Exhibit 10.46
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “ Agreement
”) is dated as of October 5, 2007, between NS8 Corporation, a
Delaware corporation (the “ Company ”), and
James C. Forbes (the “ Executive
”).
1.
Employment . The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the
Company, on the terms and conditions set forth herein.
2.
Term . The employment of the Executive by the
Company as provided herein will commence on October 29 2007 (the
“ Effective Date ”) and terminate as herein
provided (such period, the “ Employment Period
”).
3.
Position, Duties and Responsibilities .
(a)
Position . Effective as of the Effective Date and
throughout the Employment Period, the Executive hereby agrees to
serve, and the Company hereby agrees to employ, the Executive, as
Chief Executive Officer of the Company, reporting to the
Company’s Board of Directors (the “ Board
”). The Executive shall devote his best efforts
and all of his business time and attention to the performance of
services to the Company in his capacity as an officer thereof and
as may reasonably be requested by the Board. The duties,
functions, responsibilities and authority of the Executive,
including those reasonably required by the Board hereunder, shall
be those as are reasonable and customary for a person serving as
chief executive officer of an enterprise comparable to the
Company. Subject to the foregoing, the Company shall
retain full direction and control of the means and methods by which
the Executive performs the above services.
(b)
Exclusivity . Except with the prior written approval
of the Board (which the Board may grant or withhold in its sole and
absolute discretion), the Executive, during the Employment Period,
shall devote all of his working time, attention and energies to the
business of the Company and will not (i) run his own business (ii)
accept any other employment, (iii) serve on the board of directors
or similar body of any other business entity, or (iv) engage,
directly or indirectly, in any other business activity (whether or
not pursued for pecuniary advantage).
(c)
Conditions to Employment . The Executive has
provided the Company with satisfactory proof of the
Executive’s legal right to work and carryout business in the
United States. In addition, the Executive has provided
satisfactory proof of the Executive’s ability to freely and
legally obtain work visas or apply for immigration applications as
might be necessary in order to conduct business at branch offices
or subsidiaries of the Company legally domiciled in countries
outside of the United States. The Executive is not party to any
contract or agreement, whether oral or in writing, that may
preclude him from rendering services as an employee of the Company
hereunder. In connection with, and as a condition to his
employment by the Company, the Executive has executed and agrees to
be bound by that certain Confidential Information and Invention
Assignment Agreement with the Company attached hereto as Exhibit
A .
4.
Compensation and Related Matters .
(a)
Salary . The Company shall pay the Executive a base
salary of $200,000 per year, which shall be paid to Executive in
accordance with the Company’s standard payroll
practices. The Executive’s performance and salary
shall be subject to review and increase consistent with the
standard practices of the Company.
(b)
Bonus . The Executive shall be eligible to receive a
quarterly incentive bonus with a target of a maximum of up to
$12,500 each quarter and a maximum of up to $50,000 in annual
incentive bonus each calendar year (the “ Bonus
”), which amount shall be pro-rated with respect to the
remainder of calendar year 2007 by reference to the number of whole
calendar months remaining between the Effective Date and December
31, 2007. The Bonus shall be payable to the Executive in
respect of his services to the Company based on the achievement of
revenue, operating profit, and operating metric objectives
(hereinafter “Performance Milestones”) for the
remainder of 2007 as determined by the Board of the Company, and on
the achievement of Performance Milestones for subsequent quarters
as determined by the Board of the Company and presented to the
Executive in advance of each such quarter. Each Performance
Milestones presented to the Executive by the Board of the Company
will be attached hereto as Schedule “A” and will form
as an integral part of this Agreement. For each calendar quarter,
the Bonus shall be payable as soon as practicable following the
Board’s determination in its reasonable judgment that all or
any portion of the Bonus has been earned as a result of the
achievement of the Performance Milestones on a pro rata basis for
such quarter. In addition to the quarterly Bonus of the
Executive during the entire term of this Agreement, a one time
commencement bonus (“Commencement Bonus”) not exceeding
an aggregate sum of $20,000 shall be paid in installments of $5,000
on the last business week of each quarter starting with the quarter
immediately following the execution of this Agreement until the end
of the first year of this Agreement.
Total
cash compensation potential: $329,000 per year comprised
of:
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·
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$200,000
base Salary per annum.
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·
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Up
to $50,000 to be earned as a quarterly performance incentive Bonus
paid in quarterly installments of up to $12,500 per quarter for
performance achievements as determined by the Board;
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|
·
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Up
to $50,000 to be earned as an annual performance Bonus as
determined by the Board;
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·
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One
time Commencement Bonus of $20,000 paid in quarterly installments
of $5,000 during the last Friday of each ensuing quarter;
and
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·
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An
annual car allowance starting at $9,000 to be paid in equal monthly
installments of $750 per month.
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(c)
Stock Options .
(i)
Initial Option Grant . The Executive shall be
granted on the Effective Date, an option to purchase 5,000,000
shares of the Company’s Common Stock at an exercise price of
Two Cents ($0.02) per share (the “ Initial Option
”) over a four (4) year vesting period.
The shares covered by the Initial Option,
if immediately exercisable, would constitute two and a half percent
(2.5%) of the outstanding Common Stock of the Company on a fully
diluted basis as of the date of grant of the Initial Option.
