SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
NEOMEDIA TECHNOLOGIES, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the 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 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:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
NEOMEDIA TECHNOLOGIES, INC.
2201 Second Street, Suite 600
Fort Myers, Florida 33901
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO
BE HELD ON JUNE 6, 2002
--------------------------------------------------
To Our Stockholders:
The Annual Meeting of Stockholders of NeoMedia Technologies, Inc. will be held
at the office of the Company, 2201 Second Street, Suite 600, Fort Myers, Florida
33901, on June 6, 2002, beginning at 10:00 a.m., Eastern Daylight Savings Time,
for the following purposes:
1. To elect five directors to hold office until the next annual meeting of
stockholders and the due election and qualification of their successors
(Item No.1 on proxy card);
2. To approve an amendment to NeoMedia's Certificate of Incorporation to
increase the number of shares of authorized common stock, par value
$.01, from 50,000,000 to 200,000,000 shares and to increase the number
of shares of authorized preferred stock, par value $0.01, from
10,000,000 to 25,000,000 (Item No.2 on proxy card);
3. To approve the 2002 Stock Option Plan (Item No. 3 on proxy card); and
4. 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 April 12,
2002 (the "Record Date") are entitled to receive notice of and to vote at the
annual meeting, or any postponement or adjournment thereof.
--------------------------------------------------------------------------------
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.
BY ORDER OF THE BOARD OF DIRECTORS
--------------------------------------------------------------------------------
April 12, 2002 ----------------------------------------
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, since it is important that as many shares as possible be represented at
the annual meeting. Please date, sign and promptly return the proxy in the
enclosed envelope. You may revoke your proxy at any time before it has been
voted.
Proxy Statement for
Annual Meeting of Stockholders of
NEOMEDIA TECHNOLOGIES, INC.
To Be Held on June 6, 2002
TABLE OF CONTENTS
Page
----
General.................................................................. 1
Principal Holders of Voting Securities................................... 2
Proposal One - Election of Directors..................................... 3
Recommendation of the Board of Directors........................... 3
Information Concerning Nominees.................................... 3
Stock Ownership of Executive Officers and Directors................ 4
Committees of the Board of Directors............................... 5
Compensation of Directors.......................................... 6
Summary Compensation Table......................................... 6
Employment Agreements.............................................. 7
Incentive Plan for Management...................................... 7
Stock Option Plan.................................................. 7
401(k) Plan........................................................ 8
Option/Warrant Granted in Last Fiscal Year in 2001................. 8
Aggregate Option and Warrant Exercises in Last Fiscal Year and
Fiscal Year-End Option Values................................... 8
Certain Relationships and Related Transactions..................... 9
Section 16(a) Beneficial Ownership Reporting Compliance............ 9
Stock Price Performance Graph...................................... 10
Report of the Compensation Committee............................... 11
Report of the Audit Committee...................................... 12
Proposal Two - Increase in Number of Authorized Shares of Common Stock... 14
General............................................................ 14
Vote Required for Approval......................................... 14
Recommendation of the Board of Directors........................... 14
Proposal Three - Approval of 2002 Stock Option Plan...................... 15
General............................................................ 15
Plan and Participants.............................................. 15
Option Terms and Grants............................................ 16
Federal Tax Aspects of Plan........................................ 17
Vote Required for Approval......................................... 17
Recommendation of Board of Directors............................... 17
Auditors................................................................. 18
Stockholder Proposals.................................................... 18
Other Matters to be Acted Upon at the Annual Meeting of Stockholders..... 18
APPENDIX A - 2002 STOCK OPTION PLAN....................................... 19
NEOMEDIA TECHNOLOGIES, INC.
2201 Second Street, Suite 600
Fort Myers, Florida 33901
PROXY STATEMENT
For Annual Meeting of Stockholders
to be held at 10:00 a.m., June 6, 2002
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 principal
executive offices of NeoMedia, 2201 Second Street, Suite 600, Fort Myers,
Florida 33901 on June 6, 2002, beginning at 10:00 a.m., 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, 2001, are first being mailed
on or about May 13, 2002, to all stockholders entitled to vote.
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 April 12, 2002 (the "Record
Date") are entitled to notice of the Annual Meeting and to vote the shares of
common stock of NeoMedia 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 the Record Date, there were 36,927,392 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. Abstentions
and withheld votes will be counted for purposes of determining if a quorum is
present but will not be counted in the election of directors and will have the
same effect as votes against each of the other matters. Broker non-votes (shares
held of record by a broker for which a proxy is not given and the broker or
other nominee holding shares for a beneficial owner has not received
instructions from the beneficial owner) will be counted for purposes of
determining the existence of a quorum, but, as shares not entitled to be voted,
will not be counted for purposes of determining the total number of votes on any
matter considered at the Annual Meeting.
