EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this “Agreement”) dated as of February 9, 2015 (the
“Effective Date”), by and between IPSA International Services, Inc., a Delaware
corporation (the “Company”), the sole stockholder of which is root9B
Technologies, Inc., a Delaware corporation (“root9B”), and Dan Wachtler
(“Wachtler”). Capitalized terms not defined when first used will have the
meaning given those terms in Section 13.

Section 1.                      Employment.  The Company hereby employs Wachtler
and Wachtler hereby accepts such employment, subject to the terms and conditions
set forth in this Agreement.

Section 2.                      Duties.  Wachtler will serve as CEO and
President of the Company with responsibility for all aspects of the business of
the Company.  Wachtler will report directly to the designee appointed by root9B,
who shall be Joseph J. Grano, Jr., Brian King or such other senior officer of
root9B as approved by Wachtler, such approval not to be unreasonably withheld
(the “Designee”).  During the Term, Wachtler will devote substantially all of
his business time to the performance of his duties to the Company.

Section 3.                      Board.  Wachtler shall, at his option, serve as
a member of the root9B Board of Directors (the “Board”) for the period of
Wachtler’s employment, provided that if Wachtler’s employment ends, but Wachtler
elects in writing to remain subject to all of the restrictions set forth in the
Wachtler Non-Compete Agreement, Wachtler may remain on the Board for so long as
he is subject to all such restrictions.

Section 4.                      Term and Place of Employment.

4.1           Term of Employment.  Wachtler’s employment with the Company will
be for the Term, subject to earlier termination pursuant to Sections 7 and 8.

4.2           Place of Employment.  Wachtler will be based in the Phoenix
metropolitan area office of the Company, but will spend such time at the New
York City office of the Company as is necessary to discharge his duties.  In
addition, Wachtler will be required to travel as necessary to fulfill his
duties.

Section 5.                       Compensation of Wachtler.  During the Term, the
Company will provide Wachtler with the following compensation, less such
deductions as will be required to be withheld by applicable law and regulations:

5.1           Salary.  The Company will pay to Wachtler an annual base salary of
$450,000 per annum (the “Base Salary”) at such regular weekly, biweekly or
semi-monthly time or times as root9B makes payment of its regular payroll in the
regular course of business, but no less

 
 

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 frequently than monthly, provided, however, that such salary may be increased
but not decreased at any time, and shall be increased by 5% per annum, at a
minimum, for each annual period after the original Term.

5.2           Bonus.  For each calendar year of the Term, in addition to his
Base Salary, Wachtler shall be eligible to receive an annual bonus of up to 67%
of his Base Salary for such year and grants of equity in root9B, each as
determined by the Board in its discretion.

5.3           Expenses.  The Company will either pay for or reimburse, at
Wachtler’s option, Wachtler for the cost of an apartment in New York City or
residential hotel accommodations, at his option, in an amount not to exceed
$8,000 per month.  The Company will provide Wachtler with reimbursement for all
other reasonable and necessary business, entertainment, business travel expenses
and other bona fide expenses, consistent with Company policy, incurred by
Wachtler on behalf of the Company in connection with the performance of
Wachtler’s duties, upon his accounting therefor.

5.4           Benefits.  Wachtler will participate in all employee benefit
plans, practices and programs maintained by root9B, as in effect from time to
time, on a basis no less favorable than is provided to other similarly situated
executives of root9B and its subsidiaries.  Such benefit plans may include:
medical, hospitalization, dental or vision plans, disability insurance plans,
health programs and pension or retirement plans.

5.5           Fringe Benefits and Perquisites.  During the Term, Wachtler shall
be entitled to fringe benefits and perquisites consistent with the practices of
root9B, and to the extent root9B provides similar benefits or perquisites (or
both) to similarly situated executives of root9B and its subsidiaries, if any,
that are not duplicative of the matters referred to in Section 5.4.

Section 6.                       Vacations/Sick Leave/Holidays.  Wachtler will
be entitled to paid vacation in the amount provided by root9B to its similarly
situated executive personnel, which currently provides for 25 paid vacation days
per year and increases based on tenure.

Section 7.                       Disability/Death.  If Wachtler becomes
Disabled, the Company may, at its option, terminate the employment of Wachtler
under this Agreement immediately upon giving Wachtler notice to that
effect.  Wachtler’s  employment will terminate upon his death.

Section 8.                       Termination of Employment.

8.1            Termination For Cause.  The Company may terminate the employment
of Wachtler at any time for Incurable Cause by giving Wachtler notice of
termination, with reasonable specificity of the basis for the Incurable Cause
and, if for a Curable Cause, a notice of termination that sets forth the steps
that Wachtler must take to cure the Curable Cause.

