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EX-2.1 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession Exhibit Table of Contents
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGERAMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "Agreement")
dated as of the 19th day of June 2003 by and among Sky Way Communications
Holding Corp., a Florida corporation ("SWYC"), SWYC Acquisition Corporation, a
Florida corporation, a wholly-owned subsidiary of SWYC ("Acquisition Corp."),
Sky Way Aircraft, Inc., a Nevada corporation ("SkyWay"), Brent Kovar, a
principal beneficial shareholder (the "SkyWay Principal Shareholder") of Sky Way
for the limited purpose of the indemnification provisions set forth in paragraph
13 hereto and Michael D. Farkas a principal beneficial shareholder (the "SWYC
Principal Shareholder") of SWYC for the limited purpose of the indemnification
provisions set forth in paragraph 13 hereto.
WITNESSETH:WHEREAS, the parties entered into an Agreement and Plan of Merger dated
as of May 30, 2003 and desire to amend and restate the agreement in its entirety;
WHEREAS, 10,000,000 shares of the commonstock, $.001 par value ("SkyWay
Common Stock") and 1,000,000 shares of the preferred stock, par value $.001
("SkyWay Preferred Stock"), of SkyWay are issued and outstanding as of the date
hereof;
WHEREAS, the Board of Directors of each of SWYC, Acquisition Corp.,
and SkyWay have adopted, approved and authorized the execution and delivery of
this Agreement so as to implement the Merger (as such term is hereinafter
defined in Section 1 hereof) in compliance with the provisions of the General
Corporation Law of the State of Florida ("FGCL") and Title 7, Chapter 78 of the
Nevada Revised Statutes ("NRS") with the result that SkyWay shall continue as
the surviving corporation and the separate existence of Acquisition Corp.
(except as it may be continued by operation of law) shall cease;
WHEREAS, SWYC, Acquisition Corp. and SkyWay intend that the merger of
Acquisition Corp. with and into SkyWay will qualify as a tax-free reorganization
pursuant to Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and desire to prescribe certain
conditions precedent to such Merger; and
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
result and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. The Merger. Subject to the terms and conditions hereinbelow set forth,
on the Effective Date (as hereinafter defined in Section 5 hereof) Acquisition
Corp. shall be merged with and into SkyWay (the "Merger") and, in connection
therewith:
(a) Except to the extent provided or permitted by the FGCL or NRS, the
separate existence of Acquisition Corp. shall cease and terminate, and SkyWay
shall continue as the surviving corporation and as a wholly-owned subsidiary of
SWYC (SkyWay as the surviving corporation after the Merger is hereinafter
sometimes referred to as the "Surviving Corporation");
(b) all of the rights, privileges, immunities, powers, franchises and
authority (both public and private) of SkyWay and Acquisition Corp. shall vest
in the Surviving Corporation;
(c) all of the assets and property of SkyWay and AcquisitionCorp. of every
kind, nature and description (real, personal and mixed and both tangible and
intangible) and every interest therein, wheresoever located, including, without
limitation, all debts or other obligations belonging or due to SkyWay or
Acquisition Corp., all claims and all causes of action, shall be, and be deemed
to be, vested, absolutely and unconditionally, in the Surviving Corporation; and
(d) all debts and obligations of SkyWay or Acquisition Corp., all rights
of creditors of SkyWay or Acquisition Corp. and all liens or security interests
encumbering any of the property of SkyWay or Acquisition Corp. shall be vested
in the Surviving Corporation and shall remain in full force and effect without
modification or impairment and shall be, and be deemed to be, enforceable
against the Surviving Corporation and its assets and properties with the same
full force and effect as if such debts, obligations, liens or security interests
had been originally incurred or created by the Surviving Corporation in its own
name and for its own behalf. Without limiting the generality of the foregoing,
Surviving Corporation specifically assumes all continuing obligations which
SkyWay or Acquisition Corp. would otherwise have to indemnify its officers and
directors, to the fullest extent currently provided in the Surviving
Corporation's Certificate of Incorporation, By-Laws and pursuant to the FGCL,
with respect to any and all claims arising out of actions taken or omitted by
such officers and directors prior to the Effective Date.
2. Instruments of Conveyance. Without limiting the generality of the
provisions of Section 1 hereof and/or the succession provisions of applicable
law, the officers and directors of SkyWay last in office shall (to the extent
they, or any of them, possess and/or may exercise the power to do so) execute,
deliver and/or record such deeds and/or other instruments of transfer and/or
conveyance, and take or cause to be taken, such other and further actions, as
the case may be, as shall be reasonably requested by SkyWay or its legal
counsel, to vest, perfect, confirm, implement the transfer of, or establish in
the name, on behalf or for the account or the benefit of SkyWay, title to,
and/or possession of, any or all of the assets, property, property interests,
rights, privileges, immunities, powers and franchises owned and/or exercisable
by Acquisition Corp. (or in which Acquisition Corp. had an interest and/or the
power to exercise immediately prior to the Effective Date) and which was vested,
or intended to be vested, in SkyWay pursuant to the provisions of this Agreement
and the Merger.
3. Constitutional Documents, Directors and Officers. On and as of the
Effective Date:
(a) The Certificate of Incorporation of SkyWay on such date in full force
and effect shall be the Certificate of Incorporation of the Surviving
Corporation, until the same shall be altered, amended, modified, terminated or
rescinded in the manner provided by the NRS, which rights of alteration,
amendment, modification, termination and/or rescission are hereby expressly
reserved by SkyWay.
(b) The By-Laws of SkyWay on such date in full force and effect shall be
the By-Laws of the Surviving Corporation, until the same shall be altered,
amended, modified, terminated or rescinded in the manner provided in the
Certificate of Incorporation of SkyWay and/or the NRS, which rights of
alteration, amendment, modification, termination and/or rescission are hereby
expressly reserved by SkyWay; and
(c) The members of the Board of Directors of the Surviving Corporation
shall be the directors of SkyWay immediately prior to the Effective Date, who
shall hold such office as provided in the By-Laws of SkyWay and/or the NRS. The
officers of the Surviving Corporation shall be the former officers of SkyWay,
who shall hold office as provided in the By-Laws of SkyWay.
4. Conversion.
(a) On the Effective Date, all of the outstanding shares of SkyWay Common
Stock shall be converted and exchanged into 1,000,000 shares of Series B
Convertible Preferred Stock, $.0001 par value of SWYC (to be authorized pursuant
to Section 10(f) ("SWYC Series B Preferred Stock"), a copy of which is attached
hereto as Exhibit A; and all of the outstanding Sky Way Preferred Stock shall be
converted and exchanged into 1,000,000 shares of Series A Convertible Preferred
Stock, $.0001 par value of SWYC (to be authorized pursuant to Section 10(f)
("SWYC Series A Preferred Stock"), a copy of which is attached hereto as Exhibit
B.
(b) On the Effective Date, each outstanding option and warrant of SkyWay
which is exercisable into shares of SkyWay Common Stock, as set forth in
Schedule 4 (b) hereto, shall become an outstanding option and warrant of SWYC
exercisable into shares of the SWYC Common Stock with the right to purchase the
same number of shares at the same exercise price, with the same expiration date
and subject to the same other terms and conditions.
(c) each issued and outstanding share of the capital stock of Acquisition
Corp. shall be converted into and become one fully paid and nonassessable share
of Common Stock of the Surviving Corporation.
(d) The shares of the SWYC Common Stock and SWYC Preferred Stock to be
issued to the SkyWay shareholders or to other third parties as contemplated by
Section 15 of this Agreement shall be deemed to be "restricted securities" as
defined by Rule 144(a)(3) under the Securities Act of 1933, as amended (the
"Securities Act"). The certificates evidencing such shares shall bear the
following restrictive legend:
"The shares evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be sold or otherwise transferred unless registered under the Securities Act or
there is an opinion from counsel to the company that such sale or other transfer
may be made pursuant to an exemption from the registration requirement of the
Securities Act."
(e) On the Effective Date, the officers of SWYC shall be Brent Kovar,
Chairman of the Board and President, Jim Kent, Chief Executive Officer, Joy
Kovar, Secretary, each to serve until the first meeting of the Board of
Directors immediately following the next Annual Meeting of Stockholders of SWYC
or until the Board otherwise directs.
(f) On the Effective Date, the Board of Directors of SWYC shall be Brent
Kovar who shall serve until the next Annual Meeting of Stockholders of SWYC and
Jamee Kalimi who shall serve until her resignation from the Board of Directors
becomes effective ten days after an Information Statement is mailed to all
stockholders of the Company in compliance with Section 14(F) of the Exchange Act
and Rule 14f-1 thereunder.
(g) Anti-dilution rights. Notwithstanding the foregoing, in the event from
the date hereof through the Third (3rd) Year anniversary of the Effective Date,
SWYC issues common stock or preferred stock pursuant to, or in connection with,
a capital raise or financing (a "Financing") in the aggregate amount of up to
One Million ($1,000,000) Dollars, the common stockholders of SWYC on the date of
the Effective Date, shall be entitled to the issuance of additional shares, on a
pro rata basis, equal to the number of shares of common stock or preferred stock
issued in connection with such Financing (the "Additional Shares"). The
Additional Shares shall be issued of the first day following the closing of each
Financing. No holder of SWYC Preferred Stock shall be entitled to receive any
Additional Shares in the event they convert their SWYC Preferred Stock into
common stock after the Effective Date.
5. The Effective Date.
(a) Subject to the satisfaction and/or waiver of the conditions herein
described, the Merger shall become effective as at the close of business on the
date specified in the certificate of merger ("Certificate of Merger") to be
filed in the manner required by the FGCL and NRS, or, if none, on the date of
filing (the "Effective Date"). Upon the receipt by SkyWay of consents from the
holders of more than 50% of the outstanding shares of the SkyWay Common Stock,
SkyWay and Acquisition Corp. shall cause to be filed the Certificate of Merger
in the manner required by the FGCL and NRS. Such filing shall be made on, or as
soon as practicable after, the Closing Date; and the parties hereto shall
thereafter execute, acknowledge, deliver and/or record such other and further
instruments, documents or certificates and/or take and perform such other and
further actions as may be required to effect and/or implement the Merger.
(b) The closing of the Merger (the "Closing") shall take place on such
date, at such place and at such time (the "Closing Date") within two (2)
business days after the satisfaction or waiver of the last of the conditions set
forth in Sections 11 and 12 hereof as shall be determined by the mutual consent
of SWYC and SkyWay at the offices of Williams Law Group, P.A., Tampa, Florida.
6. SkyWay Representations and Warranties. In order to induce SWYC and
Acquisition Corp. to execute, and perform their obligations under this
Agreement, SkyWay does hereby represent, warrant, covenant and agree (which
representations, warranties, covenants and agreements shall be, and be deemed to
be, continuing and survive the execution and delivery of this Agreement, the
Closing and the Effective Date) as follows:
(a) SkyWay is a corporation duly organized and validly existing under the
laws of the State of Nevada and has all requisite power and authority to own,
lease and operate its properties and assets and to conduct the business as now
conducted and as proposed to be conducted. A true, complete and correct copy of
each of the Certificates of Incorporation, By-laws and other governing documents
of SkyWay has in effect on the date of this Agreement, including all amendments
thereto, have been filed as exhibits to SkyWay's registration statement filed on
Form SB-2 with the SEC.
(b) Except as set forth in Schedule 6(b), SkyWay is duly qualified to do
business as a foreign corporation, and is in good standing, in all
jurisdictions, if any, wherein such qualification is necessary and where failure
so to qualify would have a material adverse effect on the business, properties,
liabilities, assets, operations, results of operations, condition (financial or
otherwise) or affairs of SkyWay.
(c) SkyWay has never had, nor does it have, any subsidiaries, nor has it
ever owned, nor does it currently own, any capital stock or other proprietary
interest, directly or indirectly, in any corporation, association, trust,
partnership, joint venture or other entity.
(d) Subject only to obtaining the consent of its shareholders as required
by the NRS: (i) SkyWay has the full power and authority, corporate and
otherwise, to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby; (ii) the execution, delivery and performance
of this Agreement, the consummation by SkyWay of the transactions herein
contemplated and the compliance by SkyWay with the terms of this Agreement have
been duly authorized by all necessary corporate action; (iii) this Agreement is
the valid and binding obligation of SkyWay enforceable in accordance with its
terms, subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the rights of
creditors generally and the discretion of courts in granting equitable remedies;
(iv) the execution, delivery and performance of this Agreement by SkyWay and the
consummation by SkyWay of the transactions herein contemplated do not, and will
not, with or without the giving of notice or the lapse of time, or both, (A)
result in any violation of the Certificate of Incorporation or By-Laws of SkyWay
or (B) result in a breach of, or a conflict with, any of the terms or provisions
of, or constitute a default under, or result in the modification or termination
of, or result in the creation or imposition of any lien, security interest,
charge or encumbrance upon any of the properties or assets of SkyWay pursuant
to, any indenture, mortgage, note, contract, commitment or other agreement or
instrument to which SkyWay is a party or by which it is, or any of its
respective properties or assets are, or may be, bound or affected. No consent,
approval, authorization or order of, or any filing with, any court, governmental
agency, authority or body (other than the filing of a Certificate of Merger
under the NRS) and/or any party to any agreement to which SkyWay is a party
and/or by which it is bound is required in connection with the execution,
delivery and performance of this Agreement and/or the consummation by SkyWay of
the transactions contemplated by this Agreement.
(e) SkyWay is not in violation of, or in default under, (i) any term or
provision of its Certificate of Incorporation or By-Laws; (ii) any material term
or provision of any financial covenant of any indenture, mortgage, contract,
commitment or other agreement or instrument to which it is a party or by which
it is, or any or its properties or assets are, or may be, bound or affected; or
(iii) any existing applicable law, rule, regulation, judgment, order or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over it or any of its properties or business. Except as set forth in Schedule 6
(e) SkyWay owns, possesses or has obtained all governmental and other licenses,
permits, certifications, registration, approvals or consents and other
authorizations necessary to own or lease, as the case may be, and to operate its
properties and to conduct its business or operations as presently conducted and
all such governmental and other licenses, permits, certifications,
registrations, approvals, consents and other authorizations are outstanding and
in good standing and there are no proceedings pending or, to the best of its
knowledge, threatened or any basis therefor existing, seeking to cancel,
terminate or limit such licenses, permits, certifications, registrations,
approvals or consents or authorizations.
(f) Except as set forth on Schedule 6 (f) hereto, there are no claims,
actions, suits, proceedings, arbitrations, investigations or inquiries before
any court or governmental agency, court or tribunal, domestic or foreign, or
before any private arbitration tribunal, pending or, to the best of the
knowledge of SkyWay, threatened against SkyWay or involving its assets which, if
determined adversely to SkyWay, would, individually or in the aggregate, result
in a material adverse change in the financial position, shareholders' equity,
results of operations, properties, business, management or affairs of SkyWay, or
which question the validity of this Agreement or of any action taken, or to be
taken, by SkyWay pursuant to, or in connection with, this Agreement; nor, to the
best of the knowledge of SkyWay, is there any basis for any such claim, action,
suit, proceeding, arbitration, investigation or inquiry to be made by any person
and/or entity. There are no outstanding orders, judgments or decrees of any
court, governmental agency or other tribunal specifically naming SkyWay and/or
enjoining SkyWay from taking, or requiring SkyWay to take, any action, and/or by
which SkyWay is, and/or its assets are, bound or subject.
(g) Except as set forth in Schedule 6(g), SkyWay owns all trademarks,
service marks, tradenames, copyrights, similar rights and their registrations,
trade secrets, methods, practices, systems, ideas, know how and confidential
materials used or proposed to be used in the conduct of its business as
conducted as of the date hereof (collectively the "SkyWay Intangibles") free and
clear of all liens, security interests, claims and encumbrances and rights and
options of third parties (including, without limitation, former or current
officers, directors, shareholders, employees and agents).
(h) SkyWay has previously delivered to SWYC a copy of the financial
statements as they were filed in SkyWay's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2002 accompanied by the audit report of
Pritchett, Siler & Hardy, P.C., SkyWay's independent auditors, with respect to
such financial statements and will deliver prior to the Effective Date a review
of the financial statements for the 1st quarter of 2003 (the "SkyWay Financial
Statements"). The SkyWay Financial Statements are, and will be, true and
accurate, in accordance with the books and records of SkyWay and are, and will,
present fairly in all material respects the financial position and results of
operations of SkyWay as of the times and for the periods referred to therein, in
each case in accordance with generally accepted accounting principles under
current United States accounting rules and regulations, consistently applied
("GAAP"). All of the financial books and records of SkyWay have been made
available to SWYC, and such books and records completely and fairly record in
all material respects SkyWay's financial affairs which would normally be
recorded in financial books and records.
Except as will be set forth on the SkyWay Financial Statements, SkyWay
has no debt, liability or obligations of any nature, whether accrued, absolute,
contingent or otherwise, whether due or to become due and whether or not the
amount hereof is readily ascertainable, that will not be reflected as a
liability in the SkyWay Financial Statements or except for liabilities incurred
by SkyWay in the ordinary course of business, consistent with past practices
which are not otherwise prohibited by, or in violation of, or which will not
result in a breach of, the representations, warranties and covenants of SkyWay
contained in this Agreement. There will be no material loss contingencies (as
such term is used in Statement of Financial Accounting Standards No. 5 ("FAS No.
5") issued by the Financial Accounting Standards Board (the "FASB") which will
not be adequately provided for in the SkyWay Financial Statements as required by
FAS No. 5.
(i) Except as set forth in Schedule 6 (i), SkyWay does not currently own,
nor has it ever owned, any real property. Schedule 6 (i) hereto also contains a
list and a brief description of (i) all real property leased by SkyWay and (ii),
with respect to each lease, the name of the lessor, any requirement of consent
of the lessor to assignment (including assignment by way of merger or change in
control) and the termination date of the lease. SkyWay has no written leases or
subleases with respect to real property. SkyWay owns or has good and marketable
title to its assets, properties and interests in properties which will be
reflected in the latest balance sheet included in the SkyWay Financial
Statements and/or are utilized in connection with the operation of the business
of SkyWay, in all cases free and clear of all liens, security interests, claims
and encumbrances of every kind, nature and description and rights and options of
others except as will be expressly set forth in such balance sheet.
(j) SkyWay has not, except as set forth on Schedule 6 (j) hereto or in the
SkyWay Financial Statements, (i) incurred any obligation or liability (absolute
or contingent, secured or unsecured); (ii) cancelled, without payment in full,
any notes, loans or other obligations receivable or other debts or claims held
by it; (iii) sold, assigned, transferred, abandoned, mortgaged, pledged or
subjected to lien or security interest any of its material properties, tangible
or intangible, or rights under any contract, permit, license, franchise or other
agreement other than sales or other dispositions of goods or services in the
ordinary course of business at customary prices; or (iv) declared, made or paid,
or set aside for payment, any cash or non-cash dividends or other distribution
on any shares of its capital stock.
(k) SkyWay is not default, in any respect, under the terms of any
outstanding agreement which is material to the business, operations, properties,
assets or condition of SkyWay and there exists no event of default or event
which, with notice and/or the passage of time, or both, would constitute any
such default.
(l) SkyWay has filed all federal, state, municipal and local tax returns
(whether relating to income, sales, franchise, withholding, real or personal
property or otherwise) required to be filed under the laws of the United States
and all applicable states and has paid in full all taxes which are due pursuant
to such returns or claimed to be due by any taxing authority or otherwise due
and owing. No penalties or other charges are, or will become, due with respect
to the late filing of any such return. To the best of the knowledge of SkyWay,
after due investigation, each such tax return heretofore filed by SkyWay
correctly and accurately reflects the amount of its tax liability thereunder.
SkyWay has withheld, collected and paid all other levies, assessments, license
fees and taxes to the extent required and, with respect to payments, to the
extent that the same have become due and payable.
(m) The authorized and outstanding capitalization of SkyWay is as set forth
on Schedule 6(m) hereto. As of the date hereof and the Effective Date except as
set forth on Schedule 6(m) hereto, there shall not be authorized and/or issued
and outstanding any shares of capital stock of SkyWay and there shall not be
outstanding any rights to purchase shares of capital stock of SkyWay. The issued
and outstanding shares of the SkyWay Common Stock and the Sky Way Preferred
Stock have been duly authorized and validly issued. All outstanding shares of
the SkyWay Common Stock and the Sky Way Preferred Stock are fully paid and
nonassessable. Except as set forth on Schedule 4(b), there are no outstanding
warrants, options, or similar rights to purchase or convert into the SkyWay
Common Stock or the Sky Way Preferred Stock. There are no preemptive rights with
respect to the SkyWay Common Stock or the Sky Way Preferred Stock. SkyWay has no
reason to believe that any holder of such outstanding shares of the SkyWay
Common Stock or the Sky Way Preferred Stock is subject to personal liability
solely by reason of being such a holder. The offers and sales of such
outstanding shares of the SkyWay Common Stock and the Sky Way Preferred Stock
were, at all relevant times, exempt from the registration or prospectus delivery
requirements of the Securities Act and any applicable state securities laws
pursuant to an exemption for which SkyWay and/or such offering or sale fully
qualified. No dividends, redemptions or other distributions of the assets of
SkyWay have been, or will be, declared and/or paid prior to the Closing Date on
or with respect to the SkyWay Common Stock or the Sky Way Preferred Stock.
