POKERMATIC, INC.
2006 EQUITY INCENTIVE PLAN
TABLE OF CONTENTS
PAGE
1. Purpose 1
2. Definitions 1
(a) "Award Agreement" 1
(b) "Board" 1
(c) "Cause" I
(d) "Change in Control" 1
(e) "Code" 2
(f) "Committee" 2
(g) "Company" 2
(h) "Disability" 2
(i) "Exchange Act" 2
(j) "Fair Market Value" 2
(k) "ISO" 3
(l) "More-Than-10-Percent Shareholder" 3
(m) "NQSO" 3
(n) "Option" 3
(o) "Participant" 3
(p) "PLAN" 3
(q) "Related Corporation" 3
(r) "Restricted Stock" 3
(s) "Securities Act" 3
(t) "Shares" 3
3. Administration 4
4. Effective Date and Term of Plan 5
(a) Effective Date 5
(b) Term of Plan 5
5. Shares Subject to the Plan 5
6. Eligibility 5
7. Types of Awards 5
7.1 Options 5
(a) Kinds of Options 5
(b) $100,000 Limit 6
(c) Exercise Price 6
(d) Term of Options 6
(e) Exercise of Options 6
(f) Payment for Shares 6
8. Events Affecting Outstanding Awards 7
8.1 Termination of Service (Other Than by Death or Disability) 7
8.2 Death or Disability 8
8.3 Capital Adjustments 8
TABLE OF CONTENTS
(CONTINUED)
PAGE
8.4 Certain Corporate Transactions 9
9. Amendment or Termination of the Plan 9
(a) In General 9
(b) Xxxxxx of Shareholder Approval 10
10. Miscellaneous 10
10.1 Documentation of Awards 10
10.2 Rights as a Stockholder 10
10.3 Conditions on Delivery of Shares 11
10.4 Listing and Registration of Shares 11
10.5 Compliance with Rule 16b-3 11
10.6 Taxes 11
(a) Payment to Company 11
(b) Election to Withhold Shares 12
10.7 Transferability of Options 12
10.8 Registration 12
10.9 Acquisitions 12
10.10 Replacement of Outstanding Options 12
10.11 Employment/Service Rights 13
10.12 Indemnification of Board and Committee 13
10.13 Application of Funds 13
10.14 Termination of Service 13
10.15 Governing Law 13
POKERMATIC, INC.
2006 EQUITY INCENTIVE PLAN
WHEREAS, PokerMatic, Inc. (the "Company") desires to have the ability
to award certain equity-based benefits to certain key employees, consultants and
directors of the Company and its Related Corporations;
NOW, THEREFORE, the PokerMatic, Inc. 2006 Equity Incentive Plan is
hereby adopted under the following terms and conditions:
1 . Purpose. The Plan is intended to provide a means whereby the
Company may grant ISOs to key employees and grant NQSOs and Restricted Stock to
key employees, consultants and directors. Thereby, the Company expects to
attract and retain such individuals and to motivate them to exercise their best
efforts on behalf of the Company and its Related Corporations.
2. Definitions
(a) "Award Agreement" shall mean a written document evidencing
the grant of an Award under the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Cause" shall mean the Participant has --
(i) materially failed to perform his or her stated duties and
not cured such failure (if curable) within 15 days of his or her receipt of
written notice of the failure;
(ii) demonstrated his or her personal dishonesty;
(iii) engaged in willful misconduct;
(iv) engaged in a breach of fiduciary duty involving personal
profit;
(v) willfully violated any law, rule, or regulation, or final
cease-and-desist order (other than traffic violations or similar offenses); or
(vi) engaged in other serious misconduct of such a nature that
the continuation of the Participant's status as an employee, consultant or
director may reasonably be expected to affect the Company and its Related
Corporations adversely.
(d) "Change in Control" shall mean the occurrence of any of the
following:
(i) A person, including a "group" as such term is defined in
Section 13(d)(3) of the Securities Exchange Act of 1934 becomes the beneficial
owner, directly or
indirectly, of 50.1% or more of the total voting power or fair market value of
stock of the Company.
