SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. . . . . . . . . . . . . .)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NEOMEDIA TECHNOLOGIES, INC.
--------------------------------------------
(Name of Registrant as Specified in Charter)
WILLIAM E. FRITZ, SECRETARY
------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
__________________________________________________________________
2) Aggregate number of securities to which transaction applies:
__________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule O-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
__________________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________________
5) Total fee paid:
__________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
O-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount Previously Paid:______________________________________________
2) Form, Schedule or Registration Statement No:_________________________
3) Filing Party:________________________________________________________
4) Date Filed:__________________________________________________________
<PAGE>
NEOMEDIA TECHNOLOGIES, INC.
2201 SECOND STREET, SUITE 600
FORT MYERS, FLORIDA 33901
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO
BE HELD ON MARCH 27, 1998
--------------------------------------------------
TO OUR STOCKHOLDERS:
A special meeting of the stockholders of NeoMedia Technologies, Inc.
("NeoMedia") will be held at the offices of NeoMedia, 2201 Second Street, Suite
600, Fort Myers, Florida 33901 on March 27, 1998, beginning at 9:30 a.m.,
Eastern Standard Time, for the following purposes:
1. To approve an amendment to NeoMedia's Certificate of Incorporation
to increase the number of shares of authorized common stock, par
value $.01, to 50,000,000 shares and to authorize the creation of
10,000,000 shares of preferred stock, par value $.01 (Item No. 1
on the proxy card); and
2. To approve the 1998 Stock Option Plan (Item No. 2 on the proxy
card);
3. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
The close of business on February 17, 1998 has been fixed as the record
date for determining the stockholders entitled to receive notice of and to vote
at the special meeting or any postponement or adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
February 20, 1998 /s/ WILLIAM E. FRITZ
Fort Myers, Florida ---------------------------
William E. Fritz, Secretary
YOUR VOTE IS IMPORTANT
IT IS IMPORTANT THAT AS MANY SHARES AS POSSIBLE BE REPRESENTED AT THE MEETING
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. PLEASE DATE, SIGN, AND PROMPTLY
RETURN THE PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES. YOUR PROXY MAY BE REVOKED BY YOU AT ANY TIME BEFORE IT HAS
BEEN VOTED.
<PAGE>
[INSIDE FRONT COVER]
PROXY STATEMENT FOR
SPECIAL MEETING OF STOCKHOLDERS OF
NEOMEDIA TECHNOLOGIES, INC.
TO BE HELD ON MARCH 27, 1998
TABLE OF CONTENTS
PAGE
----
General.................................................................... 1
Proposal One - Increase in Number of Authorized Shares of
Common Stock and Creation of Preferred Stock...................... 2
Proposal Two - Approval of the 1998 Stock Option Plan...................... 3
General........................................................... 3
The Plan and Participants......................................... 3
Option Terms and Grants........................................... 4
Federal Tax Aspects of the Plan................................... 6
Vote Required for Approval of the Plan............................ 6
Stock Ownership of Directors, Executive Officers and Others................ 6
Executive Compensation..................................................... 9
Summary Compensation Table........................................ 9
Incentive Plan for Management.....................................10
Option/Warrant Grants in 1996.....................................11
Aggregate Options/SAR Exercises and Last Fiscal Year
Year-End Option/SAR Values.....................................11
Employment Agreements.............................................12
Director Compensation.............................................13
Other Matters to be Acted Upon at the Special Meeting......................14
<PAGE>
NEOMEDIA TECHNOLOGIES, INC.
2201 Second Street, Suite 600
Fort Myers, Florida 33901
PROXY STATEMENT
FOR A SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AT 9:30 A.M., MARCH 27, 1998
GENERAL
SOLICITATION OF PROXIES. This proxy statement is furnished in
connection with the solicitation of proxies to be used at a Special Meeting of
Stockholders (the "Special Meeting") of NeoMedia Technologies, Inc.
("NeoMedia"), a Delaware corporation, to be held at the principal offices of
NeoMedia, 2201 Second Street, Suite 600, Fort Myers, Florida 33901, on March 27,
1998, beginning at 9:30 a.m., and at any postponements or adjournments thereof,
for the purposes set forth herein. This proxy statement and the enclosed proxy
are first being mailed on or about February 20, 1998, to stockholders of record.
The solicitation of proxies in the enclosed form is made on behalf of
the Board of Directors of NeoMedia.
COSTS OF SOLICITATION. The cost of preparing, assembling and mailing
the proxy material and of reimbursing brokers, nominees and fiduciaries for the
out-of-pocket and clerical expenses of transmitting copies of the proxy material
to the beneficial owners of shares held of record by such persons will be borne
by NeoMedia. NeoMedia does not intend to solicit proxies otherwise than by use
of the mail, but certain officers, directors and employees of NeoMedia, without
additional compensation, may use their personal efforts, by telephone or
otherwise, to solicit proxies.
STOCKHOLDERS ENTITLED TO VOTE AND OUTSTANDING VOTING SHARES. Only
stockholders of record at the close of business on February 17, 1998 are
entitled to notice of the Special Meeting and to vote the shares of Common Stock
of NeoMedia held by them on that date at the meeting or any postponements or
adjournments thereof. Each outstanding share is entitled to one vote on each
matter to be voted upon. As of January 30, 1998, there were 8,305,664 shares of
NeoMedia's common stock issued and outstanding.
QUORUM AND VOTE REQUIRED FOR APPROVAL. One-third of the outstanding
shares are required to be present in person or by proxy at the meeting for there
to be a quorum for purposes of proceeding with the Special Meeting. A simple
majority of the shares present in person or by proxy at the Special Meeting, at
which a quorum is present, is required to approve the 1998 Stock Option Plan.
The affirmative vote of a majority of the total outstanding shares of Common
Stock is required to approve an amendment to NeoMedia's Certificate of
Incorporation to increase the number of shares of common stock, $.01 par value
("Common Stock") that NeoMedia is authorized to issue to 50,000,000 shares and
to authorize the issuance of 10,000,000 shares of
<PAGE>
preferred stock, $.01 par value ("Increase and Creation of Authorized Shares").
Votes may be cast by a stockholder in favor of or against the ratification of
either the 1998 Stock Option Plan and/or the Increase and Creation of Authorized
Shares, or a stockholder may elect to abstain. Abstentions and withheld votes
will be counted for purposes of determining if a quorum is present and will have
the same effect as votes against each matter. Broker non-votes (shares held of
record by a broker for which a proxy is not given) will be counted for purposes
of determining a quorum, and are shares not entitled to be voted and therefore
will not be counted for purposes of determining the total number of votes on any
matter considered at the meeting, but they do have the practical effect of
reducing the number of affirmative votes required to achieve a majority by
reducing the total number of shares from which the majority is calculated.
VOTING AND REVOKING YOUR PROXY. A stockholder signing and returning a
proxy on the enclosed form has the power to revoke it at any time before the
shares subject to it are voted by giving the Secretary of NeoMedia written
notice of revocation by submitting a later-dated proxy or by attending the
Special Meeting in person and requesting that the powers of the holders of such
person's proxy be suspended. Without such request, a proxy previously granted
will not be revoked. If a stockholder specifies how the proxy is to be voted
with respect to any of the proposals for which a choice is provided, the proxy
will be voted in accordance with such specifications. If a stockholder fails to
so specify with respect to such proposals, properly executed proxies received
prior to being voted will be voted "FOR" the adoption of the 1998 Stock Option
Plan and "FOR" the Increase and Creation of Authorized Shares.
