Document:

Unassociated Document

     

    EXHIBIT
      10-G-3

    

    

    November
      26, 2007

    

    

    

    

    Mr.
      Taras R. Proczko

    Hartmarx
      Corporation

    101
      North Wacker Drive

    Chicago,
      Illinois 60606

    

    

    
      	
               

            	
              Re:

            	
              Employment
                Agreement dated as of August 8, 2002 (the "Employment Agreement"),
                and
                Severance Agreement 

              Effective
                as of August 8, 2002 (the "Severance Agreement"), each as amended
                through
                the date hereof

            

    

    

    

    Dear
      Mr. Proczko:

    

    Reference
      is made to the Employment Agreement and the Severance Agreement between you,
      as
      Executive, and Hartmarx Corporation (the "Company").  Hartmarx
      Corporation has been authorized by the Compensation and Stock Option Committee
      of the Board of Directors to amend the Employment Agreement and the Severance
      Agreement in certain respects, effective as of the date hereof, as set forth
      below.

    

    
      	
              A.

            	
              Employment
                Agreement

            

    

    

    1.     Section
      1 of the Employment Agreement is hereby amended by deleting the first clause
      thereof, through the semi-colon ";" in line 4, and inserting the
      following:

    

    "The
      Company hereby employs Executive and Executive hereby agrees to remain in the
      employ of the Company for an employment term ("Agreement Period") beginning
      on
      the date of this Agreement, and continuing in effect through December 31,
      2009;"

    

    2.     Section
      3(a) is amended in its entirety to provide as follows:

    

    "(a)During
      the Agreement Period the Company shall pay Executive an annual base salary
      of
      not less than Executive's base salary in effect as of

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Mr.
      Taras R. Proczko

    Hartmarx
      Corporation

    November
      26, 2007

    Page
      2

    

    

    January
      1, 2007 ("Base Salary").  Base Salary shall be paid in accordance with
      the Company's customary payroll practices.  Base Salary may be
      increased at the discretion of the Compensation and Stock Option Committee
      of
      the Company Board of Directors (the "Committee") and once so increased shall
      not
      thereafter be decreased, except for across-the-board reductions similarly
      affecting all executives of the Company."

    

    3.     Section
      4(c)(iii)(D) is amended by deleting the reference to Section 7 and inserting
      a
      reference to Section 8 in its place.

    

    4.     The
      introductory paragraph of Section 4(d) is amended to read as
      follows:

    

    "(d)Good
      Reason.  The Executive may terminate his employment hereunder for
      Good Reason.  Good Reason shall mean the occurrence (without the
      Executive's written consent) of any one of the following acts by the Company,
      or
      failures by the Company to act, each of which shall be deemed to be a material
      negative change in the terms and conditions of Executive's
      employment:"

    

    5.     Section
      5(a) is amended by deleting the reference to Section 9 and inserting a reference
      to Section 10 in its place.

    

    6.    Section
      6(b)(iii) is amended by deleting the second sentence thereof and inserting
      the
      following in its place:

    

    "Such
      payments will be made within five (5) days of the date on which MIP payments
      are
      made to other MIP participants after the close of each fiscal year, but in
      any
      case not later than March 15 after the close of such fiscal year, and will
      include the cash value, determined without regard to any restrictions on the
      sale thereof, of restricted stock."

    

    7.     Section
      6(b)(v) is amended in its entirety to provide as follows:

    

    "(v)During
      the Severance Period the Company shall arrange to provide the Executive with
      life, disability, accident and health insurance benefits ("Welfare Benefits")
      substantially similar in all material respects to those which the Executive
      is
      receiving immediately prior to the Date of

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      Mr.
        Taras R. Proczko

      Hartmarx
        Corporation

      November
        26, 2007

      Page
        3

      

    

    
 

    Termination
      (without giving effect to any decrease therein which constitutes the basis,
      or
      one of the bases, upon which the Notice of Termination is based), or if such
      benefits are not available or the provision of such benefits would not be
      allowed under the terms of such plans, the Company shall pay Executive the
      after-tax economic equivalent thereof.  If the Executive receives, or
      becomes eligible to receive, Welfare Benefits from another source, then the
      Welfare Benefits otherwise receivable by the Executive pursuant to this Section
      6(b)(v) shall be reduced to the extent of such other Welfare Benefits received
      by, or made available to, the Executive during the Severance Period (and any
      such Welfare Benefits received by or made available to the Executive shall
      be
      reported to the Company by the Executive).  Nothing herein shall be
      deemed to limit Executive's rights, if any, to thereafter participate in any
      retiree medical plan then in effect."

    

    8.    New
      Section 7 is inserted as follows:

    

    "7.   Internal
      Revenue Code Section 409A.

    

    (a)Notwithstanding
      anything to the contrary set forth in Sections 6(b)(i) through (ix) or elsewhere
      in this Agreement, Executive's entitlement to a series of installments payments
      shall be treated and shall be deemed to be an entitlement to a series of
      separate payments within the meaning of Section 409A of the Internal Revenue
      Code of 1986, as amended (the "Code") and the regulations
      thereunder.

    

    (b)Any
      severance benefits paid within the later of (i) 2-1/2 months of the end of
      the
      Company's taxable year containing the Executive's severance from employment,
      or
      (ii) 2-1/2 months of the end of the Executive's taxable year containing the
      severance from employment shall be exempt from Section 409A and shall be paid
      in
      accordance with Section 6(b).  Severance benefits subject to this
      Section 7(b) shall be treated and shall be deemed to be an entitlement to a
      separate payment within the meaning of Section 409A of the Code and the
      regulations thereunder.

    

    (c)To
      the extent severance benefits are not exempt from Section 409A under Section
      7(b) above, any benefits paid in the first 6 months following the Executive's
      severance from employment that are equal to or less than the lesser of the
      amounts described in Treasury Regulation Section

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      Mr.
        Taras R. Proczko

      Hartmarx
        Corporation

      November
        26, 2007

      Page
        4

      

    

     

    
 

    1.409A-1(b)(9)(iii)(A)(1)
      and (2) shall be exempt from Section 409A and shall be paid in accordance with
      Section 6(b).  Severance benefits subject to this Section 7(c) shall
      be treated and shall be deemed to be an entitlement to a separate payment within
      the meaning of Section 409A of the Code and the regulations
      thereunder.