(ii) There is a sale of all or substantially all the assets of
the Company.
(iii) There is a merger or consolidation of the Company as a
result of which the individuals and entities who were the beneficial owners of
the stock of the Company do not beneficially own, immediately after such merger
or consolidation, directly or indirectly, 50.1% or more of the total voting
power and fair market value of the stock resulting from such merger or
consolidation in substantially the same proportion as their ownership of the
stock of the Company prior to such merger or consolidation.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) "Committee" shall mean the Company's Compensation Committee
of the Board, which shall consist solely of not fewer than two directors of the
Company who shall be appointed by, and serve at the pleasure of the Board
(taking into consideration on and after such date, if any, on which the Company
first registers equity securities under Section 12 of the Exchange Act, the
rules under section 16(b) of the Exchange Act and the requirements of section
162(m) of the Code), or if no committee has been established, the entire Board.
(g) "Company" shall mean PokerMatic, Inc., a Pennsylvania
corporation.
(h) "Disability" shall mean separation from service as a result
of a Participant's "permanent and total disability," as defined in section
22(e)(3) of the Code.
(i) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(j) "Fair Market Value" shall mean the following, arrived at by a
good faith determination of the Committee:
(1) if there are sales of Shares on a national securities
exchange or in an over-the-counter market on the date of grant (or on such other
date as value must be determined), then the mean between the highest and lowest
quoted selling price on such date; or
(2) if there are no such sales of Shares on the date of grant
(or on such other date as value must be determined) but there are such sales on
dates within a reasonable period both before and after such date, the weighted
average of the means between the highest and lowest selling price on the nearest
date before and the nearest date after such date on which there were such sales;
or
(3) except with respect to NQSOs, if actual sales are not
available during a reasonable period beginning before and ending after the date
of grant (or on such other date as value must be determined), then the mean
between the bid and asked price on such date as reported by the National
Quotation Bureau; or
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(4) if paragraphs (1) through (3) above are not applicable,
then such other method of determining fair market value as shall be adopted by
the Committee; provided that with respect to ISOs, such method is permissible
under section 422 of the Code, and with respect to NQSOs, such method is
permissible under section 409A of the Code.
Where the Fair Market Value of Shares is determined under paragraph (2) above,
the average of the quoted closing prices on the nearest date before and the
nearest date after the last business day before the specified date shall be
weighted inversely by the respective numbers of trading days between the dates
of reported sales and the valuation date, in accordance with Treas. Reg.
ss.20.203l-2(b)(l) or any successor thereto.
(k) "ISO" shall mean an Option which, at the time such Option
is granted under the Plan, qualifies as an incentive stock option within the
meaning of section 422 of the Code, unless the Award Agreement states that the
Option will not be treated as an ISO.
(1) "More-Than-l0-Percent Shareholder" shall mean any individual
who at the time of grant owns, directly or indirectly, or is deemed to own by
reason of the attribution rules of section 424(d) of the Code, Shares possessing
more than 10 percent of the total combined voting power of all classes of
Shares of the Company or of a Related Corporation.
(m) "Plan" shall mean an Option that, at the time such Option is
granted to a Participant does not meet the definition of an ISO, whether or not
it is designated as a nonqualified stock option in the Award Agreement.
(n) "Option" is an award entitling the Participant on exercise
thereof to purchase Shares at a specified exercise price. An Option may be an
ISO or an NQSO.
(o) "Participant" shall mean a key employee, consultant or
director of the Company or a Related Corporation who has been granted an Award
under the Plan.
(p) "Plan" shall mean the PokerMatic, Inc. 2006 Equity Incentive
Plan, as set forth herein and as it may be amended from time to time.
(q) "Related Corporation" shall mean either a "subsidiary
corporation" of the Company (if any), as defined in section 424(f) of the Code,
or the "parent corporation" of the Company (if any), as defined in section
424(e) of the Code.
(r) "Restricted Stock" shall mean an Award that grants the
recipient Shares (for any or no consideration) subject to whatever restrictions
are determined by the Committee.
(s) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(t) "Shares" shall mean shares of common stock of the Company, at
no par value per share.
