Document:

Unassociated Document

    EXHIBIT
10.11

     

    EMPLOYMENT
AGREEMENT

     

    This
agreement (“Agreement”) is made
as of the 22nd day of
June, 2009 (the “Effective Date”) by and
between, on the one hand, Diligent Board Member Services,
Inc., a Delaware corporation, 39 West 37th Street,
New York, New York 10018 (“DBMS,” the “Company,” or “Employer”), and, on
the other hand, Steven
Ruse, an individual residing at 660 Stonetown Road, Ringwood, NJ 07456
(“Executive”).  All
references to currency are to US dollars unless otherwise
indicated.

     

    
      	
              1.

            	
              Employment.  DBMS
      hereby employs Executive and Executive hereby accepts employment upon the
      terms and conditions hereinafter set
forth.

            

    

     

    
      	
              2.

            	
              Term.  Unless
      earlier terminated pursuant to Article 5 below, this Agreement shall
      commence on the Effective Date and shall continue in effect until
      terminated by DBMS upon 90 days prior written notice to Executive
      (hereinafter the "Term").  The
      foregoing notwithstanding, this Agreement may be terminated, without
      further obligation, by either party on written notice provided on or prior
      to July 22, 2009.

            

    

     

    
      	
              3.

            	
              Duties.  During
      the Term, Executive shall perform the duties set forth on Schedule
      A.

            

    

     

    
      	
              4.

            	
              Compensation.  For
      all services rendered by Executive and for all covenants undertaken by
      Executive pursuant to this Agreement, DBMS shall provide, and Executive
      shall accept, the following.

            

    

     

    
      	
              4.1.

            	
              Base
      Compensation.  DBMS shall pay a base cash compensation to
      Executive as per Schedule
      B.

            

    

     

    
      	
              4.2.

            	
              Fringe
      Benefits.  During the Term, DBMS shall extend to
      Executive other fringe benefits as per Schedule B. DBMS makes
      no provision for retirement or death in service benefits to the Executive
      save as may be provided from time to time within the terms of DBMS’s
      pension or profit sharing plan, if any, or as may be required by
      law.

            

    

     

    
      	
              5.

            	
              Termination.

            

    

     

    
      	
              5.1.

            	
              Termination of
      Executive for Cause.  DBMS may terminate this Agreement
      for “cause,” upon
      the occurrence of one or more of the
following:

            

    

     

    
      	
               
      

            	
              (a)

            	
              Executive
      commits a material act of dishonesty, deceit, or breach of fiduciary duty
      in the performance of Executive’s duties as an employee of
      DBMS;

            

    

     

    
      	
               
      

            	
              (b)

            	
              Executive
      neglects or fails, on a reccurring basis and in a material respect, to
      perform Executive’s job duties as defined in Schedule
      A;

            

    

     

    
      	
               
      

            	
              (c)

            	
              Executive
      substantially violates any written policy or reasonable expectation of
      DBMS regarding employee behavior or conduct that has been communicated to
      Executive by DBMS or such employee behavior or conduct is outside the
      remit of Executive’s job description and Executive does not cure such
      breach within thirty (30) days after written notice from
    DBMS;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      Employment
Agreement

       

    

    
      	
               
      

            	
              (d)

            	
              Executive
      is convicted of, or pleads nolo contendre to, (i) any felony, or any
      misdemeanor involving moral turpitude or (ii) any crime or offense
      involving dishonesty with respect to DBMS;
or

            

    

     

    
      	
               
      

            	
              (e)

            	
              Executive
      materially breaches any provision of this Agreement and does not cure such
      breach within thirty days after written notice from DBMS, except that such
      cure period shall not apply to any breach by Executive of the restrictive
      covenants in Article 8 of this
Agreement.

            

    

     

    In the
event DBMS opts to terminate this agreement for cause, DBMS shall provide
written notice of such termination which shall also specify the reason for such
termination.

     

    In the
event DBMS terminates this Agreement for cause, all obligations of DBMS under
this Agreement shall terminate.

     

    
      	
              5.2.

            	
              Illness or Disability
      of Executive.  If Executive is unable for health reasons
      to perform services for DBMS for a continuous period of more than 90 days,
      Executive shall be deemed to be permanently and totally disabled. The
      Executive shall be paid all compensation due under this Agreement until
      Agreement is terminated pursuant to Article
2.

            

    

     

    
      	
              5.3.

            	
              Death of
      Executive.  This Agreement will terminate immediately
      upon the death of Executive, and in such case the surviving named
      beneficiary or Executive’s estate shall receive any compensation earned
      and unpaid as of the date of Executive’s
death.

            

    

     

    
      	
              5.4.

            	
              Resignation by
      Employee.  In the event that Executive voluntarily
      resigns as an employee of DBMS, all obligations of DBMS under this
      Agreement shall terminate on the effective date of such
      resignation.

            

    

     

    
      	
              6.

            	
              Expenses.  In
      addition to the compensation payable hereunder, the Executive shall be
      entitled to incur other expenses (detailed in Schedules A and B herein) on
      behalf of DBMS in the performance of the Executive’s duties. Executive
      will charge such expenses to DBMS credit or charge cards, or to DBMS
      vendors or, if Executive pays such expenses from his own resources,
      Executive will be reimbursed upon submission of appropriate
      vouchers.

