-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U558tKoagUcpAZweL6/55kJeIC4kT7leEcW8jw1KBrx6Pz0rO+Fy4MKQr8K7i6yG jYM2aP+FxbairbQs3DazAg== 0000898430-01-501328.txt : 20010713 0000898430-01-501328.hdr.sgml : 20010713 ACCESSION NUMBER: 0000898430-01-501328 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20010712 EFFECTIVENESS DATE: 20010712 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIRTGAME COM CORP CENTRAL INDEX KEY: 0001040022 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 330716247 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-65006 FILM NUMBER: 1680210 BUSINESS ADDRESS: STREET 1: 12625 HIGH BLUFF DR STE 205A CITY: SAN DIEGO STATE: CA ZIP: 92130 BUSINESS PHONE: 6192595015 MAIL ADDRESS: STREET 1: 12625 HIGH BLUFF DRIVE STREET 2: SUITE 205A CITY: SAN DIEGO STATE: CA ZIP: 92130 FORMER COMPANY: FORMER CONFORMED NAME: VIRTUAL GAMING TECHNOLOGIES INC DATE OF NAME CHANGE: 19980727 S-8 1 ds8.txt FORM S-8 As filed with the Securities and Exchange Commission on July 12, 2001. Registration No. ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 REGISTRATION STATEMENT ON FORM S-8 UNDER THE SECURITIES ACT OF 1933 VIRTGAME.COM CORP. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 33-0716247 ------------------------------- --------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 5230 Carroll Canyon Road, Suite 318, San Diego, CA 92121 -------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) VIRTGAME.COM CORP. 1997 STOCK OPTION PLAN AND OTHER PLAN STOCK OPTIONS ---------------------------------------------------------------------- (Full title of the plan) Bruce Merati 5230 Carroll Canyon Road, Suite 318 San Diego, CA 92121 _______________________ (Name and address of agent for service) (858) 373-5001 -------------- (Telephone number, including area code, of agent for service)
Calculation of Registration Fee - -------------------------------------------------------------------------------------------------------------- Proposed Proposed maximum maximum Title of securities Amount to be offering price aggregate offering Amount of to be registered registered per unit price registration fee - -------------------------------------------------------------------------------------------------------------- Common Stock, $.00001 par value 3,500,000 shs. $.35/(1)/ $1,225,000 $306.25 - --------------------------------------------------------------------------------------------------------------
(1) In accordance with Rules 457(c) and 457(h) under the Securities Act of 1933, as amended, we computed the registration fee on the shares of our common stock underlying options based upon the average of the bid and asked prices for our common stock on July 11, 2001. THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. VIRTGAME.COM CORP. Common Stock ________________ VIRTGAME.COM CORP. 1997 STOCK OPTION PLAN AND OTHER STOCK OPTION PLANS ________________ 8,980,000 Shares of Common Stock, $.00001 Par Value This prospectus relates to shares of our common stock which we may issue from time to time to (i) our employees, officers, directors, consultants and independent contractors upon their exercise of stock options granted to them under our 1997 Stock Option Plan; (ii) to our former president and chief executive officer upon his exercise of stock options granted pursuant to a separate employment agreement; and (iii) a consultant to the Company pursuant to a consulting agreement. The purchase price of the shares of common stock issued upon exercise of options granted under our Plan will be determined from time to time based upon the market price of the common stock in accordance with the terms of our Plan. We suggest that you retain this prospectus for further reference. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. ________________ This prospectus only covers the sale of those shares purchased upon the exercise of stock options granted under our plan and granted to our chief executive officer. This prospectus does not cover the resales of those shares. However, persons ordinarily may publicly resell the shares of common stock acquired hereunder without registration under federal securities laws. Our affiliates, however, may not publicly resell shares acquired hereunder without compliance with Rule 144 promulgated under the Securities Act of 1933 or registration under that act. The date of this prospectus is July 12, 2001. TABLE OF CONTENTS
PAGE OUR COMPANY........................................................................... 1 INFORMATION ABOUT OUR STOCK OPTION PLAN............................................... 1 Introduction........................................................................ 1 General Purpose..................................................................... 1 ERISA............................................................................... 1 Shares Available.................................................................... 1 Administration...................................................................... 2 Eligibility......................................................................... 2 Grant of Options.................................................................... 2 Exercise of Options................................................................. 2 Nontransferability.................................................................. 3 Termination of Employment........................................................... 3 Death or Disability................................................................. 3 Duration, Amendment and Termination................................................. 