PROPOSAL ONE
INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
AND CREATION OF PREFERRED STOCK
NeoMedia's Board of Directors has authorized an amendment to NeoMedia's
Certificate of Incorporation that would increase NeoMedia's authorized capital
stock to 50,000,000 shares of Common Stock, and would authorize 10,000,000
shares of preferred stock, $.01 par value ("Preferred Stock"). NeoMedia's
current authorized capital stock is 15,000,000 shares of Common Stock. On
January 30, 1998, 8,305,664 shares of Common Stock were outstanding.
The additional shares of Common Stock to be authorized by the proposed
amendment and the new Preferred Stock will be issuable in the discretion of the
Board of Directors without further stockholder action. Such additional shares
will be issuable for proper corporate purposes, such as the issuance of Common
Stock upon the exercise of options issued pursuant to the terms of the 1998
Stock Option Plan described under Proposal Two below, for future financing and
acquisition transactions, and common stock dividends or splits. Stockholder
approval of the amendment to NeoMedia's Certificate of Incorporation to increase
the authorized shares of Common Stock and to authorize the Preferred Stock will
give NeoMedia greater flexibility by permitting such stock to be issued without
the delay of obtaining stockholder approval. The Board of Directors believes it
to be in the best interests of NeoMedia to increase the number of authorized
shares of Common Stock and to authorize the issuance of the Preferred Stock to
ensure that an ample number of such shares are available for issuance if such
issuance becomes desirable.
2
<PAGE>
The additional shares of Common Stock authorized would become part of
NeoMedia's existing class of Common Stock and would have the same rights and
privileges as the shares of Common Stock presently outstanding. There are no
preemptive rights with respect to NeoMedia's Common Stock.
The 10,000,000 shares of Preferred Stock may be issued in one or more
series at such time or times and for such consideration as shall be authorized
from time to time by the Board of Directors. The Board of Directors will be
authorized to fix the designation of each series of Preferred Stock and the
relative rights, preferences, limitations, qualifications, powers or
restrictions thereof, including the number of shares comprising each series, the
dividend rates, redemption rights, rights upon voluntary or involuntary
liquidation, provisions with respect to a retirement or sinking fund, conversion
rights, voting rights, if any, preemptive rights, other preferences,
qualifications, limitations, restrictions and the special or relative rights of
each series not inconsistent with the provisions of the Certificate of
Incorporation.
"VOTE REQUIRED FOR APPROVAL OF INCREASE IN, AND CREATION OF, AUTHORIZED CAPITAL
STOCK."
NeoMedia's Board of Directors has authorized an amendment to its
Certificate of Incorporation which would increase its authorized common capital
stock to 50,000,000 shares and authorize 10,000,000 shares of Preferred Stock as
provided above. The amendment will not be effective, however, until holders of
at least a majority of the total outstanding shares of Common Stock vote "FOR"
the amendment.
THE BOARD OF DIRECTORS OF NEOMEDIA RECOMMENDS A VOTE "FOR" THE
AMENDMENT TO INCREASE ITS AUTHORIZED COMMON CAPITAL STOCK TO 50,000,000 SHARES
AND TO AUTHORIZE 10,000,000 SHARES OF PREFERRED STOCK.
PROPOSAL TWO
APPROVAL OF THE 1998 STOCK OPTION PLAN
GENERAL
NeoMedia currently has in effect its 1996 Stock Option Plan (the "1996
Stock Option Plan"), the purpose of which is to retain the services of selected
employees and to attract new employees, consultants and directors by providing
them with the opportunity to acquire a proprietary interest in NeoMedia and thus
share in its growth and success. The 1996 Stock Option Plan provides for the
granting of a maximum of 1,500,000 "incentive stock options", within the meaning
of Section 422A of the Internal Revenue Code of 1986, as amended ("Code"), and
non-qualified (or nonstatutory) stock options. As of the date hereof, options to
purchase 1,467,152 shares of Common Stock have been granted under the 1996 Stock
Option Plan. All of such granted options are non-qualified options. In the
opinion of the Board of Directors, NeoMedia and its stockholders have benefitted
substantially from being able to grant options under the 1996 Stock Option Plan.
Such options, in the opinion of the Board, have been a highly effective
incentive to the employees, consultants and directors receiving them and have
created a commonality of purpose between NeoMedia's officers
3
<PAGE>
and other employees, consultants, directors and its stockholders with respect to
NeoMedia's strategies for profitable growth and share-value appreciation. In the
opinion of the Board, NeoMedia's ability to provide additional stock options to
its officers, other employees, consultants and directors in the future will
benefit NeoMedia's long-term performance. Accordingly, the Board of Directors
believes it is in NeoMedia's best interest to adopt a new stock option plan
which, if approved by the stockholders, will authorize it to award stock options
to its officers, other employees, consultants and directors without further
stockholder approval.
THE PLAN AND PARTICIPANTS
On January 26, 1998, the Board of Directors adopted the 1998 Stock
Option Plan (the "Plan"). The Plan authorizes the grant of non-qualified options
to purchase up to an aggregate of 8,000,000 shares of NeoMedia's Common Stock,
to (i) officers and other full-time salaried employees of NeoMedia with
managerial, professional or supervisory responsibilities, (ii) consultants and
advisors who render bona fide services to NeoMedia, in each case, where the
Committee of the Board of Directors which will administer the Plan, determines
that such officer, employee, consultant or advisor has the capacity to make a
substantial contribution to the success of NeoMedia, and (iii) to NeoMedia's
directors. As used herein with respect to the Plan, references to NeoMedia
include subsidiaries of NeoMedia.
The purposes of the Plan are to enable NeoMedia to attract and retain
persons of ability as officers and other employees, to attract and retain able
directors and consultants, and to motivate such persons to use their best
efforts on behalf of NeoMedia by providing them with an equity participation in
NeoMedia. The full text of the Plan is set forth in Appendix A hereto, and the
following description is qualified in its entirety by reference to Appendix A.
The Plan will be administered by a Committee, which will be appointed
by NeoMedia's Board of Directors and must consist of two or more members of the
Board of Directors, each of whom must be a "disinterested" person within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934. The Committee
is currently comprised of A. Hayes Barclay and James J. Keil. Under the terms of
the Plan, the Committee will have the authority to determine, subject to the
terms and conditions of the Plan, the persons to whom options are granted, the
number of options granted to each optionee and the terms and conditions of each
option, including its duration.
The Plan can be amended, suspended, reinstated or terminated, in whole
or in part, by the Board of Directors; provided, however, that without approval
of NeoMedia's stockholders, no amendment shall be made which (i) increases the
maximum number of shares of Common Stock which may be subject to stock options
granted under the Plan, except for specified adjustment provisions, (ii) extends
the term of the Plan, (iii) increases the period during which a stock option may
be exercised beyond ten years from the date of the grant, (iv) materially
increases the benefits accruing to participants under the Plan, (v) materially
modifies the requirements as to eligibility for participation in the Plan, or
(vi) will cause stock options granted under the Plan to fail to meet the
requirements of Rule 16b-3. Unless previously terminated by the Board of
Directors, the Plan will terminate on January 26, 2008, and no additional
options may be granted after that date.