            

    

     

    
      	
              7.

            	
              Devotion to
      business.  Throughout
      Executive’s employment pursuant to this Agreement, Executive will devote
      100% of Executive’s professional and business hours and Executive’s
      undivided attention to the business and affairs of DBMS and its divisions
      and affiliates, except as otherwise set forth in this
      Agreement.  Nothing in this Agreement will preclude Executive
      from devoting reasonable periods as may be required for outside activities
      and engagements that will not reflect adversely on DBMS, and that are not
      inconsistent with the mission or purposes of DBMS, including, but not
      limited to, such activities as the following: (a) service as a director,
      trustee, or member of a committee of any organization involving no
      conflict of interest with the interests of DBMS; (b) fulfilling speaking
      engagements, teaching at continuing education seminars, or fulfilling
      other professional or business educational opportunities;
      or

            

    

     

    
      
        
        

      

      
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      Employment
Agreement

       

    

    
      	
               
      

            	
              (c) engaging in charitable and community
      activities that are not inconsistent with the mission and purposes of
      DBMS.

            

    

     

    
      	
              8.

            	
              Restrictive
      Covenants.

            

    

     

    
      	
              8.1.

            	
              Competition.  Executive
      agrees that while this Agreement is in effect, and for a period of two
      years after its termination, Executive will not, without the written
      consent of DBMS, engage, directly or indirectly, either as principal,
      agent, proprietor, director, officer, employee or consultant, or
      participate in the ownership, management, operation or control, of any
      business directly competitive with the business conducted by DBMS at the
      date of termination of this Agreement.  A business competitive
      with the business of DBMS shall include, without limitation, a business
      that manufactures, provides or markets software for digital board books or
      board portals–whether delivered via the Application Service Provider model
      or as installed software–to desktop PCs, laptops, PDAs, mobile phones and
      computing devices (or other form of computing or electronic device).
      Nothing in this section shall prevent Executive from purchasing securities
      of any business whose securities are regularly traded on any national
      securities exchange, or in the over-the-counter market; provided that such
      purchases shall not result in Executive owning, directly or indirectly, at
      any time, one percent (1%) or more of the voting securities of any entity
      engaged in any business competitive to that carried on by DBMS at the
      termination of this Agreement.  The geographic area of the
      restrictions set forth in this section  shall be the United
      States and its territories and possessions, together with any other
      countries in which DBMS shall have been actively promoting its services or
      the licensing or franchise of the right to promote its services within the
      12 month period prior to termination of the employment of
      Executive.

            

    

     

    
      	
              8.2.

            	
              Recruitment of
      personnel.  Executive agrees that he will not, while this
      Agreement is in effect and for a period of two years thereafter, directly
      or indirectly, individually or in concert with other persons, aid or
      endeavor to solicit or induce

            

    

     

    
      	
              (a)

            	
              then
      remaining employees of DBMS or its affiliates, or agents, licensees,
      franchisees, or consultants performing regularly contracted work for DBMS
      or its affiliates, to leave their employment or independent contractor
      positions to accept employment or contractor positions with another person
      or entity, or

            

    

     

    
      	
              (b)

            	
              then
      customers of DBMS to obtain from another person or entity products or
      services similar to or competitive with the products or services then sold
      or provided by DBMS.

            

    

     

    
      	
              (c)

            	
              The
      geographic area of the restrictions set forth in this Article 8.2 and its
      preceding subsections shall be the United States and its territories and
      possessions, together with any other countries in which DBMS shall have
      been actively promoting its services or the licensing or franchise of the
      right to promote its services within the 12 month period prior to
      termination of the employment of
Executive.

            

    

     

    
      
        
        

      

      
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        Employment
Agreement

         

      

    

    
      	
              8.3.

            	
              Confidential
      Information.  Executive agrees that he will not, while
      this Agreement is in effect or at any time thereafter, use or disclose to
      any unauthorized person any trade secrets or other confidential
      information of DBMS or its affiliates.  Executive acknowledges
      and agrees that trade secrets and other confidential information, whether
      created by Executive in connection with his employment or by others,
      constitute DBMS’s sole and exclusive property.  For purposes of
      this section, the term “confidential information” includes all documents,
      materials and other information, whether in oral, written or electronic
      form, that have been or will be furnished by or on behalf of DBMS to
      Executive (or that have been or will be created for DBMS while Executive
      is employed by DBMS), and includes, without limitation, all notes,
      analyses, compilations, materials, manuscripts, books, pamphlets, tapes,
      CDs, products, product information, mailing lists, customer information
      and customer lists, business plans, business methods, web site designs,
      technology information, software, source code, pricing information, and
      any studies or other documents or materials prepared by the Executive
      which contain or reflect all or any portion of the originally disclosed
      materials.  Notwithstanding the foregoing, Confidential
      Information does not include information that:  (i) was or
      becomes generally available to the public other than as a result of a
      disclosure by the Executive or Executive’s agents; or (ii) becomes
      available to the Executive on a non confidential basis from an independent
      source without breach of any confidentiality obligations. or (iii) which
      Executive is required to disclose under applicable laws or regulations or
      in connection with judicial or administrative proceedings, provided that
      to the extent possible Executive shall notify DBMS if compelled to
      disclose confidential information, prior to its disclosure, so as to
      permit DBMS an opportunity to seek a protective order or other appropriate
      relief it deems prudent.  Executive will return all documents
      and other tangible evidence related to DBMS’s trade secrets and any
      confidential information on termination of this Agreement with or without
      cause.  No breach or alleged breach of this Agreement by DBMS
      shall alter the obligations of Executive set forth in this
      Article.

