Document:

Exhibit

10.23

 

 

SPECIAL

COMMITTEE COMPENSATION AGREEMENT

 

                This Agreement (“Agreement”), dated July 1, 2001, is

entered into by and between Timothy R. Duoos, a Minnesota resident (“Duoos”),

and VirtualFund.com, Inc., a Minnesota corporation (the “Company”).

R E C I T A L S

                WHEREAS, the Company wishes to procure the services

of Duoos for the Company as a member of the Special Acquisition/Investment

Committee, whether or not Duoos is on the Board of Directors of the Company,

and Duoos is willing to provide his services to the Company on the terms and

conditions hereinafter set forth.

                NOW THEREFORE, in consideration of the premises

recited above and the mutual promises and agreements herein, the parties to

this Agreement hereby agree as follows:

1.             Duties.

1.01.        Duties. The Company hereby

appoints Duoos as a member of the Special Acquisition/Investment Committee and

Duoos hereby accepts his position on such Special Acquisition/Investment

Committee on the terms and conditions set forth in this Agreement. Duoos shall

have such authority and responsibility, and shall serve in such capacities

consistent with that status, as may from time to time be assigned to him by the

Board of Directors of the Company.  In

connection with his role as a member of the Special Acquisition/Investment

Committee, Duoos will work to find a business opportunity, investment or

investments, and/or transaction to enhance value for the shareholders of the

Company and in connection therewith will:

•                    Contact, discuss and elicit interest from investment

bankers, business brokers, accountants, attorneys and other professionals (and

spheres of influence) who might help the Company to identify and effectuate a

transaction;

•                    Conduct and oversee the due diligence required to

analyze transaction options;

•                    Review and analyze proposals for a transaction, both

preliminary and firm, that are received from 

interested parties;

•                    Present the Board of Directors with details regarding

proposed transactions for their consideration and input;

•                    Negotiate the structure of, parameters of and

valuation with respect to any transaction;

•                    Negotiate any letters of intent and all other

documents necessary to consummate a transaction;

•                    Coordinate all necessary legal, accounting or other

necessary professional assistance required to successfully consummate a

transaction;

•                    Negotiate with lending or financial institutions or

any other sources of capital, if necessary, to successfully consummate a

transaction; and

•                    Coordinate all of the activities contemplated in the

pursuit of the above responsibilities.

 

 

 

1.02.        Performance of Duties. Duoos

shall serve the Company and its subsidiaries faithfully and to the best of his

ability, and devote such time as may reasonably be required to the business and

affairs of the Company and its subsidiaries during the term of this Agreement.

1.03.        No Other Agreements. Duoos hereby

confirms that he is under no contractual commitments inconsistent with his

obligations set forth in this Agreement.

2.             Term.  The term of this Agreement shall begin on

the date first above written and expire on the date that is three (3) years

after such date (even if Duoos ceases to serve as a member of the Board of

Directors of the Company during the term of this Agreement), unless this

Agreement is terminated earlier in accordance with Section 5.01

hereof.  Except as otherwise specified

herein, all rights, duties and obligations of Duoos, including without

limitation the compensation and benefits provided in Section 4 of this

Agreement, shall commence as of the date first above written.

3.             Location. Duoos shall

perform his duties in a location or locations as may be mutually agreed upon by

the Company and Duoos. 

4.             Compensation and Benefits.

4.01.        Base Compensation. During the

Term of this Agreement, the Company shall pay to Duoos base compensation at the

rate of not less than $21,667 per month in addition to his regular director

fees.  Such base compensation shall be

paid at the beginning of each calendar month during the term of this Agreement.

Duoos’s base compensation shall be reviewed annually and may be increased (but

not decreased).

4.02.        Stock

Options.  The Company shall grant to

Duoos, on the anniversary date of this Agreement, a stock option under the

Company’s Stock Plan to purchase a total of 100,000 shares of the Company’s

Common Stock for each year of service during the Term at a price of $0.15 per

share, in a manner otherwise consistent with the terms of the Company’s Stock

Option Plan.