    

    (d)To
      the extent severance benefits are not exempt from Section 409A under Section
      7(b) or 7(c) above, any benefits paid equal to or less than the applicable
      dollar amount under Section 402(g)(1)(B) of the Code for the year of severance
      from employment shall be exempt from Section 409A in accordance with Treasury
      Regulation Section 1.409A-1(b)(9)(v)(D) and shall be paid in accordance with
      Section 6(b).  Severance benefits subject to this Section 7(d) shall
      be treated and shall be deemed to be an entitlement to a separate payment within
      the meaning of Section 409A of the Code and the regulations
      thereunder.

    

    (e)To
      the extent severance benefits are not exempt from Section 409A pursuant to
      Section 7(b), 7(c) or 7(d) above, and to the extent the Executive is a
      "specified employee" (as defined below), payments due to the Executive under
      Section 6 shall begin no sooner than six months after the Executive's severance
      from employment (other than for Death); provided, however, that any payments
      not
      made during the six (6) month period described in this Section 7(e) due to
      the
      6-month delay period required under Treasury Regulation Section 1.409A-3(i)(2)
      shall be made in a single lump sum as soon as administratively practicable
      after
      the expiration of such six (6) month period, with interest thereon computed
      at
      the rate set forth in Section 17 hereof, and the balance of all other payments
      required under this Agreement shall be made as otherwise scheduled in this
      Agreement.

    

    (f)For
      purposes of this Section 7, any reference to severance of employment or
      termination of employment shall mean a "separation from service" as defined
      in
      Treasury Reg. Section 1.409A-1(h).  For purposes of this Agreement,
      the term "specified employee" shall have the meaning set forth in Treasury
      Reg.
      Section 1.409A-1(i).  The determination of whether the Executive is a
      "specified employee" shall be made by the Employer in good faith applying the
      applicable Treasury regulations.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      Mr.
        Taras R. Proczko

      Hartmarx
        Corporation

      November
        26, 2007

      Page
        5

      

    

    

    (g)Notwithstanding
      anything to the contrary set forth in this Agreement, and in addition to any
      tax
      gross-up payments to which Executive may be entitled under any other agreement
      between Executive and Company, if any of the amounts payable to Executive
      hereunder are or become subject to excise or other tax liability (including
      interest and penalties) that may be assessed by the IRS pursuant to Section
      409A
      or any other section of the Code and imposed upon Executive, the Company shall
      reimburse and gross-up Executive in an amount sufficient so that such payments
      and benefits received by Executive hereunder will be so received without
      reduction for any such taxes, interest or penalties.  Such gross-up
      payment shall be made promptly after the assessment of such excise or other
      tax
      liability (including interest and penalties); however, in any event, such
      gross-up payment shall be made no later than the end of Executive's taxable
      year
      next following his taxable year in which the related taxes, interest or
      penalties are remitted."

    

    9.     Sections
      7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 and 21, are hereby
      re-designated as Sections 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20,
      21
      and 22, respectively, and all references thereto shall be references to the
      re-designated Section numbers.

    

    10.     Section
      18 is amended to provide as follows:

    

    "18.Beneficiaries.  If
      Executive should die while any amount is payable to him hereunder, such amount
      shall be paid in a single lump sum to Executive's devisee, legatee or other
      designee or, if there is no such designee, to Executive's estate."

    

    

    
      	
              B.

            	
              Severance
                Agreement

            

    

    

    1.     Section
      2 is amended by deleting the references to Section 7 and Section 12 and
      inserting references to Section 8 and Section 13, respectively.

    

        2.     The
      introductory paragraph of Section 4(d) is amended to read as
      follows:

    

    "(d)Good
      Reason.  The Executive may terminate his employment hereunder for
      Good Reason.  Good Reason shall mean the occurrence, after
      a

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      Mr.
        Taras R. Proczko

      Hartmarx
        Corporation

      November
        26, 2007

      Page
        6

      

    

     

    
 

    Change
      in Control, (without the Executive's written consent) of any one of the
      following acts by the Company, or failures by the Company to act, each of which
      shall be deemed to be a material negative change in the terms and conditions
      of
      Executive's employment:"

    

    3.    Section
      5(a) is amended by deleting the reference to Section 10 and inserting a
      reference to Section 11 in its place.

    

    4.    Section
      6(b)(iv) is amended in its entirety to provide as follows:

    

    "(iv)During
      a period of thirty-six (36) months (the "Severance Period") the Company shall
      arrange to provide the Executive with life, disability, accident and health
      insurance benefits ("Welfare Benefits") substantially similar in all material
      respects to those which the Executive is receiving immediately prior to the
      Date
      of Termination (without giving effect to any adverse amendment to, or
      elimination of, such benefits made after a Change in Control); provided,
      however, if the termination of Executive's employment after a Change in Control
      and during the Agreement Period by the Company without Cause or by Executive
      for
      Good Reason hereunder occurs after Executive has attained the age of 57 years,
      the Welfare Benefits to be provided by the Company shall continue to be provided
      until such time that Executive becomes Medicare eligible and is covered by
      Medicare.  If any such Welfare Benefits are not available or the
      provision of such benefits would not be allowed under the terms of such plans,
      the Company shall pay Executive the after-tax economic equivalent
      thereof.  If the Executive receives, or becomes eligible to receive,
      Welfare Benefits from another source, then the Welfare Benefits otherwise
      receivable by the Executive pursuant to this Section 6(b)(iv) shall be reduced
      to the extent of such other Welfare Benefits received by, or made available
      to,
      the Executive during the Severance Period (and any such Welfare Benefits
      received by or made available to the Executive shall be reported to the Company
      by the Executive).  Nothing herein shall be deemed to limit
      Executive's rights, if any, to thereafter participate in any retiree medical
      plan then in effect.  Executive covenants and agrees that he shall
      apply for Medicare coverage on his first Medicare eligibility
      date."

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      Mr.
        Taras R. Proczko

      Hartmarx
        Corporation

      November
        26, 2007

      Page
        7

      

    

    

    5.     New
      Section 7 is inserted as follows:

    

    "7.Internal
      Revenue Code Section 409A.

    

    (a)Notwithstanding
      anything to the contrary set forth in Sections 6(b)(i) through (viii) or
      elsewhere in this Agreement, Executive's entitlement to a series of installments
      payments shall be treated and shall be deemed to be an entitlement to a series
      of separate payments within the meaning of Section 409A of the Internal Revenue
      Code of 1986, as amended (the "Code") and the regulations
      thereunder.

     

    (b)Any
      severance benefits paid within the later of (i) 2-1/2 months of the end of
      the
      Company's taxable year containing the Executive's severance from employment,
      or
      (ii) 2-1/2 months of the end of the Executive's taxable year containing the
      severance from employment shall be exempt from Section 409A and shall be paid
      in
      accordance with Section 6(b).  Severance benefits subject to this
      Section 7(b) shall be treated and shall be deemed to be an entitlement to a
      separate payment within the meaning of Section 409A of the Code and the
      regulations thereunder.