3 Options Outstanding................................................................. 4 OTHER STOCK OPTIONS................................................................... 4 INCOME TAX CONSEQUENCES............................................................... 4 Incentive Stock Options Under the Plan.............................................. 4 Nonstatutory Stock Options Under the Plan........................................... 6 Exercise of Options Through Use of Previously Acquired Common Stock of the Company.. 6 RESTRICTIONS ON RESALE................................................................ 7 LEGAL MATTERS......................................................................... 7 EXPERTS............................................................................... 7 AVAILABLE INFORMATION................................................................. 7
i PART I Item 1. Plan Information OUR COMPANY We were incorporated in the State of Delaware in October 1995. Our executive offices are located at 5230 Carroll Canyon Road, Suite 318, San Diego, California 92121; our telephone number is (858) 373-5001. INFORMATION ABOUT OUR STOCK OPTION PLAN Introduction Set forth below is a summary of our 1997 Stock Option Plan, which highlights the principal features of that plan. In addition to our plan, we have also entered into stock option agreements with each of the individuals who have been granted options. You may obtain a copy of the plan and the form of the stock option agreements by writing or calling our chief executive officer at the address and phone number listed above. General Purpose Our board of directors adopted our 1997 Stock Option Plan on May 2, 1997. On June 27, 2001, our board approved an amendment to the plan for purposes of increasing the total number of shares reserved for issuance under the plan to 8,000,000. The purpose of the plan is to provide our officers, directors, employees, consultants and independent contractors added incentive for high levels of performance and unusual efforts to increase our earnings. The plan provides these individuals with an opportunity to acquire, maintain and increase a proprietary interest in our success. The plan also encourages those employees to continue their employment with us. We are permitted to grant two different types of options under the plan, incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended, and non-statutory stock options. Both of these types of options are discussed in greater detail below. ERISA The plan is not an "employee pension benefit plan" as defined in Section 3(2) of the U.S. Employee Retirement Income Security Act and is not qualified as a profit sharing plan as described in Section 401 of the Internal Revenue Code. Shares Available We have reserved a total of 8,000,000 shares of common stock for issuance under the plan. These shares may include authorized but unissued shares or shares we reacquired at any time. If a person fails to exercise an option granted under the plan before it expires or if an option terminates for any reason, we will be able to use the shares, which are subject to that option to grant further options under the plan. The number of shares of common stock reserved for issuance under the plan is subject to equitable adjustments for any recapitalizations, mergers, consolidations, stock dividends, split-ups, combinations, exchanges or any other similar changes which may be required to prevent dilution. Similarly, our stock option committee, which administers the plan, in its sole discretion, may adjust the number of shares a selected person is permitted to acquire if an increase or decrease in the amount of outstanding capital stock occurs prior to that person's exercise of an option granted pursuant to the plan. -1- Administration The plan is administered by our stock option committee, which consists of our board of directors. The committee members act in the capacity of plan administrators. The committee has the authority to determine who will be granted options and the time or times those selected persons will be granted and may exercise all or any part of those options. The committee also determines the number of shares to be subject to each option, the purchase price of the shares of common stock covered by each option and the method of payment of such price. The committee also has the authority to construe and interpret the plan, decide all questions and settle all controversies and disputes, which may arise in connection with the plan and prescribe, amend and rescind rules and regulations relating to administration of the plan. Eligibility Only our officers, employees and directors who are also our employees or employees of any of our subsidiaries are eligible to receive grants of incentive stock option's. Our officers, employees and directors whether or not they are also employees as well as our consultants, independent contractors or our other service providers are eligible to receive grants of nonstatutory stock option's. The committee may consider any factors it believes will accomplish the purpose of the Plan when it determines (i) the number of shares to be covered by each option, (ii) the purchase price for such shares and the method of payment of such price, (iii) the individuals who will receive options, (iv) the terms and provisions of the option agreements, and (v) the times at which such options shall be granted. Grant of Options The exercise price for the options granted under the plan is specified in each stock option agreement. The plan does not specify any maximum or minimum amount of options, which may be granted to any person. However, the Internal