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EXHIBIT 99.1 EMPLOYMENT AGREEMENT

Employment Agreement

EXHIBIT 99.1 EMPLOYMENT AGREEMENT | Document Parties: iDNA, INC You are currently viewing:
This Employment Agreement involves

iDNA, INC

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Title: EXHIBIT 99.1 EMPLOYMENT AGREEMENT
Governing Law: New York     Date: 12/1/2006
Industry: Motion Pictures     Law Firm: Reed Smith     Sector: Services

EXHIBIT 99.1 EMPLOYMENT AGREEMENT, Parties: idna  inc
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EXHIBIT 99.1

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this "Agreement"), effective as of November 29, 2006

(the "Effective Date"), between JAMES J. McNAMARA ("Executive") and iDNA, INC.,

a Delaware corporation ("Employer").

In consideration of the premises and the mutual covenants hereinafter set

forth and other good and valuable consideration, the receipt and

sufficiency of which is hereby acknowledged, the parties hereto hereby

agree as follows:

1. EMPLOYMENT OF EXECUTIVE

Employer hereby agrees to employ Executive, and Executive hereby agrees to

be and remain in the employ of Employer, upon the terms and conditions

hereinafter set forth.

2. EMPLOYMENT PERIOD; EMPLOYMENT YEAR

2.1 Employment Period. Subject to earlier termination as provided in

Section 5, the term of Executive's employment under this Agreement shall

commence as of the date hereof and shall continue until January 31, 2010 (the

"Initial Employment Period"). Unless either party gives notice of non-renewal at

least ninety (90) days prior to the expiration of the Initial Employment Period

or any extension thereof, the term of this Agreement shall be extended for an

additional one (1) year period beyond the end of the Initial Employment Period,

or the end of any extension thereof, as the case may be (the Initial Employment

Period and any extension thereof is hereafter referred to as the "Employment

Period").

2.2 Employment Year. Each 12-month period ending on January 31 shall be

hereinafter considered an "Employment Year."

3. DUTIES AND RESPONSIBILITIES; PLACE OF PERFORMANCE

3.1 Duties and Responsibilities. During the Employment Period, Executive

shall have the titles of Chief Executive Officer and, if elected to the Board of

Directors by shareholders, Chairman of the Board of the Employer. Executive

shall devote substantially all of his business time to the Employer. Executive

shall be responsible for the affairs of the Employer and its subsidiaries in

pursuit of the Employer's Business. Executive shall perform such duties,

consistent with his status as Chairman of the Board and Chief Executive Officer

of Employer, as he may be assigned from time to time by Employer's Board of

Directors (the "Board").

3.2 Place of Performance. In connection with his employment during the

Employment Period, the Executive shall be based at the Employer's current

principal offices in New York, New York or such other principal offices as may

be established in the future by the Board. Executive shall travel to such

principal office, as necessary, from his home and included in Executive's Base

Salary (defined in 4.1 below) is a travel allowance of $20,000 as reimbursement

by Employer for all

 

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expenses thereof. Employer shall maintain an office for the Executive in New

York, New York. Executive may maintain a home office at his primary residence

which is currently located in Palm Beach County, Florida.

4. COMPENSATION AND RELATED MATTERS

4.1 Base Salary. Employer shall pay to Executive in the first Employment

Year a base salary at the rate of $590,000 per annum, subject to increase at the

discretion of the Board (the initial base salary, including any Board approved

increase thereof, the "Base Salary"), and in each successive Employment Year

during the Initial Employment Period shall increase by fifteen thousand dollars

($15,000) per annum, which shall be paid to Executive in arrears bi-weekly in

accordance with the customary practices of the Employer.

4.2 Incentive Compensation. Prior to the commencement of each Employment

Year, the Board of Directors shall set forth certain performance objectives

(each a "Milestone") for the Employer to achieve during each Measurement Period

(defined below) during the Initial Employment Period. A Measurement Period is

considered the 12-month period commencing February 1st and ending January 31st

to coincide with the Employer's Fiscal Periods with the first Measurement Period

commencing on February 1, 2007. To the extent the relevant Milestone for any

Employment Year is achieved, Executive shall receive a cash bonus based on a

target of $200,000 per year (the "Target Bonus"). Executive's bonus in any

Employment Year may be increased above the Target Bonus if, in the opinion of

the Board, such increase is appropriate to reward Executive's performance for

such year (the Target Bonus, together with any increase, being hereinafter

referred to as the "Bonus"). Except as otherwise set forth in Section 6 hereof,

if any Milestone for the Employment Year in which the Employment Period

terminates has been achieved prior to such termination, Executive shall be

entitled to receive the pro-rata amount of the Target Bonus earned as a result

of achieving the Milestone.

