EXHIBIT 10.35: SERVICES AGREEMENT BY AND BETWEEN ▇▇▇▇▇▇.▇▇▇ AND ▇▇▇▇▇
▇▇▇▇▇▇▇▇, INC. AS AMENDED BY AN AMENDMENT DATED MARCH 27,
2003
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is made as of February 1,
2002 (the "Effective Date"), by and between ▇▇▇▇▇▇.▇▇▇, INC., a Delaware
corporation, (the "Company"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC., a California
corporation, ("DMI").
W I T N E S S E T H:
THAT, WHEREAS, the Company desires to engage DMI to retain the services
of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇▇") as Vice Chairman and a member of the
Executive Committee of the Company and to provide other consulting services to
the Company; and
WHEREAS, DMI desires to make such services available;
NOW, THEREFORE, in consideration of the covenants and agreements
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which the parties hereby acknowledge, the parties
agree as follows:
1. ENGAGEMENT AND ACCEPTANCE. The Company hereby engages DMI for the
services of ▇▇. ▇▇▇▇▇▇▇▇ for a term commencing on the Effective Date and, unless
extended or sooner terminated as hereinafter provided, continuing until January
31, 2004 (the "Initial term"). The Initial term will renew automatically for
successive one (1) year terms (each a "Renewal term") unless a party delivers
written notice to the other party terminating the Initial term or a Renewal
term, as the case may be, at least ninety (90) days before the expiration of the
Initial term or a Renewal term, as the case may be. As used in this Agreement,
the word the "Term" shall mean the Initial term and any and all Renewal terms.
DMI hereby accepts such engagement.
2. SERVICES.
A. POSITION. During the Term, ▇▇. ▇▇▇▇▇▇▇▇ shall serve as the Vice
Chairman and a member of the Executive Committee of the Company and provide
consulting services to the Company as mutually agreed. During the Term, ▇▇.
▇▇▇▇▇▇▇▇ will, subject to the provisions contained herein, devote a sufficient
amount of his work time to fulfill his duties and responsibilities for the
Company and not engage in any interactive gaming activities that are competitive
with the business of the Company.
B. REPORTING. ▇▇. ▇▇▇▇▇▇▇▇ shall report solely to the Board of
Directors of the Company (the "Board") with respect to Board and Executive
Committee duties. With respect to the other services that ▇▇. ▇▇▇▇▇▇▇▇ will
provide under this Agreement, ▇▇. ▇▇▇▇▇▇▇▇ shall report to the Company's Chief
Executive Officer. As long as ▇▇. ▇▇▇▇▇▇▇▇ is acting as Vice Chairman and a
member of the Executive Committee of the Company, he shall be a member of the
Board.
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3. COMPENSATION.
A. FEES. Subject to upward adjustment as provided below, and except as
otherwise provided in Section 3.B. of this Agreement, the Company shall, during
the Term of this Agreement, pay to DMI, and DMI agrees to accept, in
consideration of making ▇▇. ▇▇▇▇▇▇▇▇'▇ services available to the Company, the
sum of (i) two hundred twenty thousand and no/100 dollars ($220,000) per each
twelve-month period during the Term, and (ii) the amount of payroll and other
taxes that the Company would be required to pay if ▇▇. ▇▇▇▇▇▇▇▇ were employed by
the Company at a salary equal to the amount payable under clause (i) of this
Section 3.A. (Section 3.A.(i) and (ii) being hereinafter collectively referred
to as the "Base Fee"). Except as otherwise provided in Section 3.B. of this
Agreement, the Base Fee shall be payable in equal semi-monthly or bi-weekly
installments. During the Term, the amount set forth in clause (i) of this
Section 3.A. may be increased on each anniversary of the Effective Date at the
discretion of the Board.
B. TIMING. To the extent that the Company has not paid DMI any Base Fee
payments due as of the date this Agreement is executed and delivered, the
Company shall pay DMI such payments within five (5) days of the execution and
delivery of this Agreement.
C. BONUSES. The Company reserves the right to recognize and reward the
Executive's performance and contributions the Executive may make to the Company
by awarding the Executive such additional bonus compensation, if any, as the
Board may, in its discretion, determine from time to time to be appropriate. Any
such bonus may be in cash or stock, as mutually agreed by the Company and DMI.
In the event that there is a Change of Control (as defined below), the Company
shall issue to DMI a special achievement bonus of three hundred thousand
(300,000) shares of common stock of the Company upon such Change of Control (the
"Change of Control Bonus").
