EXECUTIVE EMPLOYMENT AGREEMENT
This
Executive Employment Agreement (this "Agreement") is made and entered into
as of
this 28th of
October 2006,
by
and between New Motion, Inc. a Delaware corporation (the "Company")
and
Xxxx
Xxxxxxxxxxx ("Executive").
1. Engagement
and Duties.
1.1
Upon
the terms and subject to the conditions set forth in this Agreement,
the Company hereby engages and employs Executive as Chief Technology
Officer
and Vice President of Operations. Executive hereby accepts such engagement
and
employment.
1.2
Executive will have access to certain confidential information and may,
during the course of his employment, develop certain information which will
be
the property of the Company. Executive will be required to sign the Company's
"Proprietary Information and Assignment of Inventions Agreement" as a condition
of his employment under this Agreement.
1.3
Executive's duties and responsibilities shall be as follows: manage all
aspects of Company's technology platforms and applications, set strategy for
Company's
technology architecture, application development, and data management,
lead
the
day to day operations team, prioritize activities of all technical and
operational resources, support the integration of new technologies developed
internally, purchased by 3rd
parties,
and/or supplied by industry partners, subject to the supervision, direction
and
control
of the CEO of the Company. In addition, Executive's duties shall include those
duties
and services for the Company and its affiliates as the Board shall from time
to
time reasonably direct.
1.4
Executive agrees to devote his primary business time, energies, skills,
efforts and attention to his duties hereunder, and will not, without the prior
written consent of the Company, which consent will not be unreasonably withheld,
render any material services to any other business concern. Executive will
use
his best efforts and abilities faithfully and diligently to promote the
Company's business interests.
1.5
Except for routine travel incident to the business of the Company, Executive
shall perform his duties and obligations under this Agreement principally from
an office provided by the Company in Irvine, California, or such other location
in Los Angeles County, as the CEO may from time to time determine.
2. Term
of Employment. Executive's
employment pursuant to this Agreement shall commence
on December 28, 2006 (-Start
Date") and
shall
terminate on the earliest to occur
of
the following:
(a) the
close
of business on the second anniversary of the Start Date;
(b) the
death
of Executive;
(c) delivery
to Executive of written notice of termination by the Company
if Executive shall suffer a "permanent disability," which for purposes of this
Agreement shall mean a physical or mental disability which renders Executive
unable to perform the essential functions of his job without or without
reasonable accommodation for 90 consecutive days in any 12-month
period;
(d) 30
days
written notice to Executive of termination by the Company for
Cause
following a reasonable opportunity for Executive to cure the alleged Cause
for
termination.
For purposes of this Agreement, Cause means: (ii) any material breach of
any
of
the terms of this Agreement; (ii) any act or omission knowingly undertaken
or
omitted
by Executive with the intent of causing damage to the Company, its properties,
assets or business, goodwill, or its stockholders, officers, directors or
employees; (ii) commission of any material act of dishonesty, fraud,
misrepresentation, misappropriation, embezzlement,
or other act of moral turpitude; (iii) Executive's consistent failure to
perform
his normal duties or any obligation under any provision of this Agreement,
in
either
case, as directed by the Chief Executive Officer and/or the Board; (iv)
conviction of,
or
pleading nolo contendere to (A) any crime or offense involving monies or other
property of the Company; (B) any felony offense; or (C) any crime of moral
turpitude; or (v) the chronic or habitual use or consumption of drugs or
alcoholic beverages; or
(e) 30
days
written notice to Executive of termination by the Company "without
cause."
(f) 30
days
written notice to Company by Executive that he is terminating
his employment for Good Reason. For the purposes of this Agreement, Good Reason
means: (i) Company engages or is reasonably perceived to have engaged in an
unfair,
unlawful, or fraudulent business practice or act; (ii) Company materially
diminishes
Executive's title or duties hereunder; (iii) Company reduces Executive's base
pay;
or
(iv) any other Company action or inaction that constitutes a material breach
of
this
Agreement.
