Document:

EX-4.2

 Exhibit 4.2 

EXECUTION VERSION 
  

NAVIENT CORPORATION, 

as Company, 
 and

 THE BANK OF NEW YORK MELLON, 

as Trustee 
  

 
 FIRST
SUPPLEMENTAL INDENTURE 
 Dated as of November 6, 2014 

to 
 INDENTURE 

Dated as of July 18, 2014 
  

 
 5.000% Senior
Notes due 2020 
 5.875% Senior Notes due 2024 

 TABLE OF CONTENTS 

 

							
	 	 	 	  	Page	 
		
	ARTICLE 1.	  			
		
	DEFINITIONS	  			
			
	Section 1.1.	 	 Definition of Terms
	  	 	2	  
		
	ARTICLE 2.	  			
		
	GENERAL TERMS AND CONDITIONS OF THE SENIOR NOTES	  			
			
	Section 2.1.	 	 Designation and Principal Amount
	  	 	4	  
	Section 2.2.	 	 Maturity
	  	 	4	  
	Section 2.3.	 	 Further Issues
	  	 	4	  
	Section 2.4.	 	 Form of Payment
	  	 	4	  
	Section 2.5.	 	 Global Securities
	  	 	5	  
	Section 2.6.	 	 Interest
	  	 	5	  
	Section 2.7.	 	 Authorized Denominations
	  	 	5	  
	Section 2.8.	 	 Redemption
	  	 	5	  
	Section 2.9.	 	 Repurchase Upon Change of Control.
	  	 	5	  
	Section 2.10.	 	 Appointment of Agents
	  	 	7	  
		
	ARTICLE 3.	  			
		
	FORM OF NOTES	  			
			
	Section 3.1.	 	 Form of Senior Notes
	  	 	8	  
		
	ARTICLE 4.	  			
		
	ORIGINAL ISSUE OF NOTES	  			
			
	Section 4.1.	 	 Original Issue of Senior Notes
	  	 	8	  
		
	ARTICLE 5.	  			
		
	MISCELLANEOUS	  			
			
	Section 5.1.	 	 Ratification of Indenture
	  	 	8	  
	Section 5.2.	 	 Trustee Not Responsible for Recitals
	  	 	8	  
	Section 5.3.	 	 Governing Law
	  	 	8	  
	Section 5.4.	 	 Separability
	  	 	8	  
	Section 5.5.	 	 Counterparts
	  	 	8	  
		
	EXHIBIT A – Form of 2020 Senior Notes	  	 	A-1	  
	EXHIBIT B – Form of 2024 Senior Notes	  	 	B-1	  

  
 i 

 FIRST SUPPLEMENTAL INDENTURE, dated as of November 6, 2014 (this
“Supplemental Indenture”), between Navient Corporation, a Delaware corporation (the “Company”), and The Bank of New York Mellon, a New York banking corporation, as trustee (the “Trustee”). 

WHEREAS, the Company and the Trustee executed and delivered the base indenture, dated as of July 18, 2014 (the “Base
Indenture”, as supplemented by this Supplemental Indenture, the “Indenture”), to provide for the issuance of the Company’s debt securities (the “Securities”), to be issued in one or more series; 

WHEREAS, pursuant to the terms of the Base Indenture, the Company desires to provide for the establishment of two new series of its
notes under the Base Indenture to be known as its “5.000% Senior Notes due 2020” and its “5.875% Senior Notes due 2024” (each a series of notes, and collectively, the “Senior Notes”), the form and substance and the
terms, provisions and conditions thereof to be set forth as provided in the Base Indenture and this Supplemental Indenture; 

WHEREAS, the Board of Directors of the Company pursuant to resolutions duly adopted on July 10, 2014, have duly authorized
the issuance of the Senior Notes and has authorized the proper officers of the Company to execute any and all appropriate documents necessary or appropriate to effect each such issuance; 

WHEREAS, the Company and Navient, LLC, entered into an Agreement and Plan of Merger on October 16, 2014, pursuant to which
Navient, LLC merged with and into the Company, with the Company as the surviving corporation (the “Merger”); 

WHEREAS, as a result of the Merger, the Company assumed Navient, LLC’s obligations under an indenture, dated
October 1, 2000 and an amended and restated indenture, dated April 25, 2006; 
 WHEREAS, this Supplemental Indenture
is being entered into pursuant to the provisions of Section 14.01 of the Base Indenture; 
 WHEREAS, the Company has
requested and hereby requests that the Trustee execute and deliver this Supplemental Indenture; and 
 WHEREAS, all things
necessary to make this Supplemental Indenture a valid and legally binding agreement of the Company, in accordance with its terms, and to make the Senior Notes, when executed by the Company and authenticated and delivered by the Trustee, the valid
and legally binding obligations of the Company, have been performed, and the execution and delivery of this Supplemental Indenture has been duly authorized in all respects; 

NOW THEREFORE, in consideration of the premises and the purchase and acceptance of the Senior Notes by the Holders thereof, and
for the purpose of setting forth, as provided in the Base Indenture, the forms and terms of the Senior Notes, the Company covenants and agrees, with the Trustee, as follows: 

 ARTICLE 1. 

DEFINITIONS 

Section 1.1. Definition of Terms. Unless the context otherwise requires: 

(a) each term defined in the Base Indenture has the same meaning when used in this Supplemental Indenture; 

(b) the singular includes the plural and vice versa; and 

(c) headings are for convenience of reference only and do not affect interpretation. 

(d) a reference to a Section or Article is to a Section or Article of this Supplemental Indenture unless otherwise indicated. 

(e) The following terms have the meanings given to them in this Section 1.1(e): 

(i) “Board of Directors” means the board of directors or comparable governing body of the Company; provided that if
the Company is a wholly-owned subsidiary of another person, the Board of Directors means the board of directors or comparable governing body of such person. 

(ii) “Change of Control” means the occurrence of any of the following: (1) direct or indirect sale, transfer,
conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its subsidiaries taken as a whole to any
“person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than to the Company or one of its subsidiaries; (2) the consummation of any transaction (including, without limitation, any merger or consolidation)
the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than the Company or one of its subsidiaries becomes the beneficial owner, directly or indirectly, of more than 50% of the
then-outstanding number of shares of the Company’s voting stock; (3) the Company consolidates with, or merges with or into, any “person” (as that term is used in Section 13(d)(3) of the Exchange Act), or any
“person” (as that term is used in Section 13(d)(3) of the Exchange Act) consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding voting stock of the Company or
such other “person” (as that term is used in Section 13(d)(3) of the Exchange Act) is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the voting stock of the
Company outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the voting stock of the surviving “person” (as that term is used in Section 13(d)(3) of the Exchange Act)
immediately after giving effect to such transaction; (4) the first day on which a majority of the members of the Company’s Board of Directors are not Continuing Directors; or (5) the adoption of a plan relating to the liquidation or
dissolution of the Company; provided, however, that a transaction will not 

  
 2 

 
be deemed to involve a Change of Control if (A) the Company becomes a wholly owned subsidiary of a holding company and (B) the holders of the voting stock of such holding company
immediately following that transaction are substantially the same as the holders of the Company’s voting stock immediately prior to that transaction. For purposes of this definition, “voting stock” means capital stock or other equity
interests of any class or kind the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of the Company, even if the right to vote has been
suspended by the happening of such a contingency. 
 (iii) “Change of Control Triggering Event” means the
occurrence of both (i) a Change of Control and (ii) a Ratings Downgrade Event. 
 (iv) “Continuing
Directors” means, as of any date of determination, any member of the Board of Directors of the Company who (1) was a member of the Board of Directors of the Company on the date of the issuance of the Senior Notes; or (2) was nominated
for election or elected to the Board of Directors of the Company with the approval of a majority of the Continuing Directors who were members of such Board of Directors of the Company at the time of such nomination or election (either by specific
vote or by approval of the Company’s proxy statement in which such member was named as a nominee for election as a director). 

(v) “DTC” shall have the meaning assigned to it in Section 2.5. 

(vi) “Fitch” means Fitch, Inc., also known as Fitch Ratings. 

(vii) “Investment Grade Rating” means a rating by Moody’s equal to or higher than Baa3 (or the equivalent under
a successor rating category of Moody’s), a rating by S&P equal to or higher than BBB- (or the equivalent under any successor rating category of S&P), a rating by Fitch equal to or higher than BBB- (or the equivalent under any successor
rating category of Fitch), and the equivalent investment grade credit rating from any replacement rating agency or rating agencies selected by the Company under the circumstances permitting the Company to select a replacement agency and in the
manner for selecting a replacement agency, in each case as set forth in the definition of “Rating Agencies”. 

(viii) “Moody’s” means Moody’s Investors Service, Inc. 

(ix) “Rating Agencies” means (1) Moody’s, S&P and Fitch; and (2) if any or all of Moody’s,
S&P or Fitch ceases to rate the Senior Notes or fails to make a rating of the Senior Notes publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” within the
meaning of Section 3(a)(62) under the Exchange Act, that the Company selects (pursuant to a resolution of the Company’s Board of Directors) as a replacement agency for any of Moody’s, S&P or Fitch, or all of them, as the case may
be. 

  
 3 

 (x) “Ratings Downgrade Event” means, on any date during the Trigger
Period, the Senior Notes being downgraded by at least one modifier (a modifier being plus, neutral or minus for S&P or Fitch, 1, 2 or 3 for Moody’s and a similar modifier by any other Rating Agency) by any two of the three Rating Agencies
from the rating on the Senior Notes by each such Rating Agency on the date prior to the first day of the Trigger Period; provided that no Ratings Downgrade Event shall be deemed to occur, if either (i) the rating on the Senior Notes by each
Rating Agency that downgraded its rating is an Investment Grade Rating after the downgrade or (ii) in respect of a particular Change of Control, the Rating Agency or Agencies (as applicable) that downgraded the Senior Notes announce or confirm
or inform the Trustee in writing that the reduction was not the result, in whole or in part, of any event or circumstance comprised of, or arising as a result of, or in respect of, the applicable Change of Control. 

(xi) “S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business. 
 (xii) “Trigger Period” means the period commencing one day prior to the first public
announcement by the Company of a Change of Control or an arrangement that could result in a Change of Control and ending 60 days following consummation of the Change of Control (which period will be extended following consummation of a Change of
Control for so long as the rating of the Senior Notes is under announced consideration for possible downgrade by any of the Rating Agencies as the result, in whole or in part, of any event or circumstance comprised of, or arising as a result of, or
in respect of, the applicable Change of Control). 
 ARTICLE 2. 

GENERAL TERMS AND CONDITIONS OF THE SENIOR NOTES 

Section 2.1. Designation and Principal Amount. There is hereby authorized and established two new series of Securities under the
Base Indenture, designated as the “5.000% Senior Notes due 2020” (the “2020 Senior Notes”), and the “5.875% Senior Notes due 2024” (the “2024 Senior Notes”), neither of which is limited in aggregate principal
amount. The initial aggregate principal amount of the 2020 Senior Notes and 2024 Senior Notes to be issued under this Supplemental Indenture shall be limited to $500,000,000 and $500,000,000, respectively. Any additional amounts of each series to be
issued shall be set forth in a Company Order. 
 Section 2.2. Maturity. The stated maturity of principal for the 2020 Senior
Notes and the 2024 Senior Notes will be October 26, 2020 and October 25, 2024, respectively. 
 Section 2.3. Further
Issues. The Company may from time to time, without the consent of the Holders of a series of the Senior Notes, issue additional notes of such series. Any such additional notes will have the same ranking, interest rate, maturity date and other
terms as the series of Senior Notes. Any such additional notes, together with the series of Senior Notes herein provided for, will constitute a single series of Securities under the Indenture. 

