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Search Employment Agreement by:
EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT (the
“Agreement”)
is
made and entered into this 10th
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 1/15th
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
“Restricted
Area”
shall
include any geographical location anywhere in the world where Executive
has been
assigned to perform services on behalf of the Company during the Employment
Period and where the Company, its affiliates or Subsidiaries either
(1) is
engaged in business, and (2) has evidenced an intention to engage in
business.
(vii) “Subsidiaries”
means
any corporation, partnership, limited liability company, joint venture,
or other
business enterprise in which NeoMedia Technologies, Inc., directly
or
indirectly, owns 50% or more of the outstanding equity or other ownership
interest.
(viii) The
term
“Vendor”
shall
mean any supplier, person or entity from which the Company has purchased
products or services during the one (1) year immediately preceding
the
termination of the Executive’s employment with the Company for whatever
reason.
5
(b) Non-Competition.
During
the Employment Period and Non-Compete Period, in the Restricted Area,
the
Executive shall not, directly or indirectly, engage in, promote,
finance, own,
operate, develop, sell or manage or assist in or carry on in any
business in
competition with the business of the Company, as such business now
exists or as
it may exist at the time of the termination of the Executive’s employment with
the Company for whatever reason; provided, however, that Executive
may at any time own securities of any competitor corporation whose
securities
are publicly traded on a recognized exchange so long as the aggregate
holdings
of the Executive in any one such corporation shall constitute not
more than 5%
of the voting stock of such corporation. During the Non-Compete Period,
for
purposes of this Section
4(b)“any
business in competition with the business of the Company” shall mean any
business or entity set forth on Schedule
I
attached
hereto.
(c) Non-Solicitation
of Employees or Independent Contractors.
During
the Employment Period and the Non-Compete Period, the Executive shall
not,
directly or indirectly, solicit or attempt to induce any employee
of the Company
or independent contractor engaged and/or utilized by the Company
in any capacity
to terminate his employment with, or engagement by, the Company.
Likewise,
during the Employment Period and the Non-Compete Period, the Executive
shall
not, directly or indirectly, hire or attempt to hire for another
entity or
person any employee of the Company or independent contractor engaged
and/or
utilized by the Company in any capacity.
(d) Non-Solicitation
of Customers, Prospective Customers or Vendors.
During
the Employment Period and the Non-Compete Period, the Executive shall
not,
directly or indirectly, sell, assemble, manufacture or distribute
products or
services of the type sold or distributed by the Company to any Customer,
Prospective Customer or Vendor of the Company in the Restricted Area
through any
entity other than the
