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 Section 240.14a-11(c) or Section 240.14a-12
NEOMEDIA TECHNOLOGIES, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies: N/A
--------
2) Aggregate number of securities to which transaction applies: N/A
---------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction: N/A
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5) Total fee paid: N/A
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( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(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: N/A
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2) Form, Schedule, or Registration Statement No.: N/A
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3) Filing Party: N/A
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4) Date Filed: N/A
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<PAGE>
NEOMEDIA TECHNOLOGIES, INC.
2201 Second Street, Suite 600
Fort Myers, Florida 33901
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO
BE HELD ON AUGUST 10, 2000
--------------------------------------------------
To Our Stockholders:
The 2000 annual meeting of the stockholders of NeoMedia Technologies, Inc. will
be held at The Radisson Hotel Lisle - Naperville, 3000 Warrenvillle Road, Lisle,
Illinois 60532, on August 10, 2000, beginning at 9:30 a.m., Central Daylight
Savings Time, for the following purposes:
1. To elect nine directors to hold office during the year following the
annual meeting or until their successors are elected (Item No.1 on
proxy card);
2. To approve an amendment to the Corporation's Certificate of
Incorporation, implementing a staggered board of directors (Item No. 2
on proxy card);
3. To approve an amendment to the Corporation's Certificate of
Incorporation, eliminating the right of shareholders to take action by
written consent (Item No. 3 on proxy card);
4. To ratify the appointment of Arthur Andersen, LLP as independent
auditors of the Corporation for 2000 (Item No. 4 on proxy card); and
5. To transact such other business as may properly come before the meeting
or any postponements or adjournments thereof.
Only stockholders of record of NeoMedia at the close of business on June 28,
2000 are entitled to receive notice of and to vote at the annual meeting, or any
postponement or adjournment thereof.
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PLEASE NOTE THAT ATTENDANCE AT THE MEETING WILL BE LIMITED TO
STOCKHOLDERS OF NEOMEDIA AS OF THE RECORD DATE (OR THEIR AUTHORIZED
REPRESENTATIVES) HOLDING ADMISSION TICKETS OR OTHER EVIDENCE OF
OWNERSHIP. THE ADMISSION TICKET IS DETACHABLE FROM YOUR PROXY CARD. IF
YOUR SHARES ARE HELD BY A BANK OR BROKER, PLEASE BRING TO THE MEETING
YOUR BANK OR BROKER STATEMENT EVIDENCING YOUR BENEFICIAL OWNERSHIP OF
NEOMEDIA STOCK TO GAIN ADMISSION TO THE MEETING.
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BY ORDER OF THE BOARD OF DIRECTORS
July 6, 2000 __________________________________
Fort Myers, Florida William E. Fritz, Secretary
YOUR VOTE IS IMPORTANT
We hope you will attend the stockholders meeting. In order that there may be a
proper representation at the meeting, stockholders are requested to vote their
proxies. Please date, sign and promptly return the proxy in the enclosed
envelope. Your proxy may be revoked by you at any time before it has been voted.
<PAGE>
NEOMEDIA TECHNOLOGIES, INC.
2201 Second Street, Suite 600
Fort Myers, Florida 33901
PROXY STATEMENT
For Annual Meeting of Stockholders
to be held at 9:30 a.m., August 10, 2000
GENERAL
SOLICITATION OF PROXIES. This proxy statement is furnished in
connection with the solicitation of proxies to be used at the Annual
Stockholders Meeting (the "Annual Meeting") of NeoMedia Technologies, Inc., a
Delaware corporation ("NeoMedia"or the "Company"), to be held at the Radisson
Hotel Lisle - Naperville, 3000 Warrenville Road, Lisle, Illinois 60532, August
10, 2000, beginning at 9:30 a.m. Central Daylight Savings Time, and at any
postponements or adjournments thereof, for the purposes set forth herein. This
proxy statement, the enclosed proxy and a copy of NeoMedia's Annual Report to
Stockholders for the fiscal year ended December 31, 1999, are first being mailed
on or about July 10, 2000, 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 June 28, 2000, are entitled
to notice of the Annual 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 June 28, 2000, there were 14,413,384 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 Annual Meeting. A simple
majority of the shares present in person or by proxy at the Annual Meeting, at
which a quorum is present, is required to elect directors and approve the
Corporation's independent auditors. Votes may be cast by a stockholder in favor
of the nominees or withheld. A majority of the shares entitled to vote at the
Annual Meeting is required in
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<PAGE>
order to approve amendments to the Corporation's Certificate of Incorporation to
implement a staggered Board of Directors, and to eliminate the right of
shareholders to take action by written consent. 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.
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
annual 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 no choices are
specified, properly executed proxies received prior to being voted will be voted
"FOR" the nominees for directors contained in these proxy materials, "FOR" an
amendment to NeoMedia's Certificate of Incorporation, implementing a staggered
Board of Directors, "FOR" an amendment to NeoMedia's Certificate of
Incorporation, eliminating the right of shareholders to take action by written
consent, and "FOR" the appointment of Arthur Andersen, LLP as independent
auditors of NeoMedia for 2000.