 
 

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 Wachtler’s employment will terminate immediately upon notice that includes an
Incurable Cause.  Wachtler’s termination for a Curable Cause will take effect 30
days after the giving of the notice unless Wachtler substantially cures the
Curable Cause within such 30 day period.

8.2           Termination Without Cause.  The Company may terminate the
employment of Wachtler without Cause by giving Wachtler 15 days’ notice.

8.3           Resignation for Good Reason.  Wachtler may resign his employment
for Good Reason by giving the Company 30 days’ notice, which shall set forth the
steps that the Company must take to cure the same, which notice shall take
effect 30 days after the giving of such notice unless the basis for the Good
Reason is cured by the Company within such 30 day period.

8.4           Resignation for Material Change in Management.  Wachtler may
resign his employment following the occurrence of an MCISM, by giving 30 days’
notice to the Company, which notice shall be given, if at all, within 120 days
following the occurrence of the MCISM.

Section 9.                       Effect of Termination of Employment;
Non-Compete Agreement.

9.1           Termination for Disability, Death, Cause or Resignation without
Good Reason.  Upon termination of Wachtler’s employment due to Wachtler’s
Disability, Death, the Company’s termination of Wachtler’s employment for Cause,
or Wachtler’s resignation without Good Reason, Wachtler will not have any
further rights under this Agreement except the right to receive: (i) the accrued
but unpaid portion of his Base Salary prorated as necessary in order to account
for any partial year, and (ii) reimbursement for any accrued expenses for which
he has not been reimbursed, (iii) payment of any accrued but unpaid bonus for
the prior year, and (iv) if such termination occurs within 18 months of the
Effective Date, Wachtler’s Base Salary for the period beginning on the date of
such termination and ending on the date that is 18 months from the Effective
Date, if any.  Upon a termination hereunder within 18 months of the Effective
Date, the provisions of Sections 3, 4 and 5 of the Wachtler Non-Compete
Agreement shall continue for the balance of the 18 month period; if such
termination occurs thereafter, Wachtler shall remain bound by the provisions of
Sections 3 and 5, but not 4, of the Wachtler Non-Compete Agreement for a period
of one year after termination.

9.2            Termination without Cause or Resignation for Good Reason.  Upon
the termination of Wachtler’s employment by the Company without Cause or by
Wachtler for Good Reason, the Company will: (a) pay Wachtler the amounts set
forth in Section 9.1(i), (ii), (iii) and (iv), (b) pay Wachtler compensation
equal to the Base Salary for the remainder of the Term unless Wachtler elects a
shorter period for the purpose of reducing the time periods under the
non-compete and non-solicitation provisions set forth in the Wachtler
Non-Compete Agreement, and (iii) continue to provide all benefits provided in
Section 5.4 for so long as Wachtler elects to receive his Base Salary.  If
Wachtler provides the notice referenced above, electing to terminate

 
 

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 his severance benefits after the period of 18 months, the Wachtler Non-Compete
Agreement shall terminate at the time specified in such notice.  If such notice
is not provided, severance payments and the Wachtler Non-Compete Agreement shall
continue until the end of the Term. For clarity and notwithstanding anything to
the contrary contained herein, in no event shall the non-compete and
non-solicitation provisions set forth in the Wachtler Non-Compete Agreement
terminate less than 18 months from the Effective Date.

9.3           Termination upon MCISM.  Upon the termination of Wachtler’s
employment by Wachtler due to an MCISM, the Company will: (a) pay Wachtler the
amounts set forth in Section 9.1(i), (ii), (iii) and (iv), and (b) pay Wachtler
compensation equal to the Base Salary for the remainder of the Term unless
Wachtler elects a shorter period for the purpose of reducing the time periods
under the non-compete and non-solicitation provisions set forth in the Wachtler
Non-Compete Agreement.  If Wachtler provides the notice referenced above,
electing to terminate his severance benefits after the period of 18 months, the
Wachtler Non-Compete Agreement shall terminate at the time specified in such
notice.  If notice is not so provided, severance payments shall continue until
the end of the Term.  For clarity and notwithstanding anything to the contrary
contained herein, in no event shall the non-compete and non-solicitation
provisions set forth in the Wachtler Non-Compete Agreement terminate less than
18 months from the Effective Date.