(n) Except as set forth in Schedule 6 (n) hereto, or as set forth in, or as
contemplated by this Agreement, since the date of the SkyWay Financial
Statements, there has not been with respect to SkyWay:
(i) Any loan to any person or entity and/or the issuance of any guaranty
for, or with respect to, its or another's obligations;
(ii) Any waiver or release of any material right or claim;
(iii) Any incurrence of any material obligation or liability, absolute or
contingent;
(iv) Any payment of any material obligation or liability, absolute or
contingent, except for current liabilities reflected in, or shown on, the most
recent balance sheet of SkyWay and/or incurred subsequent to the date thereof in
the ordinary course of business and/or in connection with the transactions
contemplated by this Agreement; and
(v) Any material adverse change in the business, assets, properties,
liabilities, operations, results of operations, condition (financial or
otherwise) or affairs of SkyWay;
(vi) Any damage, destruction or loss, whether or not covered by insurance,
having or which could reasonably be expected to have a material adverse effect
on SkyWay;
(vii) (A) Any liability created, assumed, guaranteed or incurred, or (B) any
transaction, contract or commitment entered into, by SkyWay, in the case of
either clause (A) or (B) other than in the ordinary course of business;
(viii) Any payment, discharge or satisfaction of any material encumbrance by
SkyWay or any cancellation by SkyWay of any material debts or claims or any
amendment, termination or waiver of any rights of material value to SkyWay;
(ix) Any direct or indirect redemption, purchase or other acquisition of any
such shares of the capital stock of SkyWay;
(x) Any stock split, reverse stock split, combination, reclassification or
recapitalization of the SkyWay Common Stock, or any issuance of any other
security in respect of, or in exchange for, any shares of the SkyWay Common
Stock;
(xi) Any issuance by SkyWay of any shares of its capital stock or any debt
security or any subscription or similar right to acquire any shares of the
SkyWay capital stock;
(xii) Any license, sale, transfer, pledge, mortgage or other disposition of
any material tangible or intangible asset (including any SkyWay Intangibles) of
SkyWay;
(xiii) Any termination of, or written indication of an intention to terminate
or not renew, any material contract, license, commitment or other agreement
between SkyWay and any other person;
(xiv) Any material write-down or write-up of the value of any asset of
SkyWay, or any material write-off of any accounts receivable or notes receivable
of SkyWay or any portion thereof;
(xv) Any increase in, or modification of, compensation payable, or to become
payable, to any director, officer, employee, consultant or agent of SkyWay, or
the entering into of any employment contract with any officer or employee;
(xvi) Any increase in, or modification or acceleration of, any benefits
payable, or to become payable, under any bonus, pension, severance, insurance or
other benefit plan, payment or arrangement (including, but not limited to, the
granting of stock options, restricted stock awards or stock appreciation rights)
made to, for or with any director, officer, employee, consultant or agent of
SkyWay other than as described in Schedule 4(b) hereto;
(xvii) The making of any loan, advance or capital contribution to, or
investment in, any person or the engagement in any transaction with any
employee, officer, director or security holder of SkyWay, other than advances to
employees in the ordinary course of business for travel and similar business
expenses;
(xviii) Any change in the accounting methods or practices followed by SkyWay or
any change in depreciation or amortization policies or rates theretofore adopted;
(xix) Any forward sales commitments at a price less than SkyWay's cost of
sales for such commitments;
(xx) Any termination of employment of any officer or key employee of SkyWay
or any expression of intention by any officer or key employee of SkyWay to
resign from such office or employment with SkyWay;
(xxi) Any amendments or changes in SkyWay's Certificate of Incorporation or
By-Laws;
(xxii) Any agreement, understanding, authorization or proposal, whether in
writing or otherwise, for SkyWay to take any of the actions described in this
Section 8(n).
(o) Except with respect to the Global/Aircraft License Agreement (as
defined in Section 9(g) hereof), that is to be amended and restated pursuant to
Section 9(g) hereof, no other person, entity, company, corporation, business,
individual, has any right or license to use, develop, manufacture, license,
transfer, assign, sell, or convey the Technology below for any use whatsoever.
"Technology" is defined as that certain voice and data transmission technology
known and referred to as High Intensity Transfer Technology, also known as HITTS
that is set forth in the specification of United States patent application
number 09/592,687, filed June 13, 2000, and entitled "Digital data transmission
utilizing vector coordinates within a hyperbola model." The Global/Aircraft
License Agreement is attached as an exhibit to the New License Agreement
attached hereto as Exhibit C.
7. SWYC Representations and Warranties. In order to induce SkyWay to
execute, and perform its obligations under, this Agreement, SWYC does hereby
represent, warrant, covenant and agree (which representations, warranties,
covenants and agreements shall be, and be deemed to be, continuing and survive
the execution and delivery of this Agreement, the Closing and the Effective
Date) as follows:
(a) SWYC is a corporation duly organized, validly existing and in standing
under the laws of the State of Florida, with full power and authority, corporate
and otherwise, and with all licenses, permits, certifications, registrations,
approvals, consents and franchises necessary to own or lease and operate its
properties and to conduct its business as currently being conducted.
(b) SWYC is duly qualified to do business as a foreign corporation, and is
in good standing, in all jurisdictions, if any, wherein such qualification is
necessary and where failure so to qualify would have a material adverse effect
on the business, properties, liabilities, assets, operations, results of
operations, condition (financial or otherwise) or affairs of SWYC.
(c) Other than Acquisition Corp., which is a wholly-owned subsidiary of
SWYC, SWYC never had, nor does it have, any subsidiaries, nor has it ever owned,
nor does it currently own, any capital stock or other proprietary interest,
directly or indirectly, in any corporation, association, trust, partnership,
joint venture or other entity.
(d) (i) SWYC has the full power and authority, corporate and otherwise, to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby; (ii) the execution, delivery and performance of this
Agreement, the consummation by SWYC of the transactions herein contemplated and
the compliance by SWYC with the terms of this Agreement have been duly
authorized by all necessary corporate action; (iii) this Agreement is the valid
and binding obligation of SWYC enforceable in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of creditors
generally and the discretion of courts in granting equitable remedies; (iv) the
execution, delivery and performance of this Agreement by SWYC and the
consummation by SWYC of the transactions herein contemplated do not, and will
not, with or without the giving of notice or the lapse of time, or both, (A)
result in any violation of the Certificate of Incorporation or By-Laws of SWYC,
(B) result in a breach of, or a conflict with, any of the terms or provisions
of, or constitute a default under, or result in the modification or termination
of, or result in the creation or imposition of any lien, security interest,
charge or encumbrance upon any of the properties or assets of SWYC pursuant to,
any indenture, mortgage, note, contract, commitment or other agreement or
instrument to which SWYC is a party or by which it is, or any of its respective
properties or assets are, or may be, bound or affected. No consent, approval,
authorization or order of, or filing with, any court, governmental agency,
authority or body (other than as required pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder) or as otherwise provided in this Agreement) and/or any
party to an agreement to which SWYC is a party and/or by which it is bound is
required in connection with the execution, delivery and performance of this
Agreement and/or the consummation by SWYC of the transactions contemplated by
this Agreement.
(e) SWYC is not in violation of, or in default under, (i) any term or
provision of its Certificate of Incorporation or By-Laws; (ii) any material term
or provision of any financial covenant of any indenture, mortgage, contract,
commitment or other agreement or instrument to which it is a party or by which
it is, or any or its properties or assets are, or may be, bound or affected; or
(iii) any existing applicable law, rule, regulation, judgment, order or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over it or any of its properties or business, including, without limitation, all
reporting obligations pursuant to the Exchange Act and the rules and regulations
promulgated thereunder. SWYC owns, possesses or has obtained all governmental
and other licenses, permits, certifications, registration, approvals or consents
and other authorizations necessary to own or lease, as the case may be, and to
operate its properties and to conduct its business or operations as presently
conducted and all such governmental and other licenses, permits, certifications,
registrations, approvals, consents and other authorizations are outstanding and
in good standing and there are no proceedings pending or, to the best of its
knowledge, threatened or any basis therefor existing, seeking to cancel,
terminate or limit such licenses, permits, certifications, registrations,
approvals or consents or authorizations.
(f) Except as set forth in Schedule 7 (f), there are no claims, actions,
suits, proceedings, arbitrations, investigations or inquiries before any court
or governmental agency, court or tribunal, domestic or foreign, or before any
private arbitration tribunal, pending or, to the best of the knowledge of SWYC,
threatened against SWYC or involving its assets which, if determined adversely
to SWYC, would, individually or in the aggregate, result in a material adverse
change in the financial position, stockholders' equity, results of operations,
properties, business, management or affairs of SWYC, or which question the
validity of this Agreement or of any action taken, or to be taken, by SWYC
pursuant to, or in connection with, this Agreement; nor, to the best of the
knowledge of SWYC, is there any basis for any such claim, action, suit,
proceeding, arbitration, investigation or inquiry to be made by any person
and/or entity. There are no outstanding orders, judgments or decrees of any
court, governmental agency or other tribunal specifically naming SWYC and/or
enjoining SWYC from taking, or requiring SWYC to take, any action and/or by
which SWYC is, and/or its assets are, bound or subject.
(g) SWYC owns no trademarks, service marks, tradenames, copyrights, similar
rights and their registrations, trade secrets, methods, practices, systems,
ideas, know how and confidential materials (collectively the "SWYC Intangibles")
used or proposed to be used in the conduct of its business as intended to be
conducted as of the date hereof. All SWYC Intangibles related to its former
intended business of conducting on the Internet auctions between prospective
buyers and sellers have been disposed of and are no longer assets of SWYC, nor
does SWYC have any liabilities related thereto.
(h) SWYC is not aware of any material misstatements or omissions in any
periodic report previously filed by SWYC pursuant to Section 13 of the Exchange
Act or in any proxy or information material previously furnished to its
stockholders pursuant to Section 14 of the Exchange Act.
(i) SWYC has previously delivered to SkyWay a copy of the financial
statements as they were filed in; (a) SWYC's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 2002 accompanied by the audit report of
Seligson & Viannattasion, LLP, SWYC's independent auditors, with respect to such
financial statements and (b) SWYC's Quarterly Financial Report on Form 10-QSB
for the 1st quarter ended March 31, 2003 (the "SWYC Financial Statements"). The
SWYC Financial Statements are true and accurate, are in accordance with the
books and records of SWYC and present fairly in all material respects the
financial position and related results of operations of SWYC as of the times and
for the periods referred to herein, in each case in accordance with GAAP. All of
the financial books and records of SWYC have been made available to SkyWay, and
such books and records completely and fairly record in all material respects
SWYC's financial affairs which would normally be recorded in financial books and
records.
Except as set forth in Schedule 7 (k) and 7 (o), SWYC has no debt,
liabilities or obligations of any nature, whether accrued, absolute, contingent
or otherwise, whether due or to become due and whether or not the amount thereof
is readily ascertainable, that are not reflected as a liability in the SWYC
Financial Statements or except for liabilities incurred by SWYC in the ordinary
course of business since March 31, 2003 consistent with past practices which are
not otherwise prohibited by, or in violation of, or which will not result in a
breach of, the representations, warranties and covenants of SWYC contained in
this Agreement. There was no material loss contingencies (as such term is used
in FAS No. 5 issued by the FASB) which were not adequately provided for in the
SWYC Financial Statements as required by FAS No. 5.
(j) SWYC does not currently own, nor has it ever owned, any real property,
Schedule 7(j) hereto contains a list and a brief description of (i) all real
property leased by SWYC and (ii), with respect to each lease, the name of the
lessor, any requirement of consent of the lessor to assignment (including
assignment by way of merger or change in control) and the termination date of
the lease. SWYC has made available to SkyWay true and complete copies of all
leases, if any. SWYC owns and has good and marketable title to its assets,
properties and interests in properties which are reflected in the latest balance
sheet included in the SWYC Financial Statements, in all cases free and clear of
all liens, security interests, claims and encumbrances of every kind, nature and
description and rights and options of others except as expressly set forth in
such balance sheet.
(k) SWYC has not, except as set forth on Schedule 7(k) hereto or in the
SWYC Financial Statements, (i) incurred any obligation or liability (absolute or
contingent, secured or unsecured); (ii) cancelled, without payment in full, any
notes, loans or other obligations receivable or other debts or claims held by
it; (iii) sold, assigned, transferred, abandoned, mortgaged, pledged or
subjected to lien or security interest any of its material properties, tangible
or intangible, or rights under any contract, permit, license, franchise or other
agreement; (iv) entered into any line of business other than that previously
conducted by it prior to the date hereof or entered into any transaction not in
the ordinary course of its business; or (v) declared, made or paid, or set aside
for payment, any cash or non-cash dividends or other distribution on any shares
of its capital stock.
(l) Except as set forth in Schedule 7 (l) or in the SWYC Financial
Statements, SWYC is not in default, in any respect, under the terms of any
outstanding agreement which is material to the properties, assets or financial
condition of SWYC and there exists no event of default or event which, with
notice and/or the passage of time, or both, would constitute any such default.
(m) SWYC has filed all federal, state, municipal and local tax returns
(whether relating to income, sales, franchise, withholding, real or personal
property or otherwise) required to be filed under the laws of the United States
and all applicable states and has paid in full all taxes which are due pursuant
to such returns or claimed to be due by any taxing authority or otherwise due
and owing. No penalties or other charges are, or will become, due with respect
to the late filing of any such return. To the best of the knowledge of SWYC,
after due investigation, each such tax return heretofore filed by SWYC correctly
and accurately reflects the amount of its tax liability thereunder. SWYC has
withheld, collected and paid all other levies, assessments, license fees and
taxes to the extent required and, with respect to payments, to the extent that
the same have become due and payable.
(n) The authorized and outstanding capitalization of SWYC is as set forth
on Schedule 7(n) hereto. As of the date hereof and the Closing Date, there shall
not be authorized and/or issued and outstanding any shares of capital stock of
SWYC except as set forth on Schedule 7(n) or in the next sentence and there
shall not be outstanding any rights to purchase shares of capital stock of SWYC.
The issued and outstanding shares of the SWYC Common Stock have been duly
authorized and validly issued and the shares to be issued to Atlas will be duly
authorized and validly issued. All of the outstanding shares of the SWYC Common
Stock are fully paid and nonassessable. Except as set forth on Schedule 7(n),
there are no outstanding warrants, options, or similar rights to purchase or
convert into the SWYC Common Stock. There are no preemptive rights with respect
to the SWYC Common Stock. SWYC has no reason to believe that any holder of such
outstanding shares of the SWYC Common Stock is subject to personal liability
solely by reason of being such a holder. The offers and sales of such
outstanding shares of the SWYC Common Stock were, at all relevant times, exempt
from the registration or prospectus delivery requirements of the Securities Act
and any applicable state securities laws pursuant to an exemption for which SWYC
and/or such offering or sale fully qualified. No dividends, redemptions or other
distributions of the assets of SWYC have been, or will be, declared and/or
SkyWay prior to the Closing Date on or with respect to the SWYC Common Stock.
The shares of the SWYC Common Stock have been registered under Section 12(g) of
the Exchange Act.
(o) Except as set forth in Schedule 7 (k) and 7(o) hereto, or as set forth
in, or as contemplated by this Agreement, since March 31, 2003, there has not
been with respect to SWYC:
(i) Any loan to any person or entity and/or the issuance of any guaranty
for, or with respect to, its or another's obligations;
(ii) Any waiver or release of any material right or claim;
(iii) Any incurrence of any material obligation or liability, absolute or
contingent;
(iv) Any payment of any material obligation or liability, absolute or
contingent, except for current liabilities reflected in, or shown on, the most
recent balance sheet of SWYC and/or incurred subsequent to the date thereof in
the ordinary course of business and/or in connection with the transactions
contemplated by this Agreement; and
(v) Any material adverse change in the business, assets, properties,
liabilities, operations, results of operations, condition (financial or
otherwise) or affairs of SWYC;
(vi) Any damage, destruction or loss, whether or not covered by insurance,
having or which could reasonably be expected to have a material adverse effect
on SWYC;
(vii) (A) Any liability created, assumed, guaranteed or incurred, or (B) any
transaction, contract or commitment entered into, by SWYC, in the case of either
clause (A) or (B) other than in the ordinary course of business;
(viii) Any payment, discharge or satisfaction of any material encumbrance by
SWYC or any cancellation by SWYC of any material debts or claims or any
amendment, termination or waiver of any rights of material value to SWYC;
(ix) Any direct or indirect redemption, purchase or other acquisition of any
such shares of the capital stock of SWYC;
(x) any stock split, reverse stock split, combination, reclassification or
recapitalization of the SWYC Common Stock, or any issuance of any other security
in respect of, or in exchange for, any shares of the SWYC Common Stock;
(xi) Any issuance by SWYC of any shares of its capital stock or any debt
security or any subscription or similar right to acquire any shares of the
SWYC capital stock;
(xii) Any license, sale, transfer, pledge, mortgage or other disposition of
any material tangible or intangible asset (including any SWYC Intangibles) of
SWYC;
(xiii) Any termination of, or written indication of an intention to terminate
or not renew, any material contract, license, commitment or other agreement
between SWYC and any other person;
(xiv) Any material write-down or write-up of the value of any asset of SWYC,
or any material write-off of any accounts receivable or notes receivable of SWYC
or any portion thereof;
(xv) Any increase in, or modification of, compensation payable, or to become
payable to, any director, officer, employee, consultant or agent of SWYC, or the
entering into of any employment contract with any officer or employee;
(xvi) Any increase in, or modification or acceleration of, any benefits
payable or to become payable under any bonus, pension, severance, insurance or
other benefit plan, payment or arrangement (including, but not limited to, the
granting of stock options, restricted stock awards or stock appreciation rights)
made to, for or with any director, officer, employee, consultant or agent of
SWYC other than as described in Schedule 9(n) hereto;
(xvii) The making of any loan, advance or capital contribution to, or
investment in, any person or the engagement in any transaction with any
employee, officer, director or security holder of SWYC, other than advances to
employees in the ordinary course of business for travel and similar business
expenses;
(xviii) Any change in the accounting methods or practices followed by SWYC or
any change in depreciation or amortization policies or rates theretofore adopted;
(xix) Any termination of employment of any officer or key employee of SWYC or
any expression of intention by any officer or key employee of SWYC to resign
from such office or employment with SWYC;
(xx) Any amendments or changes in SWYC's Certificate of Incorporation or
By-Laws not relating to a change in name;
(xxi) Any agreement, understanding, authorization or proposal, whether in
writing or otherwise, for SWYC to take any of the actions described in this
Section 7(o).
(p) Subject to the restrictions set forth in Section 4(d) hereof and as
required by applicable law, at the Closing, all of the shares of the SWYC Common
Stock to be issued by SWYC pursuant to this Agreement shall be, and be deemed to
be, duly and validly authorized and, when issued to the SkyWay shareholders in
exchange for their shares of the SkyWay Common Stock, duly and validly issued,
fully paid and nonassessable and free and clear of all federal and state
issuance, stock and/or company taxes, liens, security interests, claims,
encumbrances and charges.
8. Acquisition Corp. Representations and Warranties. In order to induce
SkyWay to execute, and perform its obligations under, this Agreement,
Acquisition Corp. does hereby represent, warrant, covenant and agree (which
representations, warranties, covenants and agreements shall be, and be deemed to
be, continuing and survive the execution and delivery of this Agreement, the
Closing and the Effective Date) as follows:
(a) Acquisitio Corp. is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida, with full power and
authority, corporate and otherwise. Neither prior to the date hereof has
Acquisition Corp. engaged, nor prior to the Closing Date will Acquisition Corp.
engage, in any business activity of any kind, nature or description except in
connection with the implementation of the transactions herein described.
Acquisition Corp. has no subsidiaries, nor, at the present time is it, or at the
Closing will it be, a partner or joint venturer with any other person or entity.
Acquisition Corp. is a wholly-owned subsidiary of SWYC.
(b) (i) Acquisition Corp. has the full power and authority, corporate and
otherwise, to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby; (ii) the execution, delivery and performance
of this Agreement, the consummation by Acquisition Corp. of the transactions
herein contemplated and the compliance by Acquisition Corp. with the terms of
this Agreement have been duly authorized by Acquisition Corp.; (iii) this
Agreement is the valid and binding obligation of Acquisition Corp., enforceable
in accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally and the discretion of courts in
granting equitable remedies; (iv) the execution, delivery and performance of
this Agreement by Acquisition Corp. and the consummation by Acquisition Corp. of
the transactions herein contemplated do not, and will not, with or without the
giving of notice or the lapse of time, or both, (A) result in any violation of
the Certificate of Incorporation or By-Laws of Acquisition Corp., (B) result in
a breach of, or a conflict with, any of the terms or provisions of, or
constitute a default under, or result in the modification or termination of, or
result in the creation or imposition of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Acquisition Corp. pursuant
to, any indenture, mortgage, note, contract, commitment or other agreement or
instrument to which Acquisition Corp. is a party or by which it is, or any of
its properties or assets are, or may be, bound or affected; or (C) to the best
knowledge of Acquisition Corp., after due investigation, violate any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over Acquisition Corp.
or its assets. Except as otherwise required by the FGCL, no consent, approval,
authorization or order of any court, governmental agency, authority or body, is
required in connection with the execution, delivery and performance of this
Agreement, and/or the consummation by Acquisition Corp. of the transactions
contemplated by this Agreement.
(c) Acquisition Corp. is not in violation of, or in default under, (i) any
term or provision of its Certificate of Incorporation or By-Laws; (ii) any
material term or provision of any financial covenant of any indenture, mortgage,
contract, commitment or other agreement or instrument to which it is a party or
by which it or any or its properties is, or may be, bound or affected; or (iii)
any existing applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over it
or any of its assets.
(d) Acquisition Corp. was incorporated on May 19, 2003, has no assets and
has incurred no liabilities other than its incorporation costs. Prior to the
date hereof, Acquisition Corp. has conducted no business operations and, prior
to the Effective Date, its sole activities will be in connection with the
transactions contemplated by this Agreement.
(e) There are no claims, actions, suits, proceedings, arbitrations,
investigations or inquiries before any court or governmental agency, court or
tribunal, domestic, or foreign, or before any private arbitration tribunal,
pending or, to the best of the knowledge of Acquisition Corp., threatened
against Acquisition Corp. or involving its assets which, if determined adversely
to Acquisition Corp., would, individually or in the aggregate, result in a
material adverse change in the financial position, shareholders' equity, results
of operations, properties, business, management or affairs of Acquisition Corp.,
or which question the validity of this Agreement or of any action taken or to be
taken by Acquisition Corp. pursuant to, or in connection with, this Agreement;
nor, to the best of the knowledge of Acquisition Corp., is there any basis for
any such claim, action, suit, proceeding, arbitration, investigation or inquiry
to be made by any person and/or entity. There are no outstanding orders,
judgments or decrees of any court, governmental agency or other tribunal
specifically naming Acquisition Corp. and/or enjoining Acquisition Corp. from
taking, or requiring Acquisition Corp. to take, any action, and/or by which
Acquisition Corp. is, and/or its assets are, bound or subject.
9. SkyWay Covenants. SkyWay shall, during the period commencing on the
date hereof and terminating immediately following the close of business on the
Effective Date (or earlier, upon the failure or refusal of the SkyWay
shareholders or the SWYC stockholders to approve this Agreement and/or the
termination of this Agreement as hereinafter provided):
(a) Take and perform any and all actions necessary to render accurate,
and/or maintain the accuracy of, all of the representations and warranties of
SkyWay herein contained and/or satisfy each covenant or condition required to be
performed or satisfied by SkyWay at or prior to the Closing and/or to cause or
permit the implementation of the Merger;
(b) Not take or perform any action which would or might cause any
representation or warranty made by SkyWay herein to be rendered inaccurate, in
whole or in part, and/or which would prevent, inhibit or preclude the
satisfaction, in whole or in part, of any covenant required to be performed or
satisfied by SkyWay at or prior to the Closing and/or the implementation of the
Merger;
(c) Carry on and maintain its business in substantially the same form,
style and manner as heretofore operated by it; perform, in all material
respects, all of its respective obligations under all material agreements,
leases and documents relating to or affecting its respective assets, properties
and businesses; and use its best efforts to preserve intact its business
organization and the good will and relationships with its suppliers, customers
and others having business relations with it;
(d) Obtain pursuant to the NRS the required shareholder consent to approve
the merger of Acquisition Corp. into SkyWay and give notice to the
non-consenting shareholders in accordance with the NRS, if applicable.