Directors are elected by a plurality of the votes cast in person or by
proxy at the Annual Meeting. The nominee for director who receives the highest
number of affirmative votes of the shares present and voting on the election of
directors at the Annual Meeting will be elected a Director. Shares present or
represented and not so marked as to withhold authority for a particular nominee
will be voted in favor of that nominee and will be counted towards such
nominee's achievement of a plurality. Where the stockholder properly withholds
authority to vote by marking the "WITHHOLD" box for such nominee on the proxy
the shares will not be counted towards the achievement of such nominee's
plurality. 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 approve the 2002
Stock Option Plan. The vote by holders of a majority of the outstanding shares
in favor of the amendment to the Certificate of Incorporation of the Company to
increase the authorized shares of Common Stock and of Preferred Stock is
required to approve the amendment.
1
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 filing with the Secretary of NeoMedia written
notice of revocation bearing a later date than the proxy, by submitting a
later-dated proxy or by attending the annual meeting in person and voting in
person (although attendance in person will not in and of itself constitute a
revocation of a proxy) 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" (i) the nominees for directors; (ii) the approval of the proposed
amendment to the Certificate of Incorporation of the Company and (iii) approval
of the 2002 Stock Option Plan. Shares voted to abstain are included in the
number of shares present or represented and voting on each matter. Shares
subject to broker "non-votes" are not considered to have been voted for the
particular matter and have the practical effect of reducing the number of
affirmative votes required to achieve a majority for such matter by reducing the
total number of shares from which the majority is calculated.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth, as of March 15, 2002, the name of each
person who, to NeoMedia's knowledge based upon representations and/or
publicly-available filings, beneficially owned more than 5% of the shares of the
Company's Common Stock outstanding as of the Record Date, the number of shares
beneficially owned by each of these persons, and the percentage of the
outstanding shares of the Company beneficially owned by each of these persons.
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership (1) Percent of Class (2)
------------------------------------ ------------------------ --------------------
Charles W. Fritz (2)(3)...................... 2,555,930 7.0%
William E. Fritz (2)(4)...................... 2,107,699 5.7%
Edna Fritz (2)............................... 2,107,699 5.7%
-----------------------------
(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 and warrants
to purchase shares of common stock currently exercisable or exercisable
within sixty days of Record Date are deemed outstanding for computing the
beneficial ownership percentage of the person holding such options and
warrants but are not deemed outstanding for computing the beneficial
ownership percentage of any other person. Except as indicated by
footnote, to our knowledge, 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) The address of the referenced holder is c/o NeoMedia Technologies, Inc.,
2201 Second Street, Suite 600, Fort Myers, FL 33901.
(3) Consists of an aggregate of 400 shares by his four minor children;
140,775 shares issuable upon exercise of warrants to purchase common
stock; 829,600 shares issuable upon exercise of options granted under our
1998 employee stock option plan, 42,186 shares owned by Mr. Charles W.
Fritz directly, and 1,542,969 shares of common stock held by the CW/LA II
Family Limited Partnership, a family limited partnership for the benefit
of his family.
(4) Consists of 1,511,742 shares held by the Fritz Family Partnership of
which William Fritz and his wife, Edna Fritz, are the general partners,
an aggregate of 165,647 shares held by the following three trusts of
which they are trustees each of which is for the primary beneficiary of
their son or daughter - the Chandler T. Fritz 1994 Trust, the Charles W.
Frtiz 1994 Trust and the Debra F. Schiafone 1994 Trust; an aggregate of
268,787 shares owned by William or Edna Fritz directly and an aggregate
of 161,523 shares issuable upon exercise of options and/or warrants held
by William or Edna Fritz.
2
PROPOSAL ONE - ELECTION OF DIRECTORS
The number of Directors constituting the Board of Directors has been
set by a resolution of the Board of Directors at five. The Board of Directors
proposes that each of the five nominees described below be elected to the Board
to serve until the next annual meeting of stockholders and the due election and
qualification of his successor. All of the nominees are currently 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 proxies, unless
otherwise specified thereon, will be voted for the named substitute nominee 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.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF NEOMEDIA RECOMMENDS THAT YOU VOTE "FOR" ALL
OF THE ABOVE NOMINEES LISTED BELOW. UNLESS INDICATED OTHERWISE BY YOUR PROXY
VOTE, THE SHARES WILL BE VOTED "FOR" THE ELECTION AS DIRECTORS OF SUCH NOMINEES.
Information Concerning Nominees
The following is information concerning nominees for election proposed
by the Board of Directors.
CHARLES W. FRITZ, age 45, a founder of NeoMedia, has been its President
and a Director since its inception, and Chief Executive Officer and Chairman of
the Board since August 6, 1996. He 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 to1989, 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 71, a founder of NeoMedia, has been since its
inception Secretary and a Director and until May 1, 1996, Treasurer of NeoMedia.
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
President, Chief Executive Officer and Chairman of the Board.
CHARLES T. JENSEN, age 58, joined NeoMedia in November 1995 and has
been its Chief Financial Officer, Treasurer and Vice President since May 1, 1996
and a Director since August 6, 1996. Mr. Jensen currently is a member of the
Compensation Committee. Prior to November, 1995, Mr. Jensen, who has over 28
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 of Viking Range Corporation, a Mississippi
corporation which manufactures gas ranges, from November, 1993 to December,
1994. From December 1992 to February 1994, he was Treasurer of Lin Jensen, Inc.,
a Virginia corporation specializing in ladies clothing and accessories. 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 71, 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, partner or member 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.
