EXECUTIVE EMPLOYMENT AGREEMENT
This
Executive Employment Agreement (this "Agreement") is made and entered into
as
of
this
1st day of October 2005, by and between New Motion, Inc. a Delaware corporation
(the "Company")
and
Xxxxx
Xxxxxxx ("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 Financial Officer.
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: those duties and
responsibilities normally and customarily vested in the office of Chief
Financial Officer of a corporation
in the business currently conducted by the company, subject to the supervision,
direction
and control of the Board of Directors (the "Board") 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. Executive shall report directly
to
the Chief Executive
Officer of the Company.
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
(a)
Company acknowledges and approves that Executive currently has a vested
interest in another Corporation (Sega Gaining) in the parts and service business
of casino machines. From time to time Executive may chose to hold director
and
officer positions with the Corporation.
Executive has made Company aware of these circumstances and have agreed that
this will
not
prevent Executive from performing his services to Company. Executive will
perform his services
for the Corporation so not to interfere with his services to Company. Executive
shall inform
Company immediately of any potential conflicts of interests and shall resolve
such potential conflicts
in favor of the Company.
1.6
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 Orange County, California, or such other location
in
Orange County or Los Angeles County, as the Board may from time to time
determine.
2. Term
of Employment. Executive's
employment pursuant to this Agreement shall commence
on June 1st, 2005 ("Start Date") and shall terminate on the earliest to occur
of
the following:
(a) the
close
of business on the third 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,
in
the reasonable judgment of the Board, unable to perform his duties and
obligations under this Agreement for 90 days in any 12-month
period;
(d)
notice to Executive of termination by the Company for Cause. 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) notice
to
Executive of termination by the Company "without cause."
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, that if the Company terminates Executive's "at will" employment without
Cause,
then the severance amount set forth in Section 3.1 payable to Executive as
a
result of such termination shall be equal to one month's pay at Executive's
then-current base salary and such amount
shall be paid in a lump sum within 20 calendar days of the date of Executive's
termination.
In
the
event Executive is terminated for Cause pursuant to section 2(d), the Executive
shall
only receive his base salary though the termination date and shall not be
entitled to any additional compensation, including salary, bonus or
commissions.
3.
Compensation; Executive Benefit Plans.
3.1
Base
Salary. Commencing
on the Start Date, the Company shall pay Executive
an annual base salary of $165,000. Executive's annual base salary will be
increased to $185,000 on the first anniversary of the Start Date and to $205,000
on the second anniversary of the
Start
Date. 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.
In the event that Executive's employment is terminated pursuant to Section
2(e),
above
(i.e., without cause), the Company shall continue to pay Executive's
then-current base salary
and the Bonus described in Section 3.2 below as severance pay for the balance
of
the initial
term hereof, and Executive shall retain only those Options described in Section
3.3, below, that have vested prior to the effective date of such
termination.
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3.2
Bonus.
Executive
will also be eligible to receive a bonus, capped at $120,000 per
year
(the "Bonus") at the times and in the amounts set forth below:
The
Bonus
will be paid in cash pursuant to the schedule below and will accrue on each
monthly anniversary of the Start Date for a period of thirty-six months (the
"Bonus Period"). At the end of each calendar month following the Start Date,
Executive shall accrue a bonus of 1% of the Company's then completed month's
net
profits, as determined in accordance with generally accepted accounting
principals ("GAAP"). The accrued bonus for each monthly period shall be payable
under this paragraph within 30 days after the end of each calendar quarter
in
the Bonus Period
and upon completion of the un-audited interim financial statements of the
Company (or its
successor) for each such calendar quarter for which a Bonus is payable hereunder
(the "Bonus Payment Date"). The Bonus for any month in the Bonus Period which
is
less than a full month, shall
be
prorated for the applicable month. All bonus calculations shall be made by
the
Company,
whose determination shall be final and binding on Executive and the Company
absent manifest error.
In
the
event of an adjustment to the financial statements used above, occasioned by
results
of the actual year end audit, the Executive and the Company shall make an
adjusting payment
(in cash, or stock if the stock election has been made) to one another, as
necessary, to reflect any change to the financial information used to calculate
the bonus payable hereunder.
3.3
Stock
Options. Subject
to approval by the Company's Board of Directors, you
will
be granted an option to purchase up to 200,000 shares of the Company's Common
Stock
(the "Options") at an exercise valued at the fair market value of the stock
as
of the Value Determination Date (defined below). For purposes hereof, if the
Company is a private company, the fair market value of the stock as of the
last
day in the applicable quarterly period (the "Value Determination
Date") shall be determined in good faith by the Board of Directors of the
Company.
If the Company is public at that time, the fair market value of the stock on
the
Value Determination
Date shall be the average closing price of the stock on the market on which
it
is then
being traded for the 20 trading days immediately preceding the Value
Determination Date. The
Options will be governed by and granted pursuant to a separate Stock Option
Agreement. The
Options will be subject to vesting so long as you continue to be employed by
the
Company, according to the vesting schedule set
forth
in the Stock Option Agreement. .
3.4
Vacation.
You
will
receive two weeks paid vacation, one week will vest immediately upon the Start
Date and you shall accrue the other week. During the second year of your
employment, you will receive three weeks paid vacation, which shall begin to
accrue daily as
of
your first day 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 and
family 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 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. The cost of such benefits to be covered by the company.
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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.
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
Vehicle.
The
Company will reimburse Executive for automobile expenses for
one
vehicle, including lease or finance payments, gasoline, insurance, maintenance,
repairs and
all
other reasonable costs associated with the vehicle, up to a maximum
reimbursement of $800
per
month.
4.4
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 $300
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.
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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).
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6.
Miscellaneous.
6.1
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:
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If
to Company:
|
New
Motion, Inc
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| 00 Xxxxxxxxx Xxxx Xxxxx 000 | |
|
Xxxxxx
XX 00000
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000-000-0000
(phone)
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000-000-0000
(fax)
|
|
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Attn:
Board of Directors
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If
to Executive:
|
Xxxxx
Xxxxxxx
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| 5 Xxxxxx Xxxxxx, XX 00000 | |
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Tel:
000-000-0000
|
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.
6.2
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
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.
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6.4
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.
6.5
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.
6.6
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.
6.7
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).
6.8
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.
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In
witness whereof, the parties have executed this Agreement as of the date first
set forth above.
| Company: |
Executive:
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| New Motion, Inc. | ||
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| /s/ Xxxxx Xxxxxx | /s/ Xxxxx Xxxxxxx | |
| By: |
Xxxxx
Xxxxxx,
|
Xxxxx Xxxxxxx |
| Chief Executive Officer | ||
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