(a) Achievement of multiple Milestones in any Employment Year shall not

entitle Executive to more than 100% of the Target Bonus for such Employment

Year, unless the Board increases the Bonus with respect to such Employment Year.

The maximum aggregate Target Bonus during the Initial Employment Period shall be

three (3) times the Target Bonus, unless the Board increases the Bonus with

respect to one or more Employment Years.

(b) In the event of a Change in Control (as defined below) of Employer,

Executive shall be immediately entitled to the full amount of the Target Bonus

with respect to any Employment Years remaining in the Employment Period. As used

in this Agreement, the term "Change in Control" means, subject to the

limitations noted below, (i) 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 Employer; (ii) any sale, lease exchange or other transfer (in

one transaction or a series of related transactions) of shares of capital stock

of the Employer such that any person or group (other than the holders generally

of the Employer's capital stock immediately prior to such transaction or series

of transactions) shall become the owner, directly or indirectly, beneficially or

of record, of shares representing more than thirty-three percent (33%) of the

aggregate ordinary voting power represented by the issued and outstanding voting

securities of the

 

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Employer; or (iii) any merger, consolidation, recapitalization, acquisition or

similar transaction (other than any such transaction involving only the Employer

and/or one or more wholly owned subsidiaries of the Employer) in which the

outstanding voting securities of the Employer are converted into or exchanged

for cash, securities or other property, such that immediately after such

transaction any person or group (other than the holders generally of such

capital stock immediately prior to such transaction or series of transactions)

shall become the owner, directly or indirectly , beneficially or of record, of

shares representing more than fifty percent (50%) of the aggregate ordinary

voting power represented by the issued and outstanding voting securities of the

Employer. A Change of Control shall not occur as a consequence of the effect(s)

of (a) public offering approved by the Board of Directors of Employer, (b) the

exercise of any warrants or stock options pursuant the terms of the Employer

equity incentive plans, (c) exercise of warrants or stock options not under a an

equity incentive plan outstanding as of November 29, 2006 or (d) the conversion

of the Employers Convertible Note outstanding at November 29, 2006,

4.3 Annual Bonus. Executive shall receive an annual bonus based upon

increases expressed in terms of the Stock Price of Employer. As used herein,

"Stock Price" shall mean the average of the closing bid prices of the Common

Stock ("Common Stock"), par value $.05 per share, of Employer, as reported by

the principal market where the Common Stock is then traded, over the 20 trading

days preceding January 31st in each Measurement Period in each Employment Year

(as adjusted for stock splits, stock dividends, reclassification or other

similar events). If, at the end of the particular Employment Year, the

Employer's Stock Price exceeds the Employers Stock Price of the previous

Employment Anniversary by 125% and the Board of Directors deems that the

Employer has sufficient working capital, Executive shall be entitled to a cash

bonus of $100,000 per annum. Any Bonus earned as a result of achieving the stock

price target and approved by the Board of Directors, based upon sufficient

working capital of the Employer, shall be paid to Executive within sixty

business days of the end of the Employment Year in which the Milestone is

achieved.

4.4 Life Insurance. Employer shall maintain in effect at all times during

the Employment Period, at Employer's expense, a policy of split dollar life

insurance on the life of Executive with a maximum death benefit no greater than

$2.0 million, naming such person as Executive shall designate from time to time

as the owner and beneficiary thereof; provided, however, that the premium for

such life insurance shall not exceed $50,000 per year.

4.5 Automobile Allowance. Employer shall provide Executive with a monthly

allowance during the Employment Period of $1,500 to cover the costs of a leased

automobile, including maintenance, fuel, and insurance.