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3 . Administration
(a) The Plan shall be administered by the Committee. Each member
of the Committee, while serving as such, shall be deemed to be acting in his or
her capacity as a director of the Company. Acts approved by a majority of the
members of the Committee at which a quorum is present, or acts without a meeting
reduced to or approved in writing by a majority of the members of the Committee,
shall be the valid acts of the Committee. Any authority of the Committee (except
for the authority described in subsection (b)(l)-(4) and (7) below which may
only be exercised by the Committee) may be delegated to a Plan administrator.
(b) The Committee shall have the authority:
(1) to select the key employees, consultants and directors of
the Company or a Related Corporation to be granted Awards under the Plan and to
grant such Awards at such time or times as it may choose;
(2) to determine the type and size of each Award, including
the number of Shares subject to the Award;
(3) to determine the terms and conditions of each Award;
(4) to amend an existing Award in whole or in part (including
the extension of the exercise period for any NQSO to a date no later than the
later of the 15TH day of the third month following the date at which, or
December 31 of the calendar year in which, the Option would have otherwise
expired), except that the Committee may not (i) lower the exercise price of any
Option, (ii) extend the term of any ISO, or (iii) without the consent of the
Participant holding the Award, take any action under this clause if such action
would adversely affect the rights of such Participant;
(5) to adopt, amend and rescind rules and regulations for the
administration of the Plan;
(6) to interpret the Plan and decide any questions and settle
any controversies that may arise in connection with it; and
(7) to adopt such modifications, amendments, procedures,
sub-plans and the like which may be inconsistent with the provisions of the
Plan, as may be necessary to comply with the laws and regulations of other
countries in which the Company and its Related Corporations operate in order to
assure the viability of Awards granted under the Plan to individuals in such
other countries.
Such determinations and actions of the Committee, and all other determinations
and actions of the Committee made or taken under authority granted by any
provision of the Plan, shall be conclusive and shall bind all parties. Nothing
in this subsection (b) shall be construed as limiting the power of the Board or
the Committee to make the adjustments described in Sections 8.3 and 8.4.
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4. Effective Date and Term of Plan
(a) Effective Date. The Plan, having been adopted by the Board on
March 8, 2006, shall become effective on that date, but subject to the approval
of the stockholders of the Company pursuant to Section 9(b). Awards may be
granted under the Plan before such stockholder approval (but after the Board's
adoption of the Plan), subject to such stockholder approval.
(b) Term ofPlan. No Awards may be granted under the Plan after
March 7, 2016.
5. Shares Subject to the Plan
(a) Limits. The aggregate number of Shares that may be delivered
under the Plan is 1,000,000, all of which may be delivered with respect to ISOs.
On and after the date the Company first registers equity securities under
Section 12 of the Exchange Act, key employees shall be limited in the number of
Shares they receive over a specified period oftime. The number of Shares a key
employee receives and the specified period of time over which the key employee
shall receive the Shares shall be determined by the Company, pursuant to a
subsequent Plan amendment.
(b) Special Rules. The limits set forth in subsection (a) above
shall be subject to the adjustments described in Section 8.3. Shares delivered
under the Plan may be authorized but unissued Shares or reacquired Shares, and
the Company may purchase Shares required for this purpose, from time to time, if
it deems such purchase to be advisable. Any Shares still subject to an Option
which expires or otherwise terminates for any reason whatsoever (including,
without limitation, the surrender thereof) without having been exercised in
full, any Shares still subject to an Award that is forfeited, any Shares
withheld for the payment of taxes with respect to an Award, shall continue to be
available for Awards under the Plan. However, on and after the date the Company
first registers equity securities under Section 12 of the Exchange Act, if an
Option is cancelled, the Shares covered by the cancelled Option shall be counted
against the maximum number of Shares for which Options may be granted to a key
employee.
6. Eligibility. Except as otherwise provided, key employees,
consultants and directors of the Company or a Related Corporation shall be
eligible to receive Awards under the Plan. More than one Award may be granted to
a key employee, consultant or director under the Plan.