4
<PAGE>
OPTION TERMS AND GRANTS
Stock options may be granted under the Plan to purchase Common Stock at
an exercise price determined by the Committee. As of ________, 1998, the closing
price of the Common Stock on the NASDAQ SmallCap Market was $_______. There is
no limitation on the number of stock options which may be granted to any
optionee under the Plan. It is currently anticipated that stock options will be
granted to non-employee directors on the date such person first becomes a member
of the Board of Directors, upon each re-election of such person as a director
and for attendance at each directors' meeting.
Exercise of the options will be contingent on (a) the optionee's
employment or relationship with NeoMedia at the time of exercise and (b)
determination by the Committee that performance of an optionee merits such
exercise.
The Plan provides that, if a stock option or portion thereof expires or
is terminated, canceled or surrendered for any reason without being exercised in
full, the unpurchased shares of Common Stock which were subject to such stock
option or portion thereof shall be available for future grants of stock options
under the Plan.
Under the terms of the Plan, the option price for all options must be
paid in cash, by check, bank draft or money order, or with Common Stock of
NeoMedia owned by the optionee and having a fair market value on the date of
exercise equal to the aggregate exercise price of the shares to be so purchased
(subject to limitations or conditions determined by the Committee in its
discretion), or a combination thereof.
Under its terms, the Plan becomes effective upon adoption by the Board
of Directors subject, however, to approval of the Plan by the stockholders.
Options may be granted from time to time following adoption of the Plan by the
Board and prior to approval by the stockholders; however, if the Plan is not
approved by the stockholders, then the Plan, and all options previously granted
under it, become null and void and of no effect.
Options granted under the Plan will not be assignable or transferable
except by will or the laws of intestate succession or pursuant to a qualified
domestic relations order. Options granted under the Plan may be exercised by the
optionee (or the optionee's legal representative) only while the optionee is
employed by NeoMedia, or within one year after termination of employment due to
a permanent disability, or within three months after termination of employment
due to retirement. The executor or administrator of a deceased optionee's estate
or the person or persons to whom the deceased optionee's rights thereunder have
passed by will or by the laws of descent or distribution shall be entitled to
exercise the option within one year after the death of the optionee. Options
expire immediately in the event an optionee is terminated with or without cause;
provided, however, in the event NeoMedia terminates the employment of an
optionee who at the time of such termination was an officer of NeoMedia and had
been continuously employed by NeoMedia during the two-year period immediately
preceding such termination, for any reason except "good cause" (as defined in
the Plan), each stock option held by such optionee (which had not then
previously lapsed or terminated and which had been held by such optionee for
more than six months prior to such termination) shall be exercisable for a
period of three
5
<PAGE>
months after such termination to the extent otherwise exercisable during the
period. Options granted to a non-employee director who ceases to be a director
are exercisable within one year after termination of service. All of the
aforementioned exercise periods set forth in this paragraph are subject to the
further limitation that an option shall not, in any case, be exercisable beyond
its stated expiration date.
The purchase price and the number and kind of shares that may be
purchased upon exercise of options granted under the Plan, and the number of
shares which may be granted under the Plan, are subject to adjustment in certain
events, including stock splits, recapitalizations and reorganizations. If any
portion of an option terminates or lapses without being exercised, the shares
which were subject to the unexercised portion will continue to be subject to the
Plan, and new options may be granted in respect of such shares in accordance
with the terms and conditions of the Plan.
FEDERAL TAX ASPECTS OF THE PLAN
Set forth below is a general summary of the Federal income tax
consequences associated with the Plan.
Non-qualified options granted under the Plan are not intended to
qualify for the favorable income tax treatment accorded under the Code to
incentive stock options. An optionee should not recognize any income for Federal
income tax purposes at the time of the grant of options under the Plan. Upon
exercise, (a) ordinary income is realized by the optionee in an amount equal to
the difference between the option price and the fair market value of the shares
on the date of exercise and (b) NeoMedia receives a tax deduction for the same
amount, subject to applicable withholding requirements. Upon disposition of the
shares, appreciation or depreciation after the date of exercise is treated as
short-term or long-term capital gain or loss and will not result in any
additional deduction by NeoMedia.
VOTE REQUIRED FOR APPROVAL OF THE PLAN
NeoMedia's Board of Directors has approved the Plan. However, the Plan
will not be adopted unless the holders of at least a majority of the shares of
Common Stock present or represented at the meeting and entitled to vote thereon
vote "FOR" approval of the Plan.
THE BOARD OF DIRECTORS OF NEOMEDIA RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE PLAN.
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND OTHERS
The following table provides information concerning the beneficial
ownership of common stock of NeoMedia as of January 15, 1998, (i) by each person
or entity known by NeoMedia to own beneficially more than five percent of
NeoMedia's common stock, (ii) by each of NeoMedia's current directors, (iii) by
each executive officer of NeoMedia named in the Summary Compensation Table
below, and (iv) by all executive officers and directors of NeoMedia as a group.
6
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS(1)
- ------------------------ ----------------------- -------------------
<S> <C> <C>
Charles W. Fritz(2)(3) 1,992,369 22.8%
Fritz Family Limited Partnership(2)(4) 1,511,742 18.2%
Chandler T. Fritz 1994 Trust(2)(5)(6) 58,489 *
Charles W. Fritz 1994 Trust(2)(5)(7) 58,489 *
Debra F. Schiafone 1994 Trust(2)(5)(8) 58,489 *
Charles T. Jensen(2)(9) 90,386 1.1%
Robert T. Durst, Jr.(2)(9) 153,657 1.9%
A. Hayes Barclay(10) 10,000 *
James J. Keil(11) 8,000 *
Paul Reece(12) 5,000 *
Dan Trampel (2)(9) 90,386 1.1%
Kevin Leininger (2)(9) 94,906 1.1%
All executive officers and
directors as a group (9 persons)(13) 4,131,913 45.1%
<FN>
- --------------------------------------------------------------
* less than one percent of issued and outstanding shares of Common Stock of
NeoMedia
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and includes generally voting power
and/or investment power with respect to securities. Options to purchase
shares of Common Stock currently exercisable or exercisable within sixty
days of January 15, 1998 are deemed outstanding for computing the
beneficial ownership percentage of the person holding such options but are
not deemed outstanding for computing the beneficial ownership percentage of
any other person. Except as indicated by footnote, to the knowledge of
NeoMedia, the persons named in the table above have the sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(2) c/o NeoMedia Technologies, Inc.
2201 Second Street, Suite 600
Fort Myers, FL 33901
(3) Mr. Fritz may be deemed to be a parent and promoter of NeoMedia, as those
terms are defined in the Securities Act of 1933, as amended. Shares
beneficially owned include (i) 400 shares of Common Stock (100 shares owned
by each of Mr. Fritz's four minor children for an aggregate of 400 shares)
and (ii) 414,000 shares of Common Stock issuable upon exercise of two
separate warrants to purchase Common Stock which are currently exercisable.
7
<PAGE>
(4) William E. Fritz, Secretary of NeoMedia, and his wife, Edna Fritz, are the
general partners of this Limited Partnership and therefore each are deemed
to b the beneficial owner of the 1,511,742 shares held in the Fritz Family
Partnership. As Trustee of each of the Chandler R. Fritz 1994 Trust,
Charles W. Fritz 1994 Trust and Debra F. Schiafone 1994 Trust, William E.
