ADVISORY AGREEMENT
ADVISORY
AGREEMENT
This
Advisory Agreement (“Agreement”),
dated
as of October 9, 2006 (the “Effective
Date”)
is
made between a21, Inc., a Delaware corporation (the “Company”)
and
Xxxxxx X. Xxxxx (“Advisor”) (collectively,
the “Parties,”
and,
each, a “Party”).
WHEREAS,
the
Company desires to retain the services of Advisor to perform certain consulting
services for the Company and Advisor is willing to render such services to
the
Company, on the terms and subject to the conditions hereinafter set
forth.
NOW,
THEREFORE, In consideration of the terms and conditions set forth below, the
Parties agree as follows:
1. TITLE;
STATEMENT OF SERVICES; PERFORMANCE OF SERVICES.
Advisor
shall have the title of “Executive Advisor”, and shall advise the Company’s
Board of Directors (the “Board”) and its executive officers relating to
acquisitions, finance, strategy and transition matters on which they wish to
obtain Advisor’s advice (“Services”). Advisor shall report directly to the
Company’s Board of Directors and the Chairman of the Board. Advisor will provide
the Services for no more than three business days per month upon reasonable
notice by the Company, subject to Advisor’s reasonable availability, taking into
account Advisor’s other professional, business and personal
activities.
2. RESIGNATION.
Advisor
hereby resigns as Chairman of the Board and Chief Executive Officer of the
Company and from each and every other position he may hold with the Company
and
any of its subsidiaries as of the Effective Date, other than as a director
of
the Company. The Parties agree that the Employment Agreement dated May 1, 2005
between the Parties (the “Employment Agreement”) is hereby terminated and of no
further force and effect.
3. TERM.
The
term of this Agreement shall commence on the Effective Date and shall continue
for a period of one (1) year, unless earlier terminated by Company or Advisor
as
provided herein (the “Term”).
4. FEES
FOR SERVICES.
As full
consideration for rendering the Services, the Company will pay Advisor a fee
at
the annual gross rate of One Hundred Fifty Thousand Dollars ($150,000) (the
“Fee”) in monthly installments payable on the 1st
day of
each month during the Term, other than the first installment which is due and
payable on the Effective Date. In addition, Advisor shall be entitled to receive
all other compensation received by non-employee directors of the
Company.
5. EXPENSES.
Company
shall reimburse Advisor for reasonable out-of-pocket expenses necessarily and
actually incurred by Advisor in rendering its Services. The Company shall
promptly reimburse Advisor for all such documented expenses in accordance with
its expense reimbursement policy in effect from time to time.
6. INDEPENDENT
CONTRACTOR.
The
Parties acknowledge that:
(a) Advisor
shall perform its duties hereunder as an independent contractor, and not as
the
agent, employee, or servant of the Company. Advisor is not entitled to
participate in any Company benefit plans, including but not limited to any
retirement, pension, profit sharing, group insurance, health insurance, salary,
bonus, incentive compensation, vacation pay, sick pay or similar programs,
policies, or plans that have been or may be instituted by Company for the
benefit of its employees. During the Term, Advisor represents and warrants
that
Advisor will not represent to others that Advisor is an employee of
Company.
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(b) Advisor
shall be fully responsible for withholding any and all federal, state or local
income and employment taxes in connection with compensation hereunder. The
Company shall issue a Form 1099 with respect to the payments made pursuant
to
Paragraph 4 hereunder if required by applicable law.
(c) In
the
event that performance of Advisor’s services requires travel, Advisor will be
solely responsible for injuries, emergencies and/or death to Advisor that may
occur while Advisor is traveling.
(d) This
Agreement shall not be construed as creating a partnership between the Parties
or as creating any other form of legal association that would impose liability
upon one party for the act or failure to act of the other party. Further,
Advisor shall have no authority to bind the Company in any respect.
7. NON-SOLICITATION.
(a) Non-Solicitation
of Employees and Consultants.
Advisor
hereby agrees that during the Term and for a period equal to ninety (90) days
after the Term (the “Survival
Period”),
Advisor 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 Advisor’s employment by or consultancy
with 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 Advisor or any other individual, person or entity which causes them to
terminate, reduce or refrain from renewing or extending his, her or its
contractual or other relationship with the Company. For the purposes of
Paragraphs 7, 8 and 9 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.
