EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") dated November 19, 2012 by
and between MGT Capital Investments, Inc., a company incorporated under the laws
of Delaware (the "Company"), and Robert B. Ladd, an individual (the "Executive")
with reference to the following facts:

 

Executive currently serves as the President and Chief Executive Officer of the
Company without an employment agreement;

 

The Company is engaged in the business of acquiring and monetizing intellectual
property; and

 

The parties wish to enter into an Employment Agreement between the Executive and
the Company, on the terms and conditions contained in this Agreement.

 

NOW THEREFORE, in consideration of the foregoing facts and mutual agreements set
forth below, the parties, intending to be legally bound, agree as follows:

 

1.             Employment. The Company hereby agrees to employ Executive, and
Executive hereby accepts such employment and agrees to perform Executive's
duties and responsibilities in accordance with the terms and conditions
hereinafter set forth.

 

1.1           Duties and Responsibilities. Executive shall serve as Chief
Executive Officer and President. During the Employment Term, Executive shall
perform all duties and accept all responsibilities incident to such positions
and other appropriate duties as may be assigned to Executive by the Company's
Board of Directors from time to time. Executive shall also serve as a director
of the Company, and as an officer of one or more of the Company's subsidiaries
without any additional compensation. The Company shall retain full direction and
control of the manner, means and methods by which Executive performs the
services for which he is employed hereunder and of the place or places at which
such services shall be rendered.

 

1.2           Employment Term. The term of Executive's employment shall commence
on the date hereof (the "Effective Date") and shall continue until November 30,
2014, unless earlier terminated in accordance with Section 4 hereof. The term of
Executive's employment shall be automatically renewed for successive one (1)
year periods until the Executive or the Company delivers to the other party a
written notice of their intent not to renew the "Employment Term," such written
notice to be delivered at least sixty (60) days prior to the expiration of the
then-effective "Employment Term" as that term is defined below. The period
commencing as of the Effective Date and ending November 30, 2015 or such later
date to which the term of Executive's employment under the Agreement shall have
been extended is referred to herein as the "Employment Term" and the end of the
Employment Term is referred to herein as the “Expiration Date.”

 

1.3           Extent of Service. During the Employment Term, Executive agrees to
use Executive's best efforts to carry out the duties and responsibilities under
Section 1.1 hereof and to devote all requisite Executive's business time,
attention and energy thereto. Executive further agrees not to work either on a
part-time or independent contracting basis for any other business or enterprise
during the Employment Term without the prior written consent of the Company's
Board of Directors, which consent shall not be unreasonably withheld.

 

 

 

 

1.4           Base Salary and Compensation

 

(a)          Upon the execution hereof and in consideration of the execution
hereof, the Executive will receive (i) within 5 days of the execution hereof, a
cash payment of $100,000, which payment will not serve to diminish any other
compensation the Executive is or may become entitled to hereunder and (ii)
50,000 newly issued and unregistered shares of the Company’s Common Stock,
subject to an 18-month vesting schedule.

 

(b)          The Company shall pay Executive a base salary (the "Base Salary")
at the annual rate of $285,000 (U.S.) payable at such times as the Company
customarily pays its other senior level executives (but in any event no less
often than monthly). The Base Salary shall be subject to all state, federal, and
local payroll tax withholding and any other withholdings required by law. The
Executive’s Base Salary may be increased by the Compensation Committee of the
Board of Directors (the “Compensation Committee”). Once increased, such
increased amount shall constitute the Executive’s Base Salary.

 

1.5           Incentive Compensation.

 

(a)          Bonus. Executive shall be eligible to earn a cash and/or equity
bonus as the Compensation Committee may determine, from time to time, based on
meeting performance objectives and bonus criteria to be mutually identified by
Executive and the Compensation Committee. Such objectives and criteria may be
based on a favorable sale or merger of the Company, in additional to operating
metrics. Bonuses, if any, shall be subject to all applicable tax and payroll
withholdings.

 

(b)          Executive Benefits. The Executive shall be entitled to participate
in all executive benefit or incentive compensation plans now maintained or
hereafter established by the Company for the purpose of providing compensation
and/or benefits to executives of the Company and any supplemental retirement,
salary continuation, stock option, deferred compensation, supplemental medical
or life insurance or other bonus or incentive compensation plans. Unless
otherwise provided herein, the Executive’s participation in such plans shall be
on the same basis and terms as other executives of the Company. No additional
compensation provided under any of such plans shall be deemed to modify or
otherwise affect the terms of this Agreement or any of the Executive’s
entitlements hereunder.