PROPOSAL ONE - ELECTION OF DIRECTORS
The election of NeoMedia's Board of Directors will take place at the
Annual Meeting. The Board is proposing elsewhere in this Proxy Statement that an
amendment to NeoMedia's Certificate of Incorporation be approved, whereby three
classes of directors (Classes A, B, and C) shall be created (See Proposal Two of
this Proxy Statement). If Proposal Two of this Proxy Statement relating to the
adoption of the so-called "staggered" board of directors is approved, NeoMedia
will have (i) three Class A directors, each of whom shall serve for a three year
term after their election to the Board; (ii) three Class B directors, each of
whom shall serve for an initial term of two years, and (iii) three Class C
directors, each of whom shall serve for an initial term of one year. All Class
A, Class B and Class C directors shall, upon any subsequent election or
re-election, serve for a term of three years, until their successors have been
duly elected and qualified. If Proposal Two of this Proxy Statement is not
approved, there shall be no adoption of a staggered board, and consequently all
of the following nine nominees, if elected, will serve on the Board for one-year
terms, until their successors have been duly elected and qualified. All of the
nominees are currently serving as directors of NeoMedia. If, for any reason, a
nominee is unable to serve, the Board may designate a substitute nominee and, if
this occurs, the persons named in the enclosed proxy may vote proxies that would
otherwise be voted for all the named nominees for the election of such
substitute nominee or nominees unless the Board, in its discretion, reduces the
number of directors. The Board has no reason to believe that any of the nominees
named below will be unable to serve.
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Information Concerning Nominees
The following is information concerning nominees for election as
directors of NeoMedia.
Class A Nominees
CHARLES W. FRITZ, age 43, is a founder of NeoMedia and has served as an
officer (initially as President) and as a Director since its inception. On
August 6, 1996, Mr. Fritz was appointed Chief Executive Officer and Chairman of
the Board of Directors. Mr. Fritz is currently a member of the Compensation
Committee. Prior to founding NeoMedia, Mr. Fritz was an Account Executive with
IBM Corporation from 1986 to 1988, Director of Marketing and Strategic Alliances
for the Information Consulting Group from 1988-1989, and a Consultant for
McKinsey & Company. Mr. Fritz holds an M.B.A. from Rollins College and a B.A. in
finance from the University of Florida. Mr. Fritz is the son of William E.
Fritz, a Director of NeoMedia, and its Secretary.
WILLIAM E. FRITZ, age 69, is a founder of NeoMedia and has served as
Secretary and Director since its inception. Mr. Fritz also served as Treasurer
of NeoMedia from its inception until May 1, 1996. Mr. Fritz, who has over
thirty-two years in establishing and operating privately owned companies,
currently is, and for at least the past ten years has been, an officer and
either the sole stockholder or a majority stockholder, of G.T. Enterprises, Inc.
(formerly Gen-Tech, Inc.), D.M., Inc. (formerly Dev-Mark, Inc.) and EDSCO, three
railroad freight car equipment manufacturing companies. Mr. Fritz holds a
B.S.M.E. and a Bachelor of Naval Science degree from the University of
Wisconsin. Mr. Fritz is the father of Charles W. Fritz, NeoMedia's Chief
Executive Officer and Chairman of the Board.
ROBERT T. DURST, JR., age 47, has been Chief Technical Officer and
Executive Vice-President since July 21, 1997. Mr. Durst has been a Director
since August 6, 1996. Prior to joining NeoMedia, Mr. Durst held management
positions with Symbol Technologies, Inc., Bohemia, New York, from February, 1992
to March, 1996 where, among other things, he worked extensively on two
dimensional bar code technology. From March, 1986 to February, 1992, Mr. Durst
was employed as a Technical Director by Pitney Bowes, Inc., Stamford,
Connecticut. Mr. Durst holds an M.A. in Cognitive Psychology from the University
of Illinois and a B.A. from Allegheny College.
Class B Nominees
WILLIAM F. GOINS, age 58, has been President and Chief Operating
Officer since August 1, 1999. Mr. Goins has been a director since October 21,
1999. Prior to joining NeoMedia, Mr. Goins worked as a consultant for a variety
of companies. Mr. Goins held the positions of Vice President of Sales for Moore
Document Solutions from June 1996, to August 1997. Mr. Goins was the Chief
Operating Officer from January 1995, to November 1995, for Education
Alternatives, Inc., a corporate alliance providing turnkey services to public
and private schools. Mr. Goins held various positions during his 16 years at
Xerox Corporation, including the President of Integrated Systems Operations for
Xerox Corporation from 1992 to 1994. Mr. Goins holds a B.S. from Morgan State
University.
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<PAGE>
JAMES J. KEIL, age 72, has been a Director of NeoMedia since August 6,
1996. Mr. Keil currently is a member of the Compensation Committee, the Stock
Option Committee and the Audit Committee. He is founder and president of Keil &
Keil Associates, a business and marketing consulting firm located in Washington,
D.C., specializing in marketing, sales, and document applications technology
projects. Prior to forming Keil & Keil Associates in 1990, Mr. Keil worked for
approximately 38 years at IBM Corporation and Xerox Corporation in various
marketing, sales and senior executive positions. From 1989-1995, Mr. Keil was on
the Board of Directors of Elixir Technologies Corporation (a non-public
corporation), and from 1990-1992 was the Chairman of its Board of Directors.
From 1992-1996, Mr. Keil served on the Board of Directors of Document Sciences
Corporation. Mr. Keil holds a B.S. degree from the University of Dayton.
JOHN A. LOPIANO, age 61, has been a director of NeoMedia since July 29,
1998 and is currently a member of the Audit Committee and the Compensation
Committee. Mr. Lopiano recently retired as Senior Vice President of Xerox
Corporation and President of its Production Systems Group. Prior to joining
Xerox in April, 1990, Mr. Lopiano was employed for approximately 25 years by IBM
Corporation, serving in various management, marketing and product development
positions. Mr. Lopiano holds a B.S. degree from the United States Military
Academy and a Master of Business Administration from New York University. Mr.
Lopiano served as a member of Xerox's Operations Committee, Management Audit
Committee, The Xerox Foundation and the Business Development Forum (of which he
is a co-chairman). In addition, since July, 1995, Mr. Lopiano has been a trustee
of the Rochester Institute of Technology, Rochester, New York, and is currently
chairman of its Education Committee. Since March 1998, Mr. Lopiano has been a
director of Interleaf, Inc., a company listed on the Nasdaq National Market
System.