3
JAMES J. KEIL, age 74, 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, document application strategies,
recruiting and Electronic Commerce projects. Prior to forming Keil & Keil
Associates in 1990, Mr. Keil was employed for approximately 38 years by IBM
Corporation and Xerox Corporation in various marketing, sales and senior
executive positions. From 1989 to 1995, Mr. Keil was a member of the Board of
Directors of Elixir Technologies Corporation (a private corporation), and from
1990 to1992 was the Chairman of its Board of Directors. From 1992 to 1996, he
served on the Board of Directors of Document Sciences Corporation. Mr. Keil
holds a B.S. degree from the University of Dayton and did Masters level studies
at the Harvard Business School and the University of Chicago in 1961/62.
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 and
the due election and qualification of his successor. During the year ended
December 31, 2001, NeoMedia held thirteen directors' meetings and each incumbent
director attended more than seventy-five percent of the total of meetings of the
Board of Directors and the Committees of which he is a member.
Stock Ownership of Executive Officers and Directors
The following table sets forth certain information regarding beneficial
ownership of NeoMedia's common stock as of the Record Date: (i) by each of
NeoMedia's directors and nominees, (ii) by each executive officer of NeoMedia
named in the Summary Compensation Table, and (iii) by all executive officers and
directors of NeoMedia as a group.
Amount and Nature of Percent of
Beneficial Ownership (1) Class (1)
--------------------------------- ---------------
Charles W. Fritz (2)(3)....................... 2,555,930 7.0%
William E. Fritz (2)(4)....................... 2,107,519 5.8%
Charles Jensen (2)(5)......................... 500,686 1.4%
A. Hayes Barclay (6)(7)....................... 169,000 *
James J. Keil (8)(9)......................... 123,000 *
All executive officers and directors
as a group (6 persons) (10)................ 5,456,135 15.0%
==========
-------------------------------
/*/ denotes ownership of less than one percent of issued and outstanding
shares of our common stock.
(1) See Note 1 to "Principal Holders of Voting Securities" for determination
of beneficial ownership.
(2) The address of the holder is c/o NeoMedia Technologies, Inc., 2201 Second
Street, Suite 600, Fort Myers, FL 33901.
(3) See Note 3 to table under "Principal Owners of Voting Securities".
(4) See Note 4 to table under "Principal Owners of Voting Securities".
(5) Includes 499,186 shares issuable upon exercise of options.
(6) Includes 164,000 shares issuable upon exercise of options.
(7) His address is c/o Barclay & Damisch Ltd. 115 West Wesley Street Wheaton,
IL 60187.
(8) Includes 123,000 shares issuable upon exercise of options.
(9) His address is c/o Keil & Keil Associates 733 15th Street, N.W.
Washington 20005.
(10) Includes an aggregate of 1,764,786 shares issuable upon exercise of
options and 153,298 shares issuable upon exercise of warrants.
4
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. The Audit Committee 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. During 2001, members of the Audit Committee were
nonemployee directors - James J. Keil, A. Hayes Barclay and, until September
2001 when he resigned as a Director, John Lopiano. During 2001, the Audit
Committee held two 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, Paul Reece, and,
until September 2001, John Lopiano, were members of NeoMedia's Compensation
Committee during 2001. During January 2002, Mr. Reece resigned from the Board of
Directors and Compensation Committee. This Committee held seven meetings
throughout 2001.
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 2001, this Committee held four
meetings.
Compensation of Directors
Directors are reimbursed for expenses incurred in connection with
attending meetings of the Board of Directors. Upon election or re-election as a
director, non-employee directors receive options to purchase 15,000 shares of
NeoMedia's common stock under the 1998 Stock Option Plan. Each employee director
receives either fees of $2,000 per meeting attended or, at his election, options
to purchase an additional 3,000 shares of NeoMedia's common stock under the 1998
Stock Option Plan. The options are vested immediately upon grant. Should
Proposal Three (Approval of 2002 Stock Option Plan) pass, directors will
continue to have the option to receive stock options from that plan in lieu of
cash.
5
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation paid during the years ended December 31, 2001, 2000 and 1999 to:
(i) NeoMedia's Chief Executive Officer and (ii) each of NeoMedia's other
executive officers as of December 31, 2001 who received aggregate cash
compensation during the year ended December 31, 2001 in excess of $100,000 for
services rendered to NeoMedia (collectively, "the Named Executive Officers"):
Summary Compensation Table
Annual Compensation (1) Long-term Compensation
---------------------------------------------- --------------------------------
Securities
Underlying
Warrants
Other Annual and All other
Name and Principal Position Year Salary Compensation Bonus Options(2) Compensation
------------------------------------------------------------------ ---------- --------------- ----------------
Charles W. Fritz............ 2001 $221,758 $ - $ - 400,000 $21,352 (4)
Chief Executive Officer 2000 250,000 - 148,800 (3) 49,000 22,502 (4)
1999 250,000 - - 400,000 84,914 (4)
Charles T. Jensen........... 2001 144,239 - - 240,000 17,794 (4)
Chief Financial Officer, 2000 150,000 - 87,860 (3) 37,000 29,767 (4)
Vice President & Treasurer 1999 150,000 - - 180,000 42,712 (4)
----------------------
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 options granted under NeoMedia's 1998 Stock Option Plan and
warrants granted at the discretion of NeoMedia's Board of Directors.