 

1.6           Other Benefits. During the Employment Term, Executive shall be
entitled to participate in all employee benefit plans and programs made
available to the Company's senior level executives as a group or to its
employees generally, as such plans or programs may be in effect from time to
time (the "Benefit Coverages"), including, without limitation, medical, dental,
hospitalization, short-term and long-term disability and life insurance plans,
accidental death and dismemberment protection and travel accident insurance.
Executive shall be provided office space and staff assistance appropriate for
Executive's position and adequate for the performance of his duties.

 

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1.7        Reimbursement of Expenses; Vacation; Sick Days and Personal Days.
Executive shall be provided with reimbursement of expenses related to
Executive's employment by the Company on a basis no less favorable than that
which may be authorized from time to time by the Board, in its sole discretion,
for senior level executives as a group. Executive shall be entitled to vacation
and holidays in accordance with the Company's normal personnel policies for
senior level executives, but not less than three (4) weeks of vacation per
calendar year.

 

1.8        No Other Compensation. Except as expressly provided in Sections 1.4
through 1.7, Executive shall not be entitled to any other compensation or
benefits.

 

2.          Confidential Information. Executive recognizes and acknowledges that
by reason of Executive's employment by and service to the Company before, during
and, if applicable, after the Employment Term, Executive will have access to
certain confidential and proprietary information relating to the Company's
business, which may include, but is not limited to, trade secrets, trade
"know-how," and plans, financing services, funding programs, costs, strategy and
programs, computer programs and software and financial information (collectively
referred to as "Confidential Information"). Executive acknowledges that such
Confidential Information is a valuable and unique asset of the Company and
Executive covenants that he will not, unless expressly authorized in writing by
the Company, at any time during the course of Executive's employment use any
Confidential Information or divulge or disclose any Confidential Information to
any person, firm or corporation except in connection with the performance of
Executive's duties for the Company and in a manner consistent with the Company's
policies regarding Confidential Information. Executive also covenants that at
any time after the termination of such employment, directly or indirectly, he
will not use any Confidential Information or divulge or disclose any
Confidential Information to any person, firm or corporation, unless such
information is in the public domain through no fault of Executive or except when
required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body (including a committee thereof) with apparent jurisdiction
to order Executive to divulge, disclose or make accessible such information. All
written Confidential Information (including, without limitation, in any computer
or other electronic format) which comes into Executive's possession during the
course of Executive's employment shall remain the property of the Company.
Except as required in the performance of Executive's duties for the Company, or
unless expressly authorized in writing by the Company, Executive shall not
remove any written Confidential Information from the Company's premises, except
in connection with the performance of Executive's duties for the Company and in
a manner consistent with the Company's policies regarding Confidential
Information. Upon termination of Executive's employment, the Executive agrees to
return immediately to the Company all written Confidential Information
(including, without limitation, in any computer or other electronic format) in
Executive's possession. As a condition of Executive's continued employment with
the Company and in order to protect the Company's interest in such proprietary
information, the Company shall require Executive's execution of a
Confidentiality Agreement and in the form attached hereto as Exhibit "B", and
incorporated herein by this reference.

 

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3.             Non-Competition; Non-Solicitation.

 

3.1           Non-Compete. The Executive hereby covenants and agrees that during
the term of this Agreement and for a period of two years following the end of
the Employment Term, the Executive will not, without the prior written consent
of the Company, directly or indirectly, on his own behalf or in the service or
on behalf of others, whether or not for compensation, engage in any business
activity, or have any interest in any person, firm, corporation or business,
through a subsidiary or parent entity or other entity (whether as a shareholder,
agent, joint venture, security holder, trustee, partner, Executive, creditor
lending credit or money for the purpose of establishing or operating any such
business, partner or otherwise) with any Competing Business in the Covered Area.
For the purpose of this Section 3.1, (i) "Competing Business" means any company
engaged in acquiring and or monetizing intellectual property for use in the
gaming industry by any means including but not limited to commencing litigation
against companies and others violating the Company’s right in its intellectual
property or intellectual property in which the Company has acquired an interest.
And (ii) "Covered Area" means all geographical areas of the United States and
foreign jurisdictions where the Company believes the rights to its intellectual
property may have been violated. Notwithstanding the foregoing, the Executive
may own shares of companies whose securities are publicly traded, so long as
such securities do not constitute more than ten percent (10%) of the outstanding
securities of any such company.

