financial officer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, one or more
vice presidents, one or more assistant vice presidents, one or more assistant
secretaries, and one or more assistant treasurers, and any such other officers
as may be appointed in accordance with the provisions of Section 5.3 of these
bylaws. Any number of offices may be held by the same person.
5.2 Appointment of Officers.
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
bylaws, shall be appointed by the board of directors, subject to the rights,
if any, of an officer under any contract of employment.
5.3 Subordinate Officers.
The board of directors may appoint, or empower the president to
appoint, such other officers and agents as the business of the corporation may
require, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these bylaws or as the board of
directors may from time to time determine.
5.4 Removal and Resignation of Officers.
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by
the board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the resignation shall
not be necessary to make it effective. Any resignation is without prejudice
to the rights, if any, of the corporation under any contract to which the
officer is a party.
5.5 Vacancies in Offices.
Any vacancy occurring in any office of the corporation shall be
filled by the board of directors.
5.6 Chairman of the Board.
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and
perform such other powers and duties as may from time to time be assigned to
him by the board of directors or as may be prescribed by these bylaws. If
there is no president, then the chairman of the board shall also be the chief
executive officer of the corporation and shall have the powers and duties
prescribed in Section 5.7 of these bylaws.
5.7 President.
Subject to such supervisory powers, if any, as may be given by the board of
directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation.
He shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation and shall have such other
powers and duties as may be prescribed by the board of directors or these
bylaws.
5.8 Vice Presidents.
In the absence or disability of the president, the vice presidents,
if any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform
all the duties of the president and when so acting shall have all the powers
of, and be subject to all the restrictions upon, the president. The vice
presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the board of
directors, these bylaws, the president or the chairman of the board.
5.9 Secretary.
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show
the time and place of each meeting, whether regular or special (and, if
special, how authorized and the notice given), the names of those present at
directors' meetings or committee meetings, the number of shares present or
represented at stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names
of all stockholders and their addresses, the number and classes of shares held
by each, the number and date of certificates evidencing such shares, and the
number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given, notice of all
meetings of the stockholders and of the board of directors required to be
given by law or by these bylaws. He shall keep the seal of the corporation,
if one be adopted, in safe custody and shall have such other powers and
perform such other duties as may be prescribed by the board of directors or by
these bylaws.
5.10 Chief Financial Officer.
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He shall
disburse the funds of the corporation as may be ordered by the board of
directors, shall render to the president and directors, whenever they request
it, an account of all his transactions as chief financial officer and of the
financial condition of the corporation, and shall have other powers and
perform such other duties as may be prescribed by the board of directors or
these bylaws.
The chief financial officer shall be the treasurer of the
corporation.
5.11 Chief Technology Officer.
The Chief Technology Officer shall, subject to the direction and
control of the board of directors, be responsible for all technological
aspects of the Corporation's business including the design, research,
development, review and implementation of technologies. The Chief Technology
Officer shall be elected each year by the board of directors, to serve until
his or her successor is duly elected by the board of directors.
5.12 Assistant Secretary.
The assistant secretary, or, if there is more than one, the
assistant secretaries in the order determined by the stockholders or board of
directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the secretary or in the event of his or her
inability or refusal to act, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as
may be prescribed by the board of directors or these bylaws.
5.13 Assistant Treasurer.
The assistant treasurer, or, if there is more than one, the
assistant treasurers, in the order determined by the stockholders or board of
directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the chief financial officer or in the
event of his or her inability or refusal to act, perform the duties and
exercise the powers of the chief financial officer and shall perform such
other duties and have such other powers as may be prescribed by the board of
directors or these bylaws.
5.14 Representation of Shares of Other Corporations.
The chairman of the board, the president, any vice president, the
chief financial officer, the secretary or assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent, and exercise
on behalf of this corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of this corporation.
The authority granted herein may be exercised either by such person directly
or by any other person authorized to do so by proxy or power of attorney duly
executed by such person having the authority.
5.15 Authority and Duties of Officers.
In addition to the foregoing authority and duties, all officers of
the corporation shall respectively have such authority and perform such duties
in the management of the business of the corporation as may be designated from
time to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNITY
6.1 Third Party Actions.
Subject to the provisions of this Article VI, the corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the corporation) by reason of the fact that he is or was a
director or officer of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement (if such settlement is approved in advance by the corporation,
which approval shall not be unreasonably withheld) actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
6.2 Actions by or in the Right of the Corporation.
Subject to the provisions of this Article VI, the corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation,
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such other
court shall deem proper. Notwithstanding any other provision of this
Article VI, no person shall be indemnified hereunder for any expenses or
amounts paid in settlement with respect to any action to recover short-swing
profits under Section 16(b) of the Securities Exchange Act of 1934, as
amended.
6.3 Successful Defense.
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense
of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection therewith.
6.4 Determination of Conduct.
Any indemnification under Sections 6.1 and 6.2 (unless ordered by a
court) shall be made by the corporation only as authorized in the specific
case upon a determination that the indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Sections 6.1 and 6.2. Such
determination shall be made (i) by the Board of Directors or the Executive
Committee by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding or (ii) if such quorum is not
obtainable or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders. Notwithstanding the foregoing, a director, officer, employee or
agent of the corporation shall be entitled to contest any determination that
the director, officer, employee or agent has not met the applicable standard
of conduct set forth in Sections 6.1 and 6.2 by petitioning a court of
competent jurisdiction.
6.5 Payment of Expenses in Advance.
Expenses incurred in defending a civil or criminal action, suit or
proceeding, by an individual who may be entitled to indemnification pursuant
to Section 6.1 or 6.2, shall be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation as authorized in this Article VI.
6.6 Indemnity Not Exclusive.
The indemnification and advancement of expenses provided by or
granted pursuant to the other sections of this Article VI shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
6.7 Insurance Indemnification.
The corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation, as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Article VI.
6.8 The Corporation.
For purposes of this Article VI, references to the "corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors and officers, so that
any person who is or was a director, officer, employ or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall
stand in the same position under and subject to the provisions of this
Article VI (including, without limitation, the provisions of Section 6.4) with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
6.9 Employee Benefit Plans.
For purposes of this Article VI, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan;
and references to "serving at the request of the corporation" shall include
any service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to
in this Article VI.
6.10 Indemnity Fund.
Upon resolution passed by the Board, the corporation may establish a
trust or other designated account, grant a security interest or use other
means (including, without limitation, a letter of credit), to ensure the
payment of certain of its obligations arising under this Article VI and/or
agreements which may be entered into between the corporation and its officers
and directors from time to time.
6.11 Indemnification of Other Persons.
The provisions of this Article VI shall not be deemed to preclude
the indemnification of any person who is not a director or officer of the
corporation or is not serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, but whom the corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware or otherwise. The corporation may, in its sole
discretion, indemnify an employee, trustee or other agent as permitted by the
General Corporation Law of the State of Delaware. The corporation shall
indemnify an employee, trustee or other agent where required by law.
6.12 Savings Clause.
If this Article VI or any portion thereof shall be invalidated on
any ground by any court of competent jurisdiction, then the corporation shall
nevertheless indemnify each person entitled to indemnification hereunder
against expenses (including attorney's fees), judgments, fines and amounts
paid in settlement with respect to any action, suit, proceeding or
investigation, whether civil, criminal or administrative, and whether internal
or external, including a grand jury proceeding and an action or suit brought
by or in the right of the corporation, to the full extent permitted by any
applicable portion of this Article that shall not have been invalidated, or by
any other applicable law.
6.13 Continuation of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VI shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE VII
RECORDS AND REPORTS
7.1 Maintenance and Inspection of Records.
The corporation shall, either at its principal executive office or
at such place or places as designated by the board of directors, keep a record
of its stockholders listing their names and addresses and the number and class
of shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose
the corporation's stock ledger, a list of its stockholders, and its other
books and records and to make copies or extracts therefrom. A proper purpose
shall mean a purpose reasonably related to such person's interest as a
stockholder. In every instance where an attorney or other agent in the person
who seeks the right to inspection, the demand under oath shall be accompanied
by a power of attorney or such other writing that authorizes the attorney or
other agent so to act on behalf of the stockholder. The demand under oath
shall be directed to the corporation at its registered office in Delaware or
at its principal place of business.
The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
7.2 Inspection by Directors.
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of
Chancery is hereby vested with the exclusive jurisdiction to determine whether
a director is entitled to the inspection sought. The Court may summarily
order the corporation to permit the director to inspect any and all books and
records, the stock ledger, and the stock list and to make copies or extracts
therefrom. The Court may, in its discretion, prescribe any limitations or
conditions with reference to the inspection, or award such other and further
relief as the Court may deem just and proper.
7.3 Annual Statement to Stockholders.
The board of directors shall present at each annual meeting, and at
any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
ARTICLE VIII
GENERAL MATTERS
8.1 Checks.
From time to time, the board of directors shall determine by
resolution which person or persons may sign or endorse all checks, drafts,
other orders for payment of money, notes or other evidences of indebtedness
that are issued in the name of or payable to the corporation, and only the
persons so authorized shall sign or endorse those instruments.
8.2 Execution of Corporate Contracts and Instruments.
The board of directors, except as otherwise provided in these
bylaws, may authorize any officer or officers, or agent or agents, to enter
into any contract or execute any instrument in the name of and on behalf of
the corporation; such authority may be general or confined to specific
instances. Unless so authorized or ratified by the board of directors or
within the agency power of an officer, no officer, agent or employee shall
have any power or authority to bind the corporation by any contract or
engagement or to pledge its credit or to render it liable for any purpose or
for any amount.
8.3 Stock Certificates; Partly Paid Shares.
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply
to shares represented by a certificate until such certificate is surrendered
to the corporation. Notwithstanding the adoption of such a resolution by the
board of directors, every holder of stock represented by certificates and upon
request every holder of uncertificated shares shall be entitled to have a
certificate signed by, or in the name of the corporation by the chairman or
vice-chairman of the board of directors, or the president or vice president,
and by the chief financial officer or an assistant treasurer, or the secretary
or an assistant secretary of the corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate has ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
The corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the consideration to be
paid therefor. Upon the face or back of each stock certificate issued to
represent any such partly paid shares, upon the books and records of the
corporation in the case of uncertificated partly paid shares, the total amount
of the consideration to be paid therefor and the amount paid thereon shall be
stated. Upon the declaration of any dividend on fully paid shares, the
corporation shall declare a dividend upon partly paid shares of the same
class, but only upon the basis of the percentage of the consideration actually
paid thereon.
8.4 Special Designation on Certificates.
If the corporation is authorized to issue more than one class of
stock or more than one series of any class, then the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face of back of the certificate that the
corporation shall issue to represent such class or series of stock; provided,
however, that, except as otherwise provided in Section 202 of the General
Corporation Law of Delaware, in lieu of the foregoing requirements there may
be set forth on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock a statement that the
corporation will furnish without charge to each stockholder who so requests
the powers, the designations, the preferences, and the relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
8.5 Lost Certificates.
Except as provided in this Section 8.5, no new certificates for
shares shall be issued to replace a previously issued certificate unless the
latter is surrendered to the corporation and cancelled at the same time. The
corporation may issue a new certificate of stock or uncertificated shares in
the place of any certificate theretofore issued by it, alleged to have been
lost, stolen or destroyed, and the corporation may require the owner of the
lost, stolen or destroyed certificate, or his legal representative, to give
the corporation a bond sufficient to indemnify it against any claim that may
be made against it on account of the alleged loss, theft or destruction of any
such certificate or the issuance of such new certificate or uncertificated
shares.
8.6 Construction; Definitions.
Unless the context requires otherwise, the general provisions, rules
of construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of
this provision, the singular number includes the plural, the plural number
includes the singular, and the term "person" includes both a corporation and a
natural person.
8.7 Dividends.
The directors of the corporation, subject to any restrictions
contained in (i) the General Corporation Law of Delaware or (ii) the
corporation's certificate of incorporation, may declare and pay dividends upon
the shares of its capital stock. Dividends may be paid in cash, in property,
or in shares of the corporation's capital stock.
The directors of the corporation may set apart out of any of the
funds of the corporation available for dividends a reserve or reserves for any
proper purpose and may abolish any such reserve. Such purposes shall include
but not be limited to equalizing dividends, repairing or maintaining any
property of the corporation, and meeting contingencies.
8.8 Fiscal Year.
The fiscal year of the corporation shall be fixed by resolution of
the board of directors and may be changed by the board of directors.
8.9 Seal.
The corporation may adopt a corporate seal, which shall be adopted
and which may be altered by the board of directors, and may use the same by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.
8.10 Transfer of Stock.
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.11 Stock Transfer Agreements.
The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock
of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any
manner not prohibited by the General Corporation Law of Delaware.
8.12 Registered Stockholders.
The corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares to receive
dividends and to vote as such owner, shall be entitled to hold liable for
calls and assessments the person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of another person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
ARTICLE IX
AMENDMENTS
The bylaws of the corporation may be adopted, amended or repealed by the
stockholders entitled to vote; provided, however, that the corporation may, in
its certificate of incorporation, confer the power to adopt, amend or repeal
bylaws upon the directors. The fact that such power has been so conferred
upon the directors shall not divest the stockholders of the power, nor limit
their power to adopt, amend or repeal bylaws.
<PAGE>
CERTIFICATE OF ADOPTION OF BYLAWS
OF
SKYLYNX COMMUNICATIONS, INC.
A DELAWARE CORPORATION
Certificate by Secretary of Adoption by Board of Directors
The undersigned hereby certifies that he is the duly elected, qualified,
and acting Secretary of SkyLynx Communications, Inc., a Delaware Corporation
and that the foregoing bylaws, comprising twenty-one (21) pages, including
this page, were adopted as the Bylaws of the corporation as of November ___,
1999, by the Board of Directors of the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and, if
available, affixed the corporate seal, as of the 30th day of November, 1999.
/s/ Ned Abell
----------------------------------
Ned Abell, Secretary
<PAGE>
NEUMAN & DRENNEN, LLC
Temple-Bowron House
1507 Pine Street
Boulder, Colorado 80302
Telephone: (303) 449-2100
Facsimile: (303) 449-1045
February 11, 2000
SkyLynx Communications, Inc.
600 South Cherry Street, Suite 400
Denver, Colorado 80246
Re: S.E.C. Registration Statement on Form S-8
-----------------------------------------
Ladies and Gentlemen:
We have acted as counsel to SkyLynx Communications, Inc. (the "Company") in
connection with a Registration Statement to be filed with the United Stated
Securities and Exchange Commission, Washington, D.C., pursuant to the Securities
Act of 1933, as amended, covering the registration of an aggregate of 621,355
shares of the Company's $.001 par value common stock (the "Common Stock") for
resale by certain Selling Securityholders. In connection with such
representation of the Company, we have examined such corporate records, and have
made such inquiry of government officials and Company officials and have made
such examination of the law as we deemed appropriate in connection with
delivering this opinion.
Based upon the foregoing, we are of the opinion as follows:
1. The Company has been duly incorporated and organized under the laws of
the State of Colorado and is validly existing as a corporation in good standing
under the laws of that state.
2. The Company's authorized capital consists of 150,000,000 shares of
Common Stock having a par value of $.001 each and 50,000,000 shares of Preferred
Stock having a par value of $.01 each.
3. The 621,355 shares of Common Stock being registered for resale and
offered by the Selling Securityholders are lawfully and validly issued, fully
paid and non-assessable shares of the Company's Common Stock.
Sincerely,
Clifford L. Neuman
CLN:gg
<PAGE>
SKYLYNX COMMUNICATIONS, INC.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made
this 23rd of August between SKYLYNX COMMUNICATIONS, INC., a Colorado
corporation (the "Company") and JEFFERY A. MATHIAS ("Mathias").
W I T N E S S E T H:
WHEREAS, the parties entered into an Employment Agreement on the 1st day
of December, 1998, and an Amended and Restated Employment Agreement as of
April 20, 1999, and wish to amend and restate certain provisions of such
agreements to accurately reflect the understanding of the parties hereto; and
WHEREAS, it is intended that this Agreement will supercede all prior
agreements and that the provision of this Agreement be deemed in effect as of
April 20, 1999;
NOW, THEREFORE, in consideration of the premises and of the mutual,
promises, covenants and representations herein contained, the parties hereto
agree as follows:
1. Term. The Company will employ Mathias, and Mathias will serve the
Company, under the terms of this Agreement for an initial term ending October
31, 2000 (the "Initial Term"), commencing on December 1, 1998 (the "Effective
Date"). Effective as of the expiration of the Initial Term and as of each
anniversary date thereof, the term of this Agreement shall be extended for an
additional one-year period unless, not later than two months prior to each
such respective date, either party hereto shall have given notice to the other
than the term shall not be so extended. Notwithstanding the foregoing,
Mathias' employment hereunder may be earlier terminated, as provided in
Section 4 hereof. The term of this Agreement, as in effect from time to time
in accordance with the foregoing, shall be referred to herein as the "Term".
The period of time between the Effective Date and the termination of Mathias'
employment hereunder shall be referred to herein as the "Employment Period".
2. Employment. The Company hereby employs Mathias as President and
Chief Executive Officer of the Company upon the terms and conditions herein
set forth. Mathias shall exercise such authority, perform such duties and
functions and discharge such responsibilities as are reasonably associated
with Mathias' position, commensurate with the authority vested in Mathias
pursuant to this Agreement and consistent with the bylaws of the Company. In
connection with performance of his duties, Mathias shall report directly to
the Board of Directors of the Company (the "Board"). During the Employment
Period, Mathias shall devote full business time, skill and efforts to the
business of the Company. Notwithstanding the foregoing, Mathias may (i) make
and manage personal business investments of his choice and serve in any
capacity with any civic, educational or charitable organization, or any trade
association, without seeking or obtaining approval by the Board, provided such
activities and service do not materially interfere or conflict with the
performance of his duties hereunder and (ii) with the approval of the Board,
serve on the boards of directors of other corporations. The Company shall
provide Mathias, incident to the performance of such duties, with office
space, facilities and secretarial assistance commensurate with his position.
Mathias shall principally perform his duties for the Company in at the
corporate headquarters to be located in Denver, Colorado, or at such location
as the Board may determine in consultation with Mathias and with his express
consent.
3. Compensation and Benefits.
(a) Base Salary. During the Employment Period, the Company shall
pay to Mathias, as compensation for the performance of his duties and
obligations under this Agreement, a base salary at the rate of $144,000 per
annum, payable in arrears not less frequently than twice monthly in accordance
with the normal payroll practices of the Company (the "Base Salary"). The
Compensation Committee shall increase Mathias' base salary annually, at a rate
of not less than ten percent (10%) per year.
In the event the Company completes an initial or secondary public
offering of its common stock, Mathias' base salary shall be immediately
increased to an amount to be determined by the Compensation Committee of the
Board. Under no set of circumstances shall Mathias' Base Salary be decreased
at any time.
(b) Bonuses. The Company agrees to pay Mathias an annual cash
bonus, on or about March 31st of each year for his efforts in the prior
calendar year. The amount of such bonus shall be determined by the
Compensation Committee of the Board.