    

    (c)To
      the extent severance benefits are not exempt from Section 409A under Section
      7(b) above, any benefits paid in the first 6 months following the Executive's
      severance from employment that are equal to or less than the lesser of the
      amounts described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1)
      and
      (2) shall be exempt from Section 409A and shall be paid in accordance with
      Section 6(b).  Severance benefits subject to this Section 7(c) shall
      be treated and shall be deemed to be an entitlement to a separate payment within
      the meaning of Section 409A of the Code and the regulations
      thereunder.

    

    (d)To
      the extent severance benefits are not exempt from Section 409A under Section
      7(b) or 7(c) above, any benefits paid equal to or less than the applicable
      dollar amount under Section 402(g)(1)(B) of the Code for the year of severance
      from employment shall be exempt from Section 409A in accordance with Treasury
      Regulation Section 1.409A-1(b)(9)(v)(D) and shall be paid in accordance with
      Section 6(b).  Severance benefits subject to this Section 7(d) shall
      be treated and shall be deemed to be an entitlement to a

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      Mr.
        Taras R. Proczko

      Hartmarx
        Corporation

      November
        26, 2007

      Page
        8

      

    

     

    
 

    separate
      payment within the meaning of Section 409A of the Code and the regulations
      thereunder.

    

    (e)To
      the extent severance benefits are not exempt from Section 409A pursuant to
      Section 7(b), 7(c) or 7(d) above, and to the extent the Executive is a
      "specified employee" (as defined below), payments due to the Executive under
      Section 6 shall begin no sooner than six months after the Executive's severance
      from employment (other than for Death); provided, however, that any payments
      not
      made during the six (6) month period described in this Section 7(e) due to
      the
      6-month delay period required under Treasury Regulation Section 1.409A-3(i)(2)
      shall be made in a single lump sum as soon as administratively practicable
      after
      the expiration of such six (6) month period, with interest thereon computed
      at
      the rate set forth in Section 18 hereof, and the balance of all other payments
      required under this Agreement shall be made as otherwise scheduled in this
      Agreement.

    

    (f)For
      purposes of this Section 7, any reference to severance of employment or
      termination of employment shall mean a "separation from service" as defined
      in
      Treasury Reg. Section 1.409A-1(h).  For purposes of this Agreement,
      the term "specified employee" shall have the meaning set forth in Treasury
      Reg.
      Section 1.409A-1(i).  The determination of whether the Executive is a
      "specified employee" shall be made by the Employer in good faith applying the
      applicable Treasury regulations.

    

    (g)Notwithstanding
      anything to the contrary set forth in this Agreement, and in addition to any
      tax
      gross-up payments to which Executive may be entitled under any other agreement
      between Executive and Company, if any of the amounts payable to Executive
      hereunder are or become subject to excise or other tax liability (including
      interest and penalties) that may be assessed by the IRS pursuant to Section
      409A
      or any other section of the Code and imposed upon Executive, the Company shall
      reimburse and gross-up Executive in an amount sufficient so that such payments
      and benefits received by Executive hereunder will be so received without
      reduction for any such taxes, interest or penalties.  Such gross-up
      payment shall be made promptly after the assessment of such excise or other
      tax
      liability (including interest and penalties); however, in any event, such
      gross-up payment shall be made no later than the end of Executive's taxable
      year
      next following his taxable year in which the related taxes, interest or
      penalties are remitted."

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      Mr.
        Taras R. Proczko

      Hartmarx
        Corporation

      November
        26, 2007

      Page
        9

      

    

    

    6.     Sections
      7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21 and 22 are hereby
      re-designated as Sections 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20,
      21,
      22 and 23, respectively, and all references thereto shall be references to
      the
      re-designated Section numbers.

    

    7.     Section
      19 is amended to provide as follows:

    

    "19.Beneficiaries.  If
      Executive should die while any amount is payable to him hereunder, such amount
      shall be paid in a single lump sum to Executive's devisee, legatee or other
      designee or, if there is no such designee, to Executive's estate."

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      Mr.
        Taras R. Proczko

      Hartmarx
        Corporation

      November
        26, 2007

      Page
        10

      

    

     

     

     

    Please
      sign both copies of this letter
      where indicated below evidencing your agreement to these amendments to the
      Employment Agreement and Severance Agreement.  When fully executed,
      this letter will serve as an amendment to the Employment Agreement and Severance
      Agreement and, except as expressly amended by this letter, the Employment
      Agreement and Severance Agreement shall each remain in full force and effect
      in
      accordance with their respective terms.

    

    Very
      truly yours,

    

    /s/
      RAYMOND F. FARLEY

    

    Raymond
      F. Farley, Chairman

    Compensation
      and Stock Option

    Committee
      of the Board of Directors

    

    

    

    

    

    

    

    

    

    

    

    Agreed
      and Accepted this

    26th
      day of November, 2007

    

    

    

     /s/
      Taras R. Proczko

    Taras
      R. ProczkoFiled by Bowne Pure Compliance

 

Exhibit 10.1

SEPARATION AGREEMENT AND MUTUAL RELEASE OF CLAIMS

THIS SEPARATION AGREEMENT (the “Agreement”) is made and entered into as of the 29th
day of November, 2007 and effective on the Effective Date (defined below), by and between CHARLES
F. CHAMPION (the “Executive”) and YOUBET.COM, INC., a Delaware corporation (the “Company”).

W I T N E S S E T H:

THAT, WHEREAS, the Executive was initially employed by the Company as its President and Chief
Operating Officer pursuant to an employment agreement dated March 11, 2002; and

WHEREAS, effective as of June 16, 2003, the Executive has been employed by the Company as its
Chief Executive Officer and Chairman of the Board pursuant to an employment agreement entered into
on November 21, 2003, and amended by a first amendment thereto on August 1, 2005, and a second
amendment thereto on January 11, 2006 (collectively, the “Employment Agreement”); and

WHEREAS, the Company and the Executive have agreed that the Executive’s employment is ending
effective December 11, 2007; and

WHEREAS, while the Company intends to and shall honor its obligations to the Executive under
the Employment Agreement, the Company and the Executive desire to slightly modify their arrangement
and to release one another, all as provided in this Agreement;

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which the parties to this Agreement hereby
acknowledge, the parties hereby agree as follows:

1. Separation.

(A) Transition. The Company hereby agrees to continue to employ the Executive through
the close of business on December 11, 2007 (the “Separation Date”). Until the Separation Date, and
except for illness or injury, vacations, PTO, holidays, and emergencies, Executive will continue to
perform his regular and customary duties (and with the perquisites he has enjoyed prior to his
signing this Agreement), and the Executive will work with the Company to effectuate a smooth
transition of the Company’s leadership, provided, however, that Executive may pursue other
employment and consulting opportunities to commence after the Separation Date so long as such
pursuit does not interfere with Executive’s regular and customary duties. The Company may
terminate Executive’s employment prior to the Separation Date only for “Cause,” as that term is
defined in Section 7(d) of the Executive’s Employment Agreement, and then only if the Executive is
afforded the procedural protections set forth in Section 7(d) of the Employment Agreement for a
determination of whether there is, in fact, “Cause.”