Revenue Code states that incentive stock option's may not be granted if the sum of (i) aggregate fair market value determined at the time the incentive stock option's are granted of the stock subject to all stock options we granted under the plan which are first exercisable during the same calendar year plus (ii) the aggregate fair market value determined at the time the options are granted of all stock subject to all other incentive stock options we granted to such optionee which are exercisable for the first time during such calendar year, exceeds $100,000. Options may be exercised for a term up to ten years from the date it is granted. However, if a person owns more than 10% of the total combined voting power of all classes of our stock or the stock of our subsidiaries, that person's options must expire no later than five years after the date it is granted. Exercise of Options Incentive Stock Options ----------------------- The committee shall determine the exercise price for each share which an optionee is entitled to purchase under an incentive stock option. The minimum exercise price for an incentive stock option shall be the fair market value per share on the date we grant the incentive stock option. For those persons who own more than 10% of the total combined voting power of all classes of our stock, including the stock of our subsidiaries, the minimum exercise price for an incentive stock option shall be 110% of the fair market value per share of common stock on the date we grant the incentive stock option. Nonstatutory Stock Options -------------------------- -2- The committee shall determine the exercise price for each share, which an optionee is entitled to purchase under a nonstatutory stock option. The minimum exercise price for a nonstatutory stock option shall be 85% of the fair market value per share on the date we grant the nonstatutory stock option. For both incentive stock options and nonstatutory stock options, the committee determines the fair market value of the shares. The committee shall also determine the consideration and the method of payment of the shares issued upon exercise of an option. The consideration may consist of cash, shares of our common stock or such other consideration and method of payment for the shares as may be permitted under applicable state and federal laws. Nontransferability A person who receives options under the plan may not transfer those options during his lifetime. A person who receives options may transfer those options after his death by will or under the laws of descent and distribution. Termination of Employment If an employee who has received options ceases to be employed by, or ceases to have a relationship with us or any of our subsidiaries for any reason other than death, disability or cause, all options granted under the plan will terminate not later than three months thereafter. If we have terminated his employment with us or any of our subsidiaries for cause, all options granted to him shall expire immediately. However, the committee may, in its sole discretion, waive the expiration of the option within thirty days of his termination. Death or Disability If a holder of options dies or becomes disabled as defined in Section 22(e)(3) of the Internal Revenue Code he or his descendants shall have one year to purchase all or any part of the shares of common stock he was entitled to purchase on the date his employment terminated due to his death or disability. In no case, however, may the option holder exercise options more than ten years after the date the options were granted. Duration, Amendment and Termination Unless previously terminated, the plan will terminate on May 2, 2007. No options may be granted after that date under the plan. Options granted before the Plan terminates but exercisable afterwards will not be affected. The committee may at any time and from time to time modify, amend, suspend or terminate the plan. However, the committee may not: . increase the maximum number of shares, which may be purchased pursuant to options granted under the plan, either in the aggregate or by an option holder, except in limited circumstances; . change the designation of the class of employees eligible to receive incentive stock options . extend the term of the plan or the maximum option period under the plan . decrease the minimum incentive stock option exercise price; or . cause incentive stock options issued under the plan to fail to meet the requirements of incentive stock options under Section 422 of the Internal Revenue Code. -3- An option holder must consent to any amendment of the plan, which would adversely affect his rights as an option holder. Options Outstanding As of July 9, 2001, we have granted under the plan options to purchase a total of 4,820,000 shares of common stock, at exercise prices ranging from $0.25 to $5.00 per share, to our employees, officers, directors and consultants. OTHER STOCK OPTIONS Joseph R. Paravia, our former President and Chief Executive Officer, entered into an employment agreement with us dated September 1, 1997, to be effective as of July 31, 1996. Pursuant to the terms of the agreement, Mr. Paravia received options to purchase 480,000 shares of our common stock at an exercise price of $.25 per share. The exercise price of the options granted to Mr. Paravia was equal to the last sale price on the date of grant. All of the options granted to Mr. Paravia are immediately exercisable and expire on December 31, 2004. We entered into a consulting agreement with R. Stephen Sarli dated July 2, 2001. Pursuant to the terms of the consulting agreement, we are required to issue