(g) upon
a
Change in Control. For the purposes of this Agreement, a Change
in
Control means the sale of all or substantially all of the outstanding voting
equity
securities of the Company issued as of the date of this Agreement in a
transaction or
series
of transactions pursuant to which the business of the Company or control of
the
business of the Company is sold or transferred to a third party or parties
not
controlled by the
persons controlling the Company immediately prior to consummation of the sale;
or (ii)
any
other merger, business combination, or reorganization that results in the
business of the Company being controlled by a third party or parties not
controlled by the persons controlling the Company immediately prior to
consummation of such merger, business combination, or other
reorganization.
Effect
of
Termination.
(i)
After
the expiration of the Employment term under Section 2(a), if Executive
continues to be employed by the Company, such employment shall be terminable
"at will" by either the Company or Executive and the terms and conditions of
this Agreement shall continue to apply; provided, however, following the
expiration of the
term
if the Company terminates Executive's employment without cause then the
Company
shall within 20 days of termination pay as severance six months base pay, six
months prorated bonus based on the higher of Executive's target annual bonus
or
annual bonus earned the previous year, and accelerate the vesting of all
unvested stock options under Section 3.3. If Executive terminates his employment
for Good Reason, then the Company
shall within 20 days of termination pay as severance three months base pay,
three
months prorated bonus based on the higher of Executive's target annual bonus
or
annual bonus earned the previous year, and accelerate the vesting of all
unvested stock options under Section 3.3.
(ii) In
the
event Executive is terminated because of Death pursuant to Section
2(b), Disability pursuant to Section 2(c), or for Cause pursuant to section
2(d), the
Company shall pay Executive or his estate (A) his base salary, (B) his prorata
share of his
annual bonus calculated by taking the product of (i) Executive's annual bonus
from the
preceding year or target annual bonus, whichever is higher, and (ii) the
fraction of the calendar year worked by Executive as of the termination date,
(C) all accrued but unused vacation,
and (D) any vested deferred compensation that he has earned through the
termination
date. Executive shall not be entitled to any additional compensation,
including
salary, bonus or commissions.
(iii) In
the
event that Executive's employment is terminated before the expiration of the
term by the Company without Cause pursuant to Section 2(e), or by Executive
for Good Reason pursuant to 2(f), the Company shall, in addition to all
obligations
due to Executive as if he were terminated for Cause, within 20 days of
termination
do the following: (a) if the termination occurs during the first year of the
term,
pay
Executive an amount equal to two times Executive's target annual bonus, or
if
the
termination occurs during the second year of the term, the higher of Executive's
target annual
bonus or annual bonus earned the previous year; and (b) accelerate the vesting
of all
unvested stock options under Section 3.3.
(iv) In
the
event that Executive's employment is terminated because of a Change in Control
pursuant to Section 2(g) before the expiration of the term, the Company or
its
successors or assigns shall, in addition to all obligations due to Executive
as
if he
were terminated for Cause, within 20 days of termination do the following:
(a)
if the
termination occurs during the first year of the term, pay Executive an amount
equal to two
times
Executive's target annual bonus, or if the termination occurs during the second
year
of
the term, the higher of Executive's target annual bonus or annual bonus earned
the previous
year; and (b) accelerate the vesting of all unvested stock options under Section
3.3. In the event that Executive's employment is terminated because of a Change
in Control
pursuant to Section 2(g) following the expiration of the term, the Company
or
its successors or assigns shall within 20 days of termination pay as severance
six months base pay, six months prorated bonus based on the higher of
Executive's target annual bonus
or
annual bonus earned the previous year, and accelerate the vesting of all
unvested
stock options under Section 3.3.
3.
Compensation; Executive Benefit Plans.
3.1
Base
Salary. Commencing
on the Start Date, the Company shall pay Executive an annual base salary of
$200,000. Executive's base salary shall be payable
in installments throughout the year in the same manner and at the same times
the
Company pays base salaries to other executives of the Company.
3.2Bonus.
Executive
will also be eligible to receive a bonus, up to $45,000
per year (the "Bonus") based On-Target Marketing.
3.3
Stock
Options. Executive
will be eligible for an option to purchase shares of the Company's common stock
at an exercise price per share equal to the fair market value of the common
stock, to be determined by the Board of Directors on the date
of
the grant. Executive's option will be granted under the Company's future Stock
Option Incentive Plan, in accordance with and subject to each term of the
Company's standard form of option agreement.
