Unassociated Document


    


    EMPLOYMENT
      AGREEMENT

    


    EMPLOYMENT
      AGREEMENT, dated as of July 14, 2008 (this “Agreement”), by and between NEW
      MOTION, INC., a Delaware corporation (the “Company”), and ANDREW ZAREF
      (“Executive”).

    


    WITNESSETH:

    


    WHEREAS,
      the Company desires to employ Executive on the terms and subject to the
      conditions hereinafter set forth, and Executive desires so to be
      employed.

    


    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants hereinafter
      set forth, the parties agree as follows:

    


    1. Offices
      and Duties.
      During
      the Term (as hereinafter defined), Executive shall serve as the Chief Financial
      Officer of the Company and shall have such duties and responsibilities that
      are
      commensurate with such position and such other duties and responsibilities
      as
      are from time to time assigned to the Executive by the Company’s Chief Executive
      Officer and the Company’s board of directors. The Company’s board of directors
      may elect or designate Executive to serve in a similar capacity for a subsidiary
      or affiliate of the Company as the Company’s board of directors from time to
      time may reasonably deem necessary, proper or advisable and as the Executive
      shall accept. Executive hereby agrees that throughout the Term he shall
      faithfully, diligently and to the best of his ability, in furtherance of the
      business of the Company, perform the duties assigned to him or incidental to
      the
      offices assumed by him pursuant to this Section. Executive shall devote all
      of
      his business time and attention to the business and affairs of the Company
      and
      the performance of Executive’s duties and responsibilities hereunder; provided,
      however, Executive may serve as an advisor or director to other organizations
      as
      long as such activities are disclosed to and approved by the Company’s Chief
      Executive Officer or board of directors (which approval will not be unreasonably
      withheld) and do not interfere or conflict with his duties or obligations to
      the
      Company. Executive shall at all times be subject to the supervision, direction
      and control of the Company’s Chief Executive Officer and board of directors, and
      observe and comply with such rules, regulations, policies and practices as
      the
      Company’s board of directors may from time to time establish. Executive shall
      report to the Company’s Chief Executive Officer. The Executive represents and
      warrants to the Company that the Executive has the legal right to enter into
      this Agreement and to perform all of the obligations on the Executive’s part to
      be performed hereunder in accordance with its terms and that the Executive
      is
      not a party to any agreement or understanding, written or oral, which could
      prevent the Executive from entering into this Agreement or performing all of
      the
      Executive’s obligations hereunder. 



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    2. Term.
      The
      employment of Executive hereunder shall commence on the date hereof (the
“Commencement Date”) and continue for a term ending on the third (3rd)
      anniversary of the last day of the calendar month in which such Commencement
      Date occurs, subject to earlier termination upon the terms and conditions
      provided elsewhere herein (the “Term”). As used herein, “Termination Date” means
      the last day of the Term. Subject to the provisions of Section 14 hereof, the
      Executive shall be an “at-will” employee of the Company such that the Company
      may terminate the Executive’s employment with the Company and the Term upon
      advance written notice at any time and for any reason (or no reason).


    


    3. Compensation.

    


    (a) As
      compensation for Executive’s services hereunder, the Company shall pay to
      Executive during the Term an annual salary (the “Base Salary”), which shall be
      equal to Four Hundred Thousand Dollars ($400,000.00), payable
      in accordance with the ordinary payroll practices of the Company.
      The
      Base Salary shall be subject to increase at the end of each year of the Term
      at
      the sole and complete discretion of the Company’s board of directors; provided,
      however, that such increase shall be in an amount no less than five percent
      (5%).

    


    (b) As
      additional compensation for Executive’s services hereunder, Executive shall
      receive an automobile allowance of One Thousand Dollars ($1,000) per month
      inclusive of insurance, gas and maintenance on Executive’s vehicle.

    


    (c) Executive
      may also receive an annual bonus in an amount not to exceed Executive’s Base
      Salary for each calendar year during the Term if the Company’s business
      operations meet or exceed certain financial performance standards to be
      determined by the Company’s board of directors in accordance with this Section,
      and as part of an annual incentive plan to be submitted for approval by the
      stockholders of the Company. Any annual bonus payable to Executive for the
      calendar year ending December 31, 2008 shall be calculated by multiplying the
      total amount of the annual bonus by a fraction, the numerator of which is the
      number of days served by Executive during 2008, and the denominator shall be
      three hundred sixty five (365) days. No later than the end of the first calendar
      quarter of each calendar year, the Company’s board of directors (or the
      compensation committed thereof) shall adopt and approve: (i) financial goals
      (the “Goals”) for the Company with respect to such calendar year (which Goals
      shall be consistent for all executive officers); and (ii) the bonus targets
      and
      other performance standards (collectively, the “Bonus Matrix”) to be used to
      determine Executive’s annual bonus for such calendar year. The Company shall
      deliver the Goals and the Bonus Matrix to Executive promptly after their
      adoption and approval by the board of directors (or the compensation committed
      thereof). The Goals and the Bonus Matrix for the calendar year ending December
      31, 2008 are set forth on the 2008 Bonus Schedule attached hereto as Exhibit
      A.
      Any amounts payable under this Section shall be calculated using the results
      reported in the Company’s audited financial statements for the applicable fiscal
      year and shall be payable the later of (A) ninety (90) days after the end of
      the
      applicable fiscal year or (B) completion of the Company’s audited financial
      statements for such year. Until approval of this Agreement by the Company’s
      stockholders, in no event shall the amount payable to Executive under this
      Section in any fiscal year of the Company exceed an amount, which, when added
      to
      all other compensation (as such term is used in Section 162(m) of the Code)
      paid
      to Executive in such fiscal year results in the total of such compensation
      for
      such fiscal year to exceed One Million Dollars ($1,000,000). 