(c) Advance Incentives. The parties hereto acknowledge that the
Company has previously granted to Mathias three hundred and twenty-five
thousand (325,000) shares of the Company's common stock during the 1999
calendar year. The Company agrees to register the shares granted as an
advance incentive with the Securities and Exchange Commission as soon as
practicable, but in no event later than when the Company files for its Initial
Public Offering or a Secondary offering, subject to the requirements of the
underwriter. The total number of shares the Company must register for Mathias
shall be no more than the aggregate number of shares the Company is otherwise
registering. The Company shall bear all costs of registration associated with
such piggyback registration for Mathias.
(d) Incentive Stock Options ("ISOs"). The Company has caused to be
established a qualified incentive stock option plan (the "ISO Plan") under
Section 422 of the Internal Revenue Code of 1986, as amended. Each year
during the Employment Period, Mathias shall fully participate in the ISO Plan
and be granted a number of ISOs commensurate with his position in the Company.
The number of ISO's granted shall be calculated using the same formula used to
calculate the amount of ISOs granted other senior executives of the Company;
it being understood that as of the date of this Agreement, Mathias has been
previously granted by the Company's board of directors, incentive stock
options to purchase a total of one hundred thirty thousand four hundred thirty
four (130,434) shares of the Company's common stock.
(e) Non-Qualified Stock Options ("NSOs"). The Company has caused
to be established a Non-qualified Stock Option plan (the "Equity Incentive
Plan") that is not intended to qualify as an ISO under Section 422 of the
Internal Revenue Code of 1986, as amended. The Company's board of directors
has previously granted Mathias NSOs to purchase a total of one million eighty
thousand nine hundred sixty six (1,080,966) shares of the Company's common
stock on substantially the terms and conditions set forth in the attached form
of Stock Option Agreement, attached hereto as Exhibit A. Concurrently with
the execution of this Agreement, the Company and Mathias will enter into a
Stock Option Agreement, substantially in the form attached hereto as Exhibit
A, pursuant to which Mathias shall have an option to purchase one million
eighty thousand nine hundred sixty six (1,080,966) shares of common stock of
the Company on the terms and conditions set forth therein.
(f) Accelerated Vesting. The parties agree that all of Mathias'
Incentive Stock Options and Non-qualified Stock Options shall immediately
vest, regardless of the performance criteria, in the event of a Change in
Control of the Company as defined in Section 4(e) herein.
(g) Equity Catch-Up or Claw-Back. Notwithstanding anything
contained herein to the contrary, the parties agree that, upon the completion
of an initial or secondary public offering of the Company's Common Stock, the
sum of (i) the number of shares of Common Stock granted to Mathias according
to Section 3(c), plus (ii) the number of shares of Common Stock represented by
Incentive Stock Options granted to Mathias according to Section 3(d), plus
(iii) the number of shares of Common Stock represented by Non-Qualified Stock
Options granted to Mathias according to Section 3(e) shall represent an equity
interest in the Company equal to seven percent (7%) of the Company's issued
and outstanding Common Stock on a fully diluted basis. To the extent that
Mathias' equity interest at such time is less than or greater than seven
percent (7%), the Company and/or the Company's Compensation Committee shall
either increase or decrease the number of Non-Qualified Stock Options granted
to Mathias (through the grant of additional Non-Qualified Stock Options to
Mathias or through the cancellation of Non-Qualified Stock Options held by
Mathias) so that Mathias' equity interest at such time is equal to seven
percent (7%) of the Company's issued and outstanding Common Stock on a fully
diluted basis.
(h) Benefits. During the Employment Period, Mathias shall receive
such life insurance, disability, pension, health insurance, holiday, and sick
pay benefits and other benefits which the Company extends, as a matter of
policy, to its executives and, except as otherwise provided herein, shall be
entitled to participate in all deferred compensation and other incentive plans
of the Company on the same basis as other like executives of the Company.
(i) Vacation. Mathias shall be entitled to four (4) weeks of
vacation each year with full compensation. Mathias agrees to schedule his
vacation in a way that least interferes with the Company's business.
(j) Expenses. Mathias shall be reimbursed for his reasonable
expenses, commensurate with his position and related to the carrying out of
his duties, including expenses for entertainment, travel and similar items.
The Company shall reimburse Mathias for such expenses in a timely manner and
in accordance with the policies and procedures of the Company in effect from
time to time.
(k) Perquisites. During the Term of this Agreement, Mathias shall
be entitled to perquisites and fringe benefits that are accorded senior
executives of the Company. Such perquisites shall include an automobile
allowance of six hundred and fifty dollars ($650) per month, reimbursement for
medical expenses which may otherwise be uninsured or unreimbursed under the
Company's medical plan for Mathias and his dependents, payment for all
premiums for Mathias and his dependents under its medical insurance plans, and
payment for all premiums for Mathias under its life and disability insurance
plans. The Company shall also waive any applicable waiting periods for such
benefits, if any.
(l) Cumulative Compensation. The compensation provided for in
Sections 3(a) - (k) herein are in addition to the benefits provided for upon
termination pursuant to Section 5 herein.
4. Termination of Employment.
(a) Termination for Cause. The Company may terminate Mathias'
employment hereunder for cause. For purposes of this Agreement and subject to
Mathias' opportunity to cure as provided in Section 4(c) hereof, the Company
shall have "cause" to terminate Mathias' employment hereunder if Mathias shall
commit any of the following:
(i) any act or omission which shall represent a material
breach in any material respect of any of the terms of this Agreement;
(ii) gross misconduct that, in the reasonable good faith
opinion of the Company that is or is likely to be significantly injurious to
the Company;
(iii) gross negligence or wanton and reckless acts or omissions
in the performance of Mathias' duties, in any such case which are
significantly injurious to the Company;
(iv) bad faith in the performance of Mathias' duties,
consisting of willful acts or omissions, which are significantly injurious to
the Company;
(v) addiction to illegal drugs or chronic alcoholism; or
(vi) any conviction or pleading of guilty to a crime that
constitutes a felony under the laws of the United States or any political
subdivision thereof.
(b) Termination with Adequate Reason. Mathias shall have the right
at any time to terminate his employment with the Company with adequate reason.
For purposes of this Agreement and subject to the Company's opportunity to
cure as provided in Section 4(c) hereof, Mathias shall have adequate reason to
terminate his employment hereunder if such termination shall be the result of:
(i) a diminution during the Employment Period in Mathias'
title, duties or responsibilities as set forth in Section 2 hereof;
(ii) a breach by the Company of the compensation and benefits
provisions set forth in Section 3 hereof; or
(iii) any action of the Company to which Mathias does not
consent which would require Mathias to change his present place of residence;
or
(iv) a material breach by the Company of any material terms of
this Agreement.
(c) Notice and Opportunity to Cure. Notwithstanding the foregoing,
it shall be a condition precedent to the Company's right to terminate Mathias'
employment for "cause" and Mathias' right to terminate his employment for
"good reason" that (1) the party seeking the termination shall first have
given the other party written notice stating with specificity the reason for
the termination ("breach") and (2) if such breach is susceptible of cure or
remedy, a period of thirty (30) days from and after the giving of such notice
shall have elapsed without the breaching party having effectively cured or
remedied such breach during such 30-day period, unless such breach cannot be
cured or remedied within thirty (30) days, in which case the period for remedy
or cure shall be extended for a reasonable time (not to exceed thirty (30)
days) provided the breaching party has made and continues to make a diligent
effort to effect such remedy or cure.
(d) Termination Upon Death or Permanent and Total Disability. The
Employment Period shall be terminated by the death of Mathias. The Employment
Period may be terminated by the Company if Mathias shall be rendered incapable
of performing his duties to the Company by reason of any medically determined
physical or mental impairment that reasonably can be expected to result in
death or that can be expected to last for a period of six (6) or more
consecutive months from the first date of the disability ("Disability"). In
the event of a dispute as to whether Mathias is mentally impaired within the
meaning of this Section 4(d), or as to the likely duration of any incapacity
of Mathias either party may request a medical examination of Mathias by a
doctor appointed by the Chief of Staff of a hospital selected by mutual
agreement of the parties, or as the parties may otherwise agree, and the cost
of such written medical opinion of such doctor shall be borne by the Company.
If the Employment Period is terminated by reason of Disability of Mathias, the
Company shall give thirty (30) days' advance written notice to that effect to
Mathias.
(e) Change in Control. A "Change in Control" shall be deemed to
have occurred if and when (i) any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities and Exchange Act of 1934, as amended) who
does not own fifty percent (50%) or more of the combined voting power of the
Company's then issued and outstanding securities is or becomes a beneficial
owner, directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
issued and outstanding voting securities; (ii) the Company sells all or
substantially all of the assets of the Company; (iii) a merger is effected
whereby the Company is not the surviving entity after the merger (except in
the instance where the sole purpose of the merger is to effect a change in
domicile of the Company from one state to another); or (iv) a majority of the
individuals who were members of the Board of Directors of the Company
immediately prior to an action or series of actions, do not constitute a
majority of the Board of Directors following such action or series of actions.
In the event of a Change in Control, if Mathias and the new controlling entity
do not agree to continue with the terms of this Agreement, then this Agreement
shall be terminated and the Company shall pay Mathias the liquidated damages
defined in Section 5(a) below.
5. Consequences of Termination.
(a) Termination Without Cause or for Adequate Reason or Change of
Control. In the event of termination of Mathias' employment hereunder: (1)
by the Company without "cause" (other than upon death or Disability); (2) by
Mathias for "adequate reason"; or (3) termination effected after or upon a
Change of Control (each as defined in Section 4 hereof), in addition to any
other benefits and payments as may be required by law or otherwise accrued as
of such termination date by Mathias, Mathias shall be entitled to the
following severance pay and benefits:
(i) Severance Pay - a lump sum amount equal to one half (1/2)
of Mathias' then annual Base Salary;
(ii) Benefits Continuation - continuation for six (6) months
(the "Severance Period") of coverage under the group medical care, disability
and life insurance benefit plans or arrangements in which Mathias is
participating at the time of termination with the Company continuing to pay
its share of premiums and associated costs as if Mathias continued in the
employ of the Company; provided, however, that the Company's obligation to
provide such coverages shall be terminated if Mathias obtains comparable
substitute coverage from another employer at any time during the Severance
Period. Mathias shall be entitled, at the expiration of the Severance Period,
to elect continued medical coverage in accordance with Section 4980B of the
Internal Revenue Code of 1986, as amended (or any successor provision
thereto); and
(iii) Pro Rata Bonus Amounts - a lump sum amount equal
to the pro rata portion of any bonus amounts paid by the Company in the prior
year as bonuses.
(b) Termination Upon Disability. In the event of termination of
Mathias' employment hereunder by the Company on account of Disability, Mathias
shall be entitled to the following severance pay and benefits:
(i) Severance Pay - severance payments in the form of
continuation of Mathias' Base Salary as in effect immediately prior to such
termination for a period of six (6) months following the first date of
Disability; and
(ii) Benefits Continuation - the same benefits as provided in
Section 5(a)(ii) above, to be provided during the Employment Period while
Mathias is suffering from Disability and for a period of three (3) months
following the effective date of Mathias' termination by reason of Disability.
(c) Termination Upon Death. In the event of termination of
Mathias' employment hereunder on account of Mathias' death, Mathias' heirs,
estate or personal representatives under law, as applicable, shall be entitled
to the payment of Mathias' Base Salary as in effect immediately prior to death
for a period of not less than two (2) calendar months and not more than the
earlier of six (6) calendar months or the payment of benefits pursuant to
Mathias' life insurance policy, as provided for in Section 3(h) above.
Mathias' beneficiary or estate shall not be required to remit to the Company
any payments received pursuant to any life insurance policy purchased pursuant
to Section 3(h) above.
(d) Accrued Rights. Notwithstanding the foregoing provisions of
this Section 5, in the event of termination of Mathias' employment hereunder
for any reason, Mathias shall be entitled to payment of any unpaid portion of
his Base Salary through the effective date of termination, accrued by unpaid
vacation or benefits otherwise agreed to by the Company, and payment of any
accrued but unpaid rights solely in accordance with the terms of any incentive
bonus or employee benefit plan or program of the Company.
(e) Conditions to Severance Benefits.
(i) The Company shall have the right to seek repayment of the
severance payments and benefits provided by this Section 5 in the event that
Mathias fails to honor in accordance with their terms the provisions of
Section 6 hereof.
(ii) For purposes only of this Section 5(e), Mathias shall be
treated as having failed to honor the provisions of Sections 6 hereof only
upon the vote of two-thirds of the Board following notice of the alleged
failure by the Company to Mathias, an opportunity for Mathias to cure the
alleged failure for a period of thirty (30) days from the date of such notice
and Mathias' opportunity to be heard on the issue by the Board.
(f) Registration and/or Buyback of Securities. No later than
ninety (90) days following termination of this Agreement by Company without
cause (as described in Section 4(a)) or by Mathias with adequate reason (as
described in Section 4(b)), the Company shall cause to be prepared and filed
at its sole cost and expense registration documents with the Securities and
Exchange Commission for the purpose of registering for sale under the
Securities Act of 1933, as amended, all shares of the Company's common stock
owned by Mathias or purchasable by Mathias upon exercise of outstanding
Incentive Stock Options and Non-Qualified Stock Options that are vested as of
the date of termination. In connection with such registration, the Company
shall do the following: (i) attempt to cause such registration to be declared
effective by the Securities and Exchange Commission within one hundred twenty
(120) days of the date of termination, (ii) if successful in (i) above,
maintain the effectiveness of such registration for a minimum period of one
hundred eighty (180) days, and (iii) qualify the sale of all shares of the
Company's common stock owned by Mathias or purchasable by Mathias upon
exercise of his outstanding, vested Incentive Stock Options and Non-Qualified
Stock Options in such states and under such Blue Sky regulations as Mathias
may reasonably request. In the event said registration fails to become
effective, Mathias shall be permitted to sell in accordance with the
provisions of Rule 144 and the remaining shares shall be registered in
accordance with Section 3(c) above.
6. Confidential Information and Covenant Not to Compete. All payments
and benefits to Mathias shall be subject to Mathias' compliance with this
Agreement and the provisions of this Section 6. However, Mathias' covenants
contained in this Section 6 shall terminate and shall be unenforceable and of
no further legal force or effect in the event the Company, its successors or
assigns, becomes insolvent, is liquidated or ceases for any reason to conduct
business operations for a continuous period of at least thirty (30) days.
(a) Confidentiality. Mathias agrees that he will not at any time
during the Employment Period or for a period of two (2) year following
employment with the Company, for any reason, in any fashion, form or manner,
either directly or indirectly, divulge, disclose or communicate to any person,
firm, corporation or other business entity, in any manner whatsoever, any
confidential information or trade secrets concerning the business of the
Company, including, without limiting the generality of the foregoing, the
techniques, methods or systems of its operation or management, any information
regarding its financial matters, or any other material information concerning
the business of the Company (including customer lists), its manner of
operation, its plans or other material data (the "Business"). The provisions
of Section 6(a) shall not apply to (i) information disclosed in the
performance of Mathias' duties to the Company based on his good faith belief
that such a disclosure is in the best interests of Company; (ii) information
that is, at the time of the disclosure, public knowledge; (iii) information
disseminated by the Company to third parties in the ordinary course of
business; (iv) information lawfully received by Mathias from a third party
who, based upon inquiry by Mathias, is not bound by a confidential
relationship to the Company; or (v) information disclosed under a requirement
of law or as directed by applicable legal authority having jurisdiction over
Mathias.
(b) Litigation Support. During the Term of this Agreement, Mathias
shall, upon reasonable notice, furnish such information and proper assistance
to the Company as may reasonably be required in connection with any litigation
in which the Company or any of its subsidiaries is, or may become, a party.
Except for litigation that may be between the Company and Mathias, Mathias'
reasonable expenses (including, but not limited to, travel and attorneys'
fees) incurred in complying with this covenant shall be either advanced or
promptly reimbursed by Company to Mathias.
(c) No Solicitation of Employees. Mathias agrees that during the
Term of this Agreement and continuing for a period of one (1) year after
termination under Section 4 herein, neither Mathias nor any person or
enterprise controlled by Mathias, will solicit for employment any person
employed by the Company, with the exception of James E. Maurer.
(d) Covenant Not to Compete. Mathias agrees that he shall not
during the Employment Period, without the approval of the Board, directly or
indirectly, alone or as partner, joint venturer, officer, director, employee,
consultant, agent, independent contractor, guarantor, financier, consultant,
option holder or stockholder (other than as provided below) of any company or
business, participate in, engage in or have a financial interest in any
"Competitive Business" within the United States. For purposes of the
foregoing, the term "Competitive Business" shall mean any business, firm,
corporation or other business entity related to the provision of Internet
access or Internet related services and any business directly competing with
any product or service of SkyLynx Communications, Inc. or any affiliate
thereof. Notwithstanding the foregoing, Mathias shall not be prohibited
during the noncompetition period applicable above from acting as a passive
investor where he owns not more than five percent (5%) of the issued and
outstanding capital stock of any publicly-held company.
7. Breach of Restrictive Covenants. The parties agree that a breach or
violation of Section 6 hereof will result in immediate and irreparable injury
and harm to the innocent party, and that such innocent party shall have, in
addition to any and all remedies of law and other consequences under this
Agreement, the right to seek an injunction, specific performance or other
equitable relief to prevent the violation of the obligations hereunder.
8. Indemnification and Duty to Defend.
(a) Indemnification. Except for litigation between the Company and
Mathias, the Company agrees to indemnify Mathias to the fullest extent against
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative in which he is made party or
is threatened to be made a party by reason of his having been an officer or
director of the Company or any of its subsidiaries or affiliates, or for
actions taken purportedly on behalf of the Company or any of its subsidiaries
or affiliates. Indemnification shall include, but is not limited to: expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by Mathias as long as Mathias acted in good
faith and in a manner he reasonably believed to be in the best interests of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful. Indemnification
shall extend to all matters that relate to Mathias' association with the
Company beginning on the Effective Date of this Agreement, and such
indemnification shall survive the termination of this Agreement, regardless of
the reason for termination.
(b) Duty to Defend. Except for litigation between the Company and
Mathias, the Company will provide Mathias with a legal defense with counsel of
his choosing against any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative in which
he is made party or is threatened to be made a party by reason of his having
been an officer or director of the Company or any of its subsidiaries or
affiliates, for action taken purportedly on behalf of the Company or any of
its subsidiaries or affiliates. No settlement shall be entered into with
respect to litigation pursuant to this Section 8(b) without the express
written approval of Mathias. Additionally, upon request by Mathias, the
Company will promptly advance or pay any amounts for costs, charges, or
expenses in respect to his right to a defense and indemnification hereunder.
This duty to defend shall extend to all matters that relate to Mathias'
affiliation with the Company beginning from July 1, 1998, and such duty shall
survive the termination of this Agreement.
9. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Company, to: If to Mathias, to:
Chairman of the Board Jeffery A. Mathias
SkyLynx Communications, Inc. 724 The Circle
600 South Cherry Street, Suite 400 Elkhart, Indiana 46514
Denver, Colorado 80246
or to such other respective addresses as the parties hereto shall designate to
the other by like notice, provided that notice of a change of address shall be
effective only upon receipt thereof.
10. Waiver of Breach. Any waiver of any breach of this Agreement shall
not be construed to be a continuing waiver or consent to any subsequent breach
on the part either of Mathias or of the Company.