 

4.03.        Bonuses and Incentive Compensation.  In addition to the base compensation and the

stock options described in Sections 4.01 and 4.02, Duoos shall be eligible to

participate in any bonus or performance based incentive compensation plans

which are established by the Board of Directors of the Company or provided for

by the Board of Directors of the Company in connection with a business

opportunity, investment or investments, and/or transaction undertaken or

completed by the Company.

4.04.        Expenses.  The Company shall pay or reimburse Duoos for

all reasonable and necessary out-of-pocket expenses incurred by him (including,

but not limited to, travel, entertainment and moving expenses) in the

performance of his duties under this Agreement, subject to the presentment of

appropriate vouchers in accordance with the Company’s normal policies for

expense verification.

 

2

 

5.             Termination.

 

5.01.        Termination. Duoos’s duties under

this Agreement may be terminated prior to the expiration of the Term set forth

in Section 2, in which case the Company will be obligated to compensate Duoos

as provided for in Section 5.02:

(a)           Termination upon

Death. Duoos’s duties under this Agreement shall terminate upon his death.

(b)           Termination upon

Disability. The Company may terminate Duoos’s duties in the event that

Duoos is determined to be disabled, as defined in Section 5.03.

(c)           Termination by

the Company without Cause.  The

Company may terminate Duoos’s duties under this Agreement for any reason or for

no reason upon ninety (90) days’ written notice to Duoos.

(d)           Termination by

the Company for Cause. The Company may terminate Duoos’s duties under this

Agreement for Cause, as defined in Section 5.03, effective immediately upon

delivery to Duoos of written notice of such termination; provided, however,

that Duoos shall not be terminated for Cause unless and until the Company shall

have delivered to Duoos a copy of a resolution duly adopted by the affirmative

vote of not less than a majority of the entire membership of the Company’s

Board of Directors at a meeting called and held for such purpose (after

reasonable notice to Duoos and an opportunity for Duoos, together with Duoos’s

counsel, to be heard by said Board), finding that, in the good faith opinion of

said Board, Duoos’s conduct constitutes Cause for termination and specifying

the particulars thereof in detail.

(e)           Termination by

Duoos. Duoos may terminate his duties with the Company hereunder at any

time (i) for Good Reason, as defined in Section 5.03, effective

immediately upon delivery to the Company of written notice of such termination,

or (ii) for any reason or for no reason upon ninety (90) days’ written

notice to the Company.

(f)            Termination by

Mutual Consent. The parties may terminate the their mutual relationship

under this Agreement at any time by mutual consent.

5.02.        Compensation Upon Termination.

(a)           Death or

Disability. In the event this Agreement is terminated by reason of Duoos’s

death or disability, Duoos shall be entitled to payment of compensation earned

through the date of termination; payment of any bonus or other incentive

compensation for the year in which such death or disability occurs, pro rated

for the portion of the year preceding the date of termination; and

reimbursement of expenses incurred through the date of termination. Duoos shall

not be entitled to receive any compensation, bonus or other payments or

benefits under this Agreement with respect to any periods after the date of

termination by reason of death or disability.

(b)           Termination by

Company without Cause or by Duoos for Good Reason. If Duoos’s duties under

this Agreement are terminated by the Company without Cause pursuant to Section

5.01(c) or by Duoos for Good Reason pursuant to Section 

 

 

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5.01(e)(i), Duoos

shall be entitled to payment of compensation earned through the date of

termination; payment of any bonus or other incentive compensation for the year

in which such termination occurs, pro rated for the portion of the year

preceding the date of termination; and reimbursement of expenses incurred

through the date of termination.  In

addition, Duoos shall be entitled to continue to receive, as a severance

benefit, payment of his base compensation (at the highest annual rate in effect

during the Term of this Agreement) for the remainder of the Term of this

Agreement.  In the event Duoos is

terminated or chooses to terminate his duties under this Section 5.02(b), the

Company must pay all the sums due and owing to him immediately, after an

adjustment is made for the acceleration of such payment by the use of a

discounted present value rate of eight percent (8.00%).