(e) Immediately advise SWYC of any event, condition or occurrence which
constitutes, or may, with the passage of time and/or giving of notice,
constitute, a breach of any representation or warranty of SkyWay herein
contained and/or which prevents, inhibits or limits or may prevent, inhibit or
limit SkyWay from satisfying, in full and on a timely basis, any covenant, term
or condition herein contained and/or implementing this Agreement.
(f) (i) amend and restate the license agreement (the "Global/Aircraft
License Agreement") between Sky Way Global and SkyWay and (iii) execute a new
license agreement (the "New License Agreement") Sky Way Global and SkyWay in
form and substance substantially similar to the license agreement attached
hereto as Exhibit C.
(g) Execute an employment contract with assignment of patents and
inventions provisions between SkyWay Principal Shareholder and SkyWay in form
and substance substantially similar to the employment contract agreements
attached hereto as Exhibit D and execute an employment contract with assignment
of patents and inventions provisions between James Kent and SkyWay in form and
substance substantially similar to the employment contract E respectively
(collectively the "Employment Contracts").
10. SWYC Covenants. SWYC shall, during the period commencing on the date
hereof and terminating immediately following the close of business on the
Effective Date (or earlier, upon the failure or refusal of the SkyWay
shareholders or the SWYC stockholders to approve this Agreement and/or the
termination of this Agreement as hereinafter provided):
(a) Take and perform any and all actions necessary to render accurate,
and/or maintain the accuracy of, all of the representations and warranties of
SWYC herein contained and/or satisfy each covenant or condition required to be
performed or satisfied by SWYC at or prior to the Closing and/or to cause or
permit the implementation of the Merger;
(b) Not take or perform any action which would or might cause any
representation or warranty made by SWYC herein to be rendered inaccurate, in
whole or in part, and/or which would prevent, inhibit or preclude the
satisfaction, in whole or in part, of any covenant required to be performed or
satisfied by SWYC at or prior to the Closing and/or the implementation of the
Merger;
(c) Perform, in all material respects, all of its obligations under all
material agreements, leases and documents relating to or affecting its assets or
properties;
(d) Not make any announcement to the public in general and/or within its
industry and/or otherwise with respect to this Agreement, the Merger and the
current or future business or operations of any party hereto without the prior
written consent of SkyWay or, in the case of an announcement required by
applicable securities laws, prior consultation with SkyWay;
(e) Immediately advise SkyWay of any event, condition or occurrence which
constitutes, or may, with the passage of time and/or giving of notice,
constitute, a breach of any representation or warranty of SWYC herein contained
and/or which prevents, inhibits or limits or may prevent, inhibit or limit SWYC
from satisfying, in full and on a timely basis, any covenant, term or condition
herein contained and/or implementing this Agreement;
(f) Authorize and file the Certificate of Designations for the Series A
Preferred and Series B Preferred.
11. SWYC and Acquisition Corp. Conditions Precedent. The obligations of
SWYC and Acquisition Corp. to implement this Agreement and consummate the Merger
are, at their respective elections, subject to, and conditioned upon, the SWYC
satisfaction (and/or waiver) of each of the following conditions:
(a) The conversion (the "Conversion") of Sky Way Global Interests into
SkyWay common stock shall have taken place.
(b) There shall be no more than 10,000,000 shares of Common Stock
outstanding in SkyWay.
(c) Prior to the Closing Date, the holders of more than 50% of the
outstanding shares of the SkyWay Common Stock and SkyWay Preferred Stock shall
have consented to this Agreement and the Merger in accordance with the NRS.
(d) The Global/Aircraft License Agreement has been amended and restated and
a New License Agreement has been executed and is in full force and effect.
(e) The representations and warranties of SkyWay contained in this
Agreement shall be true and correct in all material respects as of the Effective
Date with the same effect as if made on and as of the Effective Date and SkyWay
shall have performed in all material respects all of its covenants and
obligations contemplated hereunder to be performed on or prior to the Effective
Date. At the Closing, SWYC shall have received a certificate, executed by the
Chief Executive Officer and the Secretary of SkyWay (effective as of the Closing
and the Effective Date) and in form reasonably acceptable to SWYC, certifying as
of both the date of this Agreement and the Closing Date, the truth and accuracy
of (and the remaking of) the representations and warranties of SkyWay herein
contained, including, without limitation, those set forth in Section 6 hereof.
(f) Prior to the Closing, there shall not have occurred any material
adverse change in the financial condition, business or operations of SkyWay, nor
shall any event have occurred or condition exist which, with the passage of time
or the giving of notice, or both, may cause or create any such adverse material
change.
(g) Prior to the Closing, all corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be in form and content
reasonably satisfactory to SWYC and its counsel and SWYC and its counsel shall
have received all counterpart originals or certified or other copies of such
documents and instruments as they may reasonably request.
(h) No action or proceeding shall have been instituted and be pending by
any private party and/or governmental agency or authority challenging the
legality of this Agreement or the Merger and/or seeking to prevent or delay
consummation of the transactions herein contemplated, which action or proceeding
shall have resulted in an order granting preliminary or permanent injunctive
relief prohibiting consummation of this Agreement and/or the Merger and which
order shall not have been vacated as of the Closing.
(i) the Employment Contracts have been executed.
(j) All statutory requirements for the valid consummation by SkyWay of the
transactions herein described shall have been fully and timely satisfied; all
authorizations, consents and approvals of all federal, state and local
governmental agencies and authorities required to be obtained in order to permit
consummation by SkyWay of the transactions herein described and/or to permit the
businesses currently carried on by SkyWay to continue unimpaired in all material
respects immediately following the Effective Date shall have been obtained and
shall be in full force and effect; and no action or proceeding to suspend,
revoke, cancel, terminate, modify or alter any of such authorizations, consents
or approvals shall be pending or threatened.
(k) All schedules, exhibits, and other matters contemplated to be
undertaken following the execution of this Agreement shall have been completed
and attached hereto.
12. SkyWay Conditions Precedent. The obligation of SkyWay to implement this
Agreement and to consummate the Merger is, at its election, subject to, and
conditioned upon, the satisfaction (and/or waiver) of each of the following
conditions:
(a) Prior to the Closing Date, the holders of more than 50% of the
outstanding shares of the SkyWay Common Stock shall have consented to this
Agreement and the Merger in accordance with the NRS.
(b) the Certificate of Designations for the Series A Preferred and Series B
Preferred have been filed and authorized.
(c) The representations and warranties of SWYC and Acquisition Corp.
contained in this Agreement shall be true and correct in all material respects
as of the Effective Date with the same effect as if made on and as of the
Effective Date. At the Closing, SkyWay shall have received a certificate,
executed by the President and the Secretary of SWYC and Acquisition Corp.
(effective as of the Closing and the Effective Date) and in form and content
reasonably acceptable to SkyWay, certifying, as to both the date of this
Agreement and the Closing Date the truth and accuracy of (and the remaking of)
the representations and warranties of SWYC and Acquisition Corp. herein
contained, including, without limitation, those set forth in Sections 7 and 8
hereof.
(d) Prior to the Closing, all corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be in form and content
reasonably satisfactory to SkyWay and its counsel and SkyWay and its counsel
shall have received all counterpart originals or certified or other copies of
such documents and instruments as they may reasonably request.
(e) No action or proceeding shall have been instituted and be pending by
any private party and/or governmental agency or authority challenging the
legality of this Agreement or the Merger and/or seeking to prevent or delay
consummation of the transactions herein contemplated, which action or proceeding
shall have resulted in an order granting preliminary or permanent injunctive
relief prohibiting consummation of this Agreement and/or the Merger and which
order shall not have been vacated as of the Closing.
(f) All statutory requirements for the valid consummation by SWYC of the
transactions herein described shall have been fully and timely satisfied; all
authorizations, consents and approvals of all federal, state and local
governmental agencies and authorities required to be obtained in order to permit
consummation by SWYC of the transactions herein described shall have been
obtained and shall be in full force and effect; and no action or proceeding to
suspend, revoke, cancel, terminate, modify or alter any of such authorizations,
consents or approvals shall be pending or threatened.
(g) All schedules, exhibits, and other matters contemplated to be
undertaken following the execution of this Agreement shall have been completed
and attached hereto.
13. Indemnification
(a) SWYC and the SWYC Principal Shareholder, jointly and severally, agree
to indemnify and hold harmless SkyWay and its successors and assigns (the
"SkyWay Indemnitees") against and in respect of any and all claims, suits,
actions, proceedings (formal and informal), investigations, judgments,
deficiencies, damages, settlements, liabilities, losses, costs and legal and
other expenses arising out of or based upon any breach of any representation or
warranty, covenant or agreement of SWYC contained in this Agreement or in any
other agreement executed and delivered hereunder or in connection herewith
(referred to as "SkyWay Losses").
(b) Indemnity by SkyWay and SkyWay Principal Shareholder. SkyWay and SkyWay
Principal Shareholder jointly and severally, agree to indemnify and hold
harmless SWYC its respective successors and assigns, shareholders, employees,
(the "SWYC Indemnitees") against and in respect of any and all claims, suits,
actions, proceedings (formal and informal), investigations, judgments,
deficiencies, damages, settlements, liabilities, losses, costs and legal and
other expenses arising out of or based upon any breach of any representation,
warranty, covenant or agreement of SkyWay contained in this Agreement, or in any
other agreement executed and delivered by SkyWay (referred to as the "SWYC
Losses").
(c) Defense of Claims. Any SkyWay Indemnitee or SWYC Indemnitee (the
"Indemnified Party") seeking indemnification under this Agreement shall give to
the party obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") a notice (a "Claim Notice") describing in reasonable detail the
facts giving rise to any claim for indemnification hereunder promptly upon
learning of the existence of such claim. Upon receipt by the Indemnitor of a
Claim Notice from an Indemnified Party with respect to any claim of a third
party, such Indemnitor may assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party and, in such event, shall agree to pay and
otherwise discharge with the Indemnitor's own assets all judgments,
deficiencies, damages, settlements, liabilities, losses, costs and legal and
other expenses related thereto; and the Indemnified Party shall cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony and attend all such conferences, discovery proceedings, hearings,
trials and appeals as may be reasonably requested in connection therewith. If
the Indemnitor does not assume the defense thereof within ten days of its
receipt of the Claim Notice, the Indemnitor shall similarly cooperate with the
Indemnified Party in such defense or prosecution. The Indemnified Party shall
have the right to participate in the defense or prosecution of any lawsuit with
respect to which the Indemnitor has assumed the defense and to employ its own
counsel therein, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Party unless (i) the Indemnitor shall not have
promptly employed counsel reasonably satisfactory to such Indemnified Party to
take charge of the defense of such action, (ii) such Indemnified Party shall
have reasonably concluded that there exists a significant conflict of interest
with respect to the conduct of such Indemnified Party's defense by the
Indemnitor, or (iii) the Indemnitor fails to provide reasonable insurance to the
Indemnified Party of its financial capacity to defend such action and provide
indemnification with respect to such action, in any of which events such
reasonable fees and expenses shall be borne by the Indemnitor and the Indemnitor
shall not have the right to direct the defense of any such action on behalf of
the Indemnified Party. The Indemnitor shall have the right, in its sole
discretion, to settle any claim (a) which is solely for monetary damages for
which indemnification has been sought and is available hereunder, and (b) where
there is no finding or admission of any violation of any legal requirements or
any violation of the rights of any Person and no effect on any other claims that
may be made against the indemnified party, provided that the Indemnitor shall
not agree to the settlement of any claim which constitutes the subject of a
Claim Notice which settlement in the reasonable opinion of the Indemnified Party
would have a material adverse continuing effect on the business of the
Indemnified Party without the prior written consent of the Indemnified Party.
The Indemnified Party shall give written notice to the Indemnitor of any
proposed settlement of any suit, which settlement the Indemnitor may, if it
shall have assumed the defense of the suit, reject in its reasonable judgment
within 10 days of receipt of such notice. Notwithstanding the foregoing the
Indemnified Party shall have the right to pay or settle any suit for which
indemnification has been sought and is available hereunder, provided that, if
the defense of such claim shall have been assumed by the Indemnitor, the
Indemnified Party shall automatically be deemed to have waived any right to
indemnification hereunder.
14. Termination.
(a) This Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Date, whether before or after submission to, or approval
by, the SkyWay shareholders as herein provided either: (a) by mutual agreement
of the Boards of Directors of SkyWay and SWYC; or (b) by the Board of Directors
of either SkyWay or SWYC if either (i) the Closing shall not have taken place on
or prior to June 30, 2003, or such later date as is mutually agreed (other than
by reason of the default hereunder by the terminating party) or (ii) there is
any statute, rule or regulation which makes consummation of the Merger illegal
or otherwise prohibited or any order, decree, injunction or judgment enjoining
SWYC, SkyWay or Acquisition Corp. from consummating the Merger is issued by a
court of competent jurisdiction and such order, decree, injunction or judgment
has become final and non-appealable.
(b) If SkyWay terminates this Agreement if any reason whatsoever, SkyWay
will be obligated to pay SWYC Five Hundred Thousand ($500,000.00) Dollars;
provided however, if SkyWay terminates the Agreement due to a breach of a SWYC
representation or warranty set forth in Section 7, due to a breach of an
Acquisition Corp. representation or warranty set forth in Section 8, or due to
the failure of SWYC to fulfill its covenants set forth in Section 10, then
SkyWay's obligations with respect to this Section 14 (b) herein shall terminate.
(c) In the event of the termination of this Agreement as provided in
subsection (a) of this Section 14, all of the obligations and liabilities of the
parties under this Agreement shall terminates; provided, however, that nothing
in this Section 14 shall relieve any party from any liability for any breach of
this Agreement.
15. Brokers and Finders. Except as set forth in Schedule 15, the parties
have not employed any broker, financial advisor or finder or incurred any
liability for any broker, financial advisory or finders' fees in connection with
this Agreement or the transactions contemplated hereby.
16. Costs and Expenses. Each party shall pay their own costs and expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the costs and expenses relating to the preparation of this
Agreement, such as attorneys' fees, accounting fees, printing expenses and
consent solicitation expenses.
17. Notices. Any and all notices, requests or instructions desired to be
given by any party hereto to any other party hereto shall be in writing and
shall be either be hand delivered, delivered by express courier or mailed to the
recipient first class, postage prepaid, certified, return receipt requested at
the following respective addresses:
To: SkyWay:
Sky Way Aircraft, Inc.
6021 -142nd Avenue North
Clearwater, Fl.33760
Attn: Jim Kent, Chief Executive Officer
With a copy to:
Michael T. Williams, Esq.
Williams Law Group, P.A.
2503 W. Gardner Ct.
Tampa, Fl.33611
To: SWYC or Acquisition Corp.
1680 Michigan Avenue, Suite 1000
Miami, Florida33139
Attn: Jamee Kalimi, President
With a copy to:
Anslow & Jaclyn, LLP
4400 Route 9 South, 2nd Floor
Freehold, New Jersey07728
Attn: Gregg E. Jaclin, Esq.
or to such other address as any party hereto shall designate in a writing
omplying with the provisions of this Section 17.
18. Waiver. Each of the parties hereto may, by written instrument, (a)
extend the time for the performance of any of the obligations or other acts of
any other party hereto; (b) waive any inaccuracies of such other party in the
representations and warranties contained herein or in any document delivered
pursuant to this Agreement; (c) waive compliance with any of the covenants of
such other party contained in this Agreement; (d) waive such other party's
performance of any of such other party's obligations set out in this Agreement;
and (e) waive any condition to such other party's obligation to effect the
Merger.
19. Amendments. This Agreement may be amended at any time prior to the
Effective Date (whether before or after the consent of shareholders of SkyWay as
herein provided) by a writing executed by an authorized officer of SWYC, SkyWay
and Acquisition Corp. (upon due authorization by their respective Boards of
Directors); provided, however, that in no event may the provisions of Section 4
hereof be altered, amended, modified, terminated or rescinded without the
approval of the SkyWay shareholders as required by the NRS.
20. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts
executed and to be fully performed therein and without regard to any principles
of conflicts of laws. Any action or proceeding seeking to enforce any provision
of, or based on any right arising out of, this Agreement shall only be brought
against any of the parties in the state or federal courts of the State and
County of New York and each of the parties hereby consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein. The
parties hereto each waive any claim that such jurisdiction is not a convenient
forum for any such action; provided, however, that each party reserves the right
to seek to remove the action or proceeding from the state court to the federal
court in such jurisdiction or vice versa.
21. Effectiveness. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and any controlling person of any party hereof
as provided in Section 15 of the Securities Act and their respective successors,
transferees, heirs, assigns and beneficiaries.
22. Counterparts. This Agreement may be executed in multiple copies, each
of which shall constitute an original, but all of which shall constitute one and
the same agreement.
23. Partial Invalidity. If any term, covenant or condition in this
Agreement, or the application thereof to any person or circumstance, shall be
invalid or unenforceable, the remainder of this Agreement or the application of
such term, covenant or condition to persons or circumstances, other than those
as to which it is held invalid, shall be unaffected thereby and each term,
covenant or condition of this Agreement shall be enforced to fullest extent
permitted by law.
24. Integration. This Agreement (including the Schedules hereto, the
documents and instruments delivered by the parties hereto and any other
documents executed and delivered and/or to be executed and delivered pursuant to
the provisions of this Agreement as herein provided) sets forth the entire
agreement among the parties hereto with respect to the subject matter herein
contained. There are no covenants, promises, agreements, conditions or
understandings, either oral or written, between or among the parties hereto with
respect to the subject matter hereof except as herein and in such ancillary
documents provided. This Agreement can only be altered, amended, modified,
terminated or rescinded by a writing executed by the party to be charged.
[rest of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Merger as of the date first above written.
SKY WAY COMMUNICATIONS HOLDING, CORP.
By: /s/ Jamee Kalimi, PresidentJamee Kalimi, PresidentSWYC ACQUISITION CORPORATION
By: /s/ Jamee Kalimi, PresidentJamee Kalimi, President /s/ Michael Farkas
Michael D. Farkas
SKY WAY AIRCRAFT, INC.
By: /s/ Jim KentJim Kent, Chief Executive Officer
/s/ Brent KovarBrent KovarLIST OF EXHIBITS AND SCHEDULES
EXHIBITS
EXHIBIT A Certificate of Designation for Series B Preferred
EXHIBIT B Certificate of Designation for Series A Preferred
EXHIBIT C New License Agreement
EXHIBIT D Employment Contract-Brent Kovar
EXHIBIT E Employment Contract-James KentSCHEDULES
SCHEDULE 4(b) Options and Warrants of SkyWay
SCHEDULE 6(b) Qualifications to do business of SkyWay
SCHEDULE 6(e) Government Permits and Licenses
SCHEDULE 6(f) Claims or Contingencies of SkyWay
SCHEDULE 6(g) SkyWay Intangibles
SCHEDULE 6(i) Real Property/Leases of SkyWay
SCHEDULE 6(j) Obligations or Contingencies of SkyWay
SCHEDULE 6(m) Capitalization of SkyWay
SCHEDULE 6(n) Subsequent Events of SkyWay
SCHEDULE 7 (f) Claims or Contingencies of SWYC
SCHEDULE 7(j) Real Property/Leases of SWYC
SCHEDULE 7(k) Obligations and Liabilities of SWYC
SCHEDULE 7(l) Default of SWYC
SCHEDULE 7(n) Capitalization of SWYC
SCHEDULE 7(o) Subsequent Events of SWYC
SCHEDULE 15 Other Agreements for Share Issuance
EXHIBIT A
CERTIFICATE OF DESIGNATION OF SERIES B CONVERTIBLE PREFERRED STOCK
1. Definitions. For purposes of this certificate of designation
("Certificate of Designation") of the Series B Convertible Preferred Stock
("Series A Preferred Stock"), par value $.0001 per share, the following
definitions shall apply and shall be equally applicable to both the singular and
plural forms of the defined terms:
1.1. "Affiliate" of any Person shall mean any Person who directly or
indirectly controls, is controlled by, or is under common control with, the
indicated Person. For the purposes of this definition, "control" has the meaning
specified as of the date hereof for that word in Rule 405 promulgated by the
United States Securities and Exchange Commission under the Securities Act of
1933, as amended.
1.2. "Board" shall mean the Board of Directors of the Corporation.
1.3. "Conversion Rights" shall have the meaning set forth in Section 5 below
1.4. "Conversion Stock" shall mean the Common Stock into which the Series B
Preferred Stock is convertible and the Common Stock issued upon such conversion.
1.5. "Corporation" shall mean SkyWay Communications Holding Corp., a Florida
corporation.
1.6. "Launch" shall mean each of the following events have occurred: (i) the
execution of definitive agreements with three (3) nationally recognized airlines
to provide its Products and Services; (ii) to have an operational network
capable of providing its Products and Services throughout the United States; and
(iii) an operational ground base data center.
1.7. "Person" shall include all natural persons, corporations, business
trusts, associations, limited liability companies, partnerships, joint ventures
and other entities, governments, agencies and political subdivisions.
1.8. "Product and Services" shall mean each of the following: (i) a homeland
defense security product which provides real time monitoring of (x) airplane
systems (mechanical or otherwise), (y) cockpit recordings and other recording
traditionally found on the "black box," and (z) the cabin and cockpit areas via
16 cameras; and (ii) in-flight entertainment product which would provide,
amongst others, in flight phone and Wi-Fi service that utilizes the
Corporation's Technology.
1.9. "Qualified Public Offering" shall mean the first public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offering and sale of Common Stock for the account
of the Corporation in which the aggregate gross proceeds received by the
Corporation equals or exceeds $25 million before deduction of underwriters'
commissions and expenses and the public offering price equals or exceeds $4.00
per share of Common Stock (subject to appropriate adjustment to reflect stock
splits, stock dividends, reorganizations, and all other capitalization changes
contemplated in Sections 5.4).
1.10. "Redemption Date" shall have the meaning set forth in Section 4.3 below.
1.11. "Redemption Notice" shall have the meaning set forth in Section 4.3 below.
1.12. "Redemption Price" shall have the meaning set forth in Section 4.2 below.
1.13. "Series B Conversion Rate" shall have the meaning set forth in Section 5.1 below.
1.14. "Stated Value" shall mean $15,000,000, subject to appropriate
adjustment to reflect stock splits, stock dividends, stock combinations,
recapitalizations, and like occurrences and dividends and other distributions on
such stock payable in shares of Series B Preferred Stock or Common Stock).