D. STOCK OPTIONS. Subject to the availability of shares issuable
pursuant to the Company's Stock Option Plan and subject to the applicable rules
governing the grant of options under the Company's 1998 Stock Option Plan, DMI
is hereby granted one million (1,000,000) options for the Company's common stock
pursuant to the Company's 1998 Stock Option Plan. Said stock options will have
an exercise price equal to fair market value. As used in the foregoing sentence,
"fair market value" means the closing price per share of the common stock of the
Company on the Effective Date. Commencing with the Effective Date, DMI's stock
options shall vest equally, on a monthly basis, over two (2) years, at the rate
of one twenty-fourth (1/24th) per month. All unvested options of DMI shall
immediately vest upon a Change of Control defined below and all vested options
shall be exercisable for the later of two (2) years following (a) the date of a
Change of Control or (b) the period of exercisability provided for in the
Company's 1998 Stock Option Plan. Except as otherwise provided in this
Agreement, any unvested options shall terminate as provided in the Company's
1998 Stock Option Plan or as otherwise set forth herein. To the extent of any
conflict between this Agreement, on the one hand, and the Stock Option plan
and/or the 1998 Stock Option Plan Incentive Stock Option Agreement, on the other
hand, this Agreement shall control. In no event shall DMI have less than two (2)
years after the later of (i) May 15, 2004, or (ii) the end of its engagement
under this Agreement by which to exercise any vested options.
For purposes of this Agreement, the term "Change of Control" shall
mean, a merger, acquisition or other corporate transaction where either (i)
substantially all the Company's assets or fifty percent (50%) or more of the
outstanding common stock of the Company is sold or acquired, or (ii) upon the
consummation of any transaction involving over fifty percent (50%) of the assets
or outstanding stock of the Company, the Company's existing Board as of the date
immediately preceding the consummation of the transaction no longer constitute a
majority of the Board as of any date within the twelve (12) consecutive months
subsequent to consummation of the transaction, or (iii) TVG, Inc., or any of its
related-entities or affiliates, or in conjunction with any of the major U.S.
racetracks or their affiliates, owns or controls , directly or indirectly,
thirty-three percent (33%) or more of the outstanding common stock of the
Company.
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E. CONTINGENCY. The parties recognize that, as of the Effective Date,
the Company's option pool may not have options to satisfy the aforementioned
grant to DMI of one million (1,000,000) options for the Company's common stock.
In the event that the option pool does not fully satisfy the aforementioned
grant by May 15, 2004 or there is a Change of Control as defined above, then the
Company agrees that DMI shall have an immediate right to receive the value of
the options it would have otherwise been awarded. The value of that right shall
be calculated as follows: the difference between (i) the market value of one
share of common stock of the Company as of the date that DMI notifies the
Company it is exercising its right, and (ii) the option price DMI would have
paid for a share of common stock had the Company fully satisfied the
aforementioned grant, times the number of options that should have been granted
to DMI but which were not granted. DMI may exercise this right, in whole or in
part, from time to time and at any time during the five (5) year period
following the date it is determined that the Company cannot fully satisfy the
aforementioned grant.
4. BENEFITS.
A. STAFF. During the Term, the Company shall, at its cost and expense,
provide ▇▇. ▇▇▇▇▇▇▇▇ with such secretarial and other administrative support as
he may reasonably require in connection with the performance of his duties as
Vice Chairman and a member of the Executive Committee of the Company.
B. ADDITIONAL BENEFITS. During the Term, the Company shall, at its cost
and expense, provide ▇▇. ▇▇▇▇▇▇▇▇, or reimburse DMI to the extent DMI provides
▇▇. ▇▇▇▇▇▇▇▇, with the following benefits:
(i) reimbursement of all business-related operating expenses of
▇▇. ▇▇▇▇▇▇▇▇'▇ automobile including registration, gas, oil,
maintenance, and repairs;
(ii) reimbursement of the expenses of an automobile liability
insurance policy on ▇▇. ▇▇▇▇▇▇▇▇'▇ automobile, with coverage
including ▇▇. ▇▇▇▇▇▇▇▇ in the minimum amount of one million
and no/dollars ($1,000,000) combined single limit;
(iii) all benefits and perquisites under any and all formal or
informal benefit plans, understandings, arrangements or
programs, including cash bonus and incentive plans, pension
and profit sharing plans, stock or warrant plans, group
insurance, hospitalization, medical, dental, health and
accident and disability plans, supplemental health care plans
and plans providing for life insurance coverage (inclusive of
insurance related to accidental death or dismemberment), and
medical reimbursement plans which are available to the
Company's senior executive officers (collectively referred to
herein as "Fringe Benefits");
(iv) reimbursement of ▇▇. ▇▇▇▇▇▇▇▇'▇ cellular phone and long
distance phone expenses for calls related to the business of
the Company;
(v) an annual paid vacation of twenty (20) days, which vacation
need not be taken in consecutive periods. If ▇▇. ▇▇▇▇▇▇▇▇ does
not take all such vacation time in any given calendar year,
such unused time shall carry forward into the next calendar
year and shall be paid upon the expiration or termination of
DMI's engagement; and
(vi) all paid holidays, sick days, and personal days provided by
the Company to its senior executive employees.