(c)           Termination by

Company for Cause or by Duoos without Good Reason. If Duoos’s duties under

this Agreement are terminated by the Company for Cause pursuant to Section

5.01(d), or by Duoos without Good Reason pursuant to Section 5.01(e)(ii), Duoos

shall be entitled to payment of compensation earned through the date of

termination; payment of any bonus or other incentive compensation for the year

in which such termination occurs, pro rated for the portion of the year

preceding the date of termination; and reimbursement of expenses incurred

through the date of termination. Duoos shall not be entitled to receive any

compensation, bonus or other payments or benefits under this Agreement with

respect to any periods after the date of termination by the Company for Cause

or by Duoos without Good Reason.

5.03.        Definitions.

(a)           Disability.

Duoos shall be deemed to be “disabled” if the Board of Directors of the Company

(excluding Duoos, if Duoos is a member of the Board of Directors) determines in

good faith that Duoos is physically or mentally incapacitated and has been

unable for ninety (90) days in any 360-day period to perform his duties under this

Agreement. In order to assist the Board of Directors in making that

determination, Duoos shall, as reasonably requested by the Board, (i) make

himself available for medical examinations by a physician chosen by the Board,

and (ii) grant the Board and such physician access to all relevant medical

information concerning him, arrange to furnish copies of medical records to

them and use his best efforts to cause his own physicians to be available to

discuss his health with the Board and the physician appointed by the

Board.  If Duoos disagrees with the

findings of the Board-appointed physician, he may appoint his own physician to

make the relevant determinations as to disability. In the event that the

physician appointed by Duoos disagrees with the findings of the Board-appointed

physician, the two physicians shall select a third physician whose

determination shall be binding.

(b)           Cause.

“Cause” shall mean:

(i)            the

conviction of Duoos by a court of competent jurisdiction for felony criminal

conduct; or

 

 

4

 

(ii)           the

willful engaging by Duoos in fraud or dishonesty which is demonstrably and

materially injurious to the Company or its reputation, monetarily or otherwise.

No act, or failure

to act, on Duoos’s part shall be deemed “willful” unless committed or omitted

by Duoos in bad faith and without a reasonable belief that his act or failure

to act was in the best interest of the Company.

(c)           Good Reason.

“Good Reason” shall mean the occurrence, without Duoos’s express written

consent, of any of the following:

(i)            the

assignment to Duoos of any duties inconsistent with Duoos’s status or position

with the Company;

(ii)           a

reduction by the Company in Duoos’s monthly base compensation;

(iii)          a

merger, reverse merger, consolidation, reorganization, recapitalization,

business combination or other transaction pursuant to which the Company and/or

substantially all of its assets acquires, or is (are) acquired by, or combined

with, a third party or third parties or an event or transaction in which either

or both the Control Share Acquisition section (Section 302A.671) of the

Minnesota Business Corporation Act or its successor section or the Business

Combination section (Section 302A.673) of the Minnesota Business Corporation Act

or its successor section is implicated or invoked;

(iv)          the

involuntary removal by the shareholders of all or a majority of the presently

serving Board of Directors of the Company pursuant to action taken at a

regularly scheduled shareholders meeting or a special shareholders meeting;

(v)           the

taking of any action by the Company which would directly or indirectly

materially reduce any of the other benefits described in Sections 4.03 and 4.04

and which remains uncured after thirty (30) days following the delivery of

Duoos’s written notice of such breach to the Company; or

(vi)          any

material violation of this Agreement by the Company which remains uncured after

thirty (30) days following the delivery of Duoos’s written notice of such

breach to the Company.

