EXECUTIVE EMPLOYMENT AGREEMENT (Werner Funk)

WHEREAS, the Company desires to continue the employment of Employee in an Employee capacity on the terms and conditions and for the consideration hereinafter set forth for the period provided herein commencing upon the Effective Date, and Employee desires employment with the Company on such terms and conditions and for such consideration as set forth herein; and

WHEREAS, Employee possesses significant capabilities and knowledge important for the development of the Company’s business and the Company desires to provide incentive to Employee to provide his services to the Company; and

WHEREAS, Employee has, and will acquire during the term of his employment, significant knowledge and experience in the Company’s business and intimate knowledge of its customers, processes, trade secrets, and/or other business information, and the Company needs to protect its commercial goodwill and other assets.

AGREEMENT

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(b)Employee’s salary shall be payable upon the same schedule that the Company pays its employees generally.  Base Salary will be reviewed from time to time by the Board of Directors of the Company.  

(d)Additional Bonus.  Additional bonus payments and amounts shall be determined by the Company’s board of directors in its sole discretion in accordance with performance-based criteria applicable generally to the Employee-level employees of the Company.  

(e)Equity Participation.  The Company hereby grants to Employee options to purchase up to 300,000 shares of the Company’s common stock (as adjusted for stock splits, combinations, recapitalizations, and the like occurring on and after the Effective Date) (such options the “Options”), with an exercise price of $0.1155 per share representing 110% of the average of the closing price of the common stock as reported on the OTCBB as of the Effective Date.  One-thirty sixth (1/36) of the total number of shares subject to the Options shall vest and  

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become exercisable at the end of each month following the Effective Date on the same day of each month as the Effective Date, so that all shares subject to the Options will be fully vested on the third anniversary of the Effective Date.  These Options will be exercisable for a period of seven (7) years from the Effective Date and will be incentive stock options to the extent permitted by applicable law.  The options shall be granted pursuant to the Company’s 2017 Long-Term Incentive Plan, as it may be amended and adopted from time to time.

(f)Fringe Benefits.  During the Employment Period, Employee shall be entitled to the benefits of such group medical, travel and accident, short- and long-term disability, and term life insurance, if any, as the Company shall make generally available from time to time to the Company’s Executive officers. 

(g)Other.  During the Employment Period, Employee and, to the extent applicable, Employee’s family, dependents, and beneficiaries, shall be allowed to participate in all benefits, plans, and programs, including improvements or modifications of the same, that are now or may hereafter be available to Executive officers of the Company generally.  Such benefits, plans, and programs may include a profit sharing plan, a thrift plan, group medical insurance, dental insurance, vision insurance, travel and accident insurance, short-term and long-term disability insurance, life insurance, and a pension plan.  The Company shall not, however, by reason of this subsection be obligated to institute, maintain, or refrain from changing, amending, or discontinuing any such benefit plan or program, so long as such changes are similarly applicable to Executive Officers of the Company generally. 

(h)Reimbursement.  The Company shall reimburse Employee (or, in the Company’s sole discretion, shall pay directly), upon presentation of vouchers and other supporting documentation as the Company may reasonably require, for reasonable out-of-pocket expenses incurred by Employee relating to the business or affairs of the Company or the performance of Employee’s duties hereunder, including reasonable expenses for entertainment, travel, and similar items, provided that Employee shall have complied with the Company’s regular reimbursement procedures and practices generally applicable from time to time to the Company’s Executive officers. 

(i)Vacation.  In addition to statutory holidays and other holidays declared by the Company that are of general applicability to the Company’s Employees, during the term of this Agreement, Employee shall be entitled to three (3) weeks of vacation each calendar year during Employee’s employment, accruing ratably each month, to be taken in accordance with the procedures and practices generally applicable from time to time to the Company’s Employees, provided that such vacation time for any particular calendar year that accrues but is not taken shall carry over to subsequent calendar years.   

(j)Withholding.  The Company may withhold from Employee’s compensation all applicable amounts required by law. 

