Document:

Exhibit 10.3

 

Grant No.                 

 

	
 
    	
o
    	
Participant’s   Copy
    
	
 
    	
 
    	
 
    
	
 
    	
o
    	
Company’s   Copy
    

 

CHEROKEE INC.

2006 EQUITY COMPENSATION PLAN

PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT

 

To                           :

 

Cherokee Inc. (the “Company”) has granted you (the “Grant”) performance-based restricted stock units (“PSUs”) as set forth on Exhibit A to this Agreement under its 2006 Equity Compensation Plan (the “Plan”), subject to the Vesting Schedule and requirements specified on Exhibit A.

 

The Grant is subject in all respects to the applicable provisions of the Plan.  This Agreement does not cover all of the rules that apply to the Grant under the Plan, and the Plan defines any capitalized terms in this Agreement that this Agreement does not define.

 

In addition to the Plan’s terms and restrictions, the following terms and restrictions apply:

 

	
Vesting Schedule
    	
 
    	
The Grant becomes nonforfeitable (“Vested”) as to some or all of the PSUs   only as provided on Exhibit A.
    
	
 
    	
 
    	
 
    
	
Distribution Dates
    	
 
    	
You will receive a distribution of shares (the “Shares”) of Company common   stock (“Common Stock”)   equivalent to your Vested PSUs as soon as practicable following the dates on   which you become Vested (the “Distribution   Dates”) as provided in Exhibit A, subject to any overriding   provisions in the Plan.
    
	
 
    	
 
    	
 
    
	
Limited Status
    	
 
    	
You   understand and agree that the Company will not consider you a shareholder for   any purpose with respect to the Shares, unless and until the Shares have been   issued to you on the Distribution Date(s).
    
	
 
    	
 
    	
 
    
	
Voting
    	
 
    	
PSUs   cannot be voted. You may not vote the Shares unless and until the Shares are   distributed to you.
    
	
 
    	
 
    	
 
    
	
Transfer Restrictions
    	
 
    	
You   may not sell, assign, pledge, encumber, or otherwise transfer any interest (“Transfer”) in the   PSUs or the Shares until the Shares are distributed to you. 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Any   attempted Transfer that precedes the Distribution Date for such Shares is   invalid.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Unless   the Administrator determines otherwise at any time or Exhibit A provides   otherwise, if your service with the Company terminates for any reason before   all of your PSUs are Vested, then you will forfeit such unvested PSUs (and   the Shares to which they relate) to the extent that such PSUs do not   otherwise vest as a result of the termination. 
    

 

 

	
 
    	
 
    	
The   forfeited PSUs will then immediately revert to the Company. You will receive   no payment for PSUs that you forfeit.
    
	
 
    	
 
    	
 
    
	
Additional   Conditions to Receipt
    	
 
    	
The   Company may postpone issuing and delivering any Shares for so long as the   Company determines to be advisable to satisfy the following:
    
	
 
    	
 
    
	
 
    	
 
    	
its   completing or amending any securities registration or qualification of the   Shares or its or your satisfying any   exemption from registration under any Federal or state law, rule, or   regulation;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
its   receiving proof it considers satisfactory that a person or entity seeking to   receive the Shares after your death is entitled to do so;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
your   complying with any requests for representations under the Grant and the Plan;   and 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
its   or your complying with any federal, state, or local tax withholding   obligations.
    
	
 
    	
 
    	
 
    
	
Taxes and Withholding
    	
 
    	
The   PSUs provide tax deferral, meaning that they are not taxable to you until you   actually receive Shares on or around each Distribution Date. You will then   owe taxes at ordinary income tax rates as of each Distribution Date at the   Shares’ then value.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Unless   you determine to satisfy the tax withholding obligation by some other means   approved by the Company, the Company will, if permissible under applicable   law, withhold from those Shares otherwise issuable to you the whole number of   Shares sufficient to satisfy the minimum applicable tax withholding   obligation. You acknowledge that the withheld Shares may not be sufficient to   satisfy your minimum tax withholding obligation. Accordingly, you agree to   pay the Company as soon as practicable, including through additional payroll   withholding, any amount of the tax withholding obligation that is not   satisfied by the withholding of Shares described above.
    