11. Non-Assignment: Successors. Neither party hereto may assign his or
its rights or delegate his or its duties under this Agreement without the
prior written consent of the other party; provided, however, that: (i) this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company upon any sale of all or substantially all of the
Company's assets, or upon any merger, consolidation or reorganization of the
Company with or into any other corporation, all as though such successors and
assigns of the company and their respective successors and assigns were the
Company; and (ii) this Agreement shall inure to the benefit of and be binding
upon the heirs, assigns or designees of Mathias to the extent of any payments
due to them hereunder. As used in this Agreement, the term "Company" shall be
deemed to refer to any such successor or assign of the Company referred to in
the preceding sentence.
12. Withholding of Taxes. All payments required to be made by the
Company to Mathias under this Agreement shall be subject to the withholding of
such amounts, if any, relating to tax, and other payroll deductions as the
Company may reasonably determine it should withhold pursuant to any applicable
law or regulation.
13. Severability. To the extent any provision of this Agreement or
portion thereof shall be invalid or unenforceable, it shall be considered
deleted there from and the remainder of such provision and of this agreement
shall be unaffected and shall continue in full force and effect.
14. Payment. All amounts payable by the Company to Mathias under this
Agreement shall be paid promptly on the dates required for such payment in
this Agreement without notice or demand. Any salary, benefits or other
amounts paid or to be paid to Mathias or provided to or in respect of Mathias
pursuant to this Agreement shall not be reduced by amounts owing from Mathias
to the Company.
15. Authority. Each of the parties hereto hereby represents that each
has taken all actions necessary in order to execute and deliver this Agreement
and the Stock Option Agreement attached hereto as Exhibit A.
16. 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.
17. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Colorado, without giving
effect to the choice of law principles thereof.
18. Entire Agreement. This Agreement, the attached Stock Option
Agreements and the Plan as defined in the Stock Option Agreements constitute
the entire agreement by the Company and Mathias with respect to the subject
matter hereof and supersedes any and all prior agreements or understandings
between Mathias and the Company with respect to the subject matter hereof,
whether written or oral. This Agreement may be amended or modified only by a
written instrument executed by Mathias and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and month first above-written.
SKYLYNX COMMUNICATIONS, INC.
By: /s/ Francis P. Ragano
---------------------------
Francis P. Ragano
Chairman of the Board
/s/ Jeffery A. Mathias
--------------------------------
Jeffery A. Mathias
<PAGE>
<PAGE>
EXHIBIT "A"
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
SkyLynx Communications, Inc.
Stock Options
This AMENDED AND RESTATED STOCK OPTION AGREEMENT (the "Agreement") dated
as of this 20th day of April, 1999 is intended to amend certain terms and
restate the remaining provisions of an Agreement entered into on the 1st day
of December, 1998 (the "Date of Grant"), between SkyLynx Communications, Inc.,
a Colorado corporation (the "Company") and Jeffery A. Mathias (the
"Optionee").
Pursuant to any authorized stock option plan of the Company or any other
appropriate and lawful method (collectively, the "Plan"), the Company has
authorized the execution and delivery of this Agreement. A copy of the Plan
as in effect on the Date of Grant has been supplied to the Optionee and the
Optionee hereby acknowledges receipt thereof. The provisions of the Plan,
including the definitions of capitalized terms that are not otherwise defined
in this Agreement, are incorporated herein by reference.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree
as follows:
1. Grant of Option. Subject to all the terms and conditions of the
Plan and this Agreement, the Company grants to the Optionee as of the date of
grant an option (the "Option") to purchase one million eighty thousand nine
hundred and sixty-six (1,080,966) shares of common stock, par value $.001, of
the Company ("Common Stock"). The Option is not intended to qualify as an
"incentive stock option" under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and shall be treated as a non-qualified stock
option under the Plan.
2. Exercise Price. The exercise price per share of Common Stock
covered by this Option (the "Option Price") shall be $1.94.
3. Vesting. The Optionee's right to purchase shares of the Company's
Common Stock under the Option shall vest according to the following
milestones:
a. When the Company achieves certain performance based milestones
as detailed in the Performance Criteria ("Performance
Criteria") set forth on Schedule 3(a) hereto; or
b. In any event, upon the tenth (10th) anniversary of the grant of
the options all options that are not then vested will
immediately vest.
4. Term. The term of the Option (the "Option Term") shall commence on
the Date of Grant and shall expire on the tenth anniversary thereof unless the
Option shall have been earlier terminated in accordance with the terms hereof
or of the Plan. Shares of Common Stock as to which the Option becomes
exercisable pursuant to Section 3 hereof may be purchased at any time during
the Option Term.
5. Termination of Option. The unexercised portion of the Option shall
automatically terminate and shall become null and void and be of no further
force or effect upon the expiration of the Option Term.
6. Notices. All notices or other communications which are required or
permitted hereunder shall be deemed sufficient if contained in a written
instrument given by personal delivery, telex, telecopier, telegram, air
courier or registered or certified mail, postage prepaid, return receipt
requested, addressed to such party at the address set forth below or such
other address as may thereafter be designated in a written notice from such
party to the other party.
If to the Company: Attn: Chairman of the Board
SkyLynx Communications, Inc.
600 South Cherry Street - Suite 400
Denver, Colorado 80246
If to Mathias, to: Jeffery A. Mathias
724 The Circle
Elkhart, Indiana 46514
All such notices, advances and communications shall be deemed to have
been delivered and received (i) in the case of personal delivery, on the date
of such delivery, (ii) in the case of telecopier, upon receipt of machine
confirmation and (iii) in the case of mailing, on the third business day
following such mailing.
7. No Waiver. No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
8. Optionee Undertaking. The Optionee shall take whatever additional
actions and execute whatever additional documents the Company or the Committee
may in its reasonable judgment deem necessary or advisable in order to carry
out or effect one or more of the obligations or restrictions imposed on the
Optionee pursuant to the express provisions of this Agreement.
9. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Colorado, excluding the choice of
law rules thereof.
10. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above-written.
SKYLYNX COMMUNICATIONS, INC.
By: /s/ Francis P. Ragano
---------------------------
Francis P. Ragano
Chairman of the Board
/s/ Jeffery A. Mathias
--------------------------------
Jeffery A. Mathias
<PAGE>
<PAGE>
Schedule 3(a)
PERFORMANCE CRITERIA
The Optionee's right to purchase shares of the Company's Common Stock
under the Option shall vest immediately, subject to Section 3 hereof, pursuant
to the following schedule:
(1) Upon acquisition of the Company's twenty-five thousand (25,000)
subscriber, Mathias shall vest in 288,294 stock options.
(2) Upon obtaining acceptable commitments to fund the Company for a
minimum $30,000,000, Mathias shall vest in 384,392 stock options.
Such commitments may consist of, but shall not be limited to, any
combination of the following:
(i) Initial or Secondary Public Offering;
(ii) Private Equity Placement;
(iii) High Yield Debt Offering;
(iv) Private Debt Placement;
(v) Public or Private Placement of Convertible Securities;
(vi) Joint Venture / Project Financing; and
(vii) Vendor Financing.
(3) Upon the acquisition of the Company's fifth (5th) Internet Service
Provider, Mathias shall vest in 192,481 stock options.
(4) Upon obtaining annualized gross revenues of $15,000,000 for the
Company, (based upon last quarter revenues annualized), Mathias
shall vest in another 215,799 stock options.
<PAGE>
SKYLYNX COMMUNICATIONS, INC.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made
this 23rd day of August 1999 between SKYLYNX COMMUNICATIONS, INC., a Colorado
corporation (the "Company") and JAMES E. MAURER ("Maurer").
W I T N E S S E T H:
WHEREAS, the parties entered into that certain employment agreement on
the 23rd day of December, 1998 and wish to amend certain provisions and
restate the remaining provisions of such agreement to accurately reflect the
understanding of the parties hereto; and
WHEREAS, it is intended that this Agreement will supercede such prior
agreement and that the provisions of this Agreement be deemed in effect as of
December 23, 1998;
NOW, THEREFORE, in consideration of the premises and of the mutual,
promises, covenants and representations herein contained, the parties hereto
agree as follows:
1. Term. The Company will employ Maurer, and Maurer will serve the
Company, under the terms of this Agreement for an initial term ending December
31, 2000 (the "Initial Term"), commencing as of December 23, 1998 (the
"Effective Date"). Effective as of the expiration of the Initial Term and as
of each anniversary date thereof, the term of this Agreement shall be extended
for an additional one-year period unless, not later than two months prior to
each such respective date, either party hereto shall have given notice to the
other than the term shall not be so extended. Notwithstanding the foregoing,
Maurer's employment hereunder may be earlier terminated, as provided in
Section 4 hereof. The term of this Agreement, as in effect from time to time
in accordance with the foregoing, shall be referred to herein as the "Term".
The period of time between the Effective Date and the termination of Maurer's
employment hereunder shall be referred to herein as the "Employment Period".
2. Employment. The Company hereby employs Maurer as Chief Financial
Officer of the Company upon the terms and conditions herein set forth. Maurer
shall exercise such authority, perform such duties and functions and discharge
such responsibilities as are reasonably associated with Maurer's position,
commensurate with the authority vested in Maurer pursuant to this Agreement
and consistent with the bylaws of the Company. In connection with performance
of his duties, Maurer shall report directly to the Chief Executive Officer of
the Company. During the Employment Period, Maurer shall devote full business
time, skill and efforts to the business of the Company. Notwithstanding the
foregoing, Maurer may (i) make and manage personal business investments of his
choice and serve in any capacity with any civic, educational or charitable
organization, or any trade association, without seeking or obtaining approval
by the Board, provided such activities and service do not materially interfere
or conflict with the performance of his duties hereunder and (ii) with the
approval of the Board, serve on the boards of directors of other corporations.
The Company shall provide Maurer, incident to the performance of such duties,
with office space, facilities and secretarial assistance commensurate with his
position. Maurer shall principally perform his duties for the Company in at
the corporate headquarters to be located in Denver, Colorado, or at such
location as the Board may determine in consultation with Maurer and with his
express consent.
3. Compensation and Benefits.
(a) Base Salary. During the Employment Period, the Company shall
pay to Maurer, as compensation for the performance of his duties and
obligations under this Agreement, a base salary at the rate of $120,000 per
annum, payable in arrears not less frequently than twice monthly in accordance
with the normal payroll practices of the Company (the "Base Salary"). The
Compensation Committee shall increase Maurer's Base Salary annually, at a rate
of not less than ten percent (10%) per year.
In the event the Company completes an initial or secondary public
offering of its common stock, Maurer's Base Salary shall be immediately
increased to an amount to be determined by the Compensation Committee of the
Board. Under no set of circumstances shall Maurer's Base Salary be decreased
at any time.
(b) Bonuses. The Company agrees to pay Maurer an annual cash bonus,
on or about March 31st of each year for his efforts in the prior calendar
year. The amount of such bonus shall be determined by the Compensation
Committee of the Board.
(c) Advance Incentives. The parties hereto acknowledge that the
Company has previously granted to Maurer seventy five thousand (75,000) shares
of the Company's common stock. The Company agrees to register the shares
granted as an advance incentive with the Securities and Exchange Commission as
soon as practicable, but in no event later than when the Company files for its
Initial Public Offering or a Secondary offering, subject to the requirements
of the underwriter. The total number of shares the Company must register for
Maurer shall be no more than the aggregate number of shares the Company is
otherwise registering. The Company shall bear all costs of registration
associated with such piggyback registration for Maurer.
(d) Incentive Stock Options ("ISOs"). The Company has caused to be
established a qualified incentive stock option plan (the "ISO Plan") under
Section 422 of the Internal Revenue Code of 1986, as amended. Each year
during the Employment Period, Maurer shall fully participate in the ISO Plan
and be granted a number of ISOs commensurate with his position in the Company.
The number of ISO's granted shall be calculated using the same formula used to
calculate the amount of ISOs granted other senior executives of the Company;
it being understood that as of the date of this Agreement, Maurer has been
previously granted by the Company's board of directors, incentive stock
options to purchase a total of one hundred thirty thousand four hundred thirty
four (130,434) shares of the Company's common stock.
(e) Non-Qualified Stock Options ("NSOs"). The Company has caused
to be established a Non-qualified Stock Option plan (the "Equity Incentive
Plan") that is not intended to qualify as an "incentive stock option" under
Section 422 of the Internal Revenue Code of 1986, as amended. The Company's
board of directors has previously granted Maurer NSOs to purchase a total of
seven hundred sixteen thousand five hundred sixty-six (716,566) shares of the
Company's common stock on substantially the terms and conditions set forth in
the attached form of Stock Option Agreement, attached hereto as Exhibit A.
Concurrently with the execution of this Agreement, the Company and Maurer will
enter into a Stock Option Agreement, substantially in the form attached hereto
as Exhibit A, pursuant to which Maurer shall have an option to purchase seven
hundred sixteen thousand five hundred sixty six (716,566) share of common
stock of the Company on the terms and conditions set forth therein.
(f) Accelerated Vesting. The parties agree that all of Maurer's
Incentive Stock Options and Non-qualified Stock Options shall immediately
vest, regardless of the performance criteria, in the event of: (i) a Change
in Control of the Company as defined in Section 4(e) herein; or (ii) in the
event of a termination of employment of Jeffery Mathias as the Company's Chief
Executive Officer.
(g) Equity Catch-Up or Claw-Back. Notwithstanding anything
contained herein to the contrary, the parties agree that, upon the completion
of an initial or secondary public offering of the Company's Common Stock, the
sum of (i) the number of shares of Common Stock granted to Maurer according to
Section 3(c), plus (ii) the number of shares of Common Stock represented by
Incentive Stock Options granted to Maurer according to Section 3(d), plus
(iii) the number of shares of Common Stock represented by Non-Qualified Stock
Options granted to Maurer according to Section 4(e) shall represent an equity
interest in the Company equal to four percent (4%) of the Company's issued and
outstanding Common Stock on a fully diluted basis. To the extent that Maurer's
equity interest at such time is less than or greater than four percent (4%),
the Company and/or the Company's Compensation Committee shall either increase
or decrease the number of Non-Qualified Stock Options granted to Maurer
(through the grant of additional Non-Qualified Stock Options to Maurer or
through the cancellation of Non-Qualified Stock Options held by Maurer) so
that Maurer's equity interest at such time is equal to four percent (4%) of
the Company's issued and outstanding Common Stock on a fully diluted basis.
(h) Benefits. During the Employment Period, Maurer shall receive
such life insurance, disability, pension, health insurance, holiday, and sick
pay benefits and other benefits which the Company extends, as a matter of
policy, to its executives and, except as otherwise provided herein, shall be
entitled to participate in all deferred compensation and other incentive plans
of the Company on the same basis as other like executives of the Company.
(i) Vacation. Maurer shall be entitled to four (4) weeks of
vacation each year with full compensation. Maurer agrees to schedule his
vacation in a way that least interferes with the Company's business.
(j) Expenses. Maurer shall be reimbursed for his reasonable
expenses, commensurate with his position and related to the carrying out of
his duties, including expenses for entertainment, travel and similar items.
The Company shall reimburse Maurer for such expenses in a timely manner and in
accordance with the policies and procedures of the Company in effect from time
to time.
(k) Perquisites. During the Term of this Agreement, Maurer shall
be entitled to perquisites and fringe benefits that are accorded senior
executives of the Company. Such perquisites shall include an automobile
allowance of Five Hundred Dollars ($500) per month, reimbursement for medical
expenses which may otherwise be uninsured or unreimbursed under the Company's
medical plan for Maurer and his dependents, payment for all premiums for
Maurer and his dependents under its medical insurance plans, and payment for
all premiums for Maurer under its life and disability insurance plans. The
Company shall also waive any applicable waiting periods for such benefits, if
any.
(l) Cumulative Compensation. The compensation provided for in
Sections 3(a) - (k) herein are in addition to the benefits provided for upon
termination pursuant to Section 5 herein.
4. Termination of Employment.
(a) Termination for Cause. The Company may terminate Maurer's
employment hereunder for cause. For purposes of this Agreement and subject to
Maurer's opportunity to cure as provided in Section 4(c) hereof, the Company
shall have "cause" to terminate Maurer's employment hereunder if Maurer shall
commit any of the following:
(i) any act or omission which shall represent a material
breach in any material respect of any of the terms of this Agreement;
(ii) gross misconduct that, in the reasonable good faith
opinion of the Company that is or is likely to be significantly injurious to
the Company;
(iii) gross negligence or wanton and reckless acts or omissions
in the performance of Maurer's duties, in any such case which are
significantly injurious to the Company;
(iv) bad faith in the performance of Maurer's duties,
consisting of willful acts or omissions, which are significantly injurious to
the Company;
(v) addiction to illegal drugs or chronic alcoholism; or
(vi) any conviction or pleading of guilty to a crime that
constitutes a felony under the laws of the United States or any political
subdivision thereof.
(b) Termination with Adequate Reason. Maurer shall have the right
at any time to terminate his employment with the Company with adequate reason.
For purposes of this Agreement and subject to the Company's opportunity to
cure as provided in Section 4(c) hereof, Maurer shall have adequate reason to
terminate his employment hereunder if such termination shall be the result of:
(i) a diminution during the Employment Period in Maurer's
title, duties or responsibilities as set forth in Section 2 hereof;
(ii) a breach by the Company of the compensation and benefits
provisions set forth in Section 3 hereof; or
(iii) any action of the Company to which Maurer does not consent
which would require Maurer to change his present place of residence; or
(iv) a material breach by the Company of any material terms of
this Agreement.
(c) Notice and Opportunity to Cure. Notwithstanding the foregoing,
it shall be a condition precedent to the Company's right to terminate Maurer's
employment for "cause" and Maurer's right to terminate his employment for
"good reason" that (1) the party seeking the termination shall first have
given the other party written notice stating with specificity the reason for
the termination ("breach") and (2) if such breach is susceptible of cure or
remedy, a period of thirty (30) days from and after the giving of such notice
shall have elapsed without the breaching party having effectively cured or
remedied such breach during such 30-day period, unless such breach cannot be
cured or remedied within thirty (30) days, in which case the period for remedy
or cure shall be extended for a reasonable time (not to exceed thirty (30)
days) provided the breaching party has made and continues to make a diligent
effort to effect such remedy or cure.
(d) Termination Upon Death or Permanent and Total Disability. The
Employment Period shall be terminated by the death of Maurer. The Employment
Period may be terminated by the Company if Maurer shall be rendered incapable
of performing his duties to the Company by reason of any medically determined
physical or mental impairment that reasonably can be expected to result in
death or that can be expected to last for a period of six (6) or more
consecutive months from the first date of the disability ("Disability"). In
the event of a dispute as to whether Maurer is mentally impaired within the
meaning of this Section 4(d), or as to the likely duration of any incapacity
of Maurer either party may request a medical examination of Maurer by a doctor
appointed by the Chief of Staff of a hospital selected by mutual agreement of
the parties, or as the parties may otherwise agree, and the cost of such
written medical opinion of such doctor shall be borne by the Company. If the
Employment Period is terminated by reason of Disability of Maurer, the Company
shall give thirty (30) days' advance written notice to that effect to Maurer.
