Exhibit 10.23

 

 

SPECIAL COMMITTEE COMPENSATION AGREEMENT

 

                This Agreement (“Agreement”), dated July 1, 2001, is entered
into by and between Timothy R. Duoos, a Minnesota resident (“Duoos”), and
VirtualFund.com, Inc., a Minnesota corporation (the “Company”).

R E C I T A L S

                WHEREAS, the Company wishes to procure the services of Duoos for
the Company as a member of the Special Acquisition/Investment Committee, whether
or not Duoos is on the Board of Directors of the Company, and Duoos is willing
to provide his services to the Company on the terms and conditions hereinafter
set forth.

                NOW THEREFORE, in consideration of the premises recited above
and the mutual promises and agreements herein, the parties to this Agreement
hereby agree as follows:

1.             Duties.

1.01.        Duties. The Company hereby appoints Duoos as a member of the
Special Acquisition/Investment Committee and Duoos hereby accepts his position
on such Special Acquisition/Investment Committee on the terms and conditions set
forth in this Agreement. Duoos shall have such authority and responsibility, and
shall serve in such capacities consistent with that status, as may from time to
time be assigned to him by the Board of Directors of the Company.  In connection
with his role as a member of the Special Acquisition/Investment Committee, Duoos
will work to find a business opportunity, investment or investments, and/or
transaction to enhance value for the shareholders of the Company and in
connection therewith will:

•                    Contact, discuss and elicit interest from investment
bankers, business brokers, accountants, attorneys and other professionals (and
spheres of influence) who might help the Company to identify and effectuate a
transaction;

•                    Conduct and oversee the due diligence required to analyze
transaction options;

•                    Review and analyze proposals for a transaction, both
preliminary and firm, that are received from  interested parties;

•                    Present the Board of Directors with details regarding
proposed transactions for their consideration and input;

•                    Negotiate the structure of, parameters of and valuation
with respect to any transaction;

•                    Negotiate any letters of intent and all other documents
necessary to consummate a transaction;

•                    Coordinate all necessary legal, accounting or other
necessary professional assistance required to successfully consummate a
transaction;

•                    Negotiate with lending or financial institutions or any
other sources of capital, if necessary, to successfully consummate a
transaction; and

•                    Coordinate all of the activities contemplated in the
pursuit of the above responsibilities.

 

 

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1.02.        Performance of Duties. Duoos shall serve the Company and its
subsidiaries faithfully and to the best of his ability, and devote such time as
may reasonably be required to the business and affairs of the Company and its
subsidiaries during the term of this Agreement.

1.03.        No Other Agreements. Duoos hereby confirms that he is under no
contractual commitments inconsistent with his obligations set forth in this
Agreement.

2.             Term.  The term of this Agreement shall begin on the date first
above written and expire on the date that is three (3) years after such date
(even if Duoos ceases to serve as a member of the Board of Directors of the
Company during the term of this Agreement), unless this Agreement is terminated
earlier in accordance with Section 5.01 hereof.  Except as otherwise specified
herein, all rights, duties and obligations of Duoos, including without
limitation the compensation and benefits provided in Section 4 of this
Agreement, shall commence as of the date first above written.

3.             Location. Duoos shall perform his duties in a location or
locations as may be mutually agreed upon by the Company and Duoos.

4.             Compensation and Benefits.

4.01.        Base Compensation. During the Term of this Agreement, the Company
shall pay to Duoos base compensation at the rate of not less than $21,667 per
month in addition to his regular director fees.  Such base compensation shall be
paid at the beginning of each calendar month during the term of this Agreement.
Duoos’s base compensation shall be reviewed annually and may be increased (but
not decreased).

4.02.        Stock Options.  The Company shall grant to Duoos, on the
anniversary date of this Agreement, a stock option under the Company’s Stock
Plan to purchase a total of 100,000 shares of the Company’s Common Stock for
each year of service during the Term at a price of $0.15 per share, in a manner
otherwise consistent with the terms of the Company’s Stock Option Plan.

 

4.03.        Bonuses and Incentive Compensation.  In addition to the base
compensation and the stock options described in Sections 4.01 and 4.02, Duoos
shall be eligible to participate in any bonus or performance based incentive
compensation plans which are established by the Board of Directors of the
Company or provided for by the Board of Directors of the Company in connection
with a business opportunity, investment or investments, and/or transaction
undertaken or completed by the Company.

4.04.        Expenses.  The Company shall pay or reimburse Duoos for all
reasonable and necessary out-of-pocket expenses incurred by him (including, but
not limited to, travel, entertainment and moving expenses) in the performance of
his duties under this Agreement, subject to the presentment of appropriate
vouchers in accordance with the Company’s normal policies for expense
verification.

 

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5.             Termination.