3. In June 2001, the Company's Compensation Committee approved an
adjustment, relating to the Digital:Convergence patent license fees, to
the Annual Incentive Plan for Management that reduced the 2000 bonus
payout by approximately $1.1 million. The original amount recorded in
2000 and reported on the Company's Form 10-KSB for 2000 was $430,800 for
Charles W. Fritz and $193,860 for Charles T. Jensen. The adjusted amounts
are presented in the table above.
4. Includes life insurance premiums where policy benefits are payable to his
beneficiary and automobile expenses attributable to personal use and the
corresponding income tax effects.
6
Employment Agreements
The five-year employment agreements between the Company and each of
Charles W. Fritz, as Chief Executive Officer and Chairman of the Board, and
Charles T. Jensen, as Executive Vice-President and Chief Technical Officer
expired on April 30, 2001. Their annual compensation, which at the time of
expiration was $250,000 and $150,000, respectively, was continued except that
each agreed, along with other officers of NeoMedia, to a 20% reduction in the
annual rate for the two month period ended July 15, 2001 in the effort to reduce
expenses. The Company plans to renegotiate new employment agreements with
Messrs. Fritz and Jensen. In the interim, the Company has put into place
agreements providing for six months severance in the event of termination
related to a change of control. During the year ended December 31, 2001, the
Board of Directors granted Mr. Fritz options to purchase 400,000 shares of
Common Stock under the 1998 Stock Option Plan, 200,000 of which were exercisable
at the price of $0.20 per share, and 200,000 of which were exercisable at a
price of $2.50 per share. During the year ended December 31, 2001, the Board of
Directors granted Mr. Jensen options to purchase 240,000 shares of Common Stock
under the 1998 Stock Option Plan, 150,000 of which were exercisable at the price
of $0.20 per share, and 90,000 of which were exercisable at a price of $2.50 per
share. Mr. Fritz had received under the 1998 Stock Option Plan during the year
ended December 31, 2000, options to purchase 49,000 shares at a price of $4.44
per share and during the year ended December 31, 1999, options to purchase
200,000 shares at a price of $3.63 per share and options to purchase 200,000
shares at a price of $5.13. Mr. Jensen received options to purchase 37,000
shares at $4.44 per share during 2000, and 90,000 shares at $3.63 and 90,000
shares at $5.13 during 1999, in each case under the 1998 Stock Option Plan.
Incentive Plan for Management
Effective as of January 1, 1996, NeoMedia adopted an Annual Incentive
Plan for Management ("Incentive Plan"), which provides for annual bonuses to
eligible employees based upon the attainment of certain corporate and/or
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/or 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.
Stock Option Plans
Effective as of February 1, 1996, NeoMedia adopted its 1996 Stock
Option Plan, which was amended and restated effective July 18, 1996 and further
amended through November 18, 1996, ("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. Nonqualifed options granted under the Plan
with respect to 1,500,000 shares were outstanding as of March 29, 2002.
Effective March 27, 1998, NeoMedia adopted its 1998 Stock Option Plan
("1998 Stock Option Plan"). The 1998 Stock Option Plan provides for authority
for the Board of Directors to the grant non-qualified stock options with respect
to a maximum of 8,000,000 shares of common stock, of which 7,640,000 have been
granted and were outstanding as of March 29, 2002.
7
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 $10,500 for 2001 and $11,000 for 2002) 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.
Options and Warrants Granted in the Last Fiscal Year
The following table contains information concerning the grant of options,
all of which are nonqualified, and warrants to the Named Executive Officers
during the year ended December 31, 2001:
Number of
Securities % of Total Potential Realized Value at
Underlying Options Assumed Annual Rates of Stock
Options/ Warrants Price Appreciation for Term
Warrants Granted to Exercise Expiration -------------------------------------
Name Granted (1) Employees Price Date 0% 5% 10%
---------------------- --------------- ---------------- ------------- -------------- ---------- -------- -----------
Charles W. Fritz 200,000 5.7% $2.50 1/2/11 $-- $814,447 $1,296,871
200,000 5.7% $0.20 9/13/11 $-- $65,156 $103,750
Charles T. Jensen 90,000 2.6% $2.50 1/2/11 $-- $366,501 $583,592
150,000 4.3% $0.20 9/13/11 $-- $48,867 $77,812
(1) Options granted under the 1998 Stock Option Plan.
Option and Warrant Exercises in Last Fiscal Year and Fiscal Year-End Values
None of the Named Executive Officers exercised during the year ended
December 31, 2001 any options or warrants. The following table sets forth the
number and value of all unexercised options and warrants as of December 31, 2002
by the Named Executive Officers during the year.