Class C Nominees
CHARLES T. JENSEN, age 56, has been Chief Financial Officer, Treasurer
and Vice President of NeoMedia since May 1, 1996. Mr. Jensen has been a Director
since August 6, 1996, and currently is a member of the Compensation Committee.
Prior to joining NeoMedia in November 1995, Mr. Jensen, who has over 27 years of
audit, finance and business experience, including audit experience with Price
Waterhouse & Co., was Chief Financial Officer of Jack M. Berry, Inc., a Florida
corporation which grows and processes citrus products, from December 1994, to
October 1995, and at Viking Range Corporation, a Mississippi corporation which
manufactures gas ranges, from November 1993, to December 1994. From December,
1992 to February, 1994, Mr. Jensen was Treasurer of Lin Jensen, Inc., a Virginia
corporation specializing in ladies clothing and accessories. Prior to that, from
January, 1982 to March, 1993, Mr. Jensen was Controller and Vice-President of
Finance of The Pinkerton Tobacco Co., a tobacco manufacturer. Mr. Jensen holds a
B.B.A. in accounting from Western Michigan University and is a Certified Public
Accountant.
A. HAYES BARCLAY, age 69, has been a Director of NeoMedia since August
6, 1996, and currently is a member of the Stock Option Committee and the Audit
Committee. Mr. Barclay has practiced law for approximately 36 years and since
1967, has been an officer, owner and employee of the law firm of Barclay &
Damisch, Ltd. and its predecessor, with offices in Chicago, Wheaton and
Arlington Heights, Illinois. Mr. Barclay holds a B.A. degree from Wheaton
College, a B.S. from the University of Illinois and a J.D. from the Illinois
Institute of Technology - Chicago Kent College of Law.
5
<PAGE>
PAUL REECE, age 63, has been a Director of NeoMedia since August 6,
1996, and currently is a member of the Compensation Committee. From 1987 until
1995, when he retired from Pitney Bowes, Inc., Stamford, Connecticut, Mr. Reece
served at various times as its Vice-President of Operations and Technology
Division, Vice-President of Technical Systems and Advanced Products and
Vice-President of Corporate Engineering and Technology. Prior to joining Pitney
Bowes, Inc., Mr. Reece worked for 19 years at General Electric Company in
various technical, marketing and engineering positions. Mr. Reece holds a B.S.,
M.S. and PhD. in electronics and engineering from the University of Manchester,
England.
If Proposal Two of this Proxy Statement is approved, three of
NeoMedia's directors shall be elected on an annual basis. Each such director of
NeoMedia shall hold office for an initial term as described previously in this
Proposal One, until the next appropriate annual meeting of the shareholders or
until that director's successor has been elected and qualified or until the
earlier of death or resignation. If Proposal Two of this Proxy Statement is not
approved, all directors shall be elected on an annual basis, each to hold office
until the next annual meeting of shareholders or until that director's successor
has been elected and qualified or until the earlier of death or resignation. At
present, NeoMedia's by-laws provide for not less than one director nor more than
nine. Currently, there are nine directors and nine individuals have been
nominated for election to the Board. NeoMedia's by-laws permit the Board of
Directors to fill any vacancy and such director may serve until the next annual
meeting of shareholders or until his successor is elected and qualified. From
January 1, 1999, through December 31, 1999, NeoMedia held seven directors'
meetings. During the fiscal year ended December 31, 1999, all incumbent
directors attended more than seventy-five percent of the combined total of
meetings of the Board and the Committees on which they served during 1999.
NeoMedia has agreed, for a period of four years from November 25, 1996,
if so requested by Joseph Charles & Associates, Inc. ("Joseph Charles"), the
representative of the several underwriters of NeoMedia's initial public
offering, to nominate a designee of Joseph Charles as a director of NeoMedia.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF NEOMEDIA RECOMMENDS THAT YOU VOTE "FOR" ALL
OF THE NOMINEES FOR DIRECTOR. UNLESS INDICATED OTHERWISE BY YOUR PROXY VOTE, THE
SHARES WILL BE VOTED "FOR" THE ELECTION AS DIRECTORS OF SUCH NOMINEES.
Stock Ownership of Directors and Executive Officers and Others
The following table sets forth certain information regarding beneficial
ownership of NeoMedia's common stock as of June 15, 2000, (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 directors and nominees,
(iii) by each executive officer of NeoMedia named in the Summary Compensation
Table and (iv) by all executive officers and directors of NeoMedia as a group.
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<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)............................ 2,296,969 16.0%
Fritz Family Limited Partnership(2)(4)............ 1,511,742 10.5%
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)............ 53,489 *
William and Edna Fritz(4)(5)...................... 175,752 1.2%
Charles T. Jensen(2)(10).......................... 222,886 1.6%
William Goins(2)(9)............................... 60,000 *
John Lopiano(11).................................. 85,000 *
Robert T. Durst, Jr.(2)(9)........................ 257,657 1.8%
A. Hayes Barclay(12)(14) ......................... 74,000 *
James J. Keil(13)(15)............................. 100,000 *
Paul Reece(9)(16) ................................ 75,000 *
All executive officers and
directors as a group (9 persons)(17)............ 4,859,006 33.8%
</TABLE>
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* less than one percent of issued and outstanding shares of Common Stock of
NeoMedia
(footnotes continued on next page)
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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 June 15, 2000 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), (ii) 414,000 shares of Common Stock issuable
upon exercise of two separate warrants to purchase Common Stock which
are currently exercisable, and (iii) 340,000 shares of common stock
issuable upon exercise of options granted under NeoMedia's 1998
Employee Stock Option Plan.
