SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14c-5(d)(2))
[ ] Definitive Information Statement
IGAMES ENTERTAINMENT, INC.
--------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No Fee Required
[X] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $0.004
_______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
19,597,664 shares
_______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (set forth the amount on which the
filing fee is calculated and state how it was determined):
_______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
$8,035,042
_______________________________________________________________________
(5) Total fee paid:
$1,018.39
_______________________________________________________________________
THE AMOUNT ON WHICH THE FILING FEE OF $1,018.39 WAS CALCULATED WAS DETERMINED
PURSUANT TO SECTION 14(g) OF THE EXCHANGE ACT. THE FILING FEE IS CALCULATED AS
$126.70 PER $1,000,000.00 OF MERGER CONSIDERATION, BASED ON (I) $0.41, THE
MARKET PRICE PER SHARE OF iGAMES COMMON STOCK ON AUGUST 16, 2004 MULTIPLIED BY
(II) 19,597,664, THE NUMBER OF SHARES OF MONEY CENTERS COMMON STOCK TO BE ISSUED
AND OUTSTANDING FOLLOWING THE MERGER.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_______________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_______________________________________________________________________
(3) Filing Party:
_______________________________________________________________________
(4) Date Filed:
_______________________________________________________________________
IGAMES ENTERTAINMENT, INC.
700 SOUTH HENDERSON ROAD, SUITE 210
KING OF PRUSSIA, PA 19406
INFORMATION STATEMENT
To the Stockholders of iGames Entertainment, Inc.:
This Information Statement is furnished to the stockholders of iGames
Entertainment, Inc., a Nevada corporation ("iGames"), to give you notice of the
corporate actions stockholders holding more than 50% of the voting power of our
issued and outstanding capital stock have taken to approve:
A. the Agreement and Plan of Merger between iGames and Money
Centers of America, a wholly-owned subsidiary of iGames
("Money Centers") (the "Merger Agreement"), pursuant to which
iGames would merge with and into Money Centers; and
B. our Amended and Restated 2003 Stock Incentive Plan (the
"Plan"), which was adopted in July 2003 and amended and
restated in January 2004.
On August 9, 2004, the Board of Directors, including a majority of the
independent directors, proposed and approved the Merger Agreement. At the
recommendation of our board of directors (the "Board of Directors"), including a
majority of the independent directors, Christopher M. Wolfington and Jeremy
Stein, who collectively hold the voting power of more than a majority of our
issued and outstanding shares of common stock and Series A Preferred Stock, have
executed a written consent approving the Merger Agreement and approving the
Plan. Accordingly, all necessary corporate approvals in connection with the
matters referred to herein have been obtained, and this Information Statement is
furnished solely for the purpose of informing our other stockholders, in the
manner required under the Securities Exchange Act of 1934, of these corporate
actions before they take effect. The record date ("Record Date") for determining
stockholders entitled to receive this Information Statement has been established
as the close of business on August 31, 2004.
This Information Statement is first being sent or given to our
stockholders on or about ________, 2004.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE MERGER.........................................1
SUMMARY........................................................................4
RECORD DATE AND VOTE REQUIRED..................................................5
THE MERGER.....................................................................5
THE MERGER AGREEMENT..........................................................18
DISSENTER'S RIGHTS............................................................21
APPROVAL OF AMENDED AND RESTATED 2003 STOCK INCENTIVE PLAN....................23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................32
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................34
OTHER MATTERS.................................................................34
ADDITIONAL INFORMATION........................................................34
Annex A - Nevada Revised Statutes Sections 92A.300 through 92A.500............35
Exhibit A - Agreement and Plan of Merger......................................41
Exhibit B - Money Centers of America, Inc. Amended and Restated
Certificate of Incorporation......................................45
Exhibit C - Money Centers of America, Inc. Amended and Restated Bylaws........50
Exhibit D - Amended and Restated 2003 Stock Incentive Plan....................62
QUESTIONS AND ANSWERS ABOUT THE MERGER
WHAT ARE THE MAIN TERMS OF THE MERGER?
We are currently incorporated in Nevada and governed by Nevada law.
Money Centers is currently incorporated in Delaware and governed by Delaware
law. Following the Merger Money Centers, as the surviving entity, will continue
to be governed by Delaware law.
Following the Merger, the name of the surviving corporation will be
"Money Centers of America, Inc."
Money Centers' Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws are similar to iGames' and are attached to this
Information Statement as Exhibits "B" and "C," respectively, with the exception
that Money Centers has authorized capital stock of 150,000,000 shares of common
stock and 20,000,000 shares of "blank check" preferred stock, compared to
iGames' authorized capital stock of 12,500,000 shares and 5,000,000 shares,
respectively. In addition, Money Centers' Amended and Restated Certificate of
Incorporation includes a provision placing certain obligations on holders of 5%
or more of its capital stock.
In the Merger, each holder of shares of Common Stock will receive one
share of Money Centers' common stock, par value $0.001 (the "Money Centers
Common Stock") for each share of Common Stock and each holder of shares of
iGames Series A Convertible Preferred Stock (the "Series A Preferred Stock")
will receive 11.5 shares of Money Centers Common Stock for each share of Series
A Preferred Stock. Options and warrants to purchase Common Stock, other than
warrants issued as part of the Merger consideration in iGames' acquisition of
Money Centers (the "Money Centers Merger Warrants"), will be deemed options and
warrants to purchase the same number of shares of Money Centers Common Stock
with no change in exercise price. Money Centers Merger Warrants will be
cancelled in exchange for 1.15 shares of Money Centers Common Stock for each
share of Common Stock purchasable thereunder.
The holders of our Series A Preferred Stock currently have the right to
require that we redeem the Series A Preferred Stock, together with certain
related warrants to purchase shares of our common stock, in exchange for the
capital stock of Money Centers, our principal operating subsidiary. Pursuant to
the Merger, this redemption right will be eliminated and the Series A Preferred
Stock and related warrants will be exchanged for shares of Money Centers Common
Stock. However, the exchange ratio for the Series A Preferred Stock and the
related warrants is greater than the exchange ratio for shares of our common
stock, as a result of which the holders of the Series A Preferred Stock and
related warrants will increase their percentage ownership in the surviving
entity (on a fully-diluted basis) from 63.16% to 66.35%.
Our business, Board of Directors, officers, employees, assets and
liabilities and the location of our offices will remain unchanged.
Our fiscal year end will change from March 31 to December 31.
A copy of the Merger Agreement is attached to this Information
Statement as Exhibit "A."
WHY DO THE HOLDERS OF SERIES A PREFERRED STOCK AND MONEY CENTERS MERGER WARRANTS
RECEIVE MORE SHARES OF MONEY CENTERS COMMON STOCK THAN OTHER SECURITIES HOLDERS
OF IGAMES?
Under the Certificate of Designation with respect to the Series A
Preferred Stock, the holders of a majority of the Series A Preferred Stock have
the right to demand that iGames redeem the Series A Preferred Stock and the
Money Centers Merger Warrants upon termination of the November 3, 2003 Stock
Purchase Agreement between iGames and Equitex, Inc. (the "Equitex Agreement").
The Equitex Agreement was terminated by iGames on March 12, 2003. Pursuant to
such a redemption, the holders of the Series A Preferred Stock and the Money
Centers Merger Warrants would have received, as redemption consideration, 100%
of the outstanding capital stock of Money Centers, which is iGames only
operating subsidiary. The holders of the Series A Preferred Stock and the Money
Centers Merger Warrants have agreed not to exercise the right to redemption in
exchange for an increase in their collective percentage ownership from the
current 63.16% to 66.35%, which will be effected by the exchange ratio in the
Merger.
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WHY DID THE BOARD OF DIRECTORS APPROVE THE MERGER?
Following the Board of Directors' consideration of a number of factors,
including in particular the consequences to iGames' future business prospects of
the redemption of the Series A Preferred Stock and Money Centers Merger
Warrants, the special committee of the Board of Directors appointed to review
the Merger recommended to the Board of Directors, and the Board of Directors
determined, that the Merger Agreement and the transactions contemplated thereby
are advisable and fair to and in the best interests of our stockholders.
WHY IS THERE NOT GOING TO BE A STOCKHOLDERS MEETING?
Under Nevada law, any action that is required to be taken, or that may
be taken, at any annual or special meeting of stockholders of a Nevada
corporation may be taken, without a meeting, without prior notice and without a
vote, if a written consent, setting forth the action taken, is signed by the
holder or holders of the outstanding voting securities having not less than the
minimum number of votes necessary to authorize such action. As of January 16,
2004, the date on which the stockholders holding more than fifty percent (50%)
of the voting power of issued and outstanding capital stock executed the
stockholder consent, Christopher M. Wolfington held the voting power for 2,000
shares of Common Stock and 973,181 shares of Series A Preferred Stock, each of
which has the voting power of ten (10) shares of Common Stock, and Jeremy Stein
held the voting power for 112,500 shares of Common Stock, which is approximately
65.32% and .59%, respectively, of the total number of votes entitled to be cast
by outstanding shares of Common Stock and Series A Preferred Stock, voting as a
single class, our sole voting securities currently issued and outstanding.
Because the Merger and the Plan have been approved by a majority of the issued
and outstanding voting shares as required by Nevada law, no further votes are
required. Corporate actions taken by written consent of the majority
stockholders will take effect 20 days after the mailing of this Information
Statement, which date is on or about __________, 2004.
WHAT WILL I RECEIVE FOR MY SHARES OF COMMON STOCK IF THE MERGER IS COMPLETED?
You will receive one share of Money Centers Common Stock for each share
of our common stock that you own immediately before the Merger.
WHEN WILL I RECEIVE THE NEW STOCK?
Following the Merger, you will receive written instructions for
surrender of certificates evidencing your common stock. You will receive the
Money Centers Common Stock upon surrender of the certificates in accordance with
those instructions.
WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
The Merger will be completed approximately 20 days following the
mailing date of this Information Statement, or approximately __________, 2004.
WHAT CAN I DO IF I AM NOT SATISFIED WITH THE MONEY CENTERS COMMON STOCK I WILL
RECEIVE FOR MY SHARES?
Under Nevada law, if you are not satisfied with what you are receiving
in the Merger, you are legally entitled to have the value of your shares
judicially determined. Any consideration that you receive for your shares of
capital stock pursuant to such judicial valuation could be more or less than you
would have received pursuant to the Merger. To exercise your dissenters' rights,
you must follow certain procedures under Nevada law. If you do not follow these
procedures exactly, you will lose your dissenters' rights.
SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
No, you should not send us your stock certificates prior to the Merger.
If the Merger is completed, you will receive written instructions for exchanging
your stock certificates for cash.
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WHAT ARE THE TAX CONSEQUENCES TO ME?
The Merger is intended to qualify as a tax-free reorganization for
United States federal income tax purposes. If the Merger does so qualify, no
gain or loss would generally be recognized by our U.S. shareholders upon
conversion of their shares of common stock in our company into shares of common
stock in Money Centers pursuant to the Merger. We believe, but cannot assure
you, that there will no tax consequences for holders of our shares. You are
urged to consult your own tax advisor for tax implications related to your
particular situation.
WHO CAN HELP ANSWER MY QUESTIONS ABOUT THE TRANSACTIONS?
If you have additional questions about these transactions, you should
contact Christopher M. Wolfington, at (610) 354-8888.
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SUMMARY
THE FOLLOWING SUMMARY IS INTENDED ONLY TO HIGHLIGHT INFORMATION
CONTAINED IN THIS INFORMATION STATEMENT. THIS SUMMARY IS NOT INTENDED TO BE
COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION
CONTAINED IN THIS INFORMATION STATEMENT, THE ANNEXES HERETO AND THE DOCUMENTS
OTHERWISE REFERRED TO IN THIS INFORMATION STATEMENT. YOU ARE URGED TO REVIEW
THIS ENTIRE INFORMATION STATEMENT CAREFULLY, INCLUDING THE ANNEXES HERETO AND
SUCH OTHER DOCUMENTS.
RECORD DATE AND VOTE REQUIRED (SEE PAGE 5)
The record date for stockholders to be entitled to receive this
information statement is August 31, 2004, and only stockholders of record as of
that date will receive this information statement. The holders of shares of our
common stock and Series A Preferred Stock entitled to cast a majority of the
votes of all such shares have already approved the Merger Agreement and the
Merger.
THE MERGER AND THE MERGER AGREEMENT (SEE PAGE 18)
The Merger Agreement is attached to this document as Annex A. Please
read the Merger Agreement in its entirety. It is the legal document that governs
your rights in connection with the Merger.
MERGER CONSIDERATION (SEE PAGE 19)
Pursuant to the Merger, each issued and outstanding share of our common
stock (other than shares as to which dissenters' rights have been properly
exercised) will be converted into the right to receive one share of Money
Centers Common Stock and each option or warrant to purchase shares of our common
stock (other than the Money Centers Merger Warrants) will be converted into an
option or warrant to purchase shares of Money Centers common stock at the same
exercise price. Each share of Series A Preferred Stock and each Money Centers
Merger Warrant will be converted into the right to receive 11.5 shares and 1.15
shares, respectively, of Money Centers common stock.
APPROVAL OF THE BOARD OF DIRECTORS OF IGAMES (SEE PAGE 9)
The Board of Directors has unanimously approved the Merger Agreement
and the Merger on the terms and conditions set forth in the Merger Agreement.
REASONS FOR THE MERGER (SEE PAGES 5-9)
In reaching its decision to approve the Merger Agreement, the Board of
Directors considered a number of factors, including among others:
o The relative merits of Nevada and Delaware as states of
incorporation; and
o The potential impact on iGames and its ability to remain as a
viable business entity in the event that the Series A
Preferred Stock is redeemed and Money Centers is no longer a
subsidiary of iGames.
CONDITIONS TO THE MERGER (SEE PAGE 20)
The completion of the Merger depends upon a number of conditions being
satisfied, including the following:
o approval of the Merger by our stockholders (which has been
obtained); and
o no law or proceeding restraining, enjoining or otherwise
preventing consummation of the Merger.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER (SEE PAGE 18)
iGames stockholders should be aware that members of the management and
the Board of Directors have particular interests in the Merger that may be
different from, or in addition to, the interests of iGames stockholders
generally. In particular, Christopher M. Wolfington, Chairman and Chief
Executive Officer of iGames, holds 1,243,509 shares of Series A Preferred Stock
and Money Centers Merger Warrants to purchase 2,500,000 shares of our common
stock.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO IGAMES
STOCKHOLDERS (SEE PAGE 18)
The Merger is intended to qualify for federal income tax purposes as a
"reorganization" within the meaning of Section 368(a)(1)(F) of the Code. In
general, provided that the Merger does so qualify, no gain or loss will be
recognized for federal income tax purposes by iGames stockholders with respect
thereto on the conversion of their stock into shares of Money Centers Common
Stock and no gain or loss will be recognized for federal income tax purposes by
iGames or Money Centers.
RIGHTS OF DISSENTING STOCKHOLDERS (SEE PAGE 21)
A copy of Sections 92A.300 through 92A.500 of the Nevada Revised
Statutes, which grant dissenters' rights to iGames stockholders, is attached to
this document as Annex "A." Please read these provisions of Nevada law in their
entirety.
Under Nevada law, iGames stockholders who follow the appropriate
procedures will be entitled to receive payment of the fair value of their shares
of our common stock.
RECORD DATE AND VOTE REQUIRED
Only holders of record of Common Stock and Series A Preferred Stock as
of the close of business on August 31, 2004, the Record Date, will be entitled
to receive this Information Statement. As of the close of business on the Record
Date, there were [5,524,394] shares of Common Stock and 1,351,640 shares of
Series A Preferred Stock issued and outstanding. Each share of Common Stock is
entitled to cast one vote and each share of Series A Preferred Stock is entitled
to cast 10 votes.
THE MERGER
GENERAL.
On August 9, 2004, our Board of Directors approved, subject to
stockholder approval, the Merger, pursuant to which iGames will merge with and
into its wholly-owned subsidiary, Money Centers. The Merger was approved on
August 10, 2004 by written consent of two stockholders who collectively hold
65.91% of the aggregate voting power of our Common Stock and Series A Preferred
Stock. The effect of the Merger will be to:
o change our state of incorporation from Nevada to Delaware;
o change our name from iGames Entertainment, Inc. to Money
Centers of America, Inc.;
o increase our authorized Common Stock from 12,500,000 shares to
150,000,000 shares;
o increase our authorized Preferred Stock from 5,000,000 shares
to 20,000,000 shares;
o add a provision to our Articles of Incorporation that would
require any stockholder owning 5% or more of our issued and
outstanding capital stock to agree in writing to comply with
certain rules and regulations of any gaming authority which
has jurisdiction over us or our subsidiaries and permit us to
redeem such stockholder's shares if such stockholder's
ownership of our capital stock may result in the disapproval,
modification, or non-renewal of any of our gaming operations
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contracts or the loss or non-reinstatement of any license or
franchise from any governmental agency held by us or any of
our subsidiaries; and
o eliminate the right of the holders of our Series A Preferred
Stock to effect a redemption of the Series A Preferred Stock
and Money Centers Merger Warrants, all issued in connection
with our January 2004 acquisition of Money Centers, and effect
the conversion of the outstanding Series A Preferred Stock,
and exercise of the Money Centers Merger Warrants, into shares
of common stock of the surviving entity, in exchange for an
increase in the percentage of the common stock of the
surviving entity (calculated on a fully-diluted basis) held by
the former holders of the Series A Preferred Stock and Money
Centers Merger Warrants from 63.16% to 66.35%.
BACKGROUND OF THE MERGER
On January 2, 2004, iGames acquired Money Centers by merging Money
Centers into a newly-formed subsidiary. In the merger, the former stockholders
of Money Centers received 1,351,640 shares of iGames Series A Preferred Stock
and Money Centers Merger Warrants to purchase 3,800,000 shares of our common
stock. This acquisition was completed in anticipation of the acquisition by
iGames of Chex Services, Inc. from Equitex, Inc. pursuant to the terms of a
Stock Purchase Agreement dated November 3, 2003 between iGames and Equitex, Inc.
Accordingly, the Certificate of Designation for the Series A Preferred Stock,
and the Money Centers Merger Warrants, provide in part that the holders of a
majority of the Series A Preferred Stock would have the right to effectively
"unwind" the Money Centers acquisition, through a redemption of the Series A
Preferred Stock and Money Centers Merger Warrants in exchange for the capital
stock of Money Centers, within 60 days after the Chex Services Stock Purchase
Agreement was terminated under certain circumstances.
On March 12, 2004, iGames terminated the Chex Services Stock Purchase
Agreement under circumstances that qualified to grant the foregoing redemption
rights. On May 11, 2004, Christopher M. Wolfington, the holder of a majority of
the Series A Preferred Stock, notified iGames in writing that he intended to
exercise the redemption right, but was willing to discuss potential terms on
which he would not exercise the redemption right. In order to pursue these
discussions, the Board of Directors extended the deadline for exercise of the
redemption right until September 30, 2004, and appointed a committee consisting
of Wayne DiMarco and Barry Bekkedam (the "Series A Committee") to enter into
discussions with Mr. Wolfington. Following those discussions, Mr. Wolfington and
the Series A Committee reached an agreement that, through the vehicle of a
merger of iGames into Money Centers, the Series A Preferred Stock and Money
Centers Merger Warrants would be converted into shares of Money Centers Common
Stock at an exchange ratio that was slightly higher (1.15 compared to 1.0) than
the exchange ratio for iGames' common stock in exchange for the agreement not to
require redemption of the Series A Preferred Stock and Money Centers Merger
Warrants.
In conjunction with the discussions with Mr. Wolfington, the Board of
Directors reviewed iGames' capital structure and concluded that reincorporation
in Delaware was advisable.
On August 9, 2004, the Board of Directors authorized amendments to
iGames' Articles of Incorporation that would have changed its name to "Money
Centers of America, Inc." and increased its authorized common stock and
preferred stock to the levels reflected in Money Centers' Certificate of
Incorporation.
As a result of the discussions and reflecting the other determinations
of the Board of Directors, the committee negotiated the terms and conditions of
the Merger reflected in the Merger Agreement.
REASONS FOR CHANGING OUR STATE OF INCORPORATION
The Board of Directors has determined that reincorporation in Delaware
is in the best interests of our company and our stockholders because:
o the State of Delaware has long been the leader in adopting,
construing and implementing comprehensive, flexible
corporation laws that are conducive to the operational needs
and independence of corporations domiciled in that State;
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o The corporation law of Delaware is widely regarded as the most
extensive and well-defined body of corporate law in the United
States;
o Both the legislature and the courts in Delaware have
demonstrated an ability and a willingness to act quickly and
effectively to meet changing business needs; and
o The Delaware judiciary has acquired considerable expertise in
dealing with complex corporate issues. Moreover, the Delaware
courts have repeatedly shown their willingness to accelerate
the resolution of complex corporate issues to meet the needs
of parties engaged in corporate litigation.
We anticipate that the DGCL will continue to be interpreted and
construed in significant court decisions, thus lending greater predictability
and guidance in managing and structuring the internal affairs of our company and
our relationships and contacts with others. In addition, see " Comparison of
Certain Rights of iGames Stockholders Under Nevada and Delaware Law" below.
REASONS FOR INCREASING THE MERGER EXCHANGE RATIO FOR THE SERIES A PREFERRED
STOCK
As a result of the termination of the Chex Services, Inc. acquisition,
the holders of the Series A Preferred Stock have the right to cause the Series A
Preferred Stock and Money Centers Merger Warrants to be redeemed in exchange for
the capital stock of Money Centers. If that redemption were to occur, iGames
would be left with Available Money as its only operating entity. However, as
Available Money's operations are conducted by Money Centers' personnel, and
those personnel would no longer be available to iGames for that purpose, the
Series A Committee of the Board had serious concerns regarding iGames' ability
to continue the Available Money business operation following a redemption and
felt that iGames would be unable to find a buyer for the Available Money
operation at other than a "distress level" price. Therefore, the Series A
Committee determined that the agreement to exchange the Series A Preferred Stock
and Money Centers Merger Warrants on a slightly favorable basis, resulting in an
increase in the aggregate fully-diluted ownership of the surviving entity by the
former holders of Series A Preferred Stock and Money Centers Merger Warrants,
from 63.16% to 66.35%, was in the best interests of the holders of iGames'
Common Stock.
REASONS FOR CHANGING OUR NAME
Since our inception in 2001, we have engaged in the business of
developing, manufacturing and marketing technology-based products such as slot
machine security devices and table games for the gaming industry. Beginning with
the acquisitions of Money Centers of America, Inc., a Delaware corporation
("Money Centers"), and Available Money, Inc., a Nevada corporation ("Available
Money"), in January 2004, we implemented a new business plan to become a single
source provider of cash access products and services to casinos and other gaming
facilities. The Board of Directors has determined that the name of our
corporation no longer reflects the primary business in which we are presently
engaged and that the name Money Centers of America, Inc. will more clearly
identify our corporation as a market leader in the gaming industry and improve
our marketing and acquisition efforts.
Upon completion of the Merger, we will attempt to have the trading
symbol for the Common Stock changed from "IGME" to a symbol more readily
associated with our new name. The currently outstanding stock certificates
evidencing shares of Common Stock bearing the name "iGames Entertainment, Inc."
will continue to be valid and represent shares of Common Stock following the
name change. In the future, new certificates will be issued bearing our new
name, but this will in no way affect the validity of your current stock
certificates.
REASONS FOR INCREASING OUR AUTHORIZED STOCK
The Board of Directors believes that it is advisable and in our best
interests to have available additional authorized but unissued shares of Common
and Preferred Stock to provide for future needs. Currently, we have authorized
(i) 12,500,000 shares of Common Stock with 5,524,394 shares of Common Stock
issued and outstanding, 5,388,386 shares of Common Stock reserved for issuance
upon the exercise of outstanding warrants and 10,000,000 shares of Common Stock
reserved for issuance upon the exercise of outstanding options and options to be
granted pursuant to the Plan, and (ii) 5,000,000 shares of Preferred Stock, with
1,351,640 shares of Series A Preferred Stock issued and outstanding. The
additional but unissued shares of Common and Preferred Stock will be available
for
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issuance from time to time in the discretion of the Board of Directors, normally
without further stockholder action (except as may be required for a particular
transaction by applicable law, requirements of regulatory agencies or by stock
exchange rules of any stock exchange on which the Common and Preferred Stock may
be listed in the future), for any proper corporate purpose including, among
other things, future acquisitions of property or securities of other
corporations, stock dividends, stock splits, stock options, convertible debt and
equity financing. Our Board of Directors believes that the additional but
unissued Common and Preferred Stock may be necessary for future acquisitions and
to attract potential new equity capital necessary to carry out our business
objectives. Specifically, our current business objectives include an acquisition
strategy to diversify the types of services we offer within the gaming industry.
The first step in this diversification process was our acquisitions of Money
Centers and Available Money.