    
      
        
        

      

      
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    (d) As
      additional compensation for Executive’s services to be provided hereunder, and
      as an inducement for Executive to accept employment with the Company, the
      Company shall pay Executive One Hundred Thousand Dollars ($100,000) upon
      execution of this Agreement by Executive and the Company (the “Signing Bonus”).
      In the event that Executive’s employment with the Company is terminated “for
      cause” in accordance with Section 11 or voluntarily by Executive in accordance
      with Section 13, on or prior to the Termination Date, Executive shall refund
      to
      Company an amount equal to: (i) $60,000, multiplied by a ratio equal to (A)
      the
      sum of the number of days between the Termination Date and the third anniversary
      of the Commencement Date and (B) 1,095 (which is the product of 3 x 365).


    


    (e) The
      Company shall use its commercially reasonable efforts to procure medical,
      hospitalization, dental, life and disability insurance for the benefit of
      executive and his wife and children, and the Company shall pay all premiums
      and
      any other costs or expenses incurred to maintain such policies in effect during
      the Term, or as provided under Section 14, all consistent with the Company’s
      established practices and policies. As an alternative to procuring such
      policies, the Company may authorize Executive to procure such policies, and
      the
      Company shall reimburse Executive for the reasonable costs incurred by him
      in
      connection with the procurement of such policies.

    


    (f) In
      addition to his Base Salary and other compensation provided herein, during
      the
      Term Executive shall be entitled to participate, to the extent he is eligible
      under the terms and conditions thereof, in any stock, stock option or other
      equity participation plan and any profit-sharing, pension, retirement,
      insurance, medical service or other employee benefit plan generally available
      to
      the executive officers of the Company, and to receive any other benefits or
      perquisites generally available to the executive officers of the Company
      pursuant to any employment policy or practice, which may be in effect from
      time
      to time during the Term. The Company shall be under no obligation hereunder
      to
      institute or to continue any such employee benefit plan or employment policy
      or
      practice. 

    


    (g) During
      the Term, Executive shall not be entitled to additional compensation for serving
      in any office of the Company (or any subsidiary thereof) to which he is elected
      or appointed. 



    
      
        
        

      

      
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    4. Stock
      Options.
      

    


    (a) On
      the
      Commencement Date, the Company shall grant to Executive an option (the “Option”)
      to acquire Two Hundred Thousand (200,000) shares of the Company’s common stock,
      par value $.001 per share (the “Common Stock”), subject to the terms and
      conditions of the Stock Option Agreement substantially in the form annexed
      to
      this Agreement as Exhibit
      B
      (the
“Stock Option Agreement”). The Company agrees to register the shares of Common
      Stock underlying the Option on its next regularly filed Form S-8, but in no
      event later than six (6) months following the Commencement Date. As a condition
      to receiving the Option, Executive shall execute and deliver to the Company
      the
      Stock Option Agreement. As provided in the Stock Option Agreement, the Option
      shall be exercisable at the fair market value of the Company’s common stock on
      the date of grant at any time during the ten (10) year period following the
      Commencement Date. Additionally, as provided in the Stock Option Agreement,
      the
      Option shall be subject to the following vesting schedule: 

    


    (i) the
      Option shall first vest, with respect Sixty Six Thousand Six Hundred Sixty
      Six
      (66,666) shares of Common Stock, on the first (1st)
      anniversary of the Commencement Date;

    


    (ii) thereafter,
      the Option shall next vest, with respect to Five Thousand Five Hundred Fifty
      Five (5,555) shares of Common Stock, on the last day of the calendar month
      immediately following the first (1st)
      anniversary of the Commencement Date (such vesting date, the “Second Vesting
      Date”); and

    


    (iii) thereafter,
      the Option shall next vest, with respect to the remaining One Hundred Twenty
      Seven Thousand Seven Hundred Seventy Nine (127,779) shares of Common Stock
      underlying the Option, in twenty two (22) equal installments of Five Thousand
      Five Hundred Fifty Five (5,555) shares and one final installment of Five
      Thousand Five Hundred Sixty Nine (5,569) shares, each on the last day of each
      calendar month during the period of twenty three (23) consecutive months
      commencing after the Second Vesting Date;

     

    provided
      that all Options to acquire shares of the Company’s common stock shall
      immediately and automatically vest upon a Change of Control (as hereinafter
      defined). 

    


    (b) As
      provided in the Stock Option Agreement, other than as a result of termination
      of
      Executive’s employment resulting from a Change of Control and except (as
      provided in Section 14(c)(iii) hereof) in the event of a termination of the
      Executive’s employment by the Company without “cause” (as such term is used in
      Section 11 hereof) and except in the event of a termination of the Executive’s
      employment by Executive for “good reason” (as contemplated under Section 12
      hereof), any portion of the Option that remains unvested at the time of
      termination of Executive’s employment (and/or upon termination or expiration of
      the Term) (the “Unvested Portion”) shall be extinguished and cancelled and
      Executive shall have no rights or benefits whatsoever with respect to the
      Unvested Portion. Executive represents and warrants that he is acquiring the
      Option and the shares of Common Stock issuable upon exercise thereof for
      investment purposes only, and not with a view to distribution thereof. Executive
      is aware that the Option and such shares may not be registered under the federal
      or any state securities laws and that, in addition to the other restrictions,
      the Option and such shares issuable upon exercise thereof will not be able
      to be
      transferred unless an exemption from registration is available or the option
      or
      such shares become registered.