5. DEDUCTIONS. The Company shall not deduct from the Base Fee, or any
other amounts payable to DMI by the Company, any social security taxes, federal,
state or municipal taxes or any other charges and deductions which are required
to be made from wages of employees. DMI shall indemnify and hold the
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Company harmless from and against any damages or penalties incurred by the
Company by reason of its not withholding such amounts from amounts payable to
DMI hereunder.
6. REIMBURSEMENT OF CERTAIN EXPENSES. The Company shall promptly
reimburse DMI and ▇▇. ▇▇▇▇▇▇▇▇ for reasonable out-of-pocket expenses incurred in
connection with the Company's business, including travel expenses, food, lodging
while away from home, entertainment, telephone expenses, and automobile
expenses, subject to such policies as the Company may from time to time
reasonably establish. The Company shall reimburse DMI for the reasonable legal
fees it incurs in connection with the negotiation and preparation of this
Agreement.
7. CERTAIN OTHER PROVISIONS. ▇▇. ▇▇▇▇▇▇▇▇ will comply with all
reasonable and lawful policies, procedures and practices of the Company from
time to time in effect of which he is provided notice.
8. CERTAIN AGREEMENTS.
A. CONFIDENTIAL INFORMATION. DMI and ▇▇. ▇▇▇▇▇▇▇▇ shall not during the
Term or at any time thereafter (i) except during the Term for the benefit of the
Company, disclose to any person not employed by the Company or to any person,
firm or corporation not engaged to render services to the Company, or (ii) use
for the benefit of either of DMI or ▇▇. ▇▇▇▇▇▇▇▇, or others, any confidential
information of the Company obtained by DMI or ▇▇. ▇▇▇▇▇▇▇▇ prior to the date
hereof, during the Term or any time thereafter, including "know-how," trade
secrets, details of supplier's, manufacturer's or distributor's contracts,
pricing policies, financial data, operational methods, marketing and sales
information or strategies, product development techniques or plans or any
strategies relating thereto, technical processes, designs and design projects,
and other proprietary information of the Company provided however, that this
provision shall not preclude DMI or ▇▇. ▇▇▇▇▇▇▇▇ from (a) upon advice of counsel
and after reasonable notice to the Company, making any disclosure required by
any applicable law, or (b) using or disclosing information known generally to
the public (other than information known generally to the public as a result of
any violation of this Section 8 by or on behalf of DMI or ▇▇. ▇▇▇▇▇▇▇▇).
B. PROPERTY OF COMPANY. Any interest in trademarks, service-marks,
copyrights, copyright applications, patents, patent applications, slogans,
developments and processes which DMI or ▇▇. ▇▇▇▇▇▇▇▇, during the Term, may
develop relating to the business of the Company in which the Company may then be
engaged and any memoranda, notes, lists, records and other documents (and all
copies thereof) made or compiled by DMI or ▇▇. ▇▇▇▇▇▇▇▇ or made available to DMI
or ▇▇. ▇▇▇▇▇▇▇▇ concerning the business of the Company shall belong to and
remain in the possession of the Company, and shall be delivered to the Company
promptly upon the termination of DMI's services with the Company or at any other
time upon request and reasonable notice.
C. NON-INTERFERENCE. DMI and ▇▇. ▇▇▇▇▇▇▇▇ will not, during the Term and
for a period of one (1) year after the expiration or termination of DMI's
engagement with the Company, induce any person who is an employee of the Company
to terminate his relationship with the Company.
D. NON-COMPETITION. Without the prior written consent of the Company,
neither ▇▇. ▇▇▇▇▇▇▇▇ nor any other employee of DMI shall be employed by the
Internet gaming divisions of Magna, Inc., TVG, Inc. or by any other Internet
gaming division of a direct competitor of the Company during, or for one (1)
year after the expiration or termination of, DMI's engagement with the Company.
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9. OTHER PROVISIONS.
