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 Scott Walker
("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 Executive 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 customarily vested
in the office of Chief Executive 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 Company’s Board of
Directors.
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 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 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 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 $200,000.
Executive’s annual base salary will be increased to $225,000
on the first anniversary of the Start Date and to $250,000 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.
3.2 Bonus . Executive will also be eligible to receive a
bonus (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 5% of the
Company’s then completed month’s net, before tax but
after deduction from Net Income of other executives’ bonuses,
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
400,000 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 following
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 costs of which shall be borne by the
Company.
3.6 The Company reserves the right to modify,
suspend, or disconti