Section 2.4. Form of Payment. Principal of, premium, if any, and interest on the Senior Notes shall be payable in U.S. dollars.

  
 4 

 Section 2.5. Global Securities. Upon the original issuance, the Senior Notes will be
represented by two or more Global Securities. The Company will issue the Senior Notes in denominations of $2,000 and in integral multiples of $1,000 in excess thereof and will deposit the Global Securities with the Trustee as custodian for The
Depository Trust Company (“DTC”), in New York, New York, and register the Global Securities in the name of DTC or its nominee. 

Section 2.6. Interest. 

The 2020 Senior Notes will bear interest (computed on the basis of a 360-day year consisting of twelve 30-day months) from November 6,
2014 at the rate of 5.000% per annum, payable semiannually in arrears; interest payable on each Interest Payment Date will include interest accrued from November 6, 2014, or from the most recent Interest Payment Date to which interest has
been paid or duly provided for; the Interest Payment Dates on which such interest shall be payable are April 26 and October 26, commencing on April 26, 2015; and the record date for the interest payable on any Interest Payment Date is
the close of business on the Business Day immediately preceding the relevant Interest Payment Date. 
 The 2024 Senior Notes will bear
interest (computed on the basis of a 360-day year consisting of twelve 30-day months) from November 6, 2014 at the rate of 5.875% per annum, payable semiannually in arrears; interest payable on each Interest Payment Date will include
interest accrued from November 6, 2014, or from the most recent Interest Payment Date to which interest has been paid or duly provided for; the Interest Payment Dates on which such interest shall be payable are April 25 and
October 25, commencing on April 25, 2015; and the record date for the interest payable on any Interest Payment Date is the close of business on the Business Day immediately preceding the relevant Interest Payment Date. 

Section 2.7. Authorized Denominations. The Senior Notes shall be issuable in denominations of $2,000 and in integral multiples of
$1,000 in excess thereof. 
 Section 2.8. Redemption. The 2020 Senior Notes and 2024 Senior Notes are subject to redemption at
the option of the Company as set forth in the forms of Senior Notes attached hereto as Exhibits A and B, respectively. 
 Section 2.9.
Repurchase Upon Change of Control. 
 (a) If a Change of Control Triggering Event occurs, unless the Company has exercised its right,
if any, to redeem the Senior Notes in full, the Company shall offer (the “Change of Control Offer”) to repurchase any and all of each Holder’s Senior Notes (equal to $2,000 or an integral multiple of $1,000 above that amount) at a
repurchase price in cash equal to 101% of the aggregate principal amount of the Senior Notes repurchased plus accrued and unpaid interest, if any, to, but not including, the date of repurchase (the “Change of Control Payment”). Within 30
days following any Change of Control Triggering Event, the Company shall be required to mail a notice to each Holder of the Senior Notes to the address of such Holder appearing in the Registrar, with a copy to the Trustee or otherwise in accordance
with the procedures of DTC, describing the transaction or transactions that constitute the Change of Control Triggering Event and offering to repurchase such Senior Notes on the date specified in the notice, which date will be no less than 30 days
and no more than 60 days from the date such notice is mailed (the “Change of Control Payment Date”), with the following information: 

  
 5 

 (i) a Change of Control Offer is being made pursuant to this Section 2.9 and
that all Senior Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment; 
 (ii) the
repurchase price and the Change of Control Payment Date; 
 (iii) any Senior Note not properly tendered will remain
outstanding and continue to accrue interest; 
 (iv) unless the Company defaults in the payment of the Change of Control
Payment, all Senior Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on, but not including, the Change of Control Payment Date; 

(v) Holders electing to have any Senior Notes repurchased pursuant to a Change of Control Offer will be required to surrender
such Senior Notes, in the form set forth in Exhibit A entitled “Option of Holder to Elect Purchase”, on the reverse of such Senior Notes completed, to the Paying Agent specified in the notice at the address specified in the notice prior to
the close of business on the third business day preceding the Change of Control Payment Date; 
 (vi) Holders will be
entitled to withdraw their tendered Senior Notes and their election to require the Company to repurchase such Senior Notes, provided that the Paying Agent receives, not later than the close of business on the last day of the Change of Control Offer
period, a facsimile transmission, an email or a letter setting forth the name of the Holder of Senior Notes, the principal amount of Senior Notes tendered for repurchase, and a statement that such Holder is withdrawing his tendered Senior Notes and
his election to have such Senior Notes repurchased; 
 (vii) if such notice is mailed prior to the occurrence of a Change of
Control, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control; and 
 (viii)
that Holders whose Senior Notes are being repurchased only in part will be issued new Senior Notes equal in principal amount to the unpurchased portion of the Senior Notes surrendered, which unpurchased portion must be equal to $2,000 in principal
amount or an integral multiple of $1,000 in excess thereof. 
 (b) While the Senior Notes are in global form and the Company makes an offer
to repurchase all of the Senior Notes pursuant to the Change of Control Offer, a Holder may exercise its option to elect for the repurchase of the Senior Notes through the facilities of DTC, Euroclear and Clearstream, subject to their rules and
regulations. 
 (c) The Company shall not be required to make a Change of Control Offer upon the occurrence of a Change of Control Triggering
Event if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Supplemental Indenture applicable to a Change of Control Offer made by the Company and
the third party repurchases on the applicable date all Senior Notes 

  
 6 

 
properly tendered and not withdrawn under such Change of Control Offer, provided that a failure by such third party to comply with the requirements of such Change of Control Offer and to complete
such Change of Control Offer shall be treated as a failure by the Company to comply with its obligations to offer to repurchase the Senior Notes unless the Company promptly makes an offer to repurchase the Senior Notes at 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to, but not including the date of repurchase, which shall be no later than 30 days after the third party’s scheduled Change of Control Payment Date, or (2) a notice of redemption has
been given pursuant to the Indenture as described under Section 4.03 of the Base Indenture, unless and until there is a default in payment of the applicable redemption price. Notwithstanding anything to the contrary herein, a Change of Control
Offer may be made in advance of a Change of Control, conditional upon such Change of Control. 
 (d) The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Senior Notes as a result of a Change of Control
Triggering Event. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control repurchase provisions of this Supplemental Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under Section 2.9 of this Supplemental Indenture by virtue thereof. 

(e) On the Change of Control Payment Date, the Company shall, to the extent permitted by law, 

(i) accept or cause a third party to accept for payment all Senior Notes properly tendered pursuant to the Change of Control
Offer; 
 (ii) deposit or cause a third party to deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Senior Notes properly tendered; and 
 (iii) deliver or cause to be delivered to the Trustee the
Senior Notes properly accepted, together with an Officers’ Certificate stating the principal amount of Senior Notes being repurchased. 

(f) The Paying Agent shall promptly mail to each Holder of Senior Notes the Change of Control Payment for such Senior Notes. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. 

Section 2.10. Appointment of Agents. The Trustee will initially be the Security Registrar and Paying Agent for the Senior Notes.

  
 7 

 ARTICLE 3. 

FORM OF NOTES 

Section 3.1. Form of Senior Notes. The 2020 Senior Notes and 2024 Senior Notes, and the Trustee’s Certificate of
Authentication to be endorsed thereon, are to be substantially in the form set forth in Exhibits A and B, respectively, hereto. 
 ARTICLE
4. 
 ORIGINAL ISSUE OF NOTES 

Section 4.1. Original Issue of Senior Notes. The 2020 Senior Notes and 2024 Senior Notes may, upon execution of this Supplemental
Indenture, be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall, upon Company order, authenticate and deliver such Senior Notes as in such Company order provided. 

ARTICLE 5. 

MISCELLANEOUS 

Section 5.1. Ratification of Indenture. The Base Indenture, as supplemented by this Supplemental Indenture, is in all respects
ratified and confirmed, and this Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and therein provided; provided that the provisions of this Supplemental Indenture apply solely with respect to
the Senior Notes. 
 Section 5.2. Trustee Not Responsible for Recitals. The recitals and statements herein contained are made by
the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture. 

Section 5.3. Governing Law. This Supplemental Indenture and each Senior Note shall be deemed to be contracts made under the law of
the State of New York, and for all purposes shall be governed by and construed in accordance with the law of said State. 

Section 5.4. Separability. In case any provision in the Indenture or in the Senior Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 

Section 5.5. Counterparts. This Supplemental Indenture may be executed in any number of counterparts each of which shall be an
original; but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and
delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture and signature pages for all purposes. 

  
 8 

 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed, all as of the day and year first above written. 
  

			
	NAVIENT CORPORATION, as Company
		
	By:	 	 /s/ Stephen J. O’Connell

		 	Name: Stephen J. O’Connell
		 	Title: Senior Vice President and Treasurer
	
	THE BANK OF NEW YORK MELLON, as Trustee
		
	By:	 	 /s/ Laurence J. O’Brien

		 	Name: Laurence J. O’Brien
		 	Title: Vice President

 EXHIBIT A 

[FORM OF FACE OF SECURITY] 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

  
 A-1 

 CUSIP No. 63938CAA6 

NAVIENT CORPORATION 

5.000% SENIOR NOTES DUE 2020 
  

			
	No.	  	$
		  	 As revised by the

Schedule of Increases
 or Decreases in

Global Security
 attached hereto

 Interest. Navient Corporation, a Delaware corporation (herein called the “Company”, which
term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum
of                     dollars
($                     ), as revised by the Schedule of Increases or Decreases in Global Security attached hereto, on October 26, 2020 and to
pay interest thereon from November 6, 2014 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on April 26 and October 26 in each year, commencing April 26,
2015 at the rate of 5.000% per annum, until the principal hereof is paid or made available for payment. 
 Method of
Payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on the Record Date for such interest, which shall be the Business Day immediately preceding the relevant Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice thereof having been given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, all as more fully provided in said Indenture. Payment of the principal of (and
premium, if any) and any such interest on this Security will be made at the Corporate Trust Office in U.S. Dollars. 
 Reference is
hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. 

Authentication. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by
manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.  

  
 A-2 

 IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized
officer. 
                     , 2014 

 

			
	NAVIENT CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

Dated: 
 THE BANK OF NEW YORK MELLON 

as Trustee, certifies 

that this is one of 

the Securities referred 

to in the Indenture. 
  

			
	By:	 	  

		 	Authorized Signatory

  
 A-3 

 [FORM OF REVERSE OF SECURITY] 

Indenture. This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”),
issued and to be issued in one or more series under an Indenture, dated as of July 18, 2014, among Navient Corporation (the “Company”) and The Bank of New York Mellon, as trustee (herein called the “Trustee”, which term
includes any successor trustee under the Indenture), as supplemented and amended by the First Supplemental Indenture, dated November 6, 2014 (as so supplemented, herein called the “Indenture”), between the Company and the Trustee, to
which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, initially limited in aggregate principal amount to
$                    . 