On January 2, 2004, we acquired all of the issued and outstanding
capital stock of Money Centers by virtue of a reverse triangular merger between
our wholly-owned subsidiary, Money Centers Acquisition, Inc., a Delaware
corporation, and Money Centers (the "Merger"). As a result of the Merger, Money
Centers is our wholly-owned subsidiary. In connection with the Merger, the
former stockholders of Money Centers received 1,351,640 shares of our Series A
Preferred Stock and warrants to purchase 3,800,000 shares of our Common Stock.
Money Centers is a single source provider of cash access services to
the gaming industry. Money Centers has combined state-of-the-art technology with
personalized customer services to deliver the best in ATM, Credit Card Advance,
POS Debit, Check Cashing Services, CreditPlus outsourced marker services, and
merchant card processing. As the top suppliers to the gaming industry have
consolidated service offerings, our acquisition of Money Centers will meet the
growing trend towards single source providers of products and services to
casinos and other gaming facilities worldwide. This trend supports our business
plan to identify fragmented segments of the market to capitalize on merger and
acquisition targets of synergistic companies that support our business model.
The combined companies will gain wider exposure within the casino and gaming
industry.
On January 6, 2004, we acquired all of the issued and outstanding
capital stock of Available Money from its prior stockholders. As part of this
transaction, we issued 1,470,590 shares of Common Stock to the former owners of
Available Money as payment of $2,000,000 of the purchase price in this
transaction. Available Money provides ATM services at 18 casino locations.
We anticipate that Money Centers will use the additional shares of
Money Centers Common Stock in connection with future acquisitions. It is our
intention to continue to acquire companies that offer check cashing and other
cash access services in the gaming sector to increase our market share in the
industry. We presently have no specific plans to issue additional shares of
Preferred Stock at this time.
REASONS FOR ADDING A CHARTER PROVISION RELATING TO GAMING LICENSING MATTERS
The Certificate of Incorporation of Money Centers includes a provision
regarding stockholders who own five percent (5%) or more of its issued and
outstanding capital stock and are found by governmental authorities to be not
licensable, suitable or qualified to be stockholders of Money Centers, or who
are required to apply for licensing or to be found suitable or qualified, but
fail to do so.
The jurisdictions in which Money Centers and its subsidiaries conduct
business have strict laws regarding ownership of stock of companies, such as
Money Centers, which hold or control holders of gaming licenses. Although the
proposed Article XII would apply to determinations by any governmental
authorities, it is intended particularly to help us comply with requirements of
the National Indian Gaming Commission and the gaming authorities of the
jurisdictions in which we do business.
This provision could discourage someone who might want to solicit
tenders of, or otherwise acquire, a substantial portion of our stock from doing
so and, therefore, might deprive stockholders of an opportunity to sell their
stock at a premium above the market price of the stock. However, the Board of
Directors believes the potential harm to us and our stockholders from having a
significant amount of our stock held by a person who is found not licensable,
suitable or qualified to be a stockholder, or who refuses to file a required
application to be licensed or found suitable or qualified, is substantially more
significant than the possibility that the provision would deter someone from
seeking to acquire a large portion of our stock.
8
BOARD APPROVAL
After careful consideration, the Board of Directors has unanimously
determined that the terms of the Merger Agreement and the Merger on
substantially the terms and conditions set forth in the Merger Agreement are
advisable and are fair to, and in the best interests of, iGames and its common
stockholders and has approved the Merger Agreement and the Merger on
substantially the terms and conditions set forth in the Merger Agreement.
COMPARISON OF CERTAIN RIGHTS OF IGAMES STOCKHOLDERS UNDER NEVADA AND DELAWARE
LAW
iGames is a Nevada corporation and the rights of its stockholders are
governed by the Nevada Revised Statutes (the "NRS") and the Articles of
Incorporation and By-Laws of iGames (the "iGames Articles" and "iGames By-Laws,"
respectively). Upon completion of the Merger, the stockholders of iGames will
become stockholders of Money Centers and their rights will be governed by the
Money Centers Certificate of Incorporation and By-Laws (the "Money Centers
Certificate" and "Money Centers By-Laws," respectively), which differ in certain
material respects from the iGames Articles and iGames By-Laws. As stockholders
of Money Centers, the rights of our stockholders will also be governed by the
Delaware General Corporation Law (the "DGCL") instead of the NRS.
The following comparison of the DGCL and the Money Centers Certificate
and Money Centers By-Laws, and the NRS and the iGames Articles and iGames
By-Laws, summarizes the material differences, but is not intended to list all
differences.
Business Combinations
Generally, under the DGCL and the NRS, the approval by the affirmative
vote of the holders of a majority of the outstanding stock (or, if the
certificate or articles of incorporation, as the case may be, provides for more
or less than one vote per share, a majority of the votes of the outstanding
stock) of a corporation entitled to vote on the matter is required for a merger
or consolidation or sale, lease or exchange of all or substantially all the
corporation's assets to be consummated. Neither the Money Centers Certificate
nor the iGames Articles provides for any different required vote.
State Takeover Legislation
Delaware. DGCL Section 203 (the "Delaware Business Combination Law"),
in general, prohibits a business combination between a corporation and an
interested stockholder within three years of the time such stockholder became an
interested stockholder, unless:
o prior to such time the board of directors of the corporation
approved either the business combination or the transaction
that resulted in the stockholder becoming an interested
stockholder;
o upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
exclusive of shares owned by directors who are also officers
and by certain employee stock plans; or
o at or subsequent to such time, the business combination is
approved by the board of directors and authorized by the
affirmative vote at a stockholders' meeting of at least 66
2/3% of the outstanding voting stock that is not owned by the
interested stockholder.
The term "business combination" is defined to include, among other
transactions between an interested stockholder and a corporation or any direct
or indirect majority owned subsidiary thereof, a merger or consolidation; a
sale, pledge, transfer or other disposition (including as part of a dissolution)
of assets having an aggregate market value equal to 10% or more of either the
aggregate market value of all assets of the corporation on a consolidated basis
or the aggregate market value of all the outstanding stock of the corporation;
certain transactions that would increase the interested stockholder's
proportionate share ownership of the stock of any class or series of the
corporation or such subsidiary; and any receipt by the interested stockholder of
the benefit of any loans, advances, guarantees, pledges or other financial
benefits provided by or through the corporation or any such subsidiary. In
9
general, and subject to certain exceptions, an "interested stockholder" is any
person who is the owner of 15% or more of the outstanding voting stock (or, in
the case of a corporation with classes of voting stock with disparate voting
power, 15% or more of the voting power of the outstanding voting stock) of the
corporation, and the affiliates and associates of such person. The term "owner"
is broadly defined to include any person that individually or with or through
such person's affiliates or associates, among other things, beneficially owns
such stock, or has the right to acquire such stock (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement or understanding or upon the exercise of warrants or options or
otherwise or has the right to vote such stock pursuant to any agreement or
understanding, or has an agreement or understanding with the beneficial owner of
such stock for the purpose of acquiring, holding, voting or disposing of such
stock.
The restrictions of the Delaware Business Combination Law do not apply
to corporations that have elected, in the manner provided therein, not to be
subject to the Delaware Business Combination Law or, with certain exceptions,
which do not have a class of voting stock that is listed on a national
securities exchange or authorized for quotation on the Nasdaq Stock Market or
held of record by more than 2,000 stockholders. The Money Centers Certificate
and the Money Centers By-Laws do not opt out of the Delaware Business
Combination Law.
Nevada. Nevada law prevents an "interested stockholder" and a Nevada
corporation from entering into a "combination", unless certain conditions are
met. A "combination" means any merger or consolidation with an "interested
stockholder," or any sale, lease, exchange, mortgage, pledge, transfer or other
disposition, in one transaction or a series of transactions with an "interested
stockholder" having: (i) an aggregate market value equal to 5% or more of the
aggregate market value of the assets of a corporation; (ii) an aggregate market
value equal to 5% or more of the aggregate market value of all outstanding
shares of a corporation; or (iii) representing 10% or more of the earning power
or net income of the corporation. An "interested stockholder" means a person or
entity holding the beneficial ownership of 10% or more of the outstanding voting
shares of a corporation, or an affiliate or associate thereof. A corporation may
not engage in a combination within three years after the interested stockholder
acquires his shares unless the combination or purchase is approved by the board
of directors before the interested stockholder acquired such shares. If approval
is not obtained, after the expiration of the three-year period, the business
combination may be consummated with the approval of the board of directors or a
majority of the voting power held by disinterested stockholders, or if the
consideration to be paid by the interested stockholder is at least equal to the
greater of (i) the highest price per share paid by the interested stockholder
within the three years immediately preceding the date of the announcement of the
combination or in the transaction in which he became an interested stockholder,
whichever is higher, (ii) the market value per common share on the date of
announcement of the combination or the date the interested stockholder acquired
the shares, whichever is higher, or (iii) if higher for the holders of preferred
stock, the highest liquidation value of the preferred stock. Nevada law does not
require a tender offer or to file a registration statement or information
statement with the state of Nevada.
The restrictions of Nevada law relating to combinations with interested
stockholders do not apply to corporations that have elected, in the manner
provided therein, not to be subject to the relevant sections of Nevada law or,
with certain exceptions, which do not have a class of voting stock registered
with the Securities and Exchange Commission under Section 12 of the Securities
Exchange Act. The iGames Articles and iGames By-Laws do not opt out of the
Nevada laws relating to combinations with interested stockholders.
Appraisal Rights
Delaware. Under the DGCL, except as otherwise provided by the DGCL,
stockholders of a constituent corporation in a merger or consolidation have the
right to demand and receive payment of the fair value of their stock in a merger
or consolidation. However, except as otherwise provided by the DGCL,
stockholders do not have appraisal rights in a merger or consolidation if, among
other things, their shares are:
o listed on a national securities exchange or designated as a
national market system security on an inter-dealer quotation
system by the National Association of Securities Dealers, Inc.
(the "NASD"); or
o held of record by more than 2,000 stockholders;
and, in each case, the consideration such stockholders receive for their shares
in a merger or consolidation consists solely of:
10
o shares of stock of the corporation surviving or resulting from
such merger or consolidation;
o shares of stock of any other corporation that at the effective
date of the merger or consolidation will be either listed on a
national securities exchange, or designated as a national
market system security on an interdealer quotation system by
the NASD, which is expected to be true in the case of both
Class A Common Stock and Class B Common Stock to be issued
pursuant to the Merger, or held of record by more than 2,000
stockholders;
o cash in lieu of fractional shares of the corporations
described in the two immediately preceding bullet points; or
o any combination of shares of stock and cash in lieu of
fractional shares described in the three immediately preceding
bullet points.
Nevada. A stockholder of a Nevada corporation, with certain exceptions,
has the right to dissent from, and to obtain payment of the fair value of his
shares in the event of:
o consummation of a plan of merger to which the corporation is a
party and to which such stockholder would have had a right to
vote;
o consummation of a plan of exchange to which the corporation is
a party as the corporation whose shares will be acquired, if
the stockholder is entitled to vote on the plan; and
o any corporate action taken pursuant to a vote of the
stockholders to the extent that the articles of incorporation,
bylaws or a resolution of the board of directors provides that
voting or non-voting stockholders are entitled to dissent and
obtain payment for their shares.
The NRS provide that unless a corporation's articles of incorporation
provide otherwise, which the iGames Articles do not, a stockholder does not have
dissenters' rights with respect to a plan of merger or share exchange if the
shares held by the stockholder are either listed on a national securities
exchange, designated as a national market system security on an interdealer
quotation system by the NASD, or held of record by 2,000 or more stockholders. A
stockholder of record of a Nevada corporation may assert dissenter's rights as
to less than all of the shares registered in his name only if he dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf he
asserts dissenter's rights. In such event, the stockholder's rights shall be
determined as if the shares as to which he dissents and his other shares were
registered in the names of different stockholders. See "The Merger--Appraisal
Rights."
Amendments To Charters
Under the DGCL, unless the certificate of incorporation requires a
greater vote, a proposed amendment to the certificate of incorporation requires
an affirmative vote of a majority of the voting power of the outstanding stock
entitled to vote thereon and a majority of the voting power of the outstanding
stock of each class entitled to vote thereon. The Money Centers Certificate does
not require a greater vote. The approval of the holders of a majority of the
outstanding shares of any class of capital stock of a corporation, voting
separately as a class, is required under the DGCL to approve a proposed
amendment to a corporation's certificate of incorporation, whether or not
entitled to vote on such amendment by the certificate of incorporation, if the
amendment would increase or decrease the aggregate number of authorized shares
of such class (except as provided in the last sentence of this paragraph),
increase or decrease the par value of the shares of such class, or alter or
change the powers, preferences or special rights of the shares of such class so
as to affect them adversely. For this purpose, if a proposed amendment would
alter or change the powers, preferences or special rights of one or more series
of any class so as to affect them adversely, but would not so affect the entire
class, then only the shares of the series so affected by the amendment would be
entitled to vote as a separate class on the amendment. Accordingly, a proposed
amendment the adverse effect of which on the powers, preferences or special
rights of any series of common stock does not differ from its adverse effect on
the powers, preferences or special rights of any other series of common stock
would not entitle such series to vote as a class separately from the other
series of common stock. The authorized number of shares of any class of stock
may be increased or decreased (but not below the number of shares of such class
11
outstanding) by the requisite vote described above if so provided in the
original certificate of incorporation or in any amendment thereto that created
such class of stock or that was adopted prior to the issuance of any shares of
such class, or in an amendment authorized by a majority vote of the holders of
shares of such class.
An amendment to a Nevada corporation's articles of incorporation must
be approved by the corporation's stockholders. Under the NRS, unless a Nevada
corporation's articles of incorporation or its board of directors require a
greater vote, an amendment to a Nevada corporation's articles of incorporation
must generally be approved by a majority of the votes entitled to be cast on the
amendment. If such amendments would increase or decrease the number of
authorized shares of any class or series or the par value of such shares or
would adversely affect the shares of such class or series, a majority of the
outstanding stock of such class or series would also have to approve the
amendment. The iGames Articles do not include any provision requiring greater
than a majority of votes to amend them.
Amendments To By-Laws
Under the DGCL, the power to adopt, alter and repeal by-laws is vested
in the stockholders, except to the extent that a corporation's certificate of
incorporation vests concurrent power in the board of directors or the by-laws
state otherwise. The Money Centers Certificate provides that the board of
directors has the power to make and to alter or amend the Money Centers By-Laws.
The Money Centers By-Laws may be amended by the stockholders of Money Centers at
any meeting, or by the Money Centers board of directors at any meeting by a
majority vote of the full Money Centers board of directors or by a consent in
writing signed by the entire Money Centers board of directors.
Under the NRS, except as otherwise provided in the certificate of
incorporation, by-laws may be amended, repealed or adopted by the Board of
Directors. The iGames Articles do not provide otherwise.
No Preemptive Rights
Under the DGCL, a stockholder does not possess preemptive rights unless
such rights are specifically granted in the certificate of incorporation. The
Money Centers Certificate does not provide for preemptive rights.
Under the NRS, unless otherwise provided in the articles of
incorporation, stockholders do not have preemptive rights. The iGames Articles
specifically state that stockholders have no preemptive rights.
Duration of Proxies
Under the DGCL, no proxy is valid more than three years after its date
unless otherwise provided in the proxy. A proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally.
Under the NRS, no proxy will be valid for more than six months after
its creation unless the stockholder specifies in the proxy the length of time
that it will be valid, which may not exceed seven years from the date of its
creation.
Stockholder Action
Under both the DGCL and the NRS, unless otherwise provided in the
certificate of incorporation, any action required or permitted to be taken at a
meeting of stockholders may be taken without a meeting, without prior notice and
without a vote, if a written consent or consents setting forth the action taken
is signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote upon such action were present and
voted. Neither the Money Centers Certificate nor the iGames Articles provide
otherwise.
Under both the NRS and DGCL, directors are generally elected by a
plurality of the votes cast by the stockholders entitled to vote at a
stockholders' meeting at which a quorum is present. With respect to matters
other than the election of directors, unless a greater number of affirmative
votes is required by the statute or the
12
corporation's articles or certificate of incorporation, if a quorum exists,
action on any matter is generally approved by the stockholders if the votes cast
by the holders of the shares represented at the meeting and entitled to vote on
the matter favoring the action exceed the votes cast opposing the action. In the
case of a merger of a Nevada corporation, the affirmative vote of the holders of
a majority of the issued and outstanding shares entitled to vote is required
under the NRS.
Neither the iGames Articles nor the iGames By-Laws include a provision
requiring a greater vote on any matter than required by the NRS. The iGames
Articles and iGames By-Laws both provide that any action required or permitted
to be taken by the Board of Directors or the stockholders at a meeting may be
taken without a meeting if a consent in writing setting forth the action so
taken shall be signed by all directors or stockholders, as the case may be.
Under both the DGCL and the NRS, unless otherwise provided in a
corporation's articles or certificate of incorporation or bylaws, a majority of
shares entitled to vote on a matter constitutes a quorum at a meeting of
stockholders. The NRS provides that the articles of incorporation or bylaws may
provide for a greater or lesser quorum requirement. The iGames Articles and
iGames By-Laws do not provide for a greater or lesser quorum requirement.
Nomination Procedures and Stockholder Proposals
Neither the DGCL nor the NRS provides procedures for the nomination for
election of directors by stockholders or the submission of other stockholder
proposals at an annual or special meeting of stockholders.
The Money Centers By-Laws and iGames By-Laws require that nominations
(other than by the board of directors or a nominating committee) for the
election of directors at a meeting of stockholders must be made by written
notice, delivered or mailed by first class mail, to the corporation not less
than 120 days prior to the anniversary of the date on which the proxy statement
for the immediately preceding annual meeting was mailed to stockholders or if
the corporation did not hold an annual meeting in the prior year or if the date
of the annual meeting occurs more than 30 days before or after the anniversary
of such immediately preceding annual meeting, then not later than the close of
business on the later of the 60th day prior to such annual meeting or the 10th
day following the date on which public notice of the date of such annual meeting
is first made.
Special Stockholder Meetings
The DGCL provides that a special meeting of stockholders may be called
by the board of directors or by such person or persons as may be authorized by
the certificate of incorporation or by the by-laws. The Money Centers By-Laws
provide that a special meeting of stockholders may only be called by a majority
of the entire Board of Directors, the Chairman of the Board or the Chief
Executive Officer. The DGCL and the Money Centers By-Laws require that a notice
of stockholders meeting be delivered to stockholders not less than ten days nor
more than 60 days before the meeting. The notice must state the place, day, hour
and purpose of the meeting.
Nevada law provides that, unless the articles of incorporation or
bylaws provide otherwise, the entire board of directors, any two directors or
the president may call annual or special meetings of the stockholders or
directors. iGames' By-Laws provide that a special meeting of stockholders may
only be called by a majority of the entire Board of Directors, the Chairman of
the Board or the Chief Executive Officer. Nevada law and the iGames By-Laws
require that a notice of stockholders meeting be delivered to stockholders not
less than ten days nor more than 60 days before the meeting. The notice must
state the place, day, hour and purpose of the meeting.
Stockholder Inspection of Books and Records
Under the DGCL, any stockholder may, upon five days written demand,
inspect, in person or by agent or attorney, the stockholder ledger or other
record of stockholders during usual business hours. The written demand must be
under oath and state the purpose of such an inspection. The stockholder may,
unless denied for cause as stated below, copy such records. The DGCL also allows
stockholders, by the same written demand, to inspect the corporation's other
books and records.
13
Pursuant to Section 78.105 of the NRS, a stockholder of record for at
least six months immediately preceding his demand, or any person holding at
least 5% of all outstanding shares, or authorized in writing by at least 5% of
all outstanding shares, is entitled to inspect a list of the names of the
corporation's stockholders during usual business hours, if the stockholder gives
at least five business days' prior written notice to the corporation. The
stockholders may, unless denied for cause as stated below, also copy such
records. Section 78.257 of the NRS also permits stockholders of record (combined
or individually) of 15% or more of the outstanding stock, upon 5 days written
demand, the right to inspect during normal business hours, the books and
financial records of the corporation, to make extracts therefrom and to conduct
an audit of such records. This right may not be limited by a corporation's
bylaws or articles of incorporation. The NRS also provides that a corporation
may deny any demand for inspection if the stockholder refuses to furnish the
corporation with an affidavit that such inspection is not desired for a purpose
which is in the interest of a business or object other than the business of the
corporation and that such stockholder has not previously sold or offered for
sale any list of stockholders of the corporation or any other corporation. The
NRS also provides that the corporation may charge to recover costs of copying of
providing any such records.
Cumulative Voting
Under both the DGCL and the NRS, the certificate of incorporation may
provide that at all elections of directors, or at elections held under specified
circumstances, each stockholder is entitled to cumulate such stockholder's
votes. Neither the Money Centers Certificate nor the iGames Articles provides
for cumulative voting for the election of directors.
Size of the Board of Directors and No Classification of the Money Centers Board
The DGCL permits the certificate of incorporation or the by-laws of a
corporation to contain provisions governing the number and terms of directors.
However, if the certificate of incorporation contains provisions fixing the
number of directors, such number may not be changed without amending the
certificate of incorporation. The DGCL permits the certificate of incorporation
of a corporation or a by-law adopted by the stockholders to provide that
directors be divided into one, two or three classes, with the term of office of
one class of directors to expire each year. The DGCL also permits the
certificate of incorporation to confer upon holders of any class or series of
stock the right to elect one or more directors to serve for such terms and have
such voting powers as are stated in the certificate of incorporation. The terms
of office and voting powers of directors so elected may be greater or less than
those of any other director or class of directors. The Money Centers By-Laws
provide for a Money Centers board of directors of not less than 3 nor more than
20 members, to be elected for a one-year term. The exact number of directors may
be fixed from time to time, by the Money Centers board of directors by
resolution up until the maximum of a 20-member board.
The NRS permits the articles of incorporation or the by-laws of a
corporation to contain provisions governing the number and terms of directors.
The iGames By-Laws provide for an iGames board of directors of not less than 3
nor more than 20 members, to be elected for a one-year term. The exact number of
directors may be fixed from time to time by the iGames board of directors by
resolution up until the maximum of a 20-member board. The NRS provides that a
corporation's board of directors may be divided into various classes with
staggered terms of office. The iGames Articles and iGames By-laws do not provide
for a classified board.
Removal of Directors and Filling Vacancies
The DGCL provides that all vacancies on the board of directors,
including vacancies caused by an increase in the number of authorized directors,
may be filled by the board of directors, unless otherwise provided in the
certificate of incorporation or by-laws. Neither the Money Centers Certificate
nor the Money Centers By-Laws alter this provision.
The NRS provides that vacancies on the board of directors, including
vacancies caused by an increase in the number of authorized directors, may be
filled by a majority of the remaining directors, even if they are less than a
quorum, unless otherwise provided in the articles of incorporation. The iGames
Articles do not alter this provision.
The DGCL provides that a director or directors may be removed with or
without cause by the holders of a majority in voting power of the shares then
entitled to vote at an election of directors, except that (a) members of a
14
classified board of directors may be removed only for cause, unless the
certificate of incorporation provides otherwise, and (b) in the case of a
corporation having cumulative voting, if less than the entire board of directors
is to be removed, no director may be removed without cause if the votes cast
against such director's removal would be sufficient to elect such director if
then cumulatively voted at an election of the entire board of directors or of
the class of directors of which such director is a part. The Money Centers
By-Laws provide that directors may be removed only for cause (as defined) by
that vote of the stockholders of Money Centers required under the DGCL.
The NRS provides that any director may be removed from office by the
vote of stockholders holding not less than two-thirds of the issued and
outstanding stock entitled to vote. Stockholders may remove one or more
directors with or without cause unless the articles of incorporation provide
that directors may be removed only for cause. The iGames Articles do not include
such a provision.
Vacancies
Under the DGCL, unless otherwise provided in the certificate of
incorporation or the by-laws, vacancies on a board of directors and newly
created directorships resulting from an increase in the authorized number of
directors may be filled by a majority of the directors then in office, although
less than a quorum, or by the sole remaining director, provided that, in the
case of a classified board of directors, such vacancies and newly created
directorships may be filled by a majority of the directors elected by such class
or by the sole remaining director so elected. In the case of a classified board
of directors, directors elected to fill vacancies or newly created directorships
shall hold office until the next election of the class for which such directors
have been chosen, and until their successors have been duly elected and
qualified. In addition, if, at the time of the filling of any such vacancy or
newly created directorship, the directors in office constitute less than a
majority of the whole board of directors (as constituted immediately prior to
any such increase), the Delaware Court of Chancery may, upon application of any
stockholder or stockholders holding at least 10% of the total number of
outstanding shares entitled to vote for such directors, summarily order an
election to fill any such vacancy or newly created directorship, or replace the
directors chosen by the directors then in office.
The Money Centers By-Laws provide that any vacancies on the Money
Centers Board caused by death, resignation, removal or otherwise and newly
created directorships resulting from an increase in the number of directors,
shall be filled by the affirmative vote of a majority of the remaining directors
then in office, even though less than a quorum, or by the sole remaining
director. The Money Centers By-Laws also provide that any directors chosen to
fill a vacancy on the Money Centers Board or newly created directorship will
serve for the remainder of the full term of the class for which such director
was chosen and until his successor shall be duly elected and shall have
qualified.