            

    

     

    
      	
              8.4.

            	
              Right to Injunctive
      Relief and Other Remedies.  Executive agrees that the
      restrictions contained in Article 8 are necessary for the protection of
      DBMS and any breach thereof may cause DBMS irreparable harm for which
      there may not be adequate remedy at law.  Executive consents in
      the event of such breach to the issuance of injunctive or other equitable
      relief in favor of DBMS restraining the breach of the Article 8 covenants
      by any court having jurisdiction.  Executive agrees that the
      rights of DBMS to obtain an injunction shall not be considered a waiver of
      DBMS’s rights to assert any other remedy it may have at law or in
      equity.  With regard to any preliminary injunctive or similar
      equitable relief that may be granted to enforce the covenants set forth in
      Article 8, Executive waives the requirement of a bond being posted in
      connection with such relief.

            

    

     

    
      	
              9.

            	
              Non-Disparagement.  During
      the term of this Agreement and thereafter, Executive shall not, directly
      or indirectly, disparage or make negative, derogatory or defamatory
      statements about DBMS, its business activities, or any of its directors,
      officers, employees, affiliates, agents, or representatives or any of
      them, to any person or business entity.  Neither DBMS nor its
      directors, officers, employees, affiliates, agents and representatives
      shall, directly or indirectly, disparage or make negative, derogatory or
      defamatory statements about Executive.  Except pursuant to a
      subpoena validly issued or enforced by a court, arbitrator, agency, or
      other governmental body of competent jurisdiction, or in response to a
      valid investigative demand by a governmental body, neither Executive nor
      DBMS (including any of its directors, officers, employees, affiliates,
      agents and representatives) will testify, consult, cooperate or otherwise
      communicate with any other person concerning any legal proceeding,
      judicial or administrative, against or adverse to Executive, DBMS or an
      affiliate of DBMS, actual or contemplated.  Executive and DBMS
      shall give prompt notice (i.e., no later than five (5) business days
      following receipt) to each other of any such subpoena or investigative
      demand before taking any action in response
  thereto.

            

    

     

    
      
        
        

      

      
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      Employment
Agreement

       

    

    
      	
              10.

            	
              Inventions.  Executive agrees that all inventions
      conceived of or developed by Executive during the term of the Executive’s
      employment with DBMS, whether alone or jointly with others and whether
      during working hours or otherwise, which relate to the business or
      interests of DBMS shall be DBMS’s exclusive property.  Executive
      shall (i) promptly disclose in writing to DBMS each invention related to the business or interests of DBMS that
      is conceived or developed by
      Executive during the term of Executive’s employment with DBMS, (ii) assign
      all rights to such inventions to DBMS and (iii) assist DBMS, at DBMS’s expense, in every way to obtain and protect any patents,
      trademarks or copyrights on such
  inventions.

            

    

     

    
      	
              11.

            	
              Miscellaneous.

            

    

     

    
      	
              11.1.

            	
              Severability.  If
      any provision of this Agreement shall be adjudicated to be invalid, it
      shall not affect the remaining provisions of this Agreement.  In
      addition, if any provision of this Agreement shall be adjudicated to be
      invalid as it relates to the restrictive covenants in Article 8, such
      provision shall be modified automatically to provide for the maximum
      restriction on Executive that is lawful as, for example, by decreasing the
      geographical area or duration of any such
  restriction.

            

    

     

    
      	
              11.2.

            	
              Further
      assurances.  Each of DBMS and Executive agrees, at the
      expense of DBMS, to do such acts and execute such documents as are
      reasonably necessary to implement fully his or its respective covenants
      under this Agreement.

            

    

     

    
      	
              11.3.

            	
              Succession.  This
      Agreement shall extend to and be binding upon Executive and his heirs,
      administrators and executors and upon DBMS and its successors and
      assigns.

            

    

     

    
      	
              11.4.

            	
              Entire agreement;
      waiver.  This Agreement contains the entire and only
      agreement between DBMS and Executive with respect to the subject matter
      hereof.  This Agreement supersedes all prior representations,
      agreements and understandings, whether oral or written, upon the subject
      matter hereof.  All waivers and modifications of this Agreement
      shall be in writing and signed by the party against whom enforcement of
      such waiver or modification is sought.  No waiver or failure or
      delay by either party to enforce a right set forth in this Agreement shall
      operate as a waiver of any term or condition of this Agreement as applied
      to the same or similar circumstances occurring
  thereafter.

            

    

     

    
      
        
        

      

      
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        Employment
Agreement

         

      

    

    
      	
              11.5.

            	
              Governing
      Law.  This Agreement shall be construed and interpreted
      in accordance with the laws of the United States of America and of the
      State of New York, without reference to the internal choice of law rules
      of New York.