Optional Redemption. The Securities of this series are subject to redemption at the Company’s option, at any time and from time to
time, in whole or in part, at a Redemption Price equal to the greater of (i) 100% of the principal amount to be redeemed plus accrued and unpaid interest thereon to the Redemption Date, and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest on the Securities to be redeemed (exclusive of interest accrued to the Redemption Date) discounted to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30
day months) at the applicable Treasury Rate (as defined below) plus 50 basis points plus accrued and unpaid interest on the principal amount being redeemed to the Redemption Date. 

For purposes of determining the optional redemption price, the following definitions are applicable: 

“Treasury Rate” means, with respect to any Redemption Date for the Securities, the rate per annum equal to the semi-annual
equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury
Price for such Redemption Date. 
 The Treasury Rate will be calculated on the third business day preceding the Redemption Date. 

“Comparable Treasury Issue” means the U.S. Treasury security or securities selected by an Independent Investment Banker as having an
actual or interpolated maturity comparable to the remaining term of the Securities that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining terms of the Securities. 
 “Comparable Treasury Price” means, with respect to any Redemption Date: 

(a) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest Reference
Treasury Dealer Quotations, or 

  
 A-4 

 (b) if the Independent Investment Banker is unable to obtain at least four such Reference
Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations obtained by the Independent Investment Banker. 

“Independent Investment Banker” means J.P. Morgan Securities LLC and Credit Suisse Securities (USA) LLC, as specified by the
Company, or if these firms are unwilling or unable to select the applicable Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company. 

‘‘Reference Treasury Dealer’’ means J.P. Morgan Securities LLC and Credit Suisse Securities (USA) LLC (and their
respective successors) plus two others or their affiliates which are primary U.S. government securities dealers (each a “Primary Treasury Dealer”), provided however, that if any of the foregoing shall cease to be a Primary Treasury Dealer,
the Company will substitute therefor another Primary Treasury Dealer. 
 “Reference Treasury Dealer Quotations” means, with
respect to each Reference Treasury Dealer and any Redemption Date for the Securities, an average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue for the Securities (expressed in each
case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such redemption date. 

Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each registered holder of
Securities to be redeemed. Unless the Company defaults in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the Securities or portions of the Securities called for redemption. If fewer than all of
the Securities are to be redeemed, the Trustee will select, not more than 60 days prior to the redemption date, the particular Securities or portions thereof for redemption from the outstanding Securities not previously called by such method as the
Trustee deems fair and appropriate. 
 Defaults and Remedies. If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. 

Repurchase Upon a Change of Control. Upon the occurrence of a Change of Control Triggering Event, the Holders of the Securities will
have the right to require that the Company purchase such Holder’s outstanding Securities, in whole or in part, at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the
date of purchase. 
 Amendment, Modification and Waiver. The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of a 

  
 A-5 

 
majority in aggregate principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. 

Restrictive Covenants. The Indenture does not limit the issuance of debt of the Company or any of its Subsidiaries. 

Denominations, Transfer and Exchange. The Securities of this series are issuable only in registered form without coupons in
denominations of $2,000 and in integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of
Securities of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. 
 As provided in the
Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the Registrar accompanied by a written request for
transfer in form satisfactory to the Company and the Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated transferee or transferees. 
 No service charge shall be made for
any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. 

Persons Deemed Owners. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary. 
 Miscellaneous. The Indenture and this Security shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflicts of law rules of said State. 
 All terms used in this Security and not
defined herein shall have the meanings assigned to them in the Indenture. 

  
 A-6 

 OPTION OF HOLDER TO ELECT PURCHASE 

If you want to elect to have this Security repurchased by the Company pursuant to Section 2.9 of the Supplemental Indenture, check the
box below: 
  ̈Section 2.9 

If you want to elect to have only part of the Security purchased by the Company pursuant to Section 2.9 of the Supplemental Indenture,
state the amount you elect to have repurchased: 

$                       
           
 Date:
                                 

 

			
	Your Signature:	 	  

		 	(Sign exactly as your name appears on the face of this Note)

 
			
		
	Tax Identification No.:	 	  

 Signature Guarantee*:
                                 

 
  

	*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). 

  
 A-7 

 SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY 

The following increases or decreases in this Global Security have been made: 

 

									
	 Date of

Exchange
	  	Amount of increase in
Principal Amount of
this Global Security	  	Amount of decrease
in Principal Amount
of this Global
Security	  	Principal Amount of
this Global Security
following each
decrease or increase	  	Signature of
authorized signatory
of Trustee

  
 A-8 

 EXHIBIT B 

[FORM OF FACE OF SECURITY] 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

  
 B-1 

 CUSIP No. 63938CAB4 

NAVIENT CORPORATION 

5.875% SENIOR NOTES DUE 2024 
  

			
	 No.
	 	$
		 	 As revised by the

Schedule of Increases
 or Decreases in

Global Security
 attached hereto

 Interest. Navient Corporation, a Delaware corporation (herein called the “Company”, which
term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum of
                     dollars ($             ), as revised by the Schedule of Increases or
Decreases in Global Security attached hereto, on October 25, 2024 and to pay interest thereon from November 6, 2014 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in
arrears on April 25 and October 25 in each year, commencing April 25, 2015 at the rate of 5.875% per annum, until the principal hereof is paid or made available for payment. 

Method of Payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Record Date for such interest, which shall be the Business Day immediately preceding the relevant
Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice thereof having been given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any) and any such interest on this Security will be made at the Corporate Trust Office in U.S. Dollars. 

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place. 
 Authentication. Unless the certificate of authentication hereon has
been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.  

  
 B-2 

 IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized
officer. 

                          
  , 2014 
  

			
	NAVIENT CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

Dated: 
 THE BANK OF NEW YORK MELLON 

as Trustee, certifies 
 that this
is one of 
 the Securities referred 

to in the Indenture. 
  

			
	By:	 	  

		 	Authorized Signatory

  
 B-3 

 [FORM OF REVERSE OF SECURITY] 

Indenture. This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”),
issued and to be issued in one or more series under an Indenture, dated as of July 18, 2014, among Navient Corporation (the “Company”) and The Bank of New York Mellon, as trustee (herein called the “Trustee”, which term
includes any successor trustee under the Indenture), as supplemented and amended by the First Supplemental Indenture, dated November 6, 2014 (as so supplemented, herein called the “Indenture”), between the Company and the Trustee, to
which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, initially limited in aggregate principal amount to
$            . 
 Optional Redemption. The Securities of this
series are subject to redemption at the Company’s option, at any time and from time to time, in whole or in part, at a Redemption Price equal to the greater of (i) 100% of the principal amount to be redeemed plus accrued and unpaid
interest thereon to the Redemption Date, and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Securities to be redeemed (exclusive of interest accrued to the Redemption Date) discounted to
the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30 day months) at the applicable Treasury Rate (as defined below) plus 50 basis points plus accrued and unpaid interest on the principal amount being redeemed to
the Redemption Date. 
 For purposes of determining the optional redemption price, the following definitions are applicable: 

“Treasury Rate” means, with respect to any Redemption Date for the Securities, the rate per annum equal to the semi-annual
equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury
Price for such Redemption Date. 
 The Treasury Rate will be calculated on the third business day preceding the Redemption Date. 

“Comparable Treasury Issue” means the U.S. Treasury security or securities selected by an Independent Investment Banker as having an
actual or interpolated maturity comparable to the remaining term of the Securities that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining terms of the Securities. 
 “Comparable Treasury Price” means, with respect to any Redemption Date: 

(c) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest Reference Treasury
Dealer Quotations, or 

  
 B-4 

 (d) if the Independent Investment Banker is unable to obtain at least four such Reference
Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations obtained by the Independent Investment Banker. 

“Independent Investment Banker” means J.P. Morgan Securities LLC and Credit Suisse Securities (USA) LLC, as specified by the
Company, or if these firms are unwilling or unable to select the applicable Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company. 

‘‘Reference Treasury Dealer’’ means J.P. Morgan Securities LLC and Credit Suisse Securities (USA) LLC (and their
respective successors) plus two others or their affiliates which are primary U.S. government securities dealers (each a “Primary Treasury Dealer”), provided however, that if any of the foregoing shall cease to be a Primary Treasury Dealer,
the Company will substitute therefor another Primary Treasury Dealer. 
 “Reference Treasury Dealer Quotations” means, with
respect to each Reference Treasury Dealer and any Redemption Date for the Securities, an average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue for the Securities (expressed in each
case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such redemption date. 

Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each registered holder of
Securities to be redeemed. Unless the Company defaults in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the Securities or portions of the Securities called for redemption. If fewer than all of
the Securities are to be redeemed, the Trustee will select, not more than 60 days prior to the redemption date, the particular Securities or portions thereof for redemption from the outstanding Securities not previously called by such method as the
Trustee deems fair and appropriate. 
 Defaults and Remedies. If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. 

Repurchase Upon a Change of Control. Upon the occurrence of a Change of Control Triggering Event, the Holders of the Securities will
have the right to require that the Company purchase such Holder’s outstanding Securities, in whole or in part, at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the
date of purchase. 
 Amendment, Modification and Waiver. The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of
the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of a 

  
 B-5 

 
majority in aggregate principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. 

Restrictive Covenants. The Indenture does not limit the issuance of debt of the Company or any of its Subsidiaries. 

Denominations, Transfer and Exchange. The Securities of this series are issuable only in registered form without coupons in
denominations of $2,000 and in integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of
Securities of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. 
 As provided in
the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the Registrar accompanied by a written request
for transfer in form satisfactory to the Company and the Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 
 No service charge shall be made
for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. 

Persons Deemed Owners. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary. 
 Miscellaneous. The Indenture and this Security shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflicts of law rules of said State. 
 All terms used in this
Security and not defined herein shall have the meanings assigned to them in the Indenture. 

  
 B-6 

 OPTION OF HOLDER TO ELECT PURCHASE 

If you want to elect to have this Security repurchased by the Company pursuant to Section 2.9 of the Supplemental Indenture, check the
box below: 
  ̈Section 2.9 

If you want to elect to have only part of the Security purchased by the Company pursuant to Section 2.9 of the Supplemental Indenture,
state the amount you elect to have repurchased: 

$                       
           
 Date:
                                 

 

			
	Your Signature:	 	  

		 	(Sign exactly as your name appears on the face of this Note)

 
			
		
	Tax Identification No.:	 	  

  

			
		
	Signature Guarantee*:	 	 

  
  

	*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). 

  
 B-7 

 SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY 

The following increases or decreases in this Global Security have been made: 

 

									
	 Date of Exchange
	  	Amount of increase in
Principal Amount of
this Global Security	  	Amount of decrease
in Principal Amount
of this Global
Security	  	Principal Amount of
this Global Security
following each
decrease or increase	  	Signature of
authorized signatory
of Trustee

  
 B-8Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”), dated as of September 15, 2014 (the “Effective Date”), is by and between Diligent Board Member Services, Inc., a Delaware corporation (the “Company”) and Greg B. Petersen (“Executive”).  Certain other capitalized terms used herein are defined in Section 7.18 below and throughout this Agreement.

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to employ Executive as its Executive Vice Chairman and Executive desires to be so employed by the Company on the terms and conditions specified herein; and

 

WHEREAS, the Company and Executive each believe it is in their respective best interests to enter into this Agreement setting forth the mutual understandings and agreements reached between the Company and Executive with respect to Executive’s employment with the Company and certain restrictions on Executive’s conduct benefiting the Company during such time and thereafter, all as set forth herein.