	
 
    	
 
    	
 
    
	
Additional   Representations from You
    	
 
    	
If   you receive Shares at a time when the Company does not have a current   registration statement (generally on Form S-8) under the Act that covers   issuances of Shares to you, you must comply with the following before the   Company will release the Shares to you. You must:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
represent   to the Company, in a manner satisfactory to the Company’s counsel, that you   are acquiring the Shares for your own account and not with a view to   reselling or distributing the Shares; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
agree   that you will not sell, transfer, or otherwise dispose of the Shares unless:
    

 

2

 

	
 
    	
 
    	
a   registration statement under the Act is effective at the time of disposition   with respect to the Shares you propose to sell, transfer, or otherwise   dispose of; or
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
the   Company has received an opinion of counsel or other information and   representations it considers satisfactory to the effect that, because of   Rule 144 under the Act or otherwise, no registration under the Act is   required.
    
	
 
    	
 
    	
 
    
	
Additional Restriction
    	
 
    	
If   issuing the Shares would violate any applicable federal or state securities   laws or other laws or regulations, you will not receive the Shares until the   earliest date at which the Company reasonably anticipates that the delivery   of Shares will no longer cause such violation.
    
	
 
    	
 
    	
 
    
	
No   Effect on Employment or Other Relationship
    	
 
    	
Nothing   in this Agreement restricts the Company’s rights or those of any of its   affiliates to terminate your employment or other relationship at any time,   with or without cause. The termination of your relationship, whether by the   Company or any of its affiliates or otherwise, and regardless of the reason   for such termination, has the consequences provided for under the Plan and   any applicable employment or severance agreement or plan.
    
	
 
    	
 
    	
 
    
	
No   Effect on Running Business
    	
 
    	
You   understand and agree that the existence of the PSU will not affect in any way   the right or power of the Company or its stockholders to make or authorize   any adjustments, recapitalizations, reorganizations, or other changes in the   Company’s capital structure or its business, or any merger or consolidation   of the Company, or any issuance of bonds, debentures, preferred or other   stock, with preference ahead of or convertible into, or otherwise affecting   the Company’s common stock or the rights thereof, or the dissolution or   liquidation of the Company, or any sale or transfer of all or any part of its   assets or business, or any other corporate act or proceeding, whether or not   of a similar character to those described above.
    
	
 
    	
 
    	
 
    
	
Section 409A
    	
 
    	
The   PSUs are intended to be exempt from Section 409A of the Internal Revenue   Code and, to the extent not so exempt, this Agreement is intended to comply   with the requirements of Section 409A of the Internal Revenue Code and   must be construed consistently with that section. Notwithstanding anything in   the Plan or this Agreement to the contrary, if the Vested portion is   increased in connection with your “separation from service” within the meaning   of Section 409A, as determined by the Company), other than due to death, and if (x) you are then a   “specified employee” within the meaning of Section 409A at the time of   such separation from service (as determined by the Company, by which   determination you agree you are bound) and (y) the payment under such   accelerated PSUs will result in the imposition of additional tax under   Section 409A if paid to you within the six month period following your   separation from service, then the payment under such accelerated PSUs will   not be made until the earlier of (i) the date six months and one day   following the date of your separation from service or (ii) the 10th day after your date of death, and will be   paid within 10 days thereafter. 
    

 

3

 

	
 
    	
 
    	
Neither   the Company nor you shall have the right to accelerate or defer the delivery   of any such payments or benefits except to the extent specifically permitted   or required by Section 409A. In any event, the Company makes no   representations or warranty and shall have no liability to you or any other   person, if any provisions of or payments under this Agreement are determined   to constitute deferred compensation subject to Code Section 409A but not   to satisfy the conditions of that section.
    
	
 
    	
 
    	
 
    
	
Unsecured Creditor
    	
 
    	
This   Agreement creates a contractual obligation on the part of the Company to make   payment under the PSUs credited to your account at the time provided for in   this Agreement. Neither you nor any other party claiming an interest in   deferred compensation hereunder shall have any interest whatsoever in any   specific assets of the Company. Your right to receive payments hereunder is   that of an unsecured general creditor of Company.
    
	
 
    	
 
    	
 
    
	
Governing   Law
    	
 
    	
The   laws of the State of Delaware will govern all matters relating to this   Agreement, without regard to the principles of conflict of laws.
    
	
 
    	
 
    	
 
    
	
Notices
    	
 
    	
Any   notice you give to the Company must follow the procedures then in effect. If   no other procedures apply, you must send your notice in writing by hand or by   mail to the office of the Company’s Secretary. If mailed, you should address   it to the Company’s Secretary at the Company’s then corporate headquarters,   unless the Company directs participants to send notices to another corporate   department or to a third party administrator or specifies another method of   transmitting notice. The Company and the Administrator will address any   notices to you at your office or home address as reflected on the Company’s   personnel or other business records. You and the Company may change the   address for notice by like notice to the other, and the Company can also   change the address for notice by general announcements to participants.
    