The NRS provides that a vacancy on the board of directors may generally
be filled by the affirmative vote of a majority of the remaining directors,
though constituting less than a quorum of the board of directors, unless the
articles of incorporation provide otherwise. The iGames Articles do not alter
this provision.
Indemnification of Directors and Officers
Delaware law generally permits a corporation to indemnify its directors
and officers against expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with a third-party action, other
than a derivative action, and against expenses actually and reasonably incurred
in the defense or settlement of a derivative action, provided that there is a
determination that the individual acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation. Such
determination shall be made, in the case of an individual who is a director or
officer at the time of such determination:
o by a majority of the disinterested directors, even though less
than a quorum;
o by a committee of such directors designated by a majority vote
of such directors, even though less than a quorum;
o by independent legal counsel, regardless of whether a quorum
of disinterested directors exists; or
15
o by a majority vote of the stockholders, at a meeting at which
a quorum is present.
Without court approval, however, no indemnification may be made in
respect of any derivative action in which such individual is adjudged liable to
the corporation.
Delaware law requires indemnification of directors and officers for
expenses relating to a successful defense on the merits or otherwise of a
derivative or third-party action.
Delaware law permits a corporation to advance expenses relating to the
defense of any proceeding to directors and officers contingent upon such
individuals' commitment to repay any advances unless it is determined ultimately
that such individuals are entitled to be indemnified.
Under Delaware law, the rights to indemnification and advancement of
expenses provided in the law are non-exclusive, in that, subject to public
policy issues, indemnification and advancement of expenses beyond that provided
by statute may be provided by by-law, agreement, vote of stockholders,
disinterested directors or otherwise.
The Money Centers Certificate provides that Money Centers officers and
directors shall be indemnified to the fullest extent permitted by applicable
law, and that Money Centers shall pay the expenses incurred in defending any
proceeding in advance of its final disposition; provided, however, that the
Money Centers By-Laws provide payment of expenses incurred by a director or
officer in advance of the final disposition of the proceeding shall be made only
upon the receipt of an undertaking by the director or officer to repay all
amounts advanced if it should be ultimately determined that the director or
officer is not entitled to be indemnified.
Under the NRS, a corporation may generally indemnify its officers,
directors, employees and agents against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement of any proceedings (other than
derivative actions), investigations, whether civil or administrative or criminal
in nature, if they acted in good faith on behalf of the corporation and in a
manner they 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 their conduct was unlawful. Similar standards are
applicable in derivative actions, except that indemnification may be made only
for (1) reasonable expenses (including attorneys' fees) and certain amounts paid
in settlement, and (2) in the event the person seeking indemnification has been
adjudicated liable, amounts deemed proper, fair and reasonable by the
appropriate court upon application thereto. The NRS provides that to the extent
that such persons have been successful in defense of any proceeding, they must
be indemnified by the corporation against expenses. Generally, the termination
of any action, suit or proceeding by judgment, order, settlement, conviction
upon a plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that such person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best intent of the
corporation, and with respect to a criminal investigation, or action, he had
reasonable cause to believe that his conduct was lawful. If a corporation does
not so indemnify such persons, they may seek, and a court may order,
indemnification under certain circumstances even if the board of directors or
stockholders of the corporation have determined that the persons are not
entitled to indemnification.
In addition, under both acts, expenses incurred by an officer or
director in connection with a proceeding may be paid by the corporation in
advance of the final disposition, upon receipt of an undertaking by such
director or officer to repay such amount if he is ultimately found not to be
entitled to indemnification by the corporation.
The iGames Articles provide that iGames officers and directors shall be
indemnified to the fullest extent permitted by applicable law, and that iGames
shall pay the expenses incurred in defending any proceeding in advance of its
final disposition; provided, however that the payment of expenses incurred by a
director or officer in advance of the final disposition of the proceeding shall
be made only upon the receipt of an undertaking by the director or officer to
repay all amounts advanced if it should be ultimately determined that the
director or officer is not entitled to be indemnified.
Nevada law, Delaware law and the By-Laws of Money Centers and iGames
may permit indemnification for liabilities arising under the Securities Act or
the Securities Exchange Act (the "Exchange Act"). The Board of Directors of all
entities herein has been advised that, in the opinion of the SEC,
indemnification for liabilities arising
16
under the Securities Act or the Exchange Act is contrary to public policy and is
therefore unenforceable absent a decision to the contrary by a court of
appropriate jurisdiction.
Limitation of Personal Liability of Directors
The DGCL provides that a corporation's certificate of incorporation may
include a provision limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. However, no such provision can eliminate or limit the
liability of a director for:
o any breach of the director's duty of loyalty to the
corporation or its stockholders;
o acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of the law;
o violation of certain provisions of the DGCL;
o any transaction from which the director derived an improper
personal benefit; or
o any act or omission prior to the adoption of such a provision
in the certificate of incorporation.
The Money Centers Certificate provides that, to the fullest extent
permitted by the DGCL, a director of Money Centers shall not be liable to Money
Centers or any of its stockholders for monetary damages for breach of fiduciary
duty as a director. The Money Centers Certificate also provides, that, to the
fullest extent permitted by the DGCL, a director and officer and certain
employees acting on their behalf, shall be indemnified against any action
resulting from their duties on behalf of Money Centers.
Section 78.037 of the NRS allows a corporation to provide in its
articles of incorporation (which iGames did) that a director or officer will not
be personally liable for monetary damages to the corporation or its stockholders
for breach of fiduciary duty as a director or officer, except that such
provision must not eliminate or limit the liability of a director or officer for
(i) acts or omissions which involve intentional misconduct, fraud or a knowing
violation of law; or (ii) the payment of distributions in violation of Section
78.300 of the NRS.
Derivative Actions
Under each of the Nevada Rules of Civil Procedure (the "Nevada Rules")
and the DGCL, a person may not bring a derivative action unless the person was a
stockholder of the corporation at the time of the challenged transaction or
unless the person acquired the shares by operation of law from a person who was
a stockholder at such time. The Nevada Rules and Rule 23.1 of the Delaware Court
of Chancery Rules also provide that a complaint in a derivative proceeding must
be verified and must allege with particularity the efforts, if any, made by the
plaintiff to obtain the desired action, and the reasons for his failure to
obtain the action he desires or for not making the effort. The Nevada Rules also
provide that a derivative action may not be maintained if it appears that the
plaintiff does not fairly and adequately represent the interests of
stockholders. The NRS and the Delaware Court of Chancery Rules also provide that
an action shall not be dismissed or compromised without the approval of the
court having jurisdiction of the action.
Distributions and Redemptions
Under the DGCL, unless otherwise restricted in the certificate of
incorporation, a corporation may only pay dividends out of surplus or net
profit. Additionally, under the DGCL, a corporation may not redeem any shares if
such redemption would cause an impairment of its capital. The Money Centers
Certificate does not otherwise restrict the right to pay dividends or redeem
shares.
A Nevada corporation may make distributions to its stockholders as long
as, after giving effect to such distribution (1) the corporation would be able
to pay its debts as they become due in the usual course of business and (2) the
corporation's total assets would not be less than the sum of its total
liabilities plus (unless the articles of incorporation permit otherwise, which
the iGames Articles do not) the amount that would be needed if the corporation
were to be dissolved at the time of the distribution to satisfy the preferential
rights upon dissolution of
17
stockholders whose preferential rights are superior to those receiving the
distribution. Such determinations may be made by the board of directors based on
financial statements, fair market valuation or any other reasonable method.
Under the NRS, a corporation's redemption of its own capital stock is subject to
the same restrictions as apply to a distribution.
Loans to Directors and Officers
Under the DGCL, a corporation may lend money to, or guarantee any
obligation of, an officer, including an officer who is a director, when it is
deemed, in the judgment of the board of directors, to be reasonably expected to
benefit the corporation.
Under Nevada law, a corporation may make a loan or guaranty to
directors or officers if (i) the financial interest is known or disclosed to the
board of directors or committee and noted in the minutes, and the board or
committee authorizes the transaction in good faith by a majority vote sufficient
for the purpose without counting the vote of the interested director; (ii) the
financial interest is known or disclosed to the stockholders, and the
stockholders authorize the transaction by a vote of stockholders holding a
majority of the voting power; or (iii) the transaction is fair to the
corporation at the time it is authorized or approved.
The foregoing summary does not purport to be a complete statement of
the rights of holders of Money Centers Common Stock and our common stock under,
and is qualified in its entirety by reference to Delaware law and Nevada law,
respectively, the Certificate of Incorporation and By-Laws of Money Centers and
the Articles of Incorporation and By-Laws of iGames.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors with
respect to the Merger Agreement and the transactions contemplated by the Merger
Agreement, stockholders of iGames should be aware that members of the management
and the Board of Directors have particular interests in the Merger that are
different from, or in addition to, the interests of stockholders of iGames
generally.
In particular, Christopher M. Wolfington, iGames' Chairman and Chief
Executive Officer, was formerly the majority owner of Money Centers and received
1,243,509 shares of Series A Preferred Stock and Money Centers Merger Warrants
to purchase 2,500,000 shares of our common stock. Mr. Wolfington negotiated the
terms of the Merger on his own behalf and on behalf of the other holders of
Series A Preferred Stock and Money Centers Merger Warrants, rather than on
behalf of iGames. As a result of the Merger, Mr. Wolfington's percentage
ownership, calculated on a fully-diluted basis, will increase from 66.06% to
68.08%.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO IGAMES'
STOCKHOLDERS
The Merger is intended to qualify for federal income tax purposes as a
"reorganization" within the meaning of Section 368(a)(1)(F) of the Code. In
general, provided that the Merger does so qualify, no gain or loss will be
recognized for federal income tax purposes by iGames stockholders with respect
thereto on the conversion of their stock into shares of Money Centers Common
Stock and no gain or loss will be recognized for federal income tax purposes by
iGames or Money Centers.
THE MERGER AGREEMENT
The following is only a summary of the material provisions of the
Agreement and Plan of Merger, dated as of August 10, 2004, by and between iGames
and Money Centers and is not complete. The Merger Agreement is attached to this
proxy statement as Exhibit "A." Please read the Merger Agreement in its
entirety.
GENERAL
The Merger Agreement provides that, following the approval and adoption
of the Merger Agreement by the stockholders of iGames and the satisfaction or
waiver of the other conditions to the Merger:
o iGames will merge with and into Money Centers; and
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o iGames will cease to exist and Money Centers will continue as
the surviving corporation.
As a result of the Merger, and as of the effective time of the Merger,
Money Centers will succeed to and assume all rights and obligations of iGames,
in accordance with Nevada and Delaware law.
EFFECTIVE TIME
The Merger Agreement provides that, subject to the approval of the
stockholders of iGames and the satisfaction or waiver of other conditions, the
Merger will be consummated by the filing of articles of merger and any other
appropriate documents, in accordance with the relevant provisions of Nevada and
Delaware law, with the Secretaries of State of the States of Nevada and
Delaware.
MERGER CONSIDERATION
Upon consummation of the Merger, each outstanding share of our common
stock (except shares as to which dissenters' rights have been properly
exercised) shall be converted into the right to receive one share of Money
Centers Common Stock, and each share of outstanding iGames Series A Preferred
Stock shall be converted into the right to receive 11.5 shares of Money Centers
Common Stock. The shares of iGames stock will no longer be outstanding and will
automatically be cancelled and retired and will cease to exist, and each holder
of a certificate representing such share immediately prior to the Merger will
cease to have any rights with respect to such certificate, except the right to
receive the Merger consideration upon surrender of such certificate.
TREATMENT OF STOCK OPTIONS AND WARRANTS
Under the terms of the Merger Agreement, upon consummation of the
Merger each outstanding option to purchase a share of our common stock will be
deemed to constitute an option to purchase one share of Money Centers Common
Stock at an exercise price per full share equal to the stated exercise price and
each outstanding warrant (other than a Money Centers Merger Warrant) to purchase
a share of our common stock will be deemed to constitute a warrant to purchase
one share of Money Centers Common Stock at an exercise price per full share
equal to the stated exercise price. Each outstanding Money Centers Merger
Warrant to purchase a share of our common stock will be exchanged for 1.15
shares of Money Centers Common Stock.
Under the Merger Agreement, Money Centers will assume iGames' Amended
and Restated 2003 Stock Incentive Plan, which following the Merger will be used
by Money Centers to grant options to employees.
EXCHANGE PROCEDURES
iGames will appoint an exchange agent for the purpose of exchanging
certificates representing shares of our common stock for the Merger
consideration.
DO NOT SEND IN YOUR STOCK CERTIFICATES AT THIS TIME. YOU WILL RECEIVE A
LETTER OF TRANSMITTAL AND FURTHER INSTRUCTIONS REGARDING THE EXCHANGE OF YOUR
STOCK CERTIFICATES SHORTLY AFTER THE MERGER IS COMPLETED.
If any common stock certificates are lost, stolen, or destroyed before
the Merger, the owner of the shares may be required to submit an affidavit of
that fact to Money Centers. Money Centers may also require the owner to post a
bond in a reasonable amount as indemnity against any potential claim regarding
the lost certificates. In exchange for lost, stolen or destroyed stock
certificates, after the owner has submitted an affidavit and posted a bond
acceptable to Money Centers, if required, the exchange agent will issue to the
owner the Merger consideration.
DIRECTORS AND OFFICERS
The Merger Agreement provides that the board of directors of the
surviving corporation from and after the Merger will consist of the directors of
iGames immediately prior to the Merger. The Merger Agreement further provides
that the officers of the surviving corporation from and after the Merger will be
the officers of iGames immediately prior to the Merger.
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ARTICLES OF INCORPORATION AND BYLAWS
The Merger Agreement provides that the articles of incorporation of
Money Centers in effect immediately before the Merger will be the articles of
incorporation of the surviving corporation, and the bylaws of Money Centers in
effect immediately before the Merger will be the bylaws of the surviving
corporation until later amended in accordance with Delaware law.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various customary representations and
warranties of iGames and Money Centers relating to, among other things:
o their respective organization, standing and similar corporate
matters; and
o authorization, execution, delivery, performance and
enforceability of the Merger Agreement.
CONDITIONS TO THE MERGER
The obligations of iGames and Money Centers to consummate the Merger
are subject to the satisfaction or waiver of various conditions, including that:
o the Merger Agreement and merger shall have been approved and
adopted by the stockholders of iGames; and
o there shall not be in effect any law restraining, enjoining or
otherwise preventing consummation of the Merger and no
governmental entity shall have instituted any proceeding
seeking any such law, which continues to be pending.
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DISSENTER'S RIGHTS
YOU ARE HEREBY GIVEN NOTICE THAT YOU HAVE CERTAIN DISSENTER'S AND APPRAISAL
RIGHTS UNDER NEVADA LAW.
The full text of Nevada statutes NRS 92A.300 through 92A.500 are
included as Annex "A" hereto, and are incorporated herein by reference.
Stockholders who wish to perfect their rights as dissenting
stockholders must make written demand on Money Centers for payment.
In addition, stockholders who wish to perfect such rights must submit
the certificates representing his shares to Money Centers or its transfer agent
for notation thereon that a notice of election to dissent has been filed; such
certificates to be thereupon returned to the stockholder.
Failure to submit such demand for payment or to submit such
certificates for such notation within 30 days of receipt of this information
statement may cause the holder to lose his dissenters' rights under Nevada law.
See, specifically, "rights of dissenting stockholders" below.
Any iGames stockholder who wishes to object to the Merger (an
"Objecting Stockholder") has the right to receive from Money Centers in cash,
the fair value of his or her shares, provided that the Merger is not abandoned
or fails to be approved and authorized, and provided, further, that the
following procedure is carefully followed.
No later than _______, 2004, he or she must file a written objection to
the Merger stating his or her intention to demand payment for his or her shares.
The written objection should be sent to Money Centers of America, Inc.,
Attention: Secretary, 700 S. Henderson Road, Suite 210, King of Prussia, PA,
19406. Registered Mail, Return Receipt Requested is recommended.
The objection shall include (i) a notice of election to dissent, (ii)
the stockholder's name and residence address, (iii) the number of shares as to
which the stockholder dissents and (iv) a demand for payment of the fair value
of the stockholder's shares if the Merger is consummated.
A stockholder may not dissent as to less than all of the shares as to
which he has a right to dissent, held by him of record that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any beneficial
owner as to less than all of the shares of such owner, as to which such nominee
or fiduciary has a right to dissent, held of record by such nominee or
fiduciary.
Together with the written demand or within one month thereafter, the
Objecting Stockholder must submit certificates representing all of his shares of
iGames' stock to iGames or its transfer agent for the purpose of affixing a
notation indicating that a demand for payment has been made. Otherwise, at the
option of iGames, exercised by written notice given within 45 days from the date
of filing of the notice to dissent, he or she will lose his objector's rights,
unless a court, for good cause shown, otherwise directs.
Within 15 days after the later of the Effective Date of the Merger or
last day of the period during which written demand by the Objecting Stockholder
must be made, Money Centers shall make a written offer by registered mail to
each Objecting Stockholder to pay for his or her shares at a specified price
which Money Centers considers to be their fair value. Such offer shall be
accompanied by a statement setting forth the aggregate number of shares with
respect to which notices of election to dissent have been received and the
aggregate number of holders of such shares. The offer shall also be accompanied
by (i) the advance payment to each Objecting Stockholder who has submitted to
Money Centers his or her stock certificates of an amount equal to 80% of the
amount of such offer, or (ii) as to each Objecting Stockholder who has not yet
submitted his or her stock certificates, a statement that Money Centers will
make an advance payment to him or her of an amount equal to 80% of the amount of
such offer promptly upon submission of his or her stock certificates. Every
advance payment or statement as to advance payment shall include advice to the
Objecting Stockholder to the effect that acceptance of such payment does not
constitute a waiver of any dissenters' rights. Any offer shall be made at the
same price per share to all Objecting Stockholders.
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If, within 30 days after making such offer, the Objecting Stockholder
and Money Centers agree upon the price to be paid for his or her shares, payment
must be made by Money Centers within 60 days of the date of the making of such
offer upon the surrender of the certificates representing his or her shares.
If demand for payment remains unsettled, Money Centers shall, within 60
days of the date of demand, institute a special proceeding in the Nevada
District Court wherein iGames formerly resided in the State of Nevada to
determine the rights of the Objecting Stockholder and to fix the fair value of
his or her shares.
If Money Centers fails to institute such special proceeding and the
demand for payment is unsettled, after 60 days, the Objecting Stockholder shall
be paid the amount demanded.
Within 60 days after the final determination of the special proceeding,
if any, Money Centers shall pay to each Objecting Stockholder the amount found
to be due him or her, upon surrender of the certificates representing his or her
shares.
The foregoing summary of the rights of Objecting Stockholders does not
purport to be complete and is qualified in its entirety by reference to Sections
92A.300 through 92A.500 of the Nevada Revised Statutes, a copy of which appears
in Annex "A" to this Information Statement.
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APPROVAL OF AMENDED AND RESTATED 2003 STOCK INCENTIVE PLAN
The Plan was originally adopted by the Board of Directors in July 2003.
On January 2, 2004, the Board of Directors unanimously approved and adopted
amendments to the Plan. The amendments adopted in 2004 increase the aggregate
number of shares that may be granted under the Plan to 10,000,000 and increase
the individual Participant limitation for any grant under the Plan to 5,000,000
shares.
The following is a summary of the principal features of the Plan. The
summary, however, is not a complete description of all of the provisions of the
Plan. A copy of the Plan is attached as Exhibit "D" hereto. All capitalized
terms not otherwise defined in this summary have the meanings set forth in the
Plan.
GENERAL
The Board of Directors has reserved 10,000,000 shares of Common Stock
for issuance under the Plan. Under the Plan, options may be granted which are
intended to qualify as Incentive Stock Options ("ISOs") under Section 422 of the
Internal Revenue Code of 1986 (the "Code") or which are not ("Non-ISOs")
intended to qualify as Incentive Stock Options thereunder.
The plan is not a qualified deferred compensation plan under Section
401(a) of the Code and is not subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
PURPOSE
The purpose of the Plan is to enhance our profitability and value
enabling us (i) to offer our employees, consultants and affiliates stock based
incentives and other equity interests, thereby creating a means to raise the
level of stock ownership by employees and consultants in order to attract,
retain and reward such employees and consultants and strengthen the mutuality of
interests between employees or consultants and our stockholders and (ii) to
offer equity based awards to non-employee directors thereby attracting,
retaining and rewarding such non-employee directors and strengthening the
mutuality of interests between non-employee directors and our stockholders.
ADMINISTRATION
The Plan will be administered by a Committee of the Board of Directors
(the "Committee"). All questions of interpretation of the Plan are determined by
the Committee, and its decisions are final and binding upon all participants. If
no such Committee exists, the Board of Directors will be substituted for the
Committee.
ELIGIBILITY
All of our employees and consultants are eligible to be granted
Non-Qualified Stock Options, Stock Appreciation Rights and Restricted Stock
under the Plan. All employees are eligible for Incentive Stock Options under the
Plan. The Committee determines eligibility under the Plan.
TERMS OF STOCK OPTIONS
The terms of each Stock Option granted under the Plan shall be
contained in a form of stock option agreement as shall be determined by the
Committee consistent with the provisions of the Plan, including the following:
(a) OPTION PRICE. The purchase price per share of Common Stock
subject to an ISO shall not be less than the Fair Market Value
of the share of Common Stock at the time of grant, or in the
case of the grant of an ISO to a ten percent (10%)
stockholder, not less than one hundred ten percent (110%) of
Fair Market Value of such shares of Common Stock at the time
such Option is granted. The purchase price of the shares of
Common Stock subject to each Non-ISO shall be determined by
the Committee.
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(b) VESTING. The dates on which each Stock Option (or portion
thereof) shall be exercisable and the conditions precedent to
such exercise, if any, shall be fixed by the Committee, in its
discretion, at the time such Stock Option is granted.
(c) EXPIRATION. The expiration of each Stock Option shall be fixed
by the Committee, in its discretion, at the time such Stock
Option is granted; but no Stock Option shall be exercisable
more than ten (10) years after the date on which it was
granted. Each Stock Option shall be subject to earlier
termination as expressly provided in the Plan or as determined
by the Committee, in its discretion, at the time such Stock
Option is granted.
(d) TRANSFERABILITY. No Stock Option shall be transferable, except
by will or the laws of descent and distribution, and any Stock
Option may be exercised during the lifetime of the Participant
only by him. No Stock Option granted under the Plan shall be
subject to execution, attachment or other process.
(e) OPTION ADJUSTMENTS. The aggregate number and class of shares
as to which Stock Options may be granted under the Plan, the
number and class shares covered by each outstanding Stock
Option and the exercise price per share thereof (but not the
total price), and all such Stock Options, shall each be
proportionately adjusted for any increase or decrease in the
number of issued Common Shares resulting from split-up,
spin-off or consolidation of shares or any like capital
adjustment or the payment of any stock dividend.
Except as otherwise provided in the Plan, any Stock Option granted
under the Plan shall terminate in the event of a merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation of
the Company. However, the Participant shall have the right immediately prior to
any such transaction to exercise his Stock Option in whole or in part
notwithstanding any otherwise applicable vesting requirements.
STOCK OPTION GRANTS TO NON-EMPLOYEE DIRECTORS
Upon the date of each annual meeting of stockholders, each non-employee
director shall be granted Non-Qualified Stock Options to purchase Common Stock
with a value of $12,000 pro-rated for directors who have not served for the
entire year since the date of the last annual meeting.
TERMS OF STOCK OPTIONS TO NON-EMPLOYEE DIRECTORS
The terms of each Stock Option granted to a non-employee director under
the Plan shall be contained in a form of stock option agreement as shall be
determined by the Committee consistent with the Plan, including the following:
(a) OPTION PRICE. The purchase price per share of Common Stock subject
to a non-employee director stock option shall be 100% of the Fair Market Value
of such shares of Common Stock, or in the case of a grant to a non-employee
director who is also a ten percent (10%) stockholder, one hundred ten percent
(110%) of the Fair Market Value of shares of Common Stock, at the date of grant,
or the par value of the Common Stock whichever is greater.
(b) VESTING. The stock options granted to non-employee directors upon
the date of each annual meeting of stockholders shall vest in full on the date
of the third annual meeting of stockholders held following the date of the grant
provided that the non-employee director is a member of the board of directors on
that date.
(c) METHOD OF EXERCISE. Non-employee directors electing to exercise
Stock Option shall give written notice to iGames specifying the number of shares
to be purchased and pay for Common Stock at the time of exercise in cash or by
delivery of unencumbered Common Stock owned by the non-employee director or a
combination thereof, or by such other method as approved by the Board of
Directors.
(d) OPTION TERM. Except as provided otherwise in the Plan, if not
exercised, each Option shall expire on the tenth anniversary of the date on
which the Option was granted.