A. RIGHTS AND REMEDIES UPON BREACH. If DMI or ▇▇. ▇▇▇▇▇▇▇▇ breach, or
threaten to commit a breach of, any of the provisions of Section 8 hereof (the
"Restrictive Covenants"), the Company shall have the following rights and
remedies, each of which rights and remedies shall be independent of the other
and severally enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company at law or in equity.
B. SEVERABILITY OF COVENANTS. If any court determines that any of the
Restrictive Covenants, or ANY part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and shall
be given full effect, without regard to the invalid portions.
C. BLUE-PENCILING. If any court construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration or
geographic scope of such provision, such court shall have the power to reduce
the duration or scope of such provision and, in its reduced form, such provision
shall then be enforceable.
D. ENFORCEABILITY IN JURISDICTIONS. The parties intend to and hereby
confer jurisdiction to enforce the Restrictive Covenants upon the courts of any
jurisdiction within the geographical scope of such Restrictive Covenants. If the
courts of any one or more of such jurisdictions hold the Restrictive Covenants
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of the parties that such determination not bar or in any way affect
Company's right to the relief provided in this Section 9 in the courts of any
other jurisdiction within the geographical scope of such Restrictive Covenants,
as to breaches of such Restrictive Covenants in such other respective
jurisdictions, such Restrictive Covenants as they relate to each jurisdiction
being, for this purpose, severable into diverse and independent covenants.
E. INJUNCTIVE RELIEF. Executive agrees and understands that the remedy
at law for any breach by Executive of the provisions of Section 8 hereof may be
inadequate and that damages resulting from such breach may not be susceptible to
being measured in monetary terms. Accordingly, it is acknowledged that upon
Executive's breach of any provision of Section 8 hereof, the Company shall be
entitled to seek to obtain from any court of competent jurisdiction injunctive
relief to prevent the continuation of such breach. Nothing contained herein
shall be deemed to limit the Company's remedies at law or in equity for any
breach of the provisions of Section 8 hereof which may be available to the
Company.
10. TERMINATION:
A. TERMINATION UPON DEATH. If, during the Term, ▇▇. ▇▇▇▇▇▇▇▇ dies, DMI
shall be entitled to receive the Base Fee up until the date of ▇▇. ▇▇▇▇▇▇▇▇'▇
death, any unpaid bonus for the prior year, payment for unused vacation or other
time off benefits, if any, and Fringe Benefits earned through the date of ▇▇.
▇▇▇▇▇▇▇▇'▇ death. In addition, DMI shall receive all vested options, and all
unvested options of DMI shall vest during the periods described in Section 3.D.
of this Agreement. All such options shall be exercisable for up to the latest of
two (2) years from (i) the date of vesting, (ii) ▇▇. ▇▇▇▇▇▇▇▇'▇ death, or (iii)
May 15, 2004.
B. TERMINATION UPON DISABILITY. If, during the Term, ▇▇. ▇▇▇▇▇▇▇▇
should become so physically or mentally disabled, whether totally or partially,
that ▇▇. ▇▇▇▇▇▇▇▇ is unable to perform the duties, functions and
responsibilities required hereunder for (i) a period of at least six (6)
consecutive months or (ii) shorter periods aggregating at least twelve (12)
months ("Disability"), then in such event, the Company may, at any time
thereafter, by written notice to DMI and ▇▇. ▇▇▇▇▇▇▇▇, terminate DMI's
engagement. ▇▇. ▇▇▇▇▇▇▇▇ agrees to submit to reasonable medical examinations
upon the request of Company to determine whether he has a Disability. The
determination of whether or not ▇▇. ▇▇▇▇▇▇▇▇ is subject to a Disability shall be
made jointly by ▇▇. ▇▇▇▇▇▇▇▇'▇ doctor ("▇▇. ▇▇▇▇▇▇▇▇'▇ Doctor") and by a board
certified doctor selected by Company of the
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appropriate recognized field of medicine or psychiatric practice who has
examined ▇▇. ▇▇▇▇▇▇▇▇ (the "Company's Doctor"). If ▇▇. ▇▇▇▇▇▇▇▇'▇ Doctor and the
Company's Doctor cannot agree on such determination, then they shall select a
mutually agreeable board certified doctor or practitioner of the appropriate
recognized field of medicine or psychiatric practice (the "Third Doctor") to
make the determination. After the Third Doctor has examined ▇▇. ▇▇▇▇▇▇▇▇ and
reviewed the findings of ▇▇. ▇▇▇▇▇▇▇▇'▇ Doctor and the Company's Doctor, the
Third Doctor shall determine whether ▇▇. ▇▇▇▇▇▇▇▇ has a Disability, and his or
her determination shall be final and binding. The Company and ▇▇. ▇▇▇▇▇▇▇▇ shall
pay for the cost and expense of their own doctors, and the Company shall pay for
the cost of the Third Doctor, should the Third Doctor be required. If DMI's
engagement is terminated, as aforesaid, DMI shall be entitled to receive the
Base Fee through the date of the termination of DMI's engagement, any unpaid
bonus for the prior year, payment for unused vacation, if any, payment for
unused vacation or other time off benefits, if any, and Fringe Benefits earned
through the date of the termination of DMI's engagement. In addition, DMI shall
receive all vested options, and all unvested options of DMI shall vest during
the periods described in Section 3.D. of this Agreement. All such options shall
be exercisable for up to the latest of two (2) years from (i) the date of
vesting, (ii) the termination of DMI's engagement by reason of ▇▇. ▇▇▇▇▇▇▇▇'▇
Disability, or (iii) May 15, 2004.