(B) Departure. Effective as of the Separation Date, the Executive’s employment with
the Company will end by reason of a termination of his employment without

 

 

 

(C) “Cause” as that term is defined in the Employment Agreement. Effective as of the
Separation Date, the Executive will cease to hold any and all offices with the Company, and,
notwithstanding any contrary provisions in the Employment Agreement, shall resign from the Board
and shall not seek re-election to the Board at any time thereafter.

(D) Announcement. The announcement of the Executive’s departure from the Company will
be made at a time determined by the Company, but it shall not be made unless and until the Company
has delivered to the Executive (A) by certified or cashier’s checks or by wire transfer the
payments due him under Section 5(A) of this Agreement and (B) originals of the agreed upon
documents under Section 5(B) of this Agreement. For purposes of this Section 1(C)(A), “delivered
to the Executive” shall be deemed to have been made if the Company delivers said payments via wire
transfer to an escrow or client funds account held on the Executive’s behalf by the law firm of
Funkhouser Vegosen Liebman & Dunn Ltd. (“Escrow Agent”). In the event such an escrow payment is
made, Escrow Agent shall hold all funds in escrow pending expiration of the seven (7) day
revocation period described in Section 19 below. If the Executive does not revoke his acceptance
of this Agreement prior to expiration of said revocation period, then Escrow Agent shall release
the funds to the Executive, provided that no funds will be released unless and until Escrow Agent
receives written confirmation from the Executive, and Escrow Agent has confirmed that the Company
has received a copy of such confirmation, that no such revocation has occurred, and provided
further that it is understood and agreed that such funds will not bear interest. In the event that
the Executive revokes this Agreement pursuant to Section 19 below, Escrow Agent shall return all
funds to the Company without interest within one (1) business day of notification from the Company
to Escrow Agent that revocation has occurred. In no case will Escrow Agent deliver any funds to
the Executive absent legally binding confirmation that the Executive has not revoked this Agreement
per Section 19 below.

2. Interim and Final Compensation. Until the Separation Date, the Company shall (A)
continue to employ the Executive as its Chief Executive Officer and (B) compensate him and provide
him with his benefits pursuant to his Employment Agreement. On the Separation Date, the Company
shall pay the Executive as follows (all amounts are gross amounts, and shall be reduced by required
legal deductions, if any):

	 	1)	 	unpaid salary due him through the Separation
Date, and a payment equal to the amount the Executive would have been
paid had he remained in the employ of the Company until December 31,
2007 (i.e., twenty-nine thousand eight hundred sixty and 69/100 dollars
{$29,860.69}),
	 
	 	2)	 	his earned and unused vacation pay and PTO
through the Separation Date which, as of October 31, 2007, is
eighty-five thousand and no/100 dollars ($85,000),
	 
	 	3)	 	his unreimbursed business expenses through the
Separation Date, and

 

-2-

 

	 	4)	 	a bonus for 2007 in the amount of one hundred
thirty-eight thousand eight hundred fifty-two and 25/100 dollars
($138,852.25).

In addition, on the Separation Date, the Company shall provide the Executive an opportunity to
purchase the technological and peripheral devices he used in connection with his employment (the
“Devices”) at an agreed upon price. The parties understand and agree that the Executive may retain
any Devices so purchased, without having them stripped out other than for trade secrets and
proprietary information of the Company. Executive shall return to the Company all Devices not so
purchased, which are listed on Exhibit “A,” and Executive will provide the Company with access to
the Devices as deemed reasonably necessary by the Company to remove such trade secrets and
proprietary information of the Company. Nothing contained in this Agreement shall affect the
Executive’s right to receive through the Separation Date his 401(k) plan benefits under the
Company’s 401(k) plan, and the Company shall, promptly after the Separation Date, roll over such
benefits to an individual retirement account that the Executive designates.

3. Effect of Premature Termination. The parties understand and agree that if prior to
the Separation Date (A) the Company terminates the Executive’s employment for a reason other than
for “Cause” as defined in the Employment Agreement, or (B) the Executive terminates his employment
for “Good Reason” as defined in the Employment Agreement, such event shall have no impact
whatsoever on the Executive’s entitlement to any of the payments and benefits due him, and the
rights he has, under this Agreement, the Company shall not be relieved from its obligations to
provide Executive with and honor the same, and the last day of Executive’s employment with the
Company shall be deemed to be the Separation Date. In the event the Executive dies or becomes
disabled prior to the Separation Date, he shall, in lieu of the terms of this Agreement, retain
those rights provided to him in Section 7(b) of the Employment Agreement, including and the Nine
Million Dollar ($9,000,000) life insurance policy provided for in Section 4(a) of his Employment
Agreement (as amended by Section 2 of the Second Amendment thereto). Executive acknowledges that
the Company’s obligation to make any premium payments on Executive’s insurance policies will
terminate upon payment to Executive of the corresponding amounts set forth in Section 5(A) below.