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intended to be legally bound hereby, agree as follows:

 

ARTICLE 1
 TERM OF AGREEMENT AND EMPLOYMENT

 

Section 1.1.                                 Employment and Acceptance.  During the Term (as defined in Section 1.2 below), the Company shall employ Executive, and Executive shall accept such employment and serve the Company, in each case, subject to the terms and conditions of this Agreement.

 

Section 1.2.                                 Term.  The term of Executive’s employment hereunder shall commence on the Effective Date and shall continue until the termination of Executive’s employment hereunder by either party pursuant to the provisions of Article 5 herein (the “Term”).

 

ARTICLE 2
  TITLE; DUTIES AND OBLIGATIONS; LOCATION

 

Section 2.1.                                 Title.  During the Term, Executive shall serve in the capacity of Executive Vice Chairman, subject to the terms of this Agreement.

 

Section 2.2.                                 Duties.  During the Term, Executive agrees to perform to the best of his ability, experience and talent those acts and duties commensurate with the position of Executive Vice Chairman, or as otherwise may be directed by the Board of Directors of the Company (the “Board”) or the Chairman of the Board (the “Chairman”).  It is agreed and understood that as Executive Vice Chairman, the Executive shall not be deemed to be the principal executive officer of the Company and therefore shall not be required to certify the Company’s periodic

 

 

reports filed with the Securities and Exchange Commission.  Executive shall report to the Board through its Chairman.  Executive may not engage, directly or indirectly, in any other business, investment or other activity that interferes with Executive’s performance of his duties and responsibilities hereunder, is contrary to the interest of the Company or any of its subsidiaries or violates Executive’s obligations under Article 6 below and/or the Non-Disclosure Agreement (as defined in Section 6.1(a) below).  The foregoing notwithstanding, the parties hereto recognize and agree that Executive may (a) manage his passive personal investments, (b) engage in civic, charitable or religious activities, (c) serve as a director, trustee or member of a committee of any non-profit or charitable organization involving no conflict of interests with the interests of the Company (as determined by the Board), (d) serve on the board of directors and committees of the board of directors of PROS Holdings, Inc. and Piksel, Inc. and (e) fulfill speaking engagements, teaching at continuing education seminars or fulfilling other professional or business educational opportunities, that, individually or in the aggregate, do not conflict with the business and affairs of the Company or interfere with Executive’s performance of his duties and responsibilities hereunder.  Except as provided for in clause (c) or clause (d) of the preceding sentence, Executive may not serve on the board of directors (or similar governing body) of any entity other than the Company or its subsidiaries during the Term without the prior written approval of the Board.

 

Section 2.3.                                 Other Positions. During the Term, upon determination of the Board, Executive may be appointed as an officer and/or or nominated for election to any governing body of, any subsidiary of the Company for no additional compensation.

 

Section 2.4.                                 Compliance With Policies, etc.  During the Term, Executive shall adhere to the Company’s policies, rules and regulations governing the conduct of its employees, now in effect, or as subsequently adopted or amended, including, but not limited to, the Company’s Code of Conduct.

 

Section 2.5.                                 Time Commitment.  The parties anticipate that, initially, Executive will be required to devote approximately fifty percent (50%) of his business time (twenty (20) hours per week on average) to the performance of his duties hereunder.  However, as an exempt employee, Executive acknowledges and agrees that he (a) will be required to work any such additional hours as are reasonably necessary to satisfactorily perform his job duties hereunder and (b) is not entitled to additional or overtime compensation for hours worked in excess of twenty (20) per week.  For the avoidance of doubt, the Executive understands that, during the Term, the number of hours that he will need to devote to the performance of his duties hereunder may materially increase (either periodically or on a regular basis, as necessary).  If the time commitment of Executive hereunder regularly exceeds, or is less than, fifty percent (50%) of his business time, Executive and the Compensation Committee of the Board (the “Compensation Committee”) will discuss in good faith an appropriate adjustment to Executive’s compensation hereunder.

 

Section 2.6.                                 Location.  The principal locations for the performance of Executive’s services under this Agreement shall be at the Company’s headquarters in New York, New York and the Company’s offices in Charlotte, North Carolina, provided, that, Executive also shall be required to travel to other locations to perform his duties hereunder.  Notwithstanding the foregoing, Executive will be permitted to perform his duties hereunder from his home office in Austin, Texas during such times that it is not necessary (as reasonably determined by the

 

2

 

Chairman) for him to provide his services from the Company’s headquarters in New York, New York, the Company’s offices in Charlotte, North Carolina, or to travel to other locations.

 

ARTICLE 3
 COMPENSATION

 

Section 3.1.                                 Base Compensation.  During the Term, the Company shall pay Executive a base salary at the annualized rate of $450,000, which shall be subject to withholding and customary deductions and be payable in equal installments in accordance with the Company’s then-customary payroll practices for its executives (the “Base Salary”), and may be increased at the sole discretion of the Compensation Committee or adjusted upward or downward as contemplated by Section 2.5 hereof.

 

Section 3.2.                                 Awards.  The Compensation Committee has approved, effective upon Executive’s commencement of services as an employee hereunder, a grant to Executive of an option to purchase 250,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) pursuant to the Company’s 2013 Incentive Plan (the “Plan”) (the “Option”), with a fair market value per share exercise price determined in accordance with the Plan.  In addition, the Compensation Committee has approved, effective upon Executive’s commencement of services as an employee hereunder, a grant to Executive of 125,000 Restricted Share Units (as defined in the Plan) covering shares of Common Stock pursuant to the Plan (the “Restricted Share Units”).  The grants of the Option and the Restricted Share Units (collectively, the “Awards”) shall be documented in Award Agreements (as defined in the Plan) between the Company and Executive in the forms attached as Exhibit A-1 and Exhibit A-2 hereto.

 

ARTICLE 4
 BENEFITS AND EXPENSES

 

Section 4.1.                                 Benefit Plans.  Executive shall be entitled to participate in all benefit plans (excluding severance plans, if any) generally made available to other senior executives of the Company, to the extent permissible under the general terms and provisions of such plans and programs in accordance with the provisions thereof.  The Company reserves the right to change or rescind its benefit plans and programs and/or change employee contribution amounts to benefit costs without advance notice in its discretion.

 

Section 4.2.                                 Expense Reimbursement.  The Company shall reimburse Executive for all necessary out-of-pocket expenses reasonably incurred by Executive during the Term in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s policies in place from time to time.  Without limitation of (but not in duplication of) the foregoing, the Company shall reimburse Executive for reasonable and necessary expenses directly associated with (a) his travel between Austin, Texas and New York, New York, Charlotte, North Carolina or any other Company office, between Company offices or to any other location (in each case, as required to perform his duties hereunder) and meals and lodging associated with such travel, and (b) Executive’s use of his office at his primary residence in Austin, Texas, in the performance of his duties hereunder, up to $150 per month.  In order to receive such reimbursement pursuant to this Section 4.2, Executive shall furnish to the Company

 

3

 

documentary evidence of each such expense in the form required to comply with the Company’s policies.

 

Section 4.3.                                 Paid Vacation.  Executive shall be entitled to four (4) weeks paid vacation days annually during the Term (pro-rated for partial years), which Executive shall take during such times as shall be consistent with Executive’s responsibilities and the time of which shall be subject to the reasonable approval of the Company.  It is understood and agreed that unused vacation time shall not carryover from year-to-year and is not payable upon termination of Executive’s employment hereunder.

 

ARTICLE 5
 TERMINATION OF EMPLOYMENT

 

Section 5.1.                                 Termination Without Cause or Resignation For Good Reason.

 

(a)                  The Company may terminate Executive’s employment hereunder at any time without Cause (other than by reason of Disability) upon written notice to Executive.  Executive may terminate his employment hereunder for Good Reason upon written notice to the Company in accordance with the definition thereof.

 

(b)                  If Executive’s employment is terminated by the Company without Cause (other than by reason of Disability) or by Executive for Good Reason pursuant to Section 5.1(a) and provided that (i) the effective date of such termination occurs on or following the one (1) year anniversary of the Effective Date and (ii) a Board Removal Event has not occurred on or prior to the effective date of such termination, then, in full discharge of all of the Company’s obligations to Executive hereunder or otherwise, the Company shall pay to Executive, and Executive shall be entitled to, the Accrued Obligations.

 

(c)                   If Executive’s employment is terminated by the Company without Cause (other than by reason of Disability) or by Executive for Good Reason pursuant to Section 5.1(a) and provided that either (i) the effective date of such termination occurs prior to the one (1) year anniversary of the Effective Date or (ii) (A) the effective date of such termination occurs on or following the one (1) year anniversary of the Effective Date and (B) a Board Removal Event has occurred on or prior to the effective date of such termination, then, in full discharge of all of the Company’s obligations to Executive hereunder or otherwise, the Company shall pay to Executive, and Executive shall be entitled to:

 

(i) the Accrued Obligations; and

 

(ii)   an annualized amount equal to Executive’s Base Salary (as in effect immediately prior to the Termination Date), which amount shall be paid, subject to Section 5.1(d) and Section 5.6, in equal installments over the twelve (12) month period following the Termination Date in accordance with the Company’s then-customary payroll practices for executives.

 

(d)                            With the exception of the Accrued Obligations, the Company’s payment of the amounts set forth in Section 5.1(c) shall be contingent upon Executive executing the Release described in Section 7.12 below, which must be executed by Executive and become effective

 

4

 

(and non-revocable) within sixty (60) days after the Termination Date.  Subject to Section 5.6 hereof, the payments set forth in Section 5.1(c)(ii), if applicable, shall commence on the first regular payroll date of the Company that occurs after the date that is sixty (60) days after the Termination Date and the first installment of such payments shall include the cumulative amount of payments that would have been paid to Executive during the period of time between the Termination Date and the commencement date had such payments commenced immediately following the Termination Date.  With the exception of the Accrued Obligations, the Company shall have no obligation to provide any of the payments set forth in Section 5.1 in the event that Executive breaches the provisions of Article 6 of this Agreement.

 

Section 5.2.                                 Termination for Cause; Voluntary Termination.

 

(a)                  The Company may terminate Executive’s employment hereunder at any time for Cause upon written notice to Executive.  Executive may voluntarily terminate his employment hereunder at any time without Good Reason upon sixty (60) days prior written notice to the Company.

 

(b)                  If Executive’s employment terminates pursuant to Section 5.2(a), in full discharge of all of the Company’s obligations to Executive hereunder or otherwise, the Company shall pay to Executive the Accrued Obligations.

 

Section 5.3.                                 Termination Resulting from Death or Disability.

 

(a)                  As the result of any Disability suffered by Executive, the Company may, upon five (5) days prior notice to Executive, terminate Executive’s employment under this Agreement.  Executive’s employment shall automatically terminate upon his death.

 

(b)                  If Executive’s employment is terminated pursuant to Section 5.3(a), Executive or Executive’s estate, as the case may be, shall be entitled to receive, and the Company’s sole obligation under this Agreement or otherwise shall be to pay or provide to Executive or Executive’s estate, as the case may be, the Accrued Obligations.

 

Section 5.4.                                 Mutual Agreement.