7. Types of Awards
7.1 Options.
(a) Kinds of Options. Both ISOs and NQSOs may be granted by the
Committee under the Plan. ISOs may only be granted to key employees of the
Company or of a Related Corporation. Once an ISO has been granted, no action by
the Committee that would cause the Option to lose its status as an ISO under the
Code will be effective without the consent of the Participant holding the
Option.
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(b) $100,000 Limit. The aggregate Fair Market Value of the Shares
with respect to which ISOs are exercisable for the first time by a key employee
during any calendar year (counting ISOs under this Plan and under any other
stock option plan of the Company or a Related Corporation) shall not exceed
$100,000. If an Option intended as an ISO is granted to a key employee and the
Option may not be treated in whole or in part as an ISO pursuant to the $100,000
limit, the Option shall be treated as an ISO to the extent it may be so treated
under the limit and as an NQSO as to the remainder. For purposes of determining
whether an ISO would cause the limit to be exceeded, ISOs shall be taken into
account in the order granted. The annual limits set forth above for ISOs shall
not apply to NQSOs.
(c) Exercise Price. The exercise price of an Option shall be
determined by the Committee, provided that the exercise price shall not be less
than the greater of(A) 100 percent (110 percent in the case of an ISO granted
to a More-Than-10-Percent Shareholder) of the Fair Market Value of the Shares
subject to the Option, determined as of the time the Option is granted, or (B)
the par value per Share.
(d) Term of Options. The term of each Option may not be more than
10 years (five years, in the case of an ISO granted to a More-Than-l0-Percent
Shareholder), from the date the Option was granted, or such earlier date as may
be specified in the Award Agreement.
(e) Exercise of Options. An Option shall become exercisable
upon a Change in Control and at such other time or times as the Committee
may specify in the Award Agreement. The Committee may at any time and from
time to time accelerate the time at which all or any part of the Option may be
exercised. Any exercise of an Option must be in writing, signed by the proper
individual, and delivered or mailed to the Company, accompanied by (i) any other
documents required by the Committee and (ii) payment in full in accordance with
subsection (f) below for the number of Shares for which the Option is exercised.
Only full shares shall be issued under the Plan, and any fractional share that
might otherwise be issuable upon exercise of an Option granted hereunder shall
be forfeited.
(f) Payment for Shares. The Award Agreement shall set forth, from
among the following alternatives, how the exercise price is to be paid:
(i) in cash or by check (acceptable to the Committee), bank
draft, or money order payable to the order of the Company;
(ii) in Shares previously acquired by the Participant;
provided, however, that if such Shares were acquired through the exercise of an
ISO and are used to pay the Option price of an ISO, the Committee may require in
the Option Agreement that such Shares have been held by the Participant for a
period of not less than the holding period described in section 422(a)(1) of the
Code on the date of exercise;
(iii) in Shares newly acquired by the Participant upon the
exercise of the Option (which shall constitute a disqualifying disposition in
the case of an Option which is an ISO); or
(iv) by any combination of the above-listed forms of payment.
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If the Option price is paid, in whole or in part, with Shares, the portion of
the Option price so paid shall be equal to the Fair Market Value on the date of
exercise of the Option of the Shares surrendered in payment of such Option
price.
7.2 Restricted Stock.
(a) General Requirements. The Committee may issue or transfer
Restricted Stock (for any or no consideration) to any key employee, consultant
or director of the Company or a Related Corporation.
(b) Rights as a Stockholder. Unless the Committee determines
otherwise, a Participant who receives Restricted Stock shall have certain rights
of a stockholder with respect to the Restricted Stock, including voting and
dividend rights (in accordance with subsection (e), below), subject to the
restrictions described in subsection (c) below and any other conditions imposed
by the Committee at the time of grant. Unless the Committee determines
otherwise, certificates evidencing shares of Restricted Stock will remain in the
possession of the Company until such Shares are free of all restrictions under
the Plan.