 

3.2           Non-Solicitation. The Executive further agrees that as long as the
Agreement remains in effect and for a period of one (1) year from its
termination, the Executive will not divert any business of the Company and or
any affiliate of the Company and/or the Company's and/or its affiliates'
business to any other person, entity or competitor, or induce or attempt to
induce, directly or indirectly, any person to leave his or her employment with
the Company.

 

3.3           Remedies. The Executive acknowledges and agrees that his
obligations provided herein are necessary and reasonable in order to protect the
Company and its affiliates and their respective business and the Executive
expressly agrees that monetary damages would be inadequate to compensate the
Company and/or its affiliates for any breach by the Executive of his covenants
and agreements set forth herein. Accordingly, the Executive agrees and
acknowledges that any such violation or threatened violation of this Section 3
will cause irreparable injury to the Company and that, in addition to any other
remedies that may be available, in law, in equity or otherwise, the Company and
its affiliates shall be entitled to obtain injunctive relief against he
threatened breach of this Section 3 or the continuation of any such breach by
the Executive without the necessity of proving actual damages.

 

4.             Termination.

 

4.1           Termination without Cause or for Good Reason.

 

(a)          If this Agreement is terminated by the Company other than for Cause
(as defined in Section 4.4 hereof) or as a result of Executive’s death or
Permanent Disability (as defined in Section 0 hereof), or if Executive
terminates his employment for Good Reason (as defined in Section 0 hereof) prior
to the Expiration Date, Executive shall receive or commence receiving as soon as
practicable in accordance with the terms of this Agreement:

 

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(i)          a severance payment (the “Severance Payment”), which amount shall
be paid in a cash lump sum within ten (10) days of the date of termination, in
an amount equal to the higher of the aggregate amount of the Executive's Base
Salary for the then remaining term of this Agreement or twelve times the average
monthly Base Salary paid or accrued during the three full calendar months
immediately preceding such termination;

 

(ii)         expense compensation, which shall be paid in a lump sum payment
within ten (10) days of the date of termination, in an amount equal to twelve
times the sum of average Base Salary during the three full months immediately
preceding such termination of providing the services to Executive set forth in
Section 1.4 and Executive’s reimbursed expenses set forth in Section 1.7;

 

(iii)        immediate vesting of all unvested stock options and the extension
of the exercise period of such options to the later of the longest period
permitted by the Company’s stock option plans or ten years following the
Termination Date;

 

(iv)        payment in respect of compensation earned but not yet paid (the
“Compensation Payment”) which amount shall be paid in a cash lump sum within ten
(10) days of the date of termination. For the purposes of this Section, the
Compensation Payment shall include any payment for the pro-rata number of
vacation days earned, but not taken in the preceding calendar year;

 

(v)         payment of the cost of comprehensive medical insurance for Executive
for a period of twelve months following the termination; and

 

(vi)        payment of the cost of office space, not to exceed $3,000 per month
for a period of twelve months.

 

(b)          For purposes of this Agreement, “Good Reason” shall mean any of the
following (without Executive’s express prior written consent):

 

(i)          Any material breach by Company of any provision of this Agreement,
including any material reduction by Company of Executive’s duties or
responsibilities (except in connection with the termination of Executive’s
employment for Cause, as a result of Permanent Disability, as a result of
Executive's death or by Executive other than for Good Reason);

 

(ii)         A reduction by the Company in Executive’s Base Salary or any
failure of the Company to reimburse Executive for material expenses described in
Section 1.7;

 

(iii)        The failure by the Company to obtain the specific assumption of
this Agreement by any successor or assign of Company as provided for in Section
8.6 hereof;

 

(iv)        Moving the principal offices of Company to a location outside of the
New York Metro Area; or

 

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(v)         Upon a Change of Control of Company (as such term is hereinafter
defined).

 

(c)          The following provisions shall apply in the event compensation
provided in Section 0 becomes payable to the Executive:

 

(i)          if the severance compensation provided for in subsection 0 above
cannot be finally determined on or before the tenth day following such
termination, the Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company of the minimum amount of such
compensation and shall pay the remainder of such compensation (together with
interest at the Federal short-term rate provided in Section 1274(d)(1)(C)(i) of
the Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth day after the Date of Termination. In the event the amount of
the estimated payment exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to the Executive payable
on the fifth day after demand by the Company (together with interest at the
Federal short-term rate provided in Section 1274(d)(1)(C)(i) of the Code).