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TERMINATION OF DIRECTORSHIP
(a) TERMINATION OTHER THAN FOR CAUSE. Upon termination of directorship
for any reason other than for Cause, all outstanding options then exercisable
and not exercised shall remain exercisable for the remainder of their term.
(b) CAUSE. Upon termination for Cause, or if iGames obtains or
discovers information after termination of directorship that such director had
engaged in conduct that would have justified a removal for cause, all
outstanding Options of such director shall immediately terminate and become null
and void.
(c) CANCELLATION OF OPTIONS. Any Options which were not exercisable
during the period such person served as a director shall not thereafter become
exercisable, and such Options shall terminate and become null and void upon
termination of directorship.
TERMS OF RESTRICTED STOCK
The terms of each award of Restricted Stock granted under the Plan
shall be in a form of Restricted Stock Award Agreement as shall be determined by
the Committee consistent with the provisions of the Plan, including the
following:
(a) PURCHASE PRICE. The purchase price of Restricted Stock shall
be fixed by the Committee. Subject to Section 4.3 of the Plan,
the purchase price for shares of Restricted Stock may be zero
to the extent permitted by applicable law.
(b) ACCEPTANCE. Awards of Restricted Stock must be accepted within
a period of sixty (60) days (or such shorter period as the
Committee may specify at grant) after the Award date, by
executing a Restricted Stock Award Agreement and by paying
whatever price (if any) the Committee has designated
thereunder.
(c) RESTRICTIONS AND CONDITIONS ON RESTRICTED STOCK AWARDS. The
shares of Restricted Stock are subject to Article X of the
Plan and the following restrictions and conditions:
(i) RESTRICTION PERIOD; VESTING AND ACCELERATION OF VESTING.
The Participant shall not be permitted to transfer shares of
Restricted Stock during a period set by the Committee (the
"Restriction Period") commencing with the date of the award of
the Restricted Stock, as set forth in the Restricted Stock
award agreement and such agreement shall set forth a vesting
schedule and any events which would accelerate vesting of the
shares of Restricted Stock. Within these limits, based on
service, or other criteria determined by the Committee, the
Committee may provide for the lapse of such restrictions in
installments in whole or in part, or may accelerate the
vesting of all or any part of any Restricted Stock award.
(ii) RIGHTS AS STOCKHOLDER. Except as provided otherwise in
the Plan and as otherwise determined by the Committee, the
Participants have, with respect to the shares of Restricted
Stock, all of the rights of a holder of shares of Common Stock
of the Company including, without limitation, the right to
receive any dividends, the right to vote such shares, and
subject to and conditioned upon the full vesting of shares of
Restricted Stock, the right to tender such shares.
Notwithstanding the foregoing, the payment of dividends shall
be deferred until, and conditioned upon, the expiration of the
applicable Restriction Period, unless the Committee, in its
sole discretion, specifies otherwise at the time of the Award.
(iii) TERMINATION OF EMPLOYMENT OR TERMINATION OF CONSULTANACY
FOR RESTRICTED STOCK. Subject to the applicable provisions of
the Restricted Stock award agreement and this Plan, upon a
Participant's Termination of Employment or Termination of
Consultancy for any reason during the relevant Restriction
Period, all Restricted Stock still subject to restriction will
vest or be forfeited in accordance with the terms and
conditions established by the Committee at grant or
thereafter.
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TERMS OF TANDEM STOCK APPRECIATION RIGHTS
Tandem Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be
determined from time to time by the Committee, including the following:
(a) TERM. A Tandem Stock Appreciation Right or applicable portion
thereof granted with respect to a Reference Stock Option shall
terminate and no longer be exercisable upon the termination or
exercise of the Reference Stock Option, except that, unless
otherwise determined by the Committee, in its sole discretion,
at the time of grant, a Tandem Stock Appreciation Right
granted with respect to less than the full number of shares
covered by the Reference Stock Option shall not be reduced
until and then only to the extent the exercise or termination
of the Reference Stock Option causes the number of shares
covered by the Tandem Stock Appreciation Right to exceed the
number of shares remaining available and unexercised under the
Reference Stock Option.
(b) EXERCISABILITY. Tandem Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that
the Reference Stock Options to which they relate shall be
exercisable in accordance with the Plan.
(c) METHOD OF EXERCISE. A Tandem Stock Appreciation Right may be
exercised by a Participant by surrendering the applicable
portion of the Reference Stock Option. Upon such exercise and
surrender, the Participant shall be entitled to receive an
amount determined in the manner prescribed in the Plan. Stock
Options that have been so surrendered, in whole or in part,
shall no longer be exercisable to the extent the related
Tandem Stock Appreciation Rights have been exercised.
(d) PAYMENT. Upon the exercise of a Tandem Stock Appreciation
Right a Participant shall be entitled to receive up to, but no
more than, an amount in cash and/or Common Stock (as chosen by
the Committee in its sole discretion) equal in value to the
excess of the Fair Market Value of one share of Common Stock
over the option price per share specified in the Reference
Stock Option multiplied by the number of shares in respect of
which the Tandem Stock Appreciation Right shall have been
exercised, with the Committee having the right to determine
the form of payment.
(e) DEEMED EXERCISE OF REFERENCE STOCK OPTION. Upon the exercise
of a Tandem Stock Appreciation Right, the Reference Stock
Option or part thereof to which such Stock Appreciation Right
is related shall be deemed to have been exercised for the
purpose of the limitation set forth in Article IV of the Plan
on the number of shares of Common Stock to be issued under the
Plan.
TERMS OF NON-TANDEM STOCK APPRECIATION RIGHTS.
Non-Tandem Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be
determined from time to time by the Committee, including the following:
(a) TERM. The term of each Non-Tandem Stock Appreciation Right
shall be fixed by the Committee, but shall not be greater than
ten (10) years after the date the right is granted.
(b) EXERCISABILITY. Non-Tandem Stock Appreciation Rights shall be
exercisable at such time or times and subject to such terms
and conditions as shall be determined by the Committee at the
time of grant. If the Committee provides, in its discretion,
that any such right is exercisable subject to certain
limitations (including, without limitation, that it is
exercisable only in installments or within certain time
periods), the Committee may waive such limitation on the
exercisability at any time at or after grant in whole or in
part (including, without limitation, that the Committee may
waive the installment exercise provisions or accelerate the
time at which rights may be exercised), based on such factors,
if any, as the Committee shall determine, in its sole
discretion.
26
(c) METHOD OF EXERCISE. Subject to whatever installment exercise
and waiting period provisions apply under the Plan, Non-Tandem
Stock Appreciation Rights may be exercised in whole or in part
at any time during the option term, by giving written notice
of exercise to iGames specifying the number of Non-Tandem
Stock Appreciation Rights to be exercised.
(d) PAYMENT. Upon the exercise of a Non-Tandem Stock Appreciation
Right a Participant shall be entitled to receive, for each
right exercised, up to, but no more than an amount in cash
and/or Common Stock (as chosen by the Committee in its sole
discretion) equal in value to the excess of the Fair Market
Value of one share of Common Stock on the date the right is
exercised over the Fair Market Value of one (1) share of
Common Stock on the date the right was awarded to the
Participant.
LIMITED STOCK APPRECIATION RIGHTS. The Committee may, in its sole
discretion, grant Tandem and Non-Tandem Stock Appreciation Rights either as a
general Stock Appreciation Right or as a Limited Stock Appreciation Right.
Limited Stock Appreciation rights may be exercised only upon a Change in Control
(to the extent provided in an award agreement granting such Limited Stock
Appreciation Rights) or the occurrence of such other event as the committee may,
in its sole discretion, designate at the time of grant or thereafter. Upon the
exercise of Limited Stock Appreciation Rights, except as otherwise provided in
an Award agreement, the Participant shall receive cash or Common Stock, as
determined by the Committee.
FEDERAL INCOME TAX ASPECTS OF THE PLAN
THE FOLLOWING SUMMARY OF THE EFFECT OF CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE RECEIPT AND EXERCISE OF AWARDS GRANTED BY US IS BASED ON THE
LAWS AND REGULATIONS IN EFFECT AS OF THE DATE OF THIS INFORMATION STATEMENT AND
DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE LAW IN THIS AREA.
FURTHERMORE, THE DISCUSSION BELOW DOES NOT ADDRESS THE TAX CONSEQUENCES OF THE
RECEIPT AND EXERCISE OF AWARDS UNDER FOREIGN, STATE AND/OR LOCAL TAX LAWS, AND
SUCH TAX LAWS MAY NOT CORRESPOND TO THE FEDERAL TAX TREATMENT DESCRIBED HEREIN.
THE EXACT FEDERAL INCOME TAX TREATMENT OF TRANSACTIONS UNDER THE PLAN WILL VARY
DEPENDING UPON THE SPECIFIC FACTS AND CIRCUMSTANCES INVOLVED. IN ADDITION, THIS
SUMMARY DOES NOT DISCUSS ESTATE, GIFT OR OTHER TAX CONSEQUENCES OTHER THAN
INCOME TAX CONSEQUENCES. THE COMPANY ADVISES EACH PARTICPANT TO CONSULT HIS OR
HER OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF PARTICIPATION IN THE PLAN
AND FOR REFERENCE TO APPILCABLE PROVISIONS OF THE CODE.
Stock Options. The tax consequences of a Stock Option depend on whether
the Stock Option is an ISO or a Non-ISO. An optionee will not recognize income
at the time of a grant or exercise of an ISO, and we may not deduct the related
expense at those times. However, for purposes of the alternative minimum tax,
the difference between the exercise price and the fair market value of the
Common Stock as of the date of exercise will be included in alternative minimum
taxable income. The optionee has a taxable event only upon a later sale or
disposition of the Common Stock acquired pursuant to the exercise of the ISO.
The tax treatment of the disposition of the Common Stock will depend on when the
optionee disposes of the Common Stock. An optionee who disposes of Common Stock
acquired pursuant to the exercise of an ISO within one year from the date of
exercise or within two years of the date of grant of the ISO will recognize
ordinary income equal to the difference between the ISO's exercise price and the
lesser of the fair market value of the Common Stock on the date of exercise or
such value on the date of disposition and will recognize capital gain to the
extent that the amount received on disposition exceeds such fair market value on
the date of exercise. To the extent that an optionee recognizes ordinary income
pursuant to the preceding sentence, we are allowed a deduction for federal
income tax purposes in like amount in the year of disposition. An optionee who
disposes of Common Stock after a date that is both two years after the grant of
the ISO and one year after its exercise will recognize capital gain equal to the
difference between the amount received on disposition and the ISO's exercise
price.
A different set of rules governs Non-ISOs. There are no federal income
tax consequences to the optionee or us upon the grant of Non-ISOs. Upon exercise
of a Non-ISO, the optionee will recognize ordinary income in the amount by which
the fair market value of the Common Stock received upon exercise, valued as of
the date of exercise, exceeds the exercise price of the Stock Option. We are
allowed a deduction for federal income tax
27
purposes equal to the amount of ordinary income recognized by the optionee at
the time of exercise of a Non-ISO. The optionee's basis in Common Stock acquired
upon exercise of a Non-ISO will equal the exercise price paid for such stock on
exercise plus the amount, if any, of ordinary income recognized in connection
with the exercise of such Non-ISO. Any subsequently realized gain or loss will
be capital gain or loss, and the optionee's holding period for purposes of
determining whether such gain or loss will be long-term or short-term capital
gain or loss will begin at the time the optionee recognizes any such ordinary
income.
Stock Appreciation Rights. Generally, the holder of a stock
appreciation right will recognize ordinary income equal to the amount paid by us
under the right on the date the holder receives payment from us. We will
generally be entitled to a deduction in an amount equal to the ordinary income
recognized by the holder.
Restricted Stock. We are authorized to make grants of Restricted Stock,
either for or without consideration, to participants subject to the potential
forfeiture of such Restricted Stock. In general, there will be no tax
consequences to a participant upon the grant of Restricted Stock. Instead, the
participant will be taxed at ordinary income rates at the time the forfeiture
conditions expire or are removed on an amount equal to the excess of the fair
market value of the Restricted Stock at that time over the amount the
participant paid to acquire such Restricted Stock. Any dividends paid with
respect to Restricted Stock prior to the time that the forfeiture conditions
expire or are removed will be taxable to the participant as compensation income
at such participant's ordinary income tax rate.
A participant who acquires Restricted Stock, however, may make an
election under Section 83(b) of the Internal Revenue Code with respect to such
stock. If such an election is made within 30 days of the receipt of such
Restricted Stock, the participant is taxed at ordinary income rates in the year
in which the participant acquires the Restricted Stock. The ordinary income the
participant must recognize is equal to the excess of the fair market value of
the Restricted Stock at the time of the participant's acquisition of the
Restricted Stock (determined without regard to the restrictions) over the amount
that the participant paid to acquire such Restricted Stock. If a participant
makes a timely election under Section 83(b) of the Internal Revenue Code with
respect to Restricted Stock, the participant generally will not be required to
report any additional income with respect to such Restricted Stock until he
disposes of such stock, at which time he will generally recognize capital gain
or loss equal to the difference between the sales price and the sum of the
purchase price paid, if any, for the shares plus the ordinary income recognized
pursuant to the election under Section 83(b) of the Internal Revenue Code. Such
capital gain or loss will be long-term gain or loss eligible for taxation at the
15% tax rate for individuals and other noncorporate taxpayers if such stock has
been held for over one year from the receipt of such stock. Any dividends paid
with respect to Restricted Stock for which a Section 83(b) election is made will
be taxable to the participant at the 15% tax rate for individuals and other
noncorporate taxpayers.
In the event that a participant forfeits Restricted Stock with respect
to which an election under Section 83(b) of the Internal Revenue Code has been
made, the participant ordinarily will not be entitled to recognize any loss for
federal income tax purposes (except to the extent the amount realized by the
participant at the time of such forfeiture is less than the participant's
purchase price for such stock). We generally will be entitled to a deduction
equal to the amount of ordinary income (if any) recognized by a participant with
respect to Restricted Stock for our taxable year in which, or with which, ends
the taxable year of the participant in which such ordinary income is recognized.
Special Rules Applicable To "Insiders." If a recipient of an award is
an "insider" (a director, officer or other individual subject to Section 16 of
the Exchange Act), the recipient may be required to defer determination of the
amount of income and the timing of income recognition in connection with an
award under the plan, and the beginning of the holding period for any shares the
recipient receives, until the expiration of any period during which the
recipient would be restricted from disposing of any shares the recipient
received. If a recipient is an insider, the recipient is advised to consult a
tax advisor to determine the tax consequences of an award granted to the
recipient under the plan.
Section 162(M). Under Section 162(m) of the Code, we may be precluded
from claiming a federal income tax deduction for compensation in excess of
$1,000,000 paid to the chief executive officer or to any of the other four most
highly compensated officers in any one year. Compensation would include any
amounts received under an award in connection with which ordinary income is
recognized. An exception does exist, however, for "performance-based"
compensation, including amounts received upon the exercise of Stock Options and
amounts
28
received under Stock Appreciation Rights pursuant to a plan approved by
stockholders that meets certain requirements. The Plan is intended to allow
option grants made thereunder to meet the requirements of "performance-based"
compensation.
NEW PLAN BENEFITS
The following table sets forth the benefits or amounts from the Plan
that will be allocated or received by each of the following persons:
o Each executive officer and director of iGames;
o All current executive officers, as a group;
o All current directors who are not executive officers, as a
group; and
o All employees, including officers that are not executive
officers, as a group.
NEW PLAN BENEFITS
2003 AMENDED AND RESTATED STOCK INCENTIVE PLAN
----------------------------------------------
DOLLAR VALUE NUMBER OF UNITS
------------- ---------------
Christopher M. Wolfington $4,453,150(1) 2,635,000
Wayne DiMarco 30,800(2) 20,000
Jeremy Stein 0(3) 187,500
Executive Group 4,453,150(1) 2,635,000
Non-Executive Director Group 30,800(2) 20,000
Non-Executive Officer Group 0(3) 187,500
(1) Dollar value is based upon the difference between the closing price of
the common stock on the NASD OTC Bulletin Board on January 2, 2004, and
$.01, the exercise price of the options granted. On January 2, 2004,
the closing price was $1.70
(2) Dollar value is based upon the difference between the closing price of
the common stock on the NASD OTC Bulletin Board on January 22, 2004,
and $.01, the exercise price of the options granted. On January 22,
2004, the closing price was $1.55.
(3) As these options were granted at an exercise price equal to the closing
price of the common stock on the NASD OTC Bulletin Board on the date of
grant, they have no dollar value.
We expect to grant additional options to purchase shares of our common
stock in the future to the persons listed on the table above and to other
eligible participants. The grant of options in the future to these persons is
entirely within the discretion of the Board of Directors or a duly constituted
committee thereof. We cannot determine the nature, amount or the dollar value of
stock option awards that may be made in the future.
29
EXECUTIVE COMPENSATION
The following tables set forth certain information relating to
compensation paid or accrued by us for the past three fiscal years to our Chief
Executive Officer and executive officers whose cash paid compensation exceeded
$100,000 for the year ended March 31, 2004 (the "Named Executive Officers").
Only those columns which call for information applicable to us or the Named
Executive Officers for the periods indicated have been included in such tables.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------- ------------
Fiscal Number of
Year Ended Other Annual Shares or
Name and Principal Position March 31 Salary Bonus Compensation Options
--------------------------- ---------- ----------- ----------- ------------ ------------
Christopher M. Wolfington, Chairman, 2004 $ 90,429 $200,000 $14,051 2,635,000(2)
Chief Executive Officer, President (1)
Jeremy Stein, President (3) 2004 $115,750 $ 8,000(4) $ 0 125,000(5)
2003 $ 50,000(6) $ 0 $ 0 62,500(7)
______________
(1) Mr. Wolfington was appointed our Chairman, Chief Executive Officer and
President on January 2, 2004, effective upon the consummation of our
acquisition of Money Centers of America, Inc. Prior to that date, he
was President of Money Centers of America, Inc., a position he still
holds. All compensation figures are for the period commencing January
2, 2004.
(2) Pursuant to his employment agreement Mr. Wolfington received options to
purchase 2,635,000 shares of Common Stock.
(3) Mr. Stein served as our Chief Executive Officer, President and a
director from April 31, 2002 until January 2, 2004, and as Secretary,
Treasurer and a director thereafter.
(4) This bonus was not paid as of March 31, 2004 and was recorded as an
accrued expense at that time.
(5) Pursuant to his employment agreement Mr. Stein received options to
purchase 62,500 shares of our common stock at an exercise price of
$2.04 per share and options to purchase 62,500 shares of our common
stock at an exercise price of $2.00 per share in Fiscal 2004.
(6) Mr. Stein began taking salary as of November 1, 2002 at the rate of
$120,000 per annum.
(7) Pursuant to his employment agreement Mr. Stein received a grant of
62,500 shares of our common stock on the effective date of his
employment agreement.
Option Grants For the Fiscal Year Ended March 31, 2004
Pursuant to his employment agreement, Mr. Wolfington received grants of
options to purchase an aggregate of 2,635,000 shares of our common stock in
Fiscal 2004. Each of these options has an exercise price of $.01 per share and
is exercisable for a period of ten years from the date of grant. These grants
represent approximately 90.6% of the options granted to our employees in fiscal
2004.
30
Pursuant to his employment agreement, in Fiscal 2004 Mr. Stein received
grants of options to purchase 62,500 shares of our common stock at an exercise
price of $2.04 per share and options to purchase 62,500 shares of our common
stock at an exercise price of $2.00 per share. These grants represent
approximately 4.3% of the options granted to our employees in fiscal 2004.
The following table sets forth information concerning year-end option
values for Fiscal 2004 for the executive officers named in our Summary
Compensation Table above.
FISCAL YEAR END OPTION VALUES
Value of Unexercised
Number of Unexercised Options In-the-Money Options
at Fiscal Year End at Fiscal Year End
------------------------------------------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
------------------------- ----------- ------------- ----------- -------------
Christopher M. Wolfington 2,635,000(1) 0 $1,449,250(2) $0
Jeremy Stein 125,000(3) 0 $0(2) $0
______________
(1) Consists of options to purchase 2,635,000 shares of our common stock at
an exercise price of $.01 per share.
(2) Based on a closing sales price of $.56 per share on March 31, 2004.
(3) Consists of options to purchase 62,500 shares of our common stock at an
exercise price of $2.04 per share and 62,500 shares of our common stock
at an exercise price of $2.00 per share.
Long Term Incentive Plans
We currently do not have any long-term incentive plans.
EMPLOYMENT AGREEMENTS
In November 2002 we entered into an employment agreement with Mr.
Stein. As there is no term to this agreement, Mr. Stein is an employee at-will.
Mr. Stein's compensation is $120,000 per annum with any increases subject to
review and approval by our Board of Directors. Pursuant to his employment
agreement, Mr. Stein is entitled to participate in all health and other benefits
programs that cover substantially all of the Company's employees. On the date he
entered into the employment agreement, Mr. Stein was granted 250,000 shares of
restricted stock. In addition, every six months during the term of his
employment agreement, Mr. Stein is entitled to receive an additional grant of
options to purchase 62,500 shares of common stock (split-adjusted) with an
exercise price equal to the closing bid price of the Company's common stock on
the date of grant.
In January 2004, we entered into a five-year employment agreement with
Christopher M. Wolfington, our Chairman, President and Chief Executive Officer.
In addition to an annual salary of $350,000 per year (subject to annual
increases at the discretion of the Board of Directors) (the "Base Salary"), Mr.
Wolfington's employment agreement provides for a $200,000 signing bonus, a
guaranteed bonus equal to 50% of his Base Salary in any calendar year (the
"Guaranteed Bonus") and a discretionary incentive bonus of up to 50% of his Base
Salary in any calendar year pursuant to a bonus program to be adopted by the
Board of Directors (the "Incentive Bonus"). Pursuant to his employment
agreement, Mr. Wolfington is entitled to fringe benefits including participation
in retirement plans, life insurance, hospitalization, major medical, paid
vacation, a leased automobile and expense reimbursement. In addition, Mr.
Wolfington received options to purchase 760,000 shares of our common stock at an
exercise price of $.01, which are immediately vested, and options to purchase
1,875,000 shares our common stock at an exercise price of $.01, which have
vested due to the issuance of a commitment letter by Mercantile Capital, L.P.
31
to refinance our vault cash and working capital financing with a $25,000,000
line of credit. In addition, we have agreed to grant Mr. Wolfington options to
purchase an aggregate of 3,530,780 shares of our common stock, which shall vest
upon our achievement of certain cash flow objectives in 2004 to be defined by
the Board of Directors. In the event there is a change of control after which
Mr. Wolfington is asked to relocate his principal business location more than 35
miles, his duties are significantly reduced from the duties he had immediately
prior to the change of control or there is a material reduction in his Base
Salary in effect immediately prior to the change of control and, as a result of
any of the foregoing, Mr. Wolfington resigns his employment hereunder within one
year after the date of the change of control, then Mr. Wolfington shall be
entitled to receive as severance payments, his Guaranteed Bonus, his Base Salary
and his insurance benefits for a period equal to the greater of the initial term
of the agreement or 24 months from the date of the termination or cessation of
Mr. Wolfington's employment. For purposes of Mr. Wolfington's employment
agreement, a change of control occurs if we sell all or substantially all of our
assets or if shares of our capital stock representing more than 50% of the votes
which all stockholders are entitled to cast are acquired, by purchase, merger,
reorganization or otherwise) by any person or group of affiliated persons not an
affiliate of iGames at the time of such acquisition.
Repricing of Options
We have not adjusted or amended the exercise price of any stock
options.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of August 12, 2004, 5,524,394 shares of Common Stock and 1,351,640
shares of Series A Preferred Stock were issued and outstanding.
INFORMATION AS TO OWNERSHIP OF COMMON STOCK BY OFFICERS, DIRECTORS AND OWNERS OF
5% OR MORE OF OUR COMMON STOCK
For purposes of computing the percentages under this table, it is
assumed that all options and warrants to acquire Common Stock which have been
issued to the directors, executive officers and the holders of more than 5% of
Common Stock and are fully vested or will become fully vested within 60 days of
the date of this Information Statement have been exercised by these individuals
and the appropriate number of shares of Common Stock have been issued to these
individuals.