(e) Change in Control. A "Change in Control" shall be deemed to
have occurred if and when (i) any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities and Exchange Act of 1934, as amended) who
does not own fifty percent (50%) or more of the combined voting power of the
Company's then issued and outstanding securities is or becomes a beneficial
owner, directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
issued and outstanding voting securities; (ii) the Company sells all or
substantially all of the assets of the Company; (iii) a merger is effected
whereby the Company is not the surviving entity after the merger (except in
the instance where the sole purpose of the merger is to effect a change in
domicile of the Company from one state to another); or (iv) a majority of the
individuals who were members of the Board of Directors of the Company
immediately prior to an action or series of actions, do not constitute a
majority of the Board of Directors following such action or series of actions.
In the event of a Change in Control, if Maurer and the new controlling entity
do not agree to continue with the terms of this Agreement, then this Agreement
shall be terminated and the Company shall pay Maurer the liquidated damages
defined in Section 5(a) below.
5. Consequences of Termination.
(a) Termination Without Cause or for Adequate Reason or Change of
Control. In the event of termination of Maurer's employment hereunder: (1)
by the Company without "cause" (other than upon death or Disability); (2) by
Maurer for "adequate reason"; or (3) termination effected after or upon a
Change of Control (each as defined in Section 4 hereof), in addition to any
other benefits and payments as may be required by law or otherwise accrued as
of such termination date by Maurer, Maurer shall be entitled to the following
severance pay and benefits:
(i) Severance Pay - a lump sum amount equal to one half (1/2)
of Maurer's then annual Base Salary;
(ii) Benefits Continuation - continuation for six (6) months
(the "Severance Period") of coverage under the group medical care, disability
and life insurance benefit plans or arrangements in which Maurer is
participating at the time of termination with the Company continuing to pay
its share of premiums and associated costs as if Maurer continued in the
employ of the Company; provided, however, that the Company's obligation to
provide such coverages shall be terminated if Maurer obtains comparable
substitute coverage from another employer at any time during the Severance
Period. Maurer shall be entitled, at the expiration of the Severance Period,
to elect continued medical coverage in accordance with Section 4980B of the
Internal Revenue Code of 1986, as amended (or any successor provision
thereto); and
(iii) Pro Rata Bonus Amounts - a lump sum amount equal to the
pro rata portion of any bonus amounts paid by the Company in the prior year as
bonuses.
(b) Termination Upon Disability. In the event of termination of
Maurer's employment hereunder by the Company on account of Disability, Maurer
shall be entitled to the following severance pay and benefits:
(i) Severance Pay - severance payments in the form of
continuation of Maurer's Base Salary as in effect immediately prior to such
termination for a period of six (6) months following the first date of
Disability; and
(ii) Benefits Continuation - the same benefits as provided in
Section 5(a)(ii) above, to be provided during the Employment Period while
Maurer is suffering from Disability and for a period of three (3) months
following the effective date of Maurer's termination by reason of Disability.
(c) Termination Upon Death. In the event of termination of
Maurer's employment hereunder on account of Maurer's death, Maurer's heirs,
estate or personal representatives under law, as applicable, shall be entitled
to the payment of Maurer's Base Salary as in effect immediately prior to death
for a period of not less than two (2) calendar months and not more than the
earlier of six (6) calendar months or the payment of benefits pursuant to
Maurer's life insurance policy, as provided for in Section 3(h) above.
Maurer's beneficiary or estate shall not be required to remit to the Company
any payments received pursuant to any life insurance policy purchased pursuant
to Section 3(h) above.
(d) Accrued Rights. Notwithstanding the foregoing provisions of
this Section 5, in the event of termination of Maurer's employment hereunder
for any reason, Maurer shall be entitled to payment of any unpaid portion of
his Base Salary through the effective date of termination, accrued by unpaid
vacation or benefits otherwise agreed to by the Company, and payment of any
accrued but unpaid rights solely in accordance with the terms of any incentive
bonus or employee benefit plan or program of the Company.
(e) Conditions to Severance Benefits.
(i) The Company shall have the right to seek repayment of the
severance payments and benefits provided by this Section 5 in the event that
Maurer fails to honor in accordance with their terms the provisions of Section
6 hereof.
(ii) For purposes only of this Section 5(e), Maurer shall be
treated as having failed to honor the provisions of Sections 6 hereof only
upon the vote of two-thirds of the Board following notice of the alleged
failure by the Company to Maurer, an opportunity for Maurer to cure the
alleged failure for a period of thirty (30) days from the date of such notice
and Maurer's opportunity to be heard on the issue by the Board.
(f) Registration and/or Buyback of Securities. No later than
ninety (90) days following termination of this Agreement by Company without
cause (as described in Section 4(a)) or by Maurer with adequate reason (as
described in Section 4(b)), the Company shall cause to be prepared and filed
at its sole cost and expense registration documents with the Securities and
Exchange Commission for the purpose of registering for sale under the
Securities Act of 1933, as amended, all shares of the Company's common stock
owned by Maurer or purchasable by Maurer upon exercise of outstanding
Incentive Stock Options and Non-Qualified Stock Options that are vested as of
the date of termination. In connection with such registration, the Company
shall do the following: (i) attempt to cause such registration to be declared
effective by the Securities and Exchange Commission within one hundred twenty
(120) days of the date of termination, (ii) if successful in (i) above,
maintain the effectiveness of such registration for a minimum period of one
hundred eighty (180) days, and (iii) qualify the sale of all shares of the
Company's common stock owned by Maurer or purchasable by Maurer upon exercise
of his outstanding, vested Incentive Stock Options and Non-Qualified Stock
Options in such states and under such Blue Sky regulations as Maurer may
reasonably request. In the event said registration fails to become effective,
Maurer shall be permitted to sell in accordance with the provisions of Rule
144 and the remaining shares shall be registered in accordance with Section
3(c) above.
6. Confidential Information and Covenant Not to Compete. All payments
and benefits to Maurer shall be subject to Maurer's compliance with this
Agreement and the provisions of this Section 6. However, Maurer's covenants
contained in this Section 6 shall terminate and shall be unenforceable and of
no further legal force or effect in the event the Company, its successors or
assigns, becomes insolvent, is liquidated or ceases for any reason to conduct
business operations for a continuous period of at least thirty (30) days.
(a) Confidentiality. Maurer agrees that he will not at any time
during the Employment Period or for a period of two (2) year following
employment with the Company, for any reason, in any fashion, form or manner,
either directly or indirectly, divulge, disclose or communicate to any person,
firm, corporation or other business entity, in any manner whatsoever, any
confidential information or trade secrets concerning the business of the
Company, including, without limiting the generality of the foregoing, the
techniques, methods or systems of its operation or management, any information
regarding its financial matters, or any other material information concerning
the business of the Company (including customer lists), its manner of
operation, its plans or other material data (the "Business"). The provisions
of Section 6(a) shall not apply to (i) information disclosed in the
performance of Maurer's duties to the Company based on his good faith belief
that such a disclosure is in the best interests of Company; (ii) information
that is, at the time of the disclosure, public knowledge; (iii) information
disseminated by the Company to third parties in the ordinary course of
business; (iv) information lawfully received by Maurer from a third party who,
based upon inquiry by Maurer, is not bound by a confidential relationship to
the Company; or (v) information disclosed under a requirement of law or as
directed by applicable legal authority having jurisdiction over Maurer.
(b) Litigation Support. During the Term of this Agreement, Maurer
shall, upon reasonable notice, furnish such information and proper assistance
to the Company as may reasonably be required in connection with any litigation
in which the Company or any of its subsidiaries is, or may become, a party.
Except for litigation that may be between the Company and Maurer, Maurer's
reasonable expenses (including, but not limited to, travel and attorneys'
fees) incurred in complying with this covenant shall be either advanced or
promptly reimbursed by Company to Maurer.
(c) No Solicitation of Employees. Maurer agrees that during the
Term of this Agreement and continuing for a period of one (1) year after
termination under Section 4 herein, neither Maurer nor any person or
enterprise controlled by Maurer, will solicit for employment any person
employed by the Company.
(d) Covenant Not to Compete. Maurer agrees that he shall not
during the Employment Period, without the approval of the Board, directly or
indirectly, alone or as partner, joint venturer, officer, director, employee,
consultant, agent, independent contractor, guarantor, financier, consultant,
option holder or stockholder (other than as provided below) of any company or
business, participate in, engage in or have a financial interest in any
"Competitive Business" within the United States. For purposes of the
foregoing, the term "Competitive Business" shall mean any business, firm,
corporation or other business entity related to the provision of Internet
access or Internet related services and any business directly competing with
any product or service of SkyLynx Communications, Inc. or any affiliate
thereof. Notwithstanding the foregoing, Maurer shall not be prohibited during
the noncompetition period applicable above from acting as a passive investor
where she owns not more than five percent (5%) of the issued and outstanding
capital stock of any publicly-held company.
7. Breach of Restrictive Covenants. The parties agree that a breach or
violation of Section 6 hereof will result in immediate and irreparable injury
and harm to the innocent party, and that such innocent party shall have, in
addition to any and all remedies of law and other consequences under this
Agreement, the right to seek an injunction, specific performance or other
equitable relief to prevent the violation of the obligations hereunder.
8. Indemnification and Duty to Defend.
(a) Indemnification. Except for litigation between the Company and
Maurer, the Company agrees to indemnify Maurer to the fullest extent against
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative in which he is made party or
is threatened to be made a party by reason of his having been an officer or
director of the Company or any of its subsidiaries or affiliates, or for
actions taken purportedly on behalf of the Company or any of its subsidiaries
or affiliates. Indemnification shall include, but is not limited to: expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by Maurer as long as Maurer acted in good
faith and in a manner he reasonably believed to be in the best interests of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful. Indemnification
shall extend to all matters that relate to Maurer's association with the
Company beginning on the Effective Date of this Agreement, and such
indemnification shall survive the termination of this Agreement, regardless of
the reason for termination.
(b) Duty to Defend. Except for litigation between the Company and
Maurer, the Company will provide Maurer with a legal defense with counsel of
his choosing against any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative in which
he is made party or is threatened to be made a party by reason of his having
been an officer or director of the Company or any of its subsidiaries or
affiliates, for action taken purportedly on behalf of the Company or any of
its subsidiaries or affiliates. No settlement shall be entered into with
respect to litigation pursuant to this Section 8(b) without the express
written approval of Maurer. Additionally, upon request by Maurer, the Company
will promptly advance or pay any amounts for costs, charges, or expenses in
respect to his right to a defense and indemnification hereunder. This duty to
defend shall extend to all matters that relate to Maurer's affiliation with
the Company beginning from December 23, 1998, and such duty shall survive the
termination of this Agreement.
9. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Company, to: If to Maurer, to:
Chairman of the Board James E. Maurer
SkyLynx Communications, Inc. 1011 S. Valentia St., #307
600 South Cherry Street Denver, Colorado 80231
Suite 400
Denver, Colorado 80246
or to such other respective addresses as the parties hereto shall designate to
the other by like notice, provided that notice of a change of address shall be
effective only upon receipt thereof.
10. Waiver of Breach. Any waiver of any breach of this Agreement shall
not be construed to be a continuing waiver or consent to any subsequent breach
on the part either of Maurer or of the Company.
11. Non-Assignment: Successors. Neither party hereto may assign his or
its rights or delegate his or its duties under this Agreement without the
prior written consent of the other party; provided, however, that: (i) this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company upon any sale of all or substantially all of the
Company's assets, or upon any merger, consolidation or reorganization of the
Company with or into any other corporation, all as though such successors and
assigns of the company and their respective successors and assigns were the
Company; and (ii) this Agreement shall inure to the benefit of and be binding
upon the heirs, assigns or designees of Maurer to the extent of any payments
due to them hereunder. As used in this Agreement, the term "Company" shall be
deemed to refer to any such successor or assign of the Company referred to in
the preceding sentence.
12. Withholding of Taxes. All payments required to be made by the
Company to Maurer under this Agreement shall be subject to the withholding of
such amounts, if any, relating to tax, and other payroll deductions as the
Company may reasonably determine it should withhold pursuant to any applicable
law or regulation.
13. Severability. To the extent any provision of this Agreement or
portion thereof shall be invalid or unenforceable, it shall be considered
deleted there from and the remainder of such provision and of this agreement
shall be unaffected and shall continue in full force and effect.
14. Payment. All amounts payable by the Company to Maurer under this
Agreement shall be paid promptly on the dates required for such payment in
this Agreement without notice or demand. Any salary, benefits or other
amounts paid or to be paid to Maurer or provided to or in respect of Maurer
pursuant to this Agreement shall not be reduced by amounts owing from Maurer
to the Company.
15. Authority. Each of the parties hereto hereby represents that each
has taken all actions necessary in order to execute and deliver this Agreement
and the Stock Option Agreement attached hereto as Exhibit A.
16. 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.
17. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Colorado, without giving
effect to the choice of law principles thereof.
18. Entire Agreement. This Agreement, the attached Stock Option
Agreements and the Plan as defined in the Stock Option Agreements constitute
the entire agreement by the Company and Maurer with respect to the subject
matter hereof and supersedes any and all prior agreements or understandings
between Maurer and the Company with respect to the subject matter hereof,
whether written or oral. This Agreement may be amended or modified only by a
written instrument executed by Maurer and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and month first above-written.
SKYLYNX COMMUNICATIONS, INC.
By: /s/ Jeffery A. Mathias
--------------------------
Jeffery A. Mathias
Chief Executive Officer
/s/ James E. Maurer
-------------------------------
James E. Maurer
<PAGE>
<PAGE>
EXHIBIT "A"
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
SkyLynx Communications, Inc.
Stock Options
This AMENDED AND RESTATED STOCK OPTION AGREEMENT (the "Agreement") dated
as of the 23rd day of August, 1999 is intended to amend certain terms and
restate the remaining provisions of an Agreement entered into on the 23rd of
December 1998 (the "Date of Grant"), between SkyLynx Communications, Inc., a
Colorado corporation (the "Company") and James E. Maurer (the "Optionee").
Pursuant to any authorized stock option plan of the Company or any other
appropriate and lawful method (collectively, the "Plan"), the Company has
authorized the execution and delivery of this Agreement. A copy of the Plan
as in effect on the Date of Grant has been supplied to the Optionee and the
Optionee hereby acknowledges receipt thereof. The provisions of the Plan,
including the definitions of capitalized terms that are not otherwise defined
in this Agreement, are incorporated herein by reference.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree
as follows:
1. Grant of Option. Subject to all the terms and conditions of the
Plan and this Agreement, the Company grants to the Optionee as of the date of
grant an option (the "Option") to purchase seven hundred sixteen thousand five
hundred sixty six (716,566) shares of common stock, par value $.001, of the
Company ("Common Stock"). The Option is not intended to qualify as an
"incentive stock option" under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and shall be treated as a non-qualified stock
option under the Plan.
2. Exercise Price. The exercise price per share of Common Stock
covered by this Option (the "Option Price") shall be $1.94.
3. Vesting. The Optionee's right to purchase shares of the Company's
Common Stock under the Option shall vest according to the following
milestones:
a. When the Company achieves certain performance based milestones
as detailed in the Performance Criteria ("Performance
Criteria") set forth on Schedule 3(a) hereto; or
b. In any event, upon the tenth (10th) anniversary of the grant of
the options all options that are not then vested will
immediately vest.
4. Term. The term of the Option (the "Option Term") shall commence on
the Date of Grant and shall expire on the tenth anniversary thereof unless the
Option shall have been earlier terminated in accordance with the terms hereof
or of the Plan. Shares of Common Stock as to which the Option becomes
exercisable pursuant to Section 3 hereof may be purchased at any time during
the Option Term.
5. Termination of Option. The unexercised portion of the Option shall
automatically terminate and shall become null and void and be of no further
force or effect upon the expiration of the Option Term.
6. Notices. All notices or other communications which are required or
permitted hereunder shall be deemed sufficient if contained in a written
instrument given by personal delivery, telex, telecopier, telegram, air
courier or registered or certified mail, postage prepaid, return receipt
requested, addressed to such party at the address set forth below or such
other address as may thereafter be designated in a written notice from such
party to the other party.
If to the Company: Attn: Chief Executive Officer
SkyLynx Communications, Inc.
600 South Cherry Street - Suite 400
Denver, Colorado 80246
If to Maurer, to: James E. Maurer
1011 S. Valentia St., #307
Denver, Colorado 80231
All such notices, advances and communications shall be deemed to have
been delivered and received (i) in the case of personal delivery, on the date
of such delivery, (ii) in the case of telecopier, upon receipt of machine
confirmation and (iii) in the case of mailing, on the third business day
following such mailing.
7. No Waiver. No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
8. Optionee Undertaking. The Optionee shall take whatever additional
actions and execute whatever additional documents the Company or the Committee
may in its reasonable judgment deem necessary or advisable in order to carry
out or effect one or more of the obligations or restrictions imposed on the
Optionee pursuant to the express provisions of this Agreement.
9. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Colorado, excluding the choice of
law rules thereof.
10. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above-written.
SKYLYNX COMMUNICATIONS, INC.
By: /s/ Jeffery A. Mathias
----------------------------
Jeffery A. Mathias
Chief Executive Officer
/s/ James E. Maurer
---------------------------------
James E. Maurer
<PAGE>
<PAGE>
Schedule 3(a)
PERFORMANCE CRITERIA
The Optionee's right to purchase shares of the Company's Common Stock
under the Option shall vest immediately, subject to Section 3 hereof, pursuant
to the following schedule:
(1) Upon acquisition of the Company's twenty-fifth thousand (25,000)
subscriber, Maurer shall vest in 191,108 stock options.
(2) Upon obtaining acceptable commitments to fund the Company for a
minimum $30,000,000, Maurer shall vest in 254,811 stock options. Such
commitments may consist of, but shall not be limited to, any combination of
the following:
(i) Initial or Secondary Public Offering;
(ii) Private Equity Placement;
(iii) High Yield Debt Offering;
(iv) Private Debt Placement;
(v) Public or Private Placement of Convertible Securities;
(vi) Joint Venture / Project Financing; and
(vii) Vendor Financing.
(3) Upon the acquisition of the Company's fifth (5th) Internet Service
Provider, Maurer shall vest in 127,595 stock options.
(4) Upon obtaining annualized gross revenues of $15,000,000 for the
Company, (based upon last quarter revenues annualized), Maurer shall vest in
another 143,052 stock options.
<PAGE>
SKYLYNX COMMUNICATIONS, INC.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made
this 23rd day of August 1999 between SKYLYNX COMMUNICATIONS, INC., a Colorado
corporation (the "Company") and DAVID H. ROBERTS ("Roberts").
W I T N E S S E T H:
WHEREAS, the parties entered into that certain employment agreement on
the 7th day of January, 1999 and wish to amend certain provisions and restate
the remaining provisions of such agreement to accurately reflect the
understanding of the parties hereto; and
WHEREAS, it is intended that this Agreement will supercede such prior
agreement and that the provisions of this Agreement be deemed in effect as of
January 7, 1999;
NOW, THEREFORE, in consideration of the premises and of the mutual,
promises, covenants and representations herein contained, the parties hereto
agree as follows:
1. Term. The Company will employ Roberts, and Roberts will serve the
Company, under the terms of this Agreement for an initial term ending January
7, 2001 (the "Initial Term"), commencing as of January 7, 1999 (the "Effective
Date"). Effective as of the expiration of the Initial Term and as of each
anniversary date thereof, the term of this Agreement shall be extended for an
additional one-year period unless, not later than two months prior to each
such respective date, either party hereto shall have given notice to the other
than the term shall not be so extended. Notwithstanding the foregoing,
Roberts' employment hereunder may be earlier terminated, as provided in
Section 4 hereof. The term of this Agreement, as in effect from time to time
in accordance with the foregoing, shall be referred to herein as the "Term".