	
 
    	
 
    	
 
    
	
Plan   Governs
    	
 
    	
Wherever   a conflict may arise between the terms of this Agreement and the terms of the   Plan, the terms of the Plan will control.
    

 

 

	
 
    	
 
    	
CHEROKEE INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
By:
    	
 
    
					

 

4

 

ACKNOWLEDGMENT

 

I acknowledge I received a copy of the Plan.  I represent that I have read and am familiar with the Plan’s terms.  I accept the Grant subject to all of the terms and provisions of this Agreement and of the Plan under which the Grant is made, as the Plan may be amended in accordance with its terms.  I agree to accept as binding, conclusive, and final all decisions or interpretations of the Administrator concerning any questions arising under the Plan with respect to the Grant.

 

 

	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    

 

 

NO ONE MAY SELL, TRANSFER, OR DISTRIBUTE THE SECURITIES COVERED BY THE GRANT WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY OR OTHER INFORMATION AND REPRESENTATIONS SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

5

 

Exhibit A

 

Grant No.                  

 

Cherokee Inc.

2006 Equity Compensation Plan

Performance-Based Restricted Stock Unit

 

Recipient Information:

 

	
Name:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Signature:   X
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Grant   Information:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
PSUs:
    	
 
    	
 
    	
Date   of Grant:
    	
 
    
						

 

	
Vesting Schedule
    	
 
    	
The Grant will vest in up to three increments where the average   closing sale price of the Company’s common stock during the calendar month   preceding the end of the Company’s applicable fiscal year is at least equal   to (i) $15.35 for the Company’s fiscal year ending February 1, 2014   (“Fiscal 2014”),   (ii) $16.88 for the Company’s fiscal year ending January 31, 2015   (“Fiscal 2015”) and   (iii) $18.57 for the Company’s fiscal year ending January 30, 2016   (“Fiscal 2016”). If a price   target is met, one-third of the PSUs will vest on the last day of the month   preceding the end of the Company’s applicable fiscal year. In addition, if a   price target for either Fiscal 2014 or Fiscal 2015 is not met, the portion of   the Grant that would have vested had such target been met for such fiscal   year will rollover to the following fiscal year and will vest on the last day   of the month preceding the end of the Company’s applicable fiscal year in the   event the price target for the following fiscal year is met. For example, if   at the end of Fiscal 2014 the Company’s average closing share price for the   month preceding the end of Fiscal 2014 is below $15.35 (i) no portion of   the Grant will vest on the last day of the month preceding the end of the   Company’s applicable fiscal year at the end of Fiscal 2014 and   (ii) two-thirds of the PSUs will vest in the event that the Company’s   average closing share price for the month preceding the end of Fiscal 2015 is   at least $16.88. Similarly, if neither target for Fiscal 2014 and Fiscal 2015   is met (i) the entire Grant will vest on the last day of the month   preceding the end of the Company’s applicable fiscal year in the event that   the Company’s average closing share price for the month preceding the end of   Fiscal 2016 is at least $18.57 and (ii) no portion of the Grant will   vest in the event that the Company’s average closing share price for the   month preceding the end of Fiscal 2016 is below $18.57. 
    

 

6

 

	
 
    	
 
    	
You   must continue to be employed by the Company through the relevant vesting   dates to be eligible for vesting.
    
	
 
    	
 
    	
 
    
	
Grant   Expiration Rules
    	
 
    	
Except   as otherwise provided in an employment, retention, or other individual   agreement covering you, you will forfeit any unvested portions of the Grant   immediately when you cease to be employed by (or a member of the Board of)   the Company.
    
	
 
    	
 
    	
 
    
	
Distribution   Dates
    	
 
    	
The   Distribution Date for Shares will be the date the Company selects within 90   days following each applicable Vesting Date, but in no event later than the date that is two and   one-half (2 1⁄2) months from the end of the Company’s tax year that includes   the date on which you become Vested.
    

 

7EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”)
dated June 1, 2013 by and between MGT Capital Investments, Inc., a company incorporated under the laws of Delaware (the “Company”),
and L. Michael Haller, an individual residing at 137 Rimrock Road, Thousand Oaks, CA. 91361 (the “Executive”). 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 employs Executive, and
Executive hereby accepts such employment and agrees to perform Executive’s duties and responsibilities as more accurately
described herein in accordance with the terms and conditions hereinafter set forth.