(c) Restrictions. Except as otherwise specifically provided by
the Plan, Restricted Stock may not be sold, assigned, transferred, pledged, or
otherwise encumbered or disposed of, and if the Participant ceases to be an
employee, consultant or director of any of the Company and its Related
Corporations for any reason, must be forfeited to the Company. These
restrictions will lapse at such time or times, and on such conditions, as the
Committee may specify in the Award Agreement. Upon the lapse of all
restrictions, the Shares will cease to be Restricted Stock for purposes of the
Plan. The Committee may at any time accelerate the time at which the
restrictions on all or any part of the Shares will lapse.
(d) Notice of Tax Election. Any Participant making an election
under section 83(b) of the Code for the immediate recognition of income
attributable to an Award of Restricted Stock must provide a copy thereof to the
Company within 10 days of the filing of such election with the Internal Revenue
Service.
(e) Dividend Rights. Dividends payable with respect to dividend
rights attributable to a Restricted Stock Award shall be paid to the Participant
at the same time such dividends are paid to other individuals who own Shares.
8. Events Affecting Outstanding Awards
8.1 Termination of Service (Other Than by Death or Disability). If a
Participant ceases to be an employee, consultant or director of any of the
Company and its Related Corporations for any reason other than death or
Disability, then the following shall apply:
(a) Options. Except as otherwise set forth in the Award Agreement
and except in the event of a termination of service for Cause, all Options held
by the Participant that were not exercisable immediately before the
Participant's termination of service shall terminate at that time. Any Options
that were exercisable immediately before the termination of service will
continue to be exercisable for three months (or, with respect to NQSOs, for such
longer
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period as set forth in the Award Agreement), and shall thereupon terminate. In
no event, however, shall an Option remain exercisable beyond the latest date on
which it could have been exercised without regard to this Section. For purposes
of this Section, a termination of service shall not be deemed to have resulted
by reason of a sick leave or other bona fide leave of absence. In the event of a
termination of service for Cause, all Options held by the Participant (whether
or not they are exercisable) shall terminate at that time.
(b) Restricted Stock. Except as otherwise set forth in the Award
Agreement, all Restricted Stock held by the Participant at the date of
termination of service must be transferred to the Company (and, if the
certificates representing such Restricted Stock are held by the Company, such
Restricted Stock shall be so transferred without any further action by the
Participant), in accordance with Section 7.3.
8.2 Death or Disability. If a Participant dies or incurs a Disability,
the following shall apply:
(a) Options. Except as otherwise set forth in the Award
Agreement, all Options held by the Participant immediately before death or
Disability, as the case may be, to the extent then exercisable, may be exercised
by the Participant or by the Participant's legal representative (in the case of
Disability), or by the Participant's executor or administrator or by the
individual(s) to whom the Option is transferred by will or the laws of descent
and distribution, at any time within the one-year period ending with the first
anniversary of the Participant's death or Disability, and shall thereupon
terminate. In no event, however, shall an Option remain exercisable beyond the
latest date on which it could have been exercised without regard to this
Section. Except as otherwise determined by the Committee, all Options held by a
Participant immediately before death or Disability that are not then exercisable
shall terminate at the date of death or Disability.
(b) Restricted Stock. Except as otherwise set forth in the Award
Agreement, all Restricted Stock held by the Participant at the date of death or
Disability, as the case may be, must be transferred to the Company (and, if the
certificates representing such Restricted Stock are held by the Company, such
Restricted Stock shall be so transferred without any further action by the
Participant), in accordance with Section 7.3.
8.3 Capital Adjustments. The maximum number of Shares that may be
delivered under the Plan (including the number of Shares that may be delivered
with respect to ISOs) and the maximum number of Shares with respect to which
Awards may be granted to any Participant under the Plan, all as stated in
Section 5 (as well as the exercise price per Share under outstanding Options)
shall be proportionately adjusted, as may be deemed appropriate by the
Committee, to reflect any increase or decrease in the number of issued Shares
resulting from a subdivision (share-split), consolidation (reverse split), stock
dividend, or similar change in the capitalization of the Company.
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8.4 Certain Corporate Transactions.