            

    

     

    
      	
              11.6.

            	
              Compliance with
      Applicable Laws and Regulations.  This Agreement is to be
      construed, and the compensation provided under this Agreement is to be
      paid, in such manner and at such times as shall comply with all applicable
      laws and regulations, including but not limited to, Internal Revenue Code
      Section 409A and the regulations and guidance promulgated thereunder by
      the U.S. Department of the
Treasury.

            

    

     

    
      	
              11.7.

            	
              Notices.  Any
      notice or other communication required or permitted to be made or given to
      either party pursuant to this Agreement shall be sufficiently made or
      given on the date of mailing if the notice or communication is in writing
      and is delivered by hand or sent to the recipient by nationally recognized
      courier or certified mail, return receipt requested, addressed to the
      intended recipient at his or its address set forth in the preamble to this
      Agreement or to such other address as the recipient shall have designated
      by written notice given to the party providing
  notice.

            

    

     

    
      	
              11.8.

            	
              Arbitration.
      All disputes between the parties to this Agreement shall be resolved by
      arbitration before a single arbitrator in New York, New York, in
      accordance with the commercial arbitration rules of the American
      Arbitration Association.  At any hearing, the parties shall have
      the right to submit argument and evidence, including testimony, by IP
      videoconference.  This agreement to arbitrate, together with any
      proceedings in connection with an arbitration award, shall be governed by
      the Federal Arbitration Act, 9 U.S.C. Sec. 1 et
  seq.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Notwithstanding
      anything to the contrary in Article 11.8, each of the parties shall have
      the right to seek a temporary or preliminary injunction or other
      provisional equitable relief in a court having jurisdiction.  If
      a party files an action requesting provisional relief in a court, such
      party shall make a motion, which motion all the other parties shall join,
      to refer further proceedings (other than any hearing on the imposition or
      lifting of provisional remedies) to arbitration in accordance with this
      Article 11.8.

            

    

     

    
      	
               
      

            	
              (b)

            	
              DBMS
      and Executive agree that any arbitration pursuant to this Agreement may be
      consolidated, before the same arbitrator, with any other arbitration
      pursuant to any employment or corporate governance agreements providing
      for arbitration and to which DBMS or any of its officers, directors or
      shareholders are parties.  In the sound discretion of the
      arbitrator, the issues to be heard may be consolidated or severed for
      purposes of hearing.

            

    

     

    
      	
              11.9.

            	
              Legal
      Fees.  Executive, and his heirs, shall be entitled
      to reasonable attorney’s fees incurred in the successful defense or
      enforcement of any of their rights
hereunder.

            

    

     

    
      	
              11.10.

            	
              Article
      Headings.  The article headings in this Agreement are for
      convenience only and shall not be considered a part of, or modify,
      explain, enlarge, restrict or in any way affect, the construction or
      interpretation of any provisions of this
  Agreement.

            

    

     

    
      
        
        

      

      
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        Employment
Agreement

         

      

    

    
      	
              11.11.

            	
              Counterparts.  This
      Agreement may be executed in counterparts.  Facsimile and
      electronic signatures shall be treated as originals for all purposes of
      this Agreement.

            

    

     

    
      	
              12.

            	
              Condition
      precedent. This Agreement is subject, as a condition precedent, to
      approval by the Company’s Board of Directors. This Agreement shall be
      submitted to the Board at its next regularly-scheduled meeting, which is
      scheduled for June 25, 2009.

            

    

     

    
      	
               
      

            	
              WITNESS
      the signatures of the parties hereto as of the date first written
      above.

            

    

     

    
      
        	 	Diligent Board Member Services,
      Inc.   	 	 	Executive	 
	 	 	 	 	 	 
	By:	
                /s/
      Alessandro Sodi

              	 	 	
                /s/
      Steven P. Ruse

              	 
	 	
                Alessandro
      Sodi 

              	 	 	
                Steven
      P. Ruse

              	 
	 	
                CEO

              	 	 	
                 

              	 

      

    

     

    
      
        
        

      

      
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      Employment
Agreement

       

      SCHEDULE
A:

    

     

    
      	Responsibilities	June 22, 2009 to August 17,
      2009:
	 	 
	 	Advisor
      to President.
	 	 
	Responsibilities	August 17, 2009 and
      thereafter:
	 	 
	 
      	This
      position is subject to the subsequent election by the Board of Directors
      of the Executive as Executive Vice President, Chief Financial
      Officer.  
	 	 
	
              Job
      Title:

            	Executive
      Vice President, Chief Financial Officer
	 	 	 
	
              Function:

            	The
      Chief Financial Officer (CFO) provides both operational and financial
      support to the organization. The CFO supervises the finance unit and is
      the chief financial spokesperson for the organization. The CFO reports
      directly to the President/Chief Executive Officer (CEO) on all strategic
      and tactical matters as they relate to budget management, forecasting
      needs and the securing of new funding.
	 	 
	
              Reports
      to:

            	 	
              President
      & CEO

            
	
               

            	 	
               

            
	

              Accountabilities:

            	●	Assist
      in performing all tasks necessary to achieve the organization's mission
      and help execute staff succession and growth plans.
	 	 	 