 

(ii)         If the payment of the Total Payments (as defined below) will be
subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code, the
Company shall pay the Executive on or before the tenth day following the Date of
Termination, an additional amount (the “Gross-Up Payment”) such that the net
amount retained by the Executive, after deduction of any Excise Tax on Total
Payments and any federal and state and local income tax and Excise Tax upon the
payment provided for by this paragraph, shall be equal to the Total Payments.
For purposes of determining whether any of the payments will be subject to the
Excise Tax and the amount of such Excise Tax, (A) any payments or benefits
received or to be received by the Executive in connection with a Change in
Control of the Company or the Executive’s termination of employment, whether
payable pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, its successors, any person whose actions result
in a Change in Control of the Company or any corporation affiliated or which, as
a result of the completion of transaction causing such a Change in Control, will
become affiliated with the Company within the meaning of Section 1504 of Code
(the “Total Payments”) shall be treated as “parachute payments” within the
meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments”
within the meaning of Section 280G(b)(1) shall be treated as subject to the
Excise Tax, unless, in the opinion of tax counsel selected by the Company’s
independent auditors and acceptable to the Executive, the Total Payments (in
whole or in part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the Code either in
their entirety or in excess of the base amount within the meaning of Section
280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax, (B) the
amount of the Total Payments that shall be treated as subject to the Excise Tax
shall be equal to the lesser of (I) the total amount of the Total Payments or
(II) the amount of excess parachute payments or benefit shall be determined by
the Company’s independent auditors in accordance with the principles of Section
280G of the Code. For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive’s
residence on the Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes. In the event the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder at the time of termination of the
Executive’s employment, the Executive shall repay to the Company at the time the
amount of such reduction in Excise Tax is finally determined the portion of the
Gross-Up Payment that can be repaid such that the Executive remains whole on an
after-tax basis following such repayment (taking into account any reduction in
income or excise taxes to the Executive from such repayment) plus interest on
the amount of such repayment at the Federal short-term rate provided in Section
1274(d)(1)(C)(i) of the Code. In the event the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the termination of
the Executive’s employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional gross-up payment in respect of such excess
(plus any interest payable with respect to such excess) at the time that the
amount of such excess is finally determined.

 

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(iii)        This Agreement is intended to comply with the requirements of
Section 409A of the Internal Revenue Code (the “Code”) or an exemption or
exclusion therefrom. Each payment under this Agreement shall be treated as a
separate payment for purposes of Section 409A of the Code. In no event may
Executive, directly or indirectly, designate the calendar year of any payment to
be made under this Agreement. All reimbursements and in-kind benefits provided
under this Agreement that constitute deferred compensation within the meaning of
Section 409A of the Code shall be made or provided in accordance with the
requirements of Section 409A of the Code, including, without limitation, that
(i) in no event shall reimbursements by the Company under this Agreement be made
later than the end of the calendar year next following the calendar year in
which the applicable fees and expenses were incurred, provided that Executive
shall have submitted an invoice for such fees and expenses at least 10 days
before the end of the calendar year next following the calendar year in which
such fees and expenses were incurred; (ii) the amount of in-kind benefits that
the Company is obligated to pay or provide in any given calendar year (other
than medical reimbursements described in Treas. Reg. § 1.409A-3(i)(1)(iv)(B))
shall not affect the in-kind benefits that the Company is obligated to pay or
provide in any other calendar year; (iii) Executive’s right to have the Company
pay or provide such reimbursements and in-kind benefits may not be liquidated or
exchanged for any other benefit; and (iv) in no event shall the Company’s
obligations to make such reimbursements or to provide such in-kind benefits
apply later than Executive’s remaining lifetime or if longer, through the 20th
anniversary of the Effective Date. To the extent Executive is a “specified
employee,” as defined in Section 409A(a)(2)(B)(i) of the Code and the
regulations and other guidance promulgated thereunder and any elections made by
the Company in accordance therewith, notwithstanding the timing of payment
provided in any other Section of this Agreement, no payment, distribution or
benefit under this Agreement that constitutes a distribution of deferred
compensation (within the meaning of Treasury Regulation Section 1.409A-1(b))
upon separation from service (within the meaning of Treasury Regulation Section
1.409A-1(h)), after taking into account all available exemptions, that would
otherwise be payable, distributable or settled during the six-month period after
separation from service, will be made during such six-month period, and any such
payment, distribution or benefit will instead be paid, distributed or settled on
the first business day after such six-month period; provided, however, that if
Executive dies following the Date of Termination and prior to the payment,
distribution, settlement or provision of the any payments, distributions or
benefits delayed on account of Section 409A of the Code, such payments,
distributions or benefits shall be paid or provided to the personal
representative of Executive’s estate within 30 days after the date of
Executive’s death

