Exhibit 10.14
EMPLOYMENT AGREEMENT
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XXXX EMPLOYMENT AGREEMENT ("Agreement") is entered into on January 1,
2002 to be effective as of January 1, 2002 between VIRTGAME CORP., a Delaware
corporation ("Employer"), and XXXXX X. XXXXXX ("Executive").
RECITAL
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Employer wishes to employ Executive, and Executive agrees to serve, as
Chief Executive Officer and President of Employer, subject to the terms and
conditions set forth below.
AGREEMENT
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It is agreed as follows:
1. TERM OF EMPLOYMENT. Employer hereby employs Executive, and
Executive hereby accepts employment with Employer, for a period of two (2) years
terminating January 1, 2004 ("Employment Period"), provided that this Agreement
shall be automatically renewed for successive two (2) year terms unless either
party elects not to renew this Agreement by delivering written notice of its
election to the other party no later than ninety (90) days prior to the end of
the current term. Notwithstanding anything in this Section I to the contrary,
this Agreement may be terminated at any time in accordance with Section 6.
2. DUTIES OF EMPLOYEE. Executive shall serve in the capacity Chief
Executive Officer and President of Employer. Executive accepts such employment
and agrees to perform services for the Company. Executive shall perform such
other services and duties as may from time to time be assigned to Executive by
Employer's Chairman or Board of Directors provided that such other services and
duties are not inconsistent with any other term of this Agreement. Except during
vacation periods or in accordance with Employer's personnel policies covering
Executive leaves and reasonable periods of illness or other incapacitation,
Executive shall devote his services to Employer's business and interests in a
manner consistent with Executive's title and office and Employer's needs for his
services. Executive shall perform the duties of Executive's office and those
assigned to Executive by the Employer's Chairman or Board of Directors with
fidelity, to the best of Executive's ability, and in the best interest of
Employer.
3. COMPENSATION OF EMPLOYEE.
3.1 BASE COMPENSATION. As compensation for Executive's
services hereunder, Executive shall receive a base salary ("Base Salary") which
will be at least One Hundred Fifty Thousand Dollars ($150,000) per year, payable
in equal bi-monthly installments, or a ratable portion thereof for periods of
less than one-half month. The term Base Salary as utilized in this Agreement
shall refer to Base Salary as so increased. Any increase in Base Salary shall
not serve to limit or reduce any other obligation to Executive under this
Agreement. Executive shall receive an increase in base salary to $200,000 upon
thirty (30) days after Employer has $2,000,000 in cash placed in financial
institution(s). Base Salary shall not be reduced at any time during the
Employment Period.
3.2 Bonus Compensation.
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3.2.1 CASH INCENTIVE BONUSES. As additional
compensation for Executive's services hereunder, Executive shall be entitled to
a cash bonus 3% of any investment capital that is received by Employer which is
directly attributable to the efforts of Employee. Employer shall be entitled to
additional cash bonuses as per the schedule below:
a) $100,000 within thirty (30) days from the
date when the stock has traded above $2.00
for sixty (60) consecutive days;
b) $200,000 within thirty (30) days from the
date when the stock has traded above $4.00
for sixty (60) consecutive days; and
c) $400,000 within thirty (30) days from the
date when the stock has traded above $6.00
for sixty (60) consecutive days.
3.2.4 STOCK OPTIONS PLAN. The Company shall issue
stock options to Executive pursuant to the Company's Stock Option Plan or any
successor thereto. With respect to the options granted, Cliff provisions apply
and the options shall stand for 2 years following Employee's departure from his
position as Executive and, in addition, for as long as he serves as Director.
Further, such options shall have anti-dilution protection as well as piggyback
registration rights. The stock options shall be issued to Executive in accord
with the schedule set forth below:
a) On January 1, 2002, 200,000 options with an
exercise price of $0.50;
b) On January 1, 2002, 200,000 options with an
exercise price of $1.50; and
c) Upon the date when the Company's stock
trades over $5.00 for thirty (30)
consecutive days, 400,000 options with an
exercise price of $1.50.
3.2.5 HEALTH INSURANCE PLAN. The Company shall
provide Executive and his immediate family members with comprehensive health
insurance, which shall cover, medical, dental and vision.
4. EXPENSE REIMBURSEMENTS. Executive shall be reimbursed for reasonable
and actual out-of-pocket expenses incurred by Executive in performance of
Executive's duties and responsibilities hereunder in accordance with Employer's
established personnel policy covering Executive officer expense reimbursements,
as such policy may be amended, revised or otherwise changed from time to time.