The period of time between the Effective Date and the termination of Roberts'
employment hereunder shall be referred to herein as the "Employment Period".
2. Employment. The Company hereby employs Roberts as Vice President of
Business Development of the Company upon the terms and conditions herein set
forth. Roberts shall exercise such authority, perform such duties and
functions and discharge such responsibilities as are reasonably associated
with Roberts' position, commensurate with the authority vested in Roberts
pursuant to this Agreement and consistent with the bylaws of the Company. In
connection with performance of his duties, Roberts shall report directly to
the Chief Executive Officer of the Company. During the Employment Period,
Roberts shall devote full business time, skill and efforts to the business of
the Company. Notwithstanding the foregoing, Roberts may (i) make and manage
personal business investments of his choice and serve in any capacity with any
civic, educational or charitable organization, or any trade association,
without seeking or obtaining approval by the Board, provided such activities
and service do not materially interfere or conflict with the performance of
his duties hereunder and (ii) with the approval of the Board, serve on the
boards of directors of other corporations. The Company shall provide Roberts,
incident to the performance of such duties, with office space, facilities and
secretarial assistance commensurate with his position. Roberts shall
principally perform his duties for the Company in at the corporate
headquarters to be located in Denver, Colorado, or at such location as the
Board may determine in consultation with Roberts and with his express consent.
3. Compensation and Benefits.
(a) Base Salary. During the Employment Period, the Company shall
pay to Roberts, as compensation for the performance of his duties and
obligations under this Agreement, a base salary at the rate of $120,000 per
annum, payable in arrears not less frequently than twice monthly in accordance
with the normal payroll practices of the Company (the "Base Salary"). The
Compensation Committee shall increase Roberts' Base Salary annually, at a rate
of not less than ten percent (10%) per year.
In the event the Company completes an initial or secondary
public offering of its common stock, Roberts' Base Salary shall be immediately
increased to an amount to be determined by the Compensation Committee of the
Board. Under no set of circumstances shall Roberts' Base Salary be decreased
at any time.
(b) Bonuses. The Company agrees to pay Roberts an annual cash
bonus, on or about March 31st of each year for his efforts in the prior
calendar year. The amount of such bonus shall be determined by the
Compensation Committee of the Board.
(c) Advance Incentives. The parties hereto acknowledge that the
Company has previously granted to Roberts seventy thousand (70,000) shares of
the Company's common stock. The Company agrees to register the shares granted
as an advance incentive with the Securities and Exchange Commission as soon as
practicable, but in no event later than when the Company files for its Initial
Public Offering or a Secondary offering, subject to the requirements of the
underwriter. The total number of shares the Company must register for Roberts
shall be no more than the aggregate number of shares the Company is otherwise
registering. The Company shall bear all costs of registration associated with
such piggyback registration for Roberts.
(d) Incentive Stock Options ("ISOs"). The Company has caused to be
established a qualified incentive stock option plan (the "ISO Plan") under
Section 422 of the Internal Revenue Code of 1986, as amended. Each year
during the Employment Period, Roberts shall fully participate in the ISO Plan
and be granted a number of ISOs commensurate with his position in the Company.
The number of ISO's granted shall be calculated using the same formula used to
calculate the amount of ISOs granted other senior executives of the Company.
(e) Non-Qualified Stock Options ("NSOs"). The Company has caused
to be established a Non-qualified Stock Option plan (the "Equity Incentive
Plan") that is not intended to qualify as an "incentive stock option" under
Section 422 of the Internal Revenue Code of 1986, as amended. The Company's
board of directors has previously granted to Roberts NSOs to purchase a total
of five hundred sixty thousand (560,000) shares of the Company's common stock
on substantially the terms and conditions set forth in the attached form of
Stock Option Agreement, attached hereto as Exhibit A. Concurrently with the
execution of this Agreement, the Company and Roberts will enter into a Stock
Option Agreement, substantially in the form attached hereto as Exhibit A,
pursuant to which the Company shall grant to Roberts an option to purchase
five hundred sixty-thousand (560,000) shares of common stock of the Company on
the terms and conditions set forth therein.
(f) Accelerated Vesting. The parties agree that all of Roberts'
Incentive Stock Options and Non-qualified Stock Options shall immediately
vest, regardless of the performance criteria, in the event of: (i) a Change
in Control of the Company as defined in Section 4(e) herein; or (ii) in the
event of a termination of employment of Jeffery Mathias as the Company's Chief
Executive Officer.
(g) Equity Catch-Up or Claw-Back. Notwithstanding anything
contained herein to the contrary, the parties agree that, upon the completion
of an initial or secondary public offering of the Company's Common Stock, the
sum of (i) the number of shares of Common Stock granted to Roberts according
to Section 3(c), plus (ii) the number of shares of Common Stock represented by
Incentive Stock Options granted to Roberts according to Section 3(d), plus
(iii) the number of shares of Common Stock represented by Non-Qualified Stock
Options granted to Roberts according to Section 3(e) shall represent an equity
interest in the Company equal to three percent (3%) of the Company's issued
and outstanding Common Stock on a fully diluted basis. To the extent that
Roberts' equity interest at such time is less than or greater than three
percent (3%), the Company and/or the Company's Compensation Committee shall
either increase or decrease the number of Non-Qualified Stock Options granted
to Roberts (through the grant of additional Non-Qualified Stock Options to
Roberts or through the cancellation of Non-Qualified Stock Options held by
Roberts) so that Roberts' equity interest at such time is equal to three
percent (3%) of the Company's issued and outstanding Common Stock on a fully
diluted basis.
(h) Benefits. During the Employment Period, Roberts shall receive
such life insurance, disability, pension, health insurance, holiday, and sick
pay benefits and other benefits which the Company extends, as a matter of
policy, to its executives and, except as otherwise provided herein, shall be
entitled to participate in all deferred compensation and other incentive plans
of the Company on the same basis as other like executives of the Company.
(i) Vacation. Roberts shall be entitled to four (4) weeks of
vacation each year with full compensation. Roberts agrees to schedule his
vacation in a way that least interferes with the Company's business.
(j) Expenses. Roberts shall be reimbursed for his reasonable
expenses, commensurate with his position and related to the carrying out of
his duties, including expenses for entertainment, travel and similar items.
The Company shall reimburse Roberts for such expenses in a timely manner and
in accordance with the policies and procedures of the Company in effect from
time to time.
(k) Perquisites. During the Term of this Agreement, Roberts shall
be entitled to perquisites and fringe benefits that are accorded senior
executives of the Company. Such perquisites shall include an automobile
allowance of Five Hundred Dollars ($500) per month, reimbursement for medical
expenses which may otherwise be uninsured or unreimbursed under the Company's
medical plan for Roberts and his dependents, payment for all premiums for
Roberts and his dependents under its medical insurance plans, and payment for
all premiums for Roberts under its life and disability insurance plans. The
Company shall also waive any applicable waiting periods for such benefits, if
any.
(l) Cumulative Compensation. The compensation provided for in
Sections 3(a) - (k) herein are in addition to the benefits provided for upon
termination pursuant to Section 5 herein.
4. Termination of Employment.
(a) Termination for Cause. The Company may terminate Roberts'
employment hereunder for cause. For purposes of this Agreement and subject to
Roberts' opportunity to cure as provided in Section 4(c) hereof, the Company
shall have "cause" to terminate Roberts' employment hereunder if Roberts shall
commit any of the following:
(i) any act or omission which shall represent a material
breach in any material respect of any of the terms of this Agreement;
(ii) gross misconduct that, in the reasonable good faith
opinion of the Company that is or is likely to be significantly injurious to
the Company;
(iii) gross negligence or wanton and reckless acts or
omissions in the performance of Roberts' duties, in any such case which are
significantly injurious to the Company;
(iv) bad faith in the performance of Roberts' duties,
consisting of willful acts or omissions, which are significantly injurious to
the Company;
(v) addiction to illegal drugs or chronic alcoholism; or
(vi) any conviction or pleading of guilty to a crime that
constitutes a felony under the laws of the United States or any political
subdivision thereof.
(b) Termination with Adequate Reason. Roberts shall have the right
at any time to terminate his employment with the Company with adequate reason.
For purposes of this Agreement and subject to the Company's opportunity to
cure as provided in Section 4(c) hereof, Roberts shall have adequate reason to
terminate his employment hereunder if such termination shall be the result of:
(i) a diminution during the Employment Period in Roberts'
title, duties or responsibilities as set forth in Section 2 hereof;
(ii) a breach by the Company of the compensation and benefits
provisions set forth in Section 3 hereof; or
(iii) any action of the Company to which Roberts does not
consent which would require Roberts to change his present place of residence;
or
(iv) a material breach by the Company of any material terms of
this Agreement.
(c) Notice and Opportunity to Cure. Notwithstanding the foregoing,
it shall be a condition precedent to the Company's right to terminate Roberts'
employment for "cause" and Roberts' right to terminate his employment for
"good reason" that (1) the party seeking the termination shall first have
given the other party written notice stating with specificity the reason for
the termination ("breach") and (2) if such breach is susceptible of cure or
remedy, a period of thirty (30) days from and after the giving of such notice
shall have elapsed without the breaching party having effectively cured or
remedied such breach during such 30-day period, unless such breach cannot be
cured or remedied within thirty (30) days, in which case the period for remedy
or cure shall be extended for a reasonable time (not to exceed thirty (30)
days) provided the breaching party has made and continues to make a diligent
effort to effect such remedy or cure.
(d) Termination Upon Death or Permanent and Total Disability. The
Employment Period shall be terminated by the death of Roberts. The Employment
Period may be terminated by the Company if Roberts shall be rendered incapable
of performing his duties to the Company by reason of any medically determined
physical or mental impairment that reasonably can be expected to result in
death or that can be expected to last for a period of six (6) or more
consecutive months from the first date of the disability ("Disability"). In
the event of a dispute as to whether Roberts is mentally impaired within the
meaning of this Section 4(d), or as to the likely duration of any incapacity
of Roberts either party may request a medical examination of Roberts by a
doctor appointed by the Chief of Staff of a hospital selected by mutual
agreement of the parties, or as the parties may otherwise agree, and the cost
of such written medical opinion of such doctor shall be borne by the Company.
If the Employment Period is terminated by reason of Disability of Roberts, the
Company shall give thirty (30) days' advance written notice to that effect to
Roberts.
(e) Change in Control. A "Change in Control" shall be deemed to
have occurred if and when (i) any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities and Exchange Act of 1934, as amended) who
does not own fifty percent (50%) or more of the combined voting power of the
Company's then issued and outstanding securities is or becomes a beneficial
owner, directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
issued and outstanding voting securities; (ii) the Company sells all or
substantially all of the assets of the Company; (iii) a merger is effected
whereby the Company is not the surviving entity after the merger (except in
the instance where the sole purpose of the merger is to effect a change in
domicile of the Company from one state to another); or (iv) a majority of the
individuals who were members of the Board of Directors of the Company
immediately prior to an action or series of actions, do not constitute a
majority of the Board of Directors following such action or series of actions.
In the event of a Change in Control, if Roberts and the new controlling entity
do not agree to continue with the terms of this Agreement, then this Agreement
shall be terminated and the Company shall pay Roberts the liquidated damages
defined in Section 5(a) below.
5. Consequences of Termination.
(a) Termination Without Cause or for Adequate Reason or Change of
Control. In the event of termination of Roberts' employment hereunder: (1)
by the Company without "cause" (other than upon death or Disability); (2) by
Roberts for "adequate reason"; or (3) termination effected after or upon a
Change of Control (each as defined in Section 4 hereof), in addition to any
other benefits and payments as may be required by law or otherwise accrued as
of such termination date by Roberts, Roberts shall be entitled to the
following severance pay and benefits:
(i) Severance Pay - a lump sum amount equal to one half (1/2)
of Roberts' then annual Base Salary;
(ii) Benefits Continuation - continuation for six (6) months
(the "Severance Period") of coverage under the group medical care, disability
and life insurance benefit plans or arrangements in which Roberts is
participating at the time of termination with the Company continuing to pay
its share of premiums and associated costs as if Roberts continued in the
employ of the Company; provided, however, that the Company's obligation to
provide such coverages shall be terminated if Roberts obtains comparable
substitute coverage from another employer at any time during the Severance
Period. Roberts shall be entitled, at the expiration of the Severance Period,
to elect continued medical coverage in accordance with Section 4980B of the
Internal Revenue Code of 1986, as amended (or any successor provision
thereto); and
(iii) Pro Rata Bonus Amounts - a lump sum amount equal to
the pro rata portion of any bonus amounts paid by the Company in the prior
year as bonuses.
(b) Termination Upon Disability. In the event of termination of
Roberts' employment hereunder by the Company on account of Disability, Roberts
shall be entitled to the following severance pay and benefits:
(i) Severance Pay - severance payments in the form of
continuation of Roberts' Base Salary as in effect immediately prior to such
termination for a period of six (6) months following the first date of
Disability; and
(ii) Benefits Continuation - the same benefits as provided in
Section 5(a)(ii) above, to be provided during the Employment Period while
Roberts is suffering from Disability and for a period of three (3) months
following the effective date of Roberts' termination by reason of Disability.
(c) Termination Upon Death. In the event of termination of
Roberts' employment hereunder on account of Roberts' death, Roberts' heirs,
estate or personal representatives under law, as applicable, shall be entitled
to the payment of Roberts' Base Salary as in effect immediately prior to death
for a period of not less than two (2) calendar months and not more than the
earlier of six (6) calendar months or the payment of benefits pursuant to
Roberts' life insurance policy, as provided for in Section 4(h) above.
Roberts' beneficiary or estate shall not be required to remit to the Company
any payments received pursuant to any life insurance policy purchased pursuant
to Section 4(h) above.
(d) Accrued Rights. Notwithstanding the foregoing provisions of
this Section 6, in the event of termination of Roberts' employment hereunder
for any reason, Roberts shall be entitled to payment of any unpaid portion of
his Base Salary through the effective date of termination, accrued by unpaid
vacation or benefits otherwise agreed to by the Company, and payment of any
accrued but unpaid rights solely in accordance with the terms of any incentive
bonus or employee benefit plan or program of the Company.
(e) Conditions to Severance Benefits.
(i) The Company shall have the right to seek repayment of the
severance payments and benefits provided by this Section 5 in the event that
Roberts fails to honor in accordance with their terms the provisions of
Section 6 hereof.
(ii) For purposes only of this Section 5(e), Roberts shall be
treated as having failed to honor the provisions of Sections 6 hereof only
upon the vote of two-thirds of the Board following notice of the alleged
failure by the Company to Roberts, an opportunity for Roberts to cure the
alleged failure for a period of thirty (30) days from the date of such notice
and Roberts' opportunity to be heard on the issue by the Board.
(f) Registration and/or Buyback of Securities. No later than
ninety (90) days following termination of this Agreement by Company without
cause (as described in Section 4(a)) or by Roberts with adequate reason (as
described in Section 4(b)), the Company shall cause to be prepared and filed
at its sole cost and expense registration documents with the Securities and
Exchange Commission for the purpose of registering for sale under the
Securities Act of 1933, as amended, all shares of the Company's common stock
owned by Roberts or purchasable by Roberts upon exercise of outstanding
Incentive Stock Options and Non-Qualified Stock Options that are vested as of
the date of termination. In connection with such registration, the Company
shall do the following: (i) attempt to cause such registration to be declared
effective by the Securities and Exchange Commission within one hundred twenty
(120) days of the date of termination, (ii) if successful in (i) above,
maintain the effectiveness of such registration for a minimum period of one
hundred eighty (180) days, and (iii) qualify the sale of all shares of the
Company's common stock owned by Roberts or purchasable by Roberts upon
exercise of his outstanding, vested Incentive Stock Options and Non-Qualified
Stock Options in such states and under such Blue Sky regulations as Roberts
may reasonably request. In the event said registration fails to become
effective, Roberts shall be permitted to sell in accordance with the
provisions of Rule 144 and the remaining shares shall be registered in
accordance with 3(c) above.
6. Confidential Information and Covenant Not to Compete. All payments
and benefits to Roberts shall be subject to Roberts' compliance with this
Agreement and the provisions of this Section 6. However, Roberts' covenants
contained in this Section 7 shall terminate and shall be unenforceable and of
no further legal force or effect in the event the Company, its successors or
assigns, becomes insolvent, is liquidated or ceases for any reason to conduct
business operations for a continuous period of at least thirty (30) days.
(a). Confidentiality. Roberts agrees that he will not at any time
during the Employment Period or for a period of two (2) year following
employment with the Company, for any reason, in any fashion, form or manner,
either directly or indirectly, divulge, disclose or communicate to any person,
firm, corporation or other business entity, in any manner whatsoever, any
confidential information or trade secrets concerning the business of the
Company, including, without limiting the generality of the foregoing, the
techniques, methods or systems of its operation or management, any information
regarding its financial matters, or any other material information concerning
the business of the Company (including customer lists), its manner of
operation, its plans or other material data (the "Business"). The provisions
of Section 6(a) shall not apply to (i) information disclosed in the
performance of Roberts' duties to the Company based on his good faith belief
that such a disclosure is in the best interests of Company; (ii) information
that is, at the time of the disclosure, public knowledge; (iii) information
disseminated by the Company to third parties in the ordinary course of
business; (iv) information lawfully received by Roberts from a third party
who, based upon inquiry by Roberts, is not bound by a confidential
relationship to the Company; or (v) information disclosed under a requirement
of law or as directed by applicable legal authority having jurisdiction over
Roberts.
(b) Litigation Support. During the Term of this Agreement, Roberts
shall, upon reasonable notice, furnish such information and proper assistance
to the Company as may reasonably be required in connection with any litigation
in which the Company or any of its subsidiaries is, or may become, a party.
Except for litigation that may be between the Company and Roberts, Roberts'
reasonable expenses (including, but not limited to, travel and attorneys'
fees) incurred in complying with this covenant shall be either advanced or
promptly reimbursed by Company to Roberts.
(c) No Solicitation of Employees. Roberts agrees that during the
Term of this Agreement and continuing for a period of one (1) year after
termination under Section 4 herein, neither Roberts nor any person or
enterprise controlled by Roberts, will solicit for employment any person
employed by the Company.
(d) Covenant Not to Compete. Roberts agrees that he shall not
during the Employment Period, without the approval of the Board, directly or
indirectly, alone or as partner, joint venturer, officer, director, employee,
consultant, agent, independent contractor, guarantor, financier, consultant,
option holder or stockholder (other than as provided below) of any company or
business, participate in, engage in or have a financial interest in any
"Competitive Business" within the United States. For purposes of the
foregoing, the term "Competitive Business" shall mean any business, firm,
corporation or other business entity related to the provision of Internet
access or Internet related services and any business directly competing with
any product or service of SkyLynx Communications, Inc. or any affiliate
thereof. Notwithstanding the foregoing, Roberts shall not be prohibited
during the noncompetition period applicable above from acting as a passive
investor where she owns not more than five percent (5%) of the issued and
outstanding capital stock of any publicly-held company.