Mr. Sarli 500,000 shares of our common stock. INCOME TAX CONSEQUENCES This section of the prospectus contains a discussion regarding the income tax consequences of the plan under Federal income tax law. This discussion is intended only as a broad discussion of the general rules under income tax laws applicable to the grant and exercise of options and the acquisition and disposition of common stock acquired pursuant to the exercise of options. Specific situations may be subject to different rules and may result in different tax consequences. You are strongly urged to consult your tax advisor with specific reference to your tax situation. Incentive Stock Options Under the Plan Grant and Exercise of Incentive Stock Options. In general, an optionee realizes no income upon the grant of plan incentive stock options assuming these options qualified as "incentive stock options" under the Internal Revenue Code when they were granted or upon the exercise of incentive stock option's. But see, "Alternative Minimum Tax," below. The amount paid by the optionee for the common stock received pursuant to the exercise of incentive stock options will generally constitute his or her basis or cost for tax purposes. The holding period for such common stock generally begins on the date the optionee exercises incentive stock options. See below for a discussion of the exceptions to these general rules when the optionee uses previously acquired stock of the company to exercise incentive stock options. Alternative Minimum Tax. Although no current taxable income is realized upon the exercise of incentive stock options, Section 56(b)(3) of the Internal Revenue Code provides that the excess of the fair market value on the date of exercise of the common stock acquired pursuant to such exercise over the option price is an item of tax adjustment. As such, the exercise of incentive stock options may result in the optionee being subject to the alternative minimum tax for the year incentive stock options are exercised. The alternative minimum tax is calculated on a taxpayer's adjusted gross income, subject to special adjustments, plus specified items of tax preference minus specified itemized deductions. The resulting amount is the alternative minimum taxable income. -4- If the shares are disposed of in a "disqualifying disposition" -- that is, within one year of exercise or two years from the date of the option grant - -- in the year in which the incentive stock option is exercised, the maximum amount that will be included as alternative minimum tax income is the gain on the disposition of the incentive stock option stock. In the event there is a disqualifying disposition in a year other than the year of exercise, the income on the disqualifying disposition will not be considered income for alternative minimum tax purposes. In addition, the basis of the incentive stock option stock for determining gain or loss for alternative minimum tax purposes will be the exercise price for the incentive stock option stock increased by the amount that alternative minimum tax income was increased due to the earlier exercise of the incentive stock option. Alternative minimum tax incurred by reason of the exercise of the incentive stock option does not result, for regular income tax purposes, in an increase in basis of the shares acquired upon exercise. The alternative minimum tax attributable to the exercise of an incentive stock option may be applied as a credit against regular tax liability in a subsequent year, subject to certain limitations. The gain recognized upon a sale or exchange of shares acquired through the exercise of the incentive stock options will be limited to the excess of the amount received in the sale or exchange over the fair market value of the shares at the time the incentive stock option was exercised. The application of the alternative minimum tax for each optionee will depend on such optionee's total income and deductions for the year of exercise. As such, the extent to which, if any, the tax adjustment item generated by the exercise of incentive stock options in conjunction with any other tax adjustment items or alternative minimum tax adjustments may result in an alternative minimum tax liability for any optionee cannot be determined. Accordingly, each optionee should consult his or her own tax counsel to determine the potential impact of the alternative minimum tax on his or her exercise of incentive stock option's. Employment and Holding Requirements of Incentive Stock Options. The Internal Revenue Code requires that the optionee remain an employee of the company or its subsidiaries at all times during the period beginning on the date that the incentive stock options are granted and ending on the day three months or one year in the case of permanent and total disability before the date that each incentive stock option is exercised. Under the plan, upon termination of employment for any reason other than cause, disability or death the options terminate three months after the termination date unless by their terms the options terminate earlier. If termination occurs as a result of disability or death, the options will expire one year after such termination unless they expire before that date by their terms. Therefore, if the options constituted incentive stock options at grant, permissible exercises after termination automatically meet the employment requirements. In order for an optionee exercising incentive stock options to qualify for the income tax free treatment set forth in the preceding section such optionee must not dispose of the common stock acquired pursuant to the exercise of incentive stock