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 Shane A. Maidy
("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 Senior Vice President of Marketing &
Licensing. 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: responsible for the
development and expansion of the Company's licensed content library
and strategic placement of such content on New Motion's mobile
platform, 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.
(a) Company acknowledges and approves that
Executive currently has a vested interest in another Corporation
that maintains and is acquiring content from international sources
which is to be utilized in various media formats. 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.
Executive may
perform his duties and obligations under this Agreement remotely
for up to three days per week, so long as doing so does not
interfere with his performance of such duties and obligations and
the Executive complies with the Company's Telecommunications
Policy. On days Executive is not working remotely, he shall work
from an office provided by the Company in Orange County,
California, or such other location in Los Angeles or Orange County,
California, as the Board may from time to time
determine.
2.
Term of
Employment. Executive's employment pursuant to this
Agreement shall commence on August 25, 2005 ("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, 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, accrued vacation and any Company approved
holidays for which the Executive worked reimbursement of any
approved expenses incurred up through date of termination and such
amount shall be paid pursuant to California law. Additionally,
Executive shall be entitled to Commissions as described in Section
3.3 of this Agreement for a period as agreed to in Exhibit A
Paragraph 2.f. which provides Executive upon termination of its
relationship with Company an one percent (1%) Commission Fee of
Company's Gross Revenue for any license signed, content secured or
relationship developed where Executive introduces Company to
Property owner, Licensor or business partner.
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, or bonus, excluding
commissions. accrued vacation, Company approved holidays for which
the Executive worked. Additionally, Executive shall be entitled to
Commissions as described in Section 3.3 of this Agreement for a
period as agreed to in Exhibit A Paragraph 2.f. which provides
Executive upon termination of its relationship with Company an one
percent (1%) Commission Fee of Company's Gross Revenue for any
license signed, content secured or relationship developed where
Executive introduces Company to Property owner, Licensor or
business partner.
3.
Compensation; Executive Benefit Plans.
3.1 Base Salary. Commencing on the
Start Date, the Company shall pay Executive an annual base salary
of $135,000.00. Executive's annual base salary will be increased to
$160,000.00 on the first 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, above (i.e., without cause),
the Company shall continue to pay Executive's then-current base
salary, Bonus described in Section 3.2, Commissions described in
Section 3.3, as severance pay for the balance of the initial term
hereof, and Executive shall retain only those Options described in
Section 3.4, below, that have vested prior to the effective date of
such termination.
3.2 Bonuses.
(a) 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 twenty four 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. Any
under payment of Bonuses will be paid to Executive within 30 days
of the discovered error, however these adjustments will not effect
the maximum allowable under Section 3.2. Any over payment of
Bonuses to Executive will be reflected in next bonus period,
however these adjustments will not effect the maximum as allowed
under Section 3.2. Any overpayment of a bonus will be adjusted
through the future bonus payment.
(b) Executive will also receive a bonus equal to 1%
of the net profits of the Company's licensing division, 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 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 which is less
than a full month, shall be prorated for the applicable month. All
bonus calculations shall be made by the Company's outside
accountants 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. Any
under payment of Bonuses will be paid to Executive within 30 days
of the discovered error, however these adjustments will not effect
the maximum allowable under Section 3.2. Any over payment of
Bonuses to Executive will be reflected in next bonus period,
however these adjustments will not effect the maximum as allowed
under Section 3.2.
3.3 Commissions. Attached as
Exhibit A to this Agreement is a copy of Executive's Consulting
Agreement with the Company, dated April 20, 2005 ("Consulting
Agreement"). Executive will receive commissions earned as a result
of services performed under the Consulting Agreement according to
the terms and at the rates set forth in section 2 of the Consulting
Agreement ("Residual Commissions"). A complete list of the
relationships, deals and/or business opportunities for which
Executive will receive Residual Commissions is set forth on Exhibit
B to this Agreement.
3.4 Stock Options. Subject to
approval by the Company's Board of Directors, you will be granted
an option to purchase up to 60,000 shares of NMI'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. Accelerated Vesting: Company agrees that all
60,000 shares (or the remaining unvested shares at the time shall
or any subsequent grant of shares) shall vest automatically for
Executive, should one of the following events take place, (1) a
"Change of Control" For purposes of this letter agreement, a
"Change of Control" shall be deemed to have occurred in the event
(i) any person (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or group of such "persons", without the consent of the
Company's Board of Directors, is or becomes a "beneficial owner"
(as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty-one
percent (51%) or more of the combined voting power of the Company's
then outstanding securities; (ii) of a merger, consolidation or
stock sale which results in the holders of the Company's capital
stock immediately prior to such merger, consolidation or stock sale
owning less than fifty percent (50%) of the voting equity of the
Company's capital stock immediately after such merger,
consolidation or stock sale; or (iii) of the sale or transfer of
all or substantially all of the assets of the Company.
3.5 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 you
shall accrue during that year. All vacation shall be paid and
earned in accordance with the Company's vacation policy.