 

1.1Duties and Responsibilities. Executive shall serve as
Executive Vice President with responsibility, among other things assigned pursuant to the terms hereof, for the Company’s
wholly owned Subsidiary MGT Capital Solutions, Inc., d/b/a Hammercat Studios (the “Subsidiary”). 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 Chief Executive Officer from time to time. 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. The Executive agrees that he shall run the Subsidiary pursuant
to an annual budget submitted to the board of directors of the Company within 30 days of the beginning of each fiscal year of the
Executive Employment hereunder.

 

1.2Employment Term. The term of Executive’s employment
shall commence on the date hereof (the “Effective Date”) and shall continue until May 31, 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 pursuant to 8.2 hereof 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 May 31, 2014 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.”

 

1.3Extent of Service. During the Employment Term, Executive
agrees to use Executive’s best efforts to carry out the duties and responsibilities including those assigned to him by the
Chief Executive Officer as well as responsibility for the operations of the Subsidiary under Section 1.1 and to devote all requisite
Executive’s business time, attention and energy thereto. Exceptions to the above are boards of director positions currently
held at Kapitall, Inc. and Pacific Advisors Fund LLC. Moreover, nothing in the foregoing shall prevent Executive from publishing
novels and short stories; provided that the publishing and creation thereof does not interfere with the Executive’s duties
hereunder.  The Company further acknowledges that the Executive,
prior to joining the Company, has acquired an interest in the intellectual property “Highlander” and certain assets
developed by Executive while under contract with Eidos, a former video game publisher.  Executive agrees to offer the publishing
rights to the Company on a First and Last Look basis.  Should the Company decline, Executive will not be precluded from placing
the property with another publisher of digital entertainment.

 

1.4Base Salary and Compensation.

 

(a)Upon the execution and in consideration of the execution
hereof, the Executive will receive of subject to vesting as provided herein, unregistered shares of the Company Common Stock (the
“Shares”) The Shares will be issued vest in accordance with the revenue milestones and vesting schedule over 24 months
as set forth on Schedule A hereto. At the end of such 24-month period any unvested and unearned shares shall automatically revert
to the Company.

 

 

MGT CAPITAL INVESTMENTS, INC.

 500 Mamaroneck Avenue
Suite 204 Harrison, NY 10528

Tel: (914) 630-7430 email: rladd@mgtci.com
web: www.mgtci.com

 

    	 

    	 

    

  

 

(b)The Company shall pay Executive a base salary (the “Base
Salary”) at the annual rate of $120,000 (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
but not decreased by the Compensation Committee of the Board of Directors (the “Compensation Committee”). Once increased,
such increased amount shall constitute the Executive’s Base Salary.

 

1.5Incentive Compensation.

 

(a)Bonus. Executive shall be paid a one-time signing bonus
of $10,000 (U.S.) within 15 days of execution of this Agreement. In addition, Executive shall be eligible to earn from time to
time a cash and/or equity bonus based on the Executive meeting performance objectives and bonus criteria set forth in Schedule
B of this Agreement.

 

(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 senior executives of the Company. Executive shall be provided office space
and staff assistance appropriate for Executive’s position and adequate for the performance of his duties which shall be in
the sole discretion of the Company.

 

1.6Reimbursement 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 four (4) weeks of vacation per calendar year.

 

1.7No Other Compensation. Except as expressly provided in
Sections 1.4 through 1.6, 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 or thereafter 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) that comes into Executive’s possession during the course of Executive’s
employment or thereafter 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. 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 customary Confidentiality Agreement.

 

 

MGT CAPITAL INVESTMENTS, INC.

 500 Mamaroneck Avenue
Suite 204 Harrison, NY 10528

Tel: (914) 630-7430 email: rladd@mgtci.com
web: www.mgtci.com

 

    	 

    	 

    

 

 

3.Non-Competition; Non-Solicitation.

 

3.1Non-Compete. The Executive hereby covenants and agrees
that during the term of this Agreement and for a period of one year 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, creating
or monetizing software for use in the mobile or online video gaming industry. and (ii) “Covered Area” means all geographical
areas of the United States and foreign jurisdictions where the Company conducts business. 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.

 

3.2Non-Solicitation. The Executive further agrees that as
long as the Agreement remains in effect and for a period of one (1) year from its Expiration Date, 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.

 

3.3Remedies. 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 any 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.

 

4.1Termination 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 Sections 4.2 and 4.3 hereof), or if Executive terminates his employment for Good Reason (as defined in Section (b) hereof) prior
to the Expiration Term, Executive shall receive or commence receiving as soon as practicable in accordance with the terms of this
Agreement:

(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 un reimbursed expenses as set forth in Section
1.6.

(iii)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 then-current calendar
year;

 

(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) after notice to the Company and a ten (10) day
period in which to cure.;

 

MGT CAPITAL INVESTMENTS, INC.