1.15. "Technology" certain voice and data transmission technology known and
referred to as High Intensity Transfer Technology, also known as HITTS that is
set forth in the specification of United States patent application number
09/592,687, filed June 13, 2000, and entitled "Digital data transmission
utilizing vector coordinates within a hyperbola model."2. General. In addition to the other rights provided in this Resolution,
by agreement or by law, the holders of the Series B Preferred Stock, the Series
A Preferred Stock, and the holders of the Common Stock shall vote together as a
single class on all actions to be taken by the shareholders of the Corporation.
At all meetings of the shareholders of the Corporation and in the case of any
actions of shareholders in lieu of a meeting, each holder of the Series B
Preferred Stock shall have that number of votes on all matters submitted to the
shareholders that is equal to the number of shares of Common Stock (rounded to
the nearest whole number) into which such holder's shares of Series B Preferred
Stock are then convertible, as provided in Section 5, at the record date for the
determination of the shareholders entitled to vote on such matters or, if no
such record date is established, at the date such vote is taken or any written
consent of such shareholders is effected.
2.1. Election of Directors.
A. Allocation of Board Seats; Elections.
(i) So long as at least 800,000 shares of Series B Preferred Stock are
outstanding (appropriately adjusted to reflect stock splits, stock dividends,
reorganizations and capitalization changes), the Corporation shall not, without
the affirmative vote of the holders of at least sixty-six percent (66%) of the
then outstanding shares of Series B Preferred Stock, increase the maximum number
of directors constituting the Board to a number other than seven (7) or
otherwise alter the Board seat allocation set forth below in this Section 2.2.
B. Quorums. At any meeting held for the purpose of electing directors,
the presence in person or by proxy of the holders of a majority of the aggregate
number of shares of the Series B Preferred Stock then outstanding (on an
as-if-converted to Common Stock basis), the Series A Preferred Stock and the
Common Stock then outstanding shall constitute a quorum for the election of the
Directors.
C. Vacancies. A vacancy in any directorship elected by the holders of the
Series B Preferred Stock, Series A Preferred Stock and Common Stock voting
together as a single class shall be filled only by the holders of the Series B
Preferred Stock, Series A Preferred Stock and Common Stock voting together as a
single class.
2.2. Additional Class Votes by the Series B Preferred Stock. For so long as
at least shares of Series B Preferred Stock remain outstanding (appropriately
adjusted to reflect stock splits, stock dividends, reorganizations and
capitalization changes), the Corporation shall not, without the affirmative vote
of holders of at least sixty-six percent (66%) of the then outstanding shares of
Series B Preferred Stock (voting as a separate class), do any of the following:
A. take any action that constitutes or results in amendment or waiver of
any provision of the Corporation's Articles of Incorporation or Bylaws if such
amendment or waiver in any way affects, alters or changes any existing rights,
preferences, privileges or provisions relating to the Series B Preferred Stock
or the holders thereof, or results in any increase or decrease in the authorized
number of shares of Series B Preferred Stock; or
B. increase or decrease the authorized number of shares of Series B
preferred Stock.
3. No Liquidation Rights.
3.1. The holders of the Series B Preferred Stock then outstanding shall not
be entitled to receive any assets of the Corporation available for distribution
to its shareholders, whether such assets are capital, surplus, or earnings,
before any payment, declaration, or setting apart for payment of any amount
shall be made in respect of the Common Stock, upon any liquidation, dissolution,
or winding up of the Corporation.
3.2. Reorganization; Sale of Assets. The following transactions shall each
be deemed to be a liquidation, dissolution or winding up of the Corporation
within the meaning of the provisions of this Section 3, and all of the
provisions of this Section 3 shall apply to any such transaction(s): (i) the
merger, acquisition, or consolidation of the Corporation into or with any other
entity or entities in which the Corporation is not the surviving entity or which
results in the exchange of outstanding shares of capital stock of the
Corporation for securities or other consideration issued or paid or caused to be
issued or paid by any such entity or Affiliate thereof pursuant to which the
shareholders of the Corporation immediately prior to the transaction do not own
a majority of the outstanding shares of capital stock of the surviving
corporation immediately after the transaction, (ii) the effectuation by the
Corporation of a transaction or series of related transactions in which 50% or
more of the voting power of the Corporation is disposed of, and (iii) any sale,
lease, license (on an exclusive basis) or transfer by the Corporation of all or
substantially all its assets. In connection therewith, the consideration to be
received by shareholders of the Corporation shall be apportioned as though first
received by the Corporation and then distributed in liquidation thereof.
4. Redemption Rights.
4.1. Scheduled Redemptions. The Corporation may, but is not obligated to,
redeem all shares of then outstanding Series A Preferred Stock within the one
year anniversary of the issuance date. Any holder of shares of Series B
Preferred Stock may, in its sole discretion, (a) accept or reject any redemption
offer, provided however, in the event that the holder of a Series B Preferred
Stock rejects the redemption offer, such holder must convert their Series B
Preferred Stock into Common Stock at the Conversion Rate set forth below.
4.2. Price. The redemption price (the "Redemption Price") of the Series B
Preferred Stock shall be an amount per share equal to the Stated Value per
share, plus one percent (5%).
4.3. Redemption Notice. If the Corporation elects to redeem the shares of
Series B Preferred Stock, then the Corporation shall, not less than fifteen (15)
days or more than sixty (60) days prior to the date fixed for redemption
("Redemption Date"), mail written notice ("Redemption Notice"), postage prepaid,
to each holder of shares of record of Series B Preferred Stock to be redeemed,
at such holder's post office address last shown on the records of the
Corporation. The Redemption Notice shall:
A. state the total number of shares of Series B Preferred Stock which the
Corporation is offering to redeem;
B. state the number of shares of Series B Preferred Stock held by the
holder which the Corporation is offering to redeem;
C. confirm the Redemption Date and Redemption Price; and
D. state the time, place and manner in which the holder may elect to
surrender to the Corporation the certificate or certificates representing the
shares of Series B Preferred Stock to be redeemed.
4.4. Surrender of Stock. On or before the Redemption Date, each holder of
Series B Preferred Stock electing to be redeemed shall surrender the certificate
or certificates representing such shares to the Corporation, in the manner and
at the place designated in the Redemption Notice, and thereupon the Redemption
Price for such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled and retired.
4.5. Termination of Rights. If the Redemption Notice is duly given, and if,
on or prior to the Redemption Date, a holder of the Series B Preferred Stock
elects to have her, his or its shares redeemed and the Redemption Price is
either paid or made available for payment, then notwithstanding that the
certificates evidencing any of the shares of Series B Preferred Stock so called
for redemption have not been surrendered, all rights with respect to such shares
shall forthwith after the Redemption Date cease except only (i) the right of the
holders to receive the Redemption Price without interest upon surrender of their
certificates therefor, or (ii) the right to receive Common Stock upon exercise
of the conversion rights as provided in Section 5 hereof on or prior to the
Redemption Date.
4.6. No Redemption. The shares of Series B Preferred Stock shall not be
redeemable under any circumstances whatsoever, except as provided in this
Section 4 or to the extent otherwise agreed to in writing by the Corporation and
the holders of any such shares.
4.7. Adjustment for Certain Dividends and Distributions. If theCorporation,
at any time or from time to time, makes or issues or fixes a record date for the
determination of holders of shares of the Series B Preferred Stock entitled to
receive a dividend or other distribution payable in additional shares of such
Series B Preferred Stock, then and in each such event the Redemption Price for
the Series B Preferred Stock then in effect shall be decreased as of the time of
such issuances or, in the event such record date is fixed, as of the close of
business on such record date, by multiplying the Redemption Price for the Series
B Preferred Stock then in effect by a fraction (a) the numerator of which is the
total number of shares of Series B Preferred 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 the Series B Preferred 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 Series B Preferred Stock issuable in payment of such
dividend or distribution; provided, however, that if such record date is fixed
and such dividend is not fully paid or if such distribution is not fully made on
the date fixed therefor, the Redemption Price for the Series B Preferred Stock
shall be recomputed accordingly as of the close of business on such record date
and thereafter the Redemption Price for the Series B Preferred Stock shall be
adjusted pursuant to this Section 4.7 as of the time of actual payment of such
dividends or distributions.
5. Automatic Conversion. The holders of the Series B Preferred Stock shall
have the following conversion rights (the "Conversion Rights"):
5.1. Automatic Conversion of the Series B Preferred Stock. If, from the
issuance date to the third year anniversary of the issuance date (the
"Conversion Period"), (a) the Corporation shall complete a Qualified Public
Offering, (b) during any period of thirty (30) consecutive trading days, the
average closing price per share of the Common Stock, as reported on a national
securities exchange, the NASDAQ NMS or Small Cap Market, or the OTC Bulletin
Board, equals or exceeds $4.00 (subject to appropriate adjustment to reflect
stock splits, stock dividends, reorganizations and other capitalization changes,
and all other events contemplated in Sections 5.6), (c) the Corporation shall
Launch (as defined herein) its Product and Services (as defined herein)
(collectively subsections (a), (b) and (c) are referred to herein as a
"Triggering Event"), or (d) the Corporation shall agree to sell (the "Sale") the
Corporation or its assets, or parts thereof, for more than $75 million, then
effective upon and subject to (x) the closing of the sale of such shares by the
Corporation pursuant to such Qualified Public Offering, (y) the expiration of
such thirty (30) consecutive trading days, (z) the Launch, or (zz) the Sale, as
the case may be, each outstanding share of Series B Preferred Stock shall
automatically convert into 200 fully paid and nonassessable shares of Common
Stock (the "Series B Conversion Rate"). Such initial Series B Conversion Rate
shall be subject to adjustment, in order to adjust the number of shares of
Common Stock into which the Series B Preferred Stock is convertible, as
hereinafter provided. Notwithstanding the foregoing, if upon the expiration of
the Conversion Period, the Triggering Event has not occurred, then the Series B
Preferred Stock shall be canceled and returned to treasury.
5.2. Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of the Series B Preferred Stock, and the number of shares of
Common Stock to be issued shall be determined by rounding to the nearest whole
share (a half share being treated as a full share for this purpose). Such
conversion shall be determined on the basis of the total number of shares of
Series B Preferred Stock the holder is at the time converting into Common Stock
and such rounding shall apply to the number of shares of Common Stock issuable
upon such aggregate conversion.
5.3. Mechanics of Automatic Conversion. The Corporation shall use reasonable
efforts to provide all holders of record of shares of Series B Preferred Stock
with at least twenty (20) days' prior written notice of the anticipated date of
any automatic conversion referenced in Section 5.1 and at least five (5) days'
prior written notice of the actual date of such conversion. Each such notice
shall designate a place for automatic conversion of all of the shares of such
Series B Preferred Stock. Such notices will be sent by mail, first class,
postage prepaid to each record holder of Series B Preferred Stock at such
holder's address appearing on the Corporation's stock register, or by overnight
courier service in the case of the notice prior to the actual date of
conversion. On or before the date fixed for conversion, each holder of shares of
Series B Preferred Stock shall surrender such holder's certificate or
certificates for all such shares to the Corporation at the place designated in
such notice, and shall thereafter receive certificates for the number of shares
of Common Stock or other securities to which such holder is entitled. Failure to
provide such notice shall not affect the validity of automatic conversion
hereunder. On the date fixed for conversion, all rights with respect to the
Series B Preferred Stock will terminate, except only (i) the rights of the
holders thereof, upon surrender of their certificate or certificates therefor,
to receive certificates for the number of shares of Common Stock or other
securities into which such Series B Preferred Stock has been converted. If so
required by the Corporation, certificates surrendered for conversion shall be
endorsed or accompanied by a written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
by her, his or its attorney duly authorized in writing. All certificates
evidencing shares of Series B Preferred Stock which are required to be
surrendered for conversion in accordance with the provisions hereof shall, from
and after the date such certificates are so required to be surrendered, be
deemed to have been retired and canceled and the shares of Series B Preferred
Stock represented thereby converted into Common Stock for all purposes,
notwithstanding the failure of the holder or holders thereof to surrender such
certificates on or prior to such date. As soon as practicable after the date of
such automatic conversion and the surrender of the certificate or certificates
for Series B Preferred Stock as aforesaid, the Corporation shall cause to be
issued and delivered to such holder, or to her, his or its written order, a
certificate or certificates for the number of full shares of Common Stock or
other securities issuable on such conversion in accordance with the provisions
hereof.
5.4. Certain Adjustments to Conversion Price for Stock Splits, Dividends,
Mergers, Reorganizations, Etc.
A. Adjustment for Stock Splits, Stock Dividends and Combinations of Common
Stock. In the event the outstanding shares of Common Stock shall, after the
filing of this Resolution, be subdivided (split), or combined (reverse split),
by reclassification or otherwise, or in the event of any dividend or other
distribution payable on the Common Stock in shares of Common Stock, the Series B
Conversion Rate in effect immediately prior to such subdivision, combination,
dividend or other distribution shall be adjusted so that the registered holder
of any share of Series B Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number and kind of shares of Common Stock and
other securities which such holder would have owned or have been entitled to
receive after the happening of any of the events described above had such share
been converted immediately prior to the happening of such event. An adjustment
made pursuant to this subparagraph (A) shall become effective immediately after
the record date in the case of a dividend or other distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination.
B. Adjustment for Merger or Reorganization, Etc. In the event of a
reclassification, reorganization or exchange (other than described in Section
5.4(A) above) or any merger, acquisition, consolidation or reorganization of the
Corporation with another Corporation (other than a merger, acquisition or other
consolidation or reorganization as defined in Section 3.2, which shall be
considered a liquidation pursuant to Section 3 above), each share of Series B
Preferred Stock shall thereafter be convertible into the kind and number of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock of the Corporation deliverable upon conversion of the
Series B Preferred Stock would have been entitled upon such reclassification,
reorganization, exchange, consolidation, merger or conveyance had the conversion
occurred immediately prior to the event; and, in any such case, appropriate
adjustment (as determined in good faith by the Board) shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holders of the Series B Preferred Stock, to the end
that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the applicable Series B Conversion Rate)
shall thereafter be applicable, as nearly as reasonably may be, in relation to
any shares of stock or other property thereafter deliverable upon the conversion
of the Series B Preferred Stock.
C. Adjustments for Other Dividends and Distributions. In the event the
Corporation, upon approval of the holders of at least sixty-six percent (66%) of
the then outstanding shares of Series B Preferred Stock (as provided by Section
2.3(D)), at any time or from time to time after the filing of this Resolution,
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Corporation other than shares of Common Stock, evidences of indebtedness,
assets (including cash), or rights, options, warrants or convertible securities,
then and in each such event, provision shall be made so that the holders of
Series B Preferred Stock shall receive upon conversion thereof, in addition to
the number of shares of Common Stock receivable thereupon, the kind and amount
of securities, evidences of indebtedness, assets (including cash), or rights,
options, warrants or convertible securities of the Corporation which they would
have received had their Series B Preferred Stock been converted into Common
Stock immediately prior to the date of such event and had they thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities, evidences of indebtedness, assets (including
cash), or rights, options, warrants or convertible securities receivable by them
as aforesaid during such period, subject to all other adjustments called for
during such period under this Section 5.4 with respect to the rights or the
holders of the Series B Preferred Stock. Any adjustment contemplated by this
paragraph (C) shall become effective immediately after the record date for the
determination of shareholders entitled to receive such dividend or other
distribution. Notwithstanding the foregoing, if upon the expiration of the
Conversion Period, the Triggering Event has not occurred, then any dividend or
distribution to be received pursuant to this Section 5.4 (C), then any such
dividend or distribution that would have been given to the Series B Preferred
Stock upon conversion shall be returned to the Corporation.
5.5. Notices of Record Date. In the event of any taking by the Corporation
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, any capital reorganization of the Corporation, any
reclassification or recapitalization of the Corporation's capital stock, any
consolidation or merger with or into another Corporation, any transfer of all or
substantially all of the assets of the Corporation or any dissolution,
liquidation or winding up of the Corporation, the Corporation shall mail to each
holder of Series B Preferred Stock at least ten (10) days prior to the date
specified for the taking of a record, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend or distribution.
5.6. Additional Notices. In the event the Corporation shall propose to take
any action of the types described in Sections 5.4 the Corporation shall give
notice to each holder of shares of Series B Preferred Stock, which notice shall
specify the record date, if any, with respect to such action and the date on
which such action is to take place. Such notice shall also set forth such facts
with respect thereto as shall be reasonably necessary to indicate the effect of
such action (to the extent such effect may be at the date of such notice) on the
Series B Conversion Price and the number, kind or class of shares or other
securities or property which shall be deliverable or purchasable upon the
occurrence of such action or deliverable upon conversion of shares of Series B
Preferred Stock. In the case of any action which would require the fixing of a
record date, such notice shall be given at least ten (10) days prior to the date
so fixed, and in case of all other action, such notice shall be given at least
ten (10) days prior to the taking of such proposed action.
5.7. Common Stock Reserved. The Corporationshall reserve and keep available
out of its authorized but unissued Common Stock such number of shares of Common
Stock as shall from time to time be sufficient to effect (a) conversion of the
Series B Preferred Stock and (b) issuance of Common Stock pursuant to any
outstanding option, warrant, or other rights to acquire Common Stock.
5.8. Payment of Taxes. The Corporation will pay all taxes (other than taxes
based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of Series B Preferred Stock, other than any tax or other charge imposed
in connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series B Preferred
Stock so converted were registered.
6. No Reissuance of Series B Preferred Stock. No share or shares of Series
B Preferred Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued.
7. Notices. Unless otherwise specified in the Corporation's Articles of
Incorporation or Bylaws, all notices or communications given hereunder shall be
in writing and, if to the Corporation, shall be delivered to it as its principal
executive offices, and if to any holder of Series B Preferred Stock, shall be
delivered to it at its address as it appears on the stock books of the
Corporation.
8. No Preemptive Rights. Shareholders shall have no preemptive rights
except as granted by the Corporation pursuant to written agreements.
EXHIBIT B
CERTIFICATE OF DESIGNATION OF SERIES A CONVERTIBLE PREFERRED STOCK
1. Definitions. For purposes of this certificate of designation
("Certificate of Designation") of the Series A Convertible Preferred Stock
("Series A Preferred Stock"), par value $.0001 per share, the following
definitions shall apply and shall be equally applicable to both the singular and
plural forms of the defined terms:
1.1. "Affiliate" of any Person shall mean any Person who directly or
indirectly controls, is controlled by, or is under common control with, the
indicated Person. For the purposes of this definition, "control" has the meaning
specified as of the date hereof for that word in Rule 405 promulgated by the
United States Securities and Exchange Commission under the Securities Act of
1933, as amended.
1.2. "Board" shall mean the Board of Directors of the Corporation.
1.3. "Conversion Rights" shall have the meaning set forth in Section 5
below
1.4. "Conversion Stock" shall mean the Common Stock into which the Series A
Preferred Stock is convertible and the Common Stock issued upon such conversion.
1.5. "Corporation" shall mean SkyWay Communications Holding Corp., a Florida
corporation.
1.6. "Liquidation Price" shall mean the sum of (i) the Stated Value per
share of Series A Preferred Stock plus (ii) plus one percent (1%) per annum
thereon from the date of issuance of share of Series A Preferred Stock through
and including the date of full payment of the Liquidation Price shall be
tendered to the holders of Series A Preferred Stock, plus (iii) unpaid dividends
thereon, if declared and unpaid, up to and including the date full payment shall
be tendered to the holders of Series A Preferred Stock.
1.7. "Person" shall include all natural persons, corporations, business
trusts, associations, limited liability companies, partnerships, joint ventures
and other entities, governments, agencies and political subdivisions.
1.8. "Qualified Public Offering" shall mean the first public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offering and sale of Common Stock for the account
of the Corporation in which the aggregate gross proceeds received by the
Corporation equals or exceeds $35 million before deduction of underwriters'
commissions and expenses and the public offering price equals or exceeds $5.00
per share of Common Stock (subject to appropriate adjustment to reflect stock
splits, stock dividends, reorganizations, and all other capitalization changes
contemplated in Sections 5.6).
1.9. "Redemption Date" shall have the meaning set forth in Section 4.3 below.
1.10. "Redemption Notice" shall have the meaning set forth in Section 4.3 below.
1.11. "Redemption Price" shall have the meaning set forth in Section 4.2 below.
1.12. "Series A Conversion Rate" shall have the meaning set forth in Section
5.1 below.
1.13. "Stated Value" shall mean $15,000,000, subject to appropriate
adjustment to reflect stock splits, stock dividends, stock combinations,
recapitalizations, and like occurrences and dividends and other distributions on
such stock payable in shares of Series A Preferred Stock or Common Stock).
2. Voting Rights.
2.1. General. In addition to the other rights provided in this Resolution,
by agreement or by law, the holders of the Series A Preferred Stock and the
holders of the Common Stock shall vote together as a single class on all actions
to be taken by the shareholders of the Corporation. At all meetings of the
shareholders of the Corporation and in the case of any actions of shareholders
in lieu of a meeting, each holder of the Series A Preferred Stock shall have
that number of votes on all matters submitted to the shareholders that is equal
to the number of shares of Common Stock (rounded to the nearest whole number)
into which such holder's shares of Series A Preferred Stock are then
convertible, as provided in Section 5, at the record date for the determination
of the shareholders entitled to vote on such matters or, if no such record date
is established, at the date such vote is taken or any written consent of such
shareholders is effected.
2.2. Election of Directors.
A. Allocation of Board Seats; Elections.
(i) So long as at least 800,000 shares of Series A Preferred Stock are
outstanding (appropriately adjusted to reflect stock splits, stock dividends,
reorganizations and capitalization changes), the Corporation shall not, without
the affirmative vote of the holders of at least sixty-six percent (66%) of the
then outstanding shares of Series A Preferred Stock, increase the maximum number
of directors constituting the Board to a number other than seven (7) or
otherwise alter the Board seat allocation set forth below in this Section 2.2.
B. Quorums. At any meeting held for the purpose of electing directors, the
presence in person or by proxy of the holders of a majority of the aggregate
number of shares of the Series A Preferred Stock then outstanding (on an
as-if-converted to Common Stock basis) and the Common Stock then outstanding
shall constitute a quorum for the election of the Directors.
C. Vacancies. A vacancy in any directorship elected by the holders of the
Series A Preferred Stock and Common Stock voting together as a single class
shall be filled only by the holders of the Series A Preferred Stock and Common
Stock voting together as a single class.