(a) If a corporate transaction occurs (as, for example, a merger,
consolidation, sale of all or substantially all of the Company's property or the
sale of more than 50% of the outstanding shares of the Company's stock,
separation, reorganization, or liquidation), each outstanding Award shall be
assumed by the surviving or successor entity; provided, however, that if a
corporate transaction is proposed, the Committee may terminate all or a portion
of any outstanding Award, effective upon the closing of the corporate
transaction, if it determines that such termination is in the best interests
of the Company. If the Committee decides to terminate outstanding Options, the
Committee shall give each Participant holding an Option to be terminated not
less than seven days' notice before any such termination, and any Option that is
to be so terminated may be exercised (if and only to the extent that it is then
exercisable) up to, and including the date immediately preceding such
termination. Further, the Committee, in its discretion, may (i) accelerate, in
whole or in part, the date on which any or all Options, vest and/or (ii) remove
the restrictions from the outstanding Restricted Stock. The Committee also may,
in its discretion, change the terms of any outstanding Award to reflect the
corporate transaction, provided that, in the case of ISOs, such change would not
constitute a "modification" under section 424(h) of the Code and in the case
of NQSOs, such change does not constitute a "modification" under Proposed Treas.
Reg. ss.1.409A-1(b)(5)(v)(B), unless the Participant consents to the change.
(b) With respect to an outstanding Award held by a Participant
who, following the corporate transaction, will be employed by or otherwise
providing services to an entity which is a surviving or acquiring entity in such
transaction or a Related Corporation of such an entity, the Committee may, in
lieu of the action described in subsection (a) above, arrange to have such
surviving or acquiring entity or Related Corporation grant to the Participant a
replacement award which, in the judgment of the Committee, is substantially
equivalent to the Award, provided that in the case of a replacement option, the
requirements of Treas. Reg. ss.1.424-1 are met with respect to ISOs and would be
met if NQSOs were ISOs. For this purpose, the requirements of Treas. Reg. ss.
1.424-l(a)(5)(iii) are deemed met if the ratio of the exercise price to the
Fair Market Value of the shares subject to the replacement option immediately
after the transaction is not greater than the ratio of the exercise price to the
Fair Market Value of the Shares immediately before the transaction.
9. Amendment or Termination of the Plan
(a) In General. The Board, pursuant to a written resolution, may
from time to time suspend or terminate the Plan or amend it and, except as
provided in Section 3(b)(4), 7.1(a), and 8.4(a), the Committee may amend any
outstanding Awards in any respect whatsoever; except that, without the approval
of the shareholders (given in the manner set forth in subsection (b) below) --
(1) no amendment may be made that would --
(A) change the class of employees eligible to participate in
the Plan with respect to ISOs;
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(B) except as permitted under Section 8.3, increase the
maximum number of Shares with respect to which ISOs may be granted under the
Plan; or
(C) extend the duration of the Plan under Section 4(b) with
respect to any ISOs granted hereunder;
(2) no amendment may be made that would require shareholder
approval under an applicable law or exchange listing rule.
Notwithstanding the foregoing, no such suspension, termination, or amendment
shall materially impair the rights of any Participant holding an outstanding
Award without the consent of such Participant, unless such suspension,
termination or amendment is necessary to comply with applicable law.
(b) Manner of Shareholder Approval. The approval of shareholders
must comply with all applicable provisions of the corporate charter and bylaws
of the Company, and applicable state law prescribing the method and degree of
shareholder approval required for the issuance of corporate stock or options. If
the applicable state law does not prescribe a method and degree of shareholder
approval in such cases, the approval of shareholders must be effected:
(1) by a method and in a degree that would be treated as
adequate under applicable state law in the case of an action requiring
shareholder approval (i.e., an action on which shareholders would be entitled to
vote if the action were taken at a duly held shareholders' meeting);
(2) by a majority of the votes cast (including abstentions, to
the extent abstentions are counted as voting under applicable state law), in a
separate vote at a duly held shareholders' meeting at which a quorum
representing a majority of all outstanding voting stock is, either in person or
by proxy, present and voting on the Plan.