Except as otherwise provided herein,
subject to the Executive remaining continuously employed by the
Company as of each such date, the Initial Option shall vest and
become exercisable in accordance with the following
schedule:
(ii)
Performance Option Grant . If the Company has
exceeded its agreed upon Performance Milestones during its first
year of operations as determined by the Board of the Company, the
Executive shall be granted an option to purchase an additional
5,000,000 shares (subject to appropriate capitalization
adjustments) of the Company’s Common Stock at an exercise
price of Two Cents ($0.02) per share over a four year period. (the
“ Performance Option ”). The shares covered by
the Performance Option, if immediately exercisable, would
constitute two and one half percent (2.5%) of the outstanding
Common Stock of the Company on a fully diluted basis as of the date
of grant. The Performance Option shall be
granted within two (2) weeks of the Company’s filing of its
Annual Report on Form 10-K for the applicable fiscal year, which
shall include the Company’s annual audited financial
statements for such fiscal year. The Performance Option
shall be vested and exercisable in accordance with the following
schedule:
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(a)
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1,250,000
end of year 1
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(b)
|
1,250,000
end of year 2
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(c)
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1,250,000
end of year 3
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(d)
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1,250,000
end of year 4
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(iii)
Miscellaneous . The Initial Option and the
Performance Option shall be intended to qualify as “incentive
stock options” within the meaning of Section 422(b) of the
Internal Revenue Code of 1986, as amended (the “ Code
”) to the maximum extent permitted under the applicable
federal income tax rules and shall each have a per share exercise
price equal to the fair market value of a share of the
Company’s Common Stock as of the dates they are
granted. The Initial Option and the Performance Option
shall be granted under, and subject to the terms and conditions of,
the Company’s Stock Option Plan (or any successor plan(s)
thereto). The specific terms of the Initial Option and
the Performance Option shall be set forth in written stock option
agreements between the Company and the Executive which, except as
provided herein, shall be in the same form as customarily used by
the Company with respect to employee stock option
grants.
(d)
Business Expenses . The Company shall reimburse the
Executive for reasonable expenses incurred in connection with the
conduct of the Company’s business upon presentation of
sufficient receipts of such expenditures consistent with the
Company’s policies as in place from time to
time.
(e)
Other Benefits . The Executive shall be entitled to
participate in or receive health, welfare, life insurance,
long-term disability insurance, bonus plan and similar benefits as
the Company provides generally from time to time to its senior
executives, and to its employees, generally. Nothing herein is
intended, or shall be construed to require the Company to institute
or continue any, or any particular, plan or benefits, other than
the contractual Bonus program and the contractual stock option
program for the Executive described in Sections 4(b) and (c),
respectively.
(f)
Relocation Expense. If determined as necessary by
the Company and the Executive for the proper execution of the
Company’s business plan, the Executive will be
relocated. If such relocation is deemed necessary, the
Company will pay necessary expenses related to the relocation of
the Executive, including but not limited to, (i) professional
moving costs, (ii) storage of household items, (iii) travel
expenses, and (iv) temporary living expenses.
(g)
Vacations . During the Employment Period, the
Executive shall be entitled to four (4) weeks of paid vacation each
year. The Executive shall also be entitled to all paid
holidays given by the Company to its senior
executives. The Executive agrees to utilize his vacation
at such time or times as are (i) consistent with the proper
performance of his duties and responsibilities hereunder; and (ii)
mutually convenient for the Company and the Executive.
(h)
Indemnification . The Executive, while acting in any
capacity on behalf of the Company or any of its subsidiaries or
affiliates, shall be entitled to coverage under each
directors’ and officers’ liability insurance policy, if
any, maintained by or on behalf of the Company’s directors
and officers. If, not currently available, the Company will adopt
such plan within 90 days of the Effective Date.
5.
Termination . The Executive’s employment
hereunder shall be terminated, or may be terminated, as the case
may be, under the following circumstances:
(a)
Death . The Executive’s employment hereunder
shall terminate upon his death.
(b)
Cause . The Company may terminate the
Executive’s employment hereunder for “ Cause
.” Cause shall mean (i) Employee’s
breach of any of the material terms of this Agreement and the
failure by the Executive to cure or remedy such breach within
thirty (30) days after receipt by the Executive of written notice
from the Board specifying the breach, (ii) his conviction of a
crime involving moral turpitude or constituting a felony under the
laws of any state, the District of Columbia or of the United
States, or (iii) his willful, intentional and material misconduct
in the performance of his duties hereunder, including without
limitation, his willful and intentional failure or refusal to carry
out any proper direction by the Board with respect to the services
to be rendered by him hereunder or the manner of rendering such
services or his habitual neglect of his duties as an officer of the
Company, which misconduct or neglect, if capable of cure in the
Board’s reasonable judgment, shall continue after receipt of
written notice from the Company, specifying the alleged
misconduct.
(c)
Employment-At-Will/Termination for Any Reason . The
Executive hereby agrees that the Company may dismiss him under this
Section 5 without regard (i) to any general or specific
policies (whether written or oral) of the Company relating to the
employment or termination of its employees, or (ii) to any
statements made to the Executive, whether made orally or contained
in any document, pertaining to the Executive’s relationship
with the Company. Notwithstanding anything to the
contrary contained herein, the Executive’s employment with
the Company is not for any specified term and may be terminated by
the Company at any time by delivery of a Notice of Termination, for
any reason, with or without Cause, without liability except with
respect to the payments provided for by Section 5
below.
(d)
Termination by the Executive for Good Reason . The
Executive may terminate his employment hereunder for “
Good Reason ”. Good Reason shall mean (i)
any reduction in the amount of the Executive’s base salary or
aggregate incentive compensation opportunities (inclusive of the
Bonus) which reduction may also occur pursuant to any assignment of
performance goals and corresponding awards which are inconsistent
with prior performance goals and awards, (ii) any significant
reduction in the aggregate value o