	 	●	Train
      the Finance Unit and other staff on raising awareness and knowledge of
      financial management matters.
	 	 	 
	 	●	Work
      with the President/CEO on the strategic vision.
	 	 	 
	 	●	Assist
      the CEO in identifying new funding opportunities.
	 	 	 
	 	●	Provide
      the CEO with an operating budget. Work with the management team to ensure
      success.
	 	 	 
	 	●	Oversee
      the management, coordination and consolidation of all fiscal reporting
      activities for the organization and its subsidiaries including:
      organizational revenue/expense and balance sheet reports.
	 	 	 
	 	●	Working
      with the Company’s Auditors, prepare and file all financial reports
      required by the Securities and Exchange Commission and by the New Zealand
      Exchange.
	 	 	 
	 	●	Oversee
      all purchasing and payroll activity.
	 	 	 
	 	●	Develop
      and maintain systems of internal controls to safeguard financial assets of
      the organization. Oversee the coordination and activities of independent
      auditors ensuring compliance issues are met, and the preparation of the
      annual financial statements is in accordance with U.S.
  GAAP.

    

     

    
      
        
        

      

      
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        Employment
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      	 	●	Attend
      Board meetings after being appointed Financial Director.
	 	 	 
	 	●	Monitor
      banking activities of the organization.
	 	 	 
	 	●	Investigate
      cost-effective benefit plans and other fringe benefits which the
      organization may offer employees and potential employees with the goal of
      attracting and retaining qualified individuals.
	 	 	 
	 	●	Oversee
      the production of monthly reports including financial statements and cash
      flow projections for use by Executive management, as well as the
      Audit/Finance Committee and Board of Directors.
	 	 	 
	 	●	Assist
      in the design, implementation, and timely calculations of wage incentives,
      commissions, and salaries for the staff.
	 	 	 
	 	●	Oversee
      Accounts Payable and Accounts Receivable.
	 	 	 
	 	●	Oversee
      business insurance plans and health care coverage analysis.
	 	 	 
	 	●	Oversee
      all tax reporting activity world wide.
	 	 	 
	 	●	Initiate
      and maintain internal controls as required under Section 404 of Sarbanes
      Oxley.

    

     

    
      
        
        

      

      
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    Employment
Agreement

     

    SCHEDULE
B:

    
       

      Base
Compensation:

      Base
compensation of $210,000 per annum will be paid bi-weekly to the Executive by
Company.

       

      Insurance
Benefits:

      Health
Insurance:  Full family health insurance coverage will be provided to
the Executive as part of, and pursuant to, the terms of the Company’s
contributory health insurance plan.

       

      Disability
and Term Life Insurance:

      There
currently is no disability or term life insurance offered by
Company.

      

      Pension
and Profit Sharing:

      There is
currently no pension or profit sharing plan offered by Company.

       

      Marketing
Expenses:

       

      Vacation:

      The
Executive will be entitled to a minimum of 3 weeks paid vacation per year - plus
public holidays and personal days - as per Company policy.

       

      Stock
Based Compensation/Bonus Program:

      Executive
shall be entitled to participate in the DBMS 2007 Stock Option and Incentive
Plan and any successor plan available to other executives of DBMS (the “Plan”).
Pursuant to the terms and conditions of the Plan, and upon execution by
Executive of a Restricted Stock Agreement substantially similarly to agreements
executed by individuals previously awarded shares of the Company’s common stock,
the Company shall award Executive shares of Company’s common stock upon approval
of this Agreement; as follows:

      

      250,000
shares, on each of August 17, 2009, August 17, 2010 and August 17, 2011, upon
approval of this Agreement by the Company’s Board of Directors, subject to the
Restricted Stock Agreement.

      

      The
Restricted Stock Agreement will provide, among other things, that the shares
will not vest for a period of one year from the award date and until Executive
has paid to the Company the taxes due on such shares at that time.

      

      
        
          
          

        

        
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      Tools:

      Desktop
and laptop computers, cell phones, business cards and office required by
Executive to fulfill his duties in the multiple countries in which Company
operates will be provided by Company as required. All marketing materials will
be provided by Company.

       

      Travel
Expense Reimbursement:

      Executive
shall be entitled to reimbursement of reasonable travel expenses incurred in
connection with travel on behalf of DBMS, upon submission of appropriate
documentation and incurred in accordance with DBMS’s travel expense policy (as
adopted and amended from time to time).

      

      When
traveling internationally, Executive will be paid an additional $250 per day to
cover personal expenses incurred when traveling on behalf of
Company.

      

      Reservation
of Rights:

      Nothing
in this Schedule B shall be deemed to limit the ability of Company to adopt,
amend, revoke or replace any fringe benefit plans or Company policies or from
taking any action in connection therewith that is applied uniformly to all
executive employees of DBMS.Unassociated Document

    EXHIBIT
10.12

     

    DILIGENT
BOARD MEMBER SERVICES, INC.