10. Miscellaneous
10.1 Documentation of Awards. Awards shall be evidenced by such
written Award Agreements, if any, as may be prescribed by the Committee from
time to time. Such instruments may be in the form of agreements to be executed
by both the Participant and the Company, or certificates, letters, or similar
instruments, which need not be executed by the Participant but acceptance of
which will evidence agreement to the terms thereof.
10.2 Rights as a Stockholder. Except as specifically provided by the
Plan or an Award Agreement, the receipt of an Award shall not give a Participant
rights as a stockholder; instead, the Participant shall obtain such rights,
subject to any limitations imposed by the Plan or the Award Agreement, upon the
actual receipt of Shares. Before issuance of a stock certificate to a
Participant, and if provided in the Award Agreement, the Participant shall be
required to sign a
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Shareholders Agreement and the certificate(s) representing such Shares shall
bear a legend to the effect that the Participant's rights as a shareholder are
subject to such Shareholders Agreement.
10.3 Conditions on Delivery of Shares. The Company shall not deliver
any Shares pursuant to the Plan or remove restrictions from Shares previously
delivered under the Plan (i) until all conditions of the Award have been
satisfied or removed, (ii) until all applicable Federal and state laws and
regulations have been complied with and (iii) if the outstanding Shares are at
the time of such delivery listed on any stock exchange or market, until the
Shares to be delivered have been listed or authorized to be listed on such
exchange or market. If an Option is exercised by the Participant's legal
representative, the Company will be under no obligation to deliver Shares
pursuant to such exercise until the Company is satisfied as to the authority of
such representative.
10.4 Listing and Registration of Shares. Each Award shall be subject
to the requirement that, if at any time the Committee shall determine, in its
discretion, that the listing, registration, or qualification of the Shares
covered thereby upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such Award
or the purchase of Shares thereunder, or that action by the Company, its
shareholders, or the Participant should be taken in order to obtain an exemption
from any such requirement or to continue any such listing, registration, or
qualification, no Option may be exercised, in whole or in part, unless and until
such listing, registration, or qualification, consent, approval, or action shall
have been effected, obtained, or taken under conditions acceptable to the
Committee. Without limiting the generality of the foregoing, each Participant or
his or her legal representative or beneficiary may also be required to give
satisfactory assurance that such person is an eligible purchaser under
applicable securities laws, and that the shares purchased upon exercise of an
Option are being purchased for investment and not with a view to distribution;
certificates representing such shares may be legended accordingly.
10.5 Compliance with Rule 16b-3. All elections and transactions under
this Plan by individuals subject to Rule 16b-3, promulgated under section 16(b)
of the Exchange Act, or any successor to such Rule, are intended to comply with
at least one of the exemptive conditions under such Rule. The Committee shall
establish such administrative guidelines to facilitate compliance with at least
one such exemptive condition under Rule 16b-3 as the Committee may deem
necessary or appropriate.
10.6 Taxes
(a) Payment to Company. The Committee may require that the
Participant or other appropriate individual remit to the Company an amount
sufficient to satisfy all Federal, state, and local withholding tax requirements
including the withholding requirements of any jurisdiction outside the United
States (the "Withholding Requirements") or make other arrangements satisfactory
to the Committee with regard to such Withholding Requirements, before the
delivery of any Shares.
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(b) Election to Withhold Shares. The Committee, in its
discretion, may permit or require the Participant to satisfy the withholding
requirements, in whole or in part, by electing to have the Company withhold
Shares (or by returning previously acquired Shares to the Company); provided,
however, that the Company may limit the number of Shares withheld to satisfy the
Withholding Requirements to the extent necessary and if by so doing adverse
accounting consequences will be avoided. Shares shall be valued, for purposes of
this subsection (b), at their Fair Market Value (determined as of the date an
amount is includible in income by the Participant (the "Determination Date"),
rather than the date of grant). If Shares acquired by the exercise of an ISO are
used to satisfy the Withholding Requirements, the Committee may require that
such Shares must have been held by the Participant for a period of not less than
the holding period described in section 422(a)(l) of the Code as of the
Determination Date. The Committee shall adopt such withholding rules as it deems
necessary to carry out the provisions of this Section.