4.6 Other Benefits. During the Employment Period, subject to, and to the

extent Executive is eligible under their respective terms, Executive shall be

entitled to receive such fringe benefits as are, or are from time to time

hereafter generally provided by Employer to Employer's senior management

employees or other employees (other than those provided under or pursuant to

separately negotiated individual employment agreements or arrangements) under

any pension or retirement plan, disability plan or insurance, group life

insurance, medical and dental insurance,

 

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accidental death and dismemberment insurance, travel accident insurance or other

similar plan or program of Employer. To the degree that Employer's medical

insurance does not fully cover the cost of an annual physical examination for

Executive, Employer shall reimburse Executive for such expense promptly after

such expense is incurred. Executive's Base Salary shall (where applicable)

constitute the compensation on the basis of which the amount of Executive's

benefits under any such plan or program shall be fixed and determined.

4.7 Expense Reimbursement. Employer shall reimburse Executive for all

business expenses reasonably incurred by him in the performance of his duties

under this Agreement upon his presentation of signed, itemized accounts of such

expenditures, all in accordance with Employer's procedures and policies as

adopted and in effect from time to time and applicable to its senior management

employees.

4.8 Vacations. Executive shall be entitled to 20 days paid vacation for

each Employment Year during the Employment Period, in accordance with the

Employer's vacation policy as in effect from time to time. The Executive shall

also be entitled to paid holidays and personal days in accordance with the

Employer's practice with respect to same as in effect from time to time.

4.9 Equity Incentives. In order to provide further incentive to Executive

and align the interests of Executive with those of the stockholders of Employer,

Employer shall grant to Executive equity incentives consisting of shares of

Common Stock and options to purchase shares of Common Stock ("Options").

(a) Share Grant. As a signing bonus, Executive shall be granted 500,000

shares of Common Stock provided however that the Executive agrees in the event

of the resignation or termination of the Executive for any reason prior to the

expiration of the Initial Term, the Employer may redeem and repurchase at the

rate of $0.01 per share (i) 375,000 shares of Common Stock prior to the

Employee's First Anniversary, (ii) 250,000 shares of Common Stock after the

First Anniversary but prior to the Second Anniversary or (iii) 125,000 shares of

Common Stock after the Second Anniversary but prior to the Third Anniversary.

The Common Stock granted pursuant to Section 4.9 of this Agreement will bear an

appropriate legend concerning the Employers redemption and repurchase rights.

(b) Option Awards. As of the date that this Agreement is approved by the

Board and executed by the Executive, Employer shall grant to Executive stock

options to purchase 500,000 shares of Common Stock at the following exercise

prices per share (i) 125,000 shares at $0.61, (ii) 125,000 shares at $0.73,

(iii) 125,000 shares at $0.88 and (iv) 125,000 shares at $1.05.

(c) Option Awards Terms. The stock options awarded in Section 4.9(b) of

this Agreement shall be subject to the following additional terms:

(i) be subject to an option agreement containing terms substantially

similar to the terms generally provided in the option agreements of the

Employer's other senior managers (except as otherwise modified herein);

 

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(ii) have a term of 7 years from the date of grant;

(iii) shall be fully vest and be exerciseable, as follows:

a. Options with respect to 125,000 shares shall vest and be

exerciseable immediately;

b. Options with respect to 125,000 shares shall vest and be

exercisable provided that the Executive remains employed by

the Employer by such date, on and after November 29, 2007;

c. Options with respect to 125,000 shares shall vest and be

exerciseable provided that the Executive remains employed by

the Employer by such date, on and after November 29, 2008;

and

d. Options with respect to 125,000 shares shall vest and be

exerciseable provided that the Executive remains employed by

the Employer by such date, on and after November 29, 2009;

provided, however, that upon a Change of Control, all Options

that have not yet vested and become exerciseable shall be deemed

to have vested and have become exerciseable as of the time

immediately preceding such Change of Control;

(iv) shall provide for cashless exercise of such Options;

(v) be issued under a qualified omnibus long-term incentive plan (a

"Plan") that will provide for Incentive Stock Options pursuant to Internal

Revenue Code ("Code") Section 422, non-qualified stock options and other forms

of long-term incentives. If the Employer does not have a Plan applicable to the

Executive or if an existing Plan does not provide for the foregoing terms or if

sufficient shares are not available for grant under an existing Plan, Employer

undertakes to implement a Plan to provide for the issuance of Executive's

Options. Failure of the Employer to implement such a Plan shall not prevent

Executive's right to receive his Options and he may elect, in his sole

discretion, to receive Options not subject to a Plan.