This includes all expenses incurred in connection with the relocation of
Executive's family from New York to Las Vegas. Executive shall furnish proper
vouchers and expense reports and shall be reimbursed only for those expenses,
which shall be reimbursable.
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5. VACATION AND SICK DAYS. Executive shall be entitled to fifteen (15)
days vacation time each year without loss of compensation. In the event that
Executive is unable for any reason to take the total amount of vacation time
authorized herein during any year, any unused vacation time shall carry over
from year to year. Executive shall also be entitled to leaves for illness or
other incapacitation.
6. TERMINATION.
6.1 TERMINATION BY EMPLOYER FOR CAUSE. Employer may terminate
this Agreement and Executive's employment hereunder for Cause (as defined
herein) any time effective upon written notice to Executive. As used herein, the
term "Cause" shall mean:
6.1.1 Habitual neglect in the performance of
Executive's material duties as set forth in Section 2 which continues
uncorrected for a period of thirty (30) days after written notice thereof by
Employer to Executive-,
6.1.2 Gross negligence involving misfeasance or
nonfeasance by Executive in the performance of Executive's material duties as
set forth in Section 2 which continues uncorrected for a period of thirty (30)
days after written notice thereof by Employer to Executive;
6.1.3 Insubordination in the form of the unexcused or
unexcusable failure to carry out the written instructions of the Board of
Directors of Employer, which continues uncorrected for a period of thirty (30)
days after written notice thereof by Employer to Executive. Any claimed
insubordination will be excusable on the basis that the Board of Directors'
instructions propose a violation of law or actions beyond the control of
Executive.
Upon termination for Cause, Executive will as soon as practicable be paid: (A)
Executive's Base Salary at the usual rate through the date of termination
specified in such notice; and (B) any amounts which Executive has earned under
any Employer benefit plan in accordance with the terms of such plan through the
date of termination.
6.2 TERMINATION WITHOUT CAUSE. Either Executive or Employer
may terminate this Agreement and Executive's employment without Cause on thirty
days' prior written notice. In the event of termination pursuant to this Section
6.2, compensation will be paid and benefits will be provided to Executive as
follows:
6.2. 1 If the termination is by Executive without
Good Reason (as defined in Section 6.4 below), Executive will as soon as
practicable be paid: (A) Executive's Base Salary at the usual rate through the
date of termination specified in such notice (but not to exceed thirty days from
the date of such notice); and (B) any amounts which Executive has earned under
any Employer benefit plan in accordance with the terms of such plan through the
date of termination; or
6.2.2 If the termination is by Employer, and except
as provided under Section 6.5, Employer will as soon as practicable pay
Executive: (A) a lump sum payment equal to Executive's Base Salary at the usual
rate for the remaining term of this agreement following the date of termination;
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plus the higher of his Annual Bonus for the last fiscal year or his
average bonus for the past three years; (B) the proportionate amount of any
unpaid bonus or incentive deemed earned for the year in which the termination
takes place; (C) a lump sum payment equal to any retirements benefits lost as a
result of not having been employed for the remaining term of the Agreement; and
(D) a reasonable amount of outplacement assistance (not to exceed fifteen
percent of Executive's Base Salary).
6.2.3 Without limiting the generality of the
foregoing, termination on account of Executive's retirement, whether voluntary
or mandatory, and whether normal or early approved, will be considered a
termination by Executive other than for Good Reason.
6.3 TERMINATION UPON DEATH OR DISABILITY. This Agreement and
Executive's employment hereunder shall terminate upon Executive's death or
Disability (as defined herein). For this purpose, 'Disability" means incapacity,
whether by reason of physical or mental illness or disability, which prevents
Executive from substantially performing Executive's material duties as set forth
in Section 2 for six (6) months. Upon termination for death, and unless Employer
shall have in force a disability insurance policy providing for benefits in an
amount at least equal thereto, upon termination for Disability, Employer shall
continue to pay the Executive's Base Salary to the surviving spouse of Executive
(or if there is none to Executive's estate) in the case of death and to
Executive or Executive's court appointed conservator in the case of Disability
for six (6) months thereafter. Termination for death shall become effective upon
the occurrence of such event and termination for Disability shall become
effective upon written notice by Employer to Executive.