Fritz is deemed to be the beneficial owner of the shares of NeoMedia held
in each trust. Accordingly, Mr. William E. Fritz is deemed to be the
beneficial owner of an aggregate of 1,687,209 shares (175,467 of which as a
result of being trustee of the Chandler T. Fritz 1994 Trust, Charles W.
Fritz 1994 Trust and Debra F. Schiafone 1994 Trust, and 1,511,742 shares as
a result of being co-general partner of the Fritz Family Partnership). Mr.
William E. Fritz may be deemed to be a parent and promoter of NeoMedia, as
those terms are defined in the Securities Act.
(5) William E. Fritz is the Trustee of this Trust and therefore is deemed to be
the beneficial owner of such shares.
(6) Chandler T. Fritz, son of William E. Fritz, is primary beneficiary of this
trust.
(7) Charles W. Fritz, son of William E. Fritz and President and Chief Executive
Officer of NeoMedia, is primary beneficiary of this trust.
(8) Debra F. Schiafone, daughter of William E. Fritz, is primary beneficiary of
this trust.
(9) Represents options granted under NeoMedia's 1996 Stock Option Plan which
are currently exercisable.
(10) c/o Barclay & Damisch Ltd.
115 West Wesley Street
Wheaton, IL 60187
Includes 3,000 currently exercisable options to purchase shares of Common
Stock granted under NeoMedia's 1996 Stock Option Plan. Does not include (i)
1,000 options which are not currently exercisable or exercisable within
sixty days of January 15, 1998 and (ii) 1,000 shares of Common Stock owned
by Mr. Barclay's adult child living at Mr. Barclay's home, beneficial
ownership of which is disclaimed.
(11) c/o Keil & Keil Associates
733 15th Street, N.W.
Washington, DC 20005
Includes 3,000 currently exercisable options to purchase shares of Common
Stock granted under NeoMedia's 1996 Stock Option Plan. Does not include
1,000 options which are not currently exercisable or exercisable within
sixty days of January 15, 1998.
(12) c/o 380 Gulf of Mexico Drive
Long Boat Key, FL 34228
Includes 3,000 currently exercisable options to purchase shares of Common
Stock granted under NeoMedia's 1996 Stock Option Plan. Does not include
1,000 options which are not currently exercisable or exercisable within
sixty days of January 15, 1998.
(13) Includes an aggregate of 438,335 currently exercisable options to
purchase shares of Common Stock granted under NeoMedia's 1996 Stock Option
Plan and 414,000 currently exercisable warrants to purchase shares of
Common Stock.
</FN>
</TABLE>
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation paid to (i) NeoMedia's Chief Executive Officer and (ii) each of
NeoMedia's four other executive officers who received aggregate cash
compensation in excess of $100,000 for services rendered to NeoMedia
(collectively, "the Named Executive Officers") during the years ended December
31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1)
------------------------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
COMPEN- WARRANTS/ COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY SATION BONUS(2) OPTIONS SATION
- --------------------------- ---- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Fritz 1997 $181,333 ----- ----- 300,000(3) $ 9,010(5)
President and Chief 1996 146,666 ----- $ 36,667 260,000(4) 5,486(5)
Executive Officer 1995 110,000 ----- ----- ----- ----
Charles T. Jensen 1997 $117,333 ----- ----- ----- $21,960(5)
Chief Financial Officer and 1996 95,000 ----- $ 50,782 90,386(6) 3,780(5)
Vice-President and Treasurer 1995(7) 10,833 ----- ----- ----- -----
Robert T. Durst, Jr. 1997 $150,500 $25,405(8) ----- ----- $ 8,432(5)
Executive Vice-President 1996 104,994 ----- $ 22,967 153,657(6) 4,704(5)
1995(9) ----- ----- ----- ----- -----
Dan Trampel 1997 $115,000 ----- ----- ----- $ 7,823(5)
Senior Vice-President - Sales 1996(10) 56,689 ----- $ 11,160 90,386(6) 500(5)
1995(9) ----- ----- ----- ----- -----
Kevin Leininger 1997 $106,667 $13,531(11) ----- ----- -----
Vice-President of Business 1996 85,955 ----- $ 13,430 94,906(6) -----
Development 1995 107,068(12) ----- ----- ----- -----
<FN>
- --------------------------------------------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where the aggregate amount of such
perquisites and other personal benefits constituted less than the lesser of
$50,000 or 10% of the total of annual salary and bonuses for the Named
Executive Officer for such year.
(2) The 1996 bonuses were paid in February, 1997, except $30,000 of the bonus
to Mr. Jensen, which was paid in August, 1996.
(3) Represents a warrant, exercisable for a period of five years commencing
December 11, 1997, to purchase up to 300,000 shares of Common Stock at an
exercise price of $7.875.
(4) Represents a warrant, exercisable until November 25, 2001 to purchase up to
260,000 shares of Common Stock at an exercise price of $8.85 per share. In
September, 1997, an aggregate of 146,000 shares were purchased
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<PAGE>
upon partial exercise of this warrant. Up to 114,000 shares may still be
purchased in accordance with the provisions of this Warrant.
(5) Includes life insurance premiums where policy benefits are payable to
beneficiary of the Named Executive Officer, and the corresponding income
tax effects.
(6) Represents options granted under NeoMedia's 1996 Stock Option Plan.
(7) Amounts cover the period from date of employment by NeoMedia in November,
1995 until December 31, 1995.
(8) Represents relocation and automobile expenses attributable to personal use
of $15,713 and $9,692, respectively.
(9) Was not employed by NeoMedia during this year.
(10) Amounts cover the period from the date of employment by NeoMedia in July,
1996 until December 31, 1996.
(11) Represents relocation expenses.
(12) Includes sales commissions of $29,568.
</FN>
</TABLE>
INCENTIVE PLAN FOR MANAGEMENT
Effective as of January 1, 1996, NeoMedia adopted an annual Incentive
Plan for Management ("Incentive Plan"), which provides for annual cash bonuses
to eligible employees based upon the attainment of certain corporate and
individual performance goals during the year. The Incentive Plan is designed to
provide additional incentive to NeoMedia's management to achieve these growth
and profitability goals. Participation in the Incentive Plan is limited to those
employees holding positions assigned to incentive eligible salary grades and
whose participation is authorized by NeoMedia's Compensation Committee (which
administers the Incentive Plan, including determination of employees eligible
for participation or exclusion). The Board of Directors can amend, modify or
terminate the Incentive Plan for the next plan year at any time prior to the
commencement of such next plan year.
To be eligible for consideration for inclusion in the Incentive Plan,
an employee must be on NeoMedia's payroll for the last three months of the year
involved. Death, total and permanent disability, or retirement are exceptions to
such minimum employment, and awards in such cases are granted on a pro-rata
basis. In addition, where employment is terminated due to job elimination, a
pro-rata award may be considered. Employees who voluntarily terminate their
employment, or who are terminated by NeoMedia for unacceptable performance,
prior to the end of the year are not eligible to participate in the Incentive
Plan. All awards are subject to any governmental regulations in effect at the
time of payment.
Performance goals are determined for both NeoMedia's and the employee's
performance during the year, and if performance goals are attained, eligible
employees are entitled to an award based upon a specified percentage of their
base salary.