options within two years from the date the incentive stock options were granted, nor within one year after the exercise of the incentive stock options. If the optionee meets these employment and holding requirements, any future gain or loss realized and recognized from the sale or exchange of the common stock should be long-term capital gain or loss, if the stock is held as a capital asset. If the optionee disposes of the shares of common stock acquired upon exercise of an incentive stock option within two years from the granting of options or one year after the exercise of options, any gain will constitute, in the year of disposition, ordinary compensation income to the extent of the excess of the fair market value of the common stock on its acquisition date over the price paid for it by the optionee. Any additional gain will be treated as capital gain. If the optionee disposes of the shares of common stock at a loss, such loss will be a capital loss. For purposes of this section, the transfer of common stock by reason of the optionee's death does not constitute a disposition of the common stock. In addition, the transferee of the common stock is not subject to the holding and employment requirements. -5- If the recipient disposes of options instead of exercising them, the incentive stock option rules discussed herein have no application. The recipient-transferor will recognize either long or short-term capital gain or loss and the purchaser will not be subject to any of these rules. Nonstatutory Stock Options Under the Plan In general, an optionee who receives a nonstatutory stock option realizes income either at the date of grant or at the date of exercise, but not at both. Unless the nonstatutory stock option has a "readily ascertainable fair market value" at the date of grant, the optionee recognizes no income on the date of grant and the compensatory aspects are held open until the nonstatutory stock option is exercised. In this case, upon exercise, the optionee will have compensation income to the extent of the difference between the fair market value of the stock at the time of exercise and the exercise price paid by the optionee. An nonstatutory stock option is deemed to have a readily ascertainable fair market value if (a) the nonstatutory stock options are actively traded on an established market or (b) the fair market value can be measured with reasonable accuracy which means that (i) the nonstatutory stock options are transferable, (ii) the nonstatutory stock option's are exercisable immediately in full, (iii) the nonstatutory stock option's and underlying stock are not subject to restrictions which have a significant effect on the nonstatutory stock option's value and (iv) the fair market value of the option privilege is readily ascertainable. Exercise of Options Through Use of Previously Acquired Common Stock of the Company Under the plan, in some circumstances an optionee may be allowed to use previously acquired common stock to exercise both incentive stock option's and nonstatutory stock option's. Such previously acquired common stock may include common stock acquired pursuant to an earlier partial exercise of options. Generally the Internal Revenue Service recognizes that an exchange of common stock for other common stock does not constitute a taxable disposition of any shares of common stock. The IRS treats such exchanges as two transactions. First, to the extent of the number of previously acquired shares of common stock, a share for share exchange occurs with each new share of common stock succeeding to the cost basis and holding period of the old shares of common stock. Second, the remaining new shares of common stock are deemed acquired at a zero cost with their holding period commencing on the date of acquisition. The foregoing rules generally apply to the use of previously acquired common stock to acquire common stock under the plan. An optionee may use common stock owned at the date options are exercised to acquire common stock upon exercise of the options. However, despite a "carryover" holding period, all of the new shares of common stock are still subject to the holding requirements discussed above. If optionee disposes of such common stock acquired pursuant to the exercises of incentive stock option's before the later of two years from the granting or one year from exercise, an early disposition occurs first to the extent of the noncarryover shares and then to the extent of the carryover shares. In addition, if an optionee uses common stock acquired through a previous partial exercise of options to acquire new common stock through an exercise of options before the first stock has met the above holding requirements, the first stock will be treated as having been disposed of in an early disposition. Therefore, the optionee will have to recognize ordinary compensation to the excess of the fair market value of the first stock on its acquisition dates over its price paid. Despite the early disposition, any excess gain is not recognized, but is deferred and carried over to the second stock. If the first stock is used to acquire other common stock which is not subject to either the plan, no early disposition will generally occur and the tax free exchange rules may apply. -6- RESTRICTIONS ON RESALE We are subject to Section 16(b) of the Securities Exchange Act of 1934, as amended. Section 16(b) allows us to recover any profit realized by any of our officers or directors from any purchase and sale, or sale and purchase, of our common stock within any period of less than six months. Further, our affiliates who acquire shares of our common stock pursuant