 500 Mamaroneck Avenue
Suite 204 Harrison, NY 10528

Tel: (914) 630-7430 email: rladd@mgtci.com
web: www.mgtci.com

 

    	 

    	 

    

 

 

(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; after notice to the
Company and a ten (10) day period in which to cure.

(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 Executive to a location
outside of the Los Angeles Metro Area 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 subsection (b) becomes payable to the Executive:

(i)if the severance compensation provided for in subsection
(b) 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.

 

MGT CAPITAL INVESTMENTS, INC.

 500 Mamaroneck Avenue
Suite 204 Harrison, NY 10528

Tel: (914) 630-7430 email: rladd@mgtci.com
web: www.mgtci.com

 

    	 

    	 

    

 

 

(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

 

4.2Permanent 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;

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

 

4.3Death. 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.

 

MGT CAPITAL INVESTMENTS, INC.

 500 Mamaroneck Avenue
Suite 204 Harrison, NY 10528

Tel: (914) 630-7430 email: rladd@mgtci.com
web: www.mgtci.com

 

    	 

    	 

    

 

 

4.4Voluntary 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 4.4 shall be made by delivery to Executive of a copy of a resolution

duly adopted by the affirmative vote of the members of the Board
of Directors at a Special Meeting 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.

 

5.1Definition. 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.

 

5.2Rights and Obligations. If a Change in Control of the
Company shall have occurred while the Executive is employed by 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 one year 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.

 

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, 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 an 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.

 

MGT CAPITAL INVESTMENTS, INC.

 500 Mamaroneck Avenue
Suite 204 Harrison, NY 10528

Tel: (914) 630-7430 email: rladd@mgtci.com
web: www.mgtci.com

 

    	 

    	 

    

 

 

8.General Provisions .

 

8.1Modification: 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.

 

8.2Notices . 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):

 

If to the Company, to:

MGT Capital Investments, Inc.

500 Mamaroneck Avenue, Suite 204

Harrison, NY 10528

 

If to Executive, to:

Michael Haller

c/o

MGT Capital Investments, Inc.

500 Mamaroneck Avenue, Suite 204

Harrison, NY 10528

 

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.

 

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

 

8.4Further 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.

 

8.5Severability . 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.

 

8.6Successors 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.

 

MGT CAPITAL INVESTMENTS, INC.

 500 Mamaroneck Avenue
Suite 204 Harrison, NY 10528

Tel: (914) 630-7430 email: rladd@mgtci.com
web: www.mgtci.com

 

    	 

    	 

    

 

 

8.7Entire 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.

 

8.8Counterparts; 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.

 

 

 

IN WITNESS WHEREOF, the undersigned, intending to be legally
bound, have executed this Agreement as of this 6th day of June, 2013.

 

 

 

 

EXECUTIVE: 

 

 

 

 

Name: H. Michael Haller

 

 

 

 

 

MGT CAPITAL INVESTMENTS, INC.

 

 

 

Name: Robert Ladd

Title: President and Chief Executive Officer

 

 

MGT CAPITAL INVESTMENTS, INC.

 500 Mamaroneck Avenue
Suite 204 Harrison, NY 10528

Tel: (914) 630-7430 email: rladd@mgtci.com
web: www.mgtci.com

 

    	 

    	 

    

 

 

SCHEDULE A

 

Vesting schedule for grant to Executive of 300,000 unregistered
MGT Common Shares, issued as inducement for signing the Agreement:

 

100,000 Shares upon achieving $1.5 million in cumulative net
revenues before 12/31/13;

 

100,000 Shares upon achieving $5.0 million in cumulative net
revenues before 6/30/14; and

 

100,000 Shares upon achieving $10.0 million in cumulative net
revenues before 6/30/15.

 

(Net revenues defined as revenues from Executive’s business
units received by MGT, after deduction paid to App stores and/or content owners.)

 

 

SCHEDULE B

 

Cash bonus schedule granted to Executive:

 

$50,000 upon achieving $1.5 million in cumulative net revenues
before 12/31/13;

 

$100,000 upon achieving $5.0 million in cumulative net revenues
before 6/30/14; and

 

$100,000 upon achieving $10.0 million in cumulative net revenues
before 6/30/15.

 

(Net revenues defined as revenues from Hammercat Studios received
by MGT, after deduction paid to App stores and/or content owners)

 

 

 

 

 

 

 

MGT CAPITAL INVESTMENTS, INC.

 500 Mamaroneck Avenue
Suite 204 Harrison, NY 10528

Tel: (914) 630-7430 email: rladd@mgtci.com
web: www.mgtci.com

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