The following presents certain information on stock options and
warrants for the Named Executive Officers of NeoMedia for the year ended
December 31, 1997:
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<PAGE>
<TABLE>
<CAPTION>
OPTION/WARRANT GRANTS IN 1997
(INDIVIDUAL GRANTS)
------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
SECURITIES TOTAL OPTIONS/
UNDERLYING WARRANTS
OPTIONS/ GRANTED TO
WARRANTS EMPLOYEES IN
NAME GRANTED 1997 EXERCISE PRICE EXPIRATION DATE
- ----------------- ---------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Charles W. Fritz 300,000(1) 100.0%(1) $7.875 12/11/02
<FN>
- ---------------------------------------------------
(1) Represents a warrant to purchase shares of Common Stock exercisable for
five years commencing December 11, 1997. Since this was the only warrant
granted to any employee of NeoMedia, it represents 100% of all warrants of
this kind granted to employees. When combined with all options granted
during the year ended December 31, 1997 under NeoMedia's 1996 Stock Option
Plan, this warrant represents 50.5% of all options and warrants granted to
employees by NeoMedia in fiscal 1997.
</FN>
</TABLE>
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth options exercised by NeoMedia's Named
Executive Officers during fiscal 1997, and the number and value of all
unexercised options at fiscal year end. The value of "in-the-money" options
refers to options having an exercise price which is less than the market price
of NeoMedia's stock on December 31, 1997:
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<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF
SECURITIES UNEXERCISED IN-THE-
UNDERLYING MONEY OPTIONS (AND
OPTIONS (AND WARRANTS) AT
WARRANTS) AT DECEMBER 31, 1997
DECEMBER 31, (BASED ON $9.094
SHARES 1997 PER SHARE)
ACQUIRED ON VALUE #EXERCISABLE/ #EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ------------------- ----------- -------- -------------- -------------------
<S> <C> <C> <C> <C>
Charles W. Fritz 146,000 $35,624 414,000/0 $393,516/0
Charles T. Jensen -- -- 90,386/0 $746,046/0
Robert T. Durst, Jr. -- -- 153,657/0 $1,268,285/0
Dan Trampel -- -- 90,386/0 $322,136/0
Kevin Leininger -- -- 94,906/0 $783,354/0
</TABLE>
For the year ended December 31, 1997, there have not been any long term
incentive plan awards made to a Named Executive Officer.
EMPLOYMENT AGREEMENTS
NeoMedia has entered into five year employment agreements ending April
30, 2001, with each of Charles W. Fritz, its President and Chief Executive
Officer, and Charles T. Jensen, its Vice President, Chief Financial Officer and
Treasurer, and with Robert T. Durst, Jr., its Executive Vice- President and
Chief Technical Officer, ending March 31, 2001. The employment agreements for
Messrs. Fritz, Durst and Jensen provide for an annual salary of $170,000,
$140,000 and $110,000, respectively, subject to annual review by the Board of
Directors which may increase but not decrease such salary, and participation in
all benefits and plans available to executive employees of NeoMedia. Effective
as of May 1, 1997, the Board of Directors increased the annual salary of Messrs.
Fritz and Jensen to $187,000 and $121,000, respectively, and increased the
annual salary of Mr. Durst to $154,000 effective April 1, 1997. Each employment
agreement terminates upon the employee's death or retirement, and may be
terminated by NeoMedia upon the employee's total disability, as defined in the
agreement, or for cause which is defined, among other things, as the willful
failure to perform duties, embezzlement, or conviction of a felony. In addition,
Messrs. Fritz, Durst and Jensen participate in a special insurance disability
plan and receive life insurance benefits not generally offered to other
employees and are also entitled to certain severance benefits. These severance
benefits vary depending upon the reason for termination and whether there has
been a change in control of NeoMedia. If termination occurs by NeoMedia (except
for cause or total disability) or by the employee for good reason, as defined in
the employment agreement, the agreement provides that NeoMedia will pay to the
terminated employee (i) his salary through the date of termination, (ii) any
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deferred and unpaid amounts due under NeoMedia's Incentive Plan for Management,
(iii) any accrued deferred compensation, (iv) an amount equal to two times the
sum of his annual base salary plus his highest incentive compensation for the
last two years, (v) unpaid incentive compensation including a pro-rata amount of
contingent incentive compensation for uncompleted periods, (vi) in lieu of any
stock options granted whether under NeoMedia's Stock Option Plan or otherwise
(which are canceled upon the following payment), a cash amount equal to the
aggregate spread between the exercise prices of all options held at such time by
such terminated employee and the higher of the highest bid price of the common
stock during the twelve months immediately preceding the date of termination, or
the highest price per share of common stock actually paid in connection with any
change in control (as defined in the employment agreement) of NeoMedia, provided
that such payments do not violate the provisions of any option or the 1996 Stock
Option Plan or other plan then in effect, (vii) an amount equal to any taxes
payable on these payments, (viii) all relocation expenses if the terminated
employee moves his principal residence more than 50 miles within one year from
the date of termination, and (ix) all legal fees and expenses incurred as a
result of the termination. In addition, unless termination is for cause,
NeoMedia must continue to fund through the terminated employee's normal
retirement age any key man insurance that is in effect on the date of
termination, maintain in effect for the benefit of the terminated employee all
employee benefit plans, programs, or arrangements in effect immediately prior to
the date of termination. If the terminated employee's continued participation
under such plan and programs is not allowable, NeoMedia is obligated to provide
him with similar benefits. Each employment agreement provides that services may
be performed for companies, other entities, and individuals (whether or not
affiliated with NeoMedia) provided that the performance of such service does not
prevent the employee from attending to the affairs of NeoMedia, and such
companies are not in competition with NeoMedia. The employment agreements of
Messrs. Fritz and Durst contain provisions prohibiting their competing with
NeoMedia both during and, depending upon the reason for such termination, for
one year following the termination of their employment.
DIRECTOR COMPENSATION
Directors are reimbursed for expenses actually incurred in connection
with attending meetings of the Board of Directors. Non-employee directors
currently receive options to purchase 3,000 shares of NeoMedia's Common Stock
upon election as a director and receive additional options to purchase 1,000
shares of NeoMedia's Common Stock as of the date of each annual meeting at which
such person is re-elected and continues to serve as director. It is currently
anticipated that in addition to receiving options upon election and re-election,
directors will be granted options for attending directors' meetings, and the
number of options currently granted upon election and re-election as a director
will be increased.
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<PAGE>
OTHER MATTERS TO BE ACTED UPON
AT THE SPECIAL MEETING OF STOCKHOLDERS
The management of NeoMedia knows of no other matters to be presented at
the Special Meeting. Should any matter requiring a vote of the stockholders
other than those listed in this Proxy Statement arise at the meeting, the
persons named in the proxy will vote the proxies in accordance with their best
judgment.
February 20, 1998 /s/ WILLIAM E. FRITZ
Fort Myers, Florida ----------------------------
William E. Fritz, Secretary
14
<PAGE>
APPENDIX A
NEOMEDIA TECHNOLOGIES, INC.