3.4
Vacation.
Executive
will receive two weeks paid vacation. One week
will
vest immediately upon the Start Date and the other shall accrue during the
first
year
of
the term hereunder.the other week. During the second year of Executive's
employment
and thereafter if Executive's employment continues following the term,
Executive
will receive three weeks paid vacation, which shall begin to accrue as of the
first
day
of his second year of employment. All vacation shall be paid and earned in
accordance with the Company's vacation policy.
3.5
Other
Benefits. During
the term of his employment hereunder, Executive
shall be eligible to participate in all operative employee benefit and welfare
plans
of
the Company then in effect from time to time and in respect of which all
similarly
situated executives of the Company generally are entitled to participate
("Company
Executive Benefit Plans"), including, to the extent then in effect, auto
allowances,
group life, medical, disability and other insurance plans, all on the same
basis
applicable to employees of the Company whose level of management and authority
is comparable to that of Executive.
3.6
The
Company reserves the right to modify, suspend, or discontinue any
and
all of the above-mentioned plans, practices, policies and programs at any time
as long
as
such action is taken generally with respect to other similarly situated
executives of
the
Company. The Company shall not reduce Executive's benefits in an amount or
manner
than it does for any similarly situated employee.
3.7
The
Company may deduct from any compensation payable to Executive
the minimum amounts sufficient to cover applicable federal, state and/or local
income tax withholding, old-age and survivors' and other social security
payments, state disability and other insurance premiums and payments. This
shall
also apply to bonus payments where Executive elects to receive stock instead
of
cash, except that Executive shall
provide the funds necessary for the Company to comply with its withholding
obligations.
This may be accomplished either by depositing such funds with the Company or
the
Company is authorized to offset the amounts required for withholding from
Executive's Base Salary.
4. Expenses.
4.1
Generally.
Executive
shall be entitled to reimbursement from the Company for the reasonable costs
and
expenses which he incurs in connection with the performance
of his duties and obligations under this Agreement in a manner consistent
with
the
Company's practices and policies as adopted or approved from time to time by
the
Board
for executive officers generally.
4.2
Travel.
All
travel requests must be approved in advance by the Chief
Executive Officer. The Company will reimburse Executive for expenses
reasonably
incurred by him for business travel, including transportation, lodging and
reasonable entertainment expenses, pursuant to the Company's Travel
Policy.
4.3
Mobile
Telephone/PDA. The
Company will reimburse Executive for
the
monthly fees associated with a mobile telephone and Blackberry service, up
to a
maximum of $200 per month.
5. Dispute
Resolution.
5.1
Agreement
to Arbitrate. Executive
and the Company agree to arbitrate
before a neutral arbitrator any and all disputes or claims arising from or
relating to
Executive's recruitment to or employment with the Company, or the termination
of
that
employment, including claims against any current or former agent or employee
of
the Company, whether the disputes or claims arise in tort, contract, or pursuant
to a statute, regulation,
or ordinance now in existence or which may in the future be enacted or
recognized,
including, but not limited to, the following claims:
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claims
for fraud, promissory estoppel, fraudulent inducement of contract
or
breach of contract or contractual obligation, whether such alleged
contract
or obligation be oral, written, or express or implied by fact or
law;
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claims
for wrongful termination of employment, violation of public policy
and
constructive discharge, infliction of emotional distress, misrepresentation,
interference with contract or prospective economic advantage,
defamation, unfair business practices, and any other tort or tort-like
causes of action relating to or arising from the employment relationship
or the formation or termination thereof;
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claims
of discrimination, harassment, or retaliation under any and all
federal,
state, or municipal statutes, regulations, or ordinances that prohibit
discrimination, harassment, or retaliation in employment, as well
as
claims for violation of any other federal, state, or municipal statute,
regulation, or ordinance, except as set forth herein;
and
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claims
for non-payment or incorrect payment of wages, commissions, bonuses,
severance, employee fringe benefits, stock options and the like,
whether
such claims be pursuant to alleged express or implied contract or
obligation,
equity, the California Labor Code, the Fair Labor Standards Act,
the Employee Retirement Income Securities Act, and any other federal,
state, or municipal laws concerning wages, compensation or employee
benefits.