6.4 TERMINATION FOR GOOD REASON. Executive may terminate this
Agreement and Executive's employment upon thirty days' prior written notice to
Employer for Good Reason, which notice must be given within sixty days of the
occurrence of an event constituting Good Reason or will be deemed waived. For
purposes of this Agreement, "Good Reason" means: (i) a reduction by Employer in
Executive's Base Salary to a rate less than the initial Base Salary rate set
forth in this Agreement; (ii) a change in the eligibility requirements or
performance criteria under any employee benefit plan or incentive compensation
arrangement under which Executive is covered on the effective date of this
Agreement, and which materially adversely affects Executive; (iii) Employer
requiring Executive to be based anywhere other than Employer's headquarters or
the relocation of Employer's headquarters more than twenty miles from its
location on the effective date of this Agreement, except for required travel on
Employer's business to the extent substantially consistent with the business
travel obligations which Executive undertook on behalf of Employer on the
effective date of this Agreement; (iv) the assignment to Executive of any duties
or responsibilities which are materially inconsistent with Executive's status or
position as a member of Employer's executive management group; or (v)
Executive's good faith and reasonable determination, after consultation with
nationally recognized counsel, that Executive is being unduly pressured or
required by the Board or a senior Executive of Employer to directly or
indirectly engage in criminal activity. In the event of termination for Good
Reason pursuant to this Section 6.4., Employer will pay Executive the amounts
and provide the benefits described under Section 6.2.2.
6.5 TERMINATION FOR GOOD REASON FOLLOWING A CHANGE IN CONTROL.
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6.5.1 DEFINITION OF CHANGE IN CONTROL. For purposes
of this Agreement, a "Change of Control" shall mean the first to occur of the
following:
(a) The acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) after the date hereof of
beneficial ownership (within the meaning of Rule 13d3 promulgated under the
Exchange Act) of thirty-three percent (33%) or more of the combined voting power
of the then outstanding voting securities of Employer entitled to vote generally
in the election of directors (the "Outstanding Employer Voting Securities");
provided, however, that the following acquisitions of common stock shall not
constitute a Change of Control: (i) any acquisition by Employer, (ii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by Employer or any corporation controlled by Employer, or (iii) any
acquisition by any corporation pursuant to a reorganization, merger, statutory
share exchange or consolidation which would not be a Change of Control under
subsection (c) of this Section 6.5; or
(b) Individuals who, as of the date hereof,
constitute the Board of Directors of Employer (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by Employer's shareholders, was approved by
a vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest or other actual or threatened "solicitation" (as
such term is used in Regulation 14A promulgated under the Exchange Act) of
proxies or consents by or on behalf of a person other than the Incumbent Board;
or
(c) Consummation of a reorganization, merger,
statutory share exchange or consolidation, unless, following such
reorganization, merger, statutory share exchange or consolidation, (i) at least
fifty percent (50%) of the combined voting power of the then outstanding voting
securities of the corporation resulting from such reorganization, merger,
statutory share exchange or consolidation entitled to vote generally in the
election of directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Employer Voting Securities immediately prior to such
reorganization, merger, statutory share exchange or consolidation in
substantially the same proportions as their ownership, immediately prior to such
reorganization, merger, statutory share exchange or consolidation, (ii) no
person (excluding Employer, any employee benefit plan (or related trust) of
Employer or such corporation resulting from such reorganization, merger,
statutory share exchange or consolidation and any person beneficially owning,
immediately prior to such reorganization, merger, statutory share exchange or
consolidation, directly or indirectly, thirty-three percent (33%) or more of the
Outstanding Employer Voting Securities, as the case may be) beneficially owns,
directly or indirectly, thirty-three percent (33%) or more of the combined
voting power of the then outstanding voting securities of the corporation
resulting from such reorganization, merger, statutory share exchange or
consolidation entitled to vote generally in the election of directors and (iii)
at least a majority of the members of the board of directors of the corporation
resulting from such reorganization, merger, statutory share exchange or
consolidation were members of the Incumbent Board at the time of the execution
of the initial agreement providing for such reorganization, merger or
consolidation; or
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(d) Consummation of (i) a complete liquidation or
dissolution of Employer or (ii) the sale or other disposition of all or
substantially all of the assets of Employer, other than to a corporation, with
respect to which following such sale or other disposition, (A) at least fifty
percent (50%) of the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Employer Voting Securities immediately
prior to such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition, of the
Outstanding Employer Voting Securities, (B) no person (excluding Employer and
any employee benefit plan (or related trust) of Employer or such corporation and
any person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, thirty-three percent (33%) or more of the
Outstanding Employer Voting Securities, as the case may be) beneficially owns,
directly or indirectly, thirty-three percent (33%) or more of, respectively, the
then outstanding shares of the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors and (C) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of Employer.