to an option described in this prospectus will not be able to rely on this prospectus to resell those shares. Accordingly, our affiliates who exercise options must insure that the resale of their shares complies with an available exemption from the registration provisions of the Federal securities law, such as Rule 144 under the Securities Act of 1933, as amended. LEGAL MATTERS Our corporate attorneys, Oppenheimer Wolff & Donnelly LLP, Newport Beach, California, will issue an opinion about the legality of the offered securities for us. EXPERTS Pannell Kerr Forster, certified public accountants, a professional corporation, audited our financial statements as of December 31, 2000 and 1999 and for the fiscal years ended December 31, 2000 and 1999, which are incorporated by reference in this prospectus. These documents are incorporated by reference herein in reliance upon their authority as experts in accounting and auditing. Item 2. Registrant Information and Employee Plan Annual Information AVAILABLE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any document we file at the SEC's offices located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. This prospectus does not contain all the information set forth in the registration statement and exhibits thereto which we have filed with the SEC under the Securities Act of 1933, to which reference is hereby made. -7- PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference. The SEC allows us to "incorporate by reference" the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) the Securities Exchange Act of 1934: 1. The Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000. 2. The Company's Quarterly Report on Form 10-QSB for the quarter ended March 31, 2001. You may request a copy of these filings at no cost by writing or telephoning us at the following address: Bruce Merati, Chief Financial Officer, 5230 Carroll Canyon Road, Suite 318, San Diego, California 92121; (858) 373- 5001. Item 4. Description of Securities. Inapplicable. Item 5. Interests of Named Experts and Counsel. Inapplicable. Item 6. Indemnification of Directors and Officers. Delaware Statutes ----------------- Section 145 of the Delaware General Corporation Law, as amended, provides for the indemnification of the Company's officers, directors, employees and agents under certain circumstances as follows: "(a) A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. -8- (b) A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (c) To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (3) by the stockholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. (g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under this section. (h) For purposes of this section, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of -9- such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. (i) For purposes of this section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this section. (j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation's obligation to advance expenses (including attorneys' fees). (Last amended by Ch.261,L.'94,eff.7-1-94.)" Certificate of Incorporation - ---------------------------- The Company's Certificate of Incorporation provides that the directors of the Company shall be protected from personal liability to the fullest extent permitted by law. The Company's Bylaws also contain a provision for the indemnification of the Company's directors (see "Indemnification of Directors and Officers - Bylaws" below). Bylaws - ------ The Company's Bylaws provide for the indemnification of the Company's directors, officers, employees, or agents under certain circumstances as follows: "7.1 Authorization For Indemnification. The Corporation may indemnify, --------------------------------- in the manner and to the full extent permitted by law, any person (or the estate, heirs, executors, or administrators of any person) who was or is a party to, or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, that he had reasonable cause to believe that his conduct was unlawful. -10- 7.2 Advance of Expenses. Costs and expenses (including attorneys' ------------------- fees) incurred by or on behalf of a director or officer in defending or investigating any action, suit, proceeding or investigation may be paid by the Corporation in advance of the final disposition of such matter, if such director or officer shall undertake in writing to repay any such advances in the event that it is ultimately determined that he is not entitled to indemnification. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board deems appropriate. Notwithstanding the foregoing, no advance shall be made by the Corporation if a determination is reasonably and promptly made by the Board by a majority vote of a quorum of disinterested directors, or (if such a quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs) by independent legal counsel in a written opinion, or by the stockholders, that, based upon the facts known to the Board or counsel at the time such determination is made, (a) the director, officer, employee or agent acted in bad faith or deliberately breached his duty to the Corporation or its stockholders, and (b) as a result of such actions by the director, officer, employee or agent, it is more likely than not that it will ultimately be determined that such director, officer, employee or agent is not entitled to indemnification. 