EMPLOYMENT AGREEMENT
This
Employment Agreement (this “Agreement”),
effective as of January 8 2006 (the “Effective
Date”),
is by
and between Xxxxx Xxxxxx (the “Executive”)
and
a21, Inc., a corporation formed under the laws of the State of Delaware (the
“Company”
or
“a21”).
W
I T N E S S E T H:
WHEREAS,
the
Company desires to employ the Executive, and the Executive is willing to render
services to the Company, on the terms and subject to the conditions hereinafter
set forth.
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants, agreements and promises
hereinafter set forth, the parties hereto covenant and agree as
follows:
1. EMPLOYMENT.
The
Company shall employ the Executive as its Executive Vice President, Sales and
Marketing, and the Executive hereby accepts such employment upon the terms
and
subject to the conditions hereinafter set forth, commencing on the Effective
Date and continuing until terminated pursuant to Paragraph 4 hereof (the
“Employment
Period”).
2. DUTIES.
(a) The
Executive shall report to the Company’s Chief Executive Officer, Chairman and
Board of Directors (the “Board”).
The
Executive will be responsible for global sales and marketing for the Company
and
its subsidiaries and for such other duties as may be assigned to him from time
to time by the Chief Executive Officer, the Chairman or the Board. The Executive
shall perform and discharge all such duties diligently and faithfully, provided
that such duties are consistent with the Executive’s position at the Company.
The Executive will be based out of his home office in Bothell, Washington,
but
the Executive acknowledges that his position will require extensive domestic
and
international travel.
(b) The
Executive shall devote his full business time, attention, skills and energies
to
the performance of his duties hereunder and to the promotion of the business
of
the Company. The Executive may not, during the Employment Period, be employed
or
engaged in any other business activity, whether or not such activity is pursued
for gain, profit or other pecuniary advantage, which would not allow him to
contribute his full business time, attention, skills and energies to the
performance of his duties hereunder and to the promotion of the business of
the
Company without the prior written consent of the Chairman of the Company.
Nothing in this paragraph will be construed as preventing the Executive from
investing his personal assets in businesses which do not compete with the
Company and engaging in not-for-profit and civic activities that do not
interfere with the Executive’s duties hereunder.
3. COMPENSATION.
(a) Salary.
For
services rendered by the Executive hereunder during the Employment Period,
the
Company shall pay Executive a base salary (the “Salary”)
at the
annual gross rate of One Hundred Eighty-Five Thousand Dollars ($185,000) in
accordance with the Company’s ordinary payroll practices. An employment review
will take place on an annual basis. Any increases in the Salary shall be
determined on an annual basis by the Board in its sole discretion.
1
(b) Signing
Bonus.
Within
thirty (30) days after the beginning of the Employment Period, the Company
shall
pay the Executive a signing bonus of Fifteen Thousand Dollars ($15,000) in
accordance with its ordinary payroll practices.
(c) Bonus.
During
the Employment Period, the Executive will be eligible to receive a cash bonus
(the “Bonus”)
based
on an EBITDA target for the Company (30% of total Bonus), a revenue target
for
the Company (30% of total Bonus) and other management objectives (40% of total
Bonus) (the (“Targets”)).
Within sixty (60) days after the beginning of each fiscal year beginning with
the fiscal year ending December 31, 2007, the Board shall establish the Targets
such that (i) upon achieving the first threshold for all of the Targets, the
Company will pay the Executive a Bonus equal to twenty percent (20%) of the
Salary; (ii) upon achieving the second threshold (which includes meeting the
annual plan for all of the Targets) for all of the Targets, the Company will
pay
the Executive a Bonus equal to forty percent (40%) of the Salary; and (iii)
upon
achieving the third threshold for all of the Targets, the Company will pay
the
Executive a Bonus equal to sixty percent (60%) of the Salary. All Targets and
Bonus threshold levels will be determined by the Board in its sole discretion.
Additional Bonuses, if any, shall be determined on an annual basis or otherwise
as determined by the Board in its sole discretion. Notwithstanding the
foregoing, for the year ended December 31, 2007, the Company shall pay the
Executive a minimum bonus of Twenty-Five Thousand Dollars
($25,000).