1998 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
This Stock Option Plan (the "Plan") is intended as an incentive to key
employees, consultants and directors of NeoMedia Technologies, Inc. (the
"Company") and its subsidiaries. The purpose of the Plan is to assist the
Company in retaining its employees with a high degree of training, experience
and ability, to attract new employees and consultants whose services are
considered unusually valuable and to provide stock ownership opportunities to
the members of the Board of Directors of the Company who are not employees of
the Company or a subsidiary ("Nonemployee Directors").
2. GENERAL PROVISIONS
2.1 Definitions
As used in the Plan:
(a) "Board of Directors" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, including any and all
amendments thereto.
(c) "Committee" means the options committee appointed by the Board of
Directors from time to time to administer the Plan pursuant to Section
2.2.
(d) "Common Stock" means the Company's Common Stock, $.01 par value.
(e) "Participant" means a person to whom a Stock Option has been granted
under the Plan.
(f) "Rule 16b-3" means Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended from time to time, or any successor
rule.
(g) "Stock Option" means an option granted under the Plan.
(h) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Stock Option, each of the corporations
other than the last corporation in the unbroken chain owns 50% or more
of the total voting power of all classes of stock in one of the other
corporations in such chain.
<PAGE>
2.2 Administration of the Plan
(a) The Plan shall be administered by the Committee which shall at all
times consist of two (2) or more persons, each of whom shall be a
member of the Board of Directors. Each member of the Committee shall
be a disinterested person (as such term is defined in Rule 16b-3). The
Board of Directors may from time to time remove members from, or add
members to, the Committee. Vacancies on the Committee, howsoever
caused, shall be filled by the Board of Directors. The Committee shall
select one of its members as Chairman, and shall hold meetings at such
times and places as it may determine.
(b) The Committee shall have the full power, subject to and within the
limits of the Plan, to: (i) interpret and administer the Plan, and
Stock Options granted under it; (ii) make and interpret rules and
regulations for the administration of the Plan and to make changes in
and revoke such rules and regulations (and in the exercise of this
power, shall generally determine all questions of policy and
expediency that may arise and may correct any defect, omission, or
inconsistency in the Plan or any agreement evidencing the grant of any
Stock Option in a manner and to the extent it shall deem necessary to
make the Plan fully effective); (iii) determine those persons to whom
Stock Options shall be granted and the number of Stock Options to be
granted to any person; (iv) determine the terms of Stock Options
granted under the Plan, consistent with the provisions of the Plan;
and (v) generally, exercise such powers and perform such acts in
connection with the Plan as are deemed necessary or expedient to
promote the best interests of the Company. The interpretation and
construction by the Committee of any provision of the Plan or of any
Stock Option shall be final, binding and conclusive. Members of the
Committee shall be subject to any additional restrictions necessary to
satisfy the disinterested administration of the Plan as required in
Rule 16b-3.
(c) The Committee may act only by a majority of its members then in
office; however, the Committee may authorize any one (1) or more of
its members or any officer of the Company to execute and deliver
documents on behalf of the Committee.
(d) No member of the Committee shall be liable for any action taken or
omitted to be taken or for any determination made by him or her in
good faith with respect to the Plan, and the Company shall indemnify
and hold harmless each member of the Committee against any cost or
expense (including counsel fees) or liability (including any sum paid
in settlement of a claim with the approval of the Committee) arising
out of any act or omission in connection with the
2
<PAGE>
administration or interpretation of the Plan, unless arising out of
such person's own fraud or bad faith.
2.3 Effective Date
The Plan shall become effective upon its adoption by the Board of
Directors, and Stock Options may be granted upon such adoption and from time to
time thereafter, subject, however, to approval of the Plan by affirmative vote
of the holders of a majority of the shares of the Common Stock present in person
or by proxy and entitled to vote at an annual meeting of the shareholders of the
Company or at a special meeting of the shareholders of the Company expressly
called for such purposes, or any adjournments thereof, within 12 months after
the adoption of the Plan by the Board of Directors. If the Plan is not approved
at such annual or special meeting or at any adjournments thereof, this Plan and
all Stock Options previously granted thereunder shall become null and void.
2.4 Duration
If approved by the shareholders of the Company, as provided in Section 2.3,
unless sooner terminated by the Board of Directors, this Plan shall remain in
effect for a period of ten (10) years following its adoption by the Board of
Directors.
2.5 Shares Subject to the Plan
The maximum number of shares of Common Stock which may be subject to Stock
Options granted under the Plan shall be 8,000,000. The Stock Options shall be
subject to adjustment in accordance with Section 5, as appropriate, and shares
to be issued upon exercise of Stock Options may be either authorized and
unissued shares of Common Stock or authorized and issued shares of Common Stock
purchased or acquired by the Company for any purpose. If a Stock Option or
portion thereof shall expire or is terminated, canceled or surrendered for any
reason without being exercised in full, the unpurchased shares of Common Stock
which were subject to such Stock Option or portion thereof shall be available
for future grants of Stock Options under the Plan.
2.6 Amendments
The Plan may be suspended, terminated or reinstated, in whole or in part,
at any time by the Board of Directors, provided however, that without the
approval of NeoMedia's stockholders, no amendment shall be made which (i)
increases the maximum number of shares of Common Stock which may be subject to
stock options granted under the Plan, except for specified adjustment
provisions, (ii) extends the term of the Plan, (iii) increases the period during
which a stock option may be exercised beyond ten years from the date of the
grant, (iv) materially increase the benefits accruing to participants under the
Plan, (v)
3
<PAGE>
materially modifies the requirements as to eligibility for participation in the
Plan, or (vi) will cause stock options granted under the Plan to fail to meet
the requirements of Rule 16b-3. The Board of Directors may from time to time
make such amendments to the Plan as it may deem advisable. Except as otherwise
provided herein, termination or amendment of the Plan shall not, without the
consent of a Participant, affect such Participant's rights under any Stock
Options previously granted to such Participant.
2.7 Participants and Grants
Stock Options may be granted by the Committee to (i) directors,
officers and other full-time salaried employees of the Company and its
Subsidiaries with managerial, professional or supervisory responsibilities and
(ii) consultants and advisors who render bona fide services to the Company and
its Subsidiaries, in each case, where the Committee determines that such
officer, employee, consultant or advisor has the capacity to make a substantial
contribution to the success of the Company. The Committee may grant Stock
Options to purchase such number of shares of Common Stock (subject to the
limitations of Sections 2.5) as the Committee may, in its sole discretion,
determine. In granting Stock Options under the Plan, the Committee, on an
individual basis, may vary the number of Stock Options as between Participants
and may grant Stock Options to a Participant in such amounts as the Committee
may determine in its sole discretion.
3. STOCK OPTIONS
3.1 General
All Stock Options granted under the Plan shall be evidenced by written
agreements executed by the Company and the Participant to whom granted, which
agreement shall state the number of shares of Common Stock which may be
purchased upon the exercise thereof and shall contain such investment
representations and other terms and conditions as the Committee may from time to
time determine.
3.2 Price
The purchase price per share of Common Stock subject to a Stock Option
shall be determined by the Committee which may be less than the fair market
value on the date of grant.
3.3 Period
The duration or term of each Stock Option granted under the Plan shall be
for such period as the Committee shall determine but in no event more than ten
(10) years from the date of grant thereof.