 

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4.2           Permanent Disability. If Executive becomes totally and permanently
disabled (as defined in the Company’s disability benefit plan applicable to
senior executive officers as in effect on the date thereof) (“Permanent
Disability”), Company or Executive may terminate this Agreement on written
notice thereof, and Executive shall receive or commence receiving, as soon as
practicable:

 

(a)          amounts payable pursuant to the terms of the disability insurance
policy or similar arrangement which Company maintains for the Executive, if any,
during the term hereof;

 

(a)          the Compensation Payment which shall be paid to Executive as a cash
lump sum within 30 days of such termination; and

 

(b)          immediate vesting of all unvested stock options.

 

4.3           Death. In the event of Executive’s death during the term of his
employment hereunder, Executive's estate or designated beneficiaries shall
receive or commence receiving, as soon as practicable in accordance with the
terms of this Agreement:

 

(a)          compensation equal to one year’s Base Salary (calculate by
multiplying the average monthly Base Salary paid or accrued for the three full
calendar months immediately such event, which shall be paid within 30 days of
such termination;

 

(b)          any death benefits provided under the Executive benefit programs,
plans and practices in which the Executive has an interest, in accordance with
their respective terms;

 

(c)          the Compensation Payment which shall be paid to Executive’s estate
as a cash lump sum within 30 days of such termination; and

 

(d)          such other payments under applicable plans or programs to which
Executive's estate or designated beneficiaries are entitled pursuant to the
terms of such plans or programs.

 

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4.4           Voluntary Termination by Executive: Discharge for Cause. The
Company shall have the right to terminate this Agreement for Cause (as
hereinafter defined). In the event that Executive’s employment is terminated by
Company for Cause, as hereinafter defined, or by Executive other than for Good
Reason or other than as a result of the Executive’s Permanent Disability or
death, prior to the Termination Date, Executive shall be entitled only to
receive, as a cash lump sum within 30 days of such termination, the Compensation
Payment. As used herein, the term “Cause” shall be limited to (a) willful
malfeasance or willful misconduct by Executive in connection with the services
to the Company in a matter of material importance to the conduct of the
Company's affairs which has a material adverse effect on the business of the
Company, or (b) the conviction of Executive for commission of a felony. For
purposes of this subsection, no act or failure to act on the Executive’s part
shall be considered “willful” unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Termination of this Agreement
for Cause pursuant to this Section 0 shall be made by delivery to Executive of a
copy of a resolution duly adopted by the affirmative vote of all the Executive,
if a Board member not participating in the vote, of the members of the Board of
Directors called and held for such purpose (after 30 days prior written notice
to Executive and reasonable opportunity for Executive to be heard before the
Board of Directors prior to such vote), finding that in the good faith business
judgment of such Board of Directors, Executive was guilty of conduct set forth
in any of clauses (a) through (b) above and specifying the particulars thereof.

 

5.             Change In Control.

 

5.1           Definition. For purposes of this Agreement, a “Change in Control”
shall be deemed to have occurred if (i) there shall be consummated (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company’s
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company’s Common Stock
immediately prior to the merger have substantially the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger, or (B) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all the assets of
the Company, or (ii) the stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company, or (iii) any person
(as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934 (the “Exchange Act”)), other than the Company or any executive
benefit plan sponsored by the Company, or such person on the Effective Date
hereof is a 20% or more beneficial owner, shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of securities of the
Company representing 20% or more of the combined voting power of the Company’s
then outstanding securities ordinarily (and apart from rights accruing in
special circumstances) having the right to vote in the election of directors, as
a result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, or (iv) at any time during a period of two
consecutive years, individuals who at the beginning of such period, constituted
the Board of Directors of the Company shall cease for any reason to constitute
at least a majority thereof, unless the election or the nomination for election
by the Company’s stockholders of each new director during such two-year period
was approved by a vote of at least two-thirds of the directors then still in
office, who were directors at the beginning of such two-year period.