In
addition, and only with respect to the fiscal year ending December 31, 2007,
the
Company will pay the Executive an additional bonus equal to (i) 0.02 multiplied
by (ii) (a) the Company’s net sales for the fiscal year ending December 31, 2007
minus (b) the Net Sales Threshold. The “Net
Sales Threshold”
will
be
the net sales target of the Company, as determined by the Board in its sole
discretion, for the year ended December 31, 2007. The Net Sales Threshold will
be determined by the Board within sixty (60) days after the beginning of the
fiscal year ending December 31, 2007.
All
Bonuses are subject to the Company’s ordinary payroll practices and payable
within sixty (60) days after the end of each fiscal year. Additional Bonuses,
if
any, shall be determined on an annual basis or otherwise as determined by the
Board in its sole discretion.
(d) Restricted
Stock.
Executive shall be entitled to receive, as soon as practicable following the
Effective Date, 350,000 shares of the Company’s restricted common stock in
accordance with a restricted stock agreement provided by the Company. 43,750
shares of such restricted Stock shall vest on the six month anniversary of
the
Effective Date and the remainder shall vest in forty-two (42) equal monthly
installments on the first day of each month thereafter such that all of such
shares shall be vested by the forty-eighth (48th)
month
anniversary of the Effective Date. In addition, all unvested shares of
restricted Stock shall vest upon a change of control, as defined in the
restricted stock agreement provided to the Executive by the
Company.
(e) Benefits.
During
the Employment Period, the Company shall pay Eight Hundred Dollars ($800) per
month (the “Benefit
Amount”)
of
medical, dental, life insurance, pension or other employee benefits for the
Executive, each as determined by the Executive, whether the Executive elects
to
use the benefit plans provided by the Company from time to time or otherwise.
The Company will permit the Executive to make contributions to the Company’s
401(k) plan, subject to the terms and conditions of such plan. The Executive
is
entitled to such amount of paid vacation as is in the best interests of the
Company after coordination with the Chairman of the Board and the Chief
Executive Officer, which in no event shall be less than fifteen (15) business
days.
2
(f) Expense
Reimbursement.
The
Executive is authorized to incur reasonable expenses related to the performance
of his duties under this Agreement in accordance with budgets and guidelines
established by the Company from time to time or otherwise approved by the Board.
The Company shall promptly reimburse the Executive for all such documented
expenses in accordance with its expense reimbursement policy in effect from
time
to time.
(g) Taxes.
All
payments and benefits provided to the Executive hereunder shall be reported
as
taxable income to the extent required by law and shall be subject to applicable
income and payroll withholding taxes.
4. TERM
AND TERMINATION.
(a) The
term
of this Agreement (the “Employment
Period”)
shall
commence on the Effective Date and continue until terminated in accordance
with
this Paragraph 4.
(b) Termination
Without Cause.
Either
party hereto may terminate this Agreement and the Executive’s employment for any
reason at any time during the Employment Period, effective upon thirty (30)
days
prior written notice to the other party. In the event the Company terminates
this Agreement and the Executive’s employment without Cause (as hereinafter
defined), the Company shall, subject to Executive’s compliance with Sections 5,
6 and 7 hereof, the Executive’s resignation from all positions (including any
directorships) with the Company or its Affiliates (as defined below) and the
execution and delivery by the Executive of a separation agreement and general
release, in a form reasonably acceptable to the Company, of all claims related
to his employment or termination thereof through and including the date
Executive signs such release, pay to the Executive (i) any unpaid Salary accrued
as of the date of termination, (ii) Salary at the annual rate in effect on
the
date of termination for a period of four (4) months in installments in
accordance with the Company’s ordinary payroll practices, (iii) a pro rata
portion of any Bonus payable in respect of the fiscal year in which the date
of
termination occurs, and (iv) reimbursement of any outstanding business expenses
for which Executive is entitled to be reimbursed in accordance with this
Agreement up to and including the date of notice of termination. The Executive
shall not be entitled to any further payments or benefits from the Company
or
any of its Affiliates, except as required by any federal or state law requiring
continuation of benefits and except as may be provided in any other written
agreement with the Company.