2.3. Additional Class Votes by the Series A Preferred Stock. For so long as
at least 800,000 shares of Series A Preferred Stock remain outstanding
(appropriately adjusted to reflect stock splits, stock dividends,
reorganizations and capitalization changes), the Corporation shall not, without
the affirmative vote of holders of at least sixty-six percent (66%) of the then
outstanding shares of Series A Preferred Stock (voting as a separate class), do
any of the following:
A. take any action that constitutes or results in amendment or waiver of
any provision of the Corporation's Articles of Incorporation or Bylaws if such
amendment or waiver in any way affects, alters or changes any existing rights,
preferences, privileges or provisions relating to the Series A Preferred Stock
or the holders thereof, or results in any increase or decrease in the authorized
number of shares of Series A Preferred Stock; or
B. increase or decrease the authorized number of shares of Series A
Preferred Stock; or
C. authorize, issue or otherwise create (by reclassification or otherwise)
any new class of capital stock of the Corporation having priority over the
Series A Preferred Stock or ranking in parity with the Series A Preferred Stock
(including any additional shares of Series A Preferred Stock) as to dividends or
the payment or distribution of assets upon the liquidation or dissolution,
voluntary or involuntary, of the Corporation; or
D. authorize or declare a payment of a dividend or distributionon any
class of capital stock (other than the Series A Preferred Stock); or
E. sell, lease, license (on an exclusive basis) or otherwise dispose of
all or substantially all of the assets of the Corporation or of any subsidiary
of the Corporation, nor shall the Corporation or any subsidiary of the
Corporation consolidate or merge with any other corporation or entity, or permit
any other corporation or entity to consolidate or merge into the Corporation or
any subsidiary of the Corporation, or enter into a plan of exchange with any
other corporation or entity, or otherwise acquire any other corporation or
entity, or otherwise take any action constituting or resulting in a liquidation,
dissolution or winding up of the Corporation.
3. Liquidation Rights.
3.1. Preference of Series A Preferred Stock. In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of the Series A Preferred Stock then outstanding shall
be entitled to receive out of the assets of the Corporation available for
distribution to its shareholders, whether such assets are capital, surplus, or
earnings, before any payment, declaration, or setting apart for payment of any
amount shall be made in respect of the Common Stock, an amount equal to the
Liquidation Price per share of the Series A Preferred Stock with respect to such
liquidation, dissolution or winding up. If, upon any liquidation, dissolution,
or winding up of the Corporation, whether voluntary or involuntary, the assets
to be distributed to the holders of the Series A Preferred Stock shall be
insufficient to permit the payment to such shareholders of the full Liquidation
Price, then all of the assets of the Corporation shall be distributed solely and
ratably to the holders of the Series A Preferred Stock.
3.2. Remaining Assets. If the assets of the Corporation available for
distribution to the Corporation's shareholders exceed the aggregate amount
payable to the holders of the Series A Preferred Stock pursuant to Section 3.1
hereof, then after the payments required by Section 3.1 shall have been made the
Corporation's remaining assets shall be distributed pro rata, on a per share
basis, among the holders of the Common Stock.
3.3. Reorganization; Sale of Assets. The following transactions shall each
be deemed to be a liquidation, dissolution or winding up of the Corporation
within the meaning of the provisions of this Section 3 (unless waived by the
affirmative vote of holders of at least sixty-six percent (66%) of the then
outstanding shares of the Series A Preferred Stock (voting together as a single
class outstanding)), and all of the provisions of this Section 3 shall apply to
any such transaction(s): (i) the merger, acquisition, or consolidation of the
Corporation into or with any other entity or entities in which the Corporation
is not the surviving entity or which results in the exchange of outstanding
shares of capital stock of the Corporation for securities or other consideration
issued or paid or caused to be issued or paid by any such entity or Affiliate
thereof pursuant to which the shareholders of the Corporation immediately prior
to the transaction do not own a majority of the outstanding shares of capital
stock of the surviving corporation immediately after the transaction, (ii) the
effectuation by the Corporation of a transaction or series of related
transactions in which 50% or more of the voting power of the Corporation is
disposed of, and (iii) any sale, lease, license (on an exclusive basis) or
transfer by the Corporation of all or substantially all its assets. In
connection therewith, the consideration to be received by shareholders of the
Corporation shall be apportioned as though first received by the Corporation and
then distributed in liquidation thereof.
3.4. Notice. Written notice of such liquidation, dissolution or winding up,
stating a payment date and the place where said payments shall be made, shall be
given by mail, postage prepaid, or by telephone facsimile to non-U.S. residents,
not less than twenty (20) days prior to the payment date stated therein, to the
holders of record of Series A Preferred Stock, such notice to be addressed to
each such holder at its address as shown by the records of the Corporation.
3.5. Determination of Consideration. To the extent any distribution pursuant
to Section 3.1 or Section 3.2 consists of property other than cash, the value
thereof shall, for purposes of Section 3.1 or Section 3.2, be the fair value at
the time of such distributions as determined in good faith by the Board.
3.6. Conversion Prior to Liquidating Distributions. Any holder of Series A
Preferred Stock may, at its option, convert all or a portion of its shares into
Common Stock upon a liquidation, dissolution or winding up of the Corporation
and thereby receive distributions with the holders of the Common Stock in lieu
of receiving distributions as a holder of the Series A Preferred Stock.
4. Redemption Rights.
4.1. Scheduled Redemptions. Unless all of the Series A Preferred Stock has
been converted to Common Stock pursuant to Section 5, the Corporation may, but
is not obligated to, redeem all shares of then outstanding Series A Preferred
Stock within the one year anniversary of the issuance date. Any holder of shares
of Series A Preferred Stock may, in its sole discretion, (a) accept or reject
any redemption offer, provided however, in the event that the holder of a Series
A Preferred Stock rejects the redemption offer, such holder must convert their
Series A Preferred Stock into Common Stock at the Conversion Rate set forth
below.
4.2. Price. The redemption price (the "Redemption Price") of the Series A
Preferred Stock shall be an amount per share equal to the Stated Value per
share, plus one percent (5%).
4.3. Redemption Notice. If the Corporation elects to redeem the shares of
Series A Preferred Stock, then the Corporation shall, not less than fifteen (15)
days or more than sixty (60) days prior to the date fixed for redemption
("Redemption Date"), mail written notice ("Redemption Notice"), postage prepaid,
to each holder of shares of record of Series A Preferred Stock to be redeemed,
at such holder's post office address last shown on the records of the
Corporation. The Redemption Notice shall:
A. state the total number of shares of Series A Preferred Stock which the
Corporation is offering to redeem;
B. state the number of shares of Series A Preferred Stock held by the
holder which the Corporation is offering to redeem;
C. confirm the Redemption Date and Redemption Price; and
D. state the time, place and manner in which the holder may elect to
surrender to the Corporation the certificate or certificates representing the
shares of Series A Preferred Stock to be redeemed.
4.4. Surrender of Stock. On or before the Redemption Date, each holder of
Series A Preferred Stock electing to be redeemed shall surrender the certificate
or certificates representing such shares to the Corporation, in the manner and
at the place designated in the Redemption Notice, and thereupon the Redemption
Price for such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled and retired.
4.5. Termination of Rights. If the Redemption Notice is duly given, and if,
on or prior to the Redemption Date, a holder of the Series A Preferred Stock
elects to have her, his or its shares redeemed and the Redemption Price is
either paid or made available for payment, then notwithstanding that the
certificates evidencing any of the shares of Series A Preferred Stock so called
for redemption have not been surrendered, all rights with respect to such shares
shall forthwith after the Redemption Date cease except only (i) the right of the
holders to receive the Redemption Price without interest upon surrender of their
certificates therefor, or (ii) the right to receive Common Stock upon exercise
of the conversion rights as provided in Section 5 hereof on or prior to the
Redemption Date.
4.6. No Redemption. The shares of Series A Preferred Stock shall not be
redeemable under any circumstances whatsoever, except as provided in this
Section 4 or to the extent otherwise agreed to in writing by the Corporation
and the holders of any such shares.
4.7. Adjustment for Certain Dividends and Distributions. If the Corporation,
at any time or from time to time, makes or issues or fixes a record date for the
determination of holders of shares of the Series A Preferred Stock entitled to
receive a dividend or other distribution payable in additional shares of such
Series A Preferred Stock, then and in each such event the Redemption Price for
the Series A Preferred Stock then in effect shall be decreased as of the time of
such issuances or, in the event such record date is fixed, as of the close of
business on such record date, by multiplying the Redemption Price for the Series
A Preferred Stock then in effect by a fraction (a) the numerator of which is the
total number of shares of Series A Preferred 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 the Series A Preferred 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 Series A Preferred Stock issuable in payment of such
dividend or distribution; provided, however, that if such record date is fixed
and such dividend is not fully paid or if such distribution is not fully made on
the date fixed therefor, the Redemption Price for the Series A Preferred Stock
shall be recomputed accordingly as of the close of business on such record date
and thereafter the Redemption Price for the Series A Preferred Stock shall be
adjusted pursuant to this Section 4.7 as of the time of actual payment of such
dividends or distributions.
5. Conversion. The holders of the Series A Preferred Stock shall have the
following conversion rights (the "Conversion Rights"):
5.1. Optional Conversion of the Series A Preferred Stock. Each share of the
Series A Preferred Stock shall be convertible, without the payment of any
additional consideration by the holder thereof and at the option of the holder
thereof, at any time after the first issuance of shares of Series A Preferred
Stock by the Corporation and from time to time, at the office of the Corporation
or any transfer agent for the Common Stock, into 100 fully paid and
nonassessable shares of Common Stock (the "Series A Conversion Rate"). Such
initial Series A Conversion Rate shall be subject to adjustment, in order to
adjust the number of shares of Common Stock into which the Series A Preferred
Stock is convertible, as hereinafter provided.
5.2. Automatic Conversion of the Series A Preferred Stock. If at any time
(a) the Corporation shall complete a Qualified Public Offering, (b) during any
period of thirty (30) consecutive trading days, the average closing price per
share of the Common Stock, as reported on a national securities exchange, the
NASDAQ NMS or Small Cap Market, or the OTC Bulletin Board, equals or exceeds
$5.00 (subject to appropriate adjustment to reflect stock splits, stock
dividends, reorganizations and other capitalization changes, and all other
events contemplated in Sections 5.6), or (c) the holders of at least sixty-six
percent (66%) of the outstanding shares of Series A Preferred Stock, shall vote
at a meeting or consent in writing to the conversion of the Series A Preferred
Stock into shares of Common Stock, then effective upon (x) the closing of the
sale of such shares by the Corporation pursuant to such Qualified Public
Offering, (y) the expiration of such thirty (30) consecutive trading days, or
(z) such vote or written consent of the holders of at least sixty-six percent
(66%) of the outstanding shares of Series A Preferred Stock, as the case may be,
all outstanding shares of Series A Preferred Stock shall automatically convert
into shares of Common Stock as provided for in Section 5.1.
5.3. Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of the Series A Preferred Stock, and the number of shares of
Common Stock to be issued shall be determined by rounding to the nearest whole
share (a half share being treated as a full share for this purpose). Such
conversion shall be determined on the basis of the total number of shares of
Series A Preferred Stock the holder is at the time converting into Common Stock
and such rounding shall apply to the number of shares of Common Stock issuable
upon such aggregate conversion.
5.4. Mechanics of Optional Conversion. Before any holder of Series A
Preferred Stock shall be entitled to convert the same into full shares of Common
Stock, such holder shall surrender the certificate or certificates therefor,
endorsed or accompanied by written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
by such holder's attorney duly authorized in writing, at the office of the
Corporation or of any transfer agent for the Common Stock, and shall give at
least five (5) days' prior written notice to the Corporation at such office that
such holder elects to convert the same or such portion thereof as such holder
elects to convert and shall state therein such holder's name or the name of the
nominees in which such holder wishes the certificate or certificates for shares
of Common Stock to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver to such holder of Series A Preferred Stock, or to
such holder's nominee or nominees, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as aforesaid.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Series A Preferred
Stock to be converted, and the person or persons entitled to receive the shares
of Common Stock issuable upon conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such date. From
and after such date, all rights of the holder with respect to the Series A
Preferred Stock so converted shall terminate, except only the right of such
holder, upon the surrender of his, her or its certificate or certificates
therefor, to receive certificates for the number of shares of Common Stock
issuable upon conversion thereof. Upon conversion of only a portion of the
number of shares covered by a certificate representing shares of Series A
Preferred Stock surrendered for conversion, the Corporation shall issue and
deliver to the holder of the certificate so surrendered for conversion, at the
expense of the Corporation, a new certificate covering the number of shares of
the Series A Preferred Stock representing the unconverted portion of the
certificate so surrendered, which new certificate shall entitle the record
holder thereof to all rights in respect of the shares of Series A Preferred
Stock represented thereby to the same extent as if the portion of the
certificate theretofore covering such unconverted shares had not been
surrendered for conversion.
5.5. Mechanics of Automatic Conversion. The Corporation shall use reasonable
efforts to provide all holders of record of shares of Series A Preferred Stock
with at least twenty (20) days' prior written notice of the anticipated date of
any automatic conversion referenced in Section 5.2 and at least five (5) days'
prior written notice of the actual date of such conversion. Each such notice
shall designate a place for automatic conversion of all of the shares of such
Series A Preferred Stock. Such notices will be sent by mail, first class,
postage prepaid to each record holder of Series A Preferred Stock at such
holder's address appearing on the Corporation's stock register, or by overnight
courier service in the case of the notice prior to the actual date of
conversion. On or before the date fixed for conversion, each holder of shares of
Series A Preferred Stock shall surrender such holder's certificate or
certificates for all such shares to the Corporation at the place designated in
such notice, and shall thereafter receive certificates for the number of shares
of Common Stock or other securities to which such holder is entitled. Failure to
provide such notice shall not affect the validity of automatic conversion
hereunder. On the date fixed for conversion, all rights with respect to the
Series A Preferred Stock will terminate, except only (i) any rights to receive
declared but unpaid dividends with a record date preceding the date of
conversion, and (ii) the rights of the holders thereof, upon surrender of their
certificate or certificates therefor, to receive certificates for the number of
shares of Common Stock or other securities into which such Series A Preferred
Stock has been converted. If so required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by a written
instrument or instruments of transfer, in form satisfactory to the Corporation,
duly executed by the registered holder or by her, his or its attorney duly
authorized in writing. All certificates evidencing shares of Series A Preferred
Stock which are required to be surrendered for conversion in accordance with the
provisions hereof shall, from and after the date such certificates are so
required to be surrendered, be deemed to have been retired and canceled and the
shares of Series A Preferred Stock represented thereby converted into Common
Stock for all purposes, notwithstanding the failure of the holder or holders
thereof to surrender such certificates on or prior to such date. As soon as
practicable after the date of such automatic conversion and the surrender of the
certificate or certificates for Series A Preferred Stock as aforesaid, the
Corporation shall cause to be issued and delivered to such holder, or to her,
his or its written order, a certificate or certificates for the number of full
shares of Common Stock or other securities issuable on such conversion in
accordance with the provisions hereof.
5.6. Certain Adjustments to Conversion Rate for Stock Splits, Dividends
Mergers, Reorganizations, Etc.
A. Adjustment for Stock Splits, Stock Dividends and Combinations of
Common Stock. In the event the outstanding shares of Common Stock shall, after
the filing of this Resolution, be subdivided (split), or combined (reverse
split), by reclassification or otherwise, or in the event of any dividend or
other distribution payable on the Common Stock in shares of Common Stock, the
Series A Conversion Rate in effect immediately prior to such subdivision,
combination, dividend or other distribution shall be adjusted so that the
registered holder of any share of Series A Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number and kind of
shares of Common Stock and other securities which such holder would have owned
or have been entitled to receive after the happening of any of the events
described above had such share been converted immediately prior to the happening
of such event. An adjustment made pursuant to this subparagraph (A) shall become
effective immediately after the record date in the case of a dividend or other
distribution and shall become effective immediately after the effective date in
the case of a subdivision or combination.
B. Adjustment for Merger or Reorganization, Etc. In the event of a
reclassification, reorganization or exchange (other than described in Section
5.6(A) above) or any merger, acquisition, consolidation or reorganization of the
Corporation with another Corporation (other than a merger, acquisition or other
consolidation or reorganization as defined in Section 3.3, which shall be
considered a liquidation pursuant to Section 3 above), each share of Series A
Preferred Stock shall thereafter be convertible into the kind and number of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock of the Corporation deliverable upon conversion of the
Series A Preferred Stock would have been entitled upon such reclassification,
reorganization, exchange, consolidation, merger or conveyance had the conversion
occurred immediately prior to the event; and, in any such case, appropriate
adjustment (as determined in good faith by the Board) shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holders of the Series A Preferred Stock, to the end
that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the applicable Series A Conversion Rate)
shall thereafter be applicable, as nearly as reasonably may be, in relation to
any shares of stock or other property thereafter deliverable upon the conversion
of the Series A Preferred Stock.
C. Adjustments for Other Dividends and Distributions. In the event the
Corporation, upon approval of the holders of at least sixty-six percent (66%) of
the then outstanding shares of Series A Preferred Stock (as provided by Section
2.3(D)), at any time or from time to time after the filing of this Resolution,
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Corporation other than shares of Common Stock, evidences of indebtedness,
assets (including cash), or rights, options, warrants or Convertible Securities,
then and in each such event (unless the holders of Series A Preferred Stock
receive a comparable dividend or distribution under Section 6), provision shall
be made so that the holders of Series A Preferred Stock shall receive upon
conversion thereof, in addition to the number of shares of Common Stock
receivable thereupon, the kind and amount of securities, evidences of
indebtedness, assets (including cash), or rights, options, warrants or
Convertible Securities of the Corporation which they would have received had
their Series A Preferred Stock been converted into Common Stock immediately
prior to the date of such event and had they thereafter, during the period from
the date of such event to and including the conversion date, retained such
securities, evidences of indebtedness, assets (including cash), or rights,
options, warrants or Convertible Securities receivable by them as aforesaid
during such period, subject to all other adjustments called for during such
period under this Section 5.6 with respect to the rights or the holders of the
Series A Preferred Stock. Any adjustment contemplated by this paragraph (C)
shall become effective immediately after the record date for the determination
of shareholders entitled to receive such dividend or other distribution.
5.7. Notices of Record Date. In the event of any taking by the Corporation
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, any capital reorganization of the Corporation, any
reclassification or recapitalization of the Corporation's capital stock, any
consolidation or merger with or into another Corporation, any transfer of all or
substantially all of the assets of the Corporation or any dissolution,
liquidation or winding up of the Corporation, the Corporation shall mail to each
holder of Series A Preferred Stock at least ten (10) days prior to the date
specified for the taking of a record, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend or distribution.
5.8. Additional Notices. In the event the Corporation shall propose to take
any action of the types described in Sections 5.6 the Corporation shall give
notice to each holder of shares of Series A Preferred Stock, which notice shall
specify the record date, if any, with respect to such action and the date on
which such action is to take place. Such notice shall also set forth such facts
with respect thereto as shall be reasonably necessary to indicate the effect of
such action (to the extent such effect may be at the date of such notice) on the
Series A Conversion Rate and the number, kind or class of shares or other
securities or property which shall be deliverable or purchasable upon the
occurrence of such action or deliverable upon conversion of shares of Series A
Preferred Stock. In the case of any action which would require the fixing of a
record date, such notice shall be given at least ten (10) days prior to the date
so fixed, and in case of all other action, such notice shall be given at least
ten (10) days prior to the taking of such proposed action.
5.9. Common Stock Reserved. The Corporation shall reserve and keep available
out of its authorized but unissued Common Stock such number of shares of Common
Stock as shall from time to time be sufficient to effect (a) conversion of the
Series A Preferred Stock and (b) issuance of Common Stock pursuant to any
outstanding option, warrant, or other rights to acquire Common Stock.
5.10. Payment of Taxes. The Corporation will pay all taxes (other than taxes
based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of Series A Preferred Stock, other than any tax or other charge imposed
in connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series A Preferred
Stock so converted were registered.
6. Dividends. The orporation shall not declare, pay, or set apart for
payment any dividend or other distribution with respect to any shares of capital
stock of the Corporation for any period, whether before or after the effective
date of this Resolution, unless and until (i) declared by the Board and (ii)
approved by the holders of the Series A Preferred Stock as set forth in Section
2.3(D). The holders of each share of Series A Preferred Stock shall also be
entitled to receive a pro-rata portion, on an as-if converted basis, of any
dividends payable on Common Stock. Dividends on shares of capital stock of the
Corporation shall be payable, whether payable in cash or other property, only
out of funds legally available therefor.
.1. Non-Cash Dividends. Whenever a dividend provided for in this Section 6
shall be payable in property other than cash, the value of such dividend shall
be deemed to be the fair market value of such property as determined in good
faith by the Board.
7. No Reissuance of Series A Preferred Stock. No share or shares of Series
A Preferred Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued.
8. Notices. Unless otherwise specified in the Corporation's Articles of
Incorporation or Bylaws, all notices or communications given hereunder shall be
in writing and, if to the Corporation, shall be delivered to it as its principal
executive offices, and if to any holder of Series A Preferred Stock, shall be
delivered to it at its address as it appears on the stock books of the
Corporation.
9. No Preemptive Rights. Shareholders shall have no preemptive rights
except as granted by the Corporation pursuant to written agreements.
6/18/03
LICENSE AGREEMENT
This License Agreement ("License Agreement") dated as of June 20, 2003,
by and between Sky Way Global, LLC, a Nevada Limited Liability Company
("Global"), Sky Way Aircraft, Inc., a Nevada corporation ("Aircraft" or the
"Company"), and Brent Kovar, an individual residing in the State of Florida.
WITNESSETH:
WHEREAS, Kovar is the creator and inventor of certain voice and data
transmission technology known and referred to as SkyWay Technology, (hereinafter
"Licensed Technology") that is set forth in the specification of United States
patent application number 09/592,687, filed June 13, 2000, and entitled "Digital
data transmission utilizing vector coordinates within a hyperbola model"
(hereinafter the "U.S. Patent Application").
WHEREAS, in January, 2001, Kovar transferred the Licensed Technology to
OSDNA, Inc., a Nevada Corporation ("OSDNA") for $1.00. A copy of the transfer
agreement is attached hereto as Exhibit A.
WHEREAS, on June 27, 2001 OSDNA transferred the Licensed Technology for
$1.00 to Global. A copy of the transfer agreement is attached hereto as Exhibit
B.
WHEREAS, on March 11, 2003, Global licensed the Licensed Technology to
Aircraft pursuant to an Amended and Restated License Agreement ("1st License
Agreement"), a copy of which is attached hereto as Exhibit C.