    
      
        
        

      

      
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    5. Restricted
      Stock Units.

    


    (a) Within
      ninety (90) days following the Commencement Date, the Company shall grant to
      Executive Restricted Stock Units for Two Hundred Thousand (200,000) shares
      of
      Common Stock (the “RSUs”), pursuant to the terms of a Restricted Stock Unit
      Agreement in a form acceptable to the Company (the “RSU Agreement”). Executive
      shall execute and deliver to the Company the RSU Agreement as a condition to
      the
      Company’s obligation to grant the RSUs. The RSUs shall be subject to vesting as
      provided in the RSU Agreement, in accordance with and subject to the following
      vesting schedule: 

    


    (i) the
      first
      One Hundred Thousand (100,000) RSUs shall vest after the closing of trading
      on
      the date that the average per share trading price of the Common Stock during
      any
      period of ten (10) consecutive trading days (following the Commencement Date)
      equals or exceeds Fifteen Dollars ($15); and 

    


    (ii)
       the
      remaining One Hundred Thousand (100,000) RSUs shall vest after the closing
      of
      trading on the date that the average per share trading price of the Common
      Stock
      during any period of ten (10) consecutive trading days equals or exceeds Twenty
      Dollars ($20);

    


    provided
      that all RSUs shall immediately and automatically vest upon a Change of Control
      (as hereinafter defined).

    


    (b) As
      provided in the RSU Agreement, other than as a result of termination of
      Executive’s employment resulting from a Change of Control, any and all of the
      RSUs that remain unvested at the time of termination of Executive’s employment
      (and/or upon termination or expiration of the Term)(the “Unvested RSU Portion”)
      shall be subject to forfeiture and Executive’s entire ownership interest in to
      the Unvested RSU Portion shall be forfeited, extinguished and cancelled and
      Executive shall have no rights or interest in the Unvested RSU Portion. Subject
      to the terms of the RSU Agreement, the Company may issue certificates or
      otherwise evidence the Executive’s interest in the RSUs by using a book entry
      account. Executive represents and warrants that he is acquiring the RSUs for
      investment purposes only, and not with a view to distribution thereof. Executive
      is aware that the RSUs may not be registered under the federal or any state
      securities laws and that, in addition to the other restrictions on the RSUs,
      the
      RSUs will not be able to be transferred unless an exemption from registration
      is
      available or the RSUs become registered.

    


    (c) If
      the
      Company’s stockholders adopt a restricted share plan, the RSUs shall be deemed
      issued in accordance therewith and subject thereto. 

    


    6. Expense
      Allowance.
      The
      Company shall pay directly, or advance funds to Executive or reimburse Executive
      for, all out-of-pocket expenses reasonably incurred by him in connection with
      the performance of his duties hereunder and the business of the Company, in
      each
      case subject to and in accordance with the Company’s standard policies
      (including, without limitation, expense verification policies) regarding the
      reimbursement of business expenses, as in effect from time to time.



    
      
        
        

      

      
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    7. Vacation.
      Executive shall be entitled to four (4) weeks paid vacation during each year
      of
      his employment hereunder (as pro rated for partial years), such vacation to
      be
      taken at such time or times as shall be agreed upon by Executive and the Company
      with due regard to the needs of the Company. Vacation time shall be cumulative
      from year to year, except that Executive shall not be entitled to take more
      than
      five (5) weeks vacation during any period of twelve (12) consecutive months
      during the Term; and provided further that at no time shall Executive be
      entitled to accrue more than five (5) weeks of vacation time under this
      Agreement; and provided further that the rights of Executive to vacation shall
      be otherwise subject to the Company’s policies on vacation as in effect from
      time to time. 

    


    8. Key-Man
      Insurance.
      The
      Company shall have the right from time to time to purchase, increase, modify
      or
      terminate insurance policies on the life of Executive for the benefit of the
      Company in such amounts as the Company may determine in its sole discretion.
      In
      connection therewith, Executive shall, at such time or times and at such place
      or places as the Company may reasonably direct, submit himself to such physical
      examinations and execute and deliver such documents as the Company may deem
      necessary or appropriate.

    


    9. Non-Competition
      Agreement.
      As a
      material inducement to the Company for entering into this Agreement and as
      a
      condition to the obligations of the Company hereunder, Executive is hereby
      executing and delivering that certain Non-Competition, Non-Solicitation and
      Proprietary Information Agreement dated of even date herewith, by and between
      Executive and the Company in the form of Exhibit
      C
      attached
      hereto (the “Non-Competition Agreement”). Each of the Company and Executive
      hereby agrees and acknowledges that the rights and obligations of the parties
      under the Non-Competition Agreement and the terms and provisions thereof are
      an
      integral part of this Agreement and hereby are incorporated in this Agreement
      as
      if fully set forth herein. Without limiting any other rights that the Company
      may have, if Executive breaches any provision of the Non-Competition Agreement,
      any right that Executive may have to receive any compensation or payments from
      the Company hereunder shall be forfeited by Executive and extinguished in all
      respects.

    


    10. Termination
      of Employment.
      Executive’s employment and the Term will terminate on the first of the following
      to occur:

    


    (a) Automatically
      upon Executive’s death. 

    


    (b) Upon
      written notice by the Company to Executive of termination due to Disability
      (as
      defined below). For the purposes of this Agreement, “Disability” shall mean a
      condition that entitles Executive to benefits under an applicable Company
      long-term disability plan or, if no such plan exists, a physical or mental
      disability which, in the reasonable judgment of the Company’s board of
      directors, is likely to render Executive unable to perform his duties and
      obligations under this Agreement for 90 days in any 12-month period.