C. TERMINATION FOR CAUSE. As used in this Agreement, the term "Cause"
means only any of the following:
(i) DMI's or ▇▇. ▇▇▇▇▇▇▇▇'▇ theft or embezzlement of the Company's
money, equipment, or securities;
(ii) DMI's or ▇▇. ▇▇▇▇▇▇▇▇'▇ conviction of a felony (other than a
traffic violation) which results in material injury to the
Company;
(iii) DMI's or ▇▇. ▇▇▇▇▇▇▇▇'▇ willful act of disloyalty that is
intended to and results in material injury to the Company;
(iv) ▇▇. ▇▇▇▇▇▇▇▇'▇ chronic alcoholism or addiction to
non-medically prescribed drugs (provided that such alcoholism
or addiction occurs during the Term);
(v) material breach by DMI or ▇▇. ▇▇▇▇▇▇▇▇ of Section 8 of this
Agreement with the Company, which breach shall not have been
cured within thirty (30) days after receipt by DMI of written
notice thereof from the Board, provided, however, that such
right of cure will exist only if the material breach has not
caused material damage to the Company or;
(vi) the Company is unable to obtain or renew a license in a
jurisdiction which is material to the Company as a result of
material actions or omissions on the part of ▇▇. ▇▇▇▇▇▇▇▇,
provided, however, that actions or omissions which ▇▇.
▇▇▇▇▇▇▇▇ reasonably believed were in the best interests of the
Company, or which were taken pursuant to the Articles of
Incorporation of the Company or Bylaws of the Company,
pursuant to the direction of the Board, or on the advice of
legal counsel shall not constitute "Cause."
The Board shall have the option to terminate the services of ▇▇.
▇▇▇▇▇▇▇▇ if there is Cause as defined above. If ▇▇. ▇▇▇▇▇▇▇▇'▇ services are
terminated as set forth in this Section 10.C., ▇▇. ▇▇▇▇▇▇▇▇'▇ services shall
cease as of such effective date of termination and all compensation shall cease
as of such effective date. For purposes of this Agreement, ▇▇. ▇▇▇▇▇▇▇▇'▇
services shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to DMI and ▇▇. ▇▇▇▇▇▇▇▇ a copy of a resolution,
duly adopted by the affirmative vote of a majority of the entire membership of
the Board at a meeting called and held for this purpose after reasonable notice
to DMI and ▇▇. ▇▇▇▇▇▇▇▇ and an opportunity for them, together with their
counsel, to be heard by the Board, finding that, in the good faith opinion of
the Board, DMI or ▇▇. ▇▇▇▇▇▇▇▇, as
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the case may be, is guilty of misconduct of the type described in this Section
10.C. hereof and specifying the particulars thereof in detail. Any act or
omission of DMI or ▇▇. ▇▇▇▇▇▇▇▇ based upon authority given pursuant to the
Articles of Incorporation of the Company or Bylaws of the Company or a
resolution duly adopted by the Company's Board or based upon the advice of
counsel for the Company shall be conclusively deemed to be done by DMI and ▇▇.
▇▇▇▇▇▇▇▇ in good faith and in the best interests of the Company and shall not
constitute "Cause."