WHEREAS, the Parties desire to amend and restate the 1st License
Agreement to grant Aircraft an exclusive, perpetual, worldwide, sublicensable,
transferable license in and to the Licensed Technology.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and covenants contained herein, the parties agree as
follows:
1. DEFINITIONS
1.1 "1st License Agreement" shall have the meaning set forth in
the Preamble;
1.2 "Affiliate" shall mean any Person who directly or indirectly
controls, is controlled by, or is under common control with, the indicated
Person. For the purposes of this definition, "control" has the meaning specified
as of the date hereof for that word in Rule 405 promulgated by the United States
Securities and Exchange Commission under the Securities Act of 1933, as amended.
1.3 "Claim" shall have the meaning set forth in Section 9 (a)
below;
1.4 "Claims Notice" shall have the meaning set forth in Section 9
(b) below;
1.5 "Contract Year" means each twelve (12) month period beginning
on the date of this Agreement, and ending on the following anniversary of such
date.
1.6 "Improvements" shall have the meaning set forth in Section 2.2
below.
1.7 "Indemnified Party" shall have the meaning set forth in
Section 9 below.
1.8 "Indemnitors" shall have the meaning set forth in Section 9
below.
1.9 "Intellectual Property Rights" shall mean (i) all inventions,
works of authorships, mask works, technology, information, know-how, show-how
materials and tools in respect of the Licensed Technology and all precursors,
portions and work in progress with respect thereto, (ii) all copyrights, patent
rights, trade secret rights, trademark rights, mask works rights and other
intellectual property rights and all business, contract rights and goodwill
incorporated or embodied in, used to develop, or related to any of the Licensed
Technology, including, but not limited to, the patents, patent applications and
disclosures, and (iii) all renewals, continuations, continuations-in-part,
reissues, and foreign equivalents in respect of any of the foregoing.
1.10 "Licensed Technology" shall have the meaning set forth in the
Preamble;
1.11 "Net Revenues" means revenues actually received by the Company
or an Affiliate from the sale, use, licensing or other disposition of products
other than to the Company or an Affiliate or services embodying the Licensed
Technology, net of any (i) returns (ii) promotional allowances, (iii)
commissions, (iv) discounts, (v) shipping, (vi) insurance costs, (vii)
consulting related to the cost of sales, (viii) installation, implementation and
support services conducted by the Company or third parties involving human
services, and (ix) use, value-added, and withholding taxes or other governmental
assessments, provided that commissions and consulting related to the cost of
sales shall have resulted from arms length transactions with parties other than
the Company or an Affiliate.
1.12 "OSDNA" shall have the meaning set forth in the Preamble;
1.13 "Royalty" means three percent (3%) of the Company's Net
Revenues from the sale of products embodying or services using the Licensed
Technology or sublicensing the Licensed Technology to third parties.
1.14 "U.S. Application" shall have the meaning set forth in Section
5.2; and
1.15 "U.S. Patent Application" shall have the meaning set forth in
the Preamble.
2. LICENSE GRANT
2.1 Exclusive Grant. Effective on the date hereof, subject to the
terms and conditions of this License Agreement, Global hereby grants to Aircraft
an exclusive (even as to Global), perpetual, irrevocable, worldwide,
transferable right and license to use, make, have made, sell, offer, to sell,
market, import, export, modify, improve, develop, reproduce, create derivative
works of, distribute, disclose, perform, display, transmit, and otherwise
exploit the Licensed Technology and Intellectual Property Rights without any
limitation whatsoever, owned or exercisable by Global, including without
limitation the right to sublicense the foregoing rights to any third party on
terms and conditions determined by the Company in its sole discretion, and to
prevent others from using, manufacturing or selling any product or service that
embodies the Licensed Technology or Intellectual Property Rights, in whole or
part.
2.2 Improvements. Any Global (i) improvements, (ii) discoveries
(in the area of enabling increased throughput of internet protocol data streams)
or (iii) modifications, including in each case those made for Global by Global
employees or contractors to the Licensed Technology or Intellectual Property
Rights, or other technologies that may be explored by Global (collectively, the
"Improvements") (i) shall be included in the license without any additional
charge to the Company, (ii) shall be deemed to be Licensed Technology hereunder,
and (iii) shall be promptly disclosed to the Company by Global. Global
acknowledges that breach of this provision would irreparably harm the Company
for which money damages would not be a sufficient remedy, and that the Company
shall be entitled to immediate specific performance or other equitable relief to
enforce such rights, without the necessity of posting any bond or surety.
2.3 Restrictions. Global shall not, itself or through others,
grant further licenses or allow a third party to use or commercialize the
Licensed Technology or Intellectual Property Rights, in whole or part, except
for the exclusive benefit of Aircraft.
2.4 No Use Required. Nothing contained in this License Agreement
shall require the Company to use, license, develop, market or otherwise exploit
any of the Licensed Technology in any manner.
2.5 Title; Rights. Notwithstanding the foregoing, Global shall
retain all title, copyright and other proprietary rights in the Licensed
Technology. Aircraft does not acquire any rights, express or implied, in the
Licensed Technology, other than those specified in this License Agreement.
3. Further Assurances. The Parties shall execute or have executed all
further instruments agreements, representations or warranties, and take such
further acts, as may be reasonably requested by either Party to carry out the
terms and conditions of this License Agreement and the transactions contemplated
hereby.
4. Payments.
4.1 The Company shall pay to Global the Royalty, quarterly in
arrears, within thirty (30) days following the end of each quarter. All amounts
payable hereunder shall be in U.S. dollars.
4.2 The Company shall submit a report to Global with each Royalty
payment in sufficient detail to allow Global to confirm the calculation of the
payment.
4.3 The Company shall keep complete and accurate records of
Royalties due hereunder. During the term of this License Agreement and no more
frequently than once per Contract Year, Aircraft shall permit an independent
third party auditor to examine and audit such records during reasonable business
hours upon (10) days prior written notice with respect to compliance with the
terms of this License Agreement. If such an audit uncovers a deficiency in
payment by the Company of greater than ten percent (10%) in reporting or
payments for the audit period, then the audited party shall bear the reasonable,
actual, and direct audit expenses and immediately pay such deficient amount,
otherwise the auditing party shall bear the costs of such audit.
5. Litigation
5.1 General Litigation. The Company shall have the sole right, at
the Company's sole cost and expense (subject to the indemnification provisions
in Sections 9 below), to bring, respond to, control and/or settle all litigation
with respect to the Licensed Technology and the Intellectual Property Rights in
its own name or in the name of Global. Global shall cooperate with and provide
such assistance to the Company in connection with any such claims. As part of
such cooperation, the Company may join or include Global, as a party. Global
shall have the right to receive, from time to time, full and complete
information from the Company concerning the status of any such litigation, and,
at Global's own expense, the right to be represented therein by counsel in an
advisory capacity. If the Company initiates litigation pursuant to this Section
5.1, it shall have the right to retain any recovery or settlement therefrom.
5.2. Intellectual Property Prosecution. Global shall be responsible
for filing, preparing and prosecuting the patent application for intellectual
property protection in respect of the Licensed Technology ("U.S. Application")
and shall pay all costs associated with such activities. The Parties shall
undertake to reach agreement upon patent protection program, including without
limitation payment of costs and fees associated therewith. Global will discuss
its decisions on these matters with the Company, and shall keep the Company
informed in respect of any such activities on at least a quarterly basis. Global
will use counsel that is reasonably acceptable to the Company. In the event that
Global desires to abandon, allows to expire or not seek protection for any of
the Intellectual Property Rights in the Licensed Technology, prior to taking or
failing to take such action, Global shall provide the Company the option to
prosecute or maintain, as the case may be, such portion of the Intellectual
Property Rights, at the Company's sole expense, and Global shall assign to the
Company such portion of the Intellectual Property Rights at the Company's
request.
5.3 Improvements. Any improvements to the Licensed Technology
(whether or not patentable or copyrightable) that either party develops shall be
owned solely by such party. Such party shall have the right, at its own expense
and solely in its own name, to apply for and prosecute its Intellectual Property
Rights with respect thereto. Any improvements to the Licensed Technology created
by Global shall be deemed to be Licensed Technology for purposes of this
License. Jointly developed improvement to the Licensed Technology shall be owned
by the Company, and Global shall and hereby does make all necessary assignments
to effect such transfer.
6. Representations and Warranties.
6.1 Global hereby represents and warrants to the Company that
Global has the full legal right, power and authority to enter into this License
Agreement and to perform all obligations under this License Agreement. In
addition, Global represents and warrants to the Company that Global has taken
all action which is necessary, required or appropriate to authorize or enable it
to enter into and perform this License Agreement and that this License, when
executed and delivered to the Company, shall constitute the valid and binding
legal obligation of Global.
6.2 Global hereby represents and warrants that it shall be the
sole and exclusive owner of the Licensed Technology, and has not granted, and
shall not grant any license, option, assignment or any other right or interest
in or to the Licensed Technology, except as expressly stated herein.
6.3 Global represents and warrants that the exercise of the
Intellectual Property Rights set forth in the License Agreement does not
infringe upon or misappropriate any, trademark, copyright, trade secret, mask
work or other intellectual or proprietary right of any third party, or to the
knowledge of Global following investigation, any patent.
6.4 Global represents and warrants that the U.S. Application
discloses an enabling disclosure of the Licensed Technology, and the prototype
revealed to the Company is an accurate and legitimate demonstration of the
Licensed Technology.
6.5 Global represents and warrants that it shall perform its
duties hereunder in a good and professional manner in accordance with general
industry standards, unless a higher standard is required herein, in which case
the higher standard shall apply.
6.6 The Company hereby represents and warrants to Global that the
Company has the full legal right, power and authority to enter into this License
Agreement and to perform all its obligations under the License Agreement. In
addition, the Company represents and warrants to Global that the Company has
taken all action which is necessary, required or appropriate to authorize or
enable it to enter into and perform this License Agreement and that this License
Agreement, when executed and delivered to Global, shall constitute the valid and
binding legal obligation of the Company.
7. Warranty/Disclaimer. Global warrants for a period of three (3) years
from the date hereof, that the Licensed Technology will perform substantially as
represented unless modified by a party other than Global or Kovar under their
direction in which case this warranty is void. Global warrants for a period of
three (3) years from the delivery of any Improvement that such Improvement will
perform substantially as described in the documentation therefore if any. EXCEPT
AS EXPRESSLY PROVIDED IN THIS SECTION 7, NEITHER PARTY MAKES ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, AND EACH PARTY HEREBY DISCLAIMS ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ALL WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
8. Limitation of Liability. EXCEPT FOR CLAIMS UNDER SECTION 9
(INDEMNIFICATION), NEITHER PARTY SHALL BE LIABLE OR OBLIGATED UNDER ANY SECTION
OF THIS LICENSE OR UNDER CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL
OR EQUITABLE THEORY FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES.
9. Indemnification.
(a) Global and Kovar (the "Indemnitors") hereby jointly and
severally indemnify and hold harmless the Company, each of its directors,
officers, employees, licensees, stockholders and agents (each, an "Indemnified
Party"), against any losses, claims, damages or liabilities (including costs of
investigation, attorney's fees and costs) resulting from a claim (the "Claim")
made by a non-party to this License Agreement to the extent the Claim relates
to, or would not have arisen but for, a breach of a representation, warranty of
covenant set forth in this License Agreement, and will reimburse an Indemnified
Party, including but not limited to costs reasonably associated with defending
against any such loss, claim, damage, liability or action.
(b) Any Indemnified Party seeking indemnification under this
Agreement shall give to the party obligated to provide to the Indemnitors a
notice (a "Claim Notice") describing in reasonable detail the facts giving rise
to any claim for indemnification hereunder promptly upon learning of the
existence of such claim. Upon receipt by the Indemnitor of a Claim Notice from
an Indemnified Party with respect to any claim of a third party, such Indemnitor
may assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Party and, in such event, shall agree to pay and otherwise discharge
with the Indemnitor's own assets all judgments, deficiencies, damages,
settlements, liabilities, losses, costs and legal and other expenses related
thereto; and the Indemnified Party shall cooperate in the defense or prosecution
thereof and shall furnish such records, information and testimony and attend all
such conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested in connection therewith. If the Indemnitor does not assume
the defense thereof within ten days of its receipt of the Claim Notice, the
Indemnitor shall similarly cooperate with the Indemnified Party in such defense
or prosecution. The Indemnified Party shall have the right to participate in the
defense or prosecution of any lawsuit with respect to which the Indemnitor has
assumed the defense and to employ its own counsel therein, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party unless
(i) the Indemnitor shall not have promptly employed counsel reasonably
satisfactory to such Indemnified Party to take charge of the defense of such
action, (ii) such Indemnified Party shall have reasonably concluded that there
exists a significant conflict of interest with respect to the conduct of such
Indemnified Party's defense by the Indemnitor, or (iii) the Indemnitor fails to
provide reasonable insurance to the Indemnified Party of its financial capacity
to defend such action and provide indemnification with respect to such action,
in any of which events such reasonable fees and expenses shall be borne by the
Indemnitor and the Indemnitor shall not have the right to direct the defense of
any such action on behalf of the Indemnified Party. The Indemnitor shall have
the right, in its sole discretion, to settle any claim (a) which is solely for
monetary damages for which indemnification has been sought and is available
hereunder, and (b) where there is no finding or admission of any violation of
any legal requirements or any violation of the rights of any Person and no
effect on any other claims that may be made against the indemnified party,
provided that the Indemnitor shall not agree to the settlement of any claim
which constitutes the subject of a Claim Notice which settlement in the
reasonable opinion of the Indemnified Party would have a material adverse
continuing effect on the business of the Indemnified Party without the prior
written consent of the Indemnified Party. The Indemnified Party shall give
written notice to the Indemnitor of any proposed settlement of any suit, which
settlement the Indemnitor may, if it shall have assumed the defense of the suit,
reject in its reasonable judgment within 10 days of receipt of such notice.
Notwithstanding the foregoing the Indemnified Party shall have the right to pay
or settle any suit for which indemnification has been sought and is available
hereunder, provided that, if the defense of such claim shall have been assumed
by the Indemnitor, the Indemnified Party shall automatically be deemed to have
waived any right to indemnification hereunder.
10. Confidential Information.
10.1 Except as otherwise provided in this section 10, each party
agrees that all business, technical and financial information it obtains from
the other party that is designated as confidential or proprietary in writing, or
is disclosed in such a manner that a reasonable person would understand the
nature and confidentiality of the information disclosed, is and shall be the
confidential property of the disclosing party and its licensors ("Confidential
Information" of the disclosing party). Each party's inventions, algorithms,
know-how and ideas disclosed to the other party hereunder shall be considered
the Confidential Information of the disclosing party. Confidential Information
shall not include information that is: (i) previously rightfully known to the
receiving party without restriction on disclosure, (ii) hereafter becomes known
to the general public, through no act or omission on the part of the receiving
party, (iii) disclosed to the receiving party by a third party without breach of
any separate nondisclosure obligation, or (iv) independently developed by the
receiving party without access to the Confidential Information of the disclosing
party, provided that only the specific information that meets one of the above
exclusions shall be excluded and not any other information that happens to
appear in proximity to such excluded portion (for example, a portion of a
document may be excluded without affecting the confidential nature of those
portions that do not themselves qualify for exclusion).
10.2 Except as expressly and unambiguously allowed herein, the
receiving party will hold in confidence and not use or disclose any Confidential
Information of the disclosing party and shall similarly bind its employees,
consultants and independent contractors in writing. The receiving party shall
treat trade secrets and Confidential Information related to the Licensed
Technology or otherwise disclosed hereunder in such manner and with such a
degree of care as such party treats its own trade secret and Confidential
Information, but in no event with less than a reasonable degree of care. The
receiving party shall be responsible for any unauthorized disclosures or use of
Confidential Information by its employees, consultants or independent
contractors.
10.3 Upon expiration or termination of this License Agreement all
of the Confidential Information of the disclosing party (including any copies or
digests thereof) will be returned to the disclosing party, and receiving party
will make no further use of such materials.
10.4 If required by law, the receiving party may disclose
Confidential Information of the disclosing party, but will give adequate prior
notice of such disclosure to the disclosing party to permit the disclosing party
to intervene and to request protective orders or other confidential treatment
therefore.
10.5 The parties acknowledge that money damages will not be an
adequate remedy if this Section 10 is breached and, therefore, either party may,
in addition to any other legal or equitable remedies, seek an injunction or
other equitable relief against such breach or threatened breach without the
necessity of posting any bond or surety.
11. Term and Termination.
11.1 Term. This License Agreement is perpetual and is irrevocable.
In the event of a material breach of this License Agreement by the Company, the
exclusive remedy available to Global shall be monetary damages. Global shall not
be able to terminate or revoke this License Agreement.
11.2 Breach. If either Party shall materially breach a material
provision of any of its obligations hereunder, the other may give written notice
specifying the default and indicating an intent to seek remedies therefore if
such default is not corrected. For purposes of this Section 11.2, a material
breach shall include without limitation a failure by the Company to pay
Royalties under this License. The defaulting party shall have thirty (30) days
in which to cure such breach, which cure period shall begin on the date it
receives the default notice from the non-breaching party. If the default is not
corrected by the end of such cure period, subject to the limitation provided in
Section 11.1 above, the non-breaching party shall have the right to seek any and
all remedies available to it at law or in equity, including the rights to
receive damages and to obtain equitable relief.
11.3 Termination for Convenience. The Company shall have the right
to terminate this License at any time upon at least sixty (60) days prior
written notice to Global, and if it elects to do so, all licensed rights granted
hereunder shall terminate.
11.6 Effects of Termination. Sections 1, 6, 7, 8, 9, 10, 11.6, and
12 of this License Agreement and any accrued rights to payment shall survive any
termination of this License Agreement. Further, any licenses granted third
parties pursuant to this License Agreement shall remain in effect after
termination in accordance with the terms of such licenses, provided that Global
shall continue to receive, and the Company shall continue to pay, Royalties from
such licenses.
12. General Provisions.
12.1 Neither party may assign this License Agreement, in whole or
in part, without the prior written consent of the other (which will not be
unreasonably withheld or delayed); provided however that either party may assign
this License Agreement: (1) to an Affiliate, or (2) to a transferee of
substantially all of the business operations of such party (whether by asset
sale, stock sale, merger, reorganization, operation of law, or otherwise) unless
such entity is a competitor of the other party. Any attempt to assign this
License Agreement other than as permitted above will be null and void.
12.2 This License Agreement shall be binding upon, inure to the
benefit of, and be enforceable by and against the respective heirs, executors,
administrators, personal representatives, successors and permitted assigns of
any of the parties to this License Agreement.
12.3 This License Agreement, and all matters arising out of or
relating to this Agreement, shall be governed by the laws of the State of
Florida without reference to conflicts of laws principles. Any legal action or
proceeding relating to this License Agreement shall be instituted in a state or
federal court in Tampa, Florida. The Parties agree to submit to the jurisdiction
of, and agree that venue is proper in, these courts in any such legal action or
proceeding.
12.4 All notices, including notices of address change, required to
be sent hereunder shall be in writing and shall be deemed to have been given
when mailed by first class mail to the following addresses:
If to Sky Way Aircraft, to:
______________
______________
______________
Fax:______________
With a copy to:
______________
______________
______________
Fax:______________
If to Sky Way Global, to:
______________
______________
______________
Fax:______________
With a copy to:
______________
______________
______________
Fax:______________
Both parties may treat documents faxed one to the other as original documents;
nevertheless, either party may require the other to exchange original signed
documents.
12.5 If any provision of this License Agreement is held to be
invalid or unenforceable, the remaining provisions of this License Agreement
will remain in full force.
12.6 The waiver by either party of any default of breach of this
License Agreement shall not constitute a waiver of any other or subsequent
default or breach.
12.7 This Agreement constitutes the complete agreement between the
parties and supercedes all prior or contemporaneous agreements or
representations, written or oral, concerning the subject matter of this License
Agreement. This License Agreement may not be modified or amended except in
writing signed by a duly authorized representative of each party; no other act,
document, usage or custom shall be deemed to amend or modify this License
Agreement.
12.8 Neither party shall be liable to the other for any delay or
failure to perform any obligation under this License Agreement if the delay or
failure is due to circumstances beyond the reasonable control of the
non-performing party.
IN WITNESS WHERE, the Parties have executed this License Agreement as
of the date above first written.
SKY WAY AIRCRAFT, INC.By: /s/ James Kent
Name: James Kent
Title: President
SKY WAY GLOBAL, LLC.By: /s/ Brent Kovar
Name: Brent Kovar
Title: Chief Executive Officer
/s/ Brent KovarBrent KovarEXHIBIT D
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Employment Agreement") dated as of the
20th day of June 2003, by and between James Kent, resident of the State of
Florida ("Executive"), SkyWay Communications Holding Corp., a corporation duly
existing under the laws of the State of Florida ("Parent Corporation") and Sky
Way Aircraft, Inc. (the "Company"), a corporation duly existing under the laws
of the State of Florida.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Employment; Term.The Company and the Parent Corporation hereby employ the
Executive and the Executive hereby accepts employment by them for the period
commencing on the date hereof (the "Appointment Date") and ending on the third
(3rd) anniversary of such date, unless earlier terminated as set forth herein
(the "Employment Term").
2. Position and Duties.
(a) Subject to the terms and conditions of this Agreement,
the Company and the Parent Corporation hereby employ the Executive to serve as
the Chief Executive Officer of the Company and the Parent Corporation. The
Executive hereby accepts such employment and agrees to perform such reasonable
responsibilities and duties commensurate with the aforesaid positions as
lawfully assigned and directed by the Boards of Directors of the Company and the
Parent Corporation (the "Boards"), or as set forth in the Bylaws of the Company
and the Parent Corporation. The Executive shall report to the Boards of the
Company and the Parent Corporation, and, subject to good faith consultation with
and the final authority of the Boards shall be responsible for the day-to-day
operations of the Company and the Parent Corporation. The Executive shall
diligently, faithfully and competently perform the Executive's duties and
obligations hereunder and shall devote all of his business time, labor, skill,
energy and attention exclusively to the business and affairs of the Company and
the Parent Corporation and to the furtherance of the interests, business and
prospects of the Company and the Parent Corporation.
(b) Other than Executive's position and employment at the
Company or Parent Corporation, Executive throughout the term of this Employment
Agreement shall not directly or indirectly, render services to any other person,
organization or entity on any matter whatsoever without the prior written
consent of the Company or Parent Corporation. In addition, Executive
acknowledges that while he is employed by the Company or Parent Corporation, he
will not compete with it. Competition prohibited includes, but is not limited
to, any direct or indirect, sole or joint, ownership, management, operation,
control or investment in the shares and/or securities of, loans or advances to,
employment or consulting with, or any other connection or affiliation with any
other entity, corporation, university, individual, except as provided in this
section, that directly or indirectly competes with the Company or Parent
Corporation.