(d) From time to time, the Board may, in its discretion, grant additional

Options to Executive, on such terms as the Board determines.

5. TERMINATION OF EMPLOYMENT PERIOD

5.1 Termination Without Cause; Voluntary Termination by Executive. Employer

may, by written notice to Executive at any time during the Employment Period,

terminate the Employment Period without Cause (as defined below). Executive may,

by written notice to

 

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Employer at any time during the Employment Period, voluntarily resign from the

Employer and terminate the Employment Period. A termination under this section

shall be effective immediately.

5.2 By Employer for Cause. Employer may, at any time during the Employment

Period, by written notice to Executive, terminate the Employment Period and this

Agreement for "Cause" (as defined below) effective immediately, except as

otherwise provided below. The notice shall set forth in reasonable detail the

basis for such termination. In the event that it is possible for the Executive

to cure or correct the circumstances set forth in the notice, the termination

shall not be effective until the date that is thirty (30) days following the

date on which such notice is given and the circumstances set forth in the notice

shall not constitute "Cause" if within thirty (30) days of such notice,

Executive cures or corrects such circumstances. The Employer shall have "Cause"

to terminate the Executive's employment hereunder upon the Executive's:

(a) fraud, embezzlement, or any other illegal act committed intentionally

by the Executive in connection with the Executive's duties as an executive of

the Employer or any subsidiary or affiliate of the Employer that causes or may

reasonably be expected to cause substantial economic injury to the Employer or

any subsidiary or affiliate of the Employer,

(b) conviction of any felony which causes or may reasonably be expected to

cause substantial economic injury to the Employer or any subsidiary or affiliate

of the Employer, or

(c) willful or grossly negligent commission of any other act or failure to

act which causes or may reasonably be expected (as of the time of such

occurrence) to cause substantial economic injury to or substantial injury to the

reputation of the Employer or any subsidiary or affiliate of the Employer,

including, without limitation, any material violation of the Foreign Corrupt

Practices Act, as described herein below. An act or failure to act on the part

of Executive shall be considered "willful" if done, or omitted to be done, by

Executive in bad faith or without a reasonable belief that the act or omission

was in the best interest of Employer.

5.3 By Executive for Good Reason. Executive may, at any time during the

Employment Period by written notice to Employer, terminate the Employment Period

under this Agreement for "Good Reason" (as defined below) effective immediately,

subject to the notice and cure period provided for below. For the purposes

hereof, "Good Reason" means any of the following without Executive's consent:

(A) subject to Section 3 above, a material and adverse change in the nature and

scope of Executive's authority and duties from those exercised or performed by

Executive immediately after the Effective Date; (B) a material breach of this

Agreement by Employer (including, but not limited to, failure to pay any amount

due to Executive when due, diminution of Executive's duties and responsibilities

or a change in Executive's place of performance); provided, however, that the

circumstances set forth in this Section 5.3(A) and (B) will not be Good Reason

if within 30 days of notice by the Executive to the Employer, Employer cures

such circumstances.

5.4 Disability. During the Employment Period, if, as a result of physical

or mental incapacity or infirmity, Executive shall be unable to perform his

duties under this Agreement for (i)

 

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a continuous period of at least 120 days, or (ii) periods aggregating at least

180 days during any period of 12 consecutive months (each a "Disability

Period"), and at the end of the Disability Period there is no reasonable

probability that Executive can promptly resume his duties hereunder, Executive

shall be deemed disabled (the "Disability") and Employer, by notice to

Executive, shall have the right to terminate the Employment Period for

Disability at, as of or after the end of the Disability Period. The existence of

the Disability shall be determined by a reputable, licensed physician. The

parties shall attempt to agree on such a physician. In the event that the

parties are unable to so agree, such physician shall be selected by an

arbitrator provided by the American Arbitration Association in New York, New

York. Executive shall cooperate in all reasonable respects to enable an

examination to be made by such physician.

5.5 Death. The Employment Period shall end on the date of Executive's

death.

6. TERMINATION COMPENSATION

6.1 Termination With or Without Cause by Employer or With or Without Good

Reason by Executive. If the Employment Period is:

(a) terminated by Employer with Cause or by Executive without Good Reason,

or the Agreement is not renewed after the Initial Employment Period, Employer

will pay to Executive eighteen (18) months of salary and benefit continuation

based upon the Execu


 
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