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NEOMEDIA TECHNOLOGIES INC. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the
“
Agreement ”)
is made and entered into this 10
th day
of June 2008, by and between
NEOMEDIA TECHNOLOGIES, INC., a
Delaware corporation (the “
Company ”),
and Iain McCready (the “
Executive ”).
RECITALS
WHEREAS ,
the Company wishes to employ the Executive, and the Executive
wishes to be employed by the Company, on the terms and subject to
the conditions contained in this Agreement.
NOW, THEREFORE ,
in consideration of the mutual promises, covenants and agreements
contained herein, and intending to be legally bound hereby, the
Company and Executive do hereby agree as follows:
1.
Employment .
(a)
The
Company hereby employs the Executive and the Executive hereby
accepts employment as the Chief Executive Officer of the
Company.
(b)
Subject
to the terms and conditions herein, the initial term of
employment shall commence on May 29, 2008 (the “
Effective Date ”)
and shall continue two (2) years from the Effective Date
unless earlier terminated as herein provided (the “
Initial Term ”).
In the event that either party desires to extend the Initial Term
for an additional period of time such party shall provide the other
party with written notice of such desire at least six (6) months
prior to the expiration of the Initial Term. Following such notice,
the Initial Term may be extended upon mutual agreement of the
parties hereto. The Initial Term and any extensions thereof shall
be referred to as the “
Employment Period .”
2.
Position and Duties .
(a)
The
Executive shall be employed throughout the Employment Period
as the Chief Executive Officer of the Company. The Executive
shall have the duties and responsibilities consistent with and
incumbent upon this position, but at all times shall act in
accordance with the directions given by the Board of
Directors.
(b)
The
Executive’s principal place of employment shall be in
Edinburgh, Scotland. The Executive acknowledges, however, that
significant domestic and international travel may be required
as part of his duties hereunder; and the Executive agrees to
undertake such travel as may be reasonably required by the
business of the Company from time to time.
(c)
Whenever
the Chief Executive Officer of the Company is required by law,
rule or regulation or requested by any governmental authority
or by the Company’s auditors to provide certifications
with respect to the Company’s financial statements or
filings with the Securities and Exchange Commission or any
other governmental authority, the Executive shall sign such
certifications as may be reasonably requested by the
Company.
3.
Compensation
.
(a)
Base Salary .
During the Employment Period, the Company shall pay to the
Executive an annual base salary (“
Base Compensation ”)
of One Hundred Sixty Thousand British Pounds Sterling
(£160,000) payable through a payroll bureau located in the
United Kingdom of Great Britain and Northern Ireland in accordance
with the Company’s customary payroll periods or such other
basis as may be determined by the Board of Directors and subject to
any applicable tax and payroll deductions required by
law.
(b)
Incentive Bonus Compensation .
The Executive shall receive incentive bonus compensation the
“
Incentive Bonus ”)
for each fiscal year of the Company in an amount of:
(i)
Twenty
Thousand British Pounds Sterling (£20,000) (the
“
Fixed Bonus ”);
and
(ii)
up
to thirty-seven and one-half percent (37.5%) of the Base
Compensation for such fiscal year, based upon objectives
determined by the Board of Directors or the Compensation
Committee thereof in its sole discretion.
The
Incentive Bonus shall be subject to applicable tax and payroll
deductions required by law. The Incentive Bonus shall be pro
rated for any fiscal year that is less than a full fiscal
year. The payment of the pro rated amount of the Fixed Bonus
for the 2008 fiscal year shall occur on or about August 29,
2008.
(c)
Sale Bonus .
If
(i) the Company has consummated a Sale Transaction (as defined
below) within eighteen (18) months after the Effective Date, (ii)
the Sale Proceeds (as defined below) are in excess of $45,000,000,
(iii) the Executive remains actively employed with the Company
through the consummation of the Sale Transaction, (iv) the
Executive is otherwise in compliance with the terms of this
Agreement as may be amended at any time in the future, and
(v) the Executive complies with, and uses commercially
reasonable efforts to take such actions as are necessary to cause
the Company to comply with, the terms and conditions of agreements
entered into by the Executive or the Company effecting or otherwise
relating to the Sale Transaction, the Executive will be eligible to
receive a sale bonus in connection with such Sale Transaction equal
to the product of 0.025 and the Sale Proceeds; provided, that for
the purposes of such calculation the amount of Sale Proceeds shall
be deemed to not exceed $200,000,000 (the “
Sale Bonus ”).