    
      
        
        

      

      
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    (c) Upon
      written notice by the Company to the Executive of a termination for “cause”
under Section 11 of this Agreement.

    


    (d) Upon
      termination for “good reason” under Section 12 of this Agreement.

    


    (e) Upon
      written notice by the Company to the Executive of an involuntary termination
      without “cause”, other than for death or Disability.

    


    (f) Upon
      “voluntary termination” by Executive under Section 13 of this Agreement.


    


    11. Termination
      for Cause.

    


    (a) In
      addition to any other rights or remedies provided by law or in this Agreement,
      the Company may terminate Executive’s employment under this Agreement for
“cause” if:

    


    (i) Executive
      is convicted of, or enters a plea of guilty or nolo contendere
      to, a
      felony offense (unless, in the case of a conviction, the conviction shall have
      been reversed on appeal); or

    


    (ii) the
      Company’s board of directors determines that Executive has:

    


    (A) committed
      fraud against, or embezzled or misappropriated funds or other assets of, the
      Company (or any subsidiary thereof);

    


    (B) violated,
      or caused the Company (or any subsidiary thereof) or any officer, employee
      or
      other agent thereof, or any other person to violate, any material law,
      regulation or ordinance or, violated, or caused the Company (or any subsidiary
      thereof) or any officer, employee or other agent thereof, or any other person
      to
      violate, any material rule, regulation, policy or practice established by the
      Company’s board of directors;

    


    (C) willfully,
      or because of gross or persistent negligence, (A) failed to properly perform
      his
      duties hereunder or (B) acted in a manner detrimental to, or adverse to the
      interests of, the Company, and such failure or action has caused, or is likely
      to cause, the Company (or any subsidiary thereof) to suffer or incur casualty,
      loss, penalty, expense or other liability or cost;

    


    (D) knowingly
      violated, or repeatedly failed to perform or satisfy any material covenant,
      condition or obligation required to be performed or satisfied by Executive
      under
      this Agreement or contained in the Company’s employee handbook or policies, as
      in force from time to time; or


    
      
        
        

      

      
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    (E) habitually
      used illegal drugs or consumed alcohol and such consumption has caused or is
      likely to cause material damage to the Company.

    


    (b) The
      Company may effect such termination for cause by giving Executive written notice
      to such effect, setting forth in reasonable detail the factual basis for such
      termination (the “Cause Notice”); provided,
      however,
      that
      Executive may avoid such termination if the termination is based on any
      occurrence, act or event described in clauses (A) to (E) of paragraph (ii)
      of
      Section 11(a) (each, a “For Cause Event”), if the matters giving rise to such
      termination (including without limitation, any breach or violation by Executive)
      are remedied or cured, if capable of remedy or cure, within 30 days after
      receipt of the Cause Notice (“30-Day Executive Cure Period”). For the avoidance
      of doubt, Executive’s employment hereunder and the Term shall be terminated
      immediately upon delivery of the Cause Notice if Executive’s employment is being
      terminated due to the occurrence, act or event described in paragraph (i) of
      Section 11(a), and Executive’s employment hereunder and the Term shall be
      terminated immediately upon expiration of the 30-Day Executive Cure Period
      if
      Executive’s employment is terminated due to the occurrence, act or events
      described in clauses (A) to (E) of paragraph (ii) of Section 11(a) (assuming
      the
      matters, violations or conditions giving rise to such termination are capable
      of
      being cured or remedied, provided that if they are incapable of being so cured
      or remedied, then such termination shall be immediate upon delivery of the
      Cause
      Notice). 

    


    (c) In
      making
      any determination pursuant to paragraph (ii) of Section 11(a) based on or due
      to
      any For Cause Event, the board of directors may take into account each and
      all
      of the following:

    


    (i) if
      Executive is made a party to, or target of, any Proceeding arising under or
      relating to any For Cause Event, Executive’s failure to defend against such
      Proceeding or to answer any complaint filed against him therein, or to deny
      any
      claim, charge, averment, or allegation thereof asserting or based upon the
      occurrence of a For Cause Event;

    


    (ii) any
      judgment, award, order, decree or other adjudication or ruling in any such
      Proceeding finding or based upon the occurrence of a For Cause Event (that
      is
      not reversed or vacated on appeal); or

    


    (iii) any
      settlement or compromise of, or consent decree issued in, any such Proceeding
      in
      which Executive expressly admits the occurrence of a For Cause Event;
provided
      that the
      Company’s board of directors shall not be required to treat any of the foregoing
      as dispositive or giving rise to an irrebuttable presumption of the occurrence
      of such For Cause Event; and provided further
      that the
      Company's board of directors may rely on any other factor or event as convincing
      evidence of the occurrence of a For Cause Event.


    
      
        
        

      

      
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    (d) In
      determining and assessing the detrimental effect of any For Cause Event on
      the
      Company and whether such For Cause Event warrants the termination of Executive’s
      employment hereunder, the Company's board of directors may take into account
      each and all of the following:

    


    (i)
       whether
      the Company's Board of Directors directed or authorized Executive to take,
      or to
      omit to take, any action involved in such For Cause Event, or approved,
      consented to or acquiesced in his taking or omitting to take such action;


    


    (ii) any
      award
      of damages, penalty or other sanction, remedy or relief granted or imposed
      in
      any Proceeding based upon or relating to such For Cause Event, and whether
      such
      sanction, remedy or relief is sufficient to recompense the Company or any other
      injured person, or to prevent or to deter the recurrence of such For Cause
      Event;

    


    (iii) whether
      any lesser sanction would be appropriate and effective; and

    


    (iv) any
      adverse effect that the loss of Executive's services would have, or be
      reasonably likely to have, upon the Company.