Number of Unexercised Value of Unexercised In-
Securities Underlying the-Money Options and
Options and Warrants at Warrants at
Shares December 31, 2001 December 31, 2001 (1)
Acquired Value ----------------------------- ------------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
--------------------------- -------------- ----------- ----------------------------- ------------------------------
Charles W. Fritz - - 699,600 549,400 - -
Charles T. Jensen - - 413,186 292,200 - -
(1) The value of in-the-money options is calculated by the difference
between the market price of the stock at December 31, 2001 ($0.14)
and the exercise price of the options.
8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During October 2001, the Company borrowed $4,000 from Charles W. Fritz,
its Chief Executive Officer and Chairman of the Board, in exchange for a
promissory note bearing interest at 10% per annum with a term of six months.
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 2001 there was no delinquency in the
Section 16(a) filing obligations of NeoMedia's officers, directors and ten
percent beneficial owners.
9
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total stockholder return (change in stock price plus reinvested
dividends) on NeoMedia's Common Stock with the cumulative total return for the
Nasdaq Stock Market Index (U.S.) (the "Nasdaq Composite Index") and the Dow
Jones Internet Composite Index (the "Dow Jones Internet Index"). The graph
assumes that $100 was invested in the Common Stock of the Company and in each of
the comparative indices on December 31, 1996, the trading day before the
beginning of the Company's fifth preceding fiscal year. The graph further
assumes that such amount was initially invested in the Common Stock of the
Company at a per share price of $5.625, the price at which shares of the
Company's common stock closed on the Nasdaq SmallCap exchange on December 31,
1996. The comparisons in the graph are required by the Securities and Exchange
Commission and are not intended to forecast or be indicative of possible future
performance of NeoMedia's Common Stock.
[LINE GRAPH APPEARS HERE]
NEOM 100 ECM
---------- ----------- ----------
Nasdaq Dow-Jones
NeoMedia Composite Internet
---------- ----------- ---------
12/31/1996 100.000 100.000 100.000
1/31/1997 111.111 112.198 100.000
2/28/1997 102.222 103.543 100.000
3/31/1997 86.667 97.041 100.000
4/30/1997 86.667 106.499 100.000
5/28/1997 82.222 119.631 100.000
6/30/1997 134.444 116.551 100.000
7/30/1997 156.667 134.044 100.000
8/31/1997 193.333 130.765 104.531
9/30/1997 183.333 133.578 122.281
10/29/1997 171.111 125.373 122.566
11/30/1997 144.444 127.899 117.909
12/31/1997 161.668 120.633 120.115
1/31/1998 122.222 130.409 120.873
2/28/1998 132.222 145.384 148.263
3/31/1998 138.889 148.614 168.266
4/30/1998 155.001 151.958 183.807
5/28/1998 137.778 147.905 166.109
6/30/1998 86.667 162.820 214.476
7/30/1998 60.555 173.134 201.712
8/31/1998 46.667 138.836 132.534
9/30/1998 45.556 163.811 171.905
10/29/1998 44.444 169.999 180.672
11/30/1998 35.556 189.681 256.419
12/31/1998 51.111 223.533 322.964
1/31/1999 73.333 258.984 491.346
2/28/1999 63.333 234.401 397.430
3/31/1999 82.222 256.451 524.322
4/30/1999 87.221 260.104 601.392
5/28/1999 93.333 254.401 505.556
6/30/1999 108.889 279.630 530.373
7/30/1999 140.000 276.484 450.490
8/31/1999 157.778 291.817 457.637
9/30/1999 120.000 293.160 503.910
10/29/1999 94.444 321.106 533.503
11/30/1999 97.778 361.195 655.996
12/31/1999 84.444 451.426 861.668
1/31/2000 173.333 434.651 811.297
2/29/2000 248.889 519.497 957.774
3/31/2000 151.111 535.434 824.677
4/30/2000 168.889 459.382 643.207
5/31/2000 91.666 404.704 515.420
6/30/2000 104.444 458.239 618.012
7/31/2000 104.444 439.436 570.532
8/31/2000 78.889 496.444 690.105
9/30/2000 113.333 434.719 615.344
10/31/2000 88.889 399.618 491.997
11/30/2000 53.333 305.169 315.420
12/31/2000 53.333 285.100 292.744
1/31/2001 88.889 315.696 326.155
2/28/2001 86.667 232.337 204.374
3/31/2001 88.889 191.542 149.487
4/30/2001 52.089 225.863 187.927
5/31/2001 38.044 219.135 188.378
6/30/2001 34.667 223.136 181.041
7/31/2001 20.444 204.978 146.312
8/31/2001 4.267 178.935 113.485
9/30/2001 3.911 142.248 83.446
10/31/2001 2.844 166.161 99.387
11/30/2001 1.956 194.318 126.180
12/31/2001 2.489 192.005 133.575
10
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee, which meets on a periodic basis, is
comprised of Messrs. Charles W. Fritz and Charles T. Jensen, officers of the
Company and James J. Keil, a non-employee member of the Board of Directors (two
non-employee Directors resigned as Directors and members during 2001). The
Compensation Committee formulates and administers compensation policies for the
President and Chief Executive Officer and all vice presidents of NeoMedia. (A
Stock Option Committee consisting of two non-employee Directors is responsible
for determining to whom and under what terms stock options should be granted,
other than options which are automatically granted to members of the Board of
Directors, under the Plan.)