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER (1) POSITION BENEFICIAL OWNERSHIP (1) PERCENTAGE OF CLASS
------------------------------- ------------------ ------------------------ -------------------
Christopher M. Wolfington President, Chief 2,637,000 (2)(3) 32.3%
700 South Henderson Road Executive Officer,
King of Prussia, PA 19406 Chairman of the
Board
Jeremy Stein Director 300,000 (4) 5.3%
301 Yamato Road, Suite 2199
Boca Raton, FL 33431
Michele Friedman Beneficial Owner 982,500 17.8%
17621 Circle Pond Court
Boca Raton, FL 33496
Wayne DiMarco Director 20,000 (5) *
131 East Church Road
King of Prussia, PA 19406
Barry Bekkedam Director 20,000 (6) *
1200 Liberty Ridge Drive
Suite 340
Wayne, PA 19087
32
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER (1) POSITION BENEFICIAL OWNERSHIP (1) PERCENTAGE OF CLASS
------------------------------- ------------------ ------------------------ -------------------
Bomoseen Associates, L.P. (7) Beneficial Owner 518,750 (8) 9.0%
1 PPG Plaza, Suite 2970
Pittsburgh, PA 15222
Theodore Stern (7) Beneficial Owner 535,000 (9) 9.2%
1 PPG Plaza, Suite 2970
Pittsburgh, PA 15222
Helene Regen Beneficial Owner 735,295 13.3%
6151 West Century Boulevard,
Suite 300
Los Angeles, CA 90060-5314
Samuel Freshman Beneficial Owner 735,295 13.3%
6151 West Century Boulevard,
Suite 300
Los Angeles, CA 90060-5314
All Executive Officers and ------------------------ -------------------
Directors as a group (4 persons) 3,007,000 35.9%
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934. All shares are beneficially
owned and sole voting and investment power is held by the persons
named, except as otherwise noted.
(2) Does not include shares of common stock issuable upon conversion of
issued and outstanding shares of Series A Convertible Preferred Stock
as these shares are not presently convertible and it is not presently
contemplated that these shares will be convertible within the next 60
days.
(3) Includes currently exercisable options to purchase 2,635,000 shares of
Common Stock.
(4) Includes currently exercisable options to purchase 187,500 shares of
Common Stock.
(5) Includes currently exercisable options to purchase 20,000 shares of
Common Stock.
(6) Includes currently exercisable options to purchase 20,000 shares of
Common Stock.
(7) Theodore Stern exercises voting and dispositive control over the shares
owned by Bomoseen Associates, L.P.
(8) Includes currently exercisable warrants to purchase 256,250 shares of
Common Stock.
(9) Includes currently exercisable warrants to purchase 256,250 shares of
Common Stock owned by Bomoseen Associates, L.P. and currently
exercisable warrants to purchase 16,250 shares of Common Stock owned by
Mr. Stern individually.
33
INFORMATION AS TO OWNERSHIP OF SERIES A PREFERRED STOCK BY OFFICERS, DIRECTORS
AND OWNERS OF 5% OR MORE OF OUR SERIES A PREFERRED STOCK
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENTAGE OF CLASS
------------------------ ------------------------ -------------------
Christopher M. Wolfington 1,243,509(2) 92.0%
700 South Henderson Road
King of Prussia, PA 19406
------------------------ -------------------
All Executive Officers and
Directors as a group (4 persons) 1,243,509 92.0%
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934. All shares are beneficially
owned and sole voting and investment power is held by the persons
named, except as otherwise noted.
(2) Based upon 1,351,640 shares of Series A Preferred Stock outstanding at
January 16, 2004. Includes 270,328 shares of Series A Preferred Stock
owned by the 2003 Grantor Retained Annuity Trust of Christopher M.
Wolfington. Does not include 54,066 shares of Series A Preferred Stock
owned by the 2003 Irrevocable Trust of Christopher M. Wolfington as Mr.
Wolfington is not the beneficial owner of such securities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have engaged IntuiCode, LLC to provide software development services
to us. During the year ended March 31, 2003, we paid IntuiCode approximately
$88,250, and during the year ended March 31, 2004 we paid IntuiCode
approximately $$117,000 plus reimbursement of $7,154 in expenses. We acquired
the rights to the Protector(TM) from IntuiCode, and paid aggregate royalties to
IntuiCode of approximately $40,965 for the year ended March 31, 2003 and $55,634
for the year ended March 31, 2004. Jeremy Stein, a member of our board of
directors, is also the Chief Executive Officer and the holder of a significant
minority percentage of the outstanding membership interests of IntuiCode. We
believe the terms of IntuiCode's engagement are at least as fair as those that
we could have obtained from unrelated third parties in arms-length negotiations.
OTHER MATTERS
There is no other business to be transacted by written consent in lieu
of a special meeting to which this Information Statement pertains.
ADDITIONAL INFORMATION
PLEASE READ THE ENTIRE DOCUMENT. Further information is available by
request or can be accessed on the Internet as set forth below. The complete
mailing address of our principal executive offices is 700 N. Henderson Road,
Suite 210, King of Prussia, Pennsylvania, 19406. We are subject to the reporting
requirements of the Securities Exchange Act of 1934, and in accordance therewith
file annual and quarterly reports, proxy statements and other information with
the SEC. Reports, proxy statements and other information filed by us can be
accessed electronically by means of the SEC's home page on the Internet at
http://www.sec.gov. You can read and copy any materials that we file with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C., 20549. You can obtain information about the operation of the SEC's Public
Reference Room by calling the SEC at 1-800-SEC-0330. A copy of any public filing
is also available, at no charge, by contacting Jeremy Stein at 1-800-530-1558.
By Order of the Board of Directors
King of Prussia, Pennsylvania
________ __, 2004
34
ANNEX A
SHAREHOLDERS DISSENTERS' RIGHTS
Rights of Dissenting Owners Under Nevada Law
92A.300 DEFINITIONS.-As used in NRS 92A.300 to 92A.500, inclusive,
unless the context otherwise requires, the words and terms defined in NRS
92A.305 to 92A.335, inclusive, have the meanings ascribed to them in those
sections.
92A.305 "BENEFICIAL STOCKHOLDER" DEFINED.-"Beneficial stockholder" means
a person who is a beneficial owner of shares held in a voting trust or by a
nominee as the stockholder of record.
92A.310 "CORPORATE ACTION" DEFINED.-"Corporate action" means the action
of a domestic corporation.
92A.315 "DISSENTER" DEFINED,"Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner required by NRS 92A.410 to
92A.480, inclusive.
92A.320 "FAIR VALUE" DEFINED.--Fair value," with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
92A.325 "STOCKHOLDER" DEFINED.-"Stockholder" means a stockholder of
record or a beneficial stockholder of a domestic corporation.
92A.330 "STOCKHOLDER OF RECORD" DEFINED.-"Stockholder of record" means
the person in whose name shares are registered in the records of a domestic
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee's certificate on file with the domestic corporation.
92A.335 "SUBJECT CORPORATION" DEFINED.-"Subject corporation" means the
domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective or
the surviving or acquiring entity of that issuer after the corporate action
becomes effective.
92A.340 COMPUTATION OF INTEREST.-Interest payable pursuant to NRS
92A.300 to 92A.500, inclusive, must be computed from the effective date of the
action until the date of payment, at the average rate currently paid by the
entity on its principal bank loans or, if it has no bank loans, at a rate that
is fair and equitable under all of the circumstances.
92A.350 RIGHTS OF DISSENTING PARTNER OF DOMESTIC LIMITED PARTNERSHIP.-A
partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a constituent
entity.
92A.360 RIGHTS OF DISSENTING MEMBER OF DOMESTIC LIMITED LIABILITY
COMPANY.-The articles of organization or operating agreement of a domestic
limited liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity.
92A.370 RIGHTS OF DISSENTING MEMBER OF DOMESTIC NONPROFIT
CORPORATION.
1. Except as otherwise provided in subsection 2 and unless otherwise
provided in the articles or bylaws, any member of any constituent domestic
nonprofit corporation who voted against the merger may, without prior notice,
but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual
35
obligations to the constituent or surviving corporations which did not occur
before his resignation and is thereby entitled to those rights, if any, which
would have existed if there had been no merger and the membership had been
terminated or the member had been expelled.
2. Unless otherwise provided in its articles of incorporation or bylaws,
no member of a domestic nonprofit corporation, including, but not limited to, a
cooperative corporation, which supplies services described in chapter 704 of NRS
to its members only, and no person who is a member of a domestic nonprofit
corporation as a condition of or by reason of the ownership of an interest in
real property, may resign and dissent pursuant to subsection 1.
92A.380 RIGHT OF STOCKHOLDER TO DISSENT FROM CERTAIN CORPORATE ACTIONS
AND TO OBTAIN PAYMENT FOR SHARES.
1. Except as otherwise provided in NRS 92A.370 to 92A.390, a stockholder
is entitled to dissent from, and obtain payment of the fair value of his shares
in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic corporation
is a party:
(1) If approval by the stockholders is required for the merger by NRS
92A.120 to 92A.160, inclusive, or the articles of incorporation and he is
entitled to vote on the merger, or
(2) If the domestic corporation is a subsidiary and is merged with its
parent under NRS 92A.180.
(b) Consummation of a plan of exchange to which the domestic corporation
is a party as the corporation whose subject owner's interests will be acquired,
if he is entitled to vote on the plan.
(c) Any corporate action taken pursuant to a vote of the stockholders to
the event that the articles of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting stockholders are entitled
to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment under NRS
92A.300 to 92A.500, inclusive, may not challenge the corporate action creating
his entitlement unless the action is unlawful or fraudulent with respect to him
or the domestic corporation.
92A.390 LIMITATIONS ON RIGHT OF DISSENT: STOCKHOLDERS OF CERTAIN CLASSES
OR SERIES; ACTION OF STOCKHOLDERS NOT REQUIRED FOR PLAN OF MERGER.
1. There is no right of dissent with respect to a plan of merger or
exchange in favor of stockholders of any class or series which, at the record
date fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting at which the plan of merger or exchange is to be acted on,
were either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc., or held
by at least 2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the shares
provide otherwise; or
(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu of
fractional owner's interests of-
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the plan of merger
or exchange, were either listed on a national securities exchange, included in
the national market system by the National Association of Securities Dealers,
Inc., or held of record by a least 2,000 interests of record; or
(2) A combination of cash and owner's interests of the kind described in
sub-subparagraphs (1) and (11) of subparagraph (1) of paragraph (b).
36
2. There is no right of dissent for any holders of stock of the
surviving domestic corporation if the plan of merger does not require action of
the stockholders of the surviving domestic corporation under NRS 92A. 130.
92A.400 LIMITATIONS ON RIGHT OF DISSENT: ASSERTION AS TO PORTIONS ONLY
TO SHARES REGISTERED TO STOCKHOLDER; ASSERTION BY BENEFICIAL STOCKHOLDER.
1. A stockholder of record may assert dissenter's rights as to fewer
than all of the shares registered in his name only if he dissents with respect
to all shares beneficially owned by any one person and notifies the subject
corporation in writing of the name and address of each person on whose behalf he
asserts dissenter's rights. The rights of a partial dissenter under this
subsection are determined as if the shares as to which he dissents and his other
shares were registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares
held on his behalf only if-
(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the beneficial
stockholder or over which he has power to direct the vote.
92A.410 NOTIFICATION OF STOCKHOLDERS REGARDING RIGHT OF DISSENT.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting must
state that stockholders are or may be entitled to assert dissenters' rights
under NRS 92A.300 to 92A.500, inclusive, and be accompanied by a copy of those
sections.
2. If the corporate action creating dissenters' rights is taken by
written consent of the stockholders or without a vote of the stockholders, the
domestic corporation shall notify in writing all stockholders entitled to assert
dissenters' rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430. (Last amended by Ch. 208, L. '97, eff.
10-1-97.)
92A.420 PREREQUISITES TO DEMAND FOR PAYMENT FOR SHARES.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, a stockholder who wishes to
assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection I
is not entitled to payment for his shares under this chapter.
92A.430 DISSENTER'S NOTICE: DELIVERY TO STOCKHOLDERS ENTITLED TO ASSERT
RIGHTS; CONTENTS.
1. If a proposed corporate action creating dissenters' rights is
authorized at a stockholders' meeting, the subject corporation shall deliver a
written dissenter's notice to all stockholders who satisfied the requirements to
assert those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to what
extent the transfer of the shares will be restricted after the demand for
payment is received;
37
(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of the terms of the
proposed action and requires that the person asserting dissenter's rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(d) Set a date by which the subject corporation must receive the demand
for payment, which may not be less than 30 nor more than 60 days after the date
the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
92A.440 DEMAND FOR PAYMENT AND DEPOSIT OF CERTIFICATES; RETENTION OF
RIGHTS OF STOCKHOLDER.
1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates, if any, in accordance with the terms of
the notice.
2. The stockholder who demands payment and deposits his certificates, if
any, before the proposed corporate action is taken retains all other rights of a
stockholder until those rights are canceled or modified by the taking of the
proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the dissenter's
notice, is not entitled to payment for his shares under this chapter. (Last
amended by Ch. 208, L. '97, eff. 10-1-97.)
92A.450 UNCERTIFICATED SHARES: AUTHORITY TO RESTRICT TRANSFER AFTER
DEMAND FOR PAYMENT; RETENTION OF RIGHTS OF STOCKHOLDER.
1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is
received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action.
92A.460 PAYMENT FOR SHARES: GENERAL REQUIREMENTS.
1. Except as otherwise provided in NRS 92A.470, within 30 days after
receipt of a demand for payment, the subject corporation shall pay each
dissenter who complied with NRS 92A.440 the amount the subject corporation
estimates to be the fair value of his shares, plus accrued interest. The
obligation of the subject corporation under this subsection may be enforced by
the district court:
(a) Of the county where the corporation's registered office is located;
or
(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, a statement of
income for that year, a statement of changes in the stockholders' equity for
that year and the latest available interim financial statements, if any;
(b) A statement of the subject corporation's estimate of the fair value
of the shares;
(c) An explanation of how the interest was calculated;
38
(d) A statement of the dissenter's rights to demand payment under NRS
92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
92A.470 PAYMENT FOR SHARES: SHARES ACQUIRED ON OR AFTER DATE OF
DISSENTER'S NOTICE.
1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment,
after taking the proposed action, it shall estimate the fair value of the
shares, plus accrued interest, and shall offer to pay this amount to each
dissenter who agrees to accept it in full satisfaction of his demand. The
subject corporation shall send with its offer a statement of its estimate of
-the fair -value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenters' right to demand payment pursuant
to NRS 92A.480.
92A.480 DISSENTER'S ESTIMATE OF FAIR VALUE: NOTIFICATION OF SUBJECT
CORPORATION; DEMAND FOR PAYMENT OF ESTIMATE
1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of
his shares and interest due, if he believes that the amount paid pursuant to NRS
92A.460 or offered pursuant to NRS 92A.470 is less than the fair value of his
shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this
section unless he notifies the subject corporation of his demand in writing
within 30 days after the subject corporation made or offered payment for his
shares.
92A.490 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: DUTIES OF SUBJECT
CORPORATION; POWERS OF COURT; RIGHTS OF DISSENTER.
1. If a demand for payment remains unsettled, the subject corporation
shall commence a proceeding within 60 days after receiving the demand and
petition the court to determine the fair value of the shares and accrued
interest. If the subject corporation does not commence the proceeding within the
60-day period, it shall pay each dissenter whose demand remains unsettled the
amount demanded.
2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it shall
commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced
under subsection 2 is plenary and exclusive. 'Me court may appoint one or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or any amendment thereto. The dissenters are entitled to the
same discovery rights as par-ties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to a
judgment:
(a) For the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the subject corporation;
or
(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold payment pursuant to
NRS 92A.470.
39
92A.500 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: ASSESSMENT OF COSTS
AND FEES.
1. The court in a proceeding to determine fair value shall determine all
of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against the subject corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters if
the court finds the subject corporation did not substantially comply with the
requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by NRS 92A.300 to 92A.500, inclusive.
3. If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the subject corporation,
the court may award to those counsel reasonable fees to be paid out of the
amounts awarded to the dissenters who were benefitted.
4. In a proceeding commenced pursuant to NRS 92A.460, the court may
assess the costs against the subject corporation, except that the court may
assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court finds
that such parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115.
40
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is made as
of this 10th day of August, 2004, pursuant to Section 92A.190 of the Nevada
Revised Statutes (the "NRS") and Section 252 of the General Corporation Law of
the State of Delaware (the "GCL"), by and between iGames Entertainment, Inc. a
Nevada corporation (the "Parent") and Money Centers of America, Inc., a Delaware
corporation (the "Subsidiary").
RECITALS:
WHEREAS, the Parent is a corporation organized and existing under the
laws of the State of Nevada;
WHEREAS, the Subsidiary is a corporation organized and existing under
the laws of the State of Delaware and is a wholly-owned subsidiary of the
Parent;
WHEREAS, the Parent is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada with an authorized
capital stock consisting of 12,500,000 shares of common stock, $.004 par value
per share (the "Parent Common Stock"), 4,053,804 of which are issued and
outstanding on the date hereof, and 5,000,000 shares of preferred stock, par
value $0.004 per share (the "Parent Preferred Stock"), of which 1,531,640 shares
of Series A Preferred Stock (the "Series A Stock") are outstanding on the date
hereof;
WHEREAS, there are issued and outstanding options to purchase Common
Shares (the "iGames Options") and warrants to purchase such shares (the "iGames
Warrants"), including without limitation warrants to purchase Common Shares
issued in connection with the January 2004 merger of the Subsidiary into a
subsidiary of Parent (the "Money Centers Merger Warrants");
WHEREAS, the Subsidiary is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware with an
authorized capital stock consisting of 150,000 shares of common stock, $.001 par
value per share, 100 shares of which are issued and outstanding on the date
hereof and held by Parent, and 20,000,000 shares of preferred stock, $.001 par
value per share, none of which is issued and outstanding;
WHEREAS, the Subsidiary has no options (the "Subsidiary Options") or
warrants (the "Subsidiary Warrants") issued and outstanding;
WHEREAS, the respective Boards of Directors of the Parent and the
Subsidiary have authorized and approved the merger of the Parent with and into
the Subsidiary subject to and upon the terms and conditions of this Merger
Agreement (the "Merger") and Sections 92A.120 and 92A.190 of the NRS and Section
252 of the GCL, and have approved this Merger Agreement and directed that it be
executed by the undersigned officers and that it be submitted to the
shareholders of the Parent for their approval; and
WHEREAS, the parties hereto desire that the Parent merge with and into
the Subsidiary and that the Subsidiary shall continue as the surviving
corporation in such merger, which is intended to qualify as a tax-free
reorganization under Section 368(a)(1)(F) or 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended, upon the terms and subject to the conditions
herein set forth and in accordance with the laws of the State of Nevada and the
laws of the State of Delaware (the "Merger").
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
PRINCIPAL TERMS OF THE MERGER
Section 1.1 Merger of Parent into Subsidiary. At the Effective Time of
the Merger (as defined in Section 1.2 hereof), the Parent shall merge with and
into the Subsidiary in accordance with the NRS and the DGCL. The separate
existence of the Parent shall thereupon cease and the Subsidiary shall be the
surviving corporation
41
(hereinafter sometimes referred to as the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Delaware.
Section 1.2 Effective Time of the Merger. The Merger shall become
effective as of the date and time (the "Effective Time of the Merger") the
following actions are completed: (a) appropriate articles of merger are filed
with the Secretary of State of the State of Nevada pursuant to Section 92A.200
of the NRS, and (b) an appropriate certificate of merger is filed with the
Secretary of the State of Delaware in accordance with Section 252 of the DGCL.
Section 1.3 Effects of the Merger. At the Effective Time of the Merger,
the Merger shall have the effects specified in the NRS, the DGCL and this Merger
Agreement.
Section 1.4 Certificate of Incorporation and Bylaws. At the Effective
Time of the Merger, the Certificate of Incorporation and bylaws of the
Subsidiary, as in effect immediately prior to the Effective Time of the Merger,
shall become the Certificate of Incorporation and bylaws of the Surviving
Corporation until duly amended in accordance with their terms and as provided by
the DGCL.
Section 1.5 Directors and Officers. At the Effective Time of the
Merger, the directors and officers of the Subsidiary in office at the Effective
Time of the Merger shall become the directors and officers, respectively, of the
Surviving Corporation, each of such directors and officers to hold office,
subject to the applicable provisions of the Certificate of Incorporation and
bylaws of the Surviving Corporation and the DGCL, until his or her successor is
duly elected or appointed and qualified.
Section 1.6 Shareholders' Dissenters Rights. The Shareholders of the
Parent are entitled to dissenters' rights under sections 92A.300 through 92A.500
of the NRS.
ARTICLE II
CONVERSION AND EXCHANGE OF STOCK
Section 2.1 Conversion. At the Effective Time of the Merger, each of
the following transactions shall be deemed to occur simultaneously:
(a) Each share of Parent Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and become one (1) validly issued, fully paid and nonassessable share of
the Surviving Corporation's common stock, par value $0.001 per share (the
"Surviving Corporation Common Stock").
(b) Each share of Series A Stock issued and outstanding immediately
prior to the Effective Time of the Merger shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
become one and 15/100 (1.15) validly issued, fully paid and nonassessable shares
of Surviving Corporation Common Stock.
(c) Each option to purchase shares of Parent Common Stock outstanding
immediately prior to the Effective Time of the Merger shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and become an option to purchase, upon the same terms and conditions, the
number of shares of Surviving Corporation Common Stock, which is equal to the
number of shares of Parent Common Stock that the optionee would have received
had the optionee exercised such option in full immediately prior to the
Effective Time of the Merger (whether or not such option was then exercisable)
and the exercise price per share under each of said options shall be the
exercise price per share thereunder immediately prior to the Effective Time of
the Merger, unless otherwise provided in the instrument granting such option.
(d) Each warrant (other than Money Centers Merger Warrants) to purchase
shares of Parent Common Stock outstanding immediately prior to the Effective
Time of the Merger shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and become a warrant to purchase,
upon the same terms and conditions, the number of shares of Surviving
Corporation Common Stock which is equal to the number of shares of Parent Common
Stock that the warrant holder would have received had the warrant holder
42
exercised such warrant in full immediately prior to the Effective Time of the
Merger (whether or not such warrant was then exercisable) and the exercise price
per share under each of said warrants shall be the exercise price per share
thereunder immediately prior to the Effective Time of the Merger, unless
otherwise provided in the instrument granting such warrant.
(d) Each Money Centers Merger Warrant outstanding immediately prior to
the Effective Time of the Merger shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and become one and
15/100 (1.15) validly issued, fully paid and nonassessable shares of Surviving
Corporation Common Stock.
(e) Each share of the Subsidiary's Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger and held by the Parent
shall be canceled without any consideration being issued or paid therefor.
Section 2.2 Exchange.
(a) After the Effective Time of the Merger, each certificate
theretofore representing issued and outstanding shares of Parent Common Stock
shall represent one (1) share of Surviving Corporation Common Stock.
(b) At any time on or after the Effective Time of the Merger, each
holder of an outstanding certificate theretofore representing Parent Common
Stock will be requested to surrender such certificate to _________________ as
the exchange agent (the "Exchange Agent"). As soon as practicable after the
surrender to the Exchange Agent of any certificate which prior to the Merger
represented shares of Parent Common Stock, together with a duly executed
transmittal letter and any other documents the Exchange Agent may specify, the
Exchange Agent shall deliver to the person in whose name such certificate has
been issued certificates registered in the name of such person representing the
number of full shares of the Surviving Corporation's Stock into which the shares
of Parent Common Stock previously represented by the surrendered certificate
shall have been reclassified.
(c) No certificates or scrip representing fractional shares of
Surviving Corporation Common Stock shall be issued in connection with the
Merger. Instead, stockholders holding a number of shares of Parent Common Stock
not evenly divisible by the exchange ratio, and stockholders holding less than
the exchange ratio of shares of Parent Common Stock, upon surrender of their old
certificates, will receive cash in lieu of fractional shares of Surviving
Corporation Common Stock. The price payable by the Parent will be determined by
multiplying the fraction of a share of new Surviving Corporation Common Stock by
the closing price for that number of shares as determined by the Board of
Directors of Parent Common Stock at the Effective Time of the Merger for which
transactions in Parent Common Stock are reported, as reported by the Nasdaq Over
the Counter Bulletin Board.
ARTICLE III
EMPLOYEE BENEFIT AND INCENTIVE COMPENSATION PLANS
At the Effective Time of the Merger, each employee benefit plan,
incentive compensation plan and other similar plans to which the Parent is then
a party shall be assumed by, and continue to be the plan of, the Surviving
Corporation. To the extent any employee benefit plan, incentive compensation
plan or other similar plan of the Parent provides for the issuance or purchase
of, or otherwise relates to, Parent Common Stock, after the Effective Time of
the Merger such plan shall be deemed to provide for the issuance or purchase of,
or otherwise relate to, Surviving Corporation Common Stock.
ARTICLE IV
CONDITIONS
Consummation of the Merger is subject to the satisfaction at or prior
to the Effective Time of the Merger of the following conditions:
43
Section 4.1 Shareholder Approval. This Merger Agreement and the Merger
shall have been adopted and approved by the affirmative vote of a majority of
the votes entitled to be cast by all shareholders of the Parent entitled to vote
on the record date fixed for determining the shareholders of the Parent entitled
to vote thereon. This Agreement and the Merger shall also have been adopted and
approved by the Parent as the holder of all the outstanding shares of the
Subsidiary's Common Stock prior to the Effective Time of the Merger.
Section 4.2 Third Party Consents. The Parent shall have received all
required consents to and approvals of the Merger.