4
<PAGE>
3.4 Exercise
Stock Options may be exercisable at such time or times as the Committee
shall specify when granting the Stock Option subject to satisfaction of all
conditions for exercise recited herein and in the Option Agreement. Without
limiting the foregoing, the Stock Option may not be exercised unless the
Participant at the time of such exercise shall have been in continuous employ
of, or relationship with, the Company up to the date of exercise and unless the
Committee has provided to the Participant a written determination no more than
30 days prior to the exercise date that the individual job performance of the
Participant merits the Participant's right to exercise such Stock Option. The
Committee shall be entitled to act in its sole discretion and the decision of
the Committee as to the Participant's right to exercise the Participant's Stock
Option shall be final, binding and conclusive on the Participant. Failure of the
Committee to deliver to the Participant such a written determination shall be
deemed a determination that the Participant is not entitled to exercise such
Stock Option.
Once exercisable, a Stock Option shall be exercisable, in whole or in part,
by delivery of a written notice of exercise to the Secretary of the Company at
the principal office of the Company specifying the number of shares of Common
Stock as to which the Stock Option is then being exercised together with payment
of the full purchase price for the shares being purchased upon such exercise.
Until the shares of Common Stock as to which a Stock Option is exercised are
issued, the Participant shall have none of the rights of a shareholder of the
Company with respect to such shares.
3.5 Payment
The purchase price for shares of Common Stock as to which a Stock Option
has been exercised and any amount required to be withheld, as contemplated by
Section 6.1, may be paid:
(a) In United States dollars in cash, or by check, bank draft or money
order payable in United States dollars to the order of the Company; or
(b) By the delivery by the Participant to the Company of whole shares of
Common Stock having an aggregate fair market value on the date of
payment equal to the aggregate of the purchase price of Common Stock
as to which the Stock Option is then being exercised or by the
withholding of whole shares of Common Stock having such fair market
value upon the exercise of such Stock Option; or
(c) By a combination of both (a) and (b) above.
The Committee may, in its discretion, impose limitations, conditions and
prohibitions on the use by a Participant of shares of Common Stock to pay the
purchase price payable by such Participant upon the exercise of a Stock Option.
3.6 Termination of Employment or Other Relationship
(a) In the event a Participant's employment by, or relationship with, the
Company shall terminate for any reason other than those reasons
specified in Sections 3.6(b), (c), (d), (e) or (g) hereof while such
Participant holds Stock Options granted under the Plan, then all
rights of any kind under any outstanding Option held by such
Participant which shall not have previously lapsed or terminated shall
expire immediately.
5
<PAGE>
(b) If a Participant's employment by, or relationship with, the Company or
its Subsidiaries shall terminate as a result of such Participant's
total disability, each Stock Option held by such Participant (which
has not previously lapsed or terminated) shall be exercisable by such
Participant for a period of one year after termination but only to the
extent the Option is otherwise exercisable during that period. For
purposes of the foregoing sentence, "total disability" shall mean
permanent mental or physical disability as determined by the
Committee.
(c) In the event of the death of a Participant, each Stock Option held by
such Participant (which has not previously lapsed or terminated) shall
be exercisable by the executor or administrator of the Participant's
estate or by the person or persons to whom the deceased Participant's
rights thereunder shall have passed by will or by the laws of descent
or distribution, for a period of one year after such Participant's
death but only to the extent the Option is otherwise exercisable
during that period.
(d) In the case of a Participant who is an employee of the Company, if a
Participant's employment by the Company shall terminate by reason of
such Participant's retirement in accordance with Company policies,
each Stock Option held by such Participant at the date of termination
(which has not previously lapsed or terminated) shall be exercisable
for a period of three (3) months after termination, but only to the
extent the Option is otherwise exercisable during that period.
(e) In the event the Company terminates the employment of a Participant
who at the time of such termination was an officer of the Company and
had been continuously employed by the Company during the two (2) year
period immediately preceding such termination, for any reason except
"good cause" (hereafter defined) and except upon such Participant's
death, total disability or retirement in accordance with Company
policies, each Stock Option held by such Participant (which has not
previously lapsed or terminated and which has been held by such
Participant for more than six (6) months prior to such termination)
shall be exercisable for a period of three (3) months after such
termination, but only to the extent the Option is otherwise
exercisable during that period. A termination for "good cause" shall
be deemed to have occurred only if the Participant in question (i) is
terminated by written notice for dishonesty, because of his conviction
of a felony, or because of his violation of any material provision of
any employment or other agreement, written or oral, with the Company
or any of its Subsidiaries, or (ii) shall voluntarily resign or
terminate his employment with the Company or any of its Subsidiaries
under or followed by such circumstances as would constitute a
6
<PAGE>
breach of any material provision of any employment or other agreement
between him and the Company or any of its Subsidiaries, or (iii) shall
have committed an act of dishonesty not discovered by the Company or
any of its Subsidiaries prior to the cessation of his employment with
the Company or any of its Subsidiaries, but which would have resulted
in his discharge if discovered prior to such date, or (iv) shall,
either before or after cessation of his employment with the Company or
any of its Subsidiaries, without the written consent of the Company or
any of its Subsidiaries, use (except for the benefit of the Company or
any of its Subsidiaries) or disclose to any other person any
confidential information relating to the continuation or proposed
continuation of the business or any trade secrets of the Company of
any of its Subsidiaries obtained as a result of or in connection with
such employment.
(f) Notwithstanding the foregoing, if at any time after termination a
Participant engages in "detrimental activity" (as hereinafter
defined), the Committee in its discretion may cause the Participant's
right to exercise such option to be forfeited. If an allegation of
detrimental activity by a Participant is made to the Committee, the
exercisability of the Participant's options will be suspended for up
to two months to permit the investigation of such allegation. For
purposes of this section, "detrimental activity" means activity that
is determined by the Committee in its sole and absolute discretion to
be detrimental to the interests of the Company or any of its
Subsidiaries, including but not limited to situations where such
Participant: (1) divulges trade secrets of the Company, proprietary
data or other confidential information relating to the Company or to
the business of the Company and any Subsidiaries, (2) enters into
employment with a competitor under circumstances suggesting that such
Participant will be using unique or special knowledge gained as a
Company employee to compete with the Company, (3) is convicted by a
court of competent jurisdiction of any felony or a crime involving
moral turpitude, (4) uses information obtained during the course of
his or her employment for his or her own purposes, such as for the
solicitation of business, (5) is determined to have engaged (whether
or not prior to termination due to retirement) in either gross
misconduct or criminal activity harmful to the Company, or (6) takes
any action that harms the business interests, reputation, or goodwill
of the Company and/or its subsidiaries.
(g) In the case of Stock Options granted to a nonemployee director who
ceases to be a member of the Board of Directors, such Stock Options
then held by such individual shall be exercisable within one year
after such termination of service.
7
<PAGE>
3.7 Effect of Leaves of Absence
It shall not be considered a termination of employment when a Participant
is on military or sick leave or such other type leave of absence which is
considered as continuing intact the employment relationship of the Participant
with the Company or any of its Subsidiaries. In case of such leave of absence,
the employment relationship shall be deemed to have continued until the later of
(i) the date when such leave shall have lasted ninety (90) days in duration, or
(ii) the date as of which the Participant's right to employment shall have no
longer been guaranteed either by statute or contract.