4. Compensation and Benefits.

(A) Compensation and Benefits. The Executive and the Company acknowledge and agree
that, subject to the remaining provisions of this Agreement, the payments set forth in this Section
are required to be made to Executive under his Employment Agreement as a result of the termination
of his employment with “Cause.” Accordingly, on the Effective Date, the Company will pay the
Executive the following (all amounts are gross amounts, and shall be reduced by required legal
deductions, if any):

	 	1)	 	two (2) years of severance pay totaling eight
hundred twenty thousand nine hundred twenty-two and 70/100 dollars
($820,922.70);

 

-3-

 

	 	2)	 	the following bonus compensation he would have
received had he remained in the employ of the Company for two (2)
additional years: four hundred ten thousand forty-six and 13/100
dollars ($410,046.13);
	 
	 	3)	 	fifteen thousand nine hundred sixty and no/100
dollars (15,960.00), which represents an amount equal to the estimated
cost of providing the Executive and his family with medical insurance
for two (2) years;
	 
	 	4)	 	ten thousand nine hundred twenty and no/100
dollars ($10,920), which represents an amount equal to the estimated
cost of Exe-U-Care reimbursements for the Executive and his family for
two (2) years;
	 
	 	5)	 	three thousand two hundred seventy-six and
no/100 dollars ($3,276.00), which represents an amount equal to the
estimated cost of group life insurance for the Executive for two (2)
years;
	 
	 	6)	 	thirty thousand five hundred ninety-four and
20/100 dollars ($30,594.20), which represents an amount equal to the
cost of the premiums for term life insurance on the Executive for two
(2) years;
	 
	 	7)	 	three thousand seven hundred eighty and no/100
dollars ($3,780.00), which represents an amount equal to the estimated
cost of short-term and long-term disability insurance for the Executive
for two (2) years;
	 
	 	8)	 	forty-three thousand one hundred sixty-two and
70/100 dollars ($43,162.70), which represents the amount to compensate
the Executive for the loss of 401(k) contributions for two (2) years;
	 
	 	9)	 	twelve thousand six hundred and no/100 dollars
($12,600.00), which represents the Executive’s automobile allowance for
two (2) years;
	 
	 	10)	 	fourteen thousand and no/100 dollars ($14,000),
which represents the Executive’s financial and tax planning
reimbursement for two (2) years;
	 
	 	11)	 	seven thousand and no/100 dollars ($7,000),
which represents the Executive’s club dues and assessments for two (2)
years; and
	 
	 	12)	 	six thousand and no/100 dollars ($6,000), which
represents the Executive’s outplacement services reimbursement for two
(2) years.

 

-4-

 

Except as otherwise provided in this Agreement, and except for any rights Executive has under
Sections 3(c) and 4(e) of the Employment Agreement, which rights are unaffected by this Agreement
and which shall survive the termination of the Executive’s employment with the Company, the
payments listed in Sections 5(A)(1)-(12) above shall constitute full payment of all present or
future monies owed to Executive under the Employment Agreement (including Section 7 thereof), and
Executive acknowledges that he is not entitled to any additional sums under the Employment
Agreement.

(B) Stock Options. The parties acknowledge and agree that the Executive was granted
the following stock options pursuant to the Company’s 1998 Stock Option Plan and that said options
are fully vested and unaffected by this Agreement and shall survive the termination of the
Executive’s employment with the Company:

	 	1)	 	four hundred thousand (400,000) options having
an exercise price equal to the closing price of the Company’s Common
Stock on March 11, 2002 at a price of fifty cents ($.50) per share;
	 
	 	2)	 	three hundred fifty thousand (350,000) options
having an exercise price equal to the closing price of the Company’s
Common Stock on September 1, 2002 at a price of fifty-seven cents
($.57) per share; and
	 
	 	3)	 	nine hundred fifty thousand (950,000) options
having an exercise price equal to the closing price of the Company’s
Common Stock on November 21, 2003 at a price of two dollars and 23/100
($2.23) per share.

(C) Documents. On the Effective Date, the Company shall deliver to the Executive the
following documents:

	 	1)	 	An original of the agreed upon press release,
in the form attached hereto as Exhibit “A,” that the Company and the
Executive shall issue to the media through Beacon Advisors on the
Effective Date immediately after the payments set forth in Section 5
have been made to the Executive.
	 
	 	2)	 	An original of the agreed upon statement, in
the form attached hereto as Exhibit “B,” that the Executive will send
to all employees of the Company via e-mail on the Effective Date
immediately after the press release has been distributed.
	 
	 	3)	 	Twelve (12) originals of an agreed upon
favorable letter of reference, in the form attached hereto as Exhibit
“C,” printed on Company stationery, signed as indicated on the letter,
and dated as of the Effective Date.

5. Additional Consideration. The Executive and the Company acknowledge and agree that
some of the payments called for under his Employment Agreement are contingent on
the occurrence of certain events, and/or are not due to Executive in a lump sum as of the
Effective Date. The Executive and the Company likewise acknowledge that in this Agreement the
Executive has agreed to forego rights to certain payments and other rights he could otherwise have
claimed under the Employment Agreement.

 

-5-

 

6. Executive’s Covenants. Until the Separation Date, the provisions of Sections 5 and
6 of the Employment Agreement shall remain in full force and effect. After the Separation Date, the
Executive agrees to continue to be bound by the provisions contained in Sections 5 and 6 of his
Employment Agreement, according to their terms.

7. Releases. In return for the mutual promises and waivers of claims contained in
this Agreement, the sufficiency of which consideration is hereby acknowledged, the Company and the
Executive agree as follows:

(A) Release of the Company. Except for any vested benefits to which the Executive is
entitled under this Agreement, the Company’s 401(k) plan, and applicable law, except for the
Executive’s right to continue or convert his insurance benefits under applicable law and the
Company’s plans, and except for the Company’s breach of this Agreement, to the maximum extent
permitted by applicable law, the Executive RELEASES and FOREVER DISCHARGES the Company and its
affiliated companies, including their and the Company’s parents, subsidiaries, divisions, partners,
joint venturers, sister corporations, and as intended third-party beneficiaries, their
predecessors, successors, heirs and assigns, and their and the Company’s past, present and future
owners, directors, officers, members, agents, attorneys, employees, representatives, trustees,
administrators, fiduciaries and insurers, jointly and severally, in their individual, fiduciary and
corporate capacities (the Company and all of the foregoing being hereinafter collectively referred
to as the “Company Releasees”), of and from, and does hereby WAIVE, any and all rights, contracts,
notes, torts, claims, grievances, arbitrations, damages, actions, causes of action, and suits,
whether or not now known, suspected, or claimed, which he ever had, now has or claims, or might
hereafter have or claim against the Company Releasees, and each of them, relating to, directly or
indirectly, any matter or thing occurring, in whole or in part, from the beginning of the world
through the date hereof, including any and all rights, claims, grievances, arbitrations, suits, or
causes of action which he has asserted or could assert (1) relating to his employment with the
Company or his termination therefrom without “Cause” on the Separation Date, (2) relating to his
Employment Agreement (unless rights thereunder are otherwise preserved by this Agreement), and (3)
under the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act,
Title VII of the Civil Rights Act, the Civil Rights Act of 1991, the Americans with Disabilities
Act, and the employment, labor, wage and discrimination laws of the United States, California, and
Nevada and their subdivisions, all as amended.

The Executive recognizes that, among other things, he is releasing the Company of any and all
claims he might have against the Company for discrimination based on age.