The Sale Bonus shall be subject to any applicable tax and payroll
deductions required by law.
The
benefit described in this
Section 3(c) shall
be payable in a single lump sum as soon as practicable, but not
more than ten (10) business days following the consummation of
the Sale Transaction (or receipt of Sale Proceeds which are not
Contingent Sale Proceeds (as defined below) sufficient to trigger
the Company’s obligation to pay a Sale Bonus); provided that
any Sale Bonus amount the Executive is entitled to receive pursuant
to this
Section 3(c) ,
shall not be payable
to the Executive until such time as the Company’s
stockholders have received payment with respect to their equity
interests pursuant to the terms of the agreement to engage in the
Sale Transaction. In the event that: (x) any portion of the
Sale Proceeds is required by the terms of the Sale Transaction to
be placed into escrow, retained or held back by the buyer, or the
payment thereof is otherwise subject to contingencies based upon
the occurrence of future events (“
Contingent Sale Proceeds ”),
the Company will not pay the Executive the portion of the Sale
Bonus attributable to the Contingent Sale Proceeds until such time
as, and only to the extent that, the Contingent Sale Proceeds are
released from escrow, no longer are retained or held back by the
buyer, or otherwise no longer are subject to payment contingencies,
as the case may be (“
Released Sale Proceeds ”);
and (y) the aggregate amount of Sale Proceeds in a Sale
Transaction that do not constitute Contingent Sale Proceeds is
insufficient to trigger the Company’s obligation to pay a
Sale Bonus, then the Sale Bonus shall not be paid unless and until
the Sale Proceeds which are not Contingent Sale Proceeds are
sufficient to trigger the Company’s obligation to pay a Sale
Bonus (e.g., because sufficient Contingent Sale Proceeds have been
released from escrow, no longer are retained or held back by the
buyer, or no longer are subject to payment
contingencies).
2
In
the event that the benefits described in this
Section 3(c) constitute
“deferred compensation” payable to a “key
employee” of a publicly-traded corporation pursuant to
Section 409A of the Internal Revenue Code of 1986, as amended,
on account of separation from service, such benefit shall not be
payable until six (6) months following Executive’s
separation from service and shall not accrue interest during such
six (6) month period.
As
used in this Agreement:
(i) A
“
Sale Transaction ”
shall
be deemed to have occurred upon the occurrence of any one or more
of the following events: (1) any “person” or
“group” (as such terms are used in connection with
Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934
(the “
Exchange Act ”))
but excluding the Executive or any employee benefit plan of the
Company (A) is or becomes the “beneficial owner” (as
defined in Rule l3d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company’s
outstanding securities then entitled to vote for the election of
directors; or (2) there shall be consummated (A) any consolidation,
merger or recapitalization of the Company or any similar
transaction involving the Company, where the Company is not the
continuing or surviving corporation, or (B) any sale, lease,
exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all of the assets of
the Company; provided that a transaction solely for the purpose of
reincorporating the Company in another jurisdiction, shall not
constitute a Sale Transaction. For purposes of
Section 3(c)(i)(2)(B) the
receipt of aggregate Sale Proceeds with respect to the sale of the
components of the Company’s business (in one transaction or a
series of related transactions) of more than $45,000,000 shall be
deemed to constitute a sale of substantially all of the assets of
the Company.
(ii) The
term “
Sale Proceeds ”
means the total amount of cash and fair market value (on the
date of payment) of all property paid or payable (including amounts
paid in escrow) in connection with the Sale Transaction. For
purposes of calculating Sale Proceeds, the value of securities,
whether debt or equity, that are freely tradeable in an established
public market will be determined on the basis of the average
closing price in such market for the ten (10) trading days prior to
the closing of the Sale Transaction (the “
Valuation Date ”);
and the value of securities that have no established public market
or other property will be the fair market value of such securities
or other property on the Valuation Date as determined in good faith
by the Board of Directors of the Company. If Sale Proceeds include
any restricted stock (i.e. stock in a public company not freely
tradeable), the value of the restricted stock shall be calculated
by the Board of Directors in good faith.
3
(d)
Options .