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5.2
Claims
Excluded from Arbitration. The
Company and Executive understand
and agree that arbitration of the disputes and claims covered by this
Agreement
shall be the sole and exclusive mechanism for resolving any and all existing
and
future disputes or claims arising out of Executive's recruitment to or
employment with
the
Company or the termination thereof. The Company and Executive further
understand
and agree that the following disputes and claims are not covered by this
Agreement
and shall therefore be resolved as permitted or required by the law then in
effect:
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claims
for workers' compensation benefits, unemployment insurance,
or state or federal disability insurance;
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claims
for injunctive and/or other equitable relief;
and
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any
other dispute or claim that has been expressly excluded from arbitration
by law.
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Also,
nothing in this section should be interpreted as restricting or prohibiting
Executive from
filing a charge or complaint with a federal, state, or local administrative
agency charged
with investigating and/or prosecuting complaints under any applicable federal,
state
or
municipal law or regulation. Any dispute or claim that is not resolved through
the
federal, state, or local agency must be submitted to arbitration in accordance
with this section.
5.3
Waiver
of Court or Jury Trial. Executive
and the Company understand
and agree that the arbitration of disputes and claims under this section shall
be instead
of a trial before a court or jury or a hearing before a government agency.
Executive
and the Company understand and agree that, by signing this Agreement,
Executive
and the Company are expressly waiving any and all rights to a trial before
a
court
or
jury or before a government agency regarding any disputes and claims which
we
now have or which we may in the future have that are subject to arbitration
under this section.
5.4
Arbitration
Procedures. The
arbitrator shall issue a written award that
sets
forth the essential findings and conclusions on which the award is based. The
arbitrator
shall have the authority to award any relief authorized by law in connection
with
the
asserted claims or disputes. The arbitrator's award shall be final and binding
on both
the
Company and Executive and it shall provide the exclusive remedy(ies) for
resolving
any and all disputes and claims subject to arbitration under this section.
The
arbitrator's award shall be subject to correction, confirmation, or vacation,
as
provided by California Code of Civil Procedure Section 1285.8 et seq and any
applicable California case law setting forth the standard of judicial review
of
arbitration awards.
The
arbitration shall be conducted in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association;
provided, however,
that the Arbitrator shall allow the discovery authorized by California Code
of
Civil
Procedure section 1283.05 or any other discovery required by California law.
Also, to the extent that any of the National Rules for the Resolution of
Employment Disputes or anything
in this Agreement conflicts with any arbitration procedures required by
California
law, the arbitration procedures required by California law shall
govern.
5.5
Place
of Arbitration. The
arbitration shall take place in Orange County,
California, or, at the Executive's option, the county in which the Executive
resides
at the time the arbitrable dispute(s) or claim(s) arose, or in any county in
which venue
would have been proper if Executive were free to bring the dispute(s) or
claim(s) in
court.
5.6
Governing
Law. This
Agreement and its validity, construction and performance shall be governed
by
the laws of the State of California, without reference to rules relating to
conflicts of law. Any dispute(s) and claim(s) to be arbitrated under this
section shall be governed by the laws of the State of California, without
reference to rules relating to conflicts of law.
5.7
Costs
of Arbitration. The
Company will bear the arbitrator's fee and
any
other type of expense or cost that the employee would not be required to bear
if
he
or she
were free to bring the dispute(s) or claim(s) in court as well as any other
expense
or cost that is unique to arbitration. The Company and Executive shall each
bear
their
own
attorneys' fees incurred in connection with the arbitration, and the arbitrator
will
not
have authority to award attorneys' fees unless a statute or contract at issue
in
the dispute authorizes the award of attorneys' fees to the prevailing party,
in
which case the arbitrator
shall have the authority to make an award of attorneys' fees as required or
permitted
by applicable law. If there is a dispute as to whether the Company or
Executive
is the prevailing party in the arbitration, the arbitrator will decide this
issue.