 

(a)                                            This Agreement and Executive’s employment hereunder may be terminated at any time by the mutual agreement of the Company and Executive.

 

(b)                                            If this Agreement is terminated pursuant to Section 5.4(a), Executive shall be entitled to receive and the Company’s sole obligation under this Agreement or otherwise shall be to pay or provide to Executive the Accrued Obligations.

 

Section 5.5.                                 Removal from any Boards and Position.  If Executive’s employment is terminated for any reason under this Agreement, he shall be deemed (without further action, deed or notice) to resign (i) if a member, from the board of directors of any subsidiary of the Company or any other board to which he has been appointed or nominated by or on behalf of the Company and (ii) from all other positions with the Company or any subsidiary of the Company, including, but not limited to, as an officer of the Company and any of its subsidiaries.

 

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Section 5.6.                                 409A Compliance.  All payments under this Agreement are intended to comply with or be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).  To the extent that any provision in this Agreement is ambiguous as to its compliance with Section 409A, or to the extent any provision in this Agreement must be modified to comply with Section 409A, such provision shall be read, or shall be modified, as the case may be, in such a manner so that no payment due to Executive shall be subject to an “additional tax” within the meaning of Section 409A(a)(1)(B).  If necessary to comply with the restriction in Section 409A(a)(2)(B) of the Code concerning payments to “specified employees,” any payment on account of Executive’s separation from service that would otherwise be due hereunder within six (6) months after such separation shall be delayed until the first business day of the seventh month following the Termination Date and the first such payment shall include the cumulative amount of any payments (without interest) that would have been paid prior to such date if not for such restriction.  Each payment in a series of payments hereunder shall be deemed to be a separate payment for purposes of Section 409A. To the extent required to avoid an accelerated or additional tax under Section 409A, amounts reimbursable to Executive under this Agreement shall be paid to Executive on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to Executive) during any one year may not affect amounts reimbursable or provided in any subsequent year.  In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on Executive by Section 409A or damages for failing to comply with Section 409A.

 

ARTICLE 6
 NON-COMPETITION, CONFIDENTIALITY AND
  NON-SOLICITATION COVENANTS

 

Section 6.1.                                 Non-Competition, Confidentiality, etc.

 

(a)                  Executive acknowledges that Executive’s employment hereunder will provide Executive with access on a continual basis to confidential and proprietary information concerning the Business, the Company and its Affiliates, which is not readily available to the public and that the Company would not enter into this Agreement but for the covenants (the “Restrictive Covenants”) contained in this Article 6 and the Company’s Assignment of Inventions, Non-Disclosure and Non-Solicitation Agreement, attached hereto as Exhibit B (“Non-Disclosure Agreement”), which shall be executed on the Effective Date by Executive.

 

(b)                  To the extent permitted by applicable law, in consideration for the salary and other payments to be provided to Executive pursuant to this Agreement, during the Term and for a period of twelve (12) months thereafter (the Term and such twelve (12) month period, the “Restricted Period”), Executive agrees not to directly or indirectly, whether as an officer, employee, agent, partner, owner, lender, investor, consultant or otherwise, anywhere in the world: (i) compete with the Business or engage in the Business for his own account or for the account of any other person or entity, or (ii) engage in any other Material Competitive Business, provided, however, that Executive may own, directly or indirectly, solely as a passive investment, securities of any entity which are traded on any national securities exchange, if Executive is not a controlling person of, or a member of a group which controls, such entity, and

 

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in any event, does not, directly or indirectly, beneficially own two percent (2%) or more of any class of securities of such publicly traded entity.

 

(c)                   The Restricted Period shall be extended for an amount of time equal to the time period during which Executive was in violation of any provision of this Article 6 and shall continue through any action, suit or proceedings arising out of or relating to this Article 6.

 

(d)                  This Article 6 and the Non-Disclosure Agreement shall survive any termination or expiration of this Agreement or the Term.

 

Section 6.2.                                 Reasonableness; Injunction.  Executive acknowledges and agrees that (i) Executive has had an opportunity to seek advice of counsel in connection with this Agreement and the Non-Disclosure Agreement, (ii) the Restrictive Covenants are reasonable in scope and in all other respects, (iii) any violation of the Restrictive Covenants will result in irreparable injury to the Company, (iv) money damages would be an inadequate remedy at law for the Company in the event of a breach of any of the Restrictive Covenants by Executive, (v) specific performance in the form of injunctive relief would be an adequate remedy for the Company, and (vi) the Restrictive Covenants shall be deemed a series of independent covenants in each jurisdiction in which they apply, and the invalidity or impairment of any Restrictive Covenant in any one such jurisdiction shall not affect the enforceability of the Restrictive Covenants in each and every other jurisdiction.  If Executive breaches or threatens to breach a Restrictive Covenant, the Company shall be entitled, in addition to all other remedies, to an injunction restraining any such breach, without any bond or other security being required and without the necessity of showing actual damages.  In addition, the Company shall be entitled to recover all reasonable attorneys’ fees and expenses incurred in connection with enforcing its rights under this Agreement and the Non-Disclosure Agreement.  Executive further agrees that a copy of a summons and complaint seeking the entry of an order to enforce its rights hereunder may be served upon Executive by certified mail, return receipt requested, at the address set forth in Section 7.5 below or at any other address which Executive shall designate in accordance with Section 7.5.

 

Section 6.3.                                 Nondisparagement.  Executive agrees that he will not at any time (whether during or after the Term) publish or communicate to any person or entity any Disparaging (as defined below) remarks, comments or statements concerning the Company and its subsidiaries, and their respective present and former members, partners, directors, officers, shareholders, employees, agents, attorneys, successors and assigns (the “Protected Parties”).  The Company agrees that it will not at any time (whether during or after the Term) publish or communicate to any person or entity any Disparaging (as defined below) remarks, comments or statements concerning Executive.

 

ARTICLE 7
 GENERAL PROVISIONS

 

Section 7.1.                                 Expenses.  The Company shall pay up to $5,000 for legal counsel for Executive in connection with the negotiation, preparation and execution of this Agreement to facilitate analysis and review necessary to enter into this Agreement, which the Company has requested.  Notwithstanding the foregoing to the contrary, the prevailing party in any dispute under this Agreement shall be entitled to recover from the losing party all fees, expenses and

 

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costs (including without limitation, attorneys’ fees and expenses) incurred by the prevailing party in connection with such dispute.

 

Section 7.2.                                 Key-Man Insurance.  Upon the Company’s request, Executive shall cooperate (including, without limitation, taking any required physical examinations) in all respects in obtaining a key-man life insurance policy on the life of Executive in which the Company is named as the beneficiary.

 

Section 7.3.                                 Entire Agreement.  This Agreement when executed, contains a complete statement of all of the terms of the arrangements between Executive and the Company with respect to Executive’s employment by the Company and supersedes any and all other agreements and understandings, whether oral or in writing, between the parties hereto with respect to the subject matter hereof.  Each party acknowledges that no representations, inducements, promises or agreements, whether oral or in writing, have been made by any party, or on behalf of any party, which are not embodied herein.  No agreement, promise or statement not contained in this Agreement shall be valid and binding, unless agreed to in writing and signed by the parties sought to be bound thereby.

 

Section 7.4.                                 No Other Contracts.  Executive represents and warrants to the Company that neither the execution and delivery of this Agreement by Executive nor the performance by Executive of Executive’s obligations hereunder, shall constitute a default under or a breach of the terms of any other agreement, contract or other arrangement, whether written or oral, to which Executive is a party or by which Executive is bound, nor shall the execution and delivery of this Agreement by Executive nor the performance by Executive of his duties and obligations hereunder give rise to any claim or charge against either Executive, the Company or any Affiliate, based upon any other contract or other arrangement, whether written or oral, to which Executive is a party or by which Executive is bound.  Executive further represents and warrants to the Company that he is not a party to or subject to any restrictive covenants, legal restrictions or other agreement, contract or arrangement, whether written or oral, in favor of any entity or person which would in any way preclude, inhibit, impair or limit Executive’s ability to perform his obligations under this Agreement, including, but not limited to, non-competition agreements, non-solicitation agreements or confidentiality agreements.  Executive shall defend, indemnify and hold the Company harmless from and against all claims, actions, losses, liabilities, damages, costs and expenses (including reasonable attorney’s fees and amounts paid in settlement in good faith) arising from or relating to any breach of the representations and warranties made by Executive in this Section 7.4.

 

Section 7.5.                                 Notices.  Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, faxed, or sent by nationally recognized overnight courier service (with next business day delivery requested).  Any such notice or communication shall be deemed given and effective, in the case of personal delivery, upon receipt by the other party, in the case of faxed notice, upon written receipt of transmission of the fax, in the case of a courier service, upon the next business day, after dispatch of the notice or communication.  Any such notice or communication shall be addressed as follows:

 

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If to the Company, to:

 

Diligent Board Member Services, Inc.

1385 Broadway, 19th Floor

New York, New York 10018

Attn: Corporate Secretary

 

With a copy to:

 

Lowenstein Sandler LLP

1251 Avenue of the Americas

New York, New York 10020

Telephone:  212.419.5843

Facsimile:  973.535.3357

Attn: Marita A. Makinen, Esq.

 

If to Executive, to:

 

Greg B. Petersen

[·]

[·]

 

With a copy to:

 

[Executive’s Attorney]

 

Any person named above may designate another address or fax number by giving notice in accordance with this Section to the other persons named above.

 

Section 7.6.                                 Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of law.

 

Section 7.7.                                 Waiver.  Either party may waive compliance by the other party with any provision of this Agreement.  The failure of a party to insist on strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.  No waiver of any provision shall be construed as a waiver of any other provision.  Any waiver must be in writing.

 

Section 7.8.                                 Severability.  If any one or more of the terms, provisions, covenants and restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated and the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute for such invalid and unenforceable provision in light of the tenor of this Agreement, and, upon so agreeing, shall incorporate such substitute provision in this

 

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Agreement.  In addition, if any one or more of the provisions contained in this Agreement shall for any reason be determined by a court of competent jurisdiction to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed, by limiting or reducing it, so as to be enforceable to the extent compatible with then applicable law.

 

Section 7.9.                                 Counterparts.  This Agreement may be executed in any number of counterparts and each such duplicate counterpart shall constitute an original, any one of which may be introduced in evidence or used for any other purpose without the production of its duplicate counterpart.  Moreover, notwithstanding that any of the parties did not execute the same counterpart, each counterpart shall be deemed for all purposes to be an original, and all such counterparts shall constitute one and the same instrument, binding on all of the parties hereto.

 

Section 7.10.                          Advice of Counsel.  Both parties hereto acknowledge that they have had the opportunity to seek and obtain the advice of counsel before entering into this Agreement and have done so to the extent desired, and have fully read the Agreement and understand the meaning and import of all the terms hereof.

 

Section 7.11.                          Assignment.  This Agreement shall inure to the benefit of the Company and its successors and assigns and shall be binding upon the Company and its successors and assigns.  This Agreement is personal to Executive, and Executive shall not assign or delegate his rights or duties under this Agreement, and any such assignment or delegation shall be null and void.