ARTICLE V
MISCELLANEOUS
Section 5.1 Amendment. This Merger Agreement may be amended, modified
or supplemented in whole or in part, at any time prior to the Effective Time of
the Merger with the mutual consent of the boards of directors of the parties
hereto; provided, however, that the Merger Agreement may not be amended after it
has been adopted by the shareholders of the Parent in any manner which, in the
judgment of the board of directors of the Parent, would have a material adverse
effect on the rights of such shareholders or in any manner not permitted under
applicable law.
Section 5.2 Termination. This Merger Agreement may be terminated or
abandoned by the parties hereto at any time prior to the filing of the
certificate of merger notwithstanding approval of this Merger Agreement by the
shareholders of either or both of the Parent or the Subsidiary.
Section 5.3 Necessary Actions, etc. If at any date after the Effective
Time of the Merger, the Surviving Corporation shall consider that any
assignments, transfers, deeds or other assurances in law are necessary or
desirable to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, title to any property or rights of the Parent, the Parent and its
officers and directors at the Effective Time of the Merger shall execute and
deliver such documents and do all things necessary and proper to vest, perfect
or confirm title to such property or rights in the Surviving Corporation, and
the officers and directors of the Surviving Corporation are fully authorized in
the name of the Parent or otherwise to take any and all such action.
Section 5.4 Counterparts. This Merger Agreement may be executed in any
number of counterparts, each of which shall be considered to be an original
instrument.
Section 5.5 Descriptive Headings. The descriptive headings are for
convenience of reference only and shall not control or affect the meaning or
construction of any provision of this Merger Agreement.
Section 5.6 Governing Law. This Merger Agreement shall be construed in
accordance with the laws of the State of Delaware, except to the extent the laws
of the State of Nevada shall mandatorily apply to the Merger.
IN WITNESS WHEREOF, the undersigned officers of each of the parties to
this Merger Agreement, pursuant to authority duly given by their respective
boards of directors, have caused this Merger Agreement to be duly executed on
the date set forth above.
IGAMES ENTERTAINMENT, INC.
By: /s/ Christopher M. Wolfington
-----------------------------
Christopher M. Wolfington
Chief Executive Officer
MONEY CENTERS OF AMERICA, INC.
By: /s/ Christopher M. Wolfington
-----------------------------
Christopher M. Wolfington
Chief Executive Officer
44
EXHIBIT B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MONEY CENTERS OF AMERICA, INC.
MONEY CENTERS OF AMERICA, INC., a corporation existing under the laws
of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is Money Centers of America, Inc. The
date of the filing of the Corporation's original Certificate of Incorporation
was October 10, 1997.
2. This Restated Certificate of Incorporation restates, integrates and
amends the Certificate of Incorporation of the Corporation.
3. This Restated Certificate of Incorporation was duly adopted by
written consent of the stockholders of the Corporation in accordance with the
applicable provisions of Sections 228, 242 and 245 of the General Corporation
Law of the State of Delaware (the "GCL").
4. The text of the Certificate of Incorporation as amended heretofore
is further amended hereby to read as herein set forth in full:
FIRST - The name of the corporation is Money Centers of America, Inc.
SECOND - The registered office of the Corporation in the State of
Delaware is to be located at 32 W. Loockerman Street, Suite 109, Dover, Delaware
19901, in the County of Kent. The registered agent at this address is Capitol
Corporate Services, Inc.
THIRD - The nature of the business to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the GCL.
FOURTH - The total number of shares of capital stock of the Corporation
that the Corporation shall have authority to issue is One Hundred Seventy
Million (170,000,000), of which One Hundred Fifty Million (150,000,000) shares
having a par value of $0.001 per share shall be designated as Common Stock and
Twenty Million (20,000,000) shares having a par value of $0.001 per share shall
be designated as Preferred Stock. Series of the Preferred Stock may be created
and issued from time to time, with such designations, preferences, conversion
rights, cumulative, relative, participating, optional or other rights, including
voting rights, qualifications, limitations or restrictions thereof as shall be
stated and expressed in the resolution or resolutions providing for the creation
and issuance of such series of Preferred Stock as adopted by the Board of
Directors pursuant to the authority in this paragraph given. The Common Stock
and the Preferred Stock may be issued from time to time without further action
by the stockholders. The Common Stock and the Preferred Stock may be issued for
such consideration as may be fixed from time to time by the Board of Directors.
A. Common Stock
The shares of Common Stock shall be alike and equal in all respects and
shall have one vote for each share. After any requirements with respect to
preferential dividends, if any, on the Preferred Stock have been met, then, and
not otherwise, dividends payable in cash or in any other medium may be declared
by the Board of Directors and paid on the shares of Common Stock. After
distribution in full of the preferential amount, if any, to be distributed to
the holders of Preferred Stock in the event of voluntary or involuntary
liquidation, dissolution, distribution of assets or winding-up of the
Corporation, the holders of the Common Stock shall be entitled to receive all of
the remaining assets of the Corporation of whatever kind available for
distribution to stockholders ratably in proportion to the number of shares of
Common Stock held by them respectively.
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B. Preferred Stock
The Board of Directors is expressly granted authority to issue shares
of the Preferred Stock. The Preferred Stock may be issued in one or more series
at such time or times and for such consideration or considerations as the Board
of Directors may determine pursuant to a resolution or resolutions providing for
such issuance duly adopted by the Board of Directors (authority to do so being
hereby expressly vested in the Board of Directors) and such resolution or
resolutions shall also set forth, with respect to each such series of Preferred
Stock, the following:
(1) The distinctive designation, stated value and number of shares
comprising such series, which number may (except where otherwise
provided by the Board of Directors in creating such series) be
increased or decreased (but not below the number of shares then
outstanding) from time to time by action of the Board of Directors;
(2) The rate of dividend, if any, on the shares of that series, whether
dividends shall be cumulative and, if so, from which date, and the
relative rights of priority, if any, of payment of dividends on shares
of that series over shares of any other series;
(3) Whether the shares of that series shall be redeemable and, if so, the
terms and conditions of such redemption, including the date upon or
after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions
and at different redemption dates, or the property or rights, including
securities of any other corporation, payable in case of redemption;
(4) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series and, if so, the terms and amounts
payable into such sinking fund;
(5) The rights to which the holders of the shares of that series shall be
entitled in the event of voluntary or involuntary liquidation,
dissolution, distribution of assets or winding-up of the Corporation,
and the relative rights of priority, if any, of payment of shares of
that series;
(6) Whether the shares of that series shall be convertible into or
exchangeable for shares of capital stock of any class or any other
series of Preferred Stock and, if so, the terms and conditions of such
conversion or exchange including the rate of conversion or exchange,
the date upon or after which they shall be convertible or exchangeable,
the duration for which they shall be convertible or exchangeable, the
event upon or after which they shall be convertible or exchangeable at
whose option they shall be convertible or exchangeable, and the method
of adjusting the rate of conversion or exchange in the event of a stock
split, stock dividend, combination of shares or similar event;
(7) Whether the shares of that series shall have voting rights in addition
to the voting rights provided by law and, if so, the terms of such
voting rights;
(8) Whether the issuance of any additional shares of such series, or of any
shares of any other series, shall be subject to restrictions as to
issuance, or as to the powers, preferences or rights of any such other
series; and
(9) Any other preferences, privileges and powers, and relative,
participating, optional or other special rights, and qualification,
limitation or restriction of such series, as the Board of Directors may
deem advisable and as shall not be inconsistent with the provisions of
this Certificate of Incorporation and to the full extent now or
hereafter permitted by the laws of the State of Delaware.
SECTION 1. FIFTH - Section 1. No Person may become the Beneficial Owner of five
percent (5%) or more of any class or series of the Corporation's issued and
outstanding capital stock unless such Person agrees in writing to: (i) provide
to the Gaming Authorities information regarding such Person, including without
limitation thereto, information regarding other gaming-related activities of
such Person and financial statements, in such form, and with such updates, as
may be required by any Gaming Authority; (ii) respond to written or oral
questions that may be propounded by any Gaming Authority; and (iii) consent to
the performance of any background investigation that may be required by any
Gaming Authority, including without limitation thereto, an investigation of any
criminal record of such Person.
46
SECTION 2. Section 2. Notwithstanding any other provisions in this Certificate,
but subject to the provisions of any resolution of the Board of Directors
creating any series of Preferred Stock or any other class of stock which has a
preference over Common Stock with regard to dividends or upon liquidation,
outstanding shares of capital stock held by a Disqualified Holder shall be
subject to redemption at any time by the Corporation by action of the Board of
Directors. The terms and conditions of such redemption shall be as follows:
(a) the redemption price of the shares to be redeemed pursuant to this
Section 2 of this Paragraph FIFTH shall be equal to the Fair Market Value of
such shares or such other redemption price as required by pertinent state or
federal law pursuant to which the redemption is required;
(b) the redemption price of such shares may be paid in cash, Redemption
Securities or any combination thereof;
(c) if less than all the shares held by Disqualified Holders are to be
redeemed, the shares to be redeemed shall be selected in such manner as shall be
determined by the Board of Directors, which may include selection first of the
most recently purchased shares thereof, selection by lot, or selection in any
other manner determined by the Board of Directors;
(d) at least thirty (30) days' written notice of the Redemption Date
shall be given to the record holders of the shares selected to be redeemed
(unless waived in writing by any such holder) provided that the Redemption Date
may be the date on which written notice shall be given to record holders if the
cash or Redemption Securities necessary to effect the redemption shall have been
deposited in trust for the benefit of such record holders and subject to
immediate withdrawal by them upon surrender of the stock certificates for their
shares to be redeemed;
(e) from and after the Redemption Date or such earlier date as mandated
by pertinent state or federal law, any and all rights of whatever nature, which
may be held by the Beneficial Owners of shares selected for redemption
(including without limitation any rights to vote or participate in dividends
declared on stock of the same class or series as such shares), shall cease and
terminate and they shall thereafter be entitled only to receive the cash or
Redemption Securities payable upon redemption; and
(f) such other terms and conditions as the Board of Directors shall
determine.
SECTION 3. Capitalized terms used in this Paragraph FIFTH shall have the
meanings provided below:
"Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 under the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Act"). The term "registrant"
as used in such Rule 12b-2 shall mean the Corporation.
"Beneficial Owner" shall mean any person who, singly or together with
any of such person's Affiliates or Associates, directly or indirectly, has
"beneficial ownership" of capital stock (as determined pursuant to Rule 13d-3 of
the Act).
"Closing Price" on any day means the reported closing sales price on
the principal United States securities exchange on which such stock is listed,
or, if such stock is not listed on any such exchange, the highest closing sales
price or bid quotation for such stock on the National Association of Securities
Dealers Automated Quotation System (including the National Market System, Small
Cap Market or OTCBB) or any system then in use, or, if no such prices or
quotations are available, the "Fair Market Value" (defined below) on the day in
question as determined by the Board of Directors in good faith.
"Disqualified Holder" shall mean any Beneficial Owner of shares of
capital stock of the Corporation or any of its Subsidiaries, whose holding of
shares of capital stock may result or, when taken together with the holding of
shares of capital stock by any other Beneficial Owner, may result, in the
judgment of the Board of Directors, in (i) the disapproval, modification, or
non-renewal of any contract under which the Corporation or any of its
Subsidiaries has sole or shared authority to manage any gaming operations, or
(ii) the loss or non-reinstatement of any license or franchise from any
governmental agency held by the Corporation or any Subsidiary to conduct any
portion of the
47
business of the Corporation or any Subsidiary, which license or franchise is
conditioned upon some or all of the holders of capital stock meeting certain
criteria.
"Fair Market Value" of a share of capital stock shall mean the average
Closing Price for such a share for the forty-five (45) most recent days during
which shares of stock of such class or series shall have been traded preceding
the day on which notice of redemption shall have been given pursuant to
subparagraph (d) of Section 2 of this Paragraph FIFTH; provided, however, that
if shares of stock of such class or series are not traded on any securities
exchange or in the over-the-counter market, "Fair Market Value" shall be
determined by the Board of Directors in good faith; and provided, further,
however, that "Fair Market Value" as to any stockholder who purchases any stock
subject to redemption within 120 days prior to a Redemption Date need not
(unless otherwise determined by the Board of Directors) exceed the purchase
price paid for such shares.
"Gaming Authorities" shall mean the National Indian Gaming Commission,
or any other tribal or governmental authority regulating any form of gaming that
has jurisdiction over the Corporation or its Subsidiaries.
"Person" shall mean any natural person, corporation, firm, partnership,
association, government, governmental agency, or any other entity, whether
acting in an individual, fiduciary, or any other capacity.
"Redemption Date" shall mean the date fixed by the Board of Directors
for the redemption of any shares of stock of the Corporation pursuant to Section
2 of this Paragraph FIFTH.
"Redemption Securities" shall mean any debt or equity securities of the
Corporation, any Subsidiary or any other corporation, or any combination
thereof, having such terms and conditions as shall be approved by the Board of
Directors and which, together with any cash to be paid as part of the redemption
price, in the opinion of any nationally recognized investment banking firm
selected by the Board of Directors (which may be a firm which provides other
investment banking, brokerage or other services to the Corporation), has a
value, at the time notice of redemption is given pursuant to subparagraph (d),
Section 2 of this Paragraph FIFTH, at least equal to the Fair Market Value of
the shares to be redeemed pursuant to Section 2 of this Paragraph FIFTH
(assuming, in the case of Redemption Securities to be publicly traded, such
Redemption Securities were fully distributed and subject only to normal trading
activity).
"Subsidiary" shall mean any company of which a majority of any class of
equity security is beneficially owned by the Corporation.
SIXTH - The Corporation shall have perpetual existence.
SEVENTH - The Corporation, to the full extent permitted by Section 145
of the GCL, as amended from time to time, shall have the power to 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 another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorney's 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 reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceedings, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, upon a plea of nolo contendere or 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.
EIGHTH - A director of the Corporation shall not be personally liable
to the Corporation or to its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; or (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; or (iii)
under Section 174 of the GCL; or (iv) for any transaction from which the
director derived an improper personal benefit.
48
NINTH - In the furtherance and not in limitation of the objects,
purposes and powers conferred by the laws of the State of Delaware, the
directors of the Corporation shall have the power to make and to alter or amend
the By-Laws; to fix the amount to be reserved as working capital; and to
authorize and cause to be executed, mortgages and liens, without limit as to the
amount, upon the property and franchise of the Corporation.
TENTH - Meetings of the stockholders may be held within or without the
State of Delaware, as the By-laws may provide. The books of the Corporation may
be kept, subject to any provisions contained in the statutes, outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the By-Laws of the Corporation. Elections of
directors need not be by written ballot unless the By-laws of the Corporation
shall so provide.
ELEVENTH - The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereinafter prescribed by statute, and all rights conferred upon
stockholders are herein granted subject to this reservation.
THE UNDERSIGNED, for the purpose of forming a corporation under the
laws of the State of Delaware, does make, file and record this Certificate, and
does certify that the facts herein stated are true; and accordingly does set
forth his hand.
Dated: ____________________ MONEY CENTERS OF AMERICA, INC.
By: __________________________________
Name: Christopher M. Wolfington
Title: President and Chief Executive Officer
49
EXHIBIT C
AMENDED AND RESTATED
BYLAWS
OF
MONEY CENTERS OF AMERICA, INC.
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of Money Centers of
America, Inc. (the "Corporation") shall be at 32 W. Loockerman Street, Suite
109, Dover, Delaware 19901, in the County of Kent. The registered agent at this
address is Capitol Corporate Services, Inc.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the United States as the Board of Directors
of the Corporation (the "Board of Directors") may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The annual meeting of stockholders shall be
held on such date and at such time as may be fixed by the Board of Directors and
stated in the notice of the meeting, for the purpose of electing directors and
for the transaction of only such other business as is properly brought before
the meeting in accordance with these amended and restated bylaws (the "Bylaws").
Written notice of an annual meeting stating the place, date and hour of
the meeting, shall be given to each stockholder entitled to vote at such meeting
at his, her or its address last known as the same appears on the books of the
Corporation, not less than ten (10) nor more than sixty (60) days before the
date of the meeting.
To be properly brought before the annual meeting, business must be
either (i) specified in the notice of annual meeting (or any supplement or
amendment thereto) given by or at the direction of the Board of Directors, (ii)
otherwise brought before the annual meeting by or at the direction of the Board
of Directors, or (iii) otherwise properly brought before the annual meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation not less than
one hundred and twenty (120) days prior to the anniversary of the date on which
the proxy statement for the immediately preceding annual meeting was mailed to
stockholders or if the Corporation did not hold an annual meeting in the prior
year or if the date of the annual meeting occurs more than thirty (30) days
before or after the anniversary of such immediately preceding annual meeting,
not later than the close of business on the later of the sixtieth (60th) day
prior to such annual meeting and the tenth (10th) day following the date on
which public announcement of the date of such annual meeting is first made. A
stockholder's notice to the Secretary shall set forth (a) as to each matter the
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, and (ii) any material
interest of the stockholder in such business, and (b) as to the stockholder
giving the notice (i) the name and record address of the stockholder and (ii)
the class, series and number of shares of capital stock of the Corporation which
are
50
beneficially owned by the stockholder. Notwithstanding anything in these Bylaws
to the contrary, no business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this Article II, Section 2. The
officer of the Corporation presiding at an annual meeting shall, if the facts
warrant, determine and declare to the annual meeting that business was not
properly brought before the annual meeting in accordance with the provisions of
this Article II, Section 2, and if such officer should so determine, such
officer shall so declare to the annual meeting and any such business not
properly brought before the meeting shall not be transacted.
Section 3. Special Meetings. Unless otherwise prescribed by law or by
the amended and restated certificate of incorporation of the Corporation (the
"Certificate of Incorporation"), special meetings of stockholders, for any
purpose or purposes, may only be called by a majority of the entire Board of
Directors, the Chairman of the Board or the Chief Executive Officer. Written
notice of a special meeting stating the place, date and hour of the meeting,
shall be given to each stockholder entitled to vote at such meeting not less
than ten (10) nor more than sixty (60) days before the date of the meeting.
Business transacted at any special meeting shall be limited to the purposes
stated in the notice. The written certificate of the officer or officers calling
any special meeting setting forth the substance of the notice, and the time and
place of the mailing of same to the stockholders, and the respective addresses
to which the same were to be mailed, shall be prima facie evidence of the manner
and fact of the calling and giving such notice.
Section 4. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of outstanding shares of capital stock
representing a majority of the voting power of the Corporation, present in
person or represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the holders of the
shares representing a majority of the voting power, present in person or
represented by proxy, and entitled to vote at the meeting, may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented by proxy. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is for more than thirty (30) days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder entitled to
vote at the meeting.
Section 5. Voting. Unless otherwise required by law, the Certificate of
Incorporation, the rules or regulations of any stock exchange applicable to the
Corporation or these Bylaws, any question (other than the election of directors)
brought before any meeting of stockholders shall be decided by the vote of the
holders of a majority of the stock represented and entitled to vote thereat. At
all meetings of stockholders for the election of directors, a plurality of the
votes cast shall be sufficient to elect. Each stockholder represented at a
meeting of stockholders shall be entitled to cast one vote for each share of the
capital stock entitled to vote thereat held by such stockholder, unless
otherwise provided by the Certificate of Incorporation. Such votes may be cast
in person or by proxy but no proxy shall be voted after three years from its
date, unless such proxy provides for a longer period. The Board of Directors, in
its discretion, or the officer of the Corporation presiding at a meeting of
stockholders, in his discretion, may require that any votes cast at such meeting
shall be cast by written ballot.
Section 6. Determination of Stockholders of Record.
(a) Meetings of Stockholders. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting. If no record date is fixed by the Board of Directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day immediately
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day immediately preceding the day on which the meeting
is held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting
unless the Board of Directors fixes a new record date for the adjourned meeting.
(b) Consent of Stockholders. In order that the Corporation may
determine the stockholders entitled to consent to corporate action in writing
without a meeting, the Board of Directors may fix a record date,
51
which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which date shall not
be more than ten (10) days after the date upon which the resolution fixing the
record date is adopted by the Board of Directors. If no record date has been
fixed by the Board of Directors, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is required by the General Corporation
Law of the State of Delaware (the "GCL"), shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in Delaware,
its principal place of business, or an officer or agent of the Corporation
having custody of the books in which proceedings of meetings of stockholders are
recorded. If no record date has been fixed by the Board of Directors and prior
action by the Board of Directors is required by the GCL, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action.
(c) Dividends. In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights of the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty (60)
days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
Section 7. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
Section 8. Inspectors of Election.
(a) Appointment. All elections of directors shall be by written ballot,
unless otherwise provided in the Certificate of Incorporation; the vote upon any
other matter need not be by ballot. In advance of any meeting of stockholders,
the Board of Directors may appoint one or more inspectors, who need not be
stockholders, to act at the meeting and to make a written report thereof. The
Board of Directors may designate one or more persons as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate is able to
act at a meeting of stockholders, the person presiding at the meeting shall
appoint one or more inspectors to act at the meeting. Each inspector, before
entering upon the discharge of his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the person's best ability.
(b) Duties. The inspectors shall ascertain the number of shares
outstanding and the voting power of each, shall determine the shares represented
at the meeting and the validity of proxies and ballots, shall count all votes
and ballots, shall determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors, and
shall certify their determination of the number of shares represented at the
meeting and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors.
(c) Polls. The date and time of the opening and the closing of the
polls for each matter upon which the stockholders will vote at a meeting shall
be announced at the meeting. No ballot, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the inspectors after the
closing of the polls unless a court with appropriate jurisdiction upon
application by a stockholder shall determine otherwise.
(d) Reconciliation of Proxies and Ballots. In determining the validity
and counting of proxies and ballots, the inspectors shall be limited to an
examination of the proxies, any envelopes submitted with
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those proxies, ballots and the regular books and records of the Corporation,
except that the inspectors may consider other reliable information for the
limited purpose of reconciling proxies and ballots submitted by or on behalf of
banks, brokers, their nominees or similar persons which represent more votes
than the holder of a proxy is authorized by the record owner to cast or more
votes than the stockholder holds of record. If the inspectors consider other
reliable information for the limited purpose permitted herein, the inspectors at
the time they make their certification pursuant to subsection (b) shall specify
the precise information considered by them including the person or persons from
whom they obtained the information, when the information was obtained, the means
by which the information was obtained and the basis for the inspectors' belief
that such information is accurate and reliable.
Section 9. Stock Ledger. The stock ledger of the Corporation shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 6 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 10. Adjournment. Any meeting of the stockholders, including one
at which directors are to be elected, may be adjourned for such periods as the
presiding officer of the meeting or the stockholders present in person or by
proxy and entitled to vote shall direct.
Section 11. Shareholder Action Without Meetings. Any action required to
be taken at any annual or special meeting of stockholders, or any action which
may be taken at any annual or special meeting of stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. Powers; Number; Qualifications. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors, except as may be otherwise provided by law or in the Certificate of
Incorporation. The number of directors which shall constitute the Board of
Directors shall be not less than three (3) nor more than twenty (20). The exact
number of directors shall be fixed from time to time by the Board of Directors,
within the limits specified in this Article III Section 1 or in the Certificate
of Incorporation. Directors need not be stockholders of the Corporation.
Section 2. Election; Term of Office; Resignation; Removal; Vacancies.
Each director shall hold office until the next annual meeting of stockholders or
until such director's earlier resignation, removal from office, death or
incapacity. Any director may resign at any time upon written notice to the Board
of Directors or to the Chief Executive Officer or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein,
and unless otherwise specified therein no acceptance of such resignation shall
be necessary to make it effective. Any director or the entire Board of Directors
may be removed, but only for cause, by that vote of the stockholders of the
Corporation required under the GCL. Unless otherwise provided in the Certificate
of Incorporation, vacancies and newly created directorships resulting from any
increase in the authorized number of directors or from any other cause may be
filled by a majority of the directors then in office, although less than a
quorum, or by a sole remaining director and each director so chosen shall hold
office until the next annual meeting of stockholders and until such director's
successor shall be duly elected and shall qualify, or until such director's
earlier resignation, removal from office, death or incapacity.