3. Compensation.
As compensation for his services and covenants hereunder, the
xecutive shall receive the following:
(a) The Executive shall receive a salary ("Base Salary") at
the rate of $150,000 per annum, less withholdings and deductions required by
law. Such Base Salary shall be payable by the Company in accordance with the
Company's customary practice, but not less than bi-monthly. The Executive's Base
Salary shall be increased by a minimum ten percent (10%) on the first
anniversary of the Appointment Date and on each anniversary date thereafter
during the Employment Term.
(b) From time to time during the Employment Term, the
Executive shall be eligible to receive a bonus at the sole and absolute
discretion of the Company or the Parent Corporation (the "Discretionary Bonus").
Whether such Discretionary Bonus shall be granted to the Executive, and, if
granted, the timing, amount and manner of payment of any such Discretionary
Bonus shall be in the sole and absolute discretion of the Company or the Parent
Corporation.
(c) Subject to the terms and conditions below, the Executive
will be entitled to the grant of stock options to purchase 210,000 shares of
common stock of the Parent Corporation ("Stock Option Grant"). These options
will be granted from a pool of options to be set aside for employees of the
Company or the Parent Corporation in a stock option plan or similar incentive
plan adopted by the board of directors of the Parent Corporation. Such options
shall vest as follows: 70,000 on the 1st anniversary of the Appointment Date;
70,000 on the 2nd anniversary of the Appointment Date; and 70,000 on the 3rd
anniversary of the Appointment Date. The option exercise price shall be the
closing market price for the common stock on the Appointment Date, and the
exercise period will be three (3) years from the vesting date, or as otherwise
set forth in such stock option plan or similar incentive plan.
The terms and conditions of these options will be subject to
those set forth in the Parent Corporation's stock option plan or similar
incentive plan referred to above. The Executive understands that the provisions
of this plan and any agreement(s) entered into between the Executive and Parent
Corporation pursuant thereto will affect, among other things, exercisability of
these options in the event of the death or disability of the Executive,
transferability of these options, and the termination of the exercise period
upon certain significant corporate transactions.
The Executive acknowledges that the stock option plan or other
incentive plan, pursuant to which the Executive's options are to be granted,
must be approved by the Parent Corporation's stockholders, and such approval is
a condition to the Parent Corporation's obligation to issue options to the
Executive as described herein. The grant of these options will only be effective
upon the Executive's express agreement to be bound to the terms of such plan,
after the Executive has received a copy thereof. Subject to the terms and
conditions stated below, the Executive must remain employed by the Company or
the Parent Corporation for the options granted hereby to vest in accordance with
the above specified vesting schedule.
(d) The Executive expressly represents, acknowledges and
agrees that the Discretionary Bonus, if any, and stock options constitute
additional consideration ("Additional Consideration") payable to him for the
Executive's adherence to the covenants undertaken by him pursuant to Section 6
of this Agreement.
4. Benefits; Vacation; Expenses.
(a) During the Executive's employment hereunder, the Executive
shall be entitled to such vacation, personal leave, health, medical, insurance,
fringe and holiday benefits as the Company may provide to its executive
employees from time to time.
(b) During the Executive's employment hereunder, the Company
shall provide Executive with an automobile allowance in the amount of $750.00
per month, for payment of expenses relating to Executive's operation and use of
an automobile in the course of performing duties under this Agreement.
(c) During the Executive's employment hereunder, the Company
shall provide the Executive with a cellular telephone, appropriate laptop and a
nationwide alpha pager, and pay directly the cost of such services, for the
Executive's use in conducting the business of the Company and the Parent
Corporation.
(d) During the Executive's employment hereunder, the Executive
shall be reimbursed by the Company for all reasonable expenses incurred by him
in connection with the business of the Company or the Parent Corporation upon
the submission of appropriate documentation with respect thereto.
5. Termination.
(a) For Cause. Notwithstanding anything to the contrary
contained herein, the Company or the Parent Corporation may terminate this
Agreement immediately for "Cause" upon written notice to the Executive, in which
event the Company shall be obligated to pay the Executive that portion of the
Base Salary due him through the date of termination, and any accrued and unpaid
expense reimbursement pursuant to Section 4(d) hereof. For purposes of this
Agreement, "Cause" shall mean and be limited to (i) the conviction of the
Executive of a felony under federal or state law; (ii) acts of dishonesty or
moral turpitude constituting fraud or embezzlement or otherwise materially
adversely affecting the business or properties of the Company or the Parent
Corporation and/or their subsidiaries or affiliates; (iii) failure by the
Executive to obey the reasonable and lawful orders of the Board of Directors or
Chairman of the Company or the Parent Corporation; (iv) violation by the
Executive of the policies, procedures or guidelines promulgated by the Board of
Directors or the Chairman of the Company or the Parent Corporation; (v) willful
disregard by the Executive of the Executive's obligations hereunder; (vi) the
material failure of the Executive to perform his duties pursuant to Section 2
hereof, as reasonably determined by the Board of Directors or Chairman of the
Company or the Parent Corporation; or (vii) conduct by the Executive that
exceeds his actual authority. Notwithstanding anything herein to the contrary,
the Company or the Parent Corporation shall notify the Executive of any
purported grounds constituting Cause, and the Executive shall have no less than
ten (10) business days within which to cure such purported grounds. In the event
that such grounds cannot be cured within said period of time, and provided that
it is possible for such grounds to be cured, the Executive shall have a
reasonable period of time to cure such grounds, provided that he is proceeding
in good faith to cure same. The notice shall state with particularity the
conduct of the Executive constituting Cause. The Executive shall have a
reasonable opportunity to present his position to the Board of the Company or
the Parent Corporation during the notice period and prior to any termination.
(b) Disability. The Company or the Parent Corporation shall
have the right to terminate this Agreement upon written notice to the Executive
if the Executive becomes Disabled (as defined below). In such event, the Company
shall be obligated to pay the Executive that portion of the Base Salary due him
through the date of termination, and accrued and unpaid expense reimbursement
pursuant to Section 4(d) hereof. The Executive shall be deemed to have become
"Disabled" for the purposes of this Agreement if the Executive fails or is
unable to perform his material duties hereunder on account of illness or other
incapacity for a period of ninety (90) consecutive days during the Employment
Term or an aggregate of one hundred twenty (120) days (whether or not
consecutive) in any twelve-month period during the Employment Term.
(c) Death. If the Executive dies during the Term, then this
Agreement shall terminate immediately and the Executive's legal representative
shall be entitled that portion of the Executive's Base Salary due him through
the date of termination.
(d) Without Cause. The Executive's employment under this
Agreement may be terminated at any time by the Company or the Parent Corporation
without Cause. Upon any termination of the Executive's employment hereunder
without Cause during the first year of the Employment Term, as additional
consideration for the Executive's adherence to his covenants in Section 6
hereof, the Company shall continue to pay to the Executive for a period of six
(6) months the Executive's Base Salary based on the Executive's monthly salary
at the time of such termination and all medical and health benefits provided at
the time of termination. The Company shall also pay to the Executive all accrued
and unpaid expense reimbursement pursuant to Section 4(d) hereof. Upon any
termination of the Executive's employment hereunder without Cause following the
first anniversary date of the Appointment Date, as additional consideration for
the Executive's adherence to his covenants in Section 6 hereof, the Company
shall continue to pay to the Executive for a period of twelve (12) months the
Executive's Base Salary based on the Executive's monthly salary at the time of
such termination and all medical and health benefits provided at the time of
termination; provided however, in the event that Executive is terminated without
Cause in the final year of this employment contract, the Company shall continue
to pay Executive his Base Salary based on the Executive's monthly salary and all
medical and health benefits provided at the time of termination up until the end
of the contract term. The Company shall also pay to the Executive all accrued
and unpaid expense reimbursement pursuant to Section 4(d) hereof. In addition to
the foregoing, in the event Executive's employment is terminated by the Company
or the Parent Corporation without Cause, then all of the Options granted to
Executive shall immediately vest and become exercisable.
6. Confidential Information; Trade Secrets; Assignment of Inventions.
(a) Confidential Information. The Company and Parent Corporation
are fully aware that Executive is a skilled professional, with many years of
experience. Executive acknowledges that in the process, during the course and
arising out of his employment hereunder he may develop Confidential Information
for Company and Parent Corporation and may learn of Confidential Information
developed or owned by Company or Parent Corporation or entrusted to Company or
Parent Corporation by others or he may have developed, learned or been entrusted
with Confidential Information of the Company or Parent Corporation while working
on the Company's or Parent Corporation's projects which were handled by
affiliates of the Company. Executive shall comply with the Company and Parent
Corporation's policies and procedures for protecting Confidential Information,
including such Confidential Information developed, learned or entrusted prior to
the signing of this Employment Agreement, and shall never, directly or
indirectly, use any Confidential Information, or disclose, copy or allow access
to any Confidential Information to any other person, corporation or entity,
except as required by the normal and proper course of his duties for Company or
Parent Corporation. Executive understands that his obligations regarding Company
or Parent Corporation's Confidential Information shall survive as long as the
confidential nature of the information is maintained. Executive also understands
that these restrictions with regard to the Company or Parent Corporation's
Confidential information shall continue to apply after his employment
terminates, regardless of the reason of termination.
(i) Definition of Confidential Information. Confidential
Information means any and all information proprietary to Company or Parent
Corporation, whether or not reduced to writing or other tangible medium of
expression, and whether or not patented, patentable, capable of trade secret
protection, or protected as an unpublished or published work under the United
States Copyright Act of 1976, as amended. Confidential Information also includes
information relating to the Intellectual Property and Business Practices of
Company or Parent Corporation. Confidential information shall also include any
other information learned by Executive during the course of his employ with
Company or Parent Corporation or during his work on the Company or Parent
Corporation's projects, and Confidential Information, as defined herein, shall
belong solely to Company or Parent Corporation , and that Executive shall have
no right therein.
(ii) Definition of Intellectual Property. Intellectual
Property includes information relating to Company or Parent Corporation's
research and development, inventions, discoveries, developments, improvements,
methods and processing, know-how, drawings, blueprints, specifications, product
briefs, algorithm, computer programs and software, compositions, works,
concepts, designs, ideas, prototypes, models, samples, screens, molds, lasts,
patents, copyrights, trademarks, trade names, Trade Secrets, formulas, writings,
notes, and patent, trademark, and copyright applications.
(iii) Definition of Business Practices. Business Practices
includes information relating to Company or Parent Corporation's intellectual
property, business plans, financial information, products, services,
manufacturing processes and methods, costs, sources of supply, advertising and
marketing plans, customer lists, manufacturer's lists, grower's lists,
distribution lists, sales, profits, pricing methods, personnel, and business
relationships.
(iv) Definition of Trade Secrets. For the purposes of this
Agreement, Trade Secrets includes, but is not limited to, all forms and types of
financial, business, scientific, technical, economic, or engineering
information, including patterns, plans, compilations, program devices, formulas,
designs, prototypes, methods, techniques, processes, procedures, programs, or
codes, whether tangible, and whether or how stored, compiled, or memorialized
physically, electronically, graphically, photographically, or in writing if (1)
the owner thereof has taken reasonable measures to keep such information secret;
(2) and the information derives independent economic value, actual or potential,
from not being generally known to, and not being readily ascertainable through
proper means by, the public.
(b) Disclosure of Intellectual Property and Assignment of Rights.
Executive shall promptly and fully disclose to Company or Parent Corporation all
Intellectual Property (as defined above), including but not limited to any
ideas, inventions, original works of authorship, developments, improvements,
modifications, enhancements or Trade Secrets, and in and to any technology,
process, application, documentation, software, hardware, firmware, creative
works, know-how and information, conceived, made, created, developed or reduced
to practice by Executive (whether alone or with others, whether or not during
normal business hours and whether or not on Company or Parent Corporation 's
premises) (the "Inventions") during and arising out of his involvement with the
Company or as a consultant, prior to this Employment Agreement, or during his
employment or within six months thereafter that relates in any way to the
business or prospective activities of Company or Parent Corporation or that
results from or is suggested by, work the Executive does for Company or Parent
Corporation (the "Company or Parent Corporation Inventions")
(i) The Executive hereby declares that he is fully aware
that the Company or Parent Corporation has full right, title and interest in and
to any Inventions and Company or Parent Corporation Inventions, and the employee
acknowledges and agrees that the employer has the entire right, title and
interest in and to any proprietary rights in the Company or Parent Corporation
Inventions or based thereon, except that the Company hereby acknowledges that
the inventions set forth on Exhibit A hereto, shall not be deemed an Invention
or Company or Parent Corporation and shall belong solely to Executive and the
other registered inventors, if any.
(ii) In consideration for the Additional Consideration,
Executive hereby assigns and agrees to assign to the Company and the Parent
Corporation, or its designees, the entire full right, title, and interest in and
to all such Inventions or Company or Parent Corporation Inventions.
(iii) The Executive agrees that, during and subsequent to
his employment by Company or Parent Corporation , he will, at Company or Parent
Corporation 's request and expense, execute any and all applications for
domestic and foreign patents, copyrights or other rights and otherwise provide
assistance (including, but not limited to, the execution and delivery of
instruments of further assurance or confirmation) to assign such Inventions and
Company or Parent Corporation Inventions to Company or Parent Corporation and to
permit Company or Parent Corporation to enforce any patents, copyrights or other
rights in and to such Inventions and Company or Parent Corporation Inventions.
All copyrightable works that Executive shall create shall be considered "work
made for hire".
(c) Protection of Documents and Return of Property. Executive will
protect, secure and safeguard all documents, books, records, tapes, disks,
videos, microfilm, micro-fiche, and other media currently existing or to be
developed in the future, in which Confidential Information is contained
("Confidential Documents and Items"), which are in the Executive's possession or
in such other possession to which the Executive, by using reasonable efforts,
could gain access to. Executive acknowledges that such Confidential Documents
and Items are and shall remain the sole and exclusive property of the Company or
Parent Corporation. Executive will not copy any Confidential Documents and Items
or remove any Confidential Documents and Items, or copies thereof, from the
Executive's premises, except as required by the normal and proper course of his
employment with the Company or Parent Corporation. Executive agrees to return to
the Company or Parent Corporation promptly upon the termination of his
employment, or at any other time when requested by the Company or Parent
Corporation, any and all property of the Executive, including, but not limited
to, all Confidential Documents and Items, and copies thereof in his possession
or control. Company or Parent Corporation will provide Executive with
reasonable, customary and cost-effective means and mechanism to protect the
Confidential Documents and Items.
(d) The Executive agrees that he shall not, directly or
indirectly, during his employment hereunder or at any time thereafter, except as
required for the conduct of the business of the Company or the Parent
Corporation or as authorized in writing by the Company or Parent Corporation,
use, publish, appropriate, exploit, copy or summarize Confidential Information,
or communicate or disclose Confidential Information to any third party.
(e) Upon termination of the Executive's employment hereunder, the
Executive shall immediately deliver or cause to be delivered to the Company or
Parent Corporation all of the Confidential Information in the Executive's
possession or control, including, without limitation: originals and/or copies of
books; catalogues; sales brochures; customer lists; price lists; employee
manuals; operation manuals; marketing and sales plans and strategies; files;
computer disks; and all other documents and materials, in any form whatsoever,
reflecting or referencing Confidential Information as well as all other
materials and equipment furnished to or acquired by the Executive as a result of
or during the course of the Executive's employment by the Company.
(f) During the Executive's employment hereunder and for a
period of six (6) months following the termination of such employment, the
Executive shall not, directly or indirectly, for himself or on behalf of any
other person, firm or entity solicit, have any contact with or accept business
from, any of the Company's or Parent Corporation's customers or clients, or
known customer or client prospects, or otherwise induce or influence any such
customer or client or known customer or client prospect to reduce its volume of
business, or terminate or divert its relationship or otherwise in any way
adversely affect its relationship, with the Company or Parent Corporation.
(g) The Executive acknowledges and agrees that the
restrictions and limitations contained in this Section 6 are reasonable as to
scope and duration and necessary to protect the business of the Company and the
Parent Corporation, to protect their proprietary interest in their Confidential
Information, and to preserve for them the competitive advantage derived from
maintaining the Confidential Information as secret. In the event that any of the
restrictions and limitations contained in this Section 6 are deemed unreasonable
or to otherwise exceed the time and/or geographic limitations permitted by
applicable law, such provisions of this Section shall be reformed to conform
with the maximum time and/or geographic limitations permitted by applicable law.
(h) The Executive acknowledges and agrees that it is
impossible to measure in money the damages which will accrue to the Company or
the Parent Corporation if the Executive shall breach or be in default of any of
the his representations or agreements set forth in this Section 6. Accordingly,
if the Executive breaches or is in default of any of the representations or
agreements set forth in this Section 6, the Company or Parent Corporation shall
have the full right to seek injunctive relief, in addition to any other existing
rights provided in this Agreement or by operation of law, without the
requirement of posting bond. In any action or proceeding instituted by or on
behalf of the Company or Parent Corporation to enforce any term of this Section
6, the Executive hereby waives any claim or defense thereto that the Company or
Parent Corporation has an adequate remedy at law or that the Company or Parent
Corporation has not been, or is not being, irreparably injured by the
Executive's breach or default. The rights and remedies of the Company and Parent
Corporation pursuant to this Section 6 are cumulative, in addition to, and shall
not be deemed to exclude, any other right or remedy which the Company or Parent
Corporation may have pursuant to this Agreement or otherwise, at law or in
equity.
7. Representations and Warranties of the Parties.
(a) In order to induce the Executive to enter into this
Agreement, the Company hereby represents and warrants to the Executive that (i)
the Company has the power and authority to execute and deliver this Agreement
and to perform all of its obligations hereunder, (ii) the execution and delivery
of this Agreement by the Company and the performance of its obligations
hereunder will not violate or be in conflict with any fiduciary or other duty,
instrument, agreement, document, arrangement or other understanding to which the
Company is a party or by which it may be bound or subject and (iii) the Company
is not a party to any instrument, agreement, document, arrangement or other
understanding with any person restricting the disclosure by the Company to the
Executive of any confidential information or the hiring of the Executive for
employment hereunder.
(b) In order to induce the Company to enter into this
Agreement, the Executive hereby represents and warrants to the Company that (i)
the Executive has the legal capacity and unrestricted right to execute and
deliver this Agreement and to perform all of his obligations hereunder and (ii)
the execution and delivery of this Agreement by the Executive and the
performance of his obligations hereunder will not violate or be in conflict with
any fiduciary or other duty, instrument, agreement (including but not limited to
any employment agreement), document, arrangement or other understanding to which
the Executive is a party or by which he may be bound or subject.
8. Directors and Officers Insurance
In connection with the Executive's employment hereunder, the
Executive shall be entitled to the maximum directors and officers liability
insurance coverage as the Company or Parent Corporation may provide to its
directors and officers from time to time.
9. Amendment and Modification.
This Agreement may not be amended, modified or changed except by
a writing signed by the parties hereto.
10. Waiver of Compliance; Consents.
Except as otherwise provided in this Agreement, any failure of
either of the parties to comply with any obligation, covenant, agreement or
condition herein may be waived by the party entitled to the benefit thereof only
by written instrument signed by the party granting such waiver, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of a party, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 10.
11. Notices.
All notices and other communications hereunder shall be deemed
given upon (a) the sender's confirmation of receipt of a facsimile transmission
to the recipient's facsimile number set forth below, (b) confirmed delivery by a
standard overnight carrier to the recipient's address set forth below, (c)
delivery by hand to the recipient's address set forth below or (c) the
expiration of five (5) business days after the day mailed in the United States
by certified or registered mail, postage prepaid, return receipt requested,
addressed to the recipient's addresses set forth below (or, in each case, to or
at such other facsimile number or address for a party as such party may specify
by notice given in accordance with this Section 11):
(a) If to the Company or Parent Corporation, to:
_________________
_________________
_________________
_________________
With a copy to:
_________________
_________________
_________________
_________________
(b) If to the Executive, to:
_________________
_________________
_________________
With a copy to:
_________________
_________________
_________________
_________________
12. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
the Executive and his heirs and legal representatives and the Company and the
Parent Corporation and their successors and assigns.
13. Governing Law.
This Agreement shall be deemed to have been made, drafted,
negotiated and the transactions contemplated hereby consummated and fully
performed in the State of Florida, and shall be governed by and construed in
accordance with the internal laws of the State of Florida without regard to the
conflicts of laws rules thereof.
14. Assignment.
Neither this Agreement nor any of the Executive's rights, powers,
duties or obligations hereunder may be assigned by the Executive.
15. Severability.
If any provision of this Agreement shall be unenforceable under
any applicable law, then notwithstanding such unenforceability the remainder of
this Agreement shall continue in full force and effect.
16. Entire Agreement.
This Agreement constitutes the entire agreement and understanding
of the parties hereto with respect to the matters set forth herein and
supersedes all prior agreements and understandings between the parties with
respect to those matters. There are no promises, representations, warranties,
covenants or undertakings other than those set forth herein.
17. Counterparts.
This Agreement may be executed in counterparts, each of which
shall be deemed an original and both of which taken together shall constitute
one and the same document.
18. Survival.
To the extent required to give effect to the intent of the
parties to this Agreement, the provisions of this Agreement shall survive any
termination hereof and any termination of the employment of the Executive
hereunder.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SKYWAY COMMUNICATIONS HOLDING CORP.By: /s/ Jamee Kalimi
Name: Jamee Kalimi
Title: President
/s/ James KentJames KentSKY WAY AIRCRAFT, INC.By: /s/ Brent Kovar
Name: Brent Kovar
Title: Chief Executive Officer
EXHIBIT EEMPLOYMENT AGREEMENT
This Employment Agreement (the "Employment Agreement") dated as of the
20th day of June 2003, by and between Brent Kovar, resident of the State of
Florida ("Executive"), SkyWay Communications Holding Corp., a corporation duly
existing under the laws of the State of Florida ("Parent Corporation") and Sky
Way Aircraft, Inc. (the "Company"), a corporation duly existing under the laws
of the State of Florida.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Employment; Term.The Company and the Parent Corporation hereby employ the
Executive and the Executive hereby accepts employment by them for the period
commencing on the date hereof (the "Appointment Date") and ending on the third
(3rd) anniversary of such date, unless earlier terminated as set forth herein
(the "Employment Term").
2. Position and Duties.
(a) Subject to the terms and conditions of this Agreement,
the Company and the Parent Corporation hereby employ the Executive to serve as
the President and Chief Technology Officer of the Company and the Parent
Corporation. The Executive hereby accepts such employment and agrees to perform
such reasonable responsibilities and duties commensurate with the aforesaid
positions as lawfully assigned and directed by the Boards of Directors of the
Company and the Parent Corporation (the "Boards"), or as set forth in the Bylaws
of the Company and the Parent Corporation. The Executive shall report to the
Boards and the Chief Executive Officer (the "CEO") of the Company and the Parent
Corporation, and, subject to good faith consultation with and the final
authority of the CEO, shall be responsible for the day-to-day operations of the
Company and the Parent Corporation. The Executive shall diligently, faithfully
and competently perform the Executive's duties and obligations hereunder and
shall devote all of his business time, labor, skill, energy and attention
exclusively to the business and affairs of the Company and the Parent
Corporation and to the furtherance of the interests, business and prospects of
the Company and the Parent Corporation.