 

Section 7.12.                          Release.  Notwithstanding anything to the contrary in this Agreement, with the exception of the Accrued Obligations, Executive shall not be entitled to receive any post-employment compensation pursuant to Section 5.1(c) hereof, unless prior to the receipt of such compensation, Executive executes and delivers to the Company a release, in form and substance satisfactory to the Company under which Executive releases and discharges the Company and its subsidiaries and Affiliates and each of their respective officers, directors, shareholders, partners, managers, agents, employees and other related parties, from any claims and causes of action of any kind, including, but not limited to, claims and causes of actions arising out of Executive’s employment or termination of employment, but excluding claims and causes of action arising solely out of the obligations of the Company to make payments or provide benefits to Executive after the termination of such employment pursuant to the express provisions of the Agreement.

 

Section 7.13.                          Agreement to Take Actions.  Each party to this Agreement shall execute and deliver such documents, certificates, agreements and other instruments, and shall take all other actions, as may be reasonably necessary or desirable in order to perform his or its obligations under this Agreement.

 

Section 7.14.                          No Attachment.  Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect; provided, however, that nothing in this

 

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Section 7.14 shall preclude the assumption of such rights by executors, administrators or other legal representatives of Executive or Executive’s estate and their assigning any rights hereunder to the person or persons entitled thereto.

 

Section 7.15.                          Tax Withholding.  The Company or other payor is authorized to withhold from any benefit provided or payment due hereunder, the amount of withholding taxes due any federal, state or local authority in respect of such benefit or payment and to take such other action as may be necessary in the opinion of the Board to satisfy all obligations for the payment of such withholding taxes.

 

Section 7.16.                          Limitation on Parachute Payments.

 

(a)  In the event that the payments or other benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s benefits under this Agreement shall be either (x) delivered in full, or (y) delivered to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. If a reduction in payments or benefits constituting “parachute payments” is necessary pursuant to the foregoing provision, reduction shall occur in the following order: reduction of cash payments; cancellation of accelerated vesting of stock awards; and reduction of employee benefits. If acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of Executive’s stock awards.

 

(b)  Unless the Company and Executive otherwise agree in writing, any determination required under this Section 7.16 shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes and may be relied upon by the Company. For purposes of making the calculations required by this Section 7.16, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. The Employee shall provide to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 7.16. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 7.16.

 

Section 7.17.                          Board Fees.  Notwithstanding anything contained herein to the contrary, it is understood and agreed that (a) Executive will be entitled to receive his board fees for the quarter ending September 30, 2014, prorated based upon the portion of such quarter that he served as a non-executive director of the Company (anticipated to be through September 15, 2014), which prorated board fees shall be paid at the same time as board fees are payable to the Company’s other non-executive directors, (b) during the Term, Executive will not be entitled to receive board fees in addition to the compensation set forth in this Agreement, and (c) if Executive remains on the Board as a non-executive director following the Termination Date, he

 

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shall be entitled to earn board fees during his remaining tenure on the Board in accordance with the Company’s policies (in effect from time to time) relating to payments to non-executive board members.

 

Section 7.18.                          Definitions.  The following definitions apply to this Agreement:

 

(a)                 “Accrued Obligations” means (i) Executive’s accrued but unpaid Base Salary through the final date of Executive’s employment by the Company (the “Termination Date”), payable in accordance with the Company’s standard payroll practices, (ii) expenses reimbursable under Section 4.2 incurred on or prior to the Termination Date but not yet reimbursed and (iii) if applicable, any accrued and unpaid amounts due and owing under any Company health plan in which Executive participates, in accordance with the terms of such plan(s).

 

(b)                 “Affiliate” means, with respect to a specified entity, any individual or entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified entity.

 

(c)                  “Board Removal Event” means Executive has ceased to be a member of the Board due to an event other than Executive’s resignation from the Board, his removal from the Board for cause or the failure of the Company’s shareholders to re-elect Executive to serve following his nomination for election by the Board.

 

(d)                 “Business” means the business of manufacturing, providing or marketing 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) and any additional Material Competitive Businesses presently or hereafter conducted by the Company and its Affiliates.  “Material Competitive Business” for purposes of this Section 7.18(d) shall mean a product or line of business which accounted for 10% or more of the Company’s revenues over the last two fiscal quarters immediately prior to the time of Executive’s termination of services, or a product or line of business in which the Company had invested $5 million or more in pursuing.

 

(e)                  “Cause” means (i) Executive commits a material act of dishonesty, deceit, or breach of fiduciary duty in the performance of Executive’s duties as an employee of the Company; (ii) Executive neglects or fails on a recurring basis and in a material respect, to perform Executive’s job duties as defined in Section 2.2 hereof and such neglect or failure continues for at least thirty (30) days after the Company notifies Executive in writing of such neglect or failure; (iii) Executive substantially violates any written policy or reasonable expectation of the Company regarding employee behavior or conduct that has been communicated to Executive by the Company and Executive does not cure such breach within thirty (30) days after written notice from the Company; (iv) Executive is convicted of, or pleads nolo contendere, to (a) any felony, or any misdemeanor involving moral turpitude or (b) any crime or offense involving dishonesty with respect to the Company or (v) Executive materially breaches any provision of this Agreement and does not cure such breach within thirty (30) days after written notice from the Company, except that such cure period shall not apply to any breach by Executive of the Restrictive Covenants.

 

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(f)                   “Code” means the Internal Revenue Code of 1986, as amended.

 

(g)                  “Disability” means a determination by the Company in accordance with applicable law that as a result of a physical or mental injury or illness, Executive is unable to perform the essential functions of his job with or without reasonable accommodation for a period of (i) ninety (90) consecutive days; or (ii) ninety (90) days during any twelve (12) month period.

 

(h)                 “Disparaging” refers to those remarks, comments or statements that impugn the character, honesty, integrity or morality or business acumen or abilities in connection with any aspect of the operation of business of the individual or entity being disparaged.

 

(i)                     “Good Reason” means a material breach by the Company of the terms of this Agreement; provided, however, that Executive must notify the Company within 30 days of the material breach that he considers it to be a “Good Reason” condition and provide the Company with at least 30 days in which to cure the condition.  If Executive fails to provide this notice and cure period prior to his resignation, or resigns more than 90 days after the initial existence of the condition, his resignation will not be deemed to be for “Good Reason.”

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

	
 
    	
COMPANY
    
	
 
    	
 
    
	
 
    	
DILIGENT   BOARD MEMBER SERVICES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Alessandro Sodi
    
	
 
    	
Name:
    	
Alessandro   Sodi
    
	
 
    	
Title:
    	
Chief   Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Greg B. Petersen
    
	
 
    	
Greg   B. Petersen
    

 

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

 

 

EXHIBIT A-1

Form of Award Agreement (Option Award)

 

STOCK OPTION AWARD AGREEMENT

 

THIS STOCK OPTION AWARD AGREEMENT (the “Option Award Agreement”) is entered into on the date set forth on Exhibit A (the “Grant Date”) by and between DILIGENT BOARD MEMBER SERVICES, INC., a Delaware corporation (the “Company”), and GREG B. PETERSEN (the “Awardee”).

 

WHEREAS, the Company is entering into this Option Award Agreement in order to effectuate the Award set forth in the Employment Agreement dated September 15, 2014 between the Company and the Awardee (the “Employment Agreement”) of incentive stock options (the “Option”) with respect to the Company’s common stock, par value $0.001 per share (the “Common Stock”) pursuant to the Diligent Board Member Services, Inc. 2013 Incentive Plan (the “2013 Plan”) on the terms and conditions provided herein.

 

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1.                                      Award.  Subject to the terms and conditions of this Option Award Agreement, the Company hereby grants to the Awardee an Option to purchase the number of Shares set forth in Exhibit A on the terms and conditions set forth in Exhibit A.  This award is made pursuant to and is subject to the terms of the 2013 Plan.  Capitalized terms used but not otherwise defined in this Agreement shall have the meanings as set forth in the 2013 Plan.  To the extent designated as an incentive stock option (“ISO”), this Option is intended to qualify as an incentive stock option under Section 422 of the Code.  However, notwithstanding such designation, if the Awardee becomes eligible in any given year to exercise ISOs for Shares having a Fair Market Value in excess of $100,000, those Options representing the excess shall be treated as non-qualified stock options (“NSOs”).  In the previous sentence, “ISOs” include ISOs granted under any plan of the Company or any parent or any subsidiary.  For the purpose of deciding which Options apply to Shares that “exceed” the $100,000 limit, ISOs shall be taken into account in the same order as granted.  The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.  The Awardee hereby acknowledges that there is no assurance that the Option will, in fact, be treated as an incentive stock option under Section 422 of the Code.

 

2.                                    Conditions of Exercise.  This Option may not be exercised unless all of the following conditions are met:

 

(a)                                 Counsel for the Company must be satisfied at the time of exercise that the issuance of Shares upon exercise of this Option will be in compliance with the Securities Act of 1933, as amended, and all other applicable federal and state laws.

 

(b)                                 The Awardee must give the Company written notice of exercise specifying

 

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the number of Shares with respect to which this Option is being exercised, and at the time of exercise pay the full purchase price for the Shares being acquired (i) in cash or check acceptable to the Company, (ii) by surrender of Shares that otherwise would have been delivered to the Awardee upon exercise of the Option, up to the largest whole number of Shares having an aggregate Fair Market Value that does not exceed the aggregate exercise price (plus tax withholdings, if applicable) and any remaining balance of the aggregate exercise price (and/or applicable tax withholdings) not satisfied by such reduction in the number of whole Shares to be issued shall be paid by the Awardee in cash or other form of payment permitted under this Option, or (iii) by such other manner as the Committee may authorize.

 

(c)                                  The Awardee must at all times during the period beginning with the Grant Date and ending on the date of such exercise have been an employee or a member of the board of directors of the Company (or of a corporation or a parent or subsidiary of a corporation assuming this Option by reason of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation in a transaction to which Section 424(a) of the Code applies), provided, however, that:

 

(i)                               if the Awardee ceases to be an employee of the Company due to termination of employment by the Company without Cause (as defined in the Employment Agreement) or the Awardee’s resignation from employment with the Company with or without Good Reason (as defined in the Employment Agreement) and the Awardee ceases to be a member of the board of directors of the Company, this Option will remain in full force and effect and may be exercised, to the extent exercisable on the date of termination, until the earlier of (x) ninety (90) days from the date of the Awardee’s termination of employment or (y) the expiration of this Option, and

 

(ii)                            if the Awardee ceases to be an employee of the Company due to death or Disability (as defined in the Employment Agreement) and the Awardee ceases to be a member of the board of directors of the Company, this Option will remain in full force and effect and may be exercised, to the extent exercisable on the date of termination, until the earlier of (x) one (1) year from the date of the Awardee’s termination of employment or (y) the expiration of this Option.

 

For avoidance of doubt, it the Awardee ceases to be an employee of the Company due to termination of employment by the Company for Cause, this Option shall immediately terminate on the date of such termination and shall not be exercisable for any period following such date.

 

(d)                                 The Company shall have the right to withhold from amounts payable to the Awardee, as compensation or otherwise, or alternatively, to require the Awardee to remit to the Company, an amount sufficient to satisfy all federal, state and local withholding tax requirements.  Notwithstanding the foregoing, if so requested by the Awardee, the Company shall provide for such withholding by withholding Common Stock that otherwise would be issued to the Awardee upon exercise of the Option having

 

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a Fair Market Value equal to the amount necessary to satisfy the minimum statutory withholding amount.