10.7 Transferability of Options. No Option may be transferred other
than by will or by the laws of descent and distribution. During a Participant's
lifetime an Option requiring exercise may be exercised only by the Participant
(or if the Participant becomes incapacitated, by the individual(s) legally
appointed to act on the Participant's behalf).
10.8 Registration. If the Participant is married at the time Shares
are delivered and if the Participant so requests at such time, the certificate
or certificates for such Shares shall be registered in the name of the
Participant and the Participant's spouse, jointly, with right of survivorship.
10.9 Acquisitions. Notwithstanding any other provision ofthis Plan,
Awards may be granted hereunder in substitution for awards held by employees and
directors of other entities who are about to, or have, become employees or
directors of the Company or a Related Corporation as a result of a merger,
consolidation, acquisition of assets or similar transaction by the Company or
the Related Corporation. The terms of the substitute Awards so granted may vary
from the terms set forth in this Plan to such extent as the Committee may deem
appropriate to conform, in whole or in part, to the provisions of the awards in
substitution for which they are granted; provided, however, that no substitute
Award shall be granted which will subject the Award to section 409A of the Code
(if it previously was not subject to such Code section).
10.10 Replacement of Outstanding Options. The Committee, in accordance
with Section 409A of the Code, shall have the authority to cancel, at any time
and from time to time, with the consent of the affected Participants, any or all
outstanding Options under the Plan and to grant in substitution therefor, new
Options under the Plan covering the same or a different number of Shares but
having a per share purchase price not less than the greater of par value or 100
percent of the Fair Market Value of a Share on the new date of the grant. The
Committee may permit the voluntary surrender of all or a portion of any Option
to be conditioned upon the granting to the Participant under the Plan of a new
Option for the same or a different number of Shares as the Option surrendered,
or may require such voluntary surrender as a condition precedent to a grant of a
new Option to such Participant. Any new Option shall be exercisable at the
price, during the period, and in accordance with any other terms and conditions
specified by the Committee at the time the new Option is granted, all determined
in accordance with the
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provisions of the Plan without regard to the price, period of exercise, and any
other terms or conditions of the Option surrendered.
10.11 Employment/Service Rights. Neither the adoption of the Plan nor
the grant of Awards will confer on any individual any right to continued
employment by or service with the Company or any of its Related Corporations or
affect in any way the right of any of the foregoing to terminate an employment
or service relationship at any time.
10.12 Indemnification of Board and Committee. Without limiting any
other rights of indemnification that they may have from the Company or any of
its Related Corporations, the members of the Board and the members of the
Committee shall be indemnified by the Company against all costs and expenses
reasonably incurred by them in connection with any claim, action, suit or
proceeding to which they or any of them may be a party by reason of any action
taken or failure to act under, or in connection with, the Plan or any Option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by legal counsel selected by the Company)
or paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except a judgment based upon a finding of willful misconduct or
recklessness on their part. Upon the making or institution of any such claim,
action, suit or proceeding, the Board or Committee member shall notify the
Company in writing, giving the Company an opportunity, at its own expense, to
handle and defend the same before such Board or Committee member undertakes to
handle it on his or her own behalf. The provisions of this Section shall not
give members of the Board or the Committee greater rights than they would have
under the Company's by-laws or Pennsylvania law.
10.13 Application of Funds. Any cash proceeds received by the Company
from the sale of Shares pursuant to Awards granted under the Plan shall be added
to the general funds of the Company. Any Shares received in payment for
additional Shares upon exercise of an Option shall become treasury stock.
10.14 Termination of Service. In no event shall a Participant be
considered to have terminated his service with the Company and its Related
Corporations if his status changes from employee to director or vice versa, or
from consultant to employee or vice versa.
10.15 Governing Law. The Plan shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the
Commonwealth of Pennsylvania (without reference to the principles of conflict of
laws) shall govern the operation of, and the rights of employees, consultants
and directors under, the Plan and Awards granted hereunder.
IN WITNESS WHEREOF, PokerMatic, Inc. has caused this plan to be duly executed
this 31st day of August, 2006.
POKERMATIC, INC.
By:
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Title: President