4. ASSIGNABILITY OF STOCK OPTIONS
Stock Options granted under the Plan shall not be assignable or otherwise
transferable by the recipient except by will or the laws of intestate
succession, or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder. Otherwise, Stock Options granted under this Plan shall be
exercisable during the lifetime of the Participant only by the Participant for
his or her individual account, and no purported assignment or transfer of such
Stock Options thereunder, whether voluntary or involuntary, by operation of law
or otherwise, shall vest in the purported assignee or transferee any interest or
right therein whatsoever but immediately upon any such purported assignment or
transfer, or any attempt to make the same, such Stock Options thereunder shall
terminate and become of no further effect.
5. REORGANIZATION AND RECAPITALIZATION OF THE COMPANY
(a) The existence of this Plan and Stock Options granted hereunder shall
not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments,
recapitalization, reorganizations or other changes in the Company's
capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
(b) Except as hereinafter provided, the issue by the Company of shares of
stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services, either upon
direct sale or upon exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with
8
<PAGE>
respect to, the number of shares of Common Stock subject to Stock
Options granted hereunder.
(c) If, and whenever, prior to the delivery by the Company or a Subsidiary
of all of the shares of Common Stock which are subject to the Stock
Options or rights granted hereunder, the Company shall effect a
subdivision or consolidation of shares or other capital readjustments,
the payment of a stock dividend or other increase or reduction of the
number of shares of the Common Stock outstanding without receiving
compensation therefor in money, services or property, the number of
shares subject to the Plan shall be proportionately adjusted and the
number of shares with respect to which Stock Options granted hereunder
may thereafter be exercised shall:
(i) in the event of an increase in the number of outstanding shares,
be proportionately increased, and the cash consideration (if any)
payable per share shall be proportionately reduced; and
(ii) in the event of a reduction in the number of outstanding shares,
be proportionately reduced, and the cash consideration (if any)
payable per share shall be proportionately increased.
(d) If the Company merges with one or more corporations, or consolidates
with one or more corporations and the Company shall be the surviving
corporation, thereafter, upon any exercise of Stock Options granted
hereunder, the Participant shall, at no additional cost (other than
the option price, if any) be entitled to receive (subject to any
required action by stockholders) in lieu of the number of shares as to
which such Stock Options shall then be exercisable the number and
class of shares of stock or other securities to which the Participant
would have been entitled pursuant to the terms of the agreement of
merger or consolidation, if immediately prior to such merger or
consolidation the Participant had been the holder of record of the
number of shares of Common Stock of the Company equal to the number of
shares as to which such Stock Options shall be exercisable. Upon any
reorganization, merger or consolidation where the Company is not the
surviving corporation, the Committee shall have the right to make all
outstanding options vest and be exercisable immediately, by giving
notice to each holder thereof or his or her personal representative
and by permitting the exercise for a period not to exceed ninety (90)
days from the date of such determination by the Committee. Upon
liquidation or dissolution of the Company, all outstanding options
shall be cancelled.
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6. MISCELLANEOUS PROVISIONS
6.1 Withholding
The Company's obligations under this Plan shall be subject to applicable
federal, state and local tax withholding requirements. Federal, state and local
withholding tax due at the time of a grant or upon the exercise of any Stock
Option may, in the discretion of the Committee, be paid in shares of Common
Stock already owned by the Participant or through the withholding of shares
otherwise issuable to such Participant, upon such terms and conditions as the
Committee shall determine. If the Participant shall fail to pay, or make
arrangements satisfactory to the Committee for the payment, to the Company of
all such federal, state and local taxes required to be withheld by the Company,
then the Company shall, to the extent permitted by law, have the right to deduct
from any payment of any kind otherwise due to such Participant an amount equal
to any federal, state or local taxes of any kind required to be withheld by the
Company.
6.2 Compliance with Law and Approval of Regulatory Bodies
No Stock Option shall be exercisable and no shares will be delivered under
the Plan except in compliance with all applicable federal and state laws and
regulations including, without limitation, compliance with all federal and state
securities laws and withholding tax requirements and with the rules of the
NASDAQ Small Cap Market and of all other domestic stock exchanges on which the
Common Stock may be listed. Any share certificate issued to evidence shares for
which a Stock Option is exercised may bear legends and statements the Committee
shall deem advisable to assure compliance with federal and state laws and
regulations. No Stock Option shall be exercisable and no shares will be
delivered under the Plan, until the Company has obtained consent or approval
from regulatory bodies, federal or state, having jurisdiction over such matters
as the Committee may deem advisable. In the case of the exercise of a Stock
Option by a person or estate acquiring the right to exercise the Stock Option as
a result of the death of the Participant, the Committee may require reasonable
evidence as to the ownership of the Stock Option and may require consents and
releases of taxing authorities that it may deem advisable.
6.3 No Right to Employment
Neither the adoption of the Plan nor its operation, nor any document
describing or referring to the Plan, or any part thereof, nor the granting of
any Stock Options hereunder, shall confer upon any Participant under the Plan
any right to continue in the employ of the Company or any Subsidiary, or shall
in any way affect the right and power of the Company or any Subsidiary to
terminate the employment of any Participant at any time with or without
assigning a reason therefore, to the same extent as might have been done if the
Plan had not been adopted.
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6.4 Exclusion from Pension Computations
By acceptance of a grant of a Stock Option under the Plan, the Participant
shall be deemed to agree that any income realized upon the receipt or exercise
thereof or upon the disposition of the shares received upon exercise will not be
taken into account as "base remuneration", "wages", "salary" or "compensation"
in determining the amount of any contribution to or payment or any other benefit
under any pension, retirement, incentive, profit-sharing or deferred
compensation plan of the Company or any Subsidiary.
6.5 Abandonment of Options
A Participant may at any time abandon a Stock Option prior to its
expiration date. The abandonment shall be evidenced in writing, in such form as
the Committee may from time to time prescribe. A Participant shall have no
further rights with respect to any Stock Option so abandoned.
6.6 Severability as to Rule 16b-3
If any of the terms or provisions of the Plan conflict with the
requirements of Rule 16b-3, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of Rule 16b-3.
6.7 Interpretation of the Plan
Headings are given to the Sections of the Plan solely as a convenience to
facilitate reference. Such headings, numbering and paragraphing shall not in any
case be deemed in any way material or relevant to the construction of the Plan
or any provision hereof. The use of the masculine gender shall also include
within its meaning the feminine. The use of the singular shall also include
within its meaning the plural and vice versa.
6.8 Use of Proceeds
Funds received by the Company upon the exercise of Stock Options shall be
used for the general corporate purposes of the Company.
6.9 Construction of Plan
The place of administration of the Plan shall be in the State of Florida,
and the validity, construction, interpretation, administration and effect of the
Plan and of its rules and regulations, and rights relating to the Plan, shall be
determined solely in accordance with the laws of the State of Florida.
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NEOMEDIA TECHNOLOGIES, INC.
SPECIAL STOCKHOLDERS' MEETING BALLOT
1. To approve increasing the authorized
number of shares of Common Stock to
50,000,000 and to approve the creation
of 10,000,000 shares of Preferred Stock FOR ___ AGAINST ___ ABSTAIN ___
2. To approve the 1998 Stock Option Plan FOR ___ AGAINST ___ ABSTAIN ___
Dated:________________________, 1998
No. of Shares ____________ ____________________________________
Signature
____________________________________
Signature
IMPORTANT: Please date and sign this
ballot. If shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give title as such. If a
corporation, please sign in full
corporate name by president or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