4. William E. Fritz, Secretary of NeoMedia, and his wife, Edna Fritz, are
the general partners of the Fritz Family Limited Partnership and
therefore each are deemed to be 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 1,857,961 shares (170,467 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, 1,511,742 shares as a result of being
co-general partner of the Fritz Family Partnership, 138,229 shares
owned by Mr. Fritz or his spouse, 12,523 shares to be issued upon the
exercise of warrants held by Mr. Fritz or his spouse and 25,000 shares
to be issued upon the exercise of warrants held by Mr. Fritz or his
spouse). 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 and 1998 Stock Option
Plans which are currently exercisable.
10. Includes 221,386 shares of common stock issueable upon exercise of
options granted under NeoMedia's 1996 and 1998 stock option plans.
11. Includes 84,000 shares of common stock issueable upon exercise of
options granted under NeoMedia's 1996 and 1998 stock option plans.
(footnotes continued on next page)
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<PAGE>
12. Includes 69,000 shares of common stock issueable upon exercise of
options granted under NeoMedia's 1996 and 1998 stock option plans.
13. Includes 44,000 shares of common stock issueable upon exercise of
options granted under NeoMedia's 1996 and 1998 stock option plans.
14. c/o Barclay & Damisch Ltd.
115 West Wesley Street
Wheaton, IL 60187
15. c/o Keil & Keil Associates
733 15th Street, N.W.
Washington, DC 20005
16. c/o 380 Gulf of Mexico Drive
Long Boat Key, FL 34228
17. Includes an aggregate of 1,176,043 currently exercisable options to
purchase shares of Common Stock granted under NeoMedia's 1996 Stock
Option Plan and 1998 Stock Option Plan and 426,523 currently
exercisable warrants to purchase shares of Common Stock.
Committees of the Board of Directors
NeoMedia's Board of Directors has an Audit Committee, Compensation
Committee and a Stock Option Committee. The Board of Directors does not have a
standing Nominating Committee.
Audit Committee. Until February 19, 1998, NeoMedia's Board of Directors
acted as the Audit Committee, which is responsible for nominating NeoMedia's
independent accountants for approval by the Board of Directors, reviewing the
scope, results and costs of the audit with NeoMedia's independent accountants,
and reviewing the financial statements, audit practices and internal controls of
NeoMedia. On February 19, 1998, the Board of Directors elected James J. Keil, A.
Hayes Barclay and Charles T. Jensen to be the sole members of the Audit
Committee, which now is composed of a majority of non-employee directors. On
December 10, 1999 the Board of Directors elected John A. Lopiano to replace
Charles T. Jensen on the Audit Committee. During 1999, the Audit Committee held
three meetings.
Compensation Committee. The Compensation Committee is responsible for
recommending compensation and benefits for the executive officers of NeoMedia to
the Board of Directors and for administering NeoMedia's Incentive Plan for
Management. Charles W. Fritz, Charles T. Jensen, James J. Keil and Paul Reece
are the current members of NeoMedia's Compensation Committee. On July 12, 1999,
the Board of Directors also elected John A. Lopiano to serve on this committee.
During 1999, the Compensation Committee held three meetings.
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Stock Option Committee. The Stock Option Committee, which is comprised
of non-employee directors, is responsible for administering NeoMedia's Stock
Option Plans. A. Hayes Barclay and James J. Keil are the current members of
NeoMedia's Stock Option Committee. During 1999, the Stock Option Committee held
six meetings.
During 1999, all directors attended at least 75% of the combined total
meetings of the Board and Committees on which they served.
Compensation of Directors
Directors are reimbursed for expenses actually incurred in connection
with attending meetings of the Board of Directors. Until February 19, 1998,
non-employee directors received options to purchase 3,000 shares of NeoMedia's
common stock under the 1996 Stock Option Plan upon election as a director and
received additional options to purchase 1,000 shares of NeoMedia's common stock
under the 1996 Stock Option Plan as of the date of each annual meeting at which
such person is re-elected and continues to serve as a director. On February 19,
1998, the Board of Directors approved the payment to non-employee directors of
director fees of $2,000 per meeting attended and approved the granting to the
non-employee directors of options to purchase 14,000 shares of NeoMedia's common
stock under the 1998 Stock Option Plan. Upon election or re-election as a
director, non-employee directors will now receive options to purchase 15,000
shares of NeoMedia's common stock under the 1998 Stock Option Plan. NeoMedia
anticipates that the Board of Directors will meet at least five times a year.
Effective October 27, 1998, a resolution was passed to grant 3,000 stock options
to each non-employee director in lieu of the $2,000 director fee per meeting.
These options are immediately vested. On August 12, 1999, the board of Directors
passed a resolution granting non-employee directors the choice between a
director fee of $2,000 or options to purchase 3,000 shares of NeoMedia's common
stock under the 1998 Stock Option Plan. These options are immediately vested.
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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, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
Summary Compensation Table
Long-term
Annual Compensation(1) Compensation
----------------------------------------------------- -------------------------
Securities
Other Under-
Annual lying All other
Name and Compen- Warrants/ Compen-
Principal Position Year Salary sation Bonus Options sation
------------------ ---- ------ ---------- ----- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Fritz 1999 $ 250,000 ----- ----- 400,000(3) $ 84,914(7)
Chief Executive Officer 1998 250,000 ----- ----- 400,000(3) 58,820(7)
1997 181,334 ----- ----- 300,000(2) 11,859(7)
Charles T. Jensen 1999 $ 150,000 ----- ----- 180,000(3) $ 42,712(7)
Chief Financial Officer, 1998 150,000 ----- ----- 180,000(3) 38,613(7)
Vice-President and 1997 117,333 ----- 21,569(7)
Treasurer
Robert T. Durst, Jr. 1999 $ 170,000 210,000(3) $ 13,876(7)
Executive Vice-President 1998 170,000 ----- ----- 180,000(3) 13,428(7)
and Chief Technical Officer 1997 150,498 $ 15,713(4) ----- ----- 15,004(7)
James Marshall(9) 1999 $ 122,250 ----- $12,000(6) ----- $ 6,063(8)
Executive Vice-President - 1998 163,000 ----- $28,960(6) 230,000(3) 2,578(8)
Sales and Marketing 1997(5) ----- ----- ----- ----- -----
William F. Goins 1999 $ 75,000 $ 25,000(10) 200,000(3) $ 625(8)
President and Chief 1998(5) ----- ----- ----- ----- -----
Operating Officer 1997(5) ----- ----- ----- ----- -----
</TABLE>
--------------------------------------------------
(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) 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.