7. Breach of Restrictive Covenants. The parties agree that a breach or
violation of Section 6 hereof will result in immediate and irreparable injury
and harm to the innocent party, and that such innocent party shall have, in
addition to any and all remedies of law and other consequences under this
Agreement, the right to seek an injunction, specific performance or other
equitable relief to prevent the violation of the obligations hereunder.
8. Indemnification and Duty to Defend.
(a) Indemnification. Except for litigation between the Company and
Roberts, the Company agrees to indemnify Roberts to the fullest extent against
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative in which he is made party or
is threatened to be made a party by reason of his having been an officer or
director of the Company or any of its subsidiaries or affiliates, or for
actions taken purportedly on behalf of the Company or any of its subsidiaries
or affiliates. Indemnification shall include, but is not limited to: expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by Roberts as long as Roberts acted in good
faith and in a manner he reasonably believed to be in the best interests of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful. Indemnification
shall extend to all matters that relate to Roberts' association with the
Company beginning on the Effective Date of this Agreement, and such
indemnification shall survive the termination of this Agreement, regardless of
the reason for termination.
(b) Duty to Defend. Except for litigation between the Company and
Roberts, the Company will provide Roberts with a legal defense with counsel of
his choosing against any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative in which
he is made party or is threatened to be made a party by reason of his having
been an officer or director of the Company or any of its subsidiaries or
affiliates, for action taken purportedly on behalf of the Company or any of
its subsidiaries or affiliates. No settlement shall be entered into with
respect to litigation pursuant to this Section 8(b) without the express
written approval of Roberts. Additionally, upon request by Roberts, the
Company will promptly advance or pay any amounts for costs, charges, or
expenses in respect to his right to a defense and indemnification hereunder.
This duty to defend shall extend to all matters that relate to Roberts'
affiliation with the Company beginning from January 7, 1999, and such duty
shall survive the termination of this Agreement.
9. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Company, to: If to Roberts, to:
Chairman of the Board David H. Roberts
SkyLynx Communications, Inc. 216 Prince Street
600 South Cherry Street - Suite 305 Alexandria, VA 22314
Denver, Colorado 80246
or to such other respective addresses as the parties hereto shall designate to
the other by like notice, provided that notice of a change of address shall be
effective only upon receipt thereof.
10. Waiver of Breach. Any waiver of any breach of this Agreement shall
not be construed to be a continuing waiver or consent to any subsequent breach
on the part either of Roberts or of the Company.
11. Non-Assignment: Successors. Neither party hereto may assign his or
its rights or delegate his or its duties under this Agreement without the
prior written consent of the other party; provided, however, that: (i) this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company upon any sale of all or substantially all of the
Company's assets, or upon any merger, consolidation or reorganization of the
Company with or into any other corporation, all as though such successors and
assigns of the company and their respective successors and assigns were the
Company; and (ii) this Agreement shall inure to the benefit of and be binding
upon the heirs, assigns or designees of Roberts to the extent of any payments
due to them hereunder. As used in this Agreement, the term "Company" shall be
deemed to refer to any such successor or assign of the Company referred to in
the preceding sentence.
12. Withholding of Taxes. All payments required to be made by the
Company to Roberts under this Agreement shall be subject to the withholding of
such amounts, if any, relating to tax, and other payroll deductions as the
Company may reasonably determine it should withhold pursuant to any applicable
law or regulation.
13. Severability. To the extent any provision of this Agreement or
portion thereof shall be invalid or unenforceable, it shall be considered
deleted there from and the remainder of such provision and of this agreement
shall be unaffected and shall continue in full force and effect.
14. Payment. All amounts payable by the Company to Roberts under this
Agreement shall be paid promptly on the dates required for such payment in
this Agreement without notice or demand. Any salary, benefits or other
amounts paid or to be paid to Roberts or provided to or in respect of Roberts
pursuant to this Agreement shall not be reduced by amounts owing from Roberts
to the Company.
15. Authority. Each of the parties hereto hereby represents that each
has taken all actions necessary in order to execute and deliver this Agreement
and the Stock Option Agreement attached hereto as Exhibit A.
16. 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.
17. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Colorado, without giving
effect to the choice of law principles thereof.
18. Entire Agreement. This Agreement, the attached Stock Option
Agreements and the Plan as defined in the Stock Option Agreements constitute
the entire agreement by the Company and Roberts with respect to the subject
matter hereof and supersedes any and all prior agreements or understandings
between Roberts and the Company with respect to the subject matter hereof,
whether written or oral. This Agreement may be amended or modified only by a
written instrument executed by Roberts and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and month first above-written.
SKYLYNX COMMUNICATIONS, INC.
By:/s/ Jeffery A. Mathias
----------------------------------
Jeffery A. Mathias
Chief Executive Officer
/s/ David H. Roberts
-------------------------------------
David H. Roberts
<PAGE>
<PAGE>
EXHIBIT "A"
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
SkyLynx Communications, Inc.
Stock Options
This AMENDED AND RESTATED STOCK OPTION AGREEMENT (the "Agreement") dated
as of the 23rd day of August, 1999 is intended to amend certain terms and
restate the remaining provisions of an Agreement entered into on the 7th day
of January, 1999 (the "Date of Grant"), between SkyLynx Communications, Inc.,
a Colorado corporation (the "Company") and David H. Roberts (the "Optionee").
Pursuant to any authorized stock option plan of the Company or any other
appropriate and lawful method (collectively, the "Plan"), the Company has
authorized the execution and delivery of this Agreement. A copy of the Plan
as in effect on the Date of Grant has been supplied to the Optionee and the
Optionee hereby acknowledges receipt thereof. The provisions of the Plan,
including the definitions of capitalized terms that are not otherwise defined
in this Agreement, are incorporated herein by reference.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree
as follows:
1. Grant of Option. Subject to all the terms and conditions of the
Plan and this Agreement, the Company grants to the Optionee as of the date of
grant an option (the "Option") to purchase five hundred sixty thousand
(560,000) shares of common stock, par value $.001, of the Company ("Common
Stock"). The Option is not intended to qualify as an "incentive stock option"
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and shall be treated as a non-qualified stock option under the Plan.
2. Exercise Price. The exercise price per share of Common Stock
covered by this Option (the "Option Price") shall be $$2.13.
3. Vesting. The Optionee's right to purchase shares of the Company's
Common Stock under the Option shall vest according to the following
milestones:
When the Company achieves certain performance based milestones as
detailed in the Performance Criteria ("Performance Criteria") set forth on
Schedule 3(a) hereto; or
In any event, upon the tenth (10th) anniversary of the grant of the
options all options that are not then vested will immediately vest.
4. Term. The term of the Option (the "Option Term") shall commence on
the Date of Grant and shall expire on the tenth anniversary thereof unless the
Option shall have been earlier terminated in accordance with the terms hereof
or of the Plan. Shares of Common Stock as to which the Option becomes
exercisable pursuant to Section 3 hereof may be purchased at any time during
the Option Term.
5. Termination of Option. The unexercised portion of the Option shall
automatically terminate and shall become null and void and be of no further
force or effect upon the expiration of the Option Term.
6. Notices. All notices or other communications which are required or
permitted hereunder shall be deemed sufficient if contained in a written
instrument given by personal delivery, telex, telecopier, telegram, air
courier or registered or certified mail, postage prepaid, return receipt
requested, addressed to such party at the address set forth below or such
other address as may thereafter be designated in a written notice from such
party to the other party.
If to the Company:
Attn: Chief Executive Officer
SkyLynx Communications, Inc.
600 South Cherry Street - Suite 305
Denver, Colorado 80246
If to Roberts, to:
David H. Roberts
216 Prince Street
Alexandria, VA 22314
All such notices, advances and communications shall be deemed to have
been delivered and received (i) in the case of personal delivery, on the date
of such delivery, (ii) in the case of telecopier, upon receipt of machine
confirmation and (iii) in the case of mailing, on the third business day
following such mailing.
7. No Waiver. No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
8. Optionee Undertaking. The Optionee shall take whatever additional
actions and execute whatever additional documents the Company or the Committee
may in its reasonable judgment deem necessary or advisable in order to carry
out or effect one or more of the obligations or restrictions imposed on the
Optionee pursuant to the express provisions of this Agreement.
9. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Colorado, excluding the choice of
law rules thereof.
10. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above-written.
SKYLYNX COMMUNICATIONS, INC.
By:/s/ Jeffery A. Mathias
------------------------
Jeffery A. Mathias
Chief Executive Officer
/s/ David H. Roberts
---------------------------
David H. Roberts
<PAGE>
<PAGE>
Schedule 3(a)
PERFORMANCE CRITERIA
The Optionee's right to purchase shares of the Company's Common Stock
under the Option shall vest immediately, subject to Section 3 hereof, pursuant
to the following schedule:
(1) Upon acquisition of the Company's twenty-fifth thousand (25,000)
subscriber, Roberts shall vest in 149,352 stock options.
(2) Upon obtaining acceptable commitments to fund the Company for a
minimum $30,000,000, Roberts shall vest in 199,136 stock options. Such
commitments may consist of, but shall not be limited to, any combination of
the following:
(i) Initial or Secondary Public Offering;
(ii) Private Equity Placement;
(iii) High Yield Debt Offering;
(iv) Private Debt Placement;
(v) Public or Private Placement of Convertible Securities;
(vi) Joint Venture / Project Financing; and
(vii) Vendor Financing.
(3) Upon the acquisition of the Company's fifth (5th) Internet Service
Provider, Roberts shall vest in 99,716 stock options.
(4) Upon obtaining annualized gross revenues of $15,000,000 for the
Company, (based upon last quarter revenues annualized), Roberts shall vest in
another 111,796 stock options.
<PAGE>
SKYLYNX COMMUNICATIONS, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, (the "Agreement") is entered into by and
between SKYLYNX COMMUNICATIONS, INC., a Colorado corporation, (the "Company")
and Ned Abell, an individual ("Abell") as of this 1st day of December 1998.
The Company and Abell shall be referred to collectively herein as "the
parties".
RECITALS
WHEREAS, the Company wishes to employ Abell as Vice President of Mergers
and Acquisitions of the Company and Abell wishes to serve the Company in this
capacity; and
WHEREAS, the Company and Abell desire to set forth in this Agreement the
terms, conditions and obligations of the parties with respect to such
employment.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. EMPLOYMENT. The Company wishes to employ Abell as Vice President of
Mergers and Acquisitions of the Company upon the terms and conditions
hereinafter set forth. Abell shall perform such duties and responsibilities
for the Company which are commensurate with his capacity and as may be
assigned him by the Company's Board of Directors. In connection with
performance of his duties, Abell shall report directly to the President and
Chief Executive Officer. Incident to the performance of such duties Abell
shall be provided by the Company with office space, facilities and secretarial
assistance commensurate with his position. Abell shall principally perform his
duties for the Company at the corporate headquarters to be located in Denver,
Colorado, or at such other location as the Board of Directors may determine in
consultation with Abell and with his express consent.
2. TERM. The initial term of employment hereunder shall begin as of
the 1st day of December 1998. The initial term shall extend for a period of
approximately two years, terminating on November 30, 2000. Unless either party
gives the other at least sixty (60) days written notice prior to the
expiration of the initial term or any extended term of his or its intention to
terminate this Agreement, the term shall be extended for successive one-year
terms. For purposes of this Agreement, "Term" shall mean the initial term and
any applicable extended term(s).
3. COMPENSATION.
(a) Base Salary. The Company agrees to pay Abell an annual base
salary of $108,000. The salary shall be payable at intervals not less often
than monthly and otherwise in accordance with the Company's policies. The
Compensation Committee shall increase Abell's base salary annually, at a rate
of not less than ten percent (10%) per year.
(b) Bonuses. The Company agrees to pay Abell an annual cash bonus,
on or about March 31st of each year for his efforts in the prior calendar
year. The amount of such bonus shall be determined by the Compensation
Committee of the Company.
(c) Advance Incentives. On or before January 15, 1999, the Company
agrees to transfer to Abell 50,000 shares of $.001 par value Common Stock of
the Company. These shares are priced at a value of $2.30 per share, as this
was the closing price of the stock on November 30, 1998. The Company agrees to
register such shares with the Securities and Exchange Commission at the time
of the next offering of common stock by the Company on an underwritten basis
at no cost to Abell. This is subject to the requirements of the underwriter
of said offering. Provided the underwriter agrees the total number of shares
the Company must register for Abell shall be no more than the aggregate number
of shares the Company is otherwise registering. Company shall bear all costs
of registration associated with such piggyback registration for Abell.
(d) Incentive Stock Options. The Company has caused to be
established a qualified employee stock option plan (the "Plan") under Section
422 of the Internal Revenue Code of 1986, as amended. Abell shall be entitled
to participate in said Plan.
In addition, Abell is hereby granted the following added Stock Option
incentives under the Plan:
Upon the completion of a minimum of five (5) new acquisitions or
transactions generated by Abell during the initial term of this Agreement,
Abell is granted five year options to purchase up to 250,000 additional shares
at a price of $1.94 per share on the following basis:
(i) 50,000 options per transaction if the acquisition is at an
effective price of less than 2.2 times the annualized recurring revenues of
the acquired entity.
(ii) 35,000 options per transaction if the acquisition is at an
effective price of 2.2 times or greater than the annualized recurring revenues
of the acquired entity.
(iii) If five (5) transactions or acquisitions are completed on
or before December 31, 1999 Abell will receive an option to purchase 100,000
more shares as an added bonus. Only a maximum of 350,000 options may be
granted under this section.
(iv) The five (5) transactions or acquisitions will be averaged
for the final determination of the number of options to be granted to Abell
hereunder.
(v) These options will fully vest in the event of a non-
statutory merger, sale, acquisition, a discharge on a not for cause basis as
outlined in ?6(c) or a change in control of the Company.
(vi) Nothing in this item 3 will prevent participation by Abell
in the ESOP Plan.
(e) Employee Benefit Plans. The Company has in place employee
benefit plans, which include, but shall not be limited to a Medical Insurance
plan, a Life Insurance plan, a Long Term Disability Insurance plan, and a
Section 125 Cafeteria Plan. By April 1, 1999, the Company shall use its best
efforts to also have in place a Section 401 K savings plan, a pension plan or
a profit sharing plan. During the Term of this Agreement, Abell, his
dependents and beneficiaries, shall be entitled to participate in these plans,
benefits and programs in accordance with their terms and the terms of this
Agreement.
(f) Vacation. Abell shall be entitled to four weeks of vacation
each year with full compensation. Abell agrees to schedule his vacation in a
way that least interferes with the Company's business.
(g) Expenses. Abell shall be reimbursed for his reasonable
expenses, commensurate with his position and related to the carrying out of
his duties, including expenses for entertainment, travel, hotel/motel, rental
car and similar items. The Company shall reimburse Abell for such expenses in
a timely manner and in accordance with the policies and procedures of the
Company in effect from time to time.
(h) Perquisites. During the Term of this Agreement, Abell shall
be entitled to perquisites and fringe benefits that are accorded senior
executives of the Company. Such perquisites shall include an automobile
allowance of $400 per month.
(i) Cumulative Compensation. The compensation provided for in
Paragraphs 3(a) - (h) herein are in addition to the benefits provided for upon
termination pursuant to Section 6 herein.
4. EXTENT OF SERVICE. Abell will devote his full time, attention and
energy to the business of the Company and will not during the Term of this
Agreement be engaged in any other activity that directly competes with the
Company. This will not be construed as preventing Abell from (a) investing his
personal assets in businesses which do not compete with the Company; (b)
purchasing securities in any corporation whose securities are publicly traded;
or (c) accepting appointments to the boards of directors of other companies
provided that the Chairman of the Company approves such appointments, which
will not be unreasonable withheld. This means that Abell will be available
daily to the Board and the other executive officers of the Company.
5. CONFIDENTIAL INFORMATION AND COVENANT NOT TO COMPETE. All payments
and benefits to Abell shall be subject to Abell's compliance with this
Agreement and the provisions of this Section 5. However, Abell's covenants
contained in this Section 5 shall terminate and shall be unenforceable and of
no further legal force or effect in the event the Company, its successors or
assigns, becomes insolvent, is liquidated or ceases for any reason to conduct
business operations for a continuous period of at least thirty (30) days,
except in the event of a sale or merger of the Company.
(a) Confidential Information. Abell acknowledges that during the
Term of this Agreement he is or will be making use of, acquiring or adding to
the Company's confidential information which includes, but is not limited to,
memoranda and other materials or records of a proprietary nature; technical
information regarding the operations of the Company; and records and policy
matters relating to finance, personnel, management, and operations. Therefore,
in order to protect the Company's confidential information and to protect
other employees who depend on the Company for regular employment, Abell agrees
that during the Term of this Agreement he will not in any way utilize any of
said confidential information except in connection with the business of the
Company, he will not copy, reproduce, or take with him the original or any
copies of said confidential information and will not directly or indirectly
divulge any of said confidential information to anyone without the prior
written consent of the Company.
(b) Litigation Support. During the Term of this Agreement, Abell
shall, upon reasonable notice, furnish such information and proper assistance
to the Company as may reasonably be required in connection with any litigation
in which the Company or any of its subsidiaries is, or may become, a party.
Except for litigation that may be between the Company and Abell, Abell's
reasonable expenses (including, but not limited to, travel and attorneys'
fees) incurred in complying with this covenant shall be either advanced or
promptly reimbursed by Company to Abell.
(c) No Solicitation of Employees. Abell agrees that during the
Term of this Agreement and continuing for a period of one (1) year after
termination under Paragraph 6(b) herein, neither Abell nor any person or
enterprise controlled by Abell will solicit for employment any person employed
by the Company.
(d) Covenant Not to Compete. Abell agrees that during the Term of
this Agreement, neither Abell nor any person or enterprise controlled by Abell
will become a stockholder, director, officer, agent, consultant or employee of
a business, whether or not incorporated, or have any financial stake of any
nature in any of the foregoing or otherwise engage directly or indirectly in
any enterprise which competes with the Company in any geographic area in which
the Company does business during such period; provided, however, that the
foregoing shall not prohibit the ownership of less than one percent (1 %) of
the outstanding shares of stock of any corporation engaged in any business,
which shares are regularly traded on a national or international securities
exchange or in any over-the-counter market.
(e) Remedies for Breach of Covenants. In the event that a covenant
included in this Agreement shall be deemed by any court to be unreasonably
broad in any respect, it shall be modified in order to make it reasonable and
shall be enforced accordingly. However, in the event that any court of
competent jurisdiction shall refuse to enforce any of the covenants contained
in Paragraphs 5(a) through (d), the unenforceable covenant shall be deemed to
be eliminated from the provisions of this Agreement for the purpose of those
proceedings to the extent necessary to permit the remaining covenants to be
enforced so that the validity, legality or enforceability of the remaining
provisions of this Agreement shall not be affected thereby.
Abell acknowledges that any material breach of his covenants
contained in this Section 5 will cause irreparable harm to the Company, which
will be difficult if not impossible to ascertain, and the Company shall be
entitled to equitable relief, including injunctive relief, against any actual
or threatened breach hereof, without bond and without liability should such
relief be denied, modified or vacated. Neither the right to obtain such relief
or the obtaining of such relief shall be exclusive of or preclude the Company
from any other remedy.