(c) Termination
for Cause.
The
Company may terminate this Agreement and the Executive’s employment for Cause
(as hereinafter defined) at any time, effective immediately upon giving the
Executive written notice of such termination. As used herein, the term
“Cause”
shall
mean any of the following events:
(i) the
Executive’s conviction of or plea of guilty, nolo contendere, or no contest to a
misdemeanor involving moral turpitude or a felony which may result in a term
of
imprisonment;
(ii) the
Executive’s material breach of this Agreement or willful failure to carry out
the lawful directives of the Board consistent with Paragraph 2(a) hereof
(provided the Company has given the Employee advance written notice specifying
the nature of such breach or failure to carry out the lawful directives of
the
Board and the Executive has not cured such breach within thirty (30) days of
having received such notice); or
3
(iii) the
Executive’s (A) willful gross misconduct, including, without limitation,
dishonesty, fraud or theft, or (B) willful bad faith act or failure to act
that
is in the sole discretion of the Board injurious to the business or reputation
of the Company.
In
the
event of termination for Cause, the Company shall, subject to Executive’s
compliance with Sections 5, 6 and 7 hereof, the Executive’s resignation from all
positions (including any directorships) with the Company or its Affiliates
(as
defined below) and the execution and delivery by the Executive of a separation
agreement and general release, in a form reasonably acceptable to the Company,
of all claims related to his employment or termination thereof through and
including the date Executive signs such release, pay to the Executive (i) any
unpaid Salary accrued as of the date of termination, (ii) an amount equal to
two
(2) months of the Salary, paid over a period of six (6) months in installments
in accordance with the Company’s ordinary payroll practices, and (iii)
reimbursement of any outstanding business expenses for which Executive is
entitled to be reimbursed in accordance with this Agreement up to and including
the date of termination. The Executive shall not be entitled to any further
payments or benefits except as required by any federal or state law requiring
continuation of benefits and except as may be provided in any other written
agreement with the Company.
(d) Death.
If the
Executive dies during the Employment Period, this Agreement and the Executive’s
employment shall terminate as of the date of his death. The Company shall pay
to
the Executive’s estate any unpaid Salary and the Executive’s estate shall not be
entitled to any further payments or benefits from the Company or any of its
Affiliates except as required by any federal or state law requiring continuation
of benefits and except as may be provided in any other written agreement with
the Company.
(e) Disability.
If the
Executive is incapacitated by accident, sickness or otherwise so as to render
him mentally or physically incapable of performing the services required of
him
under this Agreement (referred to herein as a “Disability”)
for
(i) a period of ninety (90) consecutive days or (ii) for an aggregate of one
hundred twenty (120) business days during any twelve (12) month period, the
Company may terminate this Agreement and the Executive’s employment effective
immediately after the expiration of either of such periods, upon giving the
Executive written notice of such termination. Notwithstanding the foregoing
provision, if it is determined by the Company that the Executive has a
“disability” as defined under the Americans with Disabilities Act, the
Executive’s employment shall not be terminated on the basis of such disability
unless it is first determined by the Company, after consultation with the
Executive, that there is no reasonable accommodation which would permit the
Executive to perform the essential functions of his position without imposing
an
undue hardship on the Company.
In
the
event the Executive is determined to have a Disability hereunder and receives
payments under any disability plan maintained by the Company for its employees
or under any other arrangement maintained by the Company for the Executive
or by
the Executive, such payments shall reduce and offset any Salary payable to
the
Executive pursuant to Paragraph 3 hereof, to extent permitted under such plan
or
arrangement. In the event of termination pursuant to this Subparagraph 4(e),
the
Company shall pay to the Executive any unpaid Salary accrued as of the date
of
termination and the Executive shall not be entitled to any further payments
or
benefits from the Company or any of its Affiliates except as required by any
federal or state law requiring continuation of benefits and except as may be
provided in any other agreement with the Company.