(3) Represents options granted under NeoMedia's 1998 Stock Option Plan.
(4) Represents relocation expenses.
(5) Was not employed by NeoMedia during this year.
(6) Represents sales bonus paid.
(7) Includes life insurance premiums where policy benefits are payable to
beneficiary of the Named Executive Officer, automobile expenses
attributable to personal use and the corresponding income tax effects.
(8) Automobile expenses attributable to personal use and the corresponding
income tax effects.
(9) Mr. Marshall resigned his employment from NeoMedia effective June 30,
1999.
(10) Represents sign-on bonus.
11
<PAGE>
Employment Agreements
NeoMedia has entered into five year employment agreements ending April
30, 2001, with each of Charles W. Fritz, its Chief Executive Officer and
Chairman of the Board of Directors, 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 January 1, 1998, the Board of Directors
increased the annual salary of Messrs. Fritz, Durst and Jensen to $250,000,
$170,000 and $150,000, respectively. In addition, during 1998, the Board of
Directors granted to Messrs. Fritz, Durst and Jensen options to purchase
400,000, 180,000 and 180,000, respectively, shares of NeoMedia common stock
under the 1998 Stock Option Plan. During 1999, the Board of Directors granted to
Messrs. Fritz, Durst and Jensen options to purchase 400,000, 210,000 and
180,000, respectively, shares of NeoMedia common stock under the 1998 Stock
Option Plan.
During 1999, NeoMedia entered into a one-year employment agreement
ending July 31, 2000, with William F. Goins, its President and Chief Operating
Officer. The agreement provides for an annual salary of $180,000, subject to
periodic 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. In addition, during 1999, the Board of Directors granted
to Mr. Goins options to purchase 200,000 shares of NeoMedia common stock under
the 1998 Stock Option Plan.
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 deferred and unpaid amounts due under
NeoMedia's Incentive Plan for Management, (ii) 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 Plans 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
12
<PAGE>
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.
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.
13
<PAGE>
Bonuses in the amount of $151,000 were earned by employees pursuant to
the Incentive Plan for Management for the year ended December 31, 1999. However,
no bonuses were paid to NeoMedia's executive officers during 1999. No bonuses
were paid to or earned by employees for the year ended December 31, 1998.
Stock Option Plans
Effective as of February 1, 1996 (and amended and restated effective
July 18, 1996 and further amended through November 18, 1996), NeoMedia adopted
its 1996 Stock Option Plan ("1996 Stock Option Plan"). The 1996 Stock Option
Plan provides for the granting of non-qualified stock options and "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended, and provides for the issuance of a maximum of 1,500,000 shares
of common stock. All 1,500,000 options were granted under NeoMedia's 1996 Stock
Option Plan.
Effective March 27, 1998, NeoMedia adopted its 1998 Stock Option Plan
("1998 Stock Option Plan"). The 1998 Stock Option Plan provides for the granting
of non-qualified stock options and provides for the issuance of a maximum of
8,000,000 shares of common stock.
401(k) Plan
NeoMedia maintains a 401(k) Profit Sharing Plan and Trust (the "401(k)
Plan"). All employees of NeoMedia who are 21 years of age and who have completed
three months of service are eligible to participate in the 401(k) Plan. The
401(k) Plan provides that each participant may make elective contributions of up
to 20% of such participant's pre-tax salary (up to a statutorily prescribed
annual limit, which is $10,000 for 1999) to the 401(k) Plan, although the
percentage elected by certain highly compensated participants may be required to
be lower. All amounts contributed to the 401(k) Plan by employee participants
and earnings on these contributions are fully vested at all times. The 401(k)
Plan also provides for matching and discretionary contributions by NeoMedia. To
date, NeoMedia has not made any such contributions.
14
<PAGE>
Options Granted in the Last Fiscal Year
The following presents certain information on stock options for the
Named Executive Officers for the year ended December 31, 1999:
<TABLE>
<CAPTION>
Number of
Securities % of Total
Underlying Options
Options Granted to Exercise Expiration
Name Granted(1) Employees Price Date
---- ---------- --------- ----- ----
<S> <C> <C> <C> <C> <C>
Charles W. Fritz 200,000 11.6% $3.63 02/25/09
200,000 11.6% $5.13 10/21/09
Charles T. Jensen 90,000 5.2% $3.63 2/25/09
90,000 5.2% $5.13 10/21/09
Robert T. Durst, Jr. 90,000 5.2% $3.63 02/25/09
120,000 7.0% $5.13 10/21/09
William Goins 100,000 5.8% $7.81 08/02/09
100,000 5.8% $5.13 10/21/09
</TABLE>
--------------------------------------------------------
(1) Options granted under the 1998 Stock Option Plan.
Aggregate Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Options/SAR Values
The following table sets forth options exercised by NeoMedia Named
Executive Officers during fiscal 1999, and the number and value of all
unexercised options at fiscal year end.
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised
Securities In-the-Money
Shares Underlying Options/SARs Options/SARs at
Acquired Value at December 31, 1999 December 31, 1999(1)
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Fritz(2) ----- ----- 654,000 560,000 $ 203,400 $ 417,600
Charles T. Jensen 1,000 $ 840 196,386 252,000 $ 441,029 $ 187,920
Robert T. Durst, Jr. 25,000 $ 21,000 242,657 276,000 $ 594,579 $ 187,920
William Goins ----- ----- 40,000 160,000 $ ----- $ -----
James Marshall(3) 36,000 $ 118,050 ----- ----- $ ----- $ -----
</TABLE>
-----------------------------------------
(1) The value of the in the money options is calculated by the difference
between the market price of the stock at December 31, 1999 and the exercise
price of the options.