    2007
STOCK OPTION AND INCENTIVE PLAN

    

    

    Stock
Option Agreement

     

    1.           Grant of
Option.  Diligent Board Member Services, Inc., a Delaware
corporation (the “Company”), hereby grants as of
October 9, 2009 (the “Grant
Date”) to the Optionee named in the Certificate of Stock Option Grant
attached as Exhibit
A (the “Certificate”), an option to
purchase (the “Option”)
the total number of shares subject to the Option (the “Shares”) set forth in the
Certificate at the Grant Price per share set forth in the Certificate subject to
the terms and provisions of this Stock Option Agreement (the “Agreement”) and of the
Certificate and the Diligent Board Member Services, Inc. 2007 Stock Option and
Incentive Plan (the “Plan”), which are incorporated
herein by reference. Unless otherwise defined herein, the terms defined in the
Plan shall have the same defined meanings in this Agreement.  By accepting
the Option, the Optionee (and any person to whom the Option is transferred)
acknowledges that the Plan has been made available to him or her.

     

    If
designated in the Certificate as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option as defined in Code Section 422.
Nevertheless, to the extent the Option causes the aggregate fair market value of
stock with respect to which incentive stock options are exercisable for the
first time by the Optionee to exceed $100,000 (such value to be determined as of
the Grant Date and such determination to be made in accordance with the rule
described in Code Section 422(d) and as provided in Paragraph (C) of Article V
of the Plan), then the Option shall be treated as a Non-Qualified Stock Option
with respect to the Shares whose value exceeds such $100,000
limit.]  If designated in the Certificate as a Non-Qualified Stock
Option, the Option is not intended to qualify as an Incentive Stock Option under
Code Section 422.

     

    The
Company seeks to provide a means by which the Company, through the grant of the
Option to the Optionee, may retain the Optionee’s services and motivate the
Optionee to exert his or her best efforts on behalf of the Company and any
Affiliate.

     

    2.           Terms
and Conditions.

     

    (a)    Grant Expiration
Date.  The Option shall expire on the Grant Expiration Date set
forth in the Certificate (hereinafter the “Grant Expiration
Date”).  The Optionee is responsible for taking any and all actions as
may be required to exercise the Option in a timely manner, and for properly
executing any documents as may be required for the exercise of the Option in
accordance with such rules and procedures established from time to time under
the Plan.  The Company has no duty to notify the Optionee (or any
person to whom the Option is transferred) of the expiration of the
Option.  By accepting the Option, the Optionee (and any person to whom
the Option is transferred) acknowledges that the information regarding the
procedures and requirements for the exercise of the Option has been made
available to him or her.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (b)    Exercise of Option During Continuous
Employment.  Subject to the provisions of this Agreement, the
Option may be exercised by the Optionee in installments as provided in the
Certificate, rounded to the next lowest integer in the case of any fractional
share.

     

    When the
right to exercise any installment accrues, the Shares included in that
installment may be purchased at that time.  To the extent not
exercised, an installment shall accumulate and be exercisable, in whole or in
part, in any subsequent period but not later than the Grant Expiration
Date.

     

    An
exercise of any part of the Option shall be accompanied by a written notice to
the Company as provided in Section 5 of this Agreement and specifying the number
of Shares as to which the Option is being exercised.  Such notice must
be received prior to the Grant Expiration Date.

     

    (c)    Exercise Upon
Termination of Employment.

     

    Death.  In the event
that the Optionee’s Continuous Status as an Employee terminates due to his or
her death, the Option may be exercised by the Optionee’s estate or by any other
person who acquired the Option by reason of the death of the Optionee within the
12 months immediately following his or her death and to the extent that the
Optionee was entitled to exercise the Option at the date of his or her death;
provided, however, that the Option may not be exercised after the Grant
Expiration Date.

     

    Disability.  If the
Optionee’s Continuous Status as an Employee terminates due to his or her
disability (as defined in Code Section 22(e)(3)), the Option may be exercised by
the Optionee within the 12 months immediately following such termination and to
the extent that the Optionee was entitled to exercise the Option at the date of
his or her termination due to his or her disability; provided, however, that the
Option may not be exercised after the Grant Expiration Date.

     

    Other Termination of
Relationship.  If the Optionee’s Continuous Status as an Employee
terminates other than by death or due to disability or other than involuntarily
for cause, the Optionee’s right to exercise the Option may be exercised within
the three month period immediately following such termination and to the extent
that the Optionee was entitled to exercise the Option at the date of his or her
termination; provided, however, that the Option may not be exercised after the
Grant Expiration Date.

     

    If the
Optionee’s Continuous Status as an Employee is involuntarily terminated for
cause, the Optionee’s right to exercise the Option shall immediately terminate
and any then unexercised portion of the Option shall be immediately
canceled.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    For
purposes of this Agreement, the term “cause” shall mean, with respect to any
Optionee, (a) cause as defined in the employment agreement with the Company
or any subsidiary thereof to which the Optionee is a party or, if none, (b) the
occurrence of any of the following events:

     

    (i)           the
willful and continued failure by the Optionee to substantially perform his or
her duties with the Company or any subsidiary thereof on a full-time basis
(other than any such failure resulting from total or partial incapacity due to
physical or mental illness) after a written demand for substantial performance
is delivered to the Optionee by the Board, which demand identifies the manner in
which the Board believes that he or she has not substantially performed such
duties;

     