(b) Other than Executive's position and employment at the
Company or Parent Corporation, Executive throughout the term of this Employment
Agreement shall not directly or indirectly, render services to any other person,
organization or entity on any matter whatsoever without the prior written
consent of the Company or Parent Corporation. In addition, Executive
acknowledges that while he is employed by the Company or Parent Corporation, he
will not compete with it. Competition prohibited includes, but is not limited
to, any direct or indirect, sole or joint, ownership, management, operation,
control or investment in the shares and/or securities of, loans or advances to,
employment or consulting with, or any other connection or affiliation with any
other entity, corporation, university, individual, except as provided in this
section, that directly or indirectly competes with the Company or Parent
Corporation.
3. Compensation.
As compensation for his services and covenants hereunder, the
Executive shall receive the following:
(a) The Executive shall receive a salary ("Base Salary") at
the rate of $150,000 per annum, less withholdings and deductions required by
law. Such Base Salary shall be payable by the Company in accordance with the
Company's customary practice, but not less than bi-monthly. The Executive's Base
Salary shall be increased by a minimum ten percent (10%) on the first
anniversary of the Appointment Date and on each anniversary date thereafter
during the Employment Term.
(b) From time to time during the Employment Term, the
Executive shall be eligible to receive a bonus at the sole and absolute
discretion of the Company or the Parent Corporation (the "Discretionary Bonus").
Whether such Discretionary Bonus shall be granted to the Executive, and, if
granted, the timing, amount and manner of payment of any such Discretionary
Bonus shall be in the sole and absolute discretion of the Company or the Parent
Corporation.
(c) Subject to the terms and conditions below, the Executive
will be entitled to the grant of stock options to purchase 210,000 shares of
common stock of the Parent Corporation ("Stock Option Grant"). These options
will be granted from a pool of options to be set aside for employees of the
Company or the Parent Corporation in a stock option plan or similar incentive
plan adopted by the board of directors of the Parent Corporation. Such options
shall vest as follows: 70,000 on the 1st anniversary of the Appointment Date;
70,000 on the 2nd anniversary of the Appointment Date; and 70,000 on the 3rd
anniversary of the Appointment Date. The option exercise price shall be the
closing market price for the common stock on the Appointment Date, and the
exercise period will be three (3) years from the vesting date, or as otherwise
set forth in such stock option plan or similar incentive plan.
The terms and conditions of these options will be subject to
those set forth in the Parent Corporation's stock option plan or similar
incentive plan referred to above. The Executive understands that the provisions
of this plan and any agreement(s) entered into between the Executive and Parent
Corporation pursuant thereto will affect, among other things, exercisability of
these options in the event of the death or disability of the Executive,
transferability of these options, and the termination of the exercise period
upon certain significant corporate transactions.
The Executive acknowledges that the stock option plan or other
incentive plan, pursuant to which the Executive's options are to be granted,
must be approved by the Parent Corporation's stockholders, and such approval is
a condition to the Parent Corporation's obligation to issue options to the
Executive as described herein. The grant of these options will only be effective
upon the Executive's express agreement to be bound to the terms of such plan,
after the Executive has received a copy thereof. Subject to the terms and
conditions stated below, the Executive must remain employed by the Company or
the Parent Corporation for the options granted hereby to vest in accordance with
the above specified vesting schedule.
(d) The Executive expressly represents, acknowledges and
agrees that the Discretionary Bonus, if any, and stock options constitute
additional consideration ("Additional Consideration") payable to him for the
Executive's adherence to the covenants undertaken by him pursuant to Section 6
of this Agreement.
4. Benefits; Vacation; Expenses.
(a) During the Executive's employment hereunder, the Executive
shall be entitled to such vacation, personal leave, health, medical, insurance,
fringe and holiday benefits as the Company may provide to its executive
employees from time to time.
(b) During the Executive's employment hereunder, the Company
shall provide Executive with an automobile allowance in the amount of $750.00
per month, for payment of expenses relating to Executive's operation and use of
an automobile in the course of performing duties under this Agreement.
(c) During the Executive's employment hereunder, the Company
shall provide the Executive with a cellular telephone, appropriate laptop and a
nationwide alpha pager, and pay directly the cost of such services, for the
Executive's use in conducting the business of the Company and the Parent
Corporation.
(d) During the Executive's employment hereunder, the Executive
shall be reimbursed by the Company for all reasonable expenses incurred by him
in connection with the business of the Company or the Parent Corporation upon
the submission of appropriate documentation with respect thereto.
5. Termination.
(a) For Cause. Notwithstanding anything to the contrary
contained herein, the Company or the Parent Corporation may terminate this
Agreement immediately for "Cause" upon written notice to the Executive, in which
event the Company shall be obligated to pay the Executive that portion of the
Base Salary due him through the date of termination, and any accrued and unpaid
expense reimbursement pursuant to Section 4(d) hereof. For purposes of this
Agreement, "Cause" shall mean and be limited to (i) the conviction of the
Executive of a felony under federal or state law; (ii) acts of dishonesty or
moral turpitude constituting fraud or embezzlement or otherwise materially
adversely affecting the business or properties of the Company or the Parent
Corporation and/or their subsidiaries or affiliates; (iii) failure by the
Executive to obey the reasonable and lawful orders of the Board of Directors or
Chairman of the Company or the Parent Corporation; (iv) violation by the
Executive of the policies, procedures or guidelines promulgated by the Board of
Directors or the Chairman of the Company or the Parent Corporation; (v) willful
disregard by the Executive of the Executive's obligations hereunder; (vi) the
material failure of the Executive to perform his duties pursuant to Section 2
hereof, as reasonably determined by the Board of Directors or Chairman of the
Company or the Parent Corporation; or (vii) conduct by the Executive that
exceeds his actual authority. Notwithstanding anything herein to the contrary,
the Company or the Parent Corporation shall notify the Executive of any
purported grounds constituting Cause, and the Executive shall have no less than
ten (10) business days within which to cure such purported grounds. In the event
that such grounds cannot be cured within said period of time, and provided that
it is possible for such grounds to be cured, the Executive shall have a
reasonable period of time to cure such grounds, provided that he is proceeding
in good faith to cure same. The notice shall state with particularity the
conduct of the Executive constituting Cause. The Executive shall have a
reasonable opportunity to present his position to the Board of the Company or
the Parent Corporation during the notice period and prior to any termination.
(b) Disability. The Company or the Parent Corporation shall
have the right to terminate this Agreement upon written notice to the Executive
if the Executive becomes Disabled (as defined below). In such event, the Company
shall be obligated to pay the Executive that portion of the Base Salary due him
through the date of termination, and accrued and unpaid expense reimbursement
pursuant to Section 4(d) hereof. The Executive shall be deemed to have become
"Disabled" for the purposes of this Agreement if the Executive fails or is
unable to perform his material duties hereunder on account of illness or other
incapacity for a period of ninety (90) consecutive days during the Employment
Term or an aggregate of one hundred twenty (120) days (whether or not
consecutive) in any twelve-month period during the Employment Term.
(c) Death. If the Executive dies during the Term, then this
Agreement shall terminate immediately and the Executive's legal representative
shall be entitled that portion of the Executive's Base Salary due him through
the date of termination.
(d) Without Cause. The Executive's employment under this
Agreement may be terminated at any time by the Company or the Parent Corporation
without Cause. Upon any termination of the Executive's employment hereunder
without Cause during the first year of the Employment Term, as additional
consideration for the Executive's adherence to his covenants in Section 6
hereof, the Company shall continue to pay to the Executive for a period of six
(6) months the Executive's Base Salary based on the Executive's monthly salary
at the time of such termination and all medical and health benefits provided at
the time of termination. The Company shall also pay to the Executive all accrued
and unpaid expense reimbursement pursuant to Section 4(d) hereof. Upon any
termination of the Executive's employment hereunder without Cause following the
first anniversary date of the Appointment Date, as additional consideration for
the Executive's adherence to his covenants in Section 6 hereof, the Company
shall continue to pay to the Executive for a period of twelve (12) months the
Executive's Base Salary based on the Executive's monthly salary at the time of
such termination and all medical and health benefits provided at the time of
termination; provided however, in the event that Executive is terminated without
Cause in the final year of this employment contract, the Company shall continue
to pay Executive his Base Salary based on the Executive's monthly salary and all
medical and health benefits provided at the time of termination up until the end
of the contract term. The Company shall also pay to the Executive all accrued
and unpaid expense reimbursement pursuant to Section 4(d) hereof. In addition to
the foregoing, in the event Executive's employment is terminated by the Company
or the Parent Corporation without Cause, then all of the Options granted to
Executive shall immediately vest and become exercisable.
6. Confidential Information; Trade Secrets; Assignment of Inventions.
(a) Confidential Information. The Company and Parent
Corporation are fully aware that Executive is a skilled professional, with many
years of experience. Executive acknowledges that in the process, during the
course and arising out of his employment hereunder he may develop Confidential
Information for Company and Parent Corporation and may learn of Confidential
Information developed or owned by Company or Parent Corporation or entrusted to
Company or Parent Corporation by others or he may have developed, learned or
been entrusted with Confidential Information of the Company or Parent
Corporation while working on the Company's or Parent Corporation's projects
which were handled by affiliates of the Company. Executive shall comply with the
Company and Parent Corporation's policies and procedures for protecting
Confidential Information, including such Confidential Information developed,
learned or entrusted prior to the signing of this Employment Agreement, and
shall never, directly or indirectly, use any Confidential Information, or
disclose, copy or allow access to any Confidential Information to any other
person, corporation or entity, except as required by the normal and proper
course of his duties for Company or Parent Corporation. Executive understands
that his obligations regarding Company or Parent Corporation's Confidential
Information shall survive as long as the confidential nature of the information
is maintained. Executive also understands that these restrictions with regard to
the Company or Parent Corporation's Confidential information shall continue to
apply after his employment terminates, regardless of the reason of termination.
(i) Definition of Confidential Information. Confidential
Information means any and all information proprietary to Company or Parent
Corporation, whether or not reduced to writing or other tangible medium of
expression, and whether or not patented, patentable, capable of trade secret
protection, or protected as an unpublished or published work under the United
States Copyright Act of 1976, as amended. Confidential Information also includes
information relating to the Intellectual Property and Business Practices of
Company or Parent Corporation. Confidential information shall also include any
other information learned by Executive during the course of his employ with
Company or Parent Corporation or during his work on the Company or Parent
Corporation's projects, and Confidential Information, as defined herein, shall
belong solely to Company or Parent Corporation , and that Executive shall have
no right therein.
(ii) Definition of Intellectual Property. Intellectual
Property includes information relating to Company or Parent Corporation's
research and development, inventions, discoveries, developments, improvements,
methods and processing, know-how, drawings, blueprints, specifications, product
briefs, algorithm, computer programs and software, compositions, works,
concepts, designs, ideas, prototypes, models, samples, screens, molds, lasts,
patents, copyrights, trademarks, trade names, Trade Secrets, formulas, writings,
notes, and patent, trademark, and copyright applications.
(iii) Definition of Business Practices. Business Practices
includes information relating to Company or Parent Corporation's intellectual
property, business plans, financial information, products, services,
manufacturing processes and methods, costs, sources of supply, advertising and
marketing plans, customer lists, manufacturer's lists, grower's lists,
distribution lists, sales, profits, pricing methods, personnel, and business
relationships.
(iv) Definition of Trade Secrets. For the purposes of this
Agreement, Trade Secrets includes, but is not limited to, all forms and types of
financial, business, scientific, technical, economic, or engineering
information, including patterns, plans, compilations, program devices, formulas,
designs, prototypes, methods, techniques, processes, procedures, programs, or
codes, whether tangible, and whether or how stored, compiled, or memorialized
physically, electronically, graphically, photographically, or in writing if (1)
the owner thereof has taken reasonable measures to keep such information secret;
(2) and the information derives independent economic value, actual or potential,
from not being generally known to, and not being readily ascertainable through
proper means by, the public.
(b) Disclosure of Intellectual Property and Assignment of
Rights. Executive shall promptly and fully disclose to Company or Parent
Corporation all Intellectual Property (as defined above), including but not
limited to any ideas, inventions, original works of authorship, developments,
improvements, modifications, enhancements or Trade Secrets, and in and to any
technology, process, application, documentation, software, hardware, firmware,
creative works, know-how and information, conceived, made, created, developed or
reduced to practice by Executive (whether alone or with others, whether or not
during normal business hours and whether or not on Company or Parent Corporation
's premises) (the "Inventions") during and arising out of his involvement with
the Company or as a consultant, prior to this Employment Agreement, or during
his employment or within six months thereafter that relates in any way to the
business or prospective activities of Company or Parent Corporation or that
results from or is suggested by, work the Executive does for Company or Parent
Corporation (the "Company or Parent Corporation Inventions")
(i) The Executive hereby declares that he is fully aware
that the Company or Parent Corporation has full right, title and interest in and
to any Inventions and Company or Parent Corporation Inventions, and the employee
acknowledges and agrees that the employer has the entire right, title and
interest in and to any proprietary rights in the Company or Parent Corporation
Inventions or based thereon, except that the Company hereby acknowledges that
the inventions set forth on Exhibit A hereto, shall not be deemed an Invention
or Company or Parent Corporation and shall belong solely to Executive and the
other registered inventors, if any.
(ii) In consideration for the Additional Consideration,
Executive hereby assigns and agrees to assign to the Company and the Parent
Corporation, or its designees, the entire full right, title, and interest in and
to all such Inventions or Company or Parent Corporation Inventions.
(iii) The Executive agrees that, during and subsequent to
his employment by Company or Parent Corporation , he will, at Company or Parent
Corporation 's request and expense, execute any and all applications for
domestic and foreign patents, copyrights or other rights and otherwise provide
assistance (including, but not limited to, the execution and delivery of
instruments of further assurance or confirmation) to assign such Inventions and
Company or Parent Corporation Inventions to Company or Parent Corporation and to
permit Company or Parent Corporation to enforce any patents, copyrights or other
rights in and to such Inventions and Company or Parent Corporation Inventions.
All copyrightable works that Executive shall create shall be considered "work
made for hire".
(c) Protection of Documents and Return of Property. Executive
will protect, secure and safeguard all documents, books, records, tapes, disks,
videos, microfilm, micro-fiche, and other media currently existing or to be
developed in the future, in which Confidential Information is contained
("Confidential Documents and Items"), which are in the Executive's possession or
in such other possession to which the Executive, by using reasonable efforts,
could gain access to. Executive acknowledges that such Confidential Documents
and Items are and shall remain the sole and exclusive property of the Company or
Parent Corporation. Executive will not copy any Confidential Documents and Items
or remove any Confidential Documents and Items, or copies thereof, from the
Executive's premises, except as required by the normal and proper course of his
employment with the Company or Parent Corporation. Executive agrees to return to
the Company or Parent Corporation promptly upon the termination of his
employment, or at any other time when requested by the Company or Parent
Corporation, any and all property of the Executive, including, but not limited
to, all Confidential Documents and Items, and copies thereof in his possession
or control. Company or Parent Corporation will provide Executive with
reasonable, customary and cost-effective means and mechanism to protect the
Confidential Documents and Items.
(d) The Executive agrees that he shall not, directly or
indirectly, during his employment hereunder or at any time thereafter, except as
required for the conduct of the business of the Company or the Parent
Corporation or as authorized in writing by the Company or Parent Corporation,
use, publish, appropriate, exploit, copy or summarize Confidential Information,
or communicate or disclose Confidential Information to any third party.
(e) Upon termination of the Executive's employment hereunder,
the Executive shall immediately deliver or cause to be delivered to the Company
or Parent Corporation all of the Confidential Information in the Executive's
possession or control, including, without limitation: originals and/or copies of
books; catalogues; sales brochures; customer lists; price lists; employee
manuals; operation manuals; marketing and sales plans and strategies; files;
computer disks; and all other documents and materials, in any form whatsoever,
reflecting or referencing Confidential Information as well as all other
materials and equipment furnished to or acquired by the Executive as a result of
or during the course of the Executive's employment by the Company.
(f) During the Executive's employment hereunder and for a
period of six (6) months following the termination of such employment, the
Executive shall not, directly or indirectly, for himself or on behalf of any
other person, firm or entity solicit, have any contact with or accept business
from, any of the Company's or Parent Corporation's customers or clients, or
known customer or client prospects, or otherwise induce or influence any such
customer or client or known customer or client prospect to reduce its volume of
business, or terminate or divert its relationship or otherwise in any way
adversely affect its relationship, with the Company or Parent Corporation.
(g) The Executive acknowledges and agrees that the
restrictions and limitations contained in this Section 6 are reasonable as to
scope and duration and necessary to protect the business of the Company and the
Parent Corporation, to protect their proprietary interest in their Confidential
Information, and to preserve for them the competitive advantage derived from
maintaining the Confidential Information as secret. In the event that any of the
restrictions and limitations contained in this Section 6 are deemed unreasonable
or to otherwise exceed the time and/or geographic limitations permitted by
applicable law, such provisions of this Section shall be reformed to conform
with the maximum time and/or geographic limitations permitted by applicable law.
(h) The Executive acknowledges and agrees that it is
impossible to measure in money the damages which will accrue to the Company or
the Parent Corporation if the Executive shall breach or be in default of any of
the his representations or agreements set forth in this Section 6. Accordingly,
if the Executive breaches or is in default of any of the representations or
agreements set forth in this Section 6, the Company or Parent Corporation shall
have the full right to seek injunctive relief, in addition to any other existing
rights provided in this Agreement or by operation of law, without the
requirement of posting bond. In any action or proceeding instituted by or on
behalf of the Company or Parent Corporation to enforce any term of this Section
6, the Executive hereby waives any claim or defense thereto that the Company or
Parent Corporation has an adequate remedy at law or that the Company or Parent
Corporation has not been, or is not being, irreparably injured by the
Executive's breach or default. The rights and remedies of the Company and Parent
Corporation pursuant to this Section 6 are cumulative, in addition to, and shall
not be deemed to exclude, any other right or remedy which the Company or Parent
Corporation may have pursuant to this Agreement or otherwise, at law or in
equity.
7. Representations and Warranties of the Parties.
(a) In order to induce the Executive to enter into this
Agreement, the Company hereby represents and warrants to the Executive that (i)
the Company has the power and authority to execute and deliver this Agreement
and to perform all of its obligations hereunder, (ii) the execution and delivery
of this Agreement by the Company and the performance of its obligations
hereunder will not violate or be in conflict with any fiduciary or other duty,
instrument, agreement, document, arrangement or other understanding to which the
Company is a party or by which it may be bound or subject and (iii) the Company
is not a party to any instrument, agreement, document, arrangement or other
understanding with any person restricting the disclosure by the Company to the
Executive of any confidential information or the hiring of the Executive for
employment hereunder.
(b) In order to induce the Company to enter into this
Agreement, the Executive hereby represents and warrants to the Company that (i)
the Executive has the legal capacity and unrestricted right to execute and
deliver this Agreement and to perform all of his obligations hereunder and (ii)
the execution and delivery of this Agreement by the Executive and the
performance of his obligations hereunder will not violate or be in conflict with
any fiduciary or other duty, instrument, agreement (including but not limited to
any employment agreement), document, arrangement or other understanding to which
the Executive is a party or by which he may be bound or subject.
8. Directors and Officers Insurance
In connection with the Executive's employment hereunder, the
Executive shall be entitled to the maximum directors and officers liability
insurance coverage as the Company or Parent Corporation may provide to its
directors and officers from time to time.
9. Amendment and Modification.
This Agreement may not be amended, modified or changed except by
a writing signed by the parties hereto.
10. Waiver of Compliance; Consents.
Except as otherwise provided in this Agreement, any failure of
either of the parties to comply with any obligation, covenant, agreement or
condition herein may be waived by the party entitled to the benefit thereof only
by written instrument signed by the party granting such waiver, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of a party, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 10.
11. Notices.
All notices and other communications hereunder shall be deemed
given upon (a) the sender's confirmation of receipt of a facsimile transmission
to the recipient's facsimile number set forth below, (b) confirmed delivery by a
standard overnight carrier to the recipient's address set forth below, (c)
delivery by hand to the recipient's address set forth below or (c) the
expiration of five (5) business days after the day mailed in the United States
by certified or registered mail, postage prepaid, return receipt requested,
addressed to the recipient's addresses set forth below (or, in each case, to or
at such other facsimile number or address for a party as such party may specify
by notice given in accordance with this Section 11):
(a) If to the Company or Parent Corporation, to:
_________________
_________________
_________________
_________________
With a copy to:
_________________
_________________
_________________
_________________
(b) If to the Executive, to:
_________________
_________________
_________________
With a copy to:
_________________
_________________
_________________
_________________
12. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
the Executive and his heirs and legal representatives and the Company and the
Parent Corporation and their successors and assigns.
13. Governing Law.
This Agreement shall be deemed to have been made, drafted,
negotiated and the transactions contemplated hereby consummated and fully
performed in the State of Florida, and shall be governed by and construed in
accordance with the internal laws of the State of Florida without regard to the
conflicts of laws rules thereof.
14. Assignment.
Neither this Agreement nor any of the Executive's rights, powers,
duties or obligations hereunder may be assigned by the Executive.
15. Severability.
If any provision of this Agreement shall be unenforceable under
any applicable law, then notwithstanding such unenforceability the remainder of
this Agreement shall continue in full force and effect.
16. Entire Agreement.
This Agreement constitutes the entire agreement and understanding
of the parties hereto with respect to the matters set forth herein and
supersedes all prior agreements and understandings between the parties with
respect to those matters. There are no promises, representations, warranties,
covenants or undertakings other than those set forth herein.
17. Counterparts.
This Agreement may be executed in counterparts, each of which
shall be deemed an original and both of which taken together shall constitute
one and the same document.
18. Survival.
To the extent required to give effect to the intent of the
parties to this Agreement, the provisions of this Agreement shall survive any
termination hereof and any termination of the employment of the Executive
hereunder.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SKYWAY COMMUNICATIONS HOLDING CORP.By: /s/ Jamee Kalimi
Name: Jamee Kalimi
Title: President
SKY WAY AIRCRAFT, INC.By: /s/ James Kent
Name: James Kent
Title: President
/s/ Brent KovarBrent Kovar
Dates Referenced Herein and Documents Incorporated by Reference