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION (1)
The following is a report of the Compensation Committee of the Board of
Directors (the "Committee") describing the compensation policies applicable to
the Company's executive officers during the fiscal year ended December 31, 2001.
The Committee is responsible for establishing and monitoring the general
compensation policies and compensation plans of the Company, as well as the
specific compensation levels for executive officers.
General Compensation Philosophy
Under the supervision of the Committee, the Company's compensation policy is
designed to attract, motivate and retain qualified key executives critical to
the Company's success. It is the objective of the Company to have a portion of
each executive's compensation dependent upon the Company's performance as well
as upon the executive's individual performance. Accordingly, each executive
officer's compensation package is comprised of three elements: (i) base salary
which reflects individual performance and expertise, (ii) variable bonus payable
in cash and tied to the achievement of certain annual performance goals and
(iii) stock options which are designed to align the long-term interests of the
executive officer with those of the Company's stockholders.
The Committee considers the total compensation of each executive officer in
establishing each element of compensation, other than stock options which are
the responsibility of the Stock Option Committee. All incentive compensation
plans are reviewed at least annually to assure they meet the current strategies
and needs of the Company.
The summary below describes in more detail the factors that the Committee
considers in establishing each of the three primary components of the
compensation package provided to the executive officers.
Base Salary
Base salary ranges are established based on benchmark data from nationally
recognized surveys of similar high-technology companies that compete with the
Company for executive officers and Company research of peer companies. Each
executive officer's base salary is established on the basis of the individual's
qualifications and relevant experience.
Variable Bonus
The Committee believes that a substantial portion of the annual compensation of
each executive should be in the form of variable incentive pay to reinforce the
attainment of Company goals. The Incentive Plan rewards achievement of specified
levels of corporate profitability. A pre- determined formula, which takes into
account profitability against the annual plan approved by the Board of
Directors, is used to determine the bonus award. The individual executive
officer's bonus award is based upon discretionary assessment of each officer's
performance during the prior fiscal year.P
Compensation for the Chief Executive Officer
Charles W. Fritz has served as the Company's Chairman of the Board and Chief
Executive Officer since August 1996.
Base Salary: The Committee reviews the Chief Executive Officer's major
accomplishments and reported base salary information for the chief executive
officers of other companies in the Company's peer group. Based on this
information, the Committee recommends a salary adjustment to the Board of
Directors. Beginning in 1996, the Company and Mr. Fritz entered into a five-year
employment agreement under which Mr. Fritz was paid $170,000 per year. In
January 1998, the Committee increased Mr. Fritz's salary to $250,000. In April
2001, the employment agreement expired. The Company and Mr. Fritz have not
renewed the contract. Mr. Fritz's salary is currently $250,000.
11
Cash Incentive: The Chief Executive Officer's incentive target is at the
discretion of the Committee. Achievement of the target is based on overall
company income versus annual Plan income. Mr. Fritz did not earn a bonus
relating to fiscal 2001. During June 2001, the Committee approved an adjustment,
relating to the Digital:Convergence patent license fees, to the 2000 Incentive
Plan that reduced the bonus payout by approximately $1.1 million. Mr. Fritz's
incentive relating to fiscal 2000 was reduced from $430,800 to $148,800. The
award had not been paid as of April 1, 2002.
COMPENSATION COMMITTEE
Charles W. Fritz
Charles T. Jensen
James J. Keil
(1) This Section is not "soliciting material," is not deemed "filed"
with the SEC and is not to be incorporated by reference in any
filing of the Company under the 1933 Act or the 1934 Act whether
made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors currently consists
of Messrs. Fritz, Jensen, and Keil. During the last fiscal year, no interlocking
relationship existed between the Company's Board of Directors or Compensation
Committee and the board of directors or compensation committee of any other
company.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee for the last fiscal year consisted of two
nonemployee Directors (a third resigned in September 2001). The Board of
Directors has determined that none of the members of the Audit Committee has a
relationship to NeoMedia that may interfere with his independence from NeoMedia
and its management.
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing financial
reports and other financial information provided by the Company to any
governmental body or the public, the Company's systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board of Directors have established, and the Company's auditing, accounting
and financial processes generally. The Audit Committee annually recommends to
the Board of Directors the appointment of a firm of independent auditors to
audit the financial statements of the Company and meets with such personnel of
the Company to review the scope and the results of the annual audit, the amount
of audit fees, the Company's internal accounting controls, the Company's
financial statements contained in the Company's Annual Report to Stockholders
and other related matters.
The Audit Committee has reviewed and discussed with management the
financial statements for fiscal year 2001 audited by Stonefield Josephson, Inc.,
the Company's independent auditors. The Audit Committee has discussed with
Stonefield Josephson, Inc. various matters related to the financial statements,
including those matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards, AU ss. 380). The Audit Committee has also
received the written disclosures and the letter from Stonefield Josephson, Inc.
required by Independence Standards Board Standard No. 1 (Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees), and has
discussed with the firm its independence. Based upon such review and discussions
the Audit Committee recommended to the Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ending December, 2001 for filing with the Securities and
Exchange Commission.