The
foregoing provision shall not preclude an enterprise of which Advisor is an
employee or consultant from hiring any of the foregoing employees or
consultants; provided,
however,
that
Advisor has not otherwise breached the foregoing provisions of this Section
7(a).
(b) Non-Solicitation
of Suppliers or Vendors.
Advisor
hereby agrees that during the Term 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
Term or during Advisor’s prior employment by the Company 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. The foregoing provision does not preclude
any enterprise of which Advisor is an employee or consultant from doing business
with the foregoing individuals, persons or entities, provided,
however,
that
Advisor has not otherwise breached the foregoing provisions of this Section
7(b).
(c) Non-Solicitation
of Customers.
Advisor
hereby agrees that during the Term 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
Term or Advisor’s prior employment by the Company 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 Advisor 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.
The
foregoing provision does not preclude any enterprise of which Advisor is an
employee or consultant from doing business with the foregoing persons or
entities, provided however that Advisor has not otherwise breached the foregoing
provisions of this Section 7(c).
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8. CONFIDENTIALITY.
Advisor
agrees that, during the Term and thereafter, Advisor 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
Advisor or known by him as a result of or through his prior employment by or
consultancy with 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 8, the
provisions of such other confidentiality agreement shall be binding upon Advisor
and shall not be superseded by this Paragraph 9. Upon the termination of this
Agreement or at any other time upon the Company’s request, Advisor shall deliver
forthwith to the Company all memoranda, notes, records, reports, computer disks
and other documents (including all copies thereof) containing such confidential
information.
9. NON-COMPETITION.
Advisor
acknowledges that he has substantial experience and expertise, that in the
course of providing services to the Company he has and will become familiar
with
the Company’s trade secrets and with other confidential information concerning
the Company and that Advisor’s services have been and will be of special, unique
and extraordinary value to the Company. Advisor hereby agrees that during the
Term and the Survival Period, Advisor 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 Term or Advisor’s prior
employment by the Company, or which are included in any business plans of the
Company in existence and under consideration during the Term or Advisor’s prior
employment by the Company and of which Advisor was aware. The foregoing shall
not preclude Advisor from being a passive owner of not more than 2.0% of the
outstanding stock of any class of stock of any corporation which is publicly
traded and competes with the Company, so long as Advisor has no active
participation in the business of such corporation.
10. 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, Advisor agrees not to contest the validity or enforceability of
any
provision of this Agreement and agrees 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.
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11. REMEDIES.
Advisor
acknowledges and agrees that the Company’s remedy at law for a breach or
threatened breach of any of the provisions of Paragraphs 7, 8 and 9 of this
Agreement would be inadequate and, in recognition of that fact, in the event
of
a breach or threatened breach by Advisor of any of the provisions of Paragraphs
7, 8 and 9 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 Advisor and the Company
consider the restrictions contained in Paragraphs 7, 8 and 9 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 Advisor, 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
Advisor 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),
Advisor’s obligations under Sections 7 and 8 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.
12. STOCK
OPTIONS.
As of
the Effective Date, the options to purchase the Company’s common stock granted
to Advisor pursuant to the Employment Agreement shall be deemed vested with
respect to all 800,000 shares. As of the Effective Date, the options to purchase
the Company’s common stock granted to Advisor on July 20, 2006 shall be deemed
vested with respect to 325,000 shares and options to purchase 325,000 shares
of
the Company’s common stock shall be deemed to have lapsed unexercised. Any
options to purchase the Company’s common stock owned by Advisor that have not
lapsed may be exercised through January 31, 2008 (the “Option Expiration Date”).