6.             Miscellaneous

6.01.        Idemnification. The Company will

pay on behalf of Duoos, and his executors, administrators or assigns, any

amount which he is or becomes legally obligated to pay because of any claim or

claims made against him because of any act or omission or neglect or breach of

duty, including any actual or alleged error or misstatement or misleading

statement, which he commits or suffers while acting in his capacity as a member

of Special Acquisition/Investment Committee of the Company.  The payments which the Company will be 

 

 

5

 

obligated to make

hereunder shall include, inter alia, damages, judgments, settlements and costs,

cost of investigation (excluding salaries of officers or employees of the Company)

and costs of defense of legal actions, claims or proceedings and appeals

therefrom, and costs of attachment or similar bonds; provided, however, that

the Company shall not be obligated to pay fines or other obligations or fees

imposed by law or otherwise which it is prohibited by applicable law from

paying as indemnity or for any other reason. 

If a claim under this Agreement is not paid by the Company, or on its

behalf, within ninety (90) days after a written claim has been received by the

Company, the claimant may at any time thereafter bring suit against the Company

to recover the unpaid amount of the claim and if successful in whole or in

part, the claimant shall be entitled to be paid also the expense of prosecuting

such claim.  Costs and expenses

(including attorneys’ fees) incurred by Duoos in defending or investigating any

action, suit, proceeding or investigation shall be paid by the Company in

advance of the final disposition of such matter.

 

6.02.        Assignment. Neither party may

transfer or assign any rights or delegate any obligations hereunder, in whole

or in part, whether voluntarily or by operation of law, without the prior

written consent of the other party. Any purported transfer, assignment or

delegation by either party without compliance with this Section 6.02 will be

null and void and of no force or effect. This Agreement shall be binding upon

and inure to the benefit of the parties’ successors and lawful assigns.

6.03.        Severability. Whenever possible,

each provision of this Agreement will be interpreted in such manner as to be

effective and valid under applicable law, but if any provision of this

Agreement is held to be prohibited by or unenforceable or invalid under

applicable law, such provision will be ineffective only to the extent of such

prohibition or invalidity, without invalidating the remainder of such provision

or the remaining provisions of this Agreement.

6.04.        Complete Agreement. This

Agreement and the agreements referenced herein and therein, contain the

complete agreement between the parties with respect to the subject matter

hereof and thereof, and supersede any prior understandings, agreements or

representations by or between the parties, written or oral, which may have

related to the subject matter hereof or thereof in any way.

6.05.        Counterparts. This Agreement may

be executed in one or more counterparts, any one of which need not contain the

signatures of more than one party, but all such counterparts taken together,

when delivered, will constitute one and the same instrument.

6.06.        Governing Law; Choice of Forum.

The internal law, without regard to conflicts of laws principles, of the State

of Minnesota will govern all questions concerning the construction, validity

and interpretation of this Agreement and the performance of the obligations

imposed by this Agreement. Any and every legal proceeding arising out of or in

connection with this Agreement shall be brought in the appropriate courts of

the State of Minnesota, and each of the parties hereto consents to the exclusive

jurisdiction of such courts.

6.07.        No

Waiver. No term or condition of this Agreement shall be deemed to have been

waived, nor shall there by any estoppel to enforce any provisions of this

Agreement, except by a statement in writing signed by the party against whom

enforcement of the waiver or estoppel is sought. Any written waiver shall not

be deemed a continuing waiver unless 

 

 

6

 

specifically stated,

shall operate only as to the specific term or condition waived and shall not

constitute a waiver of such term or condition for the future or as to any act

other than that specifically waived.

 

*                    

*                     *                       *                       *                     *                      *

 

 

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IN WITNESS

WHEREOF, the parties hereto have caused this Agreement to be executed as of the

day and year first above written.

	

   

  	

  TIMOTHY R. DUOOS:

  
	

   

  	

   

  
	

   

  	

  /s/ Timothy R.