9.4           Renewal.  This Agreement shall automatically renew for additional
2-year increments, unless either party provides at least 6 months’ written
notice of such party’s intent not to renew the Agreement.  In such event,
Wachtler shall remain bound by the provisions of Sections 3, 4, and 5 of the
Wachtler Non-Compete Agreement during any renewal; provided, further that
Wachtler shall remain bound by the provisions of Sections 3 and 5, but not 4, of
the Wachtler Non-Compete Agreement for a period of one year after termination,
in consideration for the payment by the Company of amounts equivalent to his
then-Base Salary, provided, however, that Wachtler may, during such 6-month
period, notify the Company in writing of his decision not to receive any
severance benefits, in which case the Wachtler Non-Compete Agreement shall
terminate upon expiration of the applicable Term.

Section 10.                      Indemnification and D&O Insurance.

10.1           In the event that Wachtler is made a party or threatened to be
made a party to any action, suit, or proceeding, whether civil, criminal,
administrative or investigative (a “Proceeding”), other than any Proceeding
initiated by Wachtler, the Company or root9B related to any contest or dispute
between Wachtler and the Company or root9B (or any of their affiliates) with
respect to this Agreement or Wachtler’s employment hereunder, by reason of the
fact that Wachtler is or was a director, officer, employee or agent of the
Company or root9B, or any affiliate of the Company or root9B, or is or was
serving at the request of the Company or root9B as a director, officer, member,
employee or agent of another corporation or a partnership, joint

 
 

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 venture, trust or other enterprise, the Company and root9B will, jointly and
severally, indemnify, defend, release and hold harmless Wachtler, to the maximum
extent permitted under applicable law and the Company’s or root9B’s bylaws, as
applicable, from and against any liabilities, costs, claims and expenses,
including all costs and expenses incurred in defense of any Proceeding
(including reasonable attorneys’ fees); provided that such indemnification,
defense, release and hold harmless shall not apply in the event of bad faith,
gross negligence or willful misconduct on the part of Wachtler.  The termination
of any action, suit or proceeding by judgment, order, settlement or its
equivalent shall not, of itself, create a presumption of bad faith, gross
negligence or willful misconduct on the part of Wachtler. Costs and expenses
incurred by Wachtler in defense of such Proceeding (including reasonable
attorneys’ fees) shall be paid by the Company or root9B in advance of the final
disposition of such litigation on a monthly basis upon receipt by the Company or
root9B, as applicable, of: (i) a written request for payment; (ii) appropriate
documentation evidencing the incurrence, amount and nature of the costs and
expenses for which payment is being sought and (iii) an undertaking, reasonably
satisfactory to root9B and the Company, by or on behalf of Wachtler to repay
such amount if it shall ultimately be determined by a court of competent
jurisdiction that Wachtler is not entitled to be indemnified by the Company and
root9B under applicable law.

10.2           root9B or any successor shall purchase and maintain, at its own
expense, directors’ and officers’ liability insurance providing coverage to
Wachtler on terms that are no less favorable than the coverage provided to other
directors and similarly situated executives of root9B and its subsidiaries.

Section 11.                       Section 409A.  This Agreement is intended to
comply with or be exempt from Section 409A of the Internal Revenue Code of 1986
as amended (the “Code”) and will be interpreted, administered and operated in a
manner consistent with that intent. Notwithstanding anything herein to the
contrary, if at the time of Wachtler’s separation from service with the Company
he is a “specified employee” as defined in Section 409A of the Code (and the
regulations thereunder) and any payments or benefits otherwise payable hereunder
as a result of such separation from service are subject to Section 409A of the
Code, then the Company will defer the commencement of the payment of any such
payments or benefits hereunder (without any reduction in such payments or
benefits ultimately paid or provided to Wachtler) until the date that is six
months following Wachtler’s separation from service with the Company (or the
earliest date as is permitted under Section 409A of the Code), and the Company
will pay any such delayed amounts in a lump sum at such time. If any other
payments of money or other benefits due to Wachtler hereunder could cause the
application of an accelerated or additional tax under Section 409A of the Code,
such payments or other benefits shall be deferred if deferral will make such
payment or other benefits compliant under Section 409A of the Code, or otherwise
such payment or other benefits shall be restructured, to the extent possible, in
a manner, reasonably determined by the Company, that does not cause such an
accelerated or additional tax. To the extent any reimbursements or in-kind
benefits due to Wachtler under this

 
 