(a)Termination by the Company for Cause.  The Company shall have the right to terminate Employee’s employment with the Company “For Cause” (as such term is hereinafter defined), effective upon notice of termination to Employee.  As used herein, the term “For Cause” shall mean (i) Employee’s repeated failure, in the reasonable judgment of the Company’s board of directors, to substantially perform his assigned duties or responsibilities as President and  

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Chief Executive Officer of the Company as reasonably directed or assigned by the Company’s board of directors (other than a failure resulting from the Employee’s Disability); (ii) Employee engaging in knowing and intentional illegal conduct that was or is materially injurious to the Company; (iii) Employee’s knowing violation of a federal or state law or regulation directly or indirectly applicable to the business of the Company, which violation was or is reasonably likely to be injurious to the Company; (iv) Employee’s material breach of the terms of any confidentiality agreement or invention assignment agreement between Employee and the Company; (v) repeated misuse (following at least one written warning from the Company) of alcohol, narcotics, or other controlled substances that is materially detrimental to the Company and that materially interferes with Employee’s performance of his duties hereunder; or (vi) Employee being convicted of, or entering a plea of nolo contendere to, a felony or committing any act of moral turpitude or fraud against, or the misappropriation of material property belonging to the Company, provided, however, in all cases other than Employee being convicted of, or entering a plea of nolo contendere to, a felony, that prior to the Company having the right to terminate Employee’s employment with the Company For Cause pursuant to this Subsection 6(a), (1) the Company’s board of directors must first provide written notice to Employee describing in reasonable detail the basis upon which the Company would terminate Employee’s employment with the Company For Cause and the Employee must have had opportunity to address the Company’s board of directors, with counsel, regarding such alleged basis and (2) Employee shall have failed, during the period of 30 days following such opportunity to address the Company’s board of directors, to remedy any such alleged basis for “For Cause” termination.  In the event Employee’s employment is terminated in accordance with this Subsection 6(a), the Company shall pay to Employee all amounts accrued through the Termination Date (as hereinafter defined), any unreimbursed expenses incurred pursuant to Subsection 5(h) of this Agreement, and any other benefits specifically provided to Employee under any benefit plan.

(b)Termination upon Death or Disability of Employee.  This Agreement shall terminate immediately upon Employee’s death or upon the Disability of Employee.  In the event Employee’s employment is terminated in accordance with this Subsection 6(b), the Company shall provide to Employee the Disability Termination Compensation as provided in Subsection 18(j). 

(c)Other Termination by Company.  In the event of any termination of this Agreement by the Company other than in accordance with subsections (a) or (b) of this Section 6, the Company shall provide to Employee the Full Termination Compensation as provided in Subsection 18(c). 

7.Termination by Employee.  The following provisions shall govern the termination of Employee’s employment by Employee during the term of this Agreement.   

(a)Termination for Good Reason.  Employee’s employment with the Company may be regarded as having been constructively terminated by the Company, and the Employee may therefore terminate his employment for Good Reason (as defined below), by providing written notice to the Company and thereupon become entitled to the Full Termination Compensation as provided in Subsection 18(c).  For purposes of this section, “Good Reason” shall mean if, at any time during the Employment Period, one or more of the following events shall occur: 

(i)without the Employee’s express written consent, the assignment to the Employee of any duties or the reduction of the Employee’s duties, either of which results in a significant diminution in the Employee’s position or responsibilities with the  

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Company in effect immediately prior to such assignment, or the removal of the Employee from such position and responsibilities; provided, however, that upon and following the consummation of a Change of Control, Employee may not terminate his employment for Good Reason pursuant to this subsection, unless Employee is assigned a title lower than that of an Employee Vice President of the controlling entity following the Change of Control or Employee is assigned any duties or his duties are reduced to a level inconsistent with the role of an Employee Vice President or higher role with such controlling entity;

(ii)without the Employee’s express written consent, a substantial reduction, without good business reasons, as determined by the Company’s board of directors, of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction;  

(iii)a material reduction by the Company in the Base Salary or bonus opportunity of the Employee as in effect immediately prior to such reduction;  

(iv)a material reduction by the Company in the kind or level of Employee benefits to which the Employee is entitled immediately prior to such reduction with the result that the Employee’s overall benefits package is significantly reduced;  

17.Excise Tax and Gross-Up Payments.  If any payment Employee receives or would receive pursuant to this Agreement (any such payment a “Payment”) will be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest or penalties are incurred by Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then Employee will be entitled  

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to receive an additional payment (a “Gross-Up Payment”) in an amount equal to the Excise Tax imposed upon the Payments made to the Employee in excess of 10% above the capped limit of 2.99 times the base amount as such term is defined in Section 280G of the Internal Revenue Code, and any Excise Tax imposed upon the Gross-Up Payment.  An initial determination (the “Determination”) as to whether a Gross-Up Payment is required pursuant to this Agreement and the amount of such Gross-Up Payment shall be made at the Company’s expense by an accounting firm selected by the Company (the “Accounting Firm”).  The Accounting Firm shall provide its Determination, together with detailed supporting calculations and documentation to the Company and Employee within 30 days of the effective date of the Termination Date, or such other time as requested by the Company.  If the Accounting Firm determines that no Excise Tax is payable by Employee with respect to a Payment, it shall furnish Employee with an opinion that no Excise Tax will be imposed with respect to any such Payment.  Employee shall have 30 days to dispute the Determination.  The Company shall pay the Gross-Up Payment, if any, to Employee within 30 days of the receipt of the Determination, regardless of whether Employee has disputed the Determination.  Upon the final resolution of a dispute, the Company shall promptly pay to Employee any additional amount required by such resolution and such resolution shall be binding, final, and conclusive upon the Company and Employee.  If there is no dispute, the Determination shall be binding, final, and conclusive upon the Company and Employee.  Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Determination, an Excise Tax will be imposed on any Payment, the Company shall pay to the applicable government taxing authorities, as Excise Tax withholding, the amount of the Excise Tax that the Company withholds from the Payment.

