EMPLOYMENT
AGREEMENT
This Employment Agreement (this “
Agreement ”), effective as of January 8 2006
(the “ Effective Date ”), is by and
between Bruce Slywka (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.
(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 (48 th )
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.
(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
(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