D. TERMINATION WITH GOOD REASON OR WITHOUT CAUSE; CHANGE OF CONTROL. If
during the Term (i) ▇▇. ▇▇▇▇▇▇▇▇ resigns as Vice Chairman and a member of the
Executive Committee of the Company for Good Reason (defined below), or (ii) his
or DMI's services are terminated without Cause (as defined above), or (iii)
there is a Change of Control (as defined above) and DMI's or ▇▇. ▇▇▇▇▇▇▇▇'▇
services for the Company are terminated by reason of such Change of Control as
provided in subparagraph (b) below, then upon such event:
a. The Company shall (1) pay DMI the Base Fee through the last
day of DMI's services, (2) pay DMI any earned but unpaid annual bonus
compensation for the prior year of the Term, (3) pay DMI for any unused
vacation or other time-off benefits, and (4) pay ▇▇. ▇▇▇▇▇▇▇▇ his
unpaid reimbursable business expenses incurred by him through the last
day of his services.
b. The Company shall also pay DMI, in a lump sum, an amount
equal to the Base Fee DMI would have received had it remained engaged
by the Company for one (1) additional year, provided, however, that if
DMI's services are terminated by the Company in connection with a
Change of Control (as defined above) or DMI terminates its services in
connection with a Change of Control (as defined above) for Good Reason
(as defined above), then the Company shall instead pay DMI, in a lump
sum, an amount equal to two and 99/100 (2.99) times the average of the
Base Fee and bonuses (but not the Change of Control Bonus) that DMI
received from the Company during the previous three (3) years, but if
DMI has not received from the Company a Base Fee and bonuses for three
(3) years, then the Company shall instead pay DMI, in a lump sum, an
amount equal to two and 99/100 (2.99) times the average of the Base Fee
and bonuses (but not the Change of Control Bonus) that DMI received
from the Company during the previous two (2) years, otherwise, the
Company shall instead pay DMI, in a lump sum, an amount equal to two
and 99/100 (2.99) times the current Base Fee and most recent bonus (but
not the Change of Control Bonus) that DMI has received from the
Company.
c. For an additional year, the Company shall continue
benefits, at its expense, to ▇▇. ▇▇▇▇▇▇▇▇ and his immediate family at
least equal to those which would have been provided to him and them in
accordance with this Agreement and the plans, programs, practices and
policies of the Company if his services had not ended or, if more
favorable to ▇▇. ▇▇▇▇▇▇▇▇, as in effect generally at any time
thereafter with respect to other executives of the Company and their
families, provided, however, that if ▇▇. ▇▇▇▇▇▇▇▇ becomes employed by
an employer and is eligible to receive reasonably comparable medical or
other welfare benefits under another employer provided plan, the
medical and other welfare benefits of the Company shall cease.
d. All stock options of DMI shall immediately vest and be
exercisable for up to the later of two (2) years following (i) the date
of the termination of DMI's engagement or ▇▇. ▇▇▇▇▇▇▇▇'▇ services or
(ii) May 15, 2004.
e. The Company will provide ▇▇. ▇▇▇▇▇▇▇▇ with (1) a favorable
reference; and (2) an agreed-upon designated contact for references. In
addition, at ▇▇. ▇▇▇▇▇▇▇▇'▇ option, and taking into account the
Company's needs as a public company, an agreed upon statement will be
issued to employees and an agreed-upon press release will be issued to
the media concerning the departure of ▇▇. ▇▇▇▇▇▇▇▇.
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▇▇. ▇▇▇▇▇▇▇▇ shall not be required to seek employment, and neither he nor DMI
shall be required to take other action, in order to mitigate their damages or to
be entitled to the benefits and payments above. There shall be no set off
against such benefits and payments due or any other amounts of money payable to
DMI or ▇▇. ▇▇▇▇▇▇▇▇ of any amounts they earn or could have earned from other
sources.
E. GOOD REASON. AS USED HEREIN, "GOOD REASON" SHALL MEAN ONLY:
(i) withdrawal by the Company from ▇▇. ▇▇▇▇▇▇▇▇ of any substantial
part of his duties then being performed, or responsibility or
authority then being carried, by him, or a material change in
▇▇. ▇▇▇▇▇▇▇▇'▇ reporting lines;
(ii) assignment by the Company to ▇▇. ▇▇▇▇▇▇▇▇ of substantial
additional duties or responsibilities which are inconsistent
with the duties or responsibilities then being carried by ▇▇.