 

(e)                                  The Shares covered by this Option have been listed (subject only to official notice of issuance) on any national securities exchange on which the Common Stock is then listed.

 

3.                                      Restrictions on Transfer and Exercise.

 

(a)                                 Except as provided in this Section 3, this Option, and rights under this Option, may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Awardee and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company.

 

(b)                                 This Option shall be exercisable only by the Awardee (or, in the case of Awardee’s Disability, by Awardee’s personal representative) during the Awardee’s lifetime, or by the person to whom the Awardee’s rights shall pass by will or the laws of descent and distribution.  Notwithstanding anything in the 2013 Plan to the contrary, an award of NSOs shall be transferable pursuant to a domestic relations order.

 

(c)                                  If at the time of the Awardee’s death this Option has not been fully exercised, the Awardee’s estate or any person who acquires the right to exercise this Option by bequest or inheritance or by reason of the Awardee’s death may, at any time within one year after the date of the Awardee’s death, exercise this Option with respect to up to the entire remaining number of Shares subject to this Option.  It shall be a condition to the exercise of this Option after the Awardee’s death that the Company shall have been furnished evidence satisfactory to it of the right of the person exercising this Option to do so and that all estate, transfer, inheritance or death taxes payable with respect to this Option or the Shares to which it relates have been paid or otherwise provided for to the satisfaction of the Company.

 

4.                                      Awardee Representations.  The Awardee understands that the Awardee (and, subject to Section 2(d) above, not the Company) shall be responsible for the Awardee’s own tax liability arising as a result of the transactions contemplated by this Agreement.

 

5.                                      No Right to Continued Employment.  By accepting this Option Award Agreement, the Awardee acknowledges and agrees that neither the grant of this Option nor any of the terms herein (including the exercise schedule) constitute an express or implied promise of continued employment or service for the exercise period or for any other period, and shall not interfere with the Awardee’s right or the right of the Company to terminate the employment or service relationship at any time, with or without cause, subject to the terms of any written employment agreement that the Awardee may have entered into with the Company.

 

6.                                      Notices.  Notices or communications to be made hereunder shall be in writing and shall be made in accordance with the Employment Agreement.

 

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7.                                      Governing Law.  This Option Award Agreement shall be construed under the laws of the State of New York, without regard to conflict of laws principles.

 

8.                                      Entire Agreement.  This Option Award Agreement, together with the Employment Agreement, constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings relating to the subject matter of this Option Award Agreement.  Notwithstanding the foregoing, this Option Award Agreement and the Award made hereby shall be subject to the terms of the 2013 Plan.

 

9.                                      Section 409A.  This Option Award Agreement is intended to comply with the requirements of Section 409A of the Code and regulations promulgated thereunder (“Section 409A”).  To the extent that any provision in this Option Award Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that no payments due under this Agreement shall be subject to an “additional tax” as defined in Section 409A(a)(1)(B) of the Code.  In no event shall the Committee, the Board, or the Company (or their respective employees, officers or directors) have any liability to the Awardee (or any other person) due to the failure of an award to satisfy the requirements of Section 409A.  Although the parties endeavor to have this Option Award Agreement comply with the requirements of Section 409A, there is no guarantee that the Awardee will not be subjected to the payment of any tax or interest under Section 409A, and the Awardee shall not have any right to indemnification with respect thereto.

 

[Signature Page Follows]

 

4

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused their duly authorized officer to execute this Agreement on the date first written above.

 

	
 
    	
DILIGENT BOARD MEMBER SERVICES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Alessandro Sodi
    
	
 
    	
 
    	
Name: Alessandro Sodi
    
	
 
    	
 
    	
Title:   Chief   Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AWARDEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Greg B. Petersen
    
	
 
    	
Name:   Greg B. Petersen
    

 

5

 

EXHIBIT A

 

(a).                              Awardee’s Name:  Greg B. Petersen

 

(b).                              Grant Date:  September 15, 2014

 

(c)                                  Number of Shares Covered By This Option:

 

250,000 Shares, as follows:

 

Number Covered by Incentive Stock Options:  250,000

 

Number Covered by Non-Qualified Stock Options:  0

 

(d)                                 Exercise Price: $3.79 USD

 

(e)                                  Expiration Date: September 15, 2024

 

(f)                                   Exercise Schedule:  The Shares shall vest as follows:

 

(i)  One-half of the Shares covered by this Option shall become vested on each of the first two anniversaries of the Effective Date (as defined in the Employment Agreement), provided that the Awardee is in the employ of the Company as an executive officer on such anniversary of the Effective Date.

 

(ii)  If the Awardee’s employment is terminated without Cause (as defined in the Employment Agreement) or the Awardee Resigns for Good Reason (as defined in the Employment Agreement) and provided that the effective date of such termination occurs prior to the one (1) year anniversary of the Effective Date, then those Shares covered by this Option that would have vested on the first anniversary of the Effective Date shall become vested and exercisable as of the effective date of such termination.

 

(iii)  Notwithstanding the foregoing, in the event the Company consummates a Change in Control, and Awardee’s employment is terminated without Cause (as defined in the Employment Agreement) or the Awardee resigns for Good Reason (as defined in the Employment Agreement) upon or within six (6) months following the date of such Change in Control, the Shares covered by this Option, to the extent not fully vested by the date on which such termination of employment occurs, will become vested upon such termination of employment.

 

 

	
/s/ GP
    	
 (Initials)
    	
 
    
	
Greg B. Petersen
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ AS
    	
 (Initials)
    	
 
    
	
Company Signatory
    	
 
    	
 
    
				

 

6

 

EXHIBIT A-2

Form of Award Agreement (RSU Award)

 

RESTRICTED SHARE UNIT AWARD AGREEMENT

 

THIS RESTRICTED SHARE UNIT AWARD AGREEMENT (the “RSU Agreement”) is entered into on the date set forth in Exhibit A (the “Grant Date”) by and between DILIGENT BOARD MEMBER SERVICES, INC., a Delaware corporation (the “Company”), and GREG B. PETERSEN (the “Awardee”).

 

WHEREAS, the Company is entering into this RSU Agreement in order to effectuate the Award set forth in the Employment Agreement dated September 15, 2014 between the Company and the Awardee (the “Employment Agreement”) of a restricted share unit award with respect to the Company’s common stock, par value $0.001 per share (the “Common Stock”) pursuant to the Diligent Board Member Services, Inc. 2013 Incentive Plan (the “2013 Plan”) on the terms and conditions provided herein.

 

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                                      Award.  The Company hereby grants the Awardee the number of Restricted Stock Units (each an “RSU,” and collectively the “RSUs”) set forth on Exhibit A.  This Award is made pursuant to and is subject to the terms of the 2013 Plan.  Capitalized terms used but not otherwise defined in this RSU Agreement shall have the meanings as set forth in the 2013 Plan.

 

2.                                      Vesting.  The Award shall be subject to the vesting conditions set forth in Exhibit A.  Each RSU shall automatically convert into one share of Common Stock on the date that it becomes vested.  Subject to the terms of this Agreement, the Awardee shall forfeit the RSUs to the extent that the Awardee does not satisfy the applicable vesting requirements set forth in Exhibit A.

 

3.                                      Transfer Restrictions.  Prior to the vesting of any RSUs, the Awardee shall not be deemed to have any ownership or shareholder rights (including, without limitation, voting rights and rights to dividends or dividend equivalents) with respect to such unvested RSUs, nor may the Awardee sell, assign, pledge or otherwise transfer (voluntarily or involuntarily) unvested RSUs.

 

4.                                      Withholding Taxes.  The Company shall have the right to withhold from amounts payable to the Awardee, as compensation or otherwise, or alternatively, to require the Awardee to remit to the Company, an amount sufficient to satisfy all federal, state and local withholding tax requirements.  Notwithstanding the foregoing, if so requested by the Awardee, the Company shall, upon conversion of RSUs, provide for such withholding by withholding Common Stock that otherwise would be issued to the Awardee having a Fair Market Value on the date of such

 

1

 

conversion that is equal to the amount necessary to satisfy the minimum statutory withholding amount.

 

5.                                      Awardee Representations.  The Awardee understands that the Awardee (and, subject to Section 4 above, not the Company) shall be responsible for the Awardee’s own tax liability arising as a result of the transactions contemplated by this RSU Agreement.

 

6.                                      Employment.  Neither this RSU Agreement nor any action taken hereunder shall be construed as giving the Awardee any right of continuing employment by the Company.

 

7.                                      Notices.  Notices or communications to be made hereunder shall be in writing and shall be made in accordance with the Employment Agreement.

 

8.                                      Governing Law.  This RSU Agreement shall be construed under the laws of the State of New York, without regard to conflict of laws principles.

 

9.                                      Entire Agreement.  This RSU Agreement, together with the Employment Agreement, constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings relating to the subject matter of this RSU Agreement.  Notwithstanding the foregoing, this RSU Agreement and the Award made hereby shall be subject to the terms of the 2013 Plan.

 

10.                               Binding Effect.  This RSU Agreement shall be binding upon and inure to the benefit of the Company and the Awardee and their respective permitted successors, assigns, heirs, beneficiaries and representatives.  This RSU Agreement is personal to the Awardee and may not be assigned by the Awardee without the prior consent of the Company.  Any attempted assignment in violation of this Section shall be null and void.

 

11.                               Amendment.  This RSU Agreement may be amended or modified only by a written instrument executed by both the Company and the Awardee.

 

12.                               Section 409A.  This RSU Agreement is intended to comply with the requirements of Section 409A of the Code and regulations promulgated thereunder (“Section 409A”).  To the extent that any provision in this RSU Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that no payments due under this RSU Agreement shall be subject to an “additional tax” as defined in Section 409A(a)(1)(B) of the Code.  For purposes of Section 409A, each payment made under this RSU Agreement shall be treated as a separate payment.  In no event may the Awardee, directly or indirectly, designate the calendar year of payment.  Notwithstanding anything contained herein to the contrary, the Awardee shall not be considered to have terminated employment with the Company for purposes of Section 3 hereof unless he would be considered to have incurred a “termination of employment” from the Company within the meaning of Treasury Regulation §1.409A-1(h)(1)(ii).  In no event shall the Committee, the Board, or the Company (or their respective employees, officers or directors) have any liability to the Awardee (or any other person) due to the failure of an Award to satisfy the requirements of Section 409A.  Although the parties endeavor to have this RSU Agreement comply with the requirements of Section 409A, there is

 

2

 

no guarantee that the Awardee will not be subjected to the payment of any tax or interest under Section 409A, and the Awardee shall not have any right to indemnification with respect thereto.

 

13.                               Counterparts.  This RSU Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

[Signature Page Follows]

 

3

 

IN WITNESS WHEREOF, the parties hereto have executed this RSU Agreement or caused their duly authorized officer to execute this RSU Agreement on the date first written above.

 

	
 
    	
DILIGENT BOARD MEMBER SERVICES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Alessandro Sodi
    
	
 
    	
 
    	
Name: Alessandro Sodi
    
	
 
    	
 
    	
Title:   Chief   Executive Officer
    
	
 
    	
 
    
	
 
    	
AWARDEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Greg B. Petersen
    
	
 
    	
Name:   Greg B. Petersen
    

 

4

 

EXHIBIT A

 

(a).                              Awardee’s Name:  Greg B. Petersen

 

(b).                              Grant Date:  September 15, 2014

 

(c).                               Number of RSUs Granted:  125,000

 

(d).                              Vesting Dates:  The RSUs shall vest as follows:

 

(i)  Fifty percent (50%) of the RSUs shall become vested on each of the first two anniversaries of the Effective Date (as defined in the Employment Agreement), provided that the Awardee is in the employ of the Company as an executive officer on such anniversary of the Effective Date.