The Executive represents and warrants that he has not heretofore assigned or transferred to
any person or entity any of the matters released under this Section 8(A), nor has he filed any
charges or complaints against any of the Company Releasees with any governmental or administrative
agency or court.

 

-6-

 

Executive further promises and agrees that, except for breaches of this Agreement or the
surviving provisions of his Employment Agreement, to the fullest extent recognized by law, neither
Executive nor any person, organization or entity acting on Executive’s behalf will ever file or
institute any suit or action at law or in equity or arbitration, alleging any claim Executive had
or now has, relating to or arising out of Executive’s employment with the Company or the separation
of that employment. Further, except for breaches of this Agreement or the surviving provisions of
his Employment Agreement, in any legally permissible or authorized proceeding, Executive waives all
rights to any form of recovery, compensation, or other remedy or relief of any kind.

(B) Release of the Executive. Except for the Executive’s breach of this Agreement, to
the maximum extent permitted by applicable law, the Company Releasees, and each of them, RELEASE
and FOREVER DISCHARGE the Executive and his heirs, legatees, agents, legal representatives,
successors and assigns (the Executive and all of the foregoing being hereinafter collectively
referred to as the “Executive Releasees”), of and from, and does hereby WAIVE, any and all rights,
contracts, notes, torts, claims, grievances, arbitrations, damages, actions, causes of action, and
suits, whether or not now known, suspected, or claimed, which they ever had, now have or claim, or
might hereafter have or claim against the Executive Releasees, and each of them, relating to,
directly or indirectly, any matter or thing occurring, in whole or in part, from the beginning of
the world through the date hereof, including any and all rights, claims, grievances, arbitrations,
suits, or causes of action which he has asserted or could assert (1) relating to the Executive’s
employment with the Company or his termination therefrom without “Cause” on the Separation Date,
(2) relating to his Employment Agreement (unless rights thereunder are otherwise preserved by this
Agreement), and (3) under applicable law.

The Company represents and warrants that the Company Releasees have not heretofore assigned or
transferred to any person or entity any of the matters released under this Section 8(B), nor have
the Company Releasees filed any charges or complaints against any of the Executive Releasees with
any governmental or administrative agency or court. For any and all of the matters released under
this Section 8(B), the Company covenants that the Company Releasees (i) shall not sue, or cause any
suit to be filed against, the Executive Releasees, or any of them, and (ii) shall not file, or
cause to be filed, any complaints, charges, grievances, or arbitrations against the Executive
Releasees, or any of them.

The foregoing release of the Executive does not extend to those claims for which Section 145
of the General Corporation Law of Delaware prohibits indemnification of Executive (the “Preserved
Claims”). Notwithstanding the preceding sentence, the parties understand and agree that:

A. without limiting the generality of the foregoing release, the foregoing release does
include and extend to (1) any claims against the Executive where he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of the Company, (2) any
criminal claims against the Executive where he had no reasonable cause to believe his conduct was
unlawful, (3) any claims brought against the Executive by the Company or pursuant to a right held
by the Company where he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and (4) any claims brought against the Executive by
the Company or pursuant to a right held by the Company where under all of the circumstances the Executive is fairly and reasonably entitled
to indemnity for such expenses that the Delaware Court of Chancery or such other court shall deem
proper;

 

-7-

 

B. nothing in the preceding sentence shall affect any right the Executive has to advances of
expenses (including attorneys’ fees) in defending any civil, criminal, administrative or
investigative action, suit or proceeding in advance of the final disposition of such action, suit,
or proceeding; and

C. nothing in the preceding sentence shall affect any right the Executive has to be covered by
directors or officers liability insurance.

The parties further understand and agree that the termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that (i) the Executive did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to the best interests of
the corporation, or (ii) with respect to any criminal action or proceeding, the Executive had
reasonable cause to believe that his conduct was unlawful.

The determination of whether there is a Preserved Claim shall be made in accordance with the
provisions of Section 145 of the General Corporation Law of Delaware, and shall be determined in
all respects by the internal law of the State of Delaware, without giving effect to the conflict of
laws principles of that State.

(C) Section 1542. The parties acknowledge and agree that they have read and
understand Section 1542 of the California Civil Code which provides as follows:

“A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor.”

Except for breaches of this Agreement and except as otherwise prohibited by applicable law, each of
the parties hereby expressly WAIVES and relinquishes all rights and benefits under Section 1542 and
any law of any jurisdiction of similar effect with respect to his or its release of any claims he
or it may have against one another.

(D) No Interference. Notwithstanding anything to the contrary in this Agreement,
nothing in this Agreement shall preclude or interfere with the Executive’s participation in any
investigations or proceedings by, or filing of any charge with, the United States Equal Employment
Opportunity Commission (“EEOC”) with respect to a violation of the civil rights laws administered
by the EEOC, provided, however, that the Executive acknowledges and agrees that he hereby WAIVES
any and all rights he may have to recovery (whether monetary or otherwise) in connection with any
such charge or for any of the other claims referenced in Section 8(A) of this Agreement.

 

-8-

 

8. Indemnification. Nothing in this Agreement shall affect the Company’s obligations
and Executive’s rights under Section 13 of the Employment Agreement, which Section shall survive the termination of the Executive’s employment with the Company and
remain in full force and effect after the Separation Date, pursuant to its terms. Notwithstanding
anything to the contrary contained in the Employment Agreement, Section 13 of the Employment
Agreement shall be governed in all respects by the internal law of the State of Delaware, without
giving effect to the conflict of laws principles of that State.

9. Non-Disparagement. The Executive and the Company acknowledge and agree that they
have mutual respect for one another. Accordingly, both parties agree as follows: Executive agrees
not to make any statements, orally or in writing, that are intended to disparage, harm the
reputation of, or allege wrongdoing by, the Company, or any of its officers, directors, employees,
or agents. The Company agrees that none of its officers, directors, employees, or agents who have
knowledge of this Agreement shall make any statements, orally or in writing, that are intended to
disparage, harm the reputation of, or allege wrongdoing by, the Executive. This prohibition shall
not apply to infra-Company communications with a legitimate business purpose (including
communications between the Company and its Board members), or as expressly authorized by law or
lawful process.

10. Treatment of Payments. Nothing in this Agreement shall affect the provisions of
Section 15 of the Employment Agreement, which Section shall survive the termination of the
Executive’s employment with the Company and remain in full force and effect after the Separation
Date, pursuant to its terms.

11. Approval. The Company represents and warrants to the Executive that this
Agreement, and the payments to be made to the Executive under it, were duly approved by the
Company’s Compensation Committee and the Board prior to the Company’s entering into this Agreement.
The Company further represents and warrants that the person signing this Agreement on behalf of the
Company has been duly authorized by the Board to execute and deliver this Agreement.