    


    Nothing
      contained in this Section 11 shall be construed in any way to limit or restrict
      the right and ability of the board of directors of the Company to consider
      or
      base its determination on any other factors that the board of directors deems
      to
      be relevant in connection with any determination or assessment under this
      Section 11. 

    


    12. Termination
      by Executive for Good Reason.
      

    


    (a) In
      addition to any other rights or remedies provided by law or in this Agreement,
      Executive may terminate his employment hereunder for “good reason” if (A) the
      Company violates, or fails to perform or satisfy any material covenant,
      condition or obligation required to be performed or satisfied by it hereunder,
      (B) as a result of any action or failure to act by the Company, there is a
      material adverse change in the nature or scope of the duties, obligations,
      rights or powers of Executive’s employment (including any such material adverse
      change resulting from a Change of Control, as hereinafter defined), or (C)
      the
      Company moves its headquarters more than fifty (50) miles from its location
      in
      New York, New York, in each case subject to the terms set forth in this Section
      12. 



    
      
        
        

      

      
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    (b) Executive
      may effect such termination for good reason by giving the Company written notice
      to such effect, setting forth in reasonable detail the factual basis for such
      termination (the “Good Reason Notice”); provided, however, that the Company may
      avoid such termination, if the matters giving rise to such termination
      (including without limitation, any breach or violation by the Company) are
      remedied or cured, within 30 days after receipt of the Good Reason Notice
      (“30-Day Company Cure Period”). For the avoidance of doubt, Executive’s
      employment hereunder and the Term shall be terminated immediately upon
      expiration of the 30-Day Company Cure Period in the case of a termination for
      “good reason” under this Section 12. 

    


    13. Voluntary
      Termination by Executive.
      In
      addition to any other rights or remedies provided by law or in this Agreement,
      Executive may terminate his employment hereunder at any time by giving the
      Company written notice to such effect at least thirty (30) days prior to the
      date of termination set forth therein, such termination to be irrevocable upon
      receipt of such notice by the Company.

    


    For
      the
      avoidance of doubt, the termination by Executive of his employment hereunder
      for
“good reason” pursuant to Section 12 of this Agreement shall not constitute or
      be deemed to constitute for any purpose a "voluntary termination" of his
      employment under this Section 13.

    


    14. Compensation
      and Benefits upon Termination.

    


    (a) If
      Executive’s employment is terminated as a result of his death or Disability, the
      Company will pay or provide to Executive any Accrued Benefits (as hereinafter
      defined). For the purposes of this Agreement, “Accrued Benefits” means: 1) any
      unpaid Base Salary through the date of termination; (2) reimbursement for any
      unreimbursed expenses incurred through the date of termination; (3) any unused
      vacation time accrued (through the date of termination) in accordance with
      Company policy; and (4) any other payments, benefits or fringe benefits to
      which
      the Executive may be entitled under the terms of any applicable compensation
      arrangement or benefit plan or program or this Agreement, in all cases only
      through the date of termination (collectively items (1) through (4) shall be
      hereafter referred to as “Accrued Benefits”). 

    


    (b) If
      Executive’s employment is terminated for cause under Section 11, or if
      Executive’s employment is terminated by Executive voluntarily under Section 13
      or voluntarily other than for good reason pursuant to Section 12 hereof, the
      Company will pay or provide to Executive any Accrued Benefits.




    
      
        
        

      

      
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    (c) If
      Executive’s employment is terminated by Executive for good reason pursuant to
      Section 12 or by the Company other than for cause under Section 11, the Company
      will pay or provide the Executive with (i) any Accrued Benefits, (ii) subject
      to
      Executive’s compliance with the obligations herein, (A) a one time payment equal
      to the sum of (x) the Base Salary payable Executive for the greater of (I)
      the
      remaining term of this Agreement or (II) twelve (12) months (the “Severance
      Period”), and (y) the Average Bonus Amount (as hereinafter defined); and (B)
      coverage under the employee benefit plans described in Section 3(e) until the
      earlier of the end of the Severance Period or Executive’s eligibility to receive
      similar benefits from a new employer; and (iii) all stock options granted under
      Section 4 hereof and other awards granted hereunder (other than options and
      awards, including the RSU granted under Section 5 hereof, that vest upon the
      achievement of performance objectives) shall automatically vest and shall remain
      exercisable for a period of one (1) year after such termination. For the
      purposes hereof, the “Average Bonus Amount” means, in the case of a termination
      of Executive’s employment, an amount equal to the average of the annual bonus
      amounts received by Executive under this Agreement for the two (2) years prior
      to such termination (with any Bonus paid on a partial year (i.e. 2008) being
      annualized). Any amount due to Executive under clause (i) and (ii)(A) of this
      Section shall be payable as follows: fifty percent (50%) of such amount shall
      be
      payable in a lump sum within thirty (30) days of termination of employment,
      and
      the balance shall be payable in twenty four (24) equal monthly installments
      over
      the period of twenty four (24) months following such termination. Amounts
      payable to Executive under this Section 14(c), if any, are hereinafter referred
      to as the “Parachute Amount.” 

    


    (d) Except
      as
      expressly set forth herein, any amount payable to Executive upon termination
      of
      his employment hereunder shall be paid promptly, and in any event within thirty
      (30) days, after the Termination Date. 

