Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Termination of Interim Chief Executive Officer
On November 21, 2012, Motricity, Inc. (the “Company” or “Motricity”) and James R. Smith, Jr., the Interim Chief Executive Officer of the Company, mutually agreed, effective November
15, 2012, to end Mr. Smith’s employment with the Company and terminate that certain Offer Letter Agreement dated January 8, 2009, as amended on May 19, 2010, April 19, 2011 and August 21, 2011 (the “Smith Offer Letter”).
In connection with Mr. Smith’s termination, on November 21, 2012, the Company entered into a Release Agreement with Mr. Smith (the “Smith
Release Agreement”), effective November 15, 2012, setting forth the terms of Mr. Smith’s mutually agreed upon termination. The Smith Release Agreement also effected the immediate resignation of Mr. Smith from his position as President of
the Company.
Pursuant to the Smith Release Agreement, Mr. Smith agreed to unilaterally release the Company from all claims arising out of his
employment with the Company or the cessation thereof (other than claims arising pursuant to the Smith Release Agreement). In accordance with the Smith Offer Letter and the Smith Release Agreement, the Company agreed to pay Mr. Smith severance in the
gross amount of $300,000, paid in equal installments over the nine months following November 15, 2012. The Company also agreed to continue to provide Mr. Smith with health insurance through COBRA, beginning on December 1, 2012, for the shorter of
nine months or until Mr. Smith is covered by another employer’s group health insurance plan. Furthermore, in accordance with the terms of the Smith Release Agreement and the terms of Restricted Stock Grant Agreements dated March 3, 2009 and
February 11, 2010, all of Mr. Smith’s restricted shares of the Company’s common stock vested and became non-forfeitable as of November 15, 2012. Following his termination, Mr. Smith remains subject to certain non-disclosure and
non-solicitation covenants with the non-solicitation obligations continuing for two years from the date of termination. If there is a breach of the Smith Release Agreement by Mr. Smith, among other things, Mr. Smith would forfeit his rights to the
severance payments thereunder.
Appointment of Chief Executive Officer
Effective November 15, 2012, the Board of Directors of the Company appointed Richard Stalzer, President of Voltari, Motricity’s Mobile Media division, to the position of Chief Executive Officer of
the Company. In connection with his appointment as the Company’s Chief Executive Officer, the Company and Mr. Stalzer entered into an amendment to the Offer Letter dated January 12, 2012 as amended on May 17, 2012 (the “Stalzer
Amendment”).
Appointment of Chief Operating Officer
Effective November 15, 2012, the Board of Directors of the Company appointed Nathan Fong, the Company’s Chief Financial Officer to the additional position of Chief Operating Officer. In connection
with the commencement of his additional title and responsibilities, the Company and Mr. Fong entered into an amendment to the Offer Letter dated May 16, 2012 as amended on May 17, 2012 (the “Fong Amendment”) The Fong Amendment also
provides that Mr. Fong’s ceasing to serve as Chief Operating Officer shall not constitute termination for Good Reason under the Company’s Amended and Restated Executive Severance and Change of Control Plan.
Appointment of Chief Administrative Officer
Effective November 15, 2012, the Company appointed Richard Sadowsky, who has been serving as the Company’s General Counsel since July 5, 2012, to the additional position of Chief Administrative
Officer. Mr. Sadowsky is currently providing services to the Company pursuant to a secondment agreement with SNR Denton US LLP where he is a partner. On November 15, 2012 the Company entered into an employment offer letter with Mr. Sadowsky (the
“Sadowsky Offer Letter”). Pursuant to the Sadowsky Offer Letter, Mr. Sadowsky will become an employee of the Company effective January 1, 2013.
Under the terms of the Sadowsky Offer Letter, Mr. Sadowsky will be entitled to an annual base salary of $285,000. Additionally, in accordance with the terms of the Sadowsky Offer Letter and the
Company’s 2010 Long-Term Incentive Plan, and subject to approval by the Compensation Committee of the Company’s Board of Directors, Mr. Sadowsky is eligible for an award of options to purchase 225,000 shares of the Company’s common
stock, 25% of which options will vest in equal tranches on each of the first four anniversaries of Mr. Sadowsky’s employment date, subject to continued employment on such dates, and 75% of which options will vest on the third anniversary of Mr.
Sadowsky’s employment date provided that certain stock price targets are achieved, subject to continued employment on such date. Under the terms of the Sadowsky Offer Letter, Mr. Sadowsky will be eligible to participate in the Company’s
2013 Corporate Incentive Plan and is subject to non-disclosure, non-competition and non-solicitation covenants. Furthermore, under the Sadowsky Offer Letter, if the Company terminates Mr. Sadowsky’s employment without cause, as defined in the
Company’s Amended and Restated Executive Severance and Change of Control Plan, he would receive six months of continued base salary payments. Mr. Sadowsky, 55 years old, has been with SNR Denton US LLP since 2002.
The foregoing descriptions of the terms of the Smith Release Agreement, the Stalzer Amendment, the Fong Amendment and the Sadowsky Offer Letter do not
purport to be complete and are qualified in their entirety by reference to the full text of such agreements, which are attached hereto as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, and are incorporated herein by reference.