12. No Precedent. By entering into this Agreement, the Company has not agreed to
grant similar benefits to any other employee, whether or not similarly situated, and no precedent,
practice, policy, or usage shall be established by the entry of the Company into this Agreement.
Nothing contained in this Agreement or any other agreement or instrument delivered by either party
to this Agreement shall constitute an admission by such party that such party is liable to the
other party, that such party has in any way violated any law, or that such party has done any of
the things alleged by the other party.

13. No Waiver. No delay on the part of any party in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by any party of any
right or remedy shall preclude other or further exercise thereof or the exercise of any other right
or remedy. The waiver of any breach or condition of this Agreement by either party shall not
constitute a precedent in the future enforcement of any of the terms and conditions of this
Agreement. Each party hereby agrees to cooperate with the other and to execute and deliver all such
additional documents and instruments, and to take all such other action, as the other party may
reasonably request from time to time to effectuate the provisions and purposes of this Agreement.

 

-9-

 

14. Severability. In the event that any of the provisions of this Settlement
Agreement and General Release are found by a judicial or other tribunal to be unenforceable, the
remaining provisions of this Settlement Agreement and General Release will remain enforceable.

15. Entire Agreement. Except as otherwise provided herein with respect to the
Employment Agreement, all understandings and agreements, if any, heretofore made between the
parties are merged into this Agreement, which alone fully and completely expresses the agreement
between the parties relating to its subject matter, and the same is entered into with no party
relying upon any statement or representation, whether written or oral, made by any person not
embodied in this Agreement. Any modification of this Agreement may be made only by a written
agreement signed by both parties to this Agreement, which written instrument must specifically
amend this Agreement. Neither party may assign this Agreement, provided, however, that if the
Executive dies before he has received all payments due him under this Agreement, such payments
shall be made to the successor trustee of his living trust or his estate, as the case may be.
Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of
the parties and their respective representatives, successors and assigns. All exhibits attached to
this Agreement are incorporated by reference and constitute a part of this Agreement as if set
forth in this Agreement in their entirety. Whenever the term “include,” “including,” or “included”
is used in this Agreement, it shall mean including without limiting the generality of the
foregoing. The recitals to this Agreement are, and shall be construed to be,- an integral part of
this Agreement. The headings of Sections and subsections contained in this Agreement are merely for
convenience of reference and shall not affect the interpretation of any of the provisions of this
Agreement. Whenever the context so requires, the singular shall include the plural and vice versa.
All words and phrases shall be construed as masculine, feminine, or neuter gender, according to the
context. This Agreement has been negotiated by the parties. This Agreement is deemed to have been
drafted jointly by the parties to this Agreement, and any uncertainty or ambiguity concerning this
Agreement shall not be construed for or against either party as an attribution of drafting to
either party.

16. Notices. Except as otherwise provided in this Agreement, all notices or other
communications required under this Agreement shall be in writing and signed by the party giving
notice, and shall be deemed to have been given when hand-delivered by personal delivery or by
Federal Express or similar courier service, or five (5) business days after being deposited in the
United States mail, registered or certified, with postage prepaid, return receipt requested,
addressed to the Company in care of James Burk, Chief Financial Officer, at 5901 De Soto Avenue,
Woodland Hills, California 91367, or to the Executive at 2747 Paradise Road, Unit 1003, Las Vegas,
NV 89109, or to such other address as either party may designate for itself or himself by notice
given to the other party from time to time in accordance with the provisions of this Agreement.

17. Counterparts. This Agreement may be executed in any one or more counterparts,
each of which shall constitute an original, no other counterpart needing to be produced, and all of
which, when taken together, shall constitute but one and the same instrument.

 

-10-

 

18. Revocation. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT THE COMPANY HAS GIVEN HIM
TWENTY-ONE (21) DAYS TO CONSIDER THIS AGREEMENT. THE COMPANY HEREBY ADVISES THE EXECUTIVE TO
CONSULT WITH A LAWYER BEFORE SIGNING THIS AGREEMENT.

THE EXECUTIVE FURTHER ACKNOWLEDGES AND AGREES THAT THE COMPANY INFORMED HIM IN WRITING OF ALL
INFORMATION REQUIRED UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967 AND THE OLDER WORKERS
BENEFIT PROTECTION ACT, AS AMENDED.

THE PARTIES ACKNOWLEDGE AND AGREE THAT THEY HAVE READ THIS AGREEMENT IN ITS ENTIRETY, THAT
THEY HAVE HAD AMPLE OPPORTUNITY TO CONFER WITH THEIR OWN COUNSEL FOR ASSISTANCE AND ADVICE
CONCERNING THIS AGREEMENT, WHICH ADVICE EXECUTIVE HAS BEEN ADVISED TO SEEK, THAT THEY HAVE
NEGOTIATED THE TERMS OF THIS AGREEMENT, THAT THEY UNDERSTAND THAT THE TERMS OF THIS AGREEMENT ARE
LEGALLY ENFORCEABLE, AND THAT THEY HAVE ENTERED INTO THIS AGREEMENT FREELY AND VOLUNTARILY.

THE PARTIES FURTHER ACKNOWLEDGE THAT, AS REQUIRED BY THE OLDER WORKERS BENEFIT PROTECTION ACT,
FOR A PERIOD OF SEVEN (7) DAYS FOLLOWING THE EXECUTION OF THIS AGREEMENT, THE EXECUTIVE MAY REVOKE
THIS AGREEMENT, AND THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE SEVEN (7)
DAYS REVOCATION PERIOD HAS EXPIRED (the “Effective Date”).

IN WITNESS WHEREOF, the parties have executed this agreement on the dates set forth below.

	 	 	 	 	 
	CHARLES F. CHAMPION	 	YOUBET.COM, INC.
	 
	 	 	 	 
	/s/ Charles F. Champion
	 	/s/ James Burk
	 	 	 
	Charles F. Champion
	 	James Burk, Chief Financial Officer
	 
	 	 	 	 
	Agreed as to terms of Escrow per

Section 1(c) above:	 	 
	 
	 	 	 	 
	FUNKHOUSER VEGOSEN LIEBMAN & DUNN LTD.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Jon Vegosen	 	 
	 

	 	 	 	 
	 

	 	Jon Vegosen, Treasurer	 	 

 

-11-

 

	 	 	 
	STATE OF CALIFORNIA

	 	) 
	 

	 	) 
	COUNTY OF LOS ANGELES

	 	) 

I, the undersigned, a Notary Public in and for said county in the state aforesaid, DO HEREBY
CERTIFY that CHARLES F. CHAMPION, personally known to me to be the same person whose name is
subscribed to the within and foregoing SEPARATION AGREEMENT, appeared before me this day in person
and acknowledged that he signed the within and foregoing SEPARATION AGREEMENT as his own free and
voluntary act and deed for the uses and purposes therein set forth.