▇▇▇▇▇▇▇▇;
(iii) material reduction in the level of ▇▇. ▇▇▇▇▇▇▇▇'▇
responsibility, authority, autonomy, title, compensation,
perquisites, or benefits;
(iv) failure to keep ▇▇. ▇▇▇▇▇▇▇▇ in office as Vice Chairman and a
member of the Executive Committee of the Company and/or on the
Board;
(v) the Company's material breach of this Agreement (or any other
agreement between DMI and/or ▇▇. ▇▇▇▇▇▇▇▇, on the one hand,
and the Company, on the other hand), and the failure of the
Company to cure such breach within thirty (30) days of notice
thereof;
(vi) material fraud on the part of the Company; or
(vii) discontinuance of the active operation of the business of the
Company, or insolvency of the Company, or the filing by or
against the Company of a petition in bankruptcy or for
reorganization or restructuring pursuant to applicable
insolvency or bankruptcy law.
▇. ▇▇▇▇▇▇▇▇▇. In the event that the Company shall not renew this
Agreement pursuant to its terms (and provided that DMI is willing to do so), the
Company may, in its discretion, pay DMI an amount up to the Base Fee payable to
DMI in the twelve (12) months immediately preceding the expiration of the Term.
G. COOPERATION AFTER TERMINATION OF AGREEMENT. Following termination of
this Agreement, regardless of the reason for such termination, DMI and ▇▇.
▇▇▇▇▇▇▇▇ shall reasonably cooperate with the Company in the prosecution of any
claims, controversies, suits, arbitrations or proceedings involving events
occurring prior to the termination of this Agreement. DMI and ▇▇. ▇▇▇▇▇▇▇▇
acknowledge that ▇▇. ▇▇▇▇▇▇▇▇ may be required to give testimony at trial or
deposition or give declarations. If ▇▇. ▇▇▇▇▇▇▇▇ shall be required to spend a
material amount of time, the Company shall compensate DMI at a per diem rate
equal to the per diem amount of the Base Fee in effect at the time of the
termination, provided, however, that if during the period or periods of time DMI
or ▇▇. ▇▇▇▇▇▇▇▇ is called upon to cooperate with the Company the Company is
paying DMI, then the Company need not pay DMI a per diem rate during any such
period. The Company shall use its best efforts to provide ▇▇. ▇▇▇▇▇▇▇▇ with
reasonable prior notice of any actions required of him and to reasonably
accommodate his schedule.
11. ASSIGNABILITY. This Agreement and the rights and obligations of the
parties hereunder may not be assigned by either party without the prior written
consent of the other party.
12. ARBITRATION. Except as otherwise provided in Section 9 of this
Agreement with regard to the Restrictive Covenants, any dispute, controversy or
claim arising out of or relating to this Agreement shall be
8
settled by binding and final arbitration in the County of Los Angeles, State of
California, under the commercial arbitration rules of the American Arbitration
Association then existing and judgment on the arbitration award may be entered
in any court having jurisdiction of the subject matter over the controversy.
13. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of California applicable to contracts
executed in and to be performed solely within the State of California.
14. ABILITY TO FULFILL OBLIGATIONS. Neither the Company, DMI nor ▇▇.
▇▇▇▇▇▇▇▇ is a party to or bound by any agreement that would be violated by the
terms of this Agreement.
15. NOTICE. Any notice required or permitted to be given hereunder
shall be given in writing and may be given by telex, telegram, facsimile
transmission or similar method if confirmed by mail as herein provided and
addressed as follows:
To the Company: You Bet International, Inc.
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman of the Board
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
Loeb & Loeb LLP
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to DMI: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇. ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ Ltd.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
by mail if sent postage prepaid by registered mail, return receipt requested; or
by hand delivery to any party at the address of the party first above set forth.
If notice, direction or instruction is given by telex, telegram or facsimile
transmission or similar method or by hand delivery, it shall be deemed to have
been given or made on the day on which it was given, and if mailed, shall be
deemed to have been given or made on the third (3) business day following the
day after which it was mailed. Any party may, from time to time, by like notice
give notice of any change of address and in such event, the address of such
party shall be deemed to be changed accordingly.
9
16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes any
and all prior or contemporaneous oral and prior written agreements and
understandings. There are no oral promises, conditions, representations,
understandings, interpretations or terms of any kind as conditions or
inducements to the execution hereof or in effect among the parties. No custom or
trade usage, nor course of conduct among the parties, shall be relied upon to
vary the terms hereof. This Agreement may not be amended, and no provision
hereof shall be waived, except by a writing signed by all of the parties to this
Agreement which states that it is intended to amend or waive a provision of this
Agreement. Any waiver of any rights or failure to act in a specific instance
shall relate only to such instance and shall not be construed as an agreement to
waiver any rights or fail to act in any other instance, whether or not similar.