    (ii)           the
willful engaging by the Optionee in conduct which is significantly injurious to
the Company or to any subsidiary of the Company, monetarily or otherwise, after
a written demand for cessation of such conduct is delivered to the Optionee by
the Board, which demand specifically identifies the manner in which the Board
believes that the Optionee has engaged in such conduct and the injury to the
Company or to a subsidiary of the Company resulting therefrom;

     

    (iii)           the
commission by the Optionee of an act or acts constituting a crime involving
moral turpitude;

     

    (iv)           the
breach by the Optionee of one or more covenants, if any, in an agreement to
which the Optionee and the Company are parties;

     

    (v)           violation
by the Optionee of Company policy; or

     

    (vi)           the
commission by the Optionee of a significant act of dishonesty, deceit or breach
of fiduciary duty in the performance of the Optionee’s duties with the Company
or with any subsidiary of the Company.

     

    For
purposes of clauses (i) and (ii) of this definition, no act, or failure to act,
on the part of an Optionee shall be deemed to be willful unless knowingly done,
or omitted to be done, by the Optionee not in good faith and without a
reasonable belief that such action or omission was in the best interests of the
Company or of a subsidiary of the Company.

     

    (d)    Payment of Grant Price Upon
Exercise.  At the time of any purchase of Shares under the Option,
the Grant Price for such Shares as set forth in the Certificate shall be paid by
the Optionee in full to the Company.  The Optionee may pay the Grant Price
in whole or in part in cash or by check made payable to the Company and/or the
Optionee may authorize a third party to sell a sufficient portion of the Shares
acquired upon the exercise of the Option and remit to the Company the portion of
the sale proceeds sufficient to pay the Grant Price and any tax withholding
resulting from such exercise that is not paid by the Optionee in cash or by
check.  No exercise shall be effective unless and until the Optionee
has paid the Grant price for the shares and all withholding tax which is
due.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    (e)    Sale of Shares.  To
the extent this grant is an Incentive Stock Option, Optionee may not sell the
shares resulting from the exercise of such Option before two years following the
Grant Date and one year after exercise of the Option.  If Optionee
does not comply with this requirement, then the favorable tax treatment for
Incentive Stock Options will not apply to such sale.

     

    (f)    Nontransferability.  The
Option shall not be transferable other than by a will of the Optionee or by the
laws of descent and distribution, and shall be exercisable during the lifetime
of the Optionee only by the Optionee or his attorney-in-fact or conservator,
unless the Option is an Incentive Stock Option and such exercise by the
attorney-in-fact or the conservator of the Optionee would disqualify the Option
as such under Code Section 422. 

     

    (g)    Adjustments in Event of Change in
Common Stock.  If any change is made in the Shares subject to the
Option, without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Option will be appropriately adjusted in the class(es) and number
of shares and price per share of stock of those subject Shares in such manner as
the Board may deem equitable to prevent substantial dilution or enlargement of
the rights granted to the Optionee; provided, however, that no such adjustment
shall cause the Company to issue a fractional share under the Option.  Such
adjustments shall be final, binding and conclusive.  (The conversion of any
convertible securities of the Company shall not be treated as a transaction not
involving the receipt of consideration by the Company.) 

     

    (h)    No Rights as a
Shareholder.  The Optionee shall have no rights as a shareholder
with respect to any Shares subject to the Option prior to the date of issuance
to him or her of a certificate or certificates for such Shares.

     

    (i)    No Rights to Continued
Relationship.  The Option shall not confer upon the Optionee any
right with respect to continuance of employment by the Company or by an
Affiliate, nor shall it interfere in any way with the right of his or her
employer to terminate his or her employment at any time.

     

    The
Option shall not confer upon the Optionee any right with respect to continuance
of a directorship of the Company or of an Affiliate, nor shall it interfere in
any way with the right of the shareholders to remove him or her as a director at
any time.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    The
Option shall not confer upon the Optionee any right with respect to continuance
of any consulting arrangement with the Company or any Affiliate, nor shall it
interfere in any way with the right of the Company or an Affiliate, as the case
may be, to terminate any such arrangement.

     

    (j)    Sale of the Company.  In
the event of a dissolution, liquidation or sale of all or substantially all of
the assets of the Company, or that the Company is not the surviving corporation
in any merger, consolidation, or reorganization, then the Option shall be
canceled as of the effective date of such transaction; provided, however, the
Board shall give at least 30 days’ prior written notice of the transaction to
the Optionee and during the period beginning with the date the Optionee receives
the notice and ending on the date of the transaction, the Optionee shall have
the right to exercise all or any part of the unexercised portion of the Option
(without regard to employment requirements or any installment exercise
limitations) (the “Accelerated
Amount”); provided further that no part of the Option may be exercised
after the Grant Expiration Date.  If the Option is an Incentive Stock
Option, the Accelerated Amount under this Section shall remain exercisable as an
Incentive Stock Option under Code Section 422 only to the extent that the
$100,000 dollar limitation of Code Section 422(d) is not exceeded.  To the
extent that such dollar limitation is exceeded, the remaining Accelerated Amount
shall be exercisable as a Non-Qualified Stock Option.