18.Definitions.  Capitalized terms used in this Agreement but not otherwise defined herein shall have the meaning hereby assigned to them as follows. 

(b)Disability.  Employee shall be deemed to have a “Disability” for purposes of this Agreement if Employee is substantially unable to perform Employee’s duties under this Agreement either for more than 180 days, whether or not consecutive, in any 12-month period by reason of a physical or mental illness or injury.  Time spent for vacation under Subsection 5(i) shall not be taken into account in the foregoing calculation for purposes of determining Disability. 

(c)Full Termination Compensation.  “Full Termination Compensation” shall mean: 

(i)all amounts accrued to Employee through the Termination Date, any unreimbursed expenses incurred pursuant to Subsection 5(h) of this Agreement, and any other benefits specifically provided to Employee under any benefit plan; 

(ii)the continuation of Employee’s Base Salary for 24 months, payable on the Company’s payroll payment dates; 

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(iii)the greater of (1) the minimum annual bonus for each of the four quarters in the year in which such termination occurs, and (2) the additional bonus earned by Employee for the four fiscal quarters immediately preceding such termination; 

(v)the continuation, at the Company’s expense, of group medical coverage under the same terms as in effect at the Termination Date for the earlier of (1) three months past the Termination Date, or (2) until Employee obtains alternate health insurance coverage, in addition to any health insurance continuation obligation under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA); and 

(vi)full acceleration of all vesting of Options and any other options or shares of capital stock that may be subject to vesting, so that all Options and any other options and shares subject to any vesting will be immediately vested and exercisable as of and for a period of two years following the Termination Date. 

(e)Protected Territory.  “Protected Territory” shall mean the world. 

(f)Termination Date.  “Termination Date” shall mean the date Employee ceases to be employed by the Company. 

(g)Related Company.  “Related Company” means any Affiliate (as defined below) of the Company that is engaged in a business substantially similar to, complementary with, or directly related to the business in which the Company is engaged during the Employment Period.  

(h)Affiliate.  “Affiliate” means, with respect to a person, another person that controls, is controlled by, or is under common control with such person. 

(i)Change of Control.  For purposes of this Agreement, a “Change of Control” means either: (i) consummation of the acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation, or stock transfer, but excluding any such transaction effected primarily for the purpose of changing the domicile of the Company), unless the Company’s stockholders of record immediately prior to such transaction or series of related transactions hold, immediately after such transaction or series of related transactions, at least 50% of the voting power of the surviving or acquiring entity (provided that the sale by the Company of its securities for the purposes of raising additional funds shall not constitute a Change of Control hereunder); or (ii) consummation of a sale of all or substantially all of the assets of the Company in a single transaction or series of related transactions. 

(j)Disability Termination Compensation.  “Disability Termination Compensation” shall mean: 

(i)all amounts accrued to Employee through the Termination Date, any unreimbursed expenses incurred pursuant to Subsection 5(h) of this Agreement, and any other benefits specifically provided to Employee under any benefit plan; 

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(ii)the continuation for a period of 12 months of Employee’s Base Salary, payable on the Company’s regular payroll payment dates; 

(iii)the continuation, at the Company’s expense, of group medical coverage under the same terms as in effect at the Termination Date for the earlier of (1) two months past the Termination Date, or (2) until Employee obtains alternate health insurance coverage, in addition to any health insurance continuation obligation under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA); and 

(iv)full acceleration of all vesting of Options and any other options or shares of capital stock that may be subject to vesting, so that all Options and any other options and shares subject to any vesting will be immediately vested and exercisable as of and for a period of two years following the Termination Date. 

19.[Intentionally Deleted]. 

21.Successors and Assigns.  The provisions hereof shall inure to the benefit of, and be binding upon, the Company’s successors and assigns. 

(c)Counterparts; Electronic Signature.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile, portable document format (.pdf), DocuSign or other electronic transmission shall be equally as effective as delivery of a manually executed counterpart of this Agreement. 

*** Signature Page Follows ***

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date set forth above.

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