 

5.2           Rights and Obligations. If a Change in Control of the Company
shall have occurred while the Executive is director of the Company, the
Executive shall be entitled to the compensation provided in Section 0 of this
Agreement upon the subsequent termination of this Agreement by either the
Company, or the Executive within two years of the date upon which the Change in
Control shall have occurred, unless such termination is a result of (i) the
Executive’s death; (ii) the Executive’s Disability; (iii) the Executive’s
Retirement; or (iv) the Executive’s termination for Cause.

 

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6.          Assignment. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of Company, but neither this Agreement nor any rights or obligations
hereunder shall be assignable or otherwise subject to hypothecation by Executive
(except by will or by operation of the laws of intestate succession or by
Executive notifying the Company that cash payment be made to an affiliated
investment partnership in which Executive is a control person) or by Company,
except that Company may assign this Agreement to any successor (whether by
merger, purchase or otherwise) to all or substantially all of the stock, assets
or businesses of Company, if such successor expressly agrees to assume the
obligations of Company hereunder.

 

7.          Indemnification. Executive, as such and as a Director of the
Company, shall be indemnified by the Company against all liability incurred by
the Executive in connection with any proceeding, including, but not necessarily
limited to, the amount of any judgment obtained against Executive, the amount of
any settlement entered into by the Executive and any claimant with the approval
of the Company, attorneys’ fees, actually and necessarily incurred by him in
connection with the defense of any action, suit, investigation or proceeding or
similar legal activity, regardless of whether criminal, civil, administrative or
investigative in nature (“Claim”), to which he is made a party or is otherwise
subject to, by reason of his being or having been a director, officer, agent or
employee of the Company, to the full extent permitted by applicable law and the
Certificate of Incorporation of the Company.. Such right of indemnification will
not be deemed exclusive of any other rights to which Executive may be entitled
under Company’s Certificate of Incorporation or By-laws, as in effect from time
to time, any agreement or otherwise.

 

8.          General Provisions.

 

8.1        Modification: No Waiver. No modification, amendment or discharge of
this Agreement shall be valid unless the same is in writing and signed by all
parties hereto. Failure of any party at any time to enforce any provisions of
this Agreement or any rights or to exercise any elections hall in no way be
considered to be a waiver of such provisions, rights or elections and shall in
no way affect the validity of this Agreement. The exercise by any party of any
of its rights or any of this elections under this Agreement shall not preclude
or prejudice such party from exercising the same or any other right it may have
under this Agreement irrespective of any previous action taken.

 

8.2        Notices. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when hand delivered or mailed by
registered or certified mail as follows (provided that notice of change of
address shall be deemed given only when received):

 

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If to the Company, to:

 

MGT Capital Investments, Inc.

500 Mamaroneck Avenue, Suite 204

Harrison, NY 10528

If to Executive, to:

Robert B. Ladd

 

Or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.

 

8.3           Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.

 

8.4           Further Assurances. Each party to this Agreement shall execute all
instruments and documents and take all actions as may be reasonably required to
effectuate this Agreement.

 

8.5           Severability. Should any one or more of the provisions of this
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, then such illegal or unenforceable
provision shall be modified by the proper court or arbitrator to the extent
necessary and possible to make such provision enforceable, and such modified
provision and all other provisions of this Agreement and of each other agreement
entered into pursuant to this Agreement shall be given effect separately from
the provisions or portion thereof determined to be illegal or unenforceable and
shall not be affected thereby.

 

8.6           Successors and Assigns. Executive may not assign this Agreement
without the prior written consent of the Company. The Company may assign its
rights without the written consent of the executive, so long as the Company or
its assignee complies with the other material terms of this Agreement. The
rights and obligations of the Company under this Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
Company, and the Executive's rights under this Agreement shall inure to the
benefit of and be binding upon his heirs and executors. The Company's
subsidiaries and controlled affiliates shall be express third party
beneficiaries of this Agreement.

 

8.7           Entire Agreement. This Agreement supersedes all prior agreements
and understandings between the parties, oral or written. No modification,
termination or attempted waiver shall be valid unless in writing, signed by the
party against whom such modification, termination or waiver is sought to be
enforced.

 

8.8           Counterparts; Facsimile. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original, and all of which taken together shall constitute one and the same
instrument. This Agreement may be executed by facsimile with original signatures
to follow.

 

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first written above.

 

EXECUTIVE:   MGT CAPITAL INVESTMENTS, INC.       /s/ Robert Ladd   /s/ Robert
Holmes   Name: Robert Holmes     Title: Director, Chairman of Compensation
Committee

 

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