  Duoos

  
	

   

  	

  Timothy R. Duoos

  
	

   

  	

   

  
	

   

  	

  COMPANY:

  
	

   

  	

   

  
	

   

  	

  VirtualFund.com, Inc., a Minnesota corporation

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ John

  Cavanaugh

  
	

   

  	

  Its:

  	

  Director

  

 

 

8Exhibit

10.24

 

 

SPECIAL

COMMITTEE COMPENSATION AGREEMENT

 

                This Agreement (“Agreement”), dated July 1, 2001, is

entered into by and between Edward S. Adams, a Minnesota resident (“Adams”),

and VirtualFund.com, Inc., a Minnesota corporation (the “Company”).

R E C I T A L S

                WHEREAS, the Company wishes to procure the services

of Adams for the Company as a member of the Special Acquisition/Investment

Committee, whether or not Adams is on the Board of Directors of the Company,

and Adams is willing to provide his services to the Company on the terms and

conditions hereinafter set forth.

                NOW THEREFORE, in consideration of the premises

recited above and the mutual promises and agreements herein, the parties to

this Agreement hereby agree as follows:

1.             Duties.

1.01.        Duties. The Company hereby

appoints Adams as a member of the Special Acquisition/Investment Committee and

Adams hereby accepts his position on such Special Acquisition/Investment

Committee on the terms and conditions set forth in this Agreement. Adams shall

have such authority and responsibility, and shall serve in such capacities

consistent with that status, as may from time to time be assigned to him by the

Board of Directors of the Company.  In

connection with his role as a member of the Special Acquisition/Investment

Committee, Adams will work to find a business opportunity, investment or

investments, and/or transaction to enhance value for the shareholders of the

Company and in connection therewith will:

•                    Contact, discuss and elicit interest from investment

bankers, business brokers, accountants, attorneys and other professionals (and

spheres of influence) who might help the Company to identify and effectuate a

transaction;

•                    Conduct and oversee the due diligence required to

analyze transaction options;

•                    Review and analyze proposals for a transaction, both

preliminary and firm, that are received from 

interested parties;

•                    Present the Board of Directors with details regarding

proposed transactions for their consideration and input;

•                    Negotiate the structure of, parameters of and

valuation with respect to any transaction;

•                    Negotiate any letters of intent and all other

documents necessary to consummate a transaction;

•                    Coordinate all necessary legal, accounting or other

necessary professional assistance required to successfully consummate a

transaction;

•                    Negotiate with lending or financial institutions or

any other sources of capital, if necessary, to successfully consummate a

transaction; and

•                    Coordinate all of the activities contemplated in the

pursuit of the above responsibilities.

 

 

 

1.02.        Performance of Duties. Adams

shall serve the Company and its subsidiaries faithfully and to the best of his

ability, and devote such time as may reasonably be required to the business and

affairs of the Company and its subsidiaries during the term of this Agreement.

1.03.        No Other Agreements. Adams hereby

confirms that he is under no contractual commitments inconsistent with his

obligations set forth in this Agreement.

2.             Term.  The term of this Agreement shall begin on

the date first above written and expire on the date that is three (3) years

after such date (even if Adams ceases to serve as a member of the Board of

Directors of the Company during the term of this Agreement), unless this

Agreement is terminated earlier in accordance with Section 5.01

hereof.  Except as otherwise specified

herein, all rights, duties and obligations of Adams, including without

limitation the compensation and benefits provided in Section 4 of this

Agreement, shall commence as of the date first above written.

3.             Location. Adams shall

perform his duties in a location or locations as may be mutually agreed upon by

the Company and Adams. 

4.             Compensation and Benefits.

4.01.        Base Compensation. During the

Term of this Agreement, the Company shall pay to Adams base compensation at the

rate of not less than $12,500 per month in addition to his regular director

fees.  Such base compensation shall be

paid at the beginning of each calendar month during the term of this Agreement.

Adams’s base compensation shall be reviewed annually and may be increased (but

not decreased).

4.02.        Stock

Options.  The Company shall grant to

Adams, on the anniversary date of this Agreement, a stock option under the

Company’s Stock Plan to purchase a total of 100,000 shares of the Company’s

Common Stock for each year of service during the Term at a price of $0.15 per

share, in a manner otherwise consistent with the terms of the Company’s Stock

Option Plan.