7.3 Insurance. The Corporation may purchase and maintain insurance on --------- behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise or as a member of any committee or similar body against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article or applicable law. 7.4 Non-exclusivity. The right of indemnity and advancement of --------------- expenses provided herein shall not be deemed exclusive of any other rights to which any person seeking indemnification or advancement of expenses from the Corporation may be entitled under any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. Any agreement for indemnification of or advancement of expenses to any director, officer, employee or other person may provide rights of indemnification or advancement of expenses which are broader or otherwise different from those set forth herein." Indemnity Agreements - -------------------- The Company's Bylaws provide that the Company may indemnify directors, officers, employees or agents to the fullest extent permitted by law and the Company has agreed to provide such indemnification to its directors pursuant to written indemnity agreements. Item 7. Exemption from Registration Claimed. Inapplicable. -11- Item 8. Exhibits. Exhibit Number Description - -------------- ----------- 5.1 Opinion of Oppenheimer Wolff & Donnelly LLP re: legality of shares. 10.1* Employment Agreement dated September 1, 1997 between Virtgame.Com Corp. and Joseph R. Paravia 10.2* Virtgame.Com Corp. Amended and Restated 1997 Stock Option Plan 10.3 Consulting Agreement dated July 2, 2001 between Virtgame.Com Corp. and R. Stephen Sarli 23.1 Consent of Oppenheimer Wolff & Donnelly LLP (filed as Exhibit 5.1 herein). 23.2 Consent of Pannell Kerr Forster __________________ *Previously filed as part of registration statement on Form 10-SB/A filed with the Securities and Exchange Commission on December 21, 1998. Item 9. Undertakings. A. The undersigned registrant hereby undertakes to file during any period in which offers or sales of the securities are being made, a post- effective amendment to this Registration Statement to include any material information with respect to the plan of distribution not previously disclosed or any material change to such information set forth in the Registration Statement. B. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. The undersigned registrant hereby undertakes to remove from registration by means of a post-effective amendment any of the securities being registered, which remain unsold at the termination of the offering. D. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. E. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. -12- SIGNATURES ---------- The Registrant - -------------- Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized on July 11, 2001. VIRTGAME.COM CORP., a Delaware corporation By:/s/ Leo I. George ------------------------------- Leo I. George, Chairman of the Board By:/s/ Bruce Merati ------------------------------- Bruce Merati, Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated. Signature Title Date ---------- ----- ---- /s/ Leo I. George Chairman of the Board July 11, 2001 - -------------------- LEO I. GEORGE /s/ Scott A. Walker Director July 11, 2001 - -------------------- SCOTT A. WALKER -13- EX-5.1 2 dex51.txt OPINION OF OPPENHEIMER WOLFF & DONNELLY LLP EXHIBIT 5.1 OPPENHEIMER WOLFF & DONNELLY LLP 840 Newport Center Drive Suite 700 Newport Beach, California 92660 (949) 823-6000 (949) 823-6030 (Fax) July 9, 2001 VirtGame.Com Corp. 5230 Carroll Canyon Road, Suite 318 San Diego, California 92121 Re: Registration Statement on Form S-8 ---------------------------------- Gentlemen: As counsel for VirtGame.Com Corp., a Delaware corporation (the "Company"), we have examined its Certificate of Incorporation, as amended, Bylaws, as amended, and such other corporate records, documents and proceedings, and such questions of law as we have deemed relevant for the purpose of this opinion. We have also, as such counsel, examined the Registration Statement on Form S-8 of the Company as filed with the Securities and Exchange Commission, covering the registration under the Securities Act of 1933, as amended, of a total 8,980,000 shares of $.00001 par value common stock ("Common Stock"), including the exhibits and form of Prospectus (the "Prospectus") pertaining thereto (collectively, the "Registration Statement"). Upon the basis of such examination, we are of the opinion that: 1. The Company is a corporation duly authorized and validly existing in good standing under the laws of the State of Delaware, with all requisite power to conduct the business described in the Registration Statement. 2. The shares of the Company's Common Stock registered pursuant to the Registration Statement have been duly and validly authorized and, subject to the payment therefor pursuant to the terms contemplated in the final Prospectus, such shares of Common Stock will be duly and validly issued as fully paid and non-assessable securities of the Company. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, /s/ Oppenheimer Wolff & Donnelly LLP EX-10.3 3 dex103.txt CONSULTING AGREEMENT DATED 7/2/2001 EXHIBIT 10.3 AGREEMENT THIS AGREEMENT (the "Agreement"), dated the 2nd day of July, 2001, is made and entered into by and between Virtgame.com Corp. (hereinafter referred to as "VGTI"), a Public Company incorporated pursuant to the laws of Delaware, and R. Stephen Sarli (hereinafter referred to as "Consultant"). P R E A M B L E: WHEREAS, VGTI desires to engage the Consultant as its general management consultant; and WHEREAS the Consultant has performed the abovementioned services for a substantial amount of time without compensation and VGTI is desirous of continuing of continuing the relationship; and WHEREAS the Consultant wishes to continue to provide the above stated services to VGTI; NOW, THEREFORE, in consideration