12
AUDIT COMMITTEE
James J. Keil
A. Hayes Barclay
The report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the filing
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
13
PROPOSAL TWO -
INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
General Information
NeoMedia's Board of Directors has authorized an amendment to NeoMedia's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 50,000,0000 to 200,000,000, and the authorized shares of
Preferred Stock from 10,000,000 to 25,000,000. As of March 15, 2002, there were
36,927,392 shares of Common Stock outstanding. In addition, 11,147,221
additional shares are reserved for issuance upon exercise of outstanding options
and warrants and 10,000,000 shares will be reserved for issuance under the 2002
Stock Option Plan if approved at the Annual Meeting. NeoMedia has previously
issued an aggregate of 452,489 shares of a Series A Convertible Preferred Stock,
which were subsequently converted into the same number of shares of Common
Stock, thereby reducing the shares of Preferred Stock which the Board of
Directors is authorized under the Certificate of Incorporation to issue to
9,547,511 shares.
The 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 1996 and 1998 Stock Option Plans, and the 2002
Stock Option Plan if Proposal Three below is approved and outstanding warrants;
for future financing and acquisition transactions; and for dividends or splits.
Stockholder approval of the amendment to NeoMedia's Certificate of Incorporation
to increase the authorized shares of Common Stock and 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 Preferred Stock to ensure that adequate shares are available
for issuance if such issuance becomes desirable.
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. All outstanding
shares of Common Stock will continue to have one vote per share. There are no
preemptive rights with respect to NeoMedia's Common Stock. The Company has no
present agreement or intent to issue any additional shares of Common Stock,
other than pursuant to the foregoing Stock Option Plans and outstanding
warrants.
The Board of Directors of NeoMedia has the authority to issue the
shares of Preferred Stock authorized in one or more series and to fix the
powers, designations, rights, preferences and restrictions thereof, including
liquidation preferences and rights as to dividends, conversion, voting and
redemption, and the number of shares constituting each series, without any
further vote or action by the Company's shareholders. The issuance of a series
of Preferred Stock in certain circumstances, based on its terms, may delay or
prevent a change in control of NeoMedia, may discourage bids for the Common
Stock at a premium over the market price of the Common Stock and may directly
affect the market price of and the voting and other rights of holders of Common
Stock. The Company currently has no plans to issue any further series of
Preferred Stock.
Vote Required for Approval
Approval of amendment will require that holders of at least a majority
of the total outstanding shares of Common Stock vote "FOR" the amendment.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF NEOMEDIA RECOMMENDS A VOTE "FOR" THE
AMENDMENT TO INCREASE ITS AUTHORIZED COMMON CAPITAL STOCK.
14
PROPOSAL THREE -
APPROVAL OF THE 2002 STOCK OPTION PLAN
General Information
NeoMedia currently has in effect its 1996 Stock Option Plan (the "1996
Stock Option Plan") and the 1998 Stock Option Plan (the "1998 Stock Option
Plan"), the purpose of which is to retain the services of selected employees and
to attract new employees, consultants, advisors 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, all
1,500,000 options to purchase have been granted under the 1996 Stock Option
Plan. All of such granted options are non-qualified options. The 1998 Stock
Option Plan provides for the granting of a maximum of 8,000,000 incentive stock
options, and non-qualified (or nonstatutory) stock options. As of March 29,
2002, 7,640,000 options, all non-qualified, to purchase shares of Common Stock
have been granted under the 1998 Stock Option Plan.
In the opinion of the Board of Directors, NeoMedia and its stockholders
have benefited substantially from being able to grant options under the 1996
Stock Option Plan and the 1998 Stock Option Plan in addition to its authority to
grant warrants. Such options, in the opinion of the Board of Directors, 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 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 of Directors, NeoMedia's ability to
provide additional stock options to its officers, employees, consultants and
directors in the future will benefit NeoMedia's long-term performance.
Accordingly, the Board of Directors has adopted the 2002 Stock Option Plan (the
"Plan") and believes it is in NeoMedia's best interest for the shareholders to
approve the Plan which will authorize the Board of Directors to award stock
options to its officers, other employees, consultants and directors without
further stockholder actions.
The Plan and Participants
The Plan authorizes the grant of non-qualified options to purchase up
to an aggregate of 10,000,000 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 appointed
Committee will be the Stock Option committee, which 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 May 21, 2012, and no additional options
may be granted under the Plan after that date.
15
Option Terms and Grants
Stock options may be granted under the Plan to purchase Common Stock at
an exercise price determined by the Committee which may be less than the fair
market value of the shares on the date of grant but not less than the per share
par value. As of March 15, 2002, the closing sale price of the Common Stock on
the NASDAQ SmallCap Market was $0.30. There is no limitation on the number of
stock options that 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, at the
Director's choice, 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 no later than 30 days prior to exercise 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 of Directors 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 that the employment or other
relationship of the relevant optionee with the Company is terminated with or
without cause or expires; 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 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.
16
Federal Tax Aspects of 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. Each such 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 such 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 (NeoMedia may be required to withhold income
tax on this amount) and (b) generally NeoMedia will be entitled to a tax
deduction for the same amount. 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. If such optionee exercises a nonqualifed option by delivering shares
of Common Stock to the Company in payment of the exercise price, special rules
will apply.