GIVEN under my hand and notarial seal this 29th day of November, 2007.

	 	 	 
	 

	 	/s/ Margarett Duran
	 

	 	 
	 

	 	Notary Public

	 	 	 	 	 
	My Commission Expires:

	 	5/7/2010
	 	 
	 

	 	 	 	 

	 	 	 
	STATE OF CALIFORNIA

	 	) 
	 

	 	) 
	COUNTY OF LOS ANGELES

	 	) 

I, the undersigned, a Notary Public in and for said county in the state aforesaid, DO HEREBY
CERTIFY that JAMES BURK, personally known to me to be the same person whose name is subscribed to
the within and foregoing SEPARATION AGREEMENT, and known to be the CHIEF FINANCIAL OFFICER of
YOUBET.COM, INC., a Delaware corporation, appeared before me this day in person and acknowledged
that he signed the within and foregoing SEPARATION AGREEMENT on behalf of said corporation, as his
own free and voluntary act and deed and as the free and voluntary act and deed of said corporation,
pursuant to authority granted to him by the Board of Directors of said corporation, for the uses
and purposes therein set forth.

GIVEN under my hand and notarial seal this 29th day of November, 2007.

	 	 	 
	 

	 	/s/ Margarett Duran
	 

	 	 
	 

	 	Notary Public

	 	 	 	 	 
	My Commission Expires:

	 	5/7/2010
	 	 
	 

	 	 	 	 

 

-12-

 

EXHIBIT “A”

PRESS RELEASE

After leading Youbet.com, Inc. on a successful growth path for more than five years, Charles
F. Champion is stepping down as the company’s Chief Executive Officer and Chairman of the Board to
pursue other opportunities. His decision is effective December 11, 2007.

Champion will work with the company to effectuate a smooth transition to a new Chief
Executive, and he will provide advice and assistance as requested by the Board of Directors. “I’m
dedicated to seeing Youbet grow as I have been for the last five years,” Champion said. “I remain a
large shareholder, and I want to see my colleagues, the board and all the shareholders succeed.”

When Champion joined Youbet in May 2002, the company was on the verge of collapse. With the
help of a new management team, he engineered a dramatic turnaround in the company’s core ADW
business. The company’s wager processing through organic growth and acquisition advanced more than
seven-fold, from $110 million to $750 million between 2002-06, resulting in a 45% share of the US
ADW market. Deloitte named the company to its 50 Fastest Growing Companies list in each of
Champion’s five years at the helm.

Champion helped launch innovative marketing programs such as Youbet Advantage and customer
protection programs such as Players Trust. Some of the most contentious issues he faced during his
time as CEO involved reconciling the common interests of diverse factions of track owners, content
providers and horsemen.

Former Illinois Governor Jim Edgar, Chairman of the Youbet Board Nominating and Governance
Committee and a shareholder, stated, “The Board is grateful to Chuck for his outstanding
contributions to the growth and success of the Company and the high level of professionalism he has
brought to it.”

Champion said that he believes in the mission of the company and hopes that his successor will
be able to take the company to a new level. “The company is on the right path.”

“I am grateful for the opportunity the Board has given me to contribute to Youbet’s growth.
More important, I have been privileged to work with an exceptional Board of Directors, senior
executives, and staff of dedicated, enthusiastic and hard working people whom I am proud to call
colleagues.”

 

-13-

 

EXHIBIT “B”

TEXT OF E-MAIL TO ALL EMPLOYEES

To My Youbet Colleagues:

The press release attached is self explanatory. After more than five invigorating years as your
CEO, I’m stepping down to pursue some other opportunities. Stepping into the role of Interim CEO
will be Gary Sproule, our long-time colleague and friend and someone in whom I have tremendous
faith and confidence. I hope you will give him the same loyalty and commitment you have shown me
over the years. Our company continues to build and improve every day, and I am confident under
Gary’s and the Board’s leadership, our company’s potential success is unlimited.

There is a lot to say, of course. But the two most important words I have for each of you are:
Thank you.

Thank you for helping us to pull ourselves out of financial disaster and put us in a position of
industry leadership.

Thank you for helping us develop programs and services that make Youbet stand out among all its
competitors, so much so that, by a wide margin, we are market share leaders.

Thank you for helping us build and sustain the most powerful technology platform in the business.

Thank you for putting your integrity on the line every day to give our customers and our partners
the most compliant wagering products in the industry.

Thank you for using your own industry capital to help us build a network of partnerships for
marketing and content that are second to none in the business.

And thank you most of all for your years of support and encouragement. It has been my privilege to
work with you, and I am prouder than you will ever know of the work you have done... and that you
continue to do on behalf of our shareowners and customers. I can only hope that I will someday be
able to work with a group of colleagues with your spirit, determination and loyalty.

Chuck

 

-14-

 

EXHIBIT “C”

REFERENCE

TO BE PRINTED ON COMPANY STATIONERY

December 11, 2007

To Whom It May Concern:

When Chuck Champion joined Youbet as Chief Executive Officer in May 2002, the company was on
the verge of collapse. With the help of a new management team, he engineered a dramatic turnaround
in the company’s core Advance Deposit Wagering business. The company’s wager processing through
organic growth and acquisition advanced more than seven-fold, from $110 million to $750 million
between 2002-06, resulting in a 45% share of the US ADW market. Deloitte named the company to its
50 Fastest Growing Companies list in each of Chuck’s first five years at the helm.

Chuck helped launch innovative marketing programs such as Youbet Advantage and customer
protection programs such as Players Trust. Some of the most contentious issues he faced during his
time as CEO involved reconciling the common interests of diverse factions of track owners, content
providers and horsemen.

Chuck has commanded a strong and positive presence with our customers and partners, whose
respect he quickly earned by his professional demeanor, intelligence, integrity, creativity and
enthusiasm. He also quickly developed an excellent rapport with employees, who have admired his
leadership and his ability to motivate and challenge them. At the same time, Chuck has been a team
player who has earned their affection.

Chuck would be a welcome addition to almost any company. We hope that you will give him
serious consideration for affiliation with your organization.

Sincerely,

Jim Edgar

Chairman of the Youbet Board Nominating and Governance Committee and

Former Governor of the State of Illinois

 

-15-

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