4
5. NON-SOLICITATION.
(a) Non-Solicitation
of Employees and Consultants.
The
Executive hereby agrees that during the Employment Period and for a period
equal
to six (6) months after the Employment Period (the “Survival
Period”),
he
shall not, directly or indirectly through any other individual, person or
entity, employ, solicit or induce any individual, who is or was at any time
during the last twelve (12) months of the Executive’s employment by the Company,
an employee or consultant of the Company, to terminate or refrain from renewing
or extending his or her employment or relationship with the Company, or to
become employed by or enter into a contractual relationship with the Executive
or any other individual, person or entity. For the purposes of Paragraphs 5,
6
and 7 of this Agreement the term “Company”
shall
be deemed to include the Company and each of its Affiliates. For the purposes
of
this Agreement, the term “Affiliate”
shall
mean, with respect to any person, any person directly or indirectly controlling,
controlled by, or under common control with, such other person at any time
during the period for which the determination of affiliation is being
made.
(b) Non-Solicitation
of Suppliers or Vendors.
The
Executive hereby agrees that during the Employment Period and the Survival
Period he may not, directly or indirectly through any other individual, person
or entity, solicit, persuade or induce any individual, person or entity which
is, or at any time during the Employment Period was, a supplier of any product
or service to the Company, or vendor of the Company (whether as a distributor,
agent, commission agent, employee or otherwise), to terminate, reduce or refrain
from renewing or extending his, her or its contractual or other relationship
with the Company.
(c) Non-Solicitation
of Customers.
The
Executive hereby agrees that during the Employment Period and the Survival
Period he may not, directly or indirectly through any other individual, person
or entity, solicit, persuade or induce any individual, person or entity which
is, or at any time during the Employment Period was, a customer of the Company
to terminate, reduce or refrain from renewing or extending its contractual
or
other relationship with the Company in regard to the purchase of products or
services manufactured, marketed or sold by the Company, or to become a customer
of or enter into any contractual or other relationship with the Executive or
any
other individual, person or entity in regard to the purchase of products or
services similar or identical to those manufactured, marketed or sold by the
Company.
6. CONFIDENTIALITY.
The
Executive agrees that, during the Employment Period and thereafter, the
Executive shall not divulge to anyone, other than as necessary in the
performance of his duties hereunder or as required by law or legal process,
confidential information of the Company, its Affiliates or its customers,
including, without limitation, know-how, trade secrets, customer lists, costs,
profits or margin information, markets, sales, pricing policies, operational
methods, plans for future development, data, drawings, samples, processes or
products and other information disclosed to the Executive or known by him as
a
result of or through his employment by the Company, which is not generally
known
in the businesses in which the Company is engaged and which relates directly
or
indirectly to the Company’s products or services or which is directly or
indirectly useful in any aspect of the Company’s business. In the event the
Company is bound by a confidentiality agreement with a customer, supplier or
other party regarding the confidential information of such customer, supplier
or
other party, which provides greater protection than specified above in this
Paragraph 6, the provisions of such other confidentiality agreement shall be
binding upon the Executive and shall not be superseded by this Paragraph 6.
Upon
the termination of the Executive’s employment hereunder or at any other time
upon the Company’s request, the Executive shall deliver forthwith to the Company
all memoranda, notes, records, reports, computer disks and other documents
(including all copies thereof) containing such confidential
information.
5
7. NON-COMPETITION.
The
Executive acknowledges that he has substantial experience and expertise, that
in
the course of providing services to the Company he will become familiar with
the
Company’s trade secrets and with other confidential information concerning the
Company and that Executive’s services have been and will be of special, unique
and extraordinary value to the Company. The Executive hereby agrees that during
the Employment Period and the Survival Period, the Executive shall not, directly
or indirectly, anywhere in the entire United States and Europe, own, manage,
operate, control or participate in the ownership, management, operation or
control of, or be connected as an officer, employee, partner, director,
independent contractor or in any other capacity with, or have any financial
interest in, or aid or assist anyone else in the manufacture, sale or
representation of products or the provision of services identical or similar
to
the products and services manufactured, sold, represented or provided by the
Company, and which products or services are marketed to the same customer base
as the products or services offered by the Company, at any time during the
Employment Period or the Survival Period, or which are included in any business
plans of the Company in existence and under consideration during the Employment
Period and of which Executive was aware.