Section 3. Nominations. Nominations of persons for election to the
Board of Directors of the Corporation at a meeting of stockholders of the
Corporation may be made at such meeting by or at the direction of the Board of
Directors, by any committee or persons appointed by the Board of Directors or by
any stockholder of the Corporation entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth in
this Article III, Section 3. Such nominations by any stockholder shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered to or mailed and received at
the principal executive offices of the Corporation not less than one hundred
twenty (120) days prior
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to the anniversary of the date on which the proxy statement for the immediately
preceding annual meeting was mailed to stockholders or if the Corporation did
not hold an annual meeting in the prior year or if the date of the annual
meeting occurs more than thirty (30) days before or after the anniversary of
such immediately preceding annual meeting, then not later than the close of
business on the later of the sixtieth (60th) day prior to such annual meeting
and the tenth (10th) day following the date on which public announcement of the
date of such annual meeting is first made. Such stockholder's notice to the
Secretary shall set forth (i) as to each person whom the stockholder proposes to
nominate for election or reelection as a director, (a) the name, age, business
address and residence address of the person, (b) the principal occupation or
employment of the person, (c) the class and number of shares of capital stock of
the Corporation which are beneficially owned by the person, and (d) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to the Rules and
Regulations of the Securities and Exchange Commission under Section 14 of the
Securities Exchange Act of 1934, as amended, and (ii) as to the stockholder
giving the notice (a) the name and record address of the stockholder and (b) the
class and number of shares of capital stock of the Corporation which are
beneficially owned by the stockholder. The Corporation may require any proposed
nominee to furnish such other information as may reasonably be required by the
Corporation to determine the eligibility of such proposed nominee to serve as a
director of the Corporation. No person shall be eligible for election as a
director of the Corporation unless nominated in accordance with the procedures
set forth herein. The officer of the Corporation presiding at an annual meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing procedure, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
Section 4. Meetings. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman of the Board or Chief Executive Officer or a majority of the entire
Board of Directors. Notice thereof stating the place, date and hour of the
meeting shall be given to each director either by mail not less than forty-eight
(48) hours before the date of the meeting, by telephone or telegram on
twenty-four (24) hours notice, or on such shorter notice as the person or
persons calling such meeting may deem necessary or appropriate in the
circumstances.
Section 5. Quorum. Except as may be otherwise specifically provided by
law, the Certificate of Incorporation or these Bylaws, at all meetings of the
Board of Directors or any committee thereof, a majority of the entire Board of
Directors or such committee, as the case may be, shall constitute a quorum for
the transaction of business and the act of a majority of the directors present
at any meeting at which there is a quorum shall be the act of the Board of
Directors or such committee, as the case may be. If a quorum shall not be
present at any meeting of the Board of Directors or of any committee thereof, a
majority of the directors present thereat may adjourn the meeting from time to
time until a quorum shall be present.
Section 6. Actions of Board of Directors. Unless otherwise provided by
the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.
Section 7. Meetings by Means of Conference Telephone. Unless otherwise
provided by the Certificate of Incorporation or these Bylaws, members of the
Board of Directors of the Corporation, or any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Article III, Section 7 shall
constitute presence in person at such meeting.
Section 8. Committees of the Board of Directors. There is hereby
established as a committee of the Board of Directors an Audit Committee having
the powers and functions set forth below and such additional powers as may be
delegated to it by the Board of Directors. The Board of Directors may from time
to time establish additional standing committees or special committees of the
Board of Directors including, but not limited to, a Compensation Committee and a
Nominating Committee, each of which shall have such powers and functions set
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forth below or as may be delegated to it by the Board of Directors. The Board of
Directors may abolish any committee established by or pursuant to this Section 8
as it may deem advisable. Each such committee shall consist of one or more
directors, the exact number being determined from time to time by the Board of
Directors. Designations of the chairman and members of each such committee, and,
if desired, a vice chairman and alternates for members, shall be made by the
Board of Directors. Each such committee shall have a secretary who shall be
designated by its chairman and shall keep regular minutes and report to the
Board of Directors as required. The vice chairman of a committee shall act as
the chairman of the committee in the absence or disability of the chairman.
(a) Audit Committee. The Audit Committee shall be responsible for the
appointment, compensation, retention and oversight of the work of any accounting
firm engaged to prepare or issue an audit report or to perform other audit,
review or attest services on behalf of the Corporation. The appointment and
retention of an accounting firm for each fiscal year shall be made in advance of
the annual meeting of stockholders in such fiscal year and shall be submitted
for ratification or rejection at such meeting. The Audit Committee shall operate
in accordance with a charter approved by the Board of Directors.
(b) Compensation Committee. The Compensation Committee, if and when
designated, shall fix from time to time the salaries of members of the Board of
Directors who are officers or employees of the Company, the Chief Executive
Officer, the President, and of any and all Vice Presidents of the Company. It
also shall perform such functions as may be delegated to it under the provisions
of any bonus, supplemental compensation, special compensation or stock option
plan of the Company. The Compensation Committee shall operate in accordance with
a charter approved by a Board of Directors.
(c) Nominating Committee. The Nominating Committee, if and when
designated, from time to time shall consider and make recommendations to the
Board of Directors, to the Chairman of the Board of Directors and to the
President with respect to the nominations or elections of directors and officers
of the Company, senior management succession plans and the appointments of such
other employees of the Company as shall be referred to the Committee. The
Committee from time to time shall consider the size, composition and functioning
of the Board of Directors and make recommendations to the Board of Directors
with respect to such matters. Prior to the annual meeting of stockholders each
year, and prior to any special meeting of stockholders at which a director is to
be elected, the Committee shall recommend to the Board of Directors persons
proposed to constitute the nominees whose election at such meeting will be
recommended by the Board of Directors. The authority vested in the Committee by
this section shall not derogate from the power of individual members of the
Board of Directors to recommend or place in nomination persons other than those
recommended by the Committee. The Committee also shall perform such other
functions and exercise such other powers as may be delegated to it from time to
time by the Board of Directors. The Nominating Committee shall operate in
accordance with a charter approved by a Board of Directors.
(d) Other Committees. The Board of Directors, or any committee, officer
or employee of the Company may establish additional standing committees or
special committees to serve in an advisory capacity or in such other capacities
as may be permitted by law, by the Certificate of Incorporation and by the
Amended and Restated By-Laws. The members of any such committee need not be
members of the Board of Directors. Any committee established pursuant to this
Section 8 may be abolished by the person or body by whom it was established as
he, she or it may deem advisable. Each such committee shall consist of two or
more members, the exact number being determined from time to time by such person
or body. Designations of members of each such committee and, if desired,
alternates for members, shall be made by such person or body, at whose will all
such members and alternates shall serve.
Section 9. Compensation. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed amount (in cash or other form of consideration) for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
Section 10. Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest,
55
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board of
Directors or committee thereof which authorizes the contract or transaction, or
solely because his or their votes are counted for such purpose, if (i) the
material facts as to his or their relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or their relationship or interest
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board of Directors, a committee thereof
or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be elected by
the Board of Directors and shall consist of: a Chairman of the Board; a Chief
Executive Officer; a President; a Secretary; and a Treasurer. The Board of
Directors, in its discretion, may also elect one or more Vice Presidents
(including Executive Vice Presidents and Senior Vice Presidents), Assistant
Secretaries, Assistant Treasurers and such other officers as in the judgment of
the Board of Directors may be necessary or desirable. Any number of offices may
be held by the same person and more than one person may hold the same office,
unless otherwise prohibited by law, the Certificate of Incorporation or these
Bylaws. The officers of the Corporation need not be stockholders of the
Corporation nor, except in the case of the Chairman of the Board of Directors,
need such officers be directors of the Corporation.
Section 2. Election. The Board of Directors at its first meeting held
after each annual meeting of stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier resignation or
removal. Except as otherwise provided in this Article IV, any officer elected by
the Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
Corporation shall be filled by the Board of Directors. The salaries of all
officers who are directors of the Corporation shall be fixed by the Board of
Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman of the Board, Chief Executive
Officer, President or any Vice President, and any such officer may, in the name
and on behalf of the Corporation, take all such action as any such officer may
deem advisable to vote in person or by proxy at any meeting of security holders
of any corporation in which the Corporation may own securities and at any such
meeting shall possess and may exercise any and all rights and powers incident to
the ownership of such securities and which, as the owner thereof, the
Corporation might have exercised and possessed if present. The Board of
Directors may, by resolution, from time to time confer like powers upon any
other person or persons.
Section 4. Chairman of the Board. The Chairman of the Board shall be a
member of the Board of Directors, and shall exercise and perform such duties and
have such powers as may be prescribed by the Board of Directors or these Bylaws,
all in accordance with basic policies as established by and subject to the
oversight of the Board of Directors. The Chairman of the Board of Directors
shall be responsible for scheduling all Board of Directors meetings, annual
stockholder meetings, Board of Directors retreats and other activities
pertaining to the Board of Directors. He shall also ensure that meeting agendas
cover all matters of importance to the Board of Directors and be responsible for
making all arrangements for meetings, to include proper notice as provided for
herein. The Chairman of the Board of Directors shall also insure that the agenda
of meetings is followed and be responsible for communication between the Board
of Directors and management, during the period between meetings of the Board of
Directors. The Chairman shall monitor the performance of the Board of Directors
as a collective body and as individual members and shall further be responsible
for strategic and financial planning and shall otherwise insure the setting and
maintaining of policies and procedures adopted by the Board of Directors.
56
Section 5. Chief Executive Officer. The Chief Executive Officer of the
Corporation shall supervise, coordinate and manage the Corporation's business
and activities and supervise, coordinate and manage its operating expenses and
capital allocation, shall have general authority to exercise all the powers
necessary for the Chief Executive Officer of the Corporation and shall perform
such other duties and have such other powers as may be prescribed by the Board
of Directors or these Bylaws, all in accordance with basic policies as
established by and subject to the oversight of the Board of Directors. In the
absence or disability of the Chairman of the Board, the duties of the Chairman
of the Board shall be performed and the Chairman of the Board's authority may be
exercised by the Chief Executive Officer and, in the event the Chief Executive
Officer is absent or disabled, such duties shall be performed and such authority
may be exercised by a director designated for such purpose by the Board of
Directors.
Section 6. President. The President shall have general authority to
exercise all the powers necessary for the President of the Corporation and shall
perform such other duties and have such other powers as may be prescribed by the
Board of Directors or these Bylaws, all in accordance with basic policies as
established by and subject to the oversight of the Board of Directors, the
Chairman of the Board and the Chief Executive Officer. In the absence or
disability of the Chief Executive Officer, the duties of the Chief Executive
Officer and the Chief Executive Officer's authority (other than the Chief
Executive Officer's authority to perform the duties of the Chairman of the Board
in the absence or disability of the Chairman of the Board) may be exercised by
the President. In the event the President is absent or disabled, such authority
may be exercised by a director designated for such purpose by the Board of
Directors.
Section 7. Vice Presidents. The Board of Directors may appoint one or
more Vice Presidents. Each Vice President shall perform such duties and have
such powers as the Board of Directors from time to time may prescribe. In the
absence or disability of the President, the duties of the President and the
President's authority (other than the President's authority to perform the
duties of the Chief Executive Officer in the absence or disability of the Chief
Executive Officer) may be exercised by any Vice-President. If the Board of
Directors has appointed more than one Vice President, then the Board of
Directors shall establish the order of succession of the Vice Presidents to the
duties and authority of the President.
Section 8. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors, the
Chairman of the Board, the Chief Executive Officer or the President, under whose
supervision the Secretary shall be. If the Secretary shall be unable or shall
refuse to cause to be given notice of all meetings of the stockholders and
special meetings of the Board of Directors, and if there be no Assistant
Secretary, then the Board of Directors, the Chairman of the Board, the Chief
Executive Officer or the President may choose another officer to cause such
notice to be given. The Secretary shall have custody of the seal of the
Corporation and the Secretary or any Assistant Secretary, if there be one, shall
have authority to affix the same to any instrument requiring it and when so
affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature. The Secretary shall see that all books,
reports, statements, certificates and other documents and records required by
law to be kept or filed are properly kept or filed, as the case may be.
Section 9. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
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Section 10. Assistant Secretaries. Except as may be otherwise provided
in these Bylaws, Assistant Secretaries, if there be any, shall perform such
duties and have such powers as from time to time may be assigned to them by the
Board of Directors, the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, if there be one, or the Secretary, and in the
absence of the Secretary or in the event of his disability or refusal to act,
shall perform the duties of the Secretary, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the Secretary.
Section 11. Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, if there be one, or the
Treasurer, and in the absence of the Treasurer or in the event of his disability
or refusal to act, shall perform the duties of the Treasurer, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the Treasurer. If required by the Board of Directors, an Assistant Treasurer
shall give the Corporation a bond in such sum and with such surety or sureties
as shall be satisfactory to the Board of Directors for the faithful performance
of the duties of his office and for the restoration to the Corporation, in case
of his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his possession or
under his control belonging to the Corporation.
Section 12. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chief Executive Officer, the President or a Vice
President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation, certifying the number of shares
owned by him in the Corporation.
Section 2. Signatures. Any or all of the signatures on the certificate
may be a facsimile, including, but not limited to, signatures of officers of the
Corporation and countersignatures of a transfer agent or registrar. In case an
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these Bylaws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the certificate
or by his attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be canceled before a new certificate shall be
issued.
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ARTICLE VI
DIVIDENDS
Section 1. The Board of Directors shall have power to reserve over and
above the capital stock paid in, such an amount in its discretion as it may deem
advisable to fix as a reserve fund, and may, from time to time, declare
dividends from the accumulated profits of the Corporation in excess of the
amounts so reserved, and pay the same to the stockholders of the Corporation,
and may also, if it deems the same advisable, declare stock dividends of the
unissued capital stock of the Corporation.
ARTICLE VII
AMENDMENTS
Section 1. By Shareholders. Amendments and changes of these Bylaws may
be made by a vote of, or a consent in writing signed individually or
collectively by the holders of issued and outstanding capital stock of the
Corporation having that number of votes equal to at least a majority of the
votes entitled to vote on matters presented to stockholders (other than the
election of directors).
Section 2. By Directors. Amendments and changes of these Bylaws may be
made at any regular or special meeting of the Board of Directors by a vote of
not less than all of the entire Board of Directors, or may be made by a consent
in writing signed individually or collectively by not less than all of the
entire Board of Directors.
ARTICLE VIII
CORPORATE SEAL
Section 1. The Corporation shall have a corporate seal, which shall
have inscribed thereon the name of the Corporation, the year of its organization
and the words "Corporate Seal, Delaware". The seal may be used by causing it or
a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
ARTICLE IX
INDEMNIFICATION
Section 1. Nature of Indemnity. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "Proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer,
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the Corporation to the fullest extent which it is empowered to
do so by the GCL, as the same exists or may hereafter be amended, against all
expense, liability and loss (including attorneys' fees) actually and reasonably
incurred by such person in connection with such Proceeding and such
indemnification shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in Section 2 hereof,
the Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding initiated by such person only if such proceeding
was authorized by the Board of Directors. The right to indemnification conferred
in this Article IX shall be a contract right and, subject to Sections 2 and 5
hereof, shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition.
The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the Corporation under Section 1 of
this Article IX or advance of expenses under Section 5 of this Article IX shall
be made promptly, and in any event within 30 days, upon the written request of
the director or officer. If a determination by the Corporation that the director
or officer is entitled to indemnification pursuant to this Article IX is
required, and the Corporation fails to respond within sixty (60) days to a
written request for indemnity, the
59
Corporation shall be deemed to have approved the request. If the Corporation
denies a written request for indemnification or advancing of expenses, in whole
or in part, or if payment in full pursuant to such request is not made within
thirty (30) days, the right to indemnification or advances as granted by this
Article IX shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to indemnification, in whole or
in part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the GCL for the Corporation to indemnify the claimant for
the amount claimed, but the burden of such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable standard of
conduct set forth in the GCL, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article IX shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, Bylaws, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the Corporation 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 or her and incurred by him
or her in any such capacity, whether or not the Corporation would have the power
to indemnify such person against such liability under this Article IX.
Section 5. Expenses. Expenses incurred by any person described in
Section 1 of this Article IX in defending a proceeding shall be paid by the
Corporation in advance of such proceeding's final disposition upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article IX and who are or were employees or agents
of the Corporation, or who are or were serving at the request of the Corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the Board of Directors.
Section 7. Contract Rights. The provisions of this Article IX shall be
deemed to be a contract right between the Corporation and each director or
officer who serves in any such capacity at any time while this Article IX and
the relevant provisions of the GCL or other applicable law are in effect, and
any repeal or modification of this Article IX or any such law shall not affect
any rights or obligations then existing with respect to any state of facts or
proceeding then existing.
ARTICLE X
WAIVERS OF NOTICE AND EXCEPTIONS TO NOTICE REQUIREMENTS
Section 1. Waivers of Notice.
(a) Written Waiver. Whenever notice is required to be given, under any
provision of the GCL or of the Certificate of Incorporation or Bylaws, a written
waiver, signed by the person or persons entitled to the notice, whether before
or after the time stated therein, shall be deemed equivalent to notice. Neither
the business
60
to be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, Board of Directors, or members of a committee of the Board of
Directors need be specified in any written waiver of notice of such meeting.
(b) Waiver by Attendance. Attendance of a person at a meeting, either
in person or by proxy, shall constitute a waiver of notice of such meeting,
except where a person attends a meeting for the express purpose of objecting at
the beginning of the meeting to the transaction of any business because the
meeting was not lawfully called or convened.
Section 2. Exception to Requirements of Notice.
(a) General Rule. Whenever notice is required to be given, under any
provision of the GCL or of the Certificate of Incorporation or these Bylaws, to
any person with whom communication is unlawful, the giving of such notice to
such person shall not be required and there shall be no duty to apply to any
governmental authority or agency for a license or permit to give such notice to
such person. Any action or meeting which shall be taken or held without notice
to any such person with whom communication is unlawful shall have the same force
and effect as if such notice had been duly given.
(b) Stockholders Without Forwarding Addresses. Whenever notice is
required to be given, under any provision of the GCL, the Certificate of
Incorporation or these Bylaws, to any stockholder to whom (i) notice of two
consecutive annual meetings, and all notices of meetings or of the taking of
action by written consent without a meeting to such person during the period
between such two consecutive annual meetings, or (ii) all, and at least two,
payments (if sent by first class mail) of dividends or interest on securities
during a twelve (12) month period, have been mailed addressed to such person at
his address as shown on the records of the Corporation and have been returned
undeliverable, the giving of such notice to such person shall not be required.
Any action or meeting which shall be taken or held without notice to such person
shall have the same force and effect as if such notice setting forth the
person's then current address, the requirement that notice be given to such
person shall be reinstated.
ARTICLE XI
GENERAL PROVISIONS
Section 1. Depositories. All monies of the Corporation shall be
deposited when as received by the Treasurer in such bank or banks or other
depositary as may from time to time be designated by the Board of Directors, and
such deposits shall be made in the name of the Corporation.
Section 2. Other Securities. The Corporation may take, acquire, hold,
mortgage, sell, or otherwise deal in stocks or bonds or securities of any other
corporation, if and as often as the Board of Directors shall determine to be
advisable and in the best interests of the Corporation.
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EXHIBIT D
iGames Entertainment, Inc.
AMENDED AND RESTATED 2003 STOCK INCENTIVE PLAN
(EFFECTIVE AS OF JANUARY 2, 2004)
ARTICLE I.
PURPOSE
The purpose of this iGames Entertainment, Inc. Amended and Restated
2003 Stock Incentive Plan (the "Plan") is to enhance the profitability and value
of iGames Entertainment, Inc. (the "Company") for the benefit of its
stockholders by enabling the Company (i) to offer employees and consultants of
the Company and its Affiliates stock based incentives and other equity interests
in the Company, thereby creating a means to raise the level of stock ownership
by employees and consultants in order to attract, retain and reward such
employees and consultants and strengthen the mutuality of interests between
employees or consultants and the Company's stockholders and (ii) to offer equity
based awards to non-employee directors thereby attracting, retaining and
rewarding such non-employee directors and strengthening the mutuality of
interests between non-employee directors and the Company's stockholders.
ARTICLE II.
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
2.1 "Affiliate" shall mean, other than the Company, each of the
following: (i) any Subsidiary; (ii) any Parent; (iii) any corporation, trade or
business (including, without limitation, a partnership or limited liability
company) which is directly or indirectly controlled fifty percent (50%) or more
(whether by ownership of stock, assets or an equivalent ownership interest or
voting interest) by the Company or one of its Affiliates; and (iv) any other
entity, approved by the Committee as an Affiliate under the Plan, in which the
Company or any of its Affiliates has a material equity interest.
2.2 "Award" shall mean any award under this Plan of any Stock Option,
Stock Appreciation Right or Restricted Stock. All Awards shall be confirmed by,
and subject to the terms of, a written agreement executed by the Company and the
Participant.
2.3 "Board" shall mean the Board of Directors of the Company.
2.4 "Cause" shall mean, with respect to a Participant's Termination of
Employment or Termination of Consultancy, unless otherwise determined by the
Committee at grant, or, if no rights of the Participant are reduced, thereafter:
(i) in the case where there is no employment agreement, consulting agreement,
change in control agreement or similar agreement in effect between the Company
or an Affiliate and the Participant at the time of the grant of the Award (or
where there is such an agreement but it does not define "cause" (or words of
like import)), termination due to a Participant's dishonesty, fraud,
insubordination, willful misconduct, refusal to perform services (for any reason
other than illness or incapacity) or materially unsatisfactory performance of
his or her duties for the Company as determined by the Committee in its sole
discretion; or (ii) in the case where there is an employment agreement,
consulting agreement, change in control agreement or similar agreement in effect
between the Company or an Affiliate and the Participant at the time of the grant
of the Award that defines "cause" (or words of like import), as defined under
such agreement; provided, however, that with regard to any agreement that
conditions "cause" on occurrence of a change in control, such definition of
"cause" shall not apply until a change in control actually takes place and then
only with regard to a termination thereafter. With respect to a Participant's
Termination of Directorship, Cause shall mean an act or failure to act that
constitutes "cause" for removal of a director under applicable state corporate
law.
2.5 "Change in Control" shall have the meaning set forth in Article XI.
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2.6 "Code" shall mean the Internal Revenue Code of 1986, as amended.
Any reference to any section of the Code shall also be a reference to any
successor provision and any Treasury regulation thereunder.
2.7 "Committee" shall mean a committee of the Board that may be
appointed from time to time by the Board. To the extent determined appropriate
by the Board, or to the extent required under Rule 16b-3 and Section 162(m) of
the Code, such committee shall consist of two or more non-employee directors,
each of whom shall be a non-employee director as defined in Rule 16b-3 and an
outside director as defined under Section 162(m) of the Code. To the extent that
no Committee exists which has the authority to administer the Plan, the
functions of the Committee shall be exercised by the Board. If for any reason
the appointed Committee does not meet the requirements of Rule 16b-3 or Section
162(m) of the Code, such noncompliance with the requirements of Rule 16b-3 or
Section 162(m) of the Code shall not affect the validity of the awards, grants,
interpretations or other actions of the Committee. Notwithstanding the
foregoing, with respect to the application of the Plan to non-employee
directors, Committee shall mean the Board.
2.8 "Common Stock" shall mean the Company's common stock, par value
$.001 per share, of the Company.
2.9 "Company" shall mean iGames Entertainment, Inc., a Nevada
corporation.
2.10 "Consultant" shall mean any advisor or consultant to the Company
or an Affiliate who is eligible pursuant to Article V to be granted Awards under
this Plan.
2.11 "Disability" shall mean total and permanent disability, as defined
in Section 22(e)(3) of the Code.
2.12 "Eligible Employees" shall mean the employees of the Company and
its Affiliates who are eligible pursuant to Article V to be granted Awards under
this Plan. Notwithstanding the foregoing, with respect to the grant of Incentive
Stock Options, Eligible Employees shall mean the employees of the Company, its
Subsidiaries and its Parents who are eligible pursuant to Article V to be
granted Stock Options under the Plan.
2.13 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
2.14 "Fair Market Value" for purposes of this Plan, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, shall mean, as of any given date: (i) if the Common Stock is listed
on a national securities exchange or quoted on the Nasdaq National Market, the
Nasdaq SmallCap Market or the Nasdaq Bulletin Board Exchange, the last sale
price of the Common Stock in the principal trading market for the Common Stock
on such date, as reported by the exchange or Nasdaq, as the case may be; (ii) if
the Common Stock is not listed on a national securities exchange or quoted on
the Nasdaq National Market or Nasdaq SmallCap Market, but is traded in the
over-the-counter market, the closing bid price for the Common Stock on such
date, as reported by the OTC Bulletin Board or the National Quotation Bureau,
Incorporated or similar publisher of such quotations; and (iii) if the fair
market value of the Common Stock cannot be determined pursuant to clause (i) or
(ii) above, such price as the Committee shall determine, in good faith, based on
reasonable methods set forth under Section 422 of the Code and the regulations
thereunder including. For purposes of the grant of any Award, the applicable
date shall be the date on which the Award is granted or, in the case of a Stock
Appreciation Right, the date a notice of exercise is received by the Committee
or, if the sale of Common Stock shall not have been reported or quoted on such
date, the first day prior thereto on which the sale of Common Stock was reported
or quoted.
2.15 "Good Reason" with respect to a Participant's Termination of
Employment or Termination of Consultancy shall mean (i) in the case where there
is no employment agreement, consulting agreement, change in control agreement or
similar agreement in effect between the Company or an Affiliate and the
Participant at the time of the grant of the Award (or where there is such an
agreement but it does not define "Good Reason" (or words of like import)), or
where "Good Reason" is not otherwise determined by the Committee at grant, or,
if no rights of the Participant are reduced, thereafter, a voluntary termination
due to "good reason," as the Committee, in its sole discretion, decides to treat
as a Good Reason termination, or (ii) in the case where there is an employment
agreement, consulting agreement, change in control agreement or similar
agreement in effect between the Company or an Affiliate and the Participant at
the time of the grant of the Award that defines "good reason" (or words of like
import), as defined under such agreement; provided, however, that with regard to
any agreement that conditions
63
"good reason" on occurrence of a change in control, such definition of "good
reason" shall not apply until a change in control actually takes place and then
only with regard to a termination thereafter.