(2) Includes stock options and warrants.
(3) Mr. Marshall resigned his employment with NeoMedia effective June 30, 1999.
As of that date, all unexercised options terminated.
15
<PAGE>
Related Party Transactions
In November 1996, NeoMedia entered into a lease with a William E. Fritz
whereby Mr. Fritz leased to NeoMedia an exhibition booth which cost $85,435.
Rental payments on the booth totaled $31,000 during 1999. The lease is for 36
months with monthly payments of $2,858. The lease expired in 1999.
In December 1998, the Company issued 30,000 options to buy shares of
the Company's common stock to John Lopiano at a price of $2.00 per share for
consulting services rendered.
In January 1999, Edna Fritz, spouse of William Fritz, purchased 82,372
shares of the Company's Common Stock from NeoMedia at a price of $3.03 per
share. In connection with this purchase, Mrs. Fritz received warrants to
purchase up to 8,237 shares at a price of $3.04 per share.
In January 1999, William Fritz purchased 42,857 shares of the Company's
Common Stock from NeoMedia at a price of $3.50 per share. In connection with
this purchase, Mr. Fritz received warrants to purchase up to 4,286 shares at a
price of $3.50 per share.
During each of the years ended December 31, 1999 and 1998, NeoMedia leased
office and residential facilities from Chas Fritz for rental payments totaling
$13,000.
In July 1999, the Company paid professional fees in the amount of $73,000
to James J. Keil for services related to the recruitment of NeoMedia's President
and Chief Operating Officer and one sales representative.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires
NeoMedia's officers and directors, and persons who own more than ten percent of
a registered class of NeoMedia's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and with
the NASDAQ SmallCap Market. Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish NeoMedia with copies of
all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to
NeoMedia, NeoMedia believes that during 1999 all Section 16(a) filing
requirements applicable to NeoMedia's officers, directors and ten percent
beneficial owners were complied with.
16
<PAGE>
PROPOSAL TWO - IMPLEMENTATION OF A
STAGGERED BOARD OF DIRECTORS
NeoMedia's Board of Directors has approved and recommends that the
shareholders approve an amendment to NeoMedia's Certificate of Incorporation,
whereby three separate classes of directors shall be created (See the proposed
Certificate of Amendment to NeoMedia's Certificate of Incorporation, attached to
this Proxy Statement as Appendix A). The three classes of directors shall be
called Class A, Class B and Class C Directors, each such class consisting of
three individual directors. The proposed Certificate of Amendment provides that
Class A directors shall serve on NeoMedia's Board of Directors for an initial
term of three years; Class B directors shall serve on NeoMedia's Board of
Directors for an initial term of two years and Class C directors shall serve on
NeoMedia's Board of Directors for an initial term of one year. The proposed
Certificate of Amendment further provides that all Class A, Class B and Class C
directors shall, upon any subsequent election or re-election, serve for a term
of three years, until their successors have been duly elected and qualified.
Thus, if this proposal to implement a staggered board of directors is approved
by NeoMedia's shareholders, three of NeoMedia's directors would be elected
henceforth on an annual basis (at NeoMedia's Annual Meeting of Shareholders),
each such director to serve for a three year term.
NeoMedia's Board of Directors believe that by staggering the
Corporation's Board of Directors in the foregoing manner, unwanted takeover
attempts would become more difficult to effectuate in that it would not be
possible to have a sudden, significant change in the management of the
Corporation, despite any sudden change in shareholdings. If approved, the
implementation of a staggered board of directors would also result in
shareholders only being able to remove an existing director for cause (pursuant
to Delaware law), thus limiting an unwanted acquirer's ability to vote out
current Board members in favor of its own representation and thereby
contributing to the overall consistency of the management of the Corporation.
If the Shareholders of NeoMedia do not approve of the implementation of
a staggered Board of Directors, all directors would continue to serve one year
terms, until their successors have been duly elected (at NeoMedia's Annual
Meeting of Shareholders) and qualified, and Neomedia's Certificate of
Incorporation will not be amended to provide for a staggered board.
THE BOARD OF DIRECTORS OF NEOMEDIA RECOMMENDS THAT YOU VOTE "FOR" AN
AMENDMENT TO NEOMEDIA'S CERTIFICATE OF INCORPORAITON, TO IMPLEMENT A STAGGERED
BOARD OF DIRECTORS.
17
<PAGE>
PROPOSAL THREE - ELIMINATION OF THE RIGHT OF SHAREHOLDERS
TO TAKE ACTION BY WRITTEN CONSENT
NeoMedia's Board of Directors has approved of an amendment of
NeoMedia's Certificate of Incorporation, to eliminate the right of shareholders
to take action by written consent. (See Appendix A). Presently, any action
required by Delaware law to be taken at any special or annual meeting of
NeoMedia's shareholders may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, are signed by the holders of NeoMedia's outstanding common stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted.
The Board of Directors believes that the advantages of eliminating the
right of shareholders to take action by written consent far outweigh the
disadvantages of the same. The principal disadvantage of eliminating the ability
of shareholders to take action by written consent concerns the practical and
administrative inconveniences and additional costs inherent in the necessity of
calling a special meeting of shareholders if the Board wishes to have an action
approved by shareholders between annual meetings, versus the simpler and less
costly method of seeking said shareholders' approval by written consent in lieu
of a special meeting. By eliminating the rights of shareholders to take action
by written consent (without prior notice to the Board of Directors or other
shareholders, and without calling the action for a vote of shareholders),
NeoMedia's Board of Directors believes unwanted, surprise changes in the
management and/or direction of the Corporation can be avoided, regardless of any
sudden change in shareholdings. The Board of Directors believes that the
foregoing will contribute to the overall consistency of the management and
direction of the Corporation. In addition, the Board of Directors believes that
the elimination of the ability of shareholders to take action by written
consent, when coupled with the implementation of a staggered board of directors
(See Proposal Two of this Proxy Statement), should provide a significant
deterrent to individuals or groups who might otherwise attempt an unwanted,
hostile takeover of the Corporation.