8. REASONABLE
RESTRICTIONS.
The
parties acknowledge that (i) the type and periods of restriction imposed in
this
Agreement are fair and reasonable and are reasonably required in order to
protect and maintain the proprietary interests of the Company described above,
other legitimate business interests of Company and the goodwill associated
with
the business of the Company, and (ii) that the time, scope, geographic area
and
other provisions of this Agreement have been specifically negotiated by
sophisticated commercial parties, represented by legal counsel, and are given
as
an integral part of the transactions contemplated by this Agreement.
Accordingly, you agree not to contest the validity or enforceability of any
provision of this Agreement and agree that if any court should hold any
provision of this Agreement to be unenforceable, the remaining provisions will
nonetheless be enforceable according to their terms.
9. REMEDIES.
The
Executive acknowledges and agrees that the Company’s remedy at law for a breach
or threatened breach of any of the provisions of Paragraphs 5, 6 or 7 of this
Agreement would be inadequate and, in recognition of that fact, in the event
of
a breach or threatened breach by the Executive of any of the provisions of
Paragraphs 5, 6 or 7 of this Agreement, it is agreed that in addition to its
remedy at law, the Company shall be entitled to appropriate equitable relief
in
the form of specific performance, preliminary or permanent injunction, temporary
restraining order or any other appropriate equitable remedy which may then
be
available. Notwithstanding any provision of this Agreement to the contrary,
it
is expressly understood and agreed that, although the Executive and the Company
consider the restrictions contained in Paragraphs 5, 6 and 7 to be reasonable
for the purpose of preserving the Company’s goodwill and other proprietary
rights, if a final judicial determination is made by a court having jurisdiction
that the time and scope of the restrictions in such Paragraphs is an
unreasonable or otherwise unenforceable restriction against the Executive,
the
provisions of such Paragraphs shall not be rendered void but shall be deemed
amended to apply as to the maximum time and scope permitted and to such other
extent as the court may determine to be reasonable. Notwithstanding the
foregoing, in the event the Company breaches any of its payment obligations
under Section 4 of this Agreement (provided
the Executive has given the Company written notice specifying the nature of
such
breach and a period of at least thirty (30) days to cure such
breach),
Executives obligations under Sections 5 and 7 of this Agreement shall terminate
and be of no further force and effect after the expiration of such thirty (30)
day period if the Company has not cured such breach.
6
10. SECTION
409A COMPLIANCE.
All
payments of “nonqualified deferred compensation” (within the meaning of Section
409A of the Internal Revenue Code of 1986, as amended (“Code”))
are
intended to comply with the requirements of Code Section 409A, and shall be
interpreted in accordance therewith. Neither party individually or in
combination may accelerate any such deferred payment, except in compliance
with
Code Section 409A, and no amount shall be paid prior to the earliest date on
which it is permitted to be paid under Code Section 409A. In the event that
the
Executive is determined to be a “key employee” (as defined in Code Section
416(i) (without regard to paragraph (5) thereof)) of the Company at a time
when
its stock is deemed to be publicly traded on an established securities market,
payments determined to be “nonqualified deferred compensation” payable following
termination of employment shall be made no earlier than the earlier of (i)
the
last day of the sixth (6th) complete calendar month following such termination
of employment, or (ii) the Executive’s death, consistent with the provisions of
Code Section 409A. Unless otherwise expressly provided, any payment of
compensation by Company to the Executive, whether pursuant to this Agreement
or
otherwise, shall be made within two and one-half months (2½ months) after the
end of the calendar year in which the Executive’s right to such payment vests
(i.e.,
is not
subject to a substantial risk of forfeiture for purposes of Code Section 409A).
Notwithstanding anything herein to the contrary, no amendment may be made to
this Agreement if it would cause the Agreement or any payment hereunder not
to
be in compliance with Code Section 409A.