17. SEVERABILITY. Should any provision of this Agreement be
unenforceable or prohibited by any applicable law, this Agreement shall be
considered divisible as to such provision which shall be inoperative, and the
remainder of this Agreement shall be valid and binding as though such provision
were not included herein and shall be construed in such a manner to maximize its
validity and enforceability.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original.
19. HEADINGS. All headings in this Agreement are for convenience only
and will not affect the meaning of any provision hereof. Whenever the term
"include," "including," or "included" is used in this Agreement, it shall mean
including without limiting the generality of the foregoing.
20. SURVIVAL OF CERTAIN PROVISIONS. The provisions of Sections 3, 4, 5,
6, 7, 8, 9, 10, 12, 13, 21, and 23 shall, to the extent applicable, continue in
full force and effect notwithstanding the expiration or earlier termination of
this Agreement or of ▇▇. ▇▇▇▇▇▇▇▇'▇ services hereunder in accordance with the
terms of this Agreement.
21. ATTORNEYS' FEES. Except as otherwise provided herein, in the event
of arbitration with respect to the subject matter of this Agreement, the
prevailing party shall be entitled to all of its costs and expenses, including
the reasonable attorneys' fees and costs, incurred in resolving or settling the
dispute. These costs and expenses shall be in addition to any other damages to
which the prevailing party may be entitled. Without limiting any other right or
remedy of DMI or ▇▇. ▇▇▇▇▇▇▇▇, in the event that the Company fails to make any
payment due to DMI or ▇▇. ▇▇▇▇▇▇▇▇ under this Agreement and such failure
continues for five (5) days after written notice thereof to the Company from DMI
or ▇▇. ▇▇▇▇▇▇▇▇, then the Company shall also pay DMI or ▇▇. ▇▇▇▇▇▇▇▇, as the
case may be, interest on the unpaid amounts at the rate of two percent (2%) per
month, compounded, until all unpaid amounts, and all reasonable attorneys' fees
and costs associated with collecting such unpaid amounts, are paid in full.
22. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement shall inure to the benefit of, and be binding upon, the Company and
any corporation with which the Company merges or consolidates, and upon DMI and
▇▇. ▇▇▇▇▇▇▇▇ and his executors, administrators, heirs and legal representatives.
23. INDEMNIFICATION. The Company will indemnify, defend, and hold ▇▇.
▇▇▇▇▇▇▇▇ and DMI, and each of them, harmless from and against any and all
demands, actions, claims, suits, liabilities, losses, damages, fees (including
reasonable attorneys' fees) and expenses relating to any acts or omissions to
act in the course or scope of his duties or services he performs on behalf of
the Company and/or while serving as an officer and/or director of the Company,
and provide them with indemnification and officers and directors liability
insurance at least to the same extent that it provides such indemnification and
insurance to the officers and directors of the Company. ▇▇. ▇▇▇▇▇▇▇▇ and DMI
will have the option to select their own counsel or be represented by counsel
10
for the Company. The Company shall pay for or reimburse ▇▇. ▇▇▇▇▇▇▇▇ and DMI for
any fees and expenses covered by this Section as and when incurred. The
provisions herein shall survive the termination of DMI's engagement and/or of
▇▇. ▇▇▇▇▇▇▇▇'▇ services with the Company for any reason.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by duly their authorized officers as of the day and year first above
written.
▇▇▇▇▇▇.▇▇▇, INC., a Delaware Corporation
By:
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
AMENDMENT TO SERVICES AGREEMENT
This Amendment dated as of March 27, 2003 (the "Amendment") to the
Services Agreement dated as of February 1, 2002 (the "Agreement") between
▇▇▇▇▇▇.▇▇▇, Inc. a Delaware corporation (the "Company"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Inc., a California corporation ("DMI") is made with reference to the following:
A. Pursuant to Section 3D of the Agreement, DMI was granted options to
purchase 1,000,000 shares of the Company's common stock (the "Options"). The
parties acknowledge that the issuee of the Options should have been ▇▇▇▇▇
▇▇▇▇▇▇▇▇, individually, rather than DMI.
NOW THEREFORE, the Services Agreement is hereby amended as follows:
1. The Options are hereby granted to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually,
retroactive to the date of the grant. Additionally, notwithstanding anything in
the Agreement to the contrary, (a) all unvested Options as of the date hereof
shall immediately vest; and (b) the Options may be transferable to DMI, its
successors or assignees, or a corporation or other entity wholly owned by ▇▇▇▇▇
▇▇▇▇▇▇▇▇.
2. In all other respects, the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized officers as of the date and year first above
written.
▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation
By:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc., a California corporation
By:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