    


    15. Change
      of Control.
      

    


    (a) For
      the
      purposes of this Section 15:

    


    (i) The
      "Act"
      is the Securities Exchange Act of 1934, as amended.

    


    (ii) A
      "person" includes a "group" within the meaning of Section 13(d)(3) of the
      Act.

    


    (iiii) "Beneficially
      owns" and "acquisition" are used herein as defined in Rules 13d-3 and 13d-5,
      respectively, under the Act. 

    


    (iv) "Non-Affiliated
      Person" means any person, other than Executive, an employee stock ownership
      trust of the Company (or any trustee thereof for the benefit of such trust),
      or
      any person controlled by Executive, the Company or such a trust.

    


    (v) "Voting
      Securities" includes Common Stock and any other securities of the Company that
      ordinarily entitle the holders thereof to vote, together with the holders of
      Common Stock or as a separate class, with respect to matters submitted to a
      vote
      of the holders of Common Stock; provided, however, that securities of the
      Company as to which the consent of the holders thereof is required by applicable
      law or the terms of such securities only with respect to certain specified
      transactions or other matters, or the holders of which are entitled to vote
      only
      upon the occurrence of certain specified events (such as default in the payment
      of a mandatory dividend on preferred stock or a scheduled installment of
      principal or interest of any debt security), shall not be Voting
      Securities.

     

    
      
        
        

      

      
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    (vi) "Right"
      means any option, warrant or other right to acquire any Voting Security (other
      than such a right of conversion or exchange included in a Voting
      Security).

    


    (vii)
       The
      "Code" is the Internal Revenue Code of 1986, as amended.

    


    (viii)
       "Base
      amount," "present value" and "parachute payment" are used herein as defined
      in
      Section 280G of the Code.

    


    (b) A
      "Change
      of Control" occurs upon an acquisition of Voting Securities or Rights by a
      Non-Affiliated Person or any change in the number or voting power of outstanding
      Voting Securities, such that such Non-Affiliated Person beneficially owns Voting
      Securities or Rights entitling such person to cast a number of votes (determined
      in accordance with Section 15(f)) equal to or greater than fifty percent (50%)
      of the sum of (A) the number of votes that may be cast by all other holders
      of
      outstanding Voting Securities and (B) the number of votes that may be cast
      by
      such Non-Affiliated Person (determined in accordance with Section 15(f)).


    


    (c) It
      is
      intended that the present value of any payments or benefits to Executive,
      whether hereunder or otherwise, that are includible in the computation of the
      Parachute Amount shall not exceed 2.99 times the Executive's base amount.
      Accordingly, if Executive receives any payment or benefit from the Company
      prior
      to payment of the Parachute Amount which, when added to the Parachute Amount,
      would subject any of the payments or benefits to Executive to the excise tax
      imposed by Section 4999 of the Code, the Parachute Amount shall be reduced
      by
      the least amount necessary to avoid such tax. The Company shall have no
      obligation hereunder to make any payment or provide any benefit to Executive
      after the payment of the Parachute Amount which would subject any of such
      payments or benefits to the excise tax imposed by Section 4999 of the
      Code.

    


    (d) Any
      other
      provision hereof notwithstanding, Executive may, prior to his receipt of the
      Parachute Amount pursuant to Section 14(c), waive the payment thereof, or,
      after
      his receipt of the Parachute Amount thereunder, treat some or all of such amount
      as a loan from the Company which Executive shall repay to the Company within
      one
      hundred eighty (180) days after the receipt thereof, together with interest
      thereon at the rate provided in Section 7872 of the Code, in either case, by
      giving the Company notice to such effect.

    


    (e) Any
      determination of the Executive's base amount, the Parachute Amount, any
      liability for excise tax under Section 4999 of the Code or other matter required
      to be made pursuant to this Section 15, shall be made by the Company's
      regularly-engaged independent certified public accountants, whose determination
      shall be conclusive and binding upon the Company and Executive; provided that
      such accountants shall give to Executive, on or before the date on which payment
      of the Parachute Amount or any later payment or benefit would be made, a notice
      setting forth in reasonable detail such determination and the basis therefor,
      and stating expressly that Executive is entitled to rely thereon.

     

    
      
        
        

      

      
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    (f) The
      number of votes that may be cast by holders of Voting Securities or Rights
      upon
      the issuance or grant thereof shall be deemed to be the largest number of votes
      that may be cast by the holders of such securities or the holders of any other
      Voting Securities into which such Voting Securities or Rights are convertible
      or
      for which they are exchangeable or exercisable, determined as though such Voting
      Securities or Rights were immediately convertible, exchangeable or exercisable
      and without regard to any anti-dilution or other adjustments provided for
      therein.

    


    16. Other
      Termination Provisions.
      The
      Company shall defend, indemnify and hold Executive harmless from any and all
      liabilities, obligations, claims or expenses which arise in connection with
      or
      as a result of Executive's service as an officer or director of the Company
      to
      the greatest extent now provided in the Company's Certificate of Incorporation
      and Bylaws and as otherwise allowed by law. During the Term and for a period
      of
      at least ten (10) years thereafter, or for a seven (7) year period commencing
      on
      the date of the termination of Executive’s employment hereunder, Executive shall
      be entitled to the same directors and officers' liability insurance coverage
      that the Company provides generally to its other directors and officers, as
      may
      be amended from time to time for such directors and officers. 

    


    17. Limitation
      of Authority.
      Except
      as expressly provided herein, no provision hereof shall be deemed to authorize
      or empower either party hereto to act on behalf of, obligate or bind the other
      party hereto.