If the shareholders of NeoMedia do not approve of the elimination of
the ability of shareholders to take action by written consent, then no change to
NeoMedia's Certificate of Incorporation reflecting the same will be made, and as
a consequence, NeoMedia's shareholders will retain the right to take action by
written consent pursuant to Delaware law.
THE BOARD OF DIRECTORS OF NEOMEDIA RECOMMENDS THAT YOU VOTE "FOR" AN
AMENDMENT TO NEOMEDIA'S CERTIFICATE OF INCORPORATION, TO ELIMINATE THE RIGHT OF
SHAREHOLDERS TO TAKE ACTION BY WRITTEN CONSENT.
18
<PAGE>
PROPOSAL FOUR - TO RATIFY THE APPOINTMENT OF
ARTHUR ANDERSEN, LLP AS INDEPENDENT
AUDITORS OF THE CORPORATION FOR 2000
AUDITORS
On June 7, 1999, NeoMedia announced that KPMG LLP (KPMG) would no
longer act as independent auditors of the Company. In a letter dated May 28,
1999, received by the Company on June 1, 1999, KPMG resigned. Neither of KPMG's
audit reports on the Company's financial statements for the two fiscal years
ended December 31, 1998, and December 31, 1997, contained an adverse opinion or
disclaimer of opinion, and no such report was qualified or modified as to audit
scope or accounting principles. However, KPMG's opinion on the financial
statements for 1998 contained a going concern uncertainty clause that indicated
that the Company's consolidated financial statements were prepared assuming the
Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered recurring losses
from operations, has a significant accumulated deficit, and a working capital
deficiency that raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
During the Company's two most recent fiscal years ended December 31,
1998, and December 31, 1997, and the subsequent interim period through May 28,
1999, there were no disagreements between the Company and KPMG on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to KPMG's satisfaction
would have caused them to make reference in connection with their opinion to the
subject matter of disagreement.
On July 14, 1999, NeoMedia engaged Arthur Andersen, LLP as the
Company's independent auditors, to audit the Company's financial statements for
the fiscal year ending December 31, 1999. Arthur Andersen, LLP replaced KPMG,
which had previously been engaged for the same purpose. The decision to name
Arthur Andersen, LLP as the Company's replacement independent auditors was
approved by the Company's Board of Directors on July 14, 1999.
Following the recommendation of the Audit Committee, the Board of
Directors has selected Arthur Andersen, LLP as the independent auditors of the
Corporation and its consolidated subsidiaries for the fiscal year ended December
31, 2000, subject to ratification by the shareholders. It is expected that a
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting and will be given the opportunity to make a statement if desired and
will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS OF NEOMEDIA RECOMMENDS THAT YOU VOTE "FOR" THE
APPOINTMENT OF ARTHUR ANDERSEN, LLP AS INDEPENDENT AUDITORS OF THE CORPORATION
FOR 2000.
19
<PAGE>
STOCKHOLDER PROPOSALS
FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS
Any proposal of a stockholder intended to be presented at NeoMedia's
2001 annual meeting of stockholders must be received by the secretary of
NeoMedia, for inclusion in NeoMedia's proxy statement and proxy relating to the
2001 annual meeting on or before March 3, 2001.
OTHER MATTERS TO BE ACTED UPON
AT THE ANNUAL MEETING OF STOCKHOLDERS
The management of NeoMedia knows of no other matters to be presented at
the Annual 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.
July 6, 2000 ___________________________________
Fort Myers, Florida William E. Fritz, Secretary
20
<PAGE>
APPENDIX A
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF NEOMEDIA TECHNOLOGIES, INC.
NeoMedia Technologies, Inc., a corporation duly organized and existing
under and by virtue of the General Corporation Law of the State of Delaware, as
amended (the "Company") DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Company has duly adopted
resolutions setting forth proposed amendments to the Company's Restated
Certificate of Incorporation, and has further directed that such amendments be
submitted to the stockholders of the Company with the recommendation that the
proposed amendments be approved and adopted. The resolutions setting forth the
proposed amendments are as follows
RESOLVED, that Article IV, Section B of the Company's Restated
Certificate of Incorporation be amended to include a new subparagraph
4, which subparagraph shall read as follows:
"4. The holders of Common Stock shall not have the
ability or the right to approve of or otherwise take action by
written consent pursuant to Section 228 of Delaware General
Corporation Law, as amended."
RESOLVED FURTHER, that the Company's Restated Certificate of
Incorporation be amended to include a new Article XII, which shall read
as follows:
"XII
Effective as of the 2000 annual meeting of
Stockholders, the directors of the Corporation shall be
divided into three classes, as nearly equal in number as
possible, with respect to the times for which they shall
severally hold office. The first class of Directors shall be
referred to as "Class A Directors," and shall serve on the
Corporation's Board of Directors for an initial term of three
years. The second class of Directors shall be referred to as
"Class B Directors," and shall serve on the Corporation's
Board of Directors for an initial term of two years. The third
class of Directors shall be referred to as "Class C
Directors," and shall serve on the Corporation's Board of
Directors for an initial term of one year. All Class A, Class
B and Class C Directors shall, upon any subsequent election or
re-election at any future annual meeting of the Corporation,
serve on the Corporation's Board of Directors for a term of
three years, regardless of the respective class' initial terms
of office, until their successors have been duly elected and
qualified.