Subject
to approval of the Company’s Board of Directors, the Company
shall issue to the Executive (i) an option to acquire Sixteen
Million Twenty-Five Thousand Six Hundred Forty-Three (16,025,643)
shares of the Company’s common stock, par value $0.01 per
share (the “Common Stock”), at a per share exercise to
be determined prior to or upon the date of the grant (the
“
First Option ”)
and (ii) an option to acquire Sixteen Million Twenty-Five Thousand
Six Hundred Forty-Three (16,025,643) shares of the Company’s
Common Stock at a per share exercise to be determined prior to or
upon the date of the grant (the “
Second Option ,”
and together with the First Option, the “
Options ”).
The First Option shall vest with respect to one hundred percent
(100%) of the shares subject to the First Option eighteen months
after the Effective Date, subject to Executive’s employment
with the Company on such date. The Second Option shall vest with
respect to 1/15
th of
the shares subject to the Second Option each month following the
Effective Date, subject to the continued employment of Executive on
such dates, such that the Second Option is vested and exercisable
with respect to one hundred percent (100%) of the shares subject to
the Second Option fifteen (15) months after the Effective Date.
Notwithstanding the foregoing, upon the occurrence of a Sale
Transaction all unvested Options immediately shall be vested and
exercisable
. Except
as otherwise expressly provided in this Agreement, all terms and
conditions concerning the granting and exercise of the Options
awarded to the Executive hereunder, shall be governed by the
Company's option plan, as such plan may be amended from time to
time. The Options shall be memorialized by a stock option agreement
between the Company and the Executive.
(e)
Expense Reimbursement .
Upon submission of adequate documentation by the Executive, the
Company shall reimburse the Executive for all reasonable expenses
paid or incurred by him in the performance of the services
contemplated hereunder in accordance with the Company’s
reimbursement policies as determined from time to time in the sole
discretion of the Board of Directors (the “
Business Expenses ”).
For the avoidance of doubt, Business Expenses shall include the
reasonable cost of home telephone and mobile phone calls made by
the Executive in the performance of the services contemplated
hereunder and the reasonable cost of a scanner/facsimile
machine. Any
disputes as to the eligibility of an expense for reimbursement
shall be resolved in the sole discretion of the Board of
Directors.
(f)
Executive Benefits .
In lieu of participation in the Company’s benefit programs,
the Company shall pay the Executive an annual bonus of Six Thousand
Niney-Five British Pounds Sterling (£6,095) (the
“
Benefit Bonus ”).
The Benefit Bonus shall be subject to applicable tax and payroll
deductions required by law. The Benefit Bonus shall be pro rated
for any fiscal year that is less than a full fiscal
year.
(g)
Vacation .
The Executive shall be entitled in each of the Company’s
fiscal years to a vacation of twenty-five (25) days, during which
time his compensation shall be paid in full, and such holidays and
other non-working days as are consistent with the policies of the
Company for executives generally. The Executive agrees to utilize
his vacation at such time or times as are (i) consistent with the
proper performance of his duties and responsibilities and (ii)
mutually convenient for the Company and the Executive. The number
of vacation days available hereunder shall be pro rated for any
fiscal year that is less than a full fiscal year.
4
4.
Restrictive Covenants .
(a)
Definitions .
(i)
The
term “
Company ”
for purposes of
Section 4 of
this Agreement shall mean NeoMedia Technologies, Inc., a Delaware
corporation, and its affiliated and related entities including, but
not limited to, all of NeoMedia Technology, Inc.’s
Subsidiaries, affiliates and joint venturers. It is understood that
any affiliated or related entities of NeoMedia Technologies, Inc.
are intended third-party beneficiaries of the provisions of this
Agreement.
(ii)
The
term “
Customer ”
shall mean any person or entity which has purchased goods, products
or services from the Company, entered into any contract for
products or services with the Company, and/or entered into any
contract for the distribution of any products or services with the
Company within the one (1) year immediately preceding the
termination of the Executive’s employment with the Company
for whatever reason.
(iii)
The
phrase “
directly or indirectly ”
shall include the Executive either on his own account, or as a
partner, owner, promoter, joint venturer, employee, agent,
consultant, advisor, manager, executive, independent contractor,
officer, director, stockholder, or otherwise, of an
entity.
(iv)
The
term “
Non-Compete Period ”
shall mean the twelve (12) months immediately following termination
of the Executive’s employment with the Company for whatever
reason.
(v)
The
term “
Prospective Customer ”
shall mean any person or entity which has purchased goods, products
or services from the Company, entered into any contract for
products or services with the Company, and/or entered into any
contract for the distribution of any products or services with the
Company within the one (1) year immediately preceding the
termination of the Executive’s employment with the Company
for whatever reason.
(vi)
The
term &l
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