Vote Required for Approval of the Plan
Approval of the Plan will require that 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".
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF NEOMEDIA RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE 2002 STOCK OPTION PLAN.
17
AUDITORS
Following the recommendation of the Audit Committee, the Board of
Directors has selected Stonefield Josephson, Inc. as the independent auditors of
the Corporation and its consolidated subsidiaries for the fiscal year ended
December 31, 2001. A representative of Stonefield Josephson, Inc. 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.
Audit Fees
The aggregate fees billed by Stonefield Josephson, Inc. ("Stonefield")
for professional services rendered for the audit of NeoMedia's annual financial
statements for the fiscal year ended December 31, 2001 and billed by that firm
and Arthur Andersen LLP ("Andersen"), NeoMedia's former independent auditors,
for the review of the financial statements included in NeoMedia's Reports on
Forms 10-Q for the year ended December 31, 2001 were approximately $210,000. The
aggregate fees billed by Stonefield, Andersen, Ernst & Young LLP, and KPMG LLP
relating to accounting services for reviews and independent auditors' consents
were approximately $85,000.
Financial Information Systems Design and Implementation Fees
There were no fees billed by Stonefield Josephson, Inc. and Arthur
Andersen LLP for financial information systems design and implementation
professional services for the year ended December 31, 2001.
STOCKHOLDER PROPOSALS
Any proposal of a stockholder intended to be presented at NeoMedia's
annual meeting of stockholders with respect to the year ended December 31, 2002,
must be received by the secretary of NeoMedia, for inclusion in NeoMedia's proxy
statement and proxy relating to the annual meeting on or before December [15],
2002.
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.
April 12, 2002 -----------------------------------
Fort Myers, Florida William E. Fritz, Secretary
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APPENDIX A
NEOMEDIA TECHNOLOGIES, INC.
2002 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.
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.
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(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 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 10,000,000. 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) 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.
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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.
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 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.
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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.
(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 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.
22
(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.
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 therefore, 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 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 therefore 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.
23
(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.
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.
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.
24
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.
25
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 2002 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 Company's Headquarters, 2201 Second Street, Suite 600,
Fort Myers, Florida on Thursday, June 6, 2002 at 10:00 a.m., and at all
postponements or adjournments thereof upon all business as may properly come
before the meeting with all 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 AND FOR PROPOSAL 2 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)
PLEASE RETAIN THIS ADMISSION TICKET
FOR THE
ANNUAL MEETING OF STOCKHOLDERS OF
NEOMEDIA TECHNOLOGIES, INC.
COMPANY HEADQUARTERS - 2201 SECOND STREET, SUITE 600.
FT. MYERS, FLORIDA 33901
THURSDAY, JUNE 6, 2002
10:00 A.M., EASTERN 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 2002 ANNUAL MEETING OF STOCKHOLDERS, PLEASE MARK THE
APPROPRIATE BOX ON THE PROXY CARD BELOW.
PRESENT THIS TICKET TO A NEOMEDIA TECHNOLOGIES, INC. REPRESENTATIVE AT THE
ENTRANCE TO THE MEETING ROOM.
Please Detach and Mail in the Envelope Provided /arrow
A [X] Please mark your votes as in this example.
1. Election of directors - The election of the following nominees to the Board
of Directors unless otherwise indicated:
A. Hayes Barclay
Charles W. Fritz
William E. Fritz
Charles T. Jensen
James J. Keil
|_| FOR |_| AGAINST |_| ABSTAIN
1
IN THE EVENT THE UNDERSIGNED WISHES TO WITHHOLD AUTHORITY FOR ANY PARTICULAR
NOMINEE OR NOMINEES LISTED ABOVE, PLEASE SO INDICATE BY CLEARLY AND NEATLY
LINING THROUGH OR STRIKING OUT THE NAME OF ANY SUCH NOMINEE OR NOMINEES.
2. To approve an amendment to the Company's Articles of Incorporation to
increase the number of authorized shares of the Company's Common Stock, $.01 par
value per share, from 50,000,000 to 200,000,000 and to increase the number of
shares of the Company's Preferred Stock, par value $.01 per share, from
10,000,000 to 25,000,000. |_| FOR |_| AGAINST |_| ABSTAIN
3. To approve the 2002 Stock Option Plan. |_| FOR |_| AGAINST |_| ABSTAIN
4. To transact such other business as may properly come before the meeting or
any adjournments or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THE SHARES WILL BE VOTED "FOR"
PROPOSALS ONE AND TWO. SUCH PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY TO VOTE
WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENTS, OR POSTPONEMENTS THEREOF.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING AND PROXY STATEMENT OF THE COMPANY.
DATED: ___________________________, 2002
Signature of Stockholder
Signature of Stockholder
Please sign your name exactly as it appears on your stock certificate. When
signing as attorney-in-fact, executor, administrator, trustee or guardian,
please add your title as such. When signing as joint tenants, all parties in the
joint tenancy must sign. If signer is a corporation, please sign in full
corporate name by duly authorized officer or officers and affix the corporate
seal.
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
2