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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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