 

(ii)  If the Awardee’s employment is terminated without Cause (as defined in the Employment Agreement) or the Awardee resigns for Good Reason (as defined in the Employment Agreement) and provided that the effective date of such termination occurs prior to the one (1) year anniversary of the Effective Date, then those RSUs covered by this Award that would have vested on the first anniversary of the Effective Date shall become vested (and no longer subject to forfeiture) as of the effective date of such termination.

 

(iii)  Notwithstanding the foregoing, in the event the Company consummates a Change in Control, and the Awardee’s employment is terminated without Cause (as defined in the Employment Agreement) or the Awardee resigns for Good Reason (as defined in the Employment Agreement) upon or within six (6) months following the date of such Change in Control, the RSUs covered by this Award, to the extent not fully vested by the date on which such termination of employment occurs, will become vested (and no longer subject to forfeiture) upon such termination of employment.

 

 

	
/s/ GP
    	
 (Initials)
    	
 
    
	
Greg B. Petersen
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ AS
    	
 (Initials)
    	
 
    
	
Company Signatory
    	
 
    	
 
    
				

 

5

 

EXHIBIT B

 

Assignment of Invention, Non-Disclosure and Non-Solicitation Agreement

 

 

ASSIGNMENT OF INVENTIONS, NON-DISCLOSURE AND NON-SOLICITATION AGREEMENT

 

Employee Name: Greg B. Petersen

 

In order for Diligent Board Member Services, Inc. and its direct and indirect subsidiaries and its and their successors and assigns (herein collectively referred to as the “Company”) to maintain a competitive edge, the Company must protect its inventions, discoveries, works of authorship and its proprietary technical and business information. Therefore, as a condition of employment with the Company, I agree as follows.

 

DEFINITIONS

 

1.              “Inventions” means any new or useful art, discovery, new contribution, finding or improvement (including without limitation any technology, computer programs, test, concept, idea, apparatus, device, mechanism, equipment, machinery, process, method, composition of matter, formula or technique), whether or not patentable, and all know-how related thereto, that has been made, created, developed, written or conceived by me (i) in the course of my employment, (ii) relating to the actual or anticipated business of the Company, or (iii) with the use of the Company’s time, material, proprietary information or facilities.

 

2.              “Works” means any materials for which copyright protection may be obtained, including without limitation literary works (including books, pamphlets, articles and other writings), mask works, artistic works (including designs, graphs, drawings, blueprints and other graphic works), computer programs, compilations, recordings, photographs, motion pictures and other audio-visual works that have been made, created, developed, written or conceived by me (i) in the course of my employment, (ii) relating to the actual or anticipated business of the Company, or (iii) with the use of the Company’s time, material, proprietary information or facilities.

 

3.              “Confidential Information” means information (i) disclosed to or known by me as a consequence of my employment with the Company (or as a consequence of my service as a member of the board of directors of the Company (the “Board”), whether prior to, during or after my employment with the Company), (ii) not generally known to others outside the Company, and (iii) which relates to the trade secrets or otherwise to the research, development efforts and methodologies, testing, engineering, manufacturing, marketing, sales, finances, operation (including without limitation any processes, formulae, methods, techniques, devices, know-how, manufacturing, processes, customer and prospect lists, sales statistics, tactics and projections, marketing strategies and plans, and personnel information or data), or other non-

 

1

 

public information of the Company or of any other party which has entrusted such information to the Company in confidence.

 

DISCLOSURE AND ASSIGNMENT OF INVENTIONS AND WORKS

 

4.              I will promptly disclose to the Company in writing, all Inventions and Works which are conceived, made, discovered, written or created by me alone or jointly with someone else on the Company’s time or on my own time, while I have been or continued to be employed by the Company or as a consequence of my service as a member of the Board, whether prior to, during or after my employment with the Company.

 

5.              All Works created by me, alone or with others, are and shall be deemed “works made for hire” under the copyright laws and are and shall be owned by the Company.

 

6.              I hereby assign to the Company all of my rights in all Inventions, and in all Works to the extent such Works may not, by operation of law, be works made for hire.

 

7.              I will give the Company all assistance it reasonably requires to perfect, protect, and use its rights to Inventions and Works. In particular, I will sign all documents, do all things, and supply all information that the Company considers necessary or desirable to transfer or record the transfer of my entire right, title and interest in Inventions and Works; and to enable the Company to obtain patent, copyright, or other legal protection for Inventions and Works. Any out-of-pocket expenses will be paid by the Company.

 

8.              I acknowledge that my work responsibilities may require me to create, develop or work on Inventions on behalf of the Company. I will immediately communicate to the President of the Company (or such other individual as the President may designate from time to time) a full and complete disclosure of each and every Invention conceived or made by me whether solely or jointly with others (a) while in the employ of the company, whether or not while actually engaged in the Company’s affairs, and (b) within two years subsequent to termination of said employment for any reason.

 

I agree to assign and transfer to the Company, without any separate remuneration or compensation other than the wages or salary received or compensation paid to me from time to time in the course of my employment by the Company, my entire right, title and interest in and to all inventions conceived or made by me, together with all United States and foreign patent rights and any other legal protection in and with respect to any and all such inventions (a) while in the employ of the Company,

 

2

 

whether or not while I was actually engaged in the Company’s affairs, or (b) within two years subsequent thereto and as a direct or indirect result of such employment.  Upon request by the Company, I agree to execute and deliver all appropriate patent applications for securing all United States and foreign patents on all such inventions, and to do, execute, and deliver any and all acts and instruments that may be necessary or proper to vest all such inventions and patents in the Company or its designee, and to enable the Company or its designee to obtain all such letters patent. I agree to render to the Company or its designee all such assistance as it may require in the prosecution of all such patent applications and applications for the reissue of such patents and in the prosecution or defense of all interferences which may be declared involving any of said patent applications or patents. I further agree not to contest the validity of any patent, United States or foreign, which is issued to the Company or its designee, on which I made any contribution, or in which I participated in any way, and not to assist any other party in any way in contesting the validity of any such patent. I further agree that the obligations and undertakings stated in this paragraph shall continue beyond the termination of my employment by the Company, but if I shall be called upon to render such assistance after the termination of my employment, I shall be entitled to a fair and reasonable per diem fee in addition to reimbursement of any expenses incurred at the request of the Company.

 

9.              As a matter of record, I understand that I may include a complete list of inventions made by me prior to the date of employment by the Company as an appendix to this Agreement. Only those inventions so listed shall be deemed to be excluded from the terms and conditions of this Agreement.

 

Other than these, I do not claim to own or control rights in any inventions or works subject to copyright and will not assert any such rights against the Company.

 

NONDISCLOSURE OF CONFIDENTIAL INFORMATION

 

10.       I will not, during my employment with the Company or any time thereafter, disclose or use any of the Confidential Information for the benefit of myself or another, unless directed or authorized in writing by the Company to do so.

 

11.       I understand that if I possess any proprietary information of another person or company as a result of prior employment or otherwise, the Company expects and requires that I will honor any and all legal obligations that I have to that person or company with respect to proprietary information, and I will refrain from any unauthorized use or disclosure of such information.

 

3

 

INSIDER TRADING

 

12.       I hereby affirm that I am aware of and understand my responsibility to safeguard Confidential Information, and will not use or share such information for securities trading purposes or for any other purpose except to conduct Company business.  To use non-public information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal.  Unauthorized use, disclosure or distribution of this information may result in disciplinary action and could also be illegal and result in criminal and civil penalties.

 

RETURN OF COMPANY PROPERTY

 

13.       All documents and other tangible property relating in any way to the business of the Company are the exclusive property of the Company (even if I authored or created them). I agree to return all such documents and tangible property to the Company upon termination of employment or at such earlier time as the Company may request me to do.

 

NON-SOLICITATION OF ACCOUNTS

 

14.       During my employment, and for one (1) year after termination of employment with the Company, I will not solicit, induce, or attempt to induce any past or current customer of the Company whose identities as such were first made known to me or with whom I first had direct contact in the course of my employment (or, in the course of my service as a member of the Board, prior to my employment) (a) to stop doing business with or through the Company, or (b) to do business with any other person, firm, partnership, corporation or other entity that provides products or services materially similar to or competitive with those provided by the Company.

 

NON-SOLICITATION OF EMPLOYEES

 

15.       During my employment by the Company and (with respect to employment or affiliation involving products or services competitive with those of the Company) for one (1) year thereafter, I shall not, directly or indirectly, induce or attempt to induce any employee of the Company to accept employment or affiliation with another firm or entity of which I am an employee, owner, partner or consultant.

 

SEVERABILITY

 

16.       If a provision of this Agreement is held invalid by a court of competent jurisdiction, the remaining provisions will nonetheless be enforceable according to their terms. Further, if any provision is held to be overbroad as written, that provision should be

 

4

 

considered to be amended to narrow its application to the extent necessary to make the provision enforceable according to applicable law and enforced as amended.

 

GOVERNING LAW

 

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

 

BURDEN AND BENEFIT

 

18.       The Company may assign its rights and delegate its duties and obligations under this Agreement to any successor in interest, whether by merger, consolidation, sale of assets, or otherwise. This Agreement shall be binding whether it is between me and the Company or between me and any successor or assigns of the Company.

 

NO EFFECT ON TERM OF EMPLOYMENT; TERM

 

19.       Nothing in this Agreement prevents or limits my right to terminate my employment at any time for any reason, and nothing in this Agreement prevents or limits the Company from terminating my employment at any time for any reason. I understand and agree that there exist no promises or guarantees of permanent employment or employment for any specified term by the Company. I acknowledge and agree that the terms and conditions hereof memorialize the agreement that has governed my employment by the Company since I was first employed by the Company, whether as an employee or independent contractor.

 

20.       I agree that injunctive or other equitable relief would be necessary to remedy any breach of my duties or obligations under this Agreement, and I waive the posting of a bond by the Company in connection with such relief.

 

ENTIRE AGREEMENT

 

21.       I understand that this Agreement contains the entire agreement and understanding between the Company and me with respect to the provisions contained in this Agreement, and that no representations, promises, agreements, or understandings, written or oral, related thereto which are not contained in this Agreement will be given any force or effect. No change or modification of this Agreement will be valid or binding unless it is in writing and signed by the party against whom the change or modification is sought to be enforced. I further understand that even if the Company waives or fails to enforce any provision of this Agreement in one instance that will not constitute a waiver of any other provisions of this Agreement at this time, or a waiver of that provision at any other time.

 

5

 

	
AGREED:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Diligent   Board Member Services, Inc.
    
	
 
    	
 
    	
 
    
	
Employee:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:   
    	
/s/   Greg B. Petersen
    	
 
    	
By:   
    	
/s/   Alessandro Sodi
    
	
Name:   Greg B. Petersen
    	
 
    	
Name:   Alessandro Sodi
    
	
Date:   September 15, 2014
    	
 
    	
Title:   Chief Executive Officer
    

 

6

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