<PAGE>
The Corporation's stockholders may only remove a
Class A, Class B or Class C Director for cause, as that term
is hereinafter defined. Cause to remove a Director shall be
deemed to exist upon the occurrence of any of the following
acts or events: (i) the given Director's gross negligence;
(ii) failure by said Director to perform his duties, or a
material breach of any agreement made by said Director, which
breach continues uncured for a period of thirty days after the
given Director has received written notice thereof; (iii)
embezzlement or conversion by the given Director of any funds
of the Corporation or any client of the Corporation without
the Corporation's consent; (v) the given Director's conviction
of a felony; (vi) the given Director's adjudication as an
incompetent; or (vii) the given Director's drug addiction. The
stockholders' determination that cause exits for removing a
Director shall be made in good faith and based upon reasonable
evidence.
The Corporation's Board of Directors may amend the
Corporation's By-Laws as appropriate in order to have said
By-Laws reflect, effectuate and remain consistent with the
foregoing provisions of this Article XII."
SECOND: That thereafter, pursuant to the resolutions of its Board of
Directors, the foregoing resolutions were submitted to the stockholders of the
Company at the Company's Annual Meeting of Stockholders on August 10, 2000, and
that at said meeting, the Company's stockholders approved the resolutions in
accordance with Section 242 of the General Corporation Law of the State of
Delaware, as amended.
THIRD: That said amendments to the Company's Certificate of
Incorporation were duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware, as amended.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Amendment of the Company's Restated Certificate of Incorporation to be signed by
its President, and attested by its Secretary, this __ day of August, 2000.
NEOMEDIA TECHNOLOGIES, INC.
By: _________________________________
William F. Goins III, President
Attest:
By: _______________________________
William F. Fritz, Secretary
A-2
<PAGE>
REVOCABLE PROXY
NEOMEDIA TECHNOLOGIES, INC.
The undersigned hereby appoints CHARLES W. FRITZ and CHARLES T. JENSEN and
WILLIAM E. FRITZ, or any of them individually, with full power of substitution,
to act as proxy and to represent the undersigned at the 2000 Annual Meeting of
shareholders and to vote all shares of common stock of NeoMedia Technologies,
Inc. which the undersigned is entitled to vote if personally present at said
meeting to be held at The Radisson otel, Lisle-Naperville; 3000 Warrenville
Road, Lisle, IL 60532 on Thursday, August 10, 2000 at 9:30 a.m., and at all
postponements or adjournments thereof upon the election of directors, the
implementation of a staggered Board of Directors, the elimination of the ability
of stockholders to take action by written consent, the appointment of Arthur
Andersen LLP as independent auditors of the Company for 2000, and all other
business as may properly come before the meeting with the powers the undersigned
would possess if then and there personally present.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR ALL OF THE NOMINEES FOR DIRECTOR LISTED IN
PROPOSAL 1, FOR PROPOSAL 2, FOR PROPOSAL 3, AND FOR PROPOSAL 4 LISTED ON THE
REVERSE SIDE. PROXIES ARE GRANTED THE DISCRETION TO VOTE UPON ALL OTHER MATTERS
THAT MAY PROPERLY BE BROUGHT BEFORE THE MEETING OR ANY POSTPONEMENT OR
ADJOURNMENT THEREOF.
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
PLEASE RETAIN THIS ADMISSION TICKET
for the
Annual Meeting of Stockholders of
NEOMEDIA TECHNOLOGIES, INC.
Radisson Hotel - Lisle-naperville
3000 Warrenville Road
Lisle, Il 60532
Thursday, August 10, 2000
9:30 A.m. Central Daylight Savings Time
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING, WHETHER OR NOT
YOU ATTEND THE MEETING IN PERSON. TO MAKE SURE YOUR SHARES ARE REPRESENTED, WE
URGE YOU TO COMPLETE AND MAIL THE PROXY CARD BELOW.
If you plan to attend the 2000 Annual Meeting of Stockholders, please mark the
appropriate box on the proxy card below.
Present the ticket to NeoMedia Technologies, Inc. representative at the entrance
to the meeting room.
Please Detach and Mail in the Envelope Provided
A X Please mark your
votes as in this
example.
FOR WITHHOLD
all nominees AUTHORITY
listed to vote for all nominees
1. ELECTION OF
DIRECTORS: [ ] [ ]
The election of
the following
nominees to the Board of Directors unless otherwise indicated:
IN THE EVENT THE UNDERSIGNED WISHES TO WITHHOLD AUTHORITY FOR ANY PARTICULAR
NOMINEE OR NOMINEES LISTED AT RIGHT, PLEASE SO INDICATE BY CLEARLY AND NEATLY
LINING THROUGH OR STRIKING OUT THE NAME OF ANY SUCH NOMINEE OR NOMINEES.
The Directors recommend to vote for the election of all of the nominees for
Director, for proposal 1, for proposal 2, an the proposal 4.
Nominees: A Hayes Barclay
Robert T. Dural, Jr.
Charles W. Fritz
William E. Fritz
William F. Goins
Charles T. Jensen
James J. Kell
John A. Lopiano
Paul Reece
FOR AGAINST ABSTAIN
2. To approve an amendment to the Company's
Certificate of Incorporation, implementing a [ ] [ ] [ ]
staggered board of directors.
3. To approve an amendment to the Company's
Certificate of Incorporation, eliminating the [ ] [ ] [ ]
ability of stockholders to take action by
written consent.
4. To ratify the appointment of Arthur
Andersen LLP as independent auditor of the [ ] [ ] [ ]
Company for 2000.
I do not plan
I plan to attend to attend the
the meeting [ ] meeting [ ]
Signature____________________ Signature____________________ Dated:________, 2000
Note: Please date and sign this ballot. If shares are held by joint tenants,
both should sign. When signing as attorney, executor, administrator,
trustees or guardian, please give full titles 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.