After the Option Expiration Date, all of Advisor’s unexercised stock options
shall expire and be cancelled. During the period commencing on the Effective
Date and through and including the Option Expiration Date, Advisor may exercise
his vested stock options either for cash or on a cashless basis. Except as
set
forth in this Paragraph 12, any of the Advisor’s unvested stock options shall be
immediately cancelled as of the Effective Date. Cashless
means the Advisor may exercise stock options without first paying to the Company
the aggregate strike price, which is defined as the strike price times the
number of option-shares being exercised. For purposes of this Agreement, a
“cashless” basis exercise means that Advisor as part of an option exercise is
permitted to trade option-shares of Company common stock in exchange for actual
shares of Company common stock using the Advisor stock option exercise by using
the “spread” between the strike price and market price to cover the aggregate
strike price that is required to be paid with regard to such option exercise.
This is represented with the following formula: the difference between the
strike price and market price, divided by the market price. For example, if
the
Advisor exercises an option on one share of Company common stock, having a
strike price of $0.25, when the then-market price of Company common stock is
$1.00, the Advisor would receive ¾ of one share of Company common stock in
return (i.e.
[($1.00-$.25)/$1.00)]). The Company shall include (i) the foregoing shares,
and
(ii) the shares into which the foregoing options, and all other options held
by
Advisor which are vested, may be exercised, on the next Form S-8 registration
statement which the Company files with the Securities and Exchange Commission
(or equivalent to register shares and options held by employees, executives
and
other agents of the Company).
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13. TERMINATION.
(a) The
Company may terminate this Agreement immediately upon giving notice to Advisor
if any of the following events occur:
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(i)
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Advisor
is convicted of or pleads guilty, nolo contendere, or no contest
to a
misdemeanor involving moral turpitude (which is likely to have an
adverse
effect on the Company or the Advisor’s ability to perform his duties
hereunder) or a felony which may result in a term of
imprisonment;
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(ii)
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Advisor’s
material breach of this Agreement or willful failure to carry out
the
lawful directives of the Board of Directors, other than as a result
of the
Advisor’s death or disability, consistent with Paragraph 1 hereof
(provided the Company has given Advisor advance written notice specifying
the nature of such material breach or failure to carry out the lawful
directives of the Board and a period of at least thirty (30) days
to cure
such breach or failure); or
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(iii)
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the
Advisor’s (A) willful gross misconduct, including, without limitation,
dishonesty, fraud or theft, or (B) willful bad faith act or failure
to act
that is injurious to the business or reputation of the
Company.
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In
the
event of termination pursuant to this Paragraph 13(a), the Company shall pay
to
Advisor any unpaid Fee accrued as of the date of termination, and Advisor shall
not be entitled to any further payments or benefits except as required by any
federal or state law.
(b) Advisor
may terminate this Agreement for any reason at any time during the Term,
effective upon thirty (30) days written notice to the Company.
14. 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 14 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:
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If
to the Company:
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a21,
Inc.
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0000
Xxxxxxxxx Xxxxxxx
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Xxxxxxxxxxxx,
Xxxxxxx 00000
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Attention:
Chairman of Compensation Committee, Board of Directors
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with
a copy to:
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Loeb
& Loeb LLP
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000
Xxxx Xxxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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Attention:
Xxxxx X. Xxxxxxxxxx, Esq.
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If
to Advisor:
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Xxxxxx
X. Xxxxx
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At
his residential address on
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file
at the corporate office of a21,
Inc.
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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.
15. GOVERNING
LAW/JURISDICTION.
This
Agreement shall be governed by and construed in accordance with the law of
the
State of Florida, 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 Jacksonville, Florida 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 Florida law.
16. 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.
17. 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.
18. 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 Advisor, except that the Advisor may assign his rights
under this Agreement to an entity controlled by Advisor.
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19. ENTIRE
AGREEMENT.
This
Agreement constitutes the entire understanding and agreement between the Company
and Advisor with regard to all matters contained herein and incorporates and
supersedes all prior agreements between the parties concerning the subject
matter hereof. There are no other agreements, conditions or representations,
oral or written, express or implied, with regard thereto. This Agreement may
be
amended only in writing, signed by both parties.
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date set forth
above.
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a21,
INC.
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ADVISOR | |||
| By: |
/s/
Xxxxxx Xxxxxxxx
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/s/ Xxxxxx X. Xxxxx | ||
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Name: Xxxxxx Xxxxxxxx |
Xxxxxx X. Xxxxx |
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| Title: Chief Financial Officer | ||||
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