6.5.2 COMPENSATION IN THE EVENT TERMINATION FOLLOWING
A CHANGE IN CONTROL. In the event Executive terminates this Agreement and
Executive's employment for Good reason following a Change in Control or Employer
terminates this Agreement without cause following Change in Control, Employer
will as soon as practicable pay Executive: (A) a lump sum payment equal to
Executive's Base Salary at the usual rate for the remaining term following the
date of termination; plus the higher of his Annual Bonus for the last fiscal
year or his average bonus for the past three years; (B) the proportionate amount
of any unpaid bonus or incentive deemed earned for the year in which the
termination takes place; (C) a lump sum payment equal to any retirements
benefits lost as a result of not having been employed for the remaining term of
the Agreement; and (D) a reasonable amount of outplacement assistance (not to
exceed fifteen percent of Executive's Base Salary).
6.6 NO LITIGATION REQUIRED. Executive shall not be required to
mitigate the amount of any payments provided for in this Section 6 by seeking
other employment or otherwise, nor shall the amount of any payments provided for
in this Section 6 be reduced by any compensation earned by Executive as the
result of employment by another employer after the date of Executive's
termination by Employer, or otherwise.
6.7 EVENTS UPON TERMINATION. The termination of this Agreement
pursuant to Section 6 shall also result in the termination of all rights and
benefits of Executive under this Agreement except for any rights to compensation
accrued under Section 6 prior to the date of termination or rights to expense
reimbursement under Section 4.
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7. EXECUTIVE'S REPRESENTATIONS. Executive represents and warrants that
Executive is free to enter into this Agreement and to perform each of the
provisions contained herein. Executive represents and warrants that Executive is
not restricted or prohibited, contractually or otherwise, from entering into and
performing this Agreement, and that Executive's execution and performance of
this Agreement is not a violation or breach of any agreement between Executive
and any other person or entity.
8. GENERAL PROVISIONS.
8.1 SEVERABLE PROVISIONS. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to be judicially
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.
8.2 ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of Employer, its successors and assigns and Employer shall
require any successor or assign (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that Employer would be
required to perform if no such succession or assignment had taken place. The
term "Employer" as used herein shall include such successors and assigns. The
term "successors and assigns" as used herein shall mean a corporation or other
entity acquiring all or substantially all the assets and business of Employer
(including this Agreement) whether by operation of law or otherwise. Neither
this Agreement nor any of the rights or obligations of Executive hereunder shall
be assignable except by operation of law or the rules of descent.
8.3 ATTORNEYS' FEES. If any legal action arises under this
Agreement or by reason of any asserted breach of it, the prevailing party shall
be entitled to recover all costs and expenses, including reasonable attorneys'
fees, incurred in enforcing or attempting to enforce any of the terms, covenants
or conditions, including costs incurred prior to commencement of legal action,
and all costs and expenses, including reasonable attorneys' fees, incurred in
any appeal from an action brought to enforce any of the terms, covenants or
conditions.
8.4 NOTICES. Any notice to be given to Employer under the
terms of this Agreement shall be addressed to Employer at the address of
Employer's principal place of business, and any notice to be given to Executive
shall be addressed to Executive at his home address last shown on the records of
Employer, or at such other address as either party may hereafter designate in
writing to the other. Any notice required or permitted under this Agreement
shall be in writing and shall be deemed effective: (i) upon receipt in the event
of delivery by hand, including delivery made by private delivery or overnight
mail service where either the recipient or delivery agent executes a written
receipt or confirmation of delivery; or (ii) 72 hours after deposited in the
Swiss mail, postage prepaid.
8.5 WAIVER. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, or prevent that party thereafter from
enforcing each and every other provision of this Agreement.
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8.6 ENTIRE AGREEMENT. AMENDMENTS. With the exception of the
Company's Employee Manual which shall remain unaffected by this Agreement, this
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto with respect to the employment of Executive by
Employer and contains all of the covenants and Agreements between the parties
with respect to the employment of Executive by Employer. Each party to this
Agreement acknowledges that no representations, inducements, promises or
agreements, orally or otherwise, have been made by any party, or anyone acting
on behalf of any party, which are not embodied herein, and that no other
agreement, statement or promise not contained in this Agreement will be
effective only if it is in writing signed by the party to be charged.
8.7 TITLES AND HEADING. Titles and headings to sections of
this Agreement are for the purpose of reference only and shall in no way limit,
define or otherwise affect the interpretation or construction of such
provisions.
8.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of California.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
"EMPLOYER"
VIRTGAME CORP., a Delaware corporation
By:
XXX X. XXXXXX
Chairman of the Board
"EXECUTIVE"
Xxxxx X. Xxxxxx
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