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 Agreement constitute “deferred compensation” under Section 409A of the Code,
any such reimbursements or in-kind benefits shall be paid to Wachtler in a
manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv). Each payment made
under this Agreement shall be designated as a “separate payment” within the
meaning of Section 409A of the Code.  References to “termination of employment”
and similar terms used in this Agreement are intended to refer to “separation
from service” within the meaning of Section 409A of the Code to the extent
necessary to comply with Section 409A of the Code. Whenever a payment under this
Agreement may be paid within a specified period, the actual date of payment
within the specified period shall be within the sole discretion of the Company.
In no event may Wachtler, directly or indirectly, designate the calendar year of
any payment to be made under this Agreement. Any provision in this Agreement
providing for any right of offset or set-off by the Company shall not permit any
offset or set-off against payments of “non-qualified deferred compensation” for
purposes of Section 409A of the Code or other amounts or payments to the extent
that such offset or set-off would result in any violation of Section 409A or
adverse tax consequences to Wachtler under Section 409A.

Section 12.                       root9B Guarantee.

12.1           To induce Wachtler to enter into this Agreement, root9B hereby
absolutely, unconditionally and irrevocably guarantees (the “Guarantee”) to
Wachtler, on the terms and conditions set forth herein, the due and punctual
payment, observance, performance and discharge of any and all (i) Company
obligations hereunder; and (ii) costs and expenses (including reasonable
attorneys’ fees and expenses) incurred by Wachtler in connection with the
enforcement of his rights hereunder (collectively, the “Guaranteed
Obligations”).

12.2           root9B agrees that the Guaranteed Obligations hereunder shall not
be released or discharged, in whole or in part, or otherwise affected by: (i)
the failure or delay of Wachtler, to assert any claim or demand or to enforce
any right or remedy; (ii) any change in the time, place or manner of payment of
the Guaranteed Obligations; (iii) the addition, substitution or release of any
person or entity now or hereafter liable with respect to the Guaranteed
Obligations; (iv) any change in the corporate existence, structure or ownership
of the Company or root9B or any other person or entity now or hereafter liable
with respect to the Guaranteed Obligations; (v) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Company or root9B or
any other person or entity now or hereafter liable with respect to the
Guaranteed Obligations; (vi) the existence of any claim, set-off or other right
which the Guarantor may have at any time against the Company or Wachtler; or
(vii) the adequacy of any other means Wachtler may have of obtaining payment of
the Guaranteed Obligations.

12.3           The Guarantee may not be revoked or terminated and shall remain
in full force and effect and binding on root9B, its successors and permitted
assigns until the complete, irrevocable and indefeasible payment and
satisfaction in full of the Guaranteed Obligations.

 
 

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12.4   Anything in this Section 12 to the contrary notwithstanding, upon the
occurrence of a transaction pursuant to which root9B owns less than 50% of the
interest in the Company, the Guarantee shall become null and void provided that:
(a) the person or persons owning more than 50% of the Company have assumed the
Guarantee, and (b) such person or persons collectively are of financial strength
at least equal to that of root9B at such time.

Section 13.                       Definitions.  The following words will have
the following meaning:

“Cause” means a Curable Cause or an Incurable Cause.

“Change in Control” shall mean the occurrence of any of the following after the
Effective Date: (i) one person (or more than one person acting as a group)
acquires ownership of stock of the Company or root9B that, together with the
stock held by such person or group, constitutes more than 50% of the total fair
market value or total voting power of the stock of such corporation, provided
that a Change in Control shall not occur if any person (or more than one person
acting as a group) that currently owns more than 50% of the total fair market
value or total voting power of the Company’s or root9B’s stock acquires
additional stock in such corporation; (ii) the Company or root9B are party to a
merger, consolidation or similar transaction or series of transaction in which
the holders of root9B stock do not, directly or in the case of the Company,
indirectly: (x) hold more than 50% of the total fair market value or total
voting power of the stock of the resulting entity, and (y) control the board of
directors of the resulting entity; (iii) a majority of the members of the Board
are replaced during any twelve-month period by directors whose appointment or
election is not endorsed by a majority of the Board before the date of
appointment or election; or (iv) the sale of all or substantially all of the
Company’s or root9B’s assets.

“Curable Cause” means the determination by the Board that: (i) Wachtler has
engaged in misconduct that could reasonably be expected to have a material
adverse effect on the business or assets of the Company, or (ii) Wachtler’s
disregard of any valid and legal directive of the Board or the Designee that is
consistent with this Agreement or Wachtler’s failure to perform his duties
(other than such failure resulting from incapacity due to Disability), which, in
each case, could reasonably be expected to have a material adverse effect on the
business or assets of the Company, or (iii) Wachtler is in material breach of
any other provision of this Agreement.  Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or upon the
written advice of counsel for root9B shall not be the subject of a Curable
Cause.