 

4.03.        Bonuses and Incentive Compensation.  In addition to the base compensation and the

stock options described in Sections 4.01 and 4.02, Adams shall be eligible to

participate in any bonus or performance based incentive compensation plans

which are established by the Board of Directors of the Company or provided for

by the Board of Directors of the Company in connection with a business

opportunity, investment or investments, and/or transaction undertaken or

completed by the Company.

4.04.        Expenses.  The Company shall pay or reimburse Adams for

all reasonable and necessary out-of-pocket expenses incurred by him (including,

but not limited to, travel, entertainment and moving expenses) in the

performance of his duties under this Agreement, subject to the presentment of

appropriate vouchers in accordance with the Company’s normal policies for

expense verification.

 

2

 

5.             Termination.

 

5.01.        Termination. Adams’s duties under

this Agreement may be terminated prior to the expiration of the Term set forth

in Section 2, in which case the Company will be obligated to compensate Adams

as provided for in Section 5.02:

(a)           Termination upon

Death. Adams’s duties under this Agreement shall terminate upon his death.

(b)           Termination upon

Disability. The Company may terminate Adams’s duties in the event that

Adams is determined to be disabled, as defined in Section 5.03.

(c)           Termination by

the Company without Cause.  The

Company may terminate Adams’s duties under this Agreement for any reason or for

no reason upon ninety (90) days’ written notice to Adams.

(d)           Termination by

the Company for Cause. The Company may terminate Adams’s duties under this

Agreement for Cause, as defined in Section 5.03, effective immediately upon

delivery to Adams of written notice of such termination; provided, however,

that Adams shall not be terminated for Cause unless and until the Company shall

have delivered to Adams a copy of a resolution duly adopted by the affirmative

vote of not less than a majority of the entire membership of the Company’s

Board of Directors at a meeting called and held for such purpose (after

reasonable notice to Adams and an opportunity for Adams, together with Adams’s

counsel, to be heard by said Board), finding that, in the good faith opinion of

said Board, Adams’s conduct constitutes Cause for termination and specifying

the particulars thereof in detail.

(e)           Termination by

Adams. Adams may terminate his duties with the Company hereunder at any

time (i) for Good Reason, as defined in Section 5.03, effective

immediately upon delivery to the Company of written notice of such termination,

or (ii) for any reason or for no reason upon ninety (90) days’ written

notice to the Company.

(f)            Termination by

Mutual Consent. The parties may terminate the their mutual relationship

under this Agreement at any time by mutual consent.

5.02.        Compensation Upon Termination.

(a)           Death or

Disability. In the event this Agreement is terminated by reason of Adams’s

death or disability, Adams shall be entitled to payment of compensation earned

through the date of termination; payment of any bonus or other incentive

compensation for the year in which such death or disability occurs, pro rated

for the portion of the year preceding the date of termination; and

reimbursement of expenses incurred through the date of termination. Adams shall

not be entitled to receive any compensation, bonus or other payments or

benefits under this Agreement with respect to any periods after the date of

termination by reason of death or disability.

(b)           Termination by

Company without Cause or by Adams for Good Reason. If Adams’s duties under

this Agreement are terminated by the Company without Cause pursuant to Section

5.01(c) or by Adams for Good Reason pursuant to Section 

 

 

3

 

5.01(e)(i), Adams

shall be entitled to payment of compensation earned through the date of

termination; payment of any bonus or other incentive compensation for the year

in which such termination occurs, pro rated for the portion of the year

preceding the date of termination; and reimbursement of expenses incurred

through the date of termination.  In

addition, Adams shall be entitled to continue to receive, as a severance

benefit, payment of his base compensation (at the highest annual rate in effect

during the Term of this Agreement) for the remainder of the Term of this

Agreement.  In the event Adams is

terminated or chooses to terminate his duties under this Section 5.02(b), the

Company must pay all the sums due and owing to him immediately, after an

adjustment is made for the acceleration of such payment by the use of a

discounted present value rate of eight percent (8.00%).