    


    18. IRC
      409A.
      This
      Agreement is intended to satisfy the requirements of Section 409A(a)(2), (3)
      and
      (4) of the Code, including current and future guidance and regulations
      interpreting such provisions. To the extent that any provision of this Agreement
      fails to satisfy those requirements, the provision shall automatically be
      modified in a manner that, in the good-faith opinion of the Company, brings
      the
      provisions into compliance with those requirements while preserving as closely
      as possible the original intent of the provision. Notwithstanding anything
      to
      the contrary in this Agreement, no severance payments or benefits shall be
      paid
      to Executive during the six (6) month period following Executive's separation
      from service to the extent that the Company and Executive mutually determine
      in
      good faith that paying such amounts at the time or times indicated in this
      Agreement would cause Executive to incur an additional tax under Section 409A
      of
      the Code, in which case such amounts shall be paid at the time or times
      indicated in this Section. If the payment of any such amounts are delayed as
      a
      result of the previous sentence, then on the first day following the end of
      such
      six (6) month period, the Company will pay Executive a lump-sum amount equal
      to
      the cumulative amount that would have otherwise been payable to Executive during
      such six (6) month period. 

     

    
      
        
        

      

      
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    19. Notices.
      All
      notices which are required by or may be given pursuant to the terms of this
      Agreement must be in writing and must be delivered personally; sent by certified
      mail, return receipt requested, postage prepaid; sent by facsimile (with written
      confirmation of transmission), provided that notice is also sent via first
      class
      mail, postage prepaid; or sent for next business day delivery by a nationally
      recognized overnight delivery service as follows:

    


    If
      to the
      Company at:

    


    42
      Corporate Park, Suite 250

    Irvine,
      California, 92606

    Attn:
      Burton Katz

    Fax:
      _______________________

    


    with
      copies to:

    


    Stubbs
      Alderton & Markiles LLP

    15260
      Ventura Blvd., 20th
      Floor

    Sherman
      Oaks, California 91403

    Attn:
      Scott Galer

    Fax:
      (818) 444-6313 

    


    If
      to
      Executive at his last residence on record with the Company,

    


    with
      copies to:

    


    Schickler
      & Schickler, L.L.P.

    1700
      Broadway

    New
      York,
      New York 10019

    Attn:
      Sloan Schickler

    Fax:
      (212) 262-6298 

    


    Any
      of
      the addresses and other contact information set forth above may be changed
      from
      time to time by written notice (delivered in accordance with this Section)
      from
      the party requesting the change. 

    


    Such
      notices and other communications will be treated for all purposes of this
      Agreement as being effective immediately if delivered personally or by facsimile
      (with written confirmation of transmission) during normal business hours, or
      five (5) days after mailing by certified mail, return receipt requested, first
      class postage prepaid, or one business day after deposit for next business
      day
      delivery by a nationally recognized overnight delivery service. 

     

    20. Amendment.
      Except
      as otherwise provided herein, no amendment of this Agreement shall be valid
      or
      effective, unless in writing and signed by or on behalf of the parties
      hereto.

    


    21. Waiver.
      No
      course of dealing or omission or delay on the part of either party hereto in
      asserting or exercising any right hereunder shall constitute or operate as
      a
      waiver of any such right. No waiver of any provision hereof shall be effective,
      unless in writing and signed by or on behalf of the party to be charged
      therewith. No waiver shall be deemed a continuing waiver or waiver in respect
      of
      any other or subsequent breach or default, unless expressly so stated in
      writing.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    22. Governing
      Law.
      This
      Agreement shall be governed by, and interpreted and enforced in accordance
      with,
      the laws of the State of New York without regard to principles of choice of
      law
      or conflict of laws.

    


    23. Arbitration.
      Any
      dispute or controversy arising out of or related to this Agreement or any breach
      hereof shall be settled by binding arbitration by the American Arbitration
      Association (or any organization successor thereto) in New York, New York in
      accordance with its Employment Arbitration Rules then prevailing. Judgment
      and
      the award rendered by the arbitration panel may be entered in any court or
      tribunal of competent jurisdiction. This provision encompasses all disputes
      relating to Executive’s employment, this Agreement, the termination of
      Executive’s employment, and the amounts paid to the Executive upon termination,
      regardless of whether such dispute arises during or after the Executive’s
      employment. In any arbitration proceeding conducted pursuant to this Section
      23,
      both parties shall have the right to discovery, to call witnesses and to
      cross-examine the other party’s witnesses (through legal counsel, expert
      witnesses, or both). All decisions of the arbitration panel shall be final,
      conclusive and binding upon the parties, and not subject to judicial review.
      The
      arbitration panel shall have no power to change any of the provisions hereof
      in
      any respect or make an award of reformation, and the jurisdiction of the
      arbitrators is expressly limited accordingly. All statutes of limitations that
      would otherwise be applicable shall apply to any arbitration proceeding
      hereunder. Any arbitration shall be conducted by an arbitration panel consisting
      of one or more arbitrators jointly selected by the parties hereto; provided,
      however, that if the parties are unable to agree on an arbitrator or
      arbitrators, the arbitrator or arbitrators shall be selected in accordance
      with
      the aforementioned Employment Arbitration Rules then prevailing. Each of the
      parties hereto shall pay the fees and expenses of its counsel, accountants
      and
      other experts incident to any such arbitration. The fees and expenses of the
      arbitrator shall be paid fifty percent (50%) by the Company and fifty percent
      (50%) by Executive. Any notice or other process relating to any such arbitration
      may be effected in the manner provided by Section 19. 

