OT-Paychecks
Talking about paychecks, I came across this doozy in the 10-Q for Metricom, the high speed wireless provider that is running out of cash. This guy is ostensibly being paid to sell the company, but the compensation is something else!
COMPENSATION DURING THE CEO TERM.
(a) Base Salary. MCOM shall initially pay Derrickson a monthly gross
base salary in the amount of One Hundred Fifty Thousand Dollars and No
Cents ($150,000.00) ("Base Salary") in accordance with MCOM's standard
payroll processing schedule. Derrickson's Base Salary shall not be
decreased absent Derrickson's prior written consent.
(b) Non-Discretionary Bonus for Additional Funding.
1) In recognition that Derrickson's services on behalf of MCOM
may attract additional third party investment in MCOM, MCOM shall
pay Derrickson an automatic and non-discretionary bonus equal to
one and one-half percent (1.5%) of the cash value of all new
investment funds received by MCOM arising from negotiations
entered into during the CEO Term and for a period of twenty-four
months thereafter (cumulatively, the "Bonus Period"). For
purposes of this Section 6, new investment funds received by MCOM
during the Bonus Period shall include, without limitation, all
venture capital and other private equity investment plus any
amounts secured by MCOM through a new line of credit, loan,
convertible note, or other debt arrangement. For each such line
of credit or other debt arrangement, the non-discretionary bonus
payment shall be calculated based on the amount that is actually
paid to MCOM. Multiple draws on any line of credit or debt
arrangement shall be taken into account separately in calculating
the bonus, and no draws on a line of credit or debt arrangement
that may create a bonus obligation to Derrickson shall be
undertaken without approval of Metricom's Board of Directors.
To the extent that new investment funds secured during the Bonus
Period include one or more investments received from Vulcan
Ventures (where each separate investment shall be referred to
singularly as a "Vulcan Investment"), then the non-discretionary
bonus provided for above, with respect only to any Vulcan
Investment shall be capped at a maximum of Three Hundred and
Fifty Thousand Dollars ($350,000).
The cap described in the immediately preceding paragraph shall be
applied separately to each distinct Vulcan Investment, on a
non-aggregated basis. For clarity, and by way of example, if
Vulcan Ventures participates in multiple investment rounds during
the Bonus Period committing "x" amount of dollars payable in
separate rounds with each payment contingent upon MCOM's
satisfaction of specified conditions at each round, the $350,000
limitation shall apply separately to the amount received at each
round. To the extent, if any, that additional investors (i. e.,
investors other than Vulcan Ventures) participate in such rounds
the cap shall not apply as to investments from such additional
investors.
During the Bonus Period, the non-discretionary bonus shall be due
and payable to Derrickson regardless of whether Derrickson is
employed by or providing services to MCOM at the time any
additional funding is received.
(2) Non-Discretionary Bonus for Liquidity Event. In addition to
any non-discretionary bonus described in (b)(1) above, Derrickson
shall also receive an automatic and non-discretionary bonus if
there is a Liquidity Event during the Bonus Period. A "Liquidity
Event" shall mean: (i) any sale, exchange, or transfer of
substantially all of the assets of MCOM, (ii) any sale, exchange
or transfer involving the common stock of MCOM if, immediately
following the transaction, the persons who held MCOM common stock
(or securities convertible into MCOM common stock) hold less than
a majority of the combined equity of MCOM (or any successor
entity), or (iii) any other sale or similar transaction in which
MCOM undergoes a change of majority shareholder control in
exchange for consideration. Upon the occurrence of a Liquidity
Event, Derrickson shall receive a non-discretionary bonus equal
one and a half percent (1.5%) of the purchase price paid in the
Liquidity Event.
(3) Timing and Nature of Payment. Each non-discretionary bonus
provided for herein shall be payable on or before the closing of
the respective transactions. The parties further agree that, in
each calendar year of the Bonus Period, the first One Million
Dollars ($1,000,000) of any non discretionary bonus provided for
herein shall, at Derrickson's election, be payable in cash or in
shares of MCOM common stock (or in securities convertible to MCOM
common stock), or in a combination thereof. If the cumulative
non-discretionary bonus exceeds $1,000,000 in any calendar year
during the Bonus Period, then the amount in excess of $1,000,000
shall be paid exclusively in shares of MCOM common stock (or in
securities convertible to MCOM common stock). In all cases where
the bonus is paid in the form of stock or other securities, the
number of shares due and payable to Derrickson shall be
calculated on the basis of the fair market value of the stock
prior to the public announcement or closing of the applicable
transaction. Thus, the total number of shares delivered to
Derrickson will be calculated based on the value of MCOM prior to
any investment which triggers the non-discretionary bonus.
7. COMPENSATION DURING THE CONSULTANT TERM
During the Consultant Term, Derrickson shall be compensated at the daily
rate of Five Thousand Dollars ($5000.00) a day. Derrickson shall not be
expected to work more than ten hours per day. If additional hours are
required, then they shall be compensated at the hourly rate of $250 per
hour. MCOM shall pay Derrickson for a minimum of three days of work a
month -- even if no services are required in a month. |