6. TERMINATION.
(a) Termination by Reason of Death or Disability. If Abell should
die or become physically or mentally disabled and unable to perform duties
hereunder for a continuous period in excess of ninety (90) days, which event
shall result in the termination of Abell's employment with the Company, the
Company shall continue to pay Abell's then-current base salary (less the
amount of any disability benefit payments paid or payable to Abell during such
period for disability benefits maintained and paid for by the Company) for the
balance of the calendar year in which such death or disability occurs, but in
no event for less than one hundred eighty (180) days, plus any bonus payments,
benefits or other items of compensation listed in Section 3 herein which are
vested, earned or fully accrued at the date of termination. In addition, in
the event of disability, Abell's participation in any medical, health,
accident, disability, death, life insurance or similar plan in which Abell was
participating immediately prior to termination shall continue for the period
in which payments are being made under this Paragraph at the Company's expense
subject to any normal employee contributions, if any), although any
continuation of health coverage shall count toward the "COBRA" continuation of
coverage period. This Paragraph shall not be effective after any termination
pursuant to Paragraph 6(b).
(b) Termination by Company for Cause. The Company shall have the
right to terminate this Agreement for cause, including but not limited to
those as defined below. For purposes of this Paragraph, cause shall exist if
the Company reasonably determines that Abell has deliberately engaged in any
of the following: (i) Abell fails or refuses to perform his duties and
responsibilities as Vice President of Mergers and Acquisitions; (ii) Abell
violates any of the Company's material policies or procedures, or engages in
any misconduct which interferes with the performance of his duties and
obligations under this Agreement; (iii) Abell is convicted for a felony or
Abell is shown to have engaged in any act of dishonesty or fraud upon the
Company, any of its subsidiaries, or any of its customers or clients; (iv)
Abell engages in any act of misconduct which results in substantial loss to
the Company or substantial damage to the Company's reputation; or (v) Abell
breaches any of his covenants contained in Sections 4 and 5 hereof. Unless
otherwise stated, if this Agreement is terminated for cause under this
Paragraph, both parties are relieved from further obligations under this
Agreement except for the Company's obligations under Section 7 herein and any
outstanding obligations under Section 3(a)-(h).
(c) Termination by Company Without Cause. If the Company or its
successors terminates the employment of Abell for any reason other than cause,
the Company shall provide Abell with ten (10) days prior written notice and
Abell shall be entitled to the following liquidated damages: (i) severance
compensation equal to six (6) months' of Abell's then-current base salary,
(ii) any earned, prorated bonus payable hereunder which is fully accrued at
the time of termination, (iii) continued payment for all benefits, plans and
programs, as defined in Paragraph 3(e) above, in which Abell is enrolled at
the time of termination, for a period equal to six (6) months, (iv) all other
items of compensation which are vested in Abell or which he has earned or to
which he is entitled under Section 3 herein at the time of termination, and
(v) registration of all shares of the Company's common stock owned by Abell at
the time of termination or purchasable by him upon exercise of outstanding,
vested Incentive Stock Options at the time of termination. The procedures for
registration and/or buyback are described in Paragraph 6(f) below.
(d) Termination by Abell. During the Term of this Agreement, Abell
may terminate this Agreement with or without cause. Abell shall have the right
to terminate this Agreement for cause, as defined below, upon providing the
Company with a Cause Notice and an opportunity to cure as described in
Paragraph 6(e). For the purposes of this Paragraph, cause shall exist in any
of the following circumstances: (i) The alleged breach or violation by the
Company of any terms of this Agreement; (ii) Any significant change in
position, duties and responsibilities of Abell to which Abell does not
consent; (iii) Any action of the Company to which Abell does not consent which
would require Abell to permanently change his place of residence; or (iv) Any
change in the circumstances of Abell's employment which Abell determines, in
good faith, results in his being unable to carry out his duties and
responsibilities as contemplated herein. In the event Abell terminates his
employment for alleged cause, and the cause is not timely cured by the Company
as defined in Paragraph 6(e) below, then Abell shall be entitled to the
liquidated damages specified in Paragraph 6(c) above. In the event Abell
terminates this Agreement without cause, Abell shall provide the Company with
written notice and the Agreement shall terminate forthwith. All obligations
of each party to the other shall terminate immediately, other than the
Company's obligation to pay base salary accrued to the date of termination, as
well as any unreimbursed expenses, any unpaid obligations under ?3 and the
Company's obligations to Abell as specified in Section 7.
(e) Cause Notice/Right to Cure. Before Abell may terminate this
Agreement for cause, as defined, Abell shall provide the Company with a Cause
Notice and an opportunity to cure. A Cause Notice is defined as prior written
notice of at least thirty (30) days by Abell upon the Company stating Abell
desire to terminate the Agreement and setting forth in detail the
circumstances Abell has determined constitute cause. After receipt of the
Cause Notice, the Company shall have a period of thirty (30) days within which
to cure the circumstances of cause as defined in the notice if the Company
agrees that cause exists. Whether the cure is sufficient or not shall be
determined by the Company in its sole and absolute discretion. In the event
the Company proposes to dismiss Abell for the cause of not performing his job
duties and responsibilities, Abell shall also have the same right to cure.
(f) Registration and/or Buyback of Securities. No later than 180
days following termination of this Agreement by Company without cause
(Paragraph 6(c)) or by Abell with cause (Paragraph 6(d)), the Company shall
cause to be prepared and filed at its sole cost and expense registration
documents with the Securities and Exchange Commission for the purpose of
registering for sale under the Securities Act of 1933, as amended, all shares
of the Company's common stock owned by Abell or purchasable by Abell upon
exercise of outstanding Incentive Stock Options that are vested as of the date
of termination. In connection with such registration, the Company shall do the
following: (i) attempt to cause, and use its' best efforts for such
registration to be declared effective by the Securities and Exchange
Commission within one hundred twenty (120) days of the date of filing, (ii) if
successful in (i) above, maintain the effectiveness of such registration for a
minimum period of one hundred eighty (180) days, and (iii) qualify the sale of
all shares of the Company's common stock owned by Abell or purchasable by
Abell upon exercise of his outstanding, vested Incentive Stock Options in such
states and under such Blue Sky regulations as Abell may reasonably request.
In the event said registration fails to become effective, Abell shall be
permitted to sell in accordance with the provisions of Rule 144 and the
remaining shares shall be registered in accordance with 3(c) above.
7. INDEMNIFICATION AND DUTY TO DEFEND.
(a) Indemnification. Except for litigation between the Company and
Abell, the Company agrees to indemnify Abell to the fullest extent against any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in which he is made party or is
threatened to be made a party by reason of his having been an officer or
director of the Company or any of its subsidiaries or affiliates, or for
actions taken purportedly on behalf of the Company or any of its subsidiaries
or affiliates. Indemnification shall include, but is not limited to: expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by Abell as long as Abell acted in good faith
and in a manner he reasonably believed to be in the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful. Indemnification
shall extend to all matters that relate to Abell's employment beginning from
July 1, 1998, and such indemnification shall survive the termination of this
Agreement, regardless of the reason for termination. This provision will not
be extended to cover matters that would constitute crimes.
(b) Duty to Defend. Except for litigation between the Company and
Abell, the Company will provide Abell with a legal defense against any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in which he is made party or is
threatened to be made a party by reason of his having been an officer or
director of the Company or any of its subsidiaries or affiliates, for action
taken purportedly on behalf of the Company or any of its subsidiaries or
affiliates. Additionally, upon request by Abell, the Company will promptly
advance or pay any amounts for costs, charges, or expenses in respect to his
right to a defense and indemnification hereunder. This duty to defend shall
extend to all matters that relate to Abell's employment beginning from
November 1, 1998, and such duty shall survive the termination of this
Agreement.
8. WITHHOLDING OF TAXES. The Company may withhold from any benefits
payable under the Agreement all federal, state, city or other taxes as shall
be required pursuant to any law or governmental regulation or ruling.
9. FACILITY OF PAYMENT. If the Company shall find that Abell is
unable to care for his affairs because of illness, accident or death, then the
Company, if it so elects, may direct that any payment due Abell or his estate
(unless a prior claim therefore has been made by a duly appointed legal
representative) or any part thereof, be paid or applied for the benefit of
Abell or to or for the benefit of his spouse, children or other dependents, or
to an institution maintaining or having custody of Abell, or any other person
deemed by the Board to be a proper recipient on behalf of Abell for payment.
Any such payment shall be in complete discharge of that particular liability
of the Company therefor.
10. SEVERABILITY. If any provision of this Agreement, as applied to any
party or to any circumstance, shall be found by a court to be void, invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement the application of any such provision in any other circumstance, or
the validity or enforceability of this Agreement.
11. ENTIRE UNDERSTANDING. This Agreement contains the entire
understanding of the parties hereto relating to the subject matter contained
herein and supersedes all prior and collateral agreements, understandings,
statements and negotiations of the parties. Each party acknowledges that no
representations, inducements, promises, or agreements, oral or written, with
reference to the subject matter hereof have been made other than as expressly
set forth herein. This Agreement cannot be changed, rescinded or terminated
orally.
12. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
deposited in the U.S. mail in a registered, postage prepaid envelope or by
courier addressed as follows: If to Abell, 345 Summerwood Lane, Castle Rock,
CO 80104, and if to the Company, c/o Chairman, 103 Sarasota Quay, Sarasota, FL
34236.
13. ASSIGNMENT. Neither Abell nor the Company may assign this Agreement
or their obligations hereunder without the prior written consent of both
parties.
14. MISCELLANEOUS.
(a) This Agreement shall be subject to and governed by the laws of
the State of Colorado;
(b)Failure to insist upon strict compliance with any provisions
hereof shall not be deemed a waiver of such provisions or any other provision
hereof;
(c) The invalidity or unenforceability of any provision hereof
shall not affect the validity or enforceability of any other provision;
(d) Each of the signatories to this Agreement represents that he is
competent to sign this Agreement and that he has obtained any and all
permissions and authorities necessary to bind himself or his organization to
this Agreement.
15. EFFECTIVE DATE; MULTIPLE COUNTERPARTS. This Agreement shall be
effective as of the date of the last signature affixed hereto. This Agreement
may be signed in more than one counterpart, each of which shall be considered
an original but both of which, together, shall constitute one in the same
document.
16. ADJUSTMENTS TO INCENTIVE STOCK OPTIONS. For purposes of this
Agreement, the number of Incentive Stock Options referenced herein shall be
adjusted for stock splits or stock dividends, if any, as declared by the Board
of Directors and approved by a majority of the shareholders of the Company as
may be required by the Company's Articles of Incorporation and Bylaws.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SKYLYNX COMMUNICATIONS, INC.
By: /s/ Gary L. Brown /s/ Ned Abell
-------------------------- ------------------------------
Gary L. Brown, Chairman Ned Abell
345 Summerwood Lane
Castle Rock, CO 80104
<PAGE>
SKYLYNX COMMUNICATIONS, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective on the 15th
day of July 1999 between SKYLYNX COMMUNICATIONS, INC., a Colorado corporation
(the "Company") and JENNY J. KIM ("Kim").
W I T N E S S E T H:
WHEREAS, the parties hereto wish to enter into an employment agreement to
employ Kim; and
WHEREAS, each of the parties desire to set forth herein certain
agreements between Kim and the Company concerning Kim's employment;
NOW, THEREFORE, in consideration of the premises and of the mutual,
promises, covenants and representations herein contained, the parties hereto
agree as follows:
1. Term. The Company will employ Kim, and Kim will serve the Company,
under the terms of this Agreement for an initial term ending December 31, 2000
(the "Initial Term"), commencing on the date hereof (the "Effective Date").
Effective as of the expiration of the Initial Term and as of each anniversary
date thereof, the term of this Agreement shall be extended for an additional
one-year period unless, not later than two months prior to each such
respective date, either party hereto shall have given notice to the other than
the term shall not be so extended. Notwithstanding the foregoing, Kim's
employment hereunder may be earlier terminated, as provided in Section 4
hereof. The term of this Agreement, as in effect from time to time in
accordance with the foregoing, shall be referred to herein as the "Term". The
period of time between the Effective Date and the termination of Kim's
employment hereunder shall be referred to herein as the "Employment Period".
2. Employment. The Company hereby employs Kim as General Counsel, Vice
President Legal Affairs of the Company upon the terms and conditions herein
set forth. Kim shall exercise such authority, perform such duties and
functions and discharge such responsibilities as are reasonably associated
with Kim's position, commensurate with the authority vested in Kim pursuant to
this Agreement and consistent with the bylaws of the Company. In connection
with performance of her duties, Kim shall report directly to the Chief
Executive Officer of the Company. During the Employment Period, Kim shall
devote full business time, skill and efforts to the business of the Company.
Notwithstanding the foregoing, Kim may (i) make and manage personal business
investments of her choice and serve in any capacity with any civic,
educational or charitable organization, or any trade association, without
seeking or obtaining approval by the Board, provided such activities and
service do not materially interfere or conflict with the performance of her
duties hereunder; and (ii) with the approval of the Board, serve on the boards
of directors of other corporations. The Company shall provide Kim, incident
to the performance of such duties, with office space, facilities and
secretarial assistance commensurate with her position. Kim shall principally
perform her duties for the Company at its San Francisco Legal Division, the
Company's headquarters in Denver, Colorado, or at such location as the Board
may determine in consultation with Kim and with her express consent.
3. Compensation and Benefits.
(a) Base Salary. During the Employment Period, the Company shall
pay to Kim, as compensation for the performance of her duties and obligations
under this Agreement, a base salary at the rate of $120,000 per annum, payable
in arrears not less frequently than twice monthly in accordance with the
normal payroll practices of the Company (the "Base Salary"). The Compensation
Committee shall increase Kim's base salary annually, at a rate of not less
than ten percent (10%) per year.
In the event the Company completes an initial or secondary
public offering of its common stock, Kim's base salary shall be immediately
increased to an amount to be determined by the Compensation Committee of the
Board. Under no set of circumstances shall Kim's Base Salary be decreased at
any time.
(b) Bonuses. The Company agrees to pay Kim an annual cash bonus, on
or about March 31st of each year for her efforts in the prior calendar year.
The amount of such bonus shall be determined by the Compensation Committee of
the Board.
(c) Advance Incentives. The Company agrees to grant Kim fifty
thousand (50,000) shares of the Company's common stock. The Company agrees to
register the shares granted as an advance incentive with the Securities and
Exchange Commission as soon as practicable, but in no event later than when
the Company files for its Initial Public Offering or a Secondary offering,
subject to the requirements of the underwriter. The total number of shares
the Company must register for Kim shall be no more than the aggregate number
of shares the Company is otherwise registering. The Company shall bear all
costs of registration associated with such piggyback registration for Kim.
(d) Incentive Stock Options ("ISOs"). The Company has caused to be
established a qualified incentive stock option plan (the "ISO Plan") under
Section 422 of the Internal Revenue Code of 1986, as amended. Each year
during the Employment Period, Kim shall fully participate in the ISO Plan and
be granted a number of ISOs commensurate with her position in the Company.
The number of ISO's granted shall be calculated using the same formula used to
calculate the amount of ISOs granted other senior executives of the Company.
(e) Non-Qualified Stock Options ("NSOs"). The Company has caused
to be established a Non-qualified Stock Option Plan (the "Equity Incentive
Plan") that is not intended to qualify as an "incentive stock option" under
Section 422 of the Internal Revenue Code of 1986, as amended. Pending
approval of the Board of Directors of the Company and its shareholders to
amend the Company's Equity Incentive Plan to increase the number of shares
subject to such plan, and the grant of stock options to be granted by the
Company to Kim, the Company and Kim will enter into a Stock Option Agreement,
substantially in the form attached hereto as Exhibit A, pursuant to which the
Company shall grant to Kim an option to purchase three hundred eighty seven
thousand five hundred (387,500) shares of Common Stock of the Company on the
terms and conditions set forth therein.
(f) Accelerated Vesting. The parties agree that all of Kim's
Incentive Stock Options and Non-qualified Stock Options shall immediately
vest, regardless of the performance criteria or vesting schedules set forth in
such stock option grants in the event of: (i) Change in Control of the
Company, as defined in Section 4(e) herein; or (ii) in the event of
termination of employment of Jeffery Mathias as the Company's Chief Executive
Officer.
(g) Equity Catch-Up or Claw-Back. Notwithstanding anything
contained herein to the contrary, the parties agree that, upon the completion
of an initial or secondary public offering of the Company's Common Stock, the
sum of (i) the number of shares of Common Stock granted to Kim according to
Section 3(c), plus (ii) the number of shares of Common Stock represented by
Incentive Stock Options granted to Kim according to Section 3(d), plus (iii)
the number of shares of Common Stock represented by Non-Qualified Stock
Options granted to Kim according to Section 3(e) shall represent an equity
interest in the Company equal to 1.8% of the Company's issued and outstanding
Common Stock on a fully diluted basis. To the extent that Kim's equity
interest at such time is less than or greater than 1.8%, the Company and/or
the Company's Compensation Committee shall either increase or decrease the
number of Non-Qualified Stock Options granted to Kim (through the grant of
additional Non-Qualified Stock Options to Kim or through the cancellation of
Non-Qualified Stock Options held by Kim) so that Kim's equity interest at such
time is equal to 1.8% of the Company's issued and outstanding Common Stock on
a fully diluted basis.
(h) Benefits. During the Employment Period, Kim shall receive such
life insurance, disability, pension, health insurance, holiday, and sick pay
benefits and other benefits which the Company extends, as a matter of policy,
to its executives and, except as otherwise provided herein, shall be entitled
to participate in all deferred compensation and other incentive plans of the
Company on the same basis as other like executives of the Company.
(i) Vacation. Kim shall be entitled to four (4) weeks of vacation
each year with full compensation. Kim agrees to schedule her vacation in a way
that least interferes with the Company's business.
(j) Expenses. Kim shall be reimbursed for her reasonable expenses,
commensurate with her position and related to the carrying out of her duties,
including expenses for entertainment, travel and similar items. The Company
shall reimburse Kim for such expenses in a timely manner and in accordance
with the policies and procedures of the Company in effect from time to time.
(k) Perquisites. During the Term of this Agreement, Kim shall be
entitled to perquisites and fringe benefits that are accorded senior
executives of the Company. Such perquisites shall include an automobile
allowance of Four Hundred Dollars ($400) per month, reimbursement for medical
expenses which may otherwise be uninsured or unreimbursed under the Company's
medical plan for Kim, payment for all premiums for Kim under its medical
insurance plans, and payment for all premiums for Kim under its life and
disability insurance plans. The Company shall also waive any applicable
waiting periods for such benefits, if any.
(l) Cumulative Compensation. The compensation provided for in
Sections 3(a) - (k) herein are in addition to the benefits provided for upon
termination pursuant to Section 5 herein.
4. Termination of Employment.
(a) Termination for Cause. The Company may terminate Kim's
employment hereunder for cause. For purposes of this Agreement and subject to
Kim's opportunity to cure as provided in Section 4(c) hereof, the Company
shall have "cause" to terminate Kim's employment hereunder if Kim shall commit
any of the following:
(i) any act or omission which shall represent a material
breach in any material respect of any of the terms of this Agreement;
(ii) gross misconduct that, in the reasonable good faith
opinion of the Company that is or is likely to be significantly injurious to
the Company;
(iii) gross negligence or wanton and reckless acts or omissions
in the performance of Kim's duties, in any such case which are significantly
injurious to the Company;
(iv) bad faith in the performance of Kim's duties, consisting
of willful acts or omissions, which are significantly injurious to the
Company;
(v) addiction to illegal drugs or chronic alcoholism, as may
be permitted by law; or
(vi) any conviction or pleading of guilty to a crime that
constitutes a felony under the laws of the United States or any political
subdivision thereof.