(c)           Termination by

Company for Cause or by Adams without Good Reason. If Adams’s duties under

this Agreement are terminated by the Company for Cause pursuant to Section

5.01(d), or by Adams without Good Reason pursuant to Section 5.01(e)(ii), Adams

shall be entitled to payment of compensation earned through the date of

termination; payment of any bonus or other incentive compensation for the year

in which such termination occurs, pro rated for the portion of the year

preceding the date of termination; and reimbursement of expenses incurred

through the date of termination. Adams shall not be entitled to receive any

compensation, bonus or other payments or benefits under this Agreement with

respect to any periods after the date of termination by the Company for Cause

or by Adams without Good Reason.

5.03.        Definitions.

(a)           Disability.

Adams shall be deemed to be “disabled” if the Board of Directors of the Company

(excluding Adams, if Adams is a member of the Board of Directors) determines in

good faith that Adams is physically or mentally incapacitated and has been

unable for ninety (90) days in any 360-day period to perform his duties under this

Agreement. In order to assist the Board of Directors in making that

determination, Adams shall, as reasonably requested by the Board, (i) make

himself available for medical examinations by a physician chosen by the Board,

and (ii) grant the Board and such physician access to all relevant medical

information concerning him, arrange to furnish copies of medical records to

them and use his best efforts to cause his own physicians to be available to

discuss his health with the Board and the physician appointed by the

Board.  If Adams disagrees with the

findings of the Board-appointed physician, he may appoint his own physician to

make the relevant determinations as to disability. In the event that the

physician appointed by Adams disagrees with the findings of the Board-appointed

physician, the two physicians shall select a third physician whose

determination shall be binding.

(b)           Cause.

“Cause” shall mean:

(i)            the

conviction of Adams by a court of competent jurisdiction for felony criminal

conduct; or

 

 

4

 

(ii)           the

willful engaging by Adams in fraud or dishonesty which is demonstrably and

materially injurious to the Company or its reputation, monetarily or otherwise.

No act, or failure

to act, on Adams’s part shall be deemed “willful” unless committed or omitted

by Adams in bad faith and without a reasonable belief that his act or failure

to act was in the best interest of the Company.

(c)           Good Reason.

“Good Reason” shall mean the occurrence, without Adams’s express written

consent, of any of the following:

(i)            the

assignment to Adams of any duties inconsistent with Adams’s status or position

with the Company;

(ii)           a

reduction by the Company in Adams’s monthly base compensation;

(iii)          a

merger, reverse merger, consolidation, reorganization, recapitalization,

business combination or other transaction pursuant to which the Company and/or

substantially all of its assets acquires, or is (are) acquired by, or combined

with, a third party or third parties or an event or transaction in which either

or both the Control Share Acquisition section (Section 302A.671) of the

Minnesota Business Corporation Act or its successor section or the Business

Combination section (Section 302A.673) of the Minnesota Business Corporation Act

or its successor section is implicated or invoked;

(iv)          the

involuntary removal by the shareholders of all or a majority of the presently

serving Board of Directors of the Company pursuant to action taken at a

regularly scheduled shareholders meeting or a special shareholders meeting;

(v)           the

taking of any action by the Company which would directly or indirectly

materially reduce any of the other benefits described in Sections 4.03 and 4.04

and which remains uncured after thirty (30) days following the delivery of

Adams’s written notice of such breach to the Company; or

(vi)          any

material violation of this Agreement by the Company which remains uncured after

thirty (30) days following the delivery of Adams’s written notice of such

breach to the Company.