for the Consultant's agreement to render the hereinafter described services, as well as of the premises, the sum of TEN ($10) DOLLARS, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows: WITNESSETH: ARTICLE ONE CONSULTANT SERVICES 1.1 The Consultant shall perform the following services for VGTI: (a) Consultant shall work with VGTI to further develop its management structure and its Board of Directors, and to plan its strategy in acquiring companies that will meld with VGTI's development plans. Consultant will also review any and all prospective joint ventures and strategic partners, and comment on the desirability and feasibility of said joint ventures/strategic partners, and will develop plans of action for any general plans for expansion as required. (b) VGTI hereby irrevocably agrees to keep Consultant apprised of all material matters involving the VGTI, as required to permit Consultant to fully, properly and legally perform its duties hereunder. (c) Consultant shall submit reports to VGTI on its progress. ARTICLE TWO FEES, EXPENSES, AND TERMINATION 2.1 Fees (a) The Consultant shall be entitled to a fee of $125,000 payable in cash on a monthly basis beginning July 2, 2001and ending December 31, 2001 or payable by issuance of 500,000 free trading shares of VGTI common stock within 10 working days of the execution of this agreement for the sum of $125,000, said sum having been earned by Consultant. 2.2 Expenses The Company shall be responsible for all reasonable expenses Sarli may incur in performing services under this Agreement. However, all expenses over $500 in any month must be pre-approved by the Company. 2.3 Term This agreement shall be for a period of 1 year. ARTICLE THREE MISCELLANEOUS 3.1 All notices, demands or other written communications hereunder shall be in writing, and unless otherwise provided, shall be deemed to have been duly given on the first business day after mailing by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: TO CONSULTANT: And TO VGTI: 5230 Carroll Canyon Rd., Suite 318, San Diego, California 92121; in each case, with copies to such other address or to such other persons as any Party shall designate to the others for such purposes in the manner herein above set forth. 3.2 Time shall be of the essence in this Agreement. 3.3 This Agreement may be executed in one or more counterparts, each of which when so executed shall constitute an original and all of which together shall constitute one and the same agreement. 3.4 This Agreement, constitutes the entire agreement between the parties hereto. There are not and shall not be any verbal statements, representations, warranties, undertakings or agreements between the parties and this Agreement may not be amended or modified in any respect except by written instrument signed by the parties hereto. 3.5 This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York. Any and all disputes arising under this Agreement whether as to interpretation, performance or otherwise, shall be subject to the exclusive jurisdiction of the Courts of the State of New York. Each of the parties hereto hereby irrevocably agrees to the jurisdiction of the Courts of the State of New York. 3.6 The parties hereto shall sign such further and other papers, cause such meetings to be held, resolutions passed and by-laws enacted, exercise their vote and do or cause to be done all such other acts and things as maybe necessary or desirable in order to give full force and effect to this Agreement and every part thereof. 3.7 The headings used herein are inserted for convenience of reference only and shall not affect the construction of, or interpretation of, this Agreement. 3.8 In the event that any Article or section of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the remainder of the provisions hereof, but such part shall be fully severable, and this Agreement shall be construed and enforced as if such invalid or unenforceable part had never been inserted herein and the parties do hereby agree that they would have signed this Agreement without such invalid or unenforceable part included herein. 3.9 In this Agreement words importing the singular number only shall include the plural and vice versa; and words importing the masculine gender shall include the feminine and vice versa. 3.10 This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal personal representatives, successors and permitted assigns. 3.11 Where the date for the expiry of any time period or for the closing of any thing hereunder expires or falls upon a day which is not a Business Day, the time so limited extends to and the thing shall be done on the day next following that is a Business Day. IN WITNESS WHEREOF the parties hereto have executed this Agreement on the day and year first above written. SIGNED, SEALED AND DELIVERED in the presence of "Company" VIRTGAME.COM CORP. a Delaware corporation By: /S/ BRUCE MERATI ------------------------------ Chief Operating Officer "Consultant" /S/ R. STEPHEN SARLI --------------------------------- R. Stephen Sarli EX-23.2 4 dex232.txt CONSENT OF PANNELL KERR FORSTER CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT We consent to the incorporation by reference in this Registration Statement of Virtgame.com Corp. on Form S-8 of our report dated February 5, 2001, appearing in the Annual Report on Form 10-KSB of Virtgame.com Corp. for the years ended December 31, 2000 and 1999 and to the reference to us under the heading "Experts" in such registration statement. San Diego, California PANNELL KERR FORSTER July 9, 2001 Certified Public Accountants A Professional Corporation -----END PRIVACY-ENHANCED MESSAGE-----