“Disability” or other forms of that word mean incapacitation or disability by
accident, sickness or otherwise so as to render Wachtler mentally or physically
incapable of performing the services required to be performed under this
Agreement for a period of 90 consecutive days or for any 180  days in any period
of 365 consecutive days.

 
 

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“Good Reason” means the occurrence of any of the following events or conditions:

(i)           the assignment to Wachtler of any duties materially inconsistent
with the duties set forth in Section 2; or

(ii)           the appointment of any officer of the Company senior to Wachtler;

(iii)           any Change in Control (other than an MCISM), unless the acquirer
agrees to assume and perform this Agreement in the same manner and to the same
extent that the Company or root9B, as applicable, would be required to perform
if no succession had taken place, except where such acquirer assumption is not
necessary because such assumption occurs by operation of law;

(iv)           any other action by the Company or root9B which results in a
material diminution in Wachtler’s position, authority, duties, compensation, or
responsibilities; or

(v)           any material failure by the Company or root9B to comply with this
Agreement.

An MCISM shall not, by itself, be deemed Good Reason.

“Incurable Cause” means: (i) the reasonable determination by the Board that
Wachtler has committed an act constituting fraud, or a felony, or criminal act;
or (ii) Wachtler’s conviction of a crime involving moral turpitude, in either
event if such act or crime, materially impairs Wachtler’s ability to perform
services for the Company or results in material reputational or financial harm
to the Company or its affiliates.

“MCISM” means a material change in the senior management of root9B which
includes, but is not limited to, the removal of either Joseph J. Grano, Jr. as
the current Chief Executive Officer or Brian King as the Chief Operating Officer
of root9B.

“Term” means a three (3) year period starting on the Effective Date and ending
on the third anniversary of the Effective Date, unless the Term is renewed
pursuant to Section 9.4.

“Wachtler Non-Compete Agreement” means that certain Confidentiality, Non-Compete
and Non-Solicitation Agreement of even date herewith by and between root9B and
Wachtler.

Section 14.                      Miscellaneous.

14.1           Assignments.  Neither Wachtler nor the Company or root9B may
assign or delegate any of their rights or duties under this Agreement without
the express written consent of

 
 

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 the other parties, except that the Company may assign this Agreement in
connection with the sale or other disposition of all or substantially all of its
assets and business (subject to applicable provisions that may result in
Wachtler’s termination of the Term)..

14.2            Entire Agreement.  This Agreement  and the Wachtler Non-Compete
Agreement constitute and embody the full and complete understanding and
agreement of the parties, and supersedes all prior understandings and
agreements, with respect to Wachtler’s employment by the Company.  This
Agreement may be amended, modified or changed only by an instrument in writing
executed by the Company, Wachtler and root9B. The invalidity or partial
invalidity of one or more provisions of this Agreement will not invalidate any
other provision of this Agreement.  No waiver by either party of any provision
or condition to be performed will be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or any prior or subsequent time.

14.3            Headings.  The headings contained in this Agreement are for
convenience of reference only and will not affect in any way the meaning or
interpretation of this Agreement.

14.4            Notices.  All notices, requests, demands and other
communications required or permitted to be given under this Agreement will be in
writing and will be deemed to have been given when delivered personally or by
private overnight delivery service to the party at the address on the signature
page or to such other address as either party may give notice of in accordance
with the provisions of this section.

14.5            Governing Law.  This Agreement will be governed by and construed
in accordance with the laws of the State of Delaware without giving effect to
such state’s conflicts of laws provisions.  Each of the parties irrevocably
consents to the jurisdiction of the federal and state courts located in County
of New Castle and State of Delaware.  The party prevailing shall be entitled to
recover its reasonable legal fees and expenses from the party not prevailing.

15.6           Binding Effect.  This Agreement shall inure to the benefit of and
be binding upon and enforceable against the parties hereto and their respective
successors, heirs, beneficiaries and permitted assigns.

14.7            Counterparts.  This Agreement may be executed in two or more
counterparts, including those signed and delivered by electronic means, each of
which will be deemed an original, but all of which together will constitute one
of the same instrument.

[signature page follows]

 
 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

IPSA International Services, Inc.
 
By: /s/ Brian King
         Brian King, Acting President
         4521 Sharon Road, Suite 300
         Charlotte, NC 28211
 
 
root9B Technologies, Inc.
 
By: /s/ Brian King                   
         Brian King COO
         4521 Sharon Road, Suite 300
         Charlotte, NC 28211
 
 
 
 
 
 
/s/ Dan Wachtler
Dan Wachtler
 

 
 

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