(b) Termination with Adequate Reason. Kim shall have the right at
any time to terminate her employment with the Company with adequate reason.
For purposes of this Agreement and subject to the Company's opportunity to
cure as provided in Section 4(c) hereof, Kim shall have adequate reason to
terminate her employment hereunder if such termination shall be the result of:
(i) a diminution during the Employment Period in Kim's title,
duties or responsibilities as set forth in Section 1 hereof;
(ii) a breach by the Company of the compensation and benefits
provisions set forth in Section 3 hereof;
(iii) any action of the Company to which Kim does not consent
which would require Kim to change her present place of residence; or
(iv) a material breach by the Company of any material terms of
this Agreement.
(c) Notice and Opportunity to Cure. Notwithstanding the foregoing,
it shall be a condition precedent to the Company's right to terminate Kim's
employment for "cause" and Kim's right to terminate her employment for "good
reason" that (1) the party seeking the termination shall first have given the
other party written notice stating with specificity the reason for the
termination ("breach") and (2) if such breach is susceptible of cure or
remedy, a period of thirty (30) days from and after the giving of such notice
shall have elapsed without the breaching party having effectively cured or
remedied such breach during such 30-day period, unless such breach cannot be
cured or remedied within thirty (30) days, in which case the period for remedy
or cure shall be extended for a reasonable time (not to exceed thirty (30)
days) provided the breaching party has made and continues to make a diligent
effort to effect such remedy or cure.
(d) Termination Upon Death or Permanent and Total Disability. The
Employment Period shall be terminated by the death of Kim. The Employment
Period may be terminated by the Company if Kim shall be rendered incapable of
performing her duties to the Company by reason of any medically determined
physical or mental impairment that reasonably can be expected to result in
death or that can be expected to last for a period of six (6) or more
consecutive months from the first date of the disability ("Disability"). In
the event of a dispute as to whether Kim is mentally impaired within the
meaning of this Section 4(d), or as to the likely duration of any incapacity
of Kim either party may request a medical examination of Kim by a doctor
appointed by the Chief of Staff of a hospital selected by mutual agreement of
the parties, or as the parties may otherwise agree, and the cost of such
written medical opinion of such doctor shall be borne by the Company. If the
Employment Period is terminated by reason of Disability of Kim, the Company
shall give thirty (30) days' advance written notice to that effect to Kim.
(e) Change in Control. A "Change in Control" shall be deemed to
have occurred if and when (i) any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities and Exchange Act of 1934, as amended) who
does not own fifty percent (50%) or more of the combined voting power of the
Company's then issued and outstanding securities is or becomes a beneficial
owner, directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
issued and outstanding voting securities; (ii) the Company sells all or
substantially all of the assets of the Company; (iii) a merger is effected
whereby the Company is not the surviving entity after the merger (except in
the instance where the sole purpose of the merger is to effect a change in
domicile of the Company from one state to another); or (iv) a majority of the
individuals who were members of the Board of Directors of the Company
immediately prior to an action or series of actions, do not constitute a
majority of the Board of Directors following such action or series of actions.
In the event of a Change in Control, if Kim and the new controlling entity do
not agree to continue with the terms of this Agreement, then this Agreement
shall be terminated and the Company shall pay Kim the liquidated damages
defined in Section 5(a) below.
5. Consequences of Termination.
(a) Termination Without Cause or for Adequate Reason or Change of
Control. In the event of termination of Kim's employment hereunder: (1) by
the Company without "cause" (other than upon death or Disability); (2) by Kim
for "adequate reason"; or (3) termination effected after or upon a Change of
Control (each as defined in Section 4 hereof), in addition to any other
benefits and payments as may be required by law or otherwise accrued as of
such termination date by Kim, Kim shall be entitled to the following severance
pay and benefits:
(i) Severance Pay - a lump sum amount equal to one half (1/2)
of Kim's then annual Base Salary;
(ii) Benefits Continuation - continuation for six (6) months
(the "Severance Period") of coverage under the group medical care, disability
and life insurance benefit plans or arrangements in which Kim is participating
at the time of termination with the Company continuing to pay its share of
premiums and associated costs as if Kim continued in the employ of the
Company; provided, however, that the Company's obligation to provide such
coverages shall be terminated if Kim obtains comparable substitute coverage
from another employer at any time during the Severance Period. Kim shall be
entitled, at the expiration of the Severance Period, to elect continued
medical coverage in accordance with Section 4980B of the Internal Revenue Code
of 1986, as amended (or any successor provision thereto); and
(iii) Pro Rata Bonus Amounts - a lump sum amount equal to the
pro rata portion of any bonus amounts paid by the Company in the prior year as
bonuses.
(b) Termination Upon Disability. In the event of termination of
Kim's employment hereunder by the Company on account of Disability, Kim shall
be entitled to the following severance pay and benefits:
(i) Severance Pay - severance payments in the form of
continuation of Kim's Base Salary as in effect immediately prior to such
termination for a period of 6 months following the first date of Disability;
and
(ii) Benefits Continuation - the same benefits as provided in
Section 5(a)(ii) above, to be provided during the Employment Period while Kim
is suffering from Disability and for a period of three (3) months following
the effective date of Kim's termination by reason of Disability.
(c) Termination Upon Death. In the event of termination of Kim's
employment hereunder on account of Kim's death, Kim's heirs, estate or
personal representatives under law, as applicable, shall be entitled to the
payment of Kim's Base Salary as in effect immediately prior to death for a
period of not less than two (2) calendar months and not more than the earlier
of six (6) calendar months or the payment of benefits pursuant to Kim's life
insurance policy, as provided for in Section 3(h) above. Kim's beneficiary
or estate shall not be required to remit to the Company any payments received
pursuant to any life insurance policy purchased pursuant to Section 3(h)
above.
(d) Accrued Rights. Notwithstanding the foregoing provisions of
this Section 5, in the event of termination of Kim's employment hereunder for
any reason, Kim shall be entitled to payment of any unpaid portion of her Base
Salary through the effective date of termination, accrued by unpaid vacation
or benefits otherwise agreed to by the Company, and payment of any accrued but
unpaid rights solely in accordance with the terms of any incentive bonus or
employee benefit plan or program of the Company.
(e) Conditions to Severance Benefits.
(i) The Company shall have the right to seek repayment of the
severance payments and benefits provided by this Section 5 in the event that
Kim fails to honor in accordance with their terms the provisions of Section 6
hereof.
(ii) For purposes only of this Section 5(e), Kim shall be
treated as having failed to honor the provisions of Section 6 hereof only upon
the vote of two-thirds of the Board following notice of the alleged failure by
the Company to Kim, an opportunity for Kim to cure the alleged failure for a
period of thirty (30) days from the date of such notice and Kim's opportunity
to be heard on the issue by the Board.
(f) Registration and/or Buyback of Securities. Not later than
ninety (90) days following termination of this Agreement by Company without
cause (as described in Section 4(a)) or by Kim with adequate reason (as
described in Section 4(b)), the Company shall cause to be prepared and filed
at its sole cost and expense registration document with the Securities and
Exchange Commission for the purpose of registering for sale under the
Securities Act of 1933, as amended, all shares of the Company's common stock
owned by Kim or purchasable by Kim upon exercise of outstanding Incentive
Stock Options and Non-Qualified Stock Options that are vested as of the date
of termination. In connection with such registration, the Company shall do the
following: (i) attempt to cause such registration to be declared effective by
the Securities and Exchange Commission within one hundred twenty (120) days of
the date of termination, (ii) if successful in (i) above, maintain the
effectiveness of such registration for a minimum period of one hundred eighty
(180) days, and (iii) qualify the sale of all shares of the Company's common
stock owned by Kim or purchasable by Kim upon exercise of her outstanding,
vested Incentive Stock Options and Non-Qualified Stock Options in such states
and under such Blue Sky regulations as Kim may reasonably request. In the
event said registration fails to become effective, Kim shall be permitted to
sell in accordance with the provisions of Rule 144 and the remaining shares
shall be registered in accordance with 3(c) above.
6. Confidential Information and Covenant Not to Compete. All payments
and benefits to Kim shall be subject to Kim's compliance with this Agreement
and the provisions of this Section 6. However, Kim's covenants contained in
this Section 6 shall terminate and shall be unenforceable and of no further
legal force or effect in the event the Company, its successors or assigns,
becomes insolvent, is liquidated or ceases for any reason to conduct business
operations for a continuous period of at least thirty (30) days.
(a) Confidentiality. Kim agrees that she will not at any time
during the Employment Period or for a period of two (2) year following
employment with the Company, for any reason, in any fashion, form or manner,
either directly or indirectly, divulge, disclose or communicate to any person,
firm, corporation or other business entity, in any manner whatsoever, any
confidential information or trade secrets concerning the business of the
Company, including, without limiting the generality of the foregoing, the
techniques, methods or systems of its operation or management, any information
regarding its financial matters, or any other material information concerning
the business of the Company (including customer lists), its manner of
operation, its plans or other material data (the "Business"). The provisions
of Section 7(a) shall not apply to (i) information disclosed in the
performance of Kim's duties to the Company based on her good faith belief that
such a disclosure is in the best interests of Company; (ii) information that
is, at the time of the disclosure, public knowledge; (iii) information
disseminated by the Company to third parties in the ordinary course of
business; (iv) information lawfully received by Kim from a third party who,
based upon inquiry by Kim, is not bound by a confidential relationship to the
Company; or (v) information disclosed under a requirement of law or as
directed by applicable legal authority having jurisdiction over Kim.
(b) Litigation Support. During the Term of this Agreement, Kim
shall, upon reasonable notice, furnish such information and proper assistance
to the Company as may reasonably be required in connection with any litigation
in which the Company or any of its subsidiaries is, or may become, a party.
Except for litigation that may be between the Company and Kim, Kim's
reasonable expenses (including, but not limited to, travel and attorneys'
fees) incurred in complying with this covenant shall be either advanced or
promptly reimbursed by Company to Kim.
(c) No Solicitation of Employees. Kim agrees that during the Term
of this Agreement and continuing for a period of one (1) year after
termination under Section 4 herein, neither Kim nor any person or enterprise
controlled by Kim, will solicit for employment any person employed by the
Company.
(d) Covenant Not to Compete. Kim agrees that she shall not during
the Employment Period, without the approval of the Board, directly or
indirectly, alone or as partner, joint venturer, officer, director, employee,
consultant, agent, independent contractor, guarantor, financier, consultant,
option holder or stockholder (other than as provided below) of any company or
business, participate in, engage in or have a financial interest in any
"Competitive Business" within the United States. For purposes of the
foregoing, the term "Competitive Business" shall mean any business, firm,
corporation or other business entity related to the provision of Internet
access or Internet related services and any business directly competing with
any product or service of SkyLynx Communications, Inc. or any affiliate
thereof. Notwithstanding the foregoing, Kim shall not be prohibited during
the noncompetition period applicable above from acting as a passive investor
where she owns not more than five percent (5%) of the issued and outstanding
capital stock of any publicly-held company.
7. Breach of Restrictive Covenants. The parties agree that a breach or
violation of Section 6 hereof will result in immediate and irreparable injury
and harm to the innocent party, and that such innocent party shall have, in
addition to any and all remedies of law and other consequences under this
Agreement, the right to seek an injunction, specific performance or other
equitable relief to prevent the violation of the obligations hereunder.
8. Indemnification and Duty to Defend.
(a) Indemnification. Except for litigation between the Company and
Kim, the Company agrees to indemnify Kim to the fullest extent against any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in which she is made party or is
threatened to be made a party by reason of her having been an officer or
director of the Company or any of its subsidiaries or affiliates, or for
actions taken purportedly on behalf of the Company or any of its subsidiaries
or affiliates. Indemnification shall include, but is not limited to: expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by Kim as long as Kim acted in good faith and
in a manner she reasonably believed to be in the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that her conduct was unlawful. Indemnification
shall extend to all matters that relate to Kim's association with the Company
beginning on the Effective Date of this Agreement, and such indemnification
shall survive the termination of this Agreement, regardless of the reason for
termination.
(b) Duty to Defend. Except for litigation between the Company and
Kim, the Company will provide Kim with a legal defense with counsel of her
choosing against any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative in which
she is made party or is threatened to be made a party by reason of her having
been an officer or director of the Company or any of its subsidiaries or
affiliates, for action taken purportedly on behalf of the Company or any of
its subsidiaries or affiliates. No settlement shall be entered into with
respect to litigation pursuant to this Section 8(b) without the express
written approval of Kim. Additionally, upon request by Kim, the Company will
promptly advance or pay any amounts for costs, charges, or expenses in respect
to her right to a defense and indemnification hereunder. This duty to defend
shall extend to all matters that relate to Kim's affiliation with the Company
beginning from July 15, 1999, and such duty shall survive the termination of
this Agreement. Notwithstanding anything contained herein to the contrary,
9. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Company, to: If to Kim, to:
Chairman of the Board Jenny J. Kim
SkyLynx Communications, Inc. 857 Partridge Avenue, #4
600 South Cherry Street - Suite 400 Menlo Park, CA 94025
Denver, Colorado 80246
or to such other respective addresses as the parties hereto shall designate to
the other by like notice, provided that notice of a change of address shall be
effective only upon receipt thereof.
10. Waiver of Breach. Any waiver of any breach of this Agreement shall
not be construed to be a continuing waiver or consent to any subsequent breach
on the part either of Kim or of the Company.
11. Non-Assignment; Successors. Neither party hereto may assign her or
its rights or delegate her or its duties under this Agreement without the
prior written consent of the other party; provided, however, that: (i) this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company upon any sale of all or substantially all of the
Company's assets, or upon any merger, consolidation or reorganization of the
Company with or into any other corporation, all as though such successors and
assigns of the company and their respective successors and assigns were the
Company; and (ii) this Agreement shall inure to the benefit of and be binding
upon the heirs, assigns or designees of Kim to the extent of any payments due
to them hereunder. As used in this Agreement, the term "Company" shall be
deemed to refer to any such successor or assign of the Company referred to in
the preceding sentence.
12. Withholding of Taxes. All payments required to be made by the
Company to Kim under this Agreement shall be subject to the withholding of
such amounts, if any, relating to tax, and other payroll deductions as the
Company may reasonably determine it should withhold pursuant to any applicable
law or regulation.
13. Severability. To the extent any provision of this Agreement or
portion thereof shall be invalid or unenforceable, it shall be considered
deleted there from and the remainder of such provision and of this agreement
shall be unaffected and shall continue in full force and effect.
14. Payment. All amounts payable by the Company to Kim under this
Agreement shall be paid promptly on the dates required for such payment in
this Agreement without notice or demand. Any salary, benefits or other
amounts paid or to be paid to Kim or provided to or in respect of Kim pursuant
to this Agreement shall not be reduced by amounts owing from Kim to the
Company.
15. Authority. Each of the parties hereto hereby represents that each
has taken or will take all actions necessary in order to execute and deliver
this Agreement and the Stock Option Agreement attached hereto as Exhibit A.
16. 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.
17. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Colorado, without giving
effect to the choice of law principles thereof.
18. Entire Agreement. This Agreement, the attached Stock Option
Agreements and the Plan as defined in the Stock Option Agreements constitute
the entire agreement by the Company and Kim with respect to the subject matter
hereof and supersedes any and all prior agreements or understandings between
Kim and the Company with respect to the subject matter hereof, whether written
or oral. This Agreement may be amended or modified only by a written
instrument executed by Kim and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and month first above-written.
SKYLYNX COMMUNICATIONS, INC.
By: /s/ Jeffery A. Mathias
--------------------------------
Jeffery A. Mathias
Chief Executive Officer
/s/ Jenny J. Kim
-----------------------------------
Jenny J. Kim
<PAGE>
Schedule 3(a)
PERFORMANCE CRITERIA
The Optionee's right to purchase shares of the Company's Common Stock
under the Option shall vest immediately, subject to Section 3 hereof, pursuant
to the following schedule:
(1) Upon acquisition of the Company's twenty-fifty thousand (25,000)
subscriber, Kim shall vest in one hundred three thousand three hundred forty
six (103,346) stock options.
(2) Upon obtaining acceptable commitments to fund the Company for a
minimum $30,000,000, Kim shall vest in one hundred thirty seven thousand
seven hundred ninety five (137,795) stock options. Such commitments may
consist of, but shall not be limited to, any combination of the following:
(i) Initial or Secondary Public Offering;
(ii) Private Equity Placement;
(iii) High Yield Debt Offering;
(iv) Private Debt Placement;
(v) Public or Private Placement of Convertible Securities;
(vi) Joint Venture / Project Financing; and
( Vendor Financing.
(3) Upon the acquisition of the Company's fifth (5th) Internet Service
Provider, Kim shall vest in sixty nine thousand fourteen (69,014) stock
options.
(4) Upon obtaining annualized gross revenues of $15,000,000 for the
Company, (based upon last quarter revenues annualized), Kim shall vest in
seventy seven thousand three hundred forty five (77,345) stock options.
<PAGE>
NEUMAN & DRENNEN, LLC
Temple-Bowron House
1507 Pine Street
Boulder, Colorado 80302
Telephone: (303) 449-2100
Facsimile: (303) 449-1045
February 11, 2000
SkyLynx Communications, Inc.
600 South Cherry Street, Suite 400
Denver, Colorado 80246
Re: S.E.C. Registration Statement on Form S-8
-----------------------------------------
Ladies and Gentlemen:
We hereby consent to the inclusion of our opinion regarding the legality
of the securities being registered by the Registration Statement to be filed
with the United Stated Securities and Exchange Commission, Washington, D.C.,
pursuant to the Securities Act of 1933, as amended, by SkyLynx Communications,
Inc., a Colorado corporation, (the "Company") in connection with the offering
by certain Selling Securityholders described therein of up to 621,355 shares
of its Common Stock, $.001 par value, as proposed and more fully described in
such Registration Statement.
We further consent to the reference in such Registration Statement to our
having given such opinions.
Sincerely,
Clifford L. Neuman
CLN:gg
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form S-8 of our
reports dated April 13, 1999, June 11, 1999, June 18, 1999, June 25, 1999, and
September 29, 1999 included in SkyLynx Communications, Inc.'s Form 10-KSB for
the year ended December 31, 1998 and the Form 8-Ks filed July 13, 1999, July
21, 1999, July 29, 1999, and October 12, 1999 and to all references to our
firm included in this registration statement.
Tampa, Florida ARTHUR ANDERSEN LLP
February 8, 2000
<PAGE>
<PAGE>
TO: The Securities and Exchange Commission
Washington, D.C.
RE: Skylynx Communications, Inc.
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement of
Skylynx Communications, Inc. on Form S-8 of our report dated March 4, 1998 for
the period from inception (July 29, 1997) to December 31, 1997.
/s/ Cordovano and Harvey, P.C.
- ------------------------------
Cordovano and Harvey, P.C.
Denver, Colorado
February 9, 2000
