CONSULTING AGREEMENT
THIS
CONSULTING AGREEMENT, dated as of January 31, 2008 (this
“Agreement”), by and between New Motion, Inc., a
Delaware corporation (“New Motion” or the
“Company”) with its offices at 42 Corporate Park,
Suite 250, Irvine, CA 92606 and Jeffrey Schwartz., an
individual residing at 6 Glen Eagles Court, New City, NY 10956
(“Consultant”). The parties to the Agreement are
sometimes referred to collectively as the
“Parties” or simply as a
“Party.”
WITNESSETH:
WHEREAS,
the Company and NM Merger Sub, a Delaware corporation and
Traffix, Inc., a Delaware corporation (“Traffix”)
are parties to that certain Agreement and Plan of Merger,
dated as of September 26, 2007 (the “Merger
Agreement”);
WHEREAS,
it is a condition to the Merger contemplated by the Merger
Agreement (the “Merger”) that Consultant terminate
his employment as Chairman and Chief Executive Officer of
Traffix and thereafter provide consulting services to the
Company; and
WHEREAS,
Consultant is willing to act as a consultant to the Company
and Company wishes to retain Consultant to perform consulting
services for the Company, all on the terms set forth
herein.
NOW,
THEREFORE, in consideration of the foregoing, and for other
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and Consultant hereby
agree as follows:
1.
Effective Date .
This Agreement shall become effective at the Effective Time of the
Merger under the Merger Agreement. Prior to the Effective time,
none of the parties hereto shall have any rights or obligations
hereunder. The date on which this Agreement becomes effective shall
be referred to herein as the “Effective
Date”.
2.
Term .
The term of this Agreement (the “Term”) shall end on
the second anniversary of the Effective Date, unless sooner
terminated pursuant to the terms hereof. The date on which the Term
ends (or the date on which Consultant’s retention hereunder
is terminated) is sometimes referred to as the “Termination
Date”.
3.
Consulting Services .
During the Term, Consultant hereby agrees to consult with Burton
Katz, the Chief Executive Officer of the Company (or any
successors) and any other executive officers of the Company
reasonably designated by the Chief Executive Officer regarding the
general strategic direction of the Company and the marketing and
development of the Company’s products and services.
Consultant agrees to devote up to three (3) business days per week
or up to twelve (12) business days per month to the performance of
said consulting services. The precise schedule for the performance
of consulting services hereunder shall be developed from to time by
the Company giving reasonable regard to Consultant’s
schedule, and subject to Consultant’s reasonable approval.
Consultant shall perform said consulting services from such
locations as the Company and Consultant shall reasonably
agree.
4.
Consulting Fee .
Company shall pay to Consultant during the Term a consulting fee of
$200,000.00 per annum (the “Base Fee”), such Base Fee
to be paid in arrears in substantially equal installments no less
often than twice per month during the Term.
5.
Benefits .
Company shall provide Consultant with the same benefits he enjoyed
as Chairman and CEO of Traffix, including a non-accountable monthly
allowance for business expenses (of up to $1,000 per month),
automobile allowance (up to $2,000 per month, including all
insurance and maintenance costs), reimbursement for professional
fees for legal and accounting fees and tax planning of $10,000 per
year, and reimbursement of fees for maintenance of American Express
black credit card. Company shall reimburse Consultant during the
Term (up to $10,000 per annum) for the cost of maintaining health
and dental insurance substantially equivalent to the coverage he
enjoyed as Chairman and CEO of Traffix.
6.
Expenses .
In accordance with the Company’s established practices
applicable to its most senior executives, Company shall pay
directly, or advance funds to Consultant or reimburse Consultant
for, all expenses reasonably and actually incurred by him in
connection with the performance of his consulting services
hereunder in excess of the monthly expense allowance specified
under Section 5 hereof.
7.
Independent Contractor .
Consultant agrees and understands that under this Agreement he is
an independent contractor and not an employee, partner, or joint
venturer of Company. Company will not pay, or withhold, any
federal, state, local, city or other payroll or employment taxes,
including, but not limited to, FICA, state and federal income
taxes, state disability insurance taxes, or state unemployment
insurance taxes relating to income received by Consultant from
Company pursuant to this Agreement. The Consultant shall be liable
for his own debts, obligations, acts and omissions and agrees to
indemnify and hold the Company harmless against any claim related
to any such taxes made by any such governmental
authority.
8.
Proprietary Information and Restrictive Covenants; Termination
Agreement .
As a condition to the obligations of the Company hereunder,
concurrently with the execution and delivery of this Agreement,
Consultant is hereby executing and delivering to the Company the
Non-Competition, Non-Solicitation and Confidentiality Agreement in
the form attached hereto as Exhibit A (the “Non-Competition
Agreement”) and the Termination of Employment Agreement and
General Release attached hereto as Exhibit B (the
“Termination Agreement”).
9.
Termination Upon Death or Disability .
Consultant’s retention as a consultant hereunder shall
terminate automatically upon his death. In the event that
Consultant is unable to perform his material duties hereunder by
reason of any disability or incapacity (due to any physical or
mental injury, infirmity, incapacity, illness or defect) for an
aggregate of 120 days in any consecutive 12-month period, Company
shall have the right to terminate Consultant’s retention as a
consultant hereunder within 60 days after the 120th day of his
disability or incapacity by giving Consultant notice to such effect
at least 30 days prior to the date of termination set forth in such
notice, and on such date such retention shall
terminate.
10.
Termination for Cause by Company .
(a)
In
addition to any other rights or remedies provided by law or in
this Agreement, the Company may terminate Consultant’s
retention as a consultant for “cause” under this
Agreement if:
(i)
Consultant
is indicted for, convicted of, or enters a plea of guilty or
nolo contendere (which plea is not withdrawn prior to its
approval by the court) to (x) a felony or crime involving
moral turpitude, or (y) any other acts involving the matters
identified in clauses (1) through (3) of paragraph (ii) below;
or
(ii)
the
Company’s Board of Directors (“Board”)
determines, after due inquiry, that Consultant
has:
| |
(1)
|
committed
fraud against, or embezzled or misappropriated funds or other
assets of, Company or any Affiliate (as defined below) thereof;
or
|
| |
(2)
|
committed
any other act or omission involving dishonesty or fraud with
respect to the Company or any Affiliate thereof;
|
| |
(3)
|
violated,
or caused Company or any Affiliate or any of their officers,
employees or other agents, or any other person to violate, any
material law, regulation or ordinance, which violation has or would
reasonably be expected to have a significant detrimental effect on
Company or its Affiliates, or any material rule, regulation, policy
or practice established by the Board and communicated to
Consultant, which violation has or would reasonably be expected to
have a significant detrimental effect on Company or its
Affiliates;
|
(iii)
the
Consultant’s willful misconduct or gross negligence with
respect to the Company or any Affiliate thereof;
(iv)
repeated
failure of the Consultant to follow established reasonable and
lawful directions of the Company; or
(v)
any
violation or breach of this Agreement, the Non-Competition
Agreement or any established Company policy, procedure or
guideline;
provided,
however, that the Consul
|