6.             Miscellaneous

6.01.        Idemnification. The Company will

pay on behalf of Adams, and his executors, administrators or assigns, any

amount which he is or becomes legally obligated to pay because of any claim or

claims made against him because of any act or omission or neglect or breach of

duty, including any actual or alleged error or misstatement or misleading

statement, which he commits or suffers while acting in his capacity as a member

of Special Acquisition/Investment Committee of the Company.  The payments which the Company will be 

 

 

5

 

obligated to make

hereunder shall include, inter alia, damages, judgments, settlements and costs,

cost of investigation (excluding salaries of officers or employees of the Company)

and costs of defense of legal actions, claims or proceedings and appeals

therefrom, and costs of attachment or similar bonds; provided, however, that

the Company shall not be obligated to pay fines or other obligations or fees

imposed by law or otherwise which it is prohibited by applicable law from

paying as indemnity or for any other reason. 

If a claim under this Agreement is not paid by the Company, or on its

behalf, within ninety (90) days after a written claim has been received by the

Company, the claimant may at any time thereafter bring suit against the Company

to recover the unpaid amount of the claim and if successful in whole or in

part, the claimant shall be entitled to be paid also the expense of prosecuting

such claim.  Costs and expenses (including

attorneys’ fees) incurred by Adams in defending or investigating any action,

suit, proceeding or investigation shall be paid by the Company in advance of

the final disposition of such matter.

 

6.02.        Assignment. Neither party may

transfer or assign any rights or delegate any obligations hereunder, in whole

or in part, whether voluntarily or by operation of law, without the prior

written consent of the other party. Any purported transfer, assignment or

delegation by either party without compliance with this Section 6.02 will be

null and void and of no force or effect. This Agreement shall be binding upon

and inure to the benefit of the parties’ successors and lawful assigns.

6.03.        Severability. Whenever possible,

each provision of this Agreement will be interpreted in such manner as to be

effective and valid under applicable law, but if any provision of this

Agreement is held to be prohibited by or unenforceable or invalid under

applicable law, such provision will be ineffective only to the extent of such

prohibition or invalidity, without invalidating the remainder of such provision

or the remaining provisions of this Agreement.

6.04.        Complete Agreement. This

Agreement and the agreements referenced herein and therein, contain the

complete agreement between the parties with respect to the subject matter

hereof and thereof, and supersede any prior understandings, agreements or

representations by or between the parties, written or oral, which may have

related to the subject matter hereof or thereof in any way.

6.05.        Counterparts. This Agreement may

be executed in one or more counterparts, any one of which need not contain the

signatures of more than one party, but all such counterparts taken together,

when delivered, will constitute one and the same instrument.

6.06.        Governing Law; Choice of Forum.

The internal law, without regard to conflicts of laws principles, of the State

of Minnesota will govern all questions concerning the construction, validity

and interpretation of this Agreement and the performance of the obligations

imposed by this Agreement. Any and every legal proceeding arising out of or in

connection with this Agreement shall be brought in the appropriate courts of

the State of Minnesota, and each of the parties hereto consents to the exclusive

jurisdiction of such courts.

6.07.        No

Waiver. No term or condition of this Agreement shall be deemed to have been

waived, nor shall there by any estoppel to enforce any provisions of this

Agreement, except by a statement in writing signed by the party against whom

enforcement of the waiver or estoppel is sought. Any written waiver shall not

be deemed a continuing waiver unless 

 

 

6

 

specifically stated,

shall operate only as to the specific term or condition waived and shall not

constitute a waiver of such term or condition for the future or as to any act

other than that specifically waived.

 

*                    

*                     *                       *                       *                     *                      *

 

 

7

 

IN WITNESS

WHEREOF, the parties hereto have caused this Agreement to be executed as of the

day and year first above written.

	

   

  	

  EDWARD S. ADAMS:

  
	

   

  	

   

  
	

   

  	

  /s/ Edward S.

  Adams

  
	

   

  	

  Edward S. Adams

  
	

   

  	

   

  
	

   

  	

  COMPANY:

  
	

   

  	

   

  
	

   

  	

  VirtualFund.com, Inc., a Minnesota corporation

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ John

  Cavanaugh

  
	

   

  	

  Its:

  	

  Director

  

 

 

8

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