11. REPRESENTATION/WARRANTY.
The
Executive represents and warrants that he is not bound by the terms of a
confidentiality agreement or non-competition agreement or any other agreement
with a former employer or other third party which would preclude him from
accepting employment by the Company or which would preclude him from effectively
performing his duties for the Company. The Company represents and warrants
that
it has all requisite corporate power and authority to consummate the
transactions contemplated by this Agreement and that this Agreement is binding
on the Company and enforceable against the Company in accordance with its
terms.
12. NOTICES.
Any
notices or other communications required to be given pursuant to this Agreement
shall be in writing and shall be deemed given: (i) upon delivery, if by hand;
(ii) after two (2) business days if sent by express mail or air courier; (iii)
four (4) business days after being mailed (seven (7) business days for
international mailings), if sent by registered or certified mail, postage
prepaid, return receipt requested; or (iv) upon transmission, if sent by
facsimile (provided that a confirmation copy is sent in the manner provided
in
clause (ii) or clause (iii) of this Paragraph 10 within thirty-six (36) hours
after such transmission), except that if notice is received by facsimile after
5:00 p.m. on a business day at the place of receipt, it shall be effective
as of
the following business day. All communications hereunder shall be delivered
to
the respective parties at the following addresses:
If
to the
Company:
a21,
Inc.
0000
Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx,
Xxxxxxx 00000
Attention:
Chairman of Compensation Committee, Board of Directors
with
a
copy to:
Loeb
& Loeb LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxxxxxxxx, Esq.
7
If
to the
Executive:
Xxxxx
X.
Xxxxxx
At
his
residential address on
file
at
the corporate office of a21, Inc.
or
to
such other address as the person to whom notice is given may have previously
furnished to the others in writing in the manner set forth above.
13. GOVERNING
LAW/JURISDICTION.
This
Agreement shall be governed by and construed in accordance with the law of
the
State of New York, regardless of the law that might otherwise govern under
applicable principles of conflicts of laws thereof. The parties hereto hereby
irrevocably consent to the exclusive jurisdiction of the state or federal courts
sitting in New York County, State of New York, in connection with any
controversy or claim arising out of or relating to this Agreement, or the
negotiation or breach thereof, and hereby waive any claim or defense that such
forum is inconvenient or otherwise improper. Each party hereby agrees that
any
such court shall have in personam jurisdiction over it and consents to service
of process in any matter authorized by New York law.
14. SEVERABILITY.
Whenever possible, each provision or portion of any provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or portion of any provision of this
Agreement is found to be invalid or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such finding or construction shall
not affect the remainder of the provisions of this Agreement, which shall be
given full force and effect without regard to the invalid or unenforceable
provision, and such invalid or unenforceable provision shall be modified
automatically to the least extent possible in order to render such provision
valid and enforceable, but only if the provision as so modified remains
consistent with the parties’ original intent.
15. WAIVER
OF BREACH.
The
waiver by either party hereto of a breach of any provision of this Agreement
by
the other party shall not operate or be construed as a waiver of any subsequent
breach.
16. SUCCESSORS
AND ASSIGNS.
This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, successors, representatives and assigns.
This
Agreement is assignable to any legal successor of the Company. This Agreement
may not be assigned by the Executive.
17. ENTIRE
AGREEMENT.
This
Agreement constitutes the entire understanding and agreement between the Company
and the Executive with regard to all matters contained herein and incorporates
and supersedes all prior agreements between the parties concerning the
employment of the Executive by the Company. There are no other agreements,
conditions or representations, oral or written, express or implied, with regard
thereto. This Agreement may be amended only in a writing signed by both
parties.
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date set forth
above.
|
a21,
INC.
|
EXECUTIVE
|
|
By: /s/
Xxxx X.
Xxxxxxxx
|
/s/
Xxxxx X.
Xxxxxx
|
|
Name:
Xxxx X. Xxxxxxxx
|
Xxxxx
X. Xxxxxx
|
|
Title:
Chief Executive Officer
|
8