 

5.01.        Termination. Duoos’s duties under this Agreement may be terminated
prior to the expiration of the Term set forth in Section 2, in which case the
Company will be obligated to compensate Duoos as provided for in Section 5.02:

(a)           Termination upon Death. Duoos’s duties under this Agreement shall
terminate upon his death.

(b)           Termination upon Disability. The Company may terminate Duoos’s
duties in the event that Duoos is determined to be disabled, as defined in
Section 5.03.

(c)           Termination by the Company without Cause.  The Company may
terminate Duoos’s duties under this Agreement for any reason or for no reason
upon ninety (90) days’ written notice to Duoos.

(d)           Termination by the Company for Cause. The Company may terminate
Duoos’s duties under this Agreement for Cause, as defined in Section 5.03,
effective immediately upon delivery to Duoos of written notice of such
termination; provided, however, that Duoos shall not be terminated for Cause
unless and until the Company shall have delivered to Duoos a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Company’s Board of Directors at a meeting called
and held for such purpose (after reasonable notice to Duoos and an opportunity
for Duoos, together with Duoos’s counsel, to be heard by said Board), finding
that, in the good faith opinion of said Board, Duoos’s conduct constitutes Cause
for termination and specifying the particulars thereof in detail.

(e)           Termination by Duoos. Duoos may terminate his duties with the
Company hereunder at any time (i) for Good Reason, as defined in Section 5.03,
effective immediately upon delivery to the Company of written notice of such
termination, or (ii) for any reason or for no reason upon ninety (90) days’
written notice to the Company.

(f)            Termination by Mutual Consent. The parties may terminate the
their mutual relationship under this Agreement at any time by mutual consent.

5.02.        Compensation Upon Termination.

(a)           Death or Disability. In the event this Agreement is terminated by
reason of Duoos’s death or disability, Duoos shall be entitled to payment of
compensation earned through the date of termination; payment of any bonus or
other incentive compensation for the year in which such death or disability
occurs, pro rated for the portion of the year preceding the date of termination;
and reimbursement of expenses incurred through the date of termination. Duoos
shall not be entitled to receive any compensation, bonus or other payments or
benefits under this Agreement with respect to any periods after the date of
termination by reason of death or disability.

(b)           Termination by Company without Cause or by Duoos for Good Reason.
If Duoos’s duties under this Agreement are terminated by the Company without
Cause pursuant to Section 5.01(c) or by Duoos for Good Reason pursuant to
Section

 

 

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5.01(e)(i), Duoos shall be entitled to payment of compensation earned through
the date of termination; payment of any bonus or other incentive compensation
for the year in which such termination occurs, pro rated for the portion of the
year preceding the date of termination; and reimbursement of expenses incurred
through the date of termination.  In addition, Duoos shall be entitled to
continue to receive, as a severance benefit, payment of his base compensation
(at the highest annual rate in effect during the Term of this Agreement) for the
remainder of the Term of this Agreement.  In the event Duoos is terminated or
chooses to terminate his duties under this Section 5.02(b), the Company must pay
all the sums due and owing to him immediately, after an adjustment is made for
the acceleration of such payment by the use of a discounted present value rate
of eight percent (8.00%).

(c)           Termination by Company for Cause or by Duoos without Good Reason.
If Duoos’s duties under this Agreement are terminated by the Company for Cause
pursuant to Section 5.01(d), or by Duoos without Good Reason pursuant to Section
5.01(e)(ii), Duoos shall be entitled to payment of compensation earned through
the date of termination; payment of any bonus or other incentive compensation
for the year in which such termination occurs, pro rated for the portion of the
year preceding the date of termination; and reimbursement of expenses incurred
through the date of termination. Duoos shall not be entitled to receive any
compensation, bonus or other payments or benefits under this Agreement with
respect to any periods after the date of termination by the Company for Cause or
by Duoos without Good Reason.

5.03.        Definitions.

(a)           Disability. Duoos shall be deemed to be “disabled” if the Board of
Directors of the Company (excluding Duoos, if Duoos is a member of the Board of
Directors) determines in good faith that Duoos is physically or mentally
incapacitated and has been unable for ninety (90) days in any 360-day period to
perform his duties under this Agreement. In order to assist the Board of
Directors in making that determination, Duoos shall, as reasonably requested by
the Board, (i) make himself available for medical examinations by a physician
chosen by the Board, and (ii) grant the Board and such physician access to all
relevant medical information concerning him, arrange to furnish copies of
medical records to them and use his best efforts to cause his own physicians to
be available to discuss his health with the Board and the physician appointed by
the Board.  If Duoos disagrees with the findings of the Board-appointed
physician, he may appoint his own physician to make the relevant determinations
as to disability. In the event that the physician appointed by Duoos disagrees
with the findings of the Board-appointed physician, the two physicians shall
select a third physician whose determination shall be binding.