5.8
Knowing
Waiver. Executive
has been advised to consult with an attorney
of his our own choosing before signing this Agreement, and has had an
opportunity
to do so. Executive agrees that he has read this section carefully and
understands
that by signing this Agreement, he is waiving all rights to a trial or hearing
before
a
court or jury of any and all disputes and claims regarding Executive's
employment
with the Company or the recruitment to or termination thereof (except as
otherwise stated herein).
6.
Miscellaneous.
1.1
Notices.
All
notices, requests and other communications (collectively,
"Notices") given pursuant to this Agreement shall be in writing, and shall
be
delivered by personal service or by United States first class, registered or
certified mail
(return receipt requested), postage prepaid, addressed to the party at the
address set forth below:
| If to Company: |
New
Motion, Inc
42
Corporate Park Suite 250
Irvine
CA 00000
000-000-0000
(phone)
000-000-0000
(facsimile)
Attention
Board of Directors & Legal
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If
to Executive:
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Xxxx
Xxxxxxxxxxx
Address
Tel:
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Any
Notice shall be deemed duly given when received by the addressee thereof,
provided that
any
Notice sent by registered or certified mail shall be deemed to have been duly
given
three days from date of deposit in the United States mails, unless sooner
received. Either party may from time to time change its address for further
Notices hereunder by giving notice to the other party in the manner prescribed
in this section.
1.2
Entire
Agreement. This
Agreement contains the sole and entire Agreement
and understanding of the parties with respect to the entire subject matter
of
this
Agreement, and any and all prior discussions, negotiations, commitments and
understandings, whether oral or otherwise, related to the subject matter of
this
Agreement are
hereby merged herein. No representations, oral or otherwise, express or implied,
other
than those contained in this Agreement have been relied upon by any party to
this Agreement.
6.3
Successors
and Assigns. The rights and obligations hereunder shall be binding upon the
Company's successors and assigns.
1.3
Severability.
The
Company and Executive believe the covenants contained in this Agreement are
reasonable and fair in all respects, and are necessary to protect the interests
of the Company and Executive. However, in case any one or more of the
provisions or parts of a provision contained in this Agreement shall, for any
reason, be
held
to be invalid, illegal or unenforceable in any respect in any jurisdiction,
such
invalidity, illegality or unenforceability shall not affect any other provision
or part of a provision
of this Agreement or any other jurisdiction, but this Agreement shall be
reformed
and construed in any such jurisdiction as if such invalid, illegal or
unenforceable
provision or part of a provision had never been contained herein and such
provision or part shall be reformed so that it would be valid, legal and
enforceable to the maximum extent permitted in such jurisdiction.
1.4
Neutral
Interpretation. This
Agreement constitutes the product of the
negotiation of the parties hereto and the enforcement hereof shall be
interpreted in a neutral
manner, and not more strongly for or against either party based upon the source
of the draftsmanship hereof.
1.5
Captions.
The
various captions of this Agreement are for reference only
and
shall not be considered or referred to in resolving questions of interpretation
of this Agreement.
1.6
Indemnification.
The
Company shall provide indemnification for its
directors and officers (which shall include Executive) to the maximum extent
allowed by
the
Company's Articles of Incorporation, by-laws or Section 145 of the Delaware
General
Corporation Law and/or California law.
1.7
Business
Day. If
the
last day permissible for delivery of any Notice
under any provision of this Agreement, or for the performance of any obligation
under this Agreement, shall be other than a business day, such last day for
such
Notice or performance shall be extended to the next following business day
(provided, however, under no circumstances shall this provision be construed
to
extend the date of termination of this Agreement).
1.8
Miscellaneous
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute
one and the same instrument. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or
interpretation of this Agreement. This Agreement embodies the entire Agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and may
not
be modified orally, but only by a writing subscribed by the party charged
therewith.
There are no restrictions, promises, representations, warranties, covenants
or
undertakings, other than those expressly set forth or referred to herein. This
Agreement supersedes
all prior Agreements and understandings (whether oral or written) between
the
parties with respect to such subject matter.
In
witness whereof, the parties have executed this Agreement as of the date first
set
forth
above.
Company: Executive:
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Company:
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Executive:
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New
Motion, Inc.
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Xxxxxx
Xxxx, Chief Executive Officer
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,Xxxx
Xxxxxxxxxxx
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