     

    (k)    Compliance with Other Laws and
Regulations.  The Option and the obligation of the Company to sell
and deliver Shares hereunder, shall be subject to all applicable federal and
state laws, rules, and regulations, and to such approvals by any government or
regulatory agency as may be required.  The Company shall not be required to
issue or deliver any certificates for Shares prior to the completion of any
registration or qualification of such Shares under any federal or state law, or
any rule or regulation of any governmental body which the Company shall, in its
sole discretion, determine to be necessary or advisable.

     

    Optionee must comply with applicable
securities laws in both the exercise of the Stock Options and the sale of the
underlying stock.

     

    To the extent applicable, it is
intended that this Agreement and the Plan comply with the provisions of Section
409A of the Code.  This Agreement and the Plan shall be administered
in a manner consistent with this intent, and any provision that would cause this
Agreement or the Plan to fail to satisfy Section 409A of the Code shall have no
force or effect until amended to comply with Section 409A of the Code (which
amendment may be retroactive to the extent permitted by Section 409A of the Code
and may be made by the Company without the consent of the
Optionee).

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    (l)    Withholding Taxes.  The
Optionee agrees to make appropriate arrangements with the Company or Affiliate,
as the case may be, for the satisfaction of all federal, state and local income
and employment tax withholding requirements applicable to the exercise of the
Option at the time of such exercise.  No Shares will be delivered
pursuant to the exercise of the Option until the Optionee, or any other person
to whom the Option is transferred, has made acceptable arrangements for these
withholding requirements.

     

    3.           Investment
Representation.  The Company may require that the Optionee furnish
to the Company, as a condition of exercising or acquiring Shares underlying the
Option, (a) written assurances satisfactory to the Company, or counsel for
the Company, as to the Optionee’s knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company, or counsel for the Company, who is knowledgeable
and experienced in financial and business matters, and that he or she is capable
of evaluating, alone or together with the purchaser representative, the merits
and risks of exercising the Option; and (b) written assurances satisfactory
to the Company, or counsel for the Company, stating that the Optionee is
acquiring the stock subject to the Option for the Optionee’s own account and not
with any present intention of selling or otherwise distributing the stock
underlying the Option.  The Company may (a) restrict the
transferability of the Shares underlying the Option and require a legend to be
endorsed on the certificates representing such Shares, as appropriate to reflect
resale restrictions, if any, imposed by the Board pursuant to the Option when
granted, or as appropriate to comply with any applicable state or federal
securities laws, rules or regulations; and (b) condition the exercise of
the Option or the issuance and delivery of the Shares underlying the Option upon
the listing, registration or qualification of such Shares upon a securities
exchange or quotation system or under applicable securities laws.  The
foregoing requirements, and any assurances given pursuant to such requirements,
shall be inoperative if (a) the issuance of Shares upon the exercise of the
Option has been registered under a then currently effective registration
statement under the Securities Act, or (b) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws.  The Company may, upon advice of counsel to the Company,
place legends on stock certificates issued under the Option as such counsel
deems necessary or appropriate in order to comply with applicable securities
laws, including, but not limited to, legends restricting the transfer of the
stock.

     

    4.           Optionee Bound by the
Plan.  The Optionee agrees to be bound by all the terms and
provisions of the Plan.  To the extent that the terms of this Agreement are
inconsistent with the terms of the Plan, the terms of the Plan shall
govern.  The captions used in the Certificate, this Agreement, and the Plan
are inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.

     

    This
Agreement, the Certificate, and the Plan shall be construed in accordance with
the laws of the State of Delaware, without regard to the conflict of laws
principles. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    5.           Notices.  Any notice to
the Company or the Board that is required to be made under the terms of the
Agreement or under the terms of the Plan shall be addressed to the Company in
care of its president at 39 West 37th Street,
8th Floor, New York, New York 10018.  Any notice that is required to
be made to the Optionee under the terms of the Agreement or under the terms of
the Plan shall be addressed to him or her at the address indicated in the
Certificate unless the Optionee notifies the Company of his or her address
change in writing as provided in this Section 5 in which case the notice shall
be addressed to the Optionee at his or her new address.  A notice under
this Section 5 shall be deemed to have been given or delivered upon personal
delivery or upon deposit in the United States mail, by registered or certified
mail, postage prepaid and properly addressed as provided in this
Section.

     

    * * * *
*

    

    IN
WITNESS WHEREOF, the parties have entered into this Agreement effective as of
the Grant Date.

     

    
      
        	 	

                Company

                Diligent
      Board Member Services, Inc.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	Name:	Alex
      Sodi	 
	 	Title:	President
      and Chief Executive Officer	 
	 	 	 	 

      

    

    

      
        	 	

                Grantee/Optionee

              	 
	 	 	 	 
	
                 

              	
                 

              	 	 
	 	Name:	 	 
	 	Title:	President
      and Chief Executive Officer	 
	 	 	 	 

      

    

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Exhibit
A

     

    CERTIFICATE
FOR

    Grant
Date:

    
 

    Type of
Option:  Incentive Stock
Option

     

    Grant/ Exercise
Price:

    

    Total
Shares Granted:

     

    Grant
Expiration Date:

     

    Vesting
Schedule:  The Options shall vest and shall no longer be
subject to substantially risk of forfeiture in accordance with the following
schedule:

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