(b)           Cause. “Cause” shall mean:

(i)            the conviction of Duoos by a court of competent jurisdiction for
felony criminal conduct; or

 

 

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(ii)           the willful engaging by Duoos in fraud or dishonesty which is
demonstrably and materially injurious to the Company or its reputation,
monetarily or otherwise.

No act, or failure to act, on Duoos’s part shall be deemed “willful” unless
committed or omitted by Duoos in bad faith and without a reasonable belief that
his act or failure to act was in the best interest of the Company.

(c)           Good Reason. “Good Reason” shall mean the occurrence, without
Duoos’s express written consent, of any of the following:

(i)            the assignment to Duoos of any duties inconsistent with Duoos’s
status or position with the Company;

(ii)           a reduction by the Company in Duoos’s monthly base compensation;

(iii)          a merger, reverse merger, consolidation, reorganization,
recapitalization, business combination or other transaction pursuant to which
the Company and/or substantially all of its assets acquires, or is (are)
acquired by, or combined with, a third party or third parties or an event or
transaction in which either or both the Control Share Acquisition section
(Section 302A.671) of the Minnesota Business Corporation Act or its successor
section or the Business Combination section (Section 302A.673) of the Minnesota
Business Corporation Act or its successor section is implicated or invoked;

(iv)          the involuntary removal by the shareholders of all or a majority
of the presently serving Board of Directors of the Company pursuant to action
taken at a regularly scheduled shareholders meeting or a special shareholders
meeting;

(v)           the taking of any action by the Company which would directly or
indirectly materially reduce any of the other benefits described in Sections
4.03 and 4.04 and which remains uncured after thirty (30) days following the
delivery of Duoos’s written notice of such breach to the Company; or

(vi)          any material violation of this Agreement by the Company which
remains uncured after thirty (30) days following the delivery of Duoos’s written
notice of such breach to the Company.

6.             Miscellaneous

6.01.        Idemnification. The Company will pay on behalf of Duoos, and his
executors, administrators or assigns, any amount which he is or becomes legally
obligated to pay because of any claim or claims made against him because of any
act or omission or neglect or breach of duty, including any actual or alleged
error or misstatement or misleading statement, which he commits or suffers while
acting in his capacity as a member of Special Acquisition/Investment Committee
of the Company.  The payments which the Company will be

 

 

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obligated to make hereunder shall include, inter alia, damages, judgments,
settlements and costs, cost of investigation (excluding salaries of officers or
employees of the Company) and costs of defense of legal actions, claims or
proceedings and appeals therefrom, and costs of attachment or similar bonds;
provided, however, that the Company shall not be obligated to pay fines or other
obligations or fees imposed by law or otherwise which it is prohibited by
applicable law from paying as indemnity or for any other reason.  If a claim
under this Agreement is not paid by the Company, or on its behalf, within ninety
(90) days after a written claim has been received by the Company, the claimant
may at any time thereafter bring suit against the Company to recover the unpaid
amount of the claim and if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim.  Costs and
expenses (including attorneys’ fees) incurred by Duoos in defending or
investigating any action, suit, proceeding or investigation shall be paid by the
Company in advance of the final disposition of such matter.

 

6.02.        Assignment. Neither party may transfer or assign any rights or
delegate any obligations hereunder, in whole or in part, whether voluntarily or
by operation of law, without the prior written consent of the other party. Any
purported transfer, assignment or delegation by either party without compliance
with this Section 6.02 will be null and void and of no force or effect. This
Agreement shall be binding upon and inure to the benefit of the parties’
successors and lawful assigns.

6.03.        Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
unenforceable or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

6.04.        Complete Agreement. This Agreement and the agreements referenced
herein and therein, contain the complete agreement between the parties with
respect to the subject matter hereof and thereof, and supersede any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof or thereof in any
way.

6.05.        Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together, when delivered, will constitute
one and the same instrument.

6.06.        Governing Law; Choice of Forum. The internal law, without regard to
conflicts of laws principles, of the State of Minnesota will govern all
questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement. Any
and every legal proceeding arising out of or in connection with this Agreement
shall be brought in the appropriate courts of the State of Minnesota, and each
of the parties hereto consents to the exclusive jurisdiction of such courts.

6.07.        No Waiver. No term or condition of this Agreement shall be deemed
to have been waived, nor shall there by any estoppel to enforce any provisions
of this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
not be deemed a continuing waiver unless

 

 

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specifically stated, shall operate only as to the specific term or condition
waived and shall not constitute a waiver of such term or condition for the
future or as to any act other than that specifically waived.

 

*                     *                     *                      
*                       *                     *                      *

 

 

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

 

TIMOTHY R. DUOOS:

 

 

 

/s/ Timothy R. Duoos

 

Timothy R. Duoos

 

 

 

COMPANY:

 

 

 

VirtualFund.com, Inc., a Minnesota corporation

 

 

 

By:

/s/ John Cavanaugh

 

Its:

Director

 

 

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