    


    24. Remedies.
      In the
      event of any actual or prospective breach or default by either party hereto,
      the
      other party shall be entitled to seek equitable relief, including remedies
      in
      the nature of rescission, injunction and specific performance. All remedies
      hereunder are cumulative and not exclusive, and nothing herein shall be deemed
      to prohibit or limit either party hereto from pursuing any other remedy or
      relief available at law or in equity for such actual or prospective breach
      or
      default, including the recovery of damages.

    


    25. Severability.
      The
      provisions hereof are severable and in the event that any provision of this
      Agreement shall be determined to be invalid or unenforceable in any respect
      by a
      court of competent jurisdiction, the remaining provisions hereof shall not
      be
      affected, but shall, subject to the discretion of such court, remain in full
      force and effect, and any invalid or unenforceable provision shall be deemed,
      without further action on the part of the parties hereto, amended and limited
      to
      the extent necessary to render the same valid and enforceable.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    26. Counterparts.
      This
      Agreement may be executed in counterparts, including, without limitation, by
      facsimile, each of which shall be deemed an original and which together shall
      constitute one and the same agreement.

    


    27. Assignment.
      This
      Agreement, and each right, interest and obligation hereunder, may not be
      assigned by either party hereto without the prior written consent of the other
      party hereto, and any purported assignment without such consent shall be void
      and without effect, except that this Agreement shall be assigned to, and assumed
      by, any person with or into which the Company merges or consolidates, or which
      acquires all or substantially all of its assets, or which otherwise succeeds
      to
      and continues the Company’s business substantially as an entirety. Except as
      otherwise expressly provided herein or required by law, Executive shall not
      have
      any power of anticipation, assignment or alienation of any payments required
      to
      be made to him hereunder, and no other person may acquire any right or interest
      in any thereof by reason of any purported sale, assignment or other disposition
      thereof, whether voluntary or involuntary, any claim in a bankruptcy or other
      insolvency proceeding against Executive, or any other ruling, judgment, order,
      writ or decree. 

    


    28. Withholding.
      The
      Company may withhold from any and all amounts payable under this Agreement
      such
      federal, state and local taxes, as may be required to be withheld pursuant
      to
      any applicable law or regulation, and all other applicable
      withholdings.

    


    29. Binding
      Effect.
      This
      Agreement shall be binding upon and inure to the benefit of the parties hereto
      and their respective successors and permitted assigns. This Agreement is not
      intended, and shall not be deemed, to create or confer any right or interest
      for
      the benefit of any person not a party hereto.

    


    30. Titles
      and Captions.
      The
      titles and captions of the Articles and Sections of this Agreement are for
      convenience of reference only and do not in any way define or interpret the
      intent of the parties hereto or modify or otherwise affect any of the provisions
      hereof.

    


    31. Grammatical
      Conventions.
      Whenever the context so requires, each pronoun or verb used herein shall be
      construed in the singular or the plural sense and each capitalized term defined
      herein and each pronoun used herein shall be construed in the masculine,
      feminine or neuter sense.

    


    32. References.
      The
      terms “herein,” “hereto,” “hereof,” “hereby,” and “hereunder,” and other terms
      of similar import, refer to this Agreement as a whole, and not to any Article,
      Section or other part hereof.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    33. No
      Presumptions.
      Each
      party hereto acknowledges that it has had an opportunity to consult with counsel
      and has participated in the preparation of this Agreement. No party hereto
      is
      entitled to any presumption with respect to the interpretation of any provision
      hereof or the resolution of any alleged ambiguity herein based on any claim
      that
      the other party hereto drafted or controlled the drafting of this
      Agreement.

    


    34. Certain
      Definitions.
      As used
      herein:

    


    (a) “Person”
      includes, without limitation, a natural person, corporation, joint stock
      company, limited liability company, partnership, joint venture, association,
      trust, government or governmental authority, agency or instrumentality, or
      any
      group of the foregoing acting in concert.

    


    (b) A
      “Proceeding” is any suit, action, arbitration, audit, investigation or other
      proceeding before or by any court, magistrate, arbitration panel or other
      tribunal, or any governmental agency, authority or instrumentality of competent
      jurisdiction.

    


    35. Entire
      Agreement.
      This
      Agreement embodies the entire agreement of the parties hereto with respect
      to
      the subject matter hereof and supersedes any prior or contemporaneous agreement,
      commitment or arrangement relating thereto, written or oral, if any, which
      shall
      terminate immediately upon the commencement of the Term, except that each party
      thereto shall (a) remain required to perform any act and to satisfy any
      obligation or condition that such party is required to perform or satisfy
      thereunder with respect to any event occurring or circumstance existing prior
      to
      the commencement of the Term hereof (including, without limitation, the payment
      or delivery to Executive of any compensation, reimbursable expense or employee
      benefit or perquisite to which he may be entitled, but which has not yet been
      paid to him, on account of his employment under any such prior arrangement)
      that
      has not been so performed or satisfied, and (b) retain his or its right under
      any such prior assignment to assert or to allege any claim or cause of action
      relating to or based upon, or otherwise to enforce, any provision thereof with
      respect to any event occurring or circumstance existing during the term thereof.
      

    


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the
      day
      and year first above written.

    


    


    
      	
              NEW
                MOTION, INC.

            
	 	 
	
              By:

            	/s/
              Burton Katz
	
              Name:

            	Burton
              Katz
	
              Title:

            	CEO
	 	 
	
              
                /s/
Andrew
                  Zaref

              

            
	
              Andrew
                Zaref

            


    

     

    
      
        
        

      

      
        18