2.16 "Incentive Stock Option" shall mean any Stock Option awarded under
this Plan intended to be and designated as an "Incentive Stock Option" within
the meaning of Section 422 of the Code.
2.17 "Limited Stock Appreciation Right" shall mean an Award of a
limited Tandem Stock Appreciation Right or a Non-Tandem Stock Appreciation Right
made pursuant to Section 8.5 of this Plan.
2.18 "Non-Qualified Stock Option" shall mean any Stock Option awarded
under this Plan that is not an Incentive Stock Option.
2.19 "Non-Tandem Stock Appreciation Right" shall mean a Stock
Appreciation Right entitling a Participant to receive an amount in cash or
Common Stock (as determined by the Committee in its sole discretion) equal to
the excess of: (i) the Fair Market Value of a share of Common Stock as of the
date such right is exercised, over (ii) the aggregate exercise price of such
right.
2.20 "Parent" shall mean any parent corporation of the Company within
the meaning of Section 424(e) of the Code.
2.21 "Participant" shall mean the following persons to whom an Award
has been made pursuant to this Plan: Eligible Employees of, and Consultants to,
the Company and its Affiliates and non-employee directors of the Company;
provided, however, that non-employee directors shall be Participants for
purposes of the Plan solely with respect to Awards pursuant to Article IX.
2.22 "Restricted Stock" shall mean an award of shares of Common Stock
under the Plan that is subject to restrictions under Article VII.
2.23 "Restriction Period" shall have the meaning set forth in
Subsection 7.3(a) with respect to Restricted Stock for Eligible Employees.
2.24 "Retirement" with respect to a Participant's Termination of
Employment or Termination of Consultancy, shall mean a Termination of Employment
or Termination of Consultancy without Cause from the Company by a Participant
who has attained (i) at least age sixty-five (65); or (ii) such earlier date
after age fifty-five (55) as may be approved by the Committee with regard to
such Participant. With respect to a Participant's Termination of Directorship,
Retirement shall mean the failure to stand for reelection or the failure to be
reelected after a Participant has attained age sixty-five (65).
2.25 "Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of the
Exchange Act as then in effect or any successor provisions.
2.26 "Section 162(m) of the Code" shall mean the exception for
performance-based compensation under Section 162(m) of the Code and any Treasury
regulations thereunder.
2.27 "Stock Appreciation Right" shall mean the right pursuant to an
Award granted under Article VIII. A Tandem Stock Appreciation Right shall mean
the right to surrender to the Company all (or a portion) of a Stock Option in
exchange for an amount in cash or stock equal to the excess of (i) the Fair
Market Value, on the date such Stock Option (or such portion thereof) is
surrendered, of the Common Stock covered by such Stock Option (or such portion
thereof), over (ii) the aggregate exercise price of such Stock Option (or such
portion thereof). A Non-Tandem Stock Appreciation Right shall mean the right to
receive an amount in cash or stock equal to the excess of (x) the Fair Market
Value of a share of Common Stock on the date such right is exercised, over (y)
the aggregate exercise price of such right, other than on surrender of a Stock
Option.
2.28 "Stock Option" or "Option" shall mean any Option to purchase
shares of Common Stock granted to Eligible Employees or Consultants pursuant to
Article VI or non-employee directors pursuant to Article IX.
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2.29 "Subsidiary" shall mean any corporation that is defined as a
subsidiary corporation in Section 424(f) of the Code.
2.30 "Ten Percent Stockholder" shall mean a person owning Common Stock
of the Company possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, its Subsidiaries and/or its
Parents in the manner provided under Section 422 of the Code.
2.31 "Termination of Consultancy" shall mean, with respect to an
individual, that the individual is no longer acting as a Consultant to the
Company or an Affiliate. In the event an entity shall cease to be an Affiliate,
there shall be deemed a Termination of Consultancy of any individual who is not
otherwise a Consultant of the Company or another Affiliate at the time the
entity ceases to be an Affiliate. In the event that a Consultant becomes an
Eligible Employee upon the termination of his consultancy, the Committee, in its
sole and absolute discretion, may determine that no Termination of Consultancy
shall be deemed to occur until such time as such Consultant is no longer a
Consultant or an Eligible Employee.
2.32 "Termination of Directorship" shall mean, with respect to a
non-employee director, that the non-employee director has ceased to be a
director of the Company.
2.33 "Termination of Employment," except as provided in the next
sentence, shall mean (i) a termination of service (for reasons other than a
military or personal leave of absence granted by the Company) of a Participant
from the Company and its Affiliates; or (ii) when an entity which is employing a
Participant ceases to be an Affiliate, unless the Participant thereupon becomes
employed by the Company or another Affiliate. In the event that an Eligible
Employee becomes a Consultant upon the termination of his employment, the
Committee, in its sole and absolute discretion, may determine that no
Termination of Employment shall be deemed to occur until such time as such
Eligible Employee is no longer an Eligible Employee or a Consultant. The
Committee may otherwise define Termination of Employment in the Option grant or,
if no rights of the Participant are reduced, may otherwise define Termination of
Employment thereafter, including, but not limited to, defining Termination of
Employment with regard to entities controlling, under common control with or
controlled by the Company rather than just the Company and its Affiliates and/or
entities that provide substantial services to the Company or its Affiliates to
which the Participant has transferred directly from the Company or its
Affiliates at the request of the Company.
2.34 "Transfer" or "Transferred" shall mean anticipate, alienate,
attach, sell, assign, pledge, encumber, charge or otherwise transfer.
ARTICLE III.
ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered and interpreted by
the Committee.
3.2 AWARDS. The Committee shall have full authority to grant, pursuant
to the terms of this Plan, (i) Stock Options, (ii) Stock Appreciation Rights,
both Tandem and Non-Tandem and (iii) Restricted Stock to Eligible Employees and
Consultants. Awards may be granted to non-employee directors of the Company
pursuant to Article IX. In particular, the Committee shall have the authority:
(a) to select the Eligible Employees and Consultants to whom Stock
Options, Stock Appreciation Rights and Restricted Stock may from time to time be
granted hereunder;
(b) to determine whether and to what extent Stock Options, Stock
Appreciation Rights and Restricted Stock or any combination thereof are to be
granted hereunder to one or more Eligible Employees or Consultants;
(c) to determine, in accordance with the terms of this Plan, the number
of shares of Common Stock to be covered by each Award to an Eligible Employee or
Consultant granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the
terms of this Plan, of any Award granted hereunder to an Eligible Employee or
Consultant (including, but not limited to, the exercise or
65
purchase price (if any), any restriction or limitation, any vesting schedule or
acceleration thereof, or any forfeiture restrictions or waiver thereof,
regarding any Stock Option or other Award, and the shares of Common Stock
relating thereto, based on such factors, if any, as the Committee shall
determine, in its sole discretion);
(e) to determine whether and under what circumstances a Stock Option
may be settled in cash, Common Stock and/or Restricted Stock under Subsection
6.3(d) or, with respect to Stock Options granted to non-employee directors,
Section 9.4(c);
(f) to determine whether, to what extent and under what circumstances
to provide loans (which shall be on a recourse basis and shall bear a reasonable
rate of interest) to Eligible Employees and Consultants in order to exercise
Options under the Plan;
(g) to modify, extend or renew a Stock Option, subject to Article XII
hereof, provided, however, that if a Stock Option is modified, extended or
renewed and thereby deemed to be the issuance of a new Stock Option under the
Code or the applicable accounting rules, the exercise price of such Stock Option
may continue to be the original exercise price even if less than the Fair Market
Value of the Common Stock at the time of such modification, extension or
renewal;
(h) to determine whether a Stock Option is an Incentive Stock Option or
Non-Qualified Stock Option, whether a Stock Appreciation Right is a Tandem Stock
Appreciation Right or Non-Tandem Stock Appreciation Right or whether an Award is
intended to satisfy Section 162(m) of the Code;
(i) to determine whether to require an Eligible Employee or Consultant,
as a condition of the granting of any Award, to not sell or otherwise dispose of
shares acquired pursuant to the exercise of an Option or as an Award for a
period of time as determined by the Committee, in its sole discretion, following
the date of the acquisition of such Option or Award;
(j) to determine whether a Stock Appreciation Right is Tandem or
Non-Tandem; and
(k) to grant Awards under the Plan as a conversion from, and
replacement of, comparable stock options, stock appreciation rights or
restricted stock held by employees of another entity who become Eligible
Employees of, or Consultants to, the Company or an Affiliate as the result of a
merger or consolidation of the employing entity with the Company or an
Affiliate, or as the result of the acquisition by the Company of property or
stock of the employing corporation. The Company may direct that replacement
Awards be granted on such terms and conditions as the Committee considers
appropriate in the circumstances, including, without limitation, that
Non-Qualified Stock Options shall be granted in lieu of Incentive Stock Options.
3.3 GUIDELINES. Subject to Article XII hereof, the Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing this Plan and perform all acts, including the delegation
of its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any Award issued under this Plan (and any agreements relating thereto); and to
otherwise supervise the administration of this Plan. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in this Plan or
in any agreement relating thereto in the manner and to the extent it shall deem
necessary to carry this Plan into effect, but only to the extent any such action
would be permitted under the applicable provisions of Rule 16b-3 (if any) and
the applicable provisions of Section 162(m) of the Code (if any). The Committee
may adopt special guidelines and provisions for persons who are residing in, or
subject to the taxes of, countries other than the United States to comply with
applicable tax and securities laws. If, or to the extent applicable, this Plan
is intended to comply with Section 162(m) of the Code and the applicable
requirements of Rule 16b-3 and shall be limited, construed and interpreted in a
manner so as to comply therewith.
3.4 DECISIONS FINAL. Any decision, interpretation or other action made
or taken in good faith by or at the direction of the Company, the Board, or the
Committee (or any of its members) arising out of or in connection with the Plan
shall be within the absolute discretion of all and each of them, as the case may
be, and shall be final, binding and conclusive on the Company and all employees
and Participants and their respective heirs, executors, administrators,
successors and assigns. The Committee shall not be bound to any standards of
uniformity
66
or similarity of action, interpretation or conduct in the discharge of its
duties hereunder, regardless of the apparent similarity of the matters coming
before it.
3.5 RELIANCE ON COUNSEL. The Company, the Board or the Committee may
consult with legal counsel, who may be counsel for the Company or other counsel,
with respect to its obligations or duties hereunder, or with respect to any
action or proceeding or any question of law, and shall not be liable with
respect to any action taken or omitted by it in good faith pursuant to the
advice of such counsel.
3.6 PROCEDURES. If the Committee is appointed, the Board may designate
one of the members of the Committee as chairman and the Committee shall hold
meetings, subject to the By-Laws of the Company, at such times and places as it
shall deem advisable. A majority of the Committee members shall constitute a
quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by all
Committee members in accordance with the By-Laws of the Company shall be fully
effective as if it had been made by a vote at a meeting duly called and held.
The Committee shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
3.7 DESIGNATION OF CONSULTANTS--LIABILITY.
(a) The Committee may designate employees of the Company and
professional advisors to assist the Committee in the administration of the Plan
and may grant authority to employees to execute agreements or other documents on
behalf of the Committee.
(b) The Committee may employ such legal counsel, consultants and agents
as it may deem desirable for the administration of the Plan and may rely upon
any opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. Expenses incurred by the Committee
or Board in the engagement of any such counsel, consultant or agent shall be
paid by the Company. The Committee, its members and any person designated
pursuant to paragraph above shall not be liable for any action or determination
made in good faith with respect to the Plan.
To the maximum extent permitted by applicable law, no officer of the
Company or member or former member of the Committee or of the Board shall be
liable for any action or determination made in good faith with respect to the
Plan or any Award granted under it. To the maximum extent permitted by
applicable law and the Certificate of Incorporation and By-Laws of the Company
and to the extent not covered by insurance, each employee of the Company and
member or former member of the Committee or of the Board shall be indemnified
and held harmless by the Company against any cost or expense (including
reasonable fees of counsel reasonably acceptable to the Company) or liability
(including any sum paid in settlement of a claim with the approval of the
Company), and advanced amounts necessary to pay the foregoing at the earliest
time and to the fullest extent permitted, arising out of any act or omission to
act in connection with the Plan, except to the extent arising out of such
officer's, member's or former member's own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the
employees, officers, directors or members or former officers, directors or
members may have under applicable law or under the Certificate of Incorporation
or By-Laws of the Company or Affiliate. Notwithstanding anything else herein,
this indemnification will not apply to the actions or determinations made by an
individual with regard to Awards granted to him or her under this Plan.
ARTICLE IV.
SHARE AND OTHER LIMITATIONS
4.1 SHARES.
(a) GENERAL LIMITATION. The aggregate number of shares of Common Stock
which may be issued or used for reference purposes under this Plan or with
respect to which other Awards may be granted shall not exceed 10,000,000 shares
(subject to any increase or decrease pursuant to Section 4.2) which may be
either authorized and unissued Common Stock or Common Stock held in or acquired
for the treasury of the Company.
67
If any Option or Stock Appreciation Right granted under this Plan
expires, terminates or is canceled for any reason without having been exercised
in full or, with respect to Options, the Company repurchases any Option pursuant
to Section 6.3(f), the number of shares of Common Stock underlying the
repurchased Option, and/or the number of shares of Common Stock underlying any
unexercised Stock Appreciation Right or Option shall again be available for the
purposes of Awards under the Plan. If a Tandem Stock Appreciation Right or a
Limited Stock Appreciation Right is granted in tandem with an Option, such grant
shall only apply once against the maximum number of shares of Common Stock that
may be issued under this Plan. In determining the number of shares of Common
Stock available for Awards other than Awards of Incentive Stock Options, if
Common Stock has been delivered or exchanged by a Participant as full or partial
payment to the Company for the exercise price or for withholding taxes, in
connection with the exercise of a Stock Option or the number shares of Common
Stock otherwise deliverable has been reduced for full or partial payment for the
exercise price or for withholding taxes, the number of shares of Common Stock
delivered, exchanged or reduced shall again be available for purposes of Awards
under this Plan.
In the event Awards are granted to employees or Consultants pursuant to
Section 3.2(k), the aggregate number of shares of Common Stock available under
the Plan for Awards other than Incentive Stock Options shall be increased by the
number of shares of Common Stock which may be issued or used for reference with
respect to those Awards granted pursuant to Section 3.2(k). The maximum number
of shares of Common Stock which may be issued under this Plan with respect to
Incentive Stock Options shall not be increased (subject to any increase or
decrease pursuant to Section 4.2).
(b) INDIVIDUAL PARTICIPANT LIMITATIONS.
(i) The maximum number of shares of Common Stock subject to
any Option which may be granted under this Plan to each Participant shall not
exceed 5,000,000 shares (subject to any increase or decrease pursuant to Section
4.2) during each fiscal year of the Company.
(ii) There are no annual individual Participant limitations on
Restricted Stock.
(iii) The maximum number of shares of Common Stock subject to
any Stock Appreciation Right which may be granted under this Plan to each
Participant shall not exceed 5,000,000 shares (subject to any increase or
decrease pursuant to Section 4.2) during each fiscal year of the Company. If a
Tandem Stock Appreciation Right or Limited Stock Appreciation Right is granted
in tandem with an Option it shall apply against the Participant's individual
share limitations for both Stock Appreciation Rights and Options.
(iv) The individual Participant limitations set forth in this
Section 4.1(b) shall be cumulative; that is, to the extent that shares of Common
Stock for which Awards are permitted to be granted to an Eligible Employee or a
Consultant during a fiscal year are not covered by an Award to such Eligible
Employee or Consultant in a fiscal year, the number of shares of Common Stock
available for Awards to such Eligible Employee or Consultant shall automatically
increase in the subsequent fiscal years during the term of the Plan until used.
4.2 CHANGES.
(a) The existence of the Plan and the Awards granted hereunder shall
not affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company or its Affiliates, any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting Common Stock, the
dissolution or liquidation of the Company or its Affiliates, any sale or
transfer of all or part of its assets or business or any other corporate act or
proceeding.
(b) In the event of any such change in the capital structure or
business of the Company by reason of any stock dividend or distribution, stock
split or reverse stock split, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares, distribution with
respect to its outstanding Common Stock or capital stock other than Common
Stock, sale or transfer of all or part of its assets or business,
reclassification of its capital stock, or any similar change affecting the
Company's capital structure or business and the Committee determines an
adjustment is appropriate under the Plan, then the aggregate number and kind of
shares which thereafter may be issued under this Plan, the number and kind of
shares or other property (including
68
cash) to be issued upon exercise of an outstanding Option or other Awards
granted under this Plan and the purchase price thereof shall be appropriately
adjusted consistent with such change in such manner as the Committee may deem
equitable to prevent substantial dilution or enlargement of the rights granted
to, or available for, Participants under this Plan or as otherwise necessary to
reflect the change, and any such adjustment determined by the Committee shall be
binding and conclusive on the Company and all Participants and employees and
their respective heirs, executors, administrators, successors and assigns.
(c) Fractional shares of Common Stock resulting from any adjustment in
Options or Awards pursuant to Section 4.2(a) or (b) shall be aggregated until,
and eliminated at, the time of exercise by rounding-down for fractions less than
one-half (1/2) and rounding-up for fractions equal to or greater than one-half
(1/2). No cash settlements shall be made with respect to fractional shares
eliminated by rounding. Notice of any adjustment shall be given by the Committee
to each Participant whose Option or Award has been adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan.
(d) In the event of a merger or consolidation in which the Company is
not the surviving entity or in the event of any transaction that results in the
acquisition of substantially all of the Company's outstanding Common Stock by a
single person or entity or by a group of persons and/or entities acting in
concert, or in the event of the sale or transfer of all of the Company's assets
(all of the foregoing being referred to as "Acquisition Events"), then the
Committee may, in its sole discretion, terminate all outstanding Options and
Stock Appreciation Rights of Eligible Employees and Consultants, effective as of
the date of the Acquisition Event, by delivering notice of termination to each
such Participant at least twenty (20) days prior to the date of consummation of
the Acquisition Event; provided, that during the period from the date on which
such notice of termination is delivered to the consummation of the Acquisition
Event, each such Participant shall have the right to exercise in full all of his
or her Options and Stock Appreciation Rights that are then outstanding (without
regard to any limitations on exercisability otherwise contained in the Option or
Award Agreements) but contingent on occurrence of the Acquisition Event, and,
provided that, if the Acquisition Event does not take place within a specified
period after giving such notice for any reason whatsoever, the notice and
exercise shall be null and void.
(e) If an Acquisition Event occurs, to the extent the Committee does
not terminate the outstanding Options and Stock Appreciation Rights pursuant to
Section 4.2(d), then the provisions of Section 4.2(b) shall apply.
4.3 PURCHASE PRICE. Notwithstanding any provision of this Plan to the
contrary, if authorized but previously unissued shares of Common Stock are
issued under this Plan, such shares shall not be issued for a consideration
which is less than as permitted under applicable law.
ARTICLE V.
ELIGIBILITY
5.1 All employees of and Consultants to the Company and its Affiliates
are eligible to be granted Non-Qualified Stock Options, Stock Appreciation
Rights and Restricted Stock under this Plan. All employees of the Company, its
Subsidiaries and its Parents are eligible to be granted Incentive Stock Options
under the Plan. The Committee shall determine eligibility under this Plan.
5.2 Non-employee directors of the Company are only eligible to receive
an Award in accordance with Article IX of the Plan.
ARTICLE VI.
STOCK OPTION GRANTS
6.1 OPTIONS. Each Stock Option granted hereunder shall be one of two
types: (i) an Incentive Stock Option intended to satisfy the requirements of
Section 422 of the Code or (ii) a Non-Qualified Stock Option.
6.2 GRANTS. The Committee shall have the authority to grant to any
Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options (in each case with or without Stock
Appreciation Rights). The Committee shall have the authority to grant to any
Consultant one or more Non-
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Qualified Stock Options (with or without Stock Appreciation Rights). To the
extent that any Stock Option does not qualify as an Incentive Stock Option
(whether because of its provisions or the time or manner of its exercise or
otherwise), such Stock Option, or the portion thereof that does not qualify,
shall constitute a separate Non-Qualified Stock Option. Notwithstanding any
other provision of this Plan to the contrary or any provision in an agreement
evidencing the grant of a Stock Option to the contrary, any Stock Option granted
to an Eligible Employee of an Affiliate (other than an Affiliate which is a
Parent or a Subsidiary) or to any Consultant shall be a Non-Qualified Stock
Option.
6.3 TERMS OF OPTIONS. Options granted under this Plan shall be subject
to the following terms and conditions, shall be subject to Section 3.2 hereof
and the other provisions of this Plan, and shall be in such form and contain
such additional terms and conditions, not inconsistent with the terms of this
Plan, as the Committee shall deem desirable:
(a) OPTION PRICE. The option price per share of Common Stock
purchasable under an Incentive Stock Option shall be determined by the Committee
at the time of grant but shall not be less than 100% of the Fair Market Value of
the share of Common Stock at the time of grant; provided, however, if an
Incentive Stock Option is granted to a Ten Percent Stockholder, the purchase
price shall be no less than 110% of the Fair Market Value of the Common Stock.
The purchase price of shares of Common Stock subject to a Non-Qualified Stock
Option shall be determined by the Committee. Notwithstanding the foregoing, if
an Option is modified, extended or renewed and, thereby, deemed to be the
issuance of a new Option under the Code, the exercise price of an Option may
continue to be the original exercise price even if less than the Fair Market
Value of the Common Stock at the time of such modification, extension or
renewal.
(b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten (10) years
after the date the Option is granted, provided, however, the term of an
Incentive Stock Option granted to a Ten Percent Stockholder may not exceed five
(5) years.
(c) EXERCISABILITY. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at grant. If the Committee provides, in its discretion, that any Stock
Option is exercisable subject to certain limitations (including, without
limitation, that it is exercisable only in installments or within certain time
periods), the Committee may waive such limitations on the exercisability at any
time at or after grant in whole or in part (including, without limitation, that
the Committee may waive the installment exercise provisions or accelerate the
time at which Options may be exercised), based on such factors, if any, as the
Committee shall determine, in its sole discretion.
(d) METHOD OF EXERCISE. Subject to whatever installment exercise and
waiting period provisions apply under subsection (c) above, Stock Options may be
exercised in whole or in part at any time during the Option term, by giving
written notice of exercise to the Company specifying the number of shares of
Common Stock to be purchased. Such notice shall be accompanied by payment in
full of the purchase price in such form, or such other arrangement for the
satisfaction of the purchase price, as the Committee may accept. To the extent
determined by the Committee in its sole discretion at or after grant, payment in
full or in part may be made as follows: (i) in cash or by check, bank draft or
money order payable to the order of the Company; (ii) if the Common Stock is
traded on a national securities exchange, the Nasdaq Stock Market, Inc. or
quoted on a national quotation system sponsored by the National Association of
Securities Dealers, through a "cashless exercise" procedure whereby the
Participant delivers irrevocable instructions to a broker to deliver promptly to
the Company an amount equal to the purchase price, (iii) in the form of Common
Stock owned by the Participant for at least 6 months (and for which the
Participant has good title free and clear of any liens and encumbrances) or (iv)
in the form of Restricted Stock; provided, however, that in each case, such
payment is based on the Fair Market Value of the Common Stock on the payment
date as determined by the Committee (without regard to any forfeiture
restrictions applicable to such Restricted Stock). No shares of Common Stock
shall be issued until payment, as provided herein, therefore has been made or
provided for. If payment in full or in part has been made in the form of
Restricted Stock, an equivalent number of shares of Common Stock issued on
exercise of the Option shall be subject to the same restrictions and conditions,
during the remainder of the Restriction Period, applicable to the Restricted
Stock surrendered therefore.
(e) INCENTIVE STOCK OPTION LIMITATIONS. To the extent that the
aggregate Fair Market Value (determined as of the time of grant) of the Common
Stock with respect to which Incentive Stock
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Options are exercisable for the first time by an Eligible Employee during any
calendar year under the Plan and/or any other stock option plan of the Company
or any Subsidiary or Parent exceeds $100,000, such Options shall be treated as
Options which are not Incentive Stock Options. In addition, if an Eligible
Employee does not remain employed by the Company, any Subsidiary or Parent at
all times from the time the Option is granted until three (3) months prior to
the date of exercise (or such other period as required by applicable law), such
Option shall be treated as an Option which is not a Non-Qualifi
Should the foregoing provision not be necessary in order for the Stock
Options to qualify as Incentive Stock Options, or should any additional
provisions be required, the Committee may amend the Plan accordingly, without
the necessity of obtaining the approval of the stockholders of the Company.
(f) BUY OUT AND SETTLEMENT PROVISIONS. The Committee may at any time on
behalf of the Company offer to buy out an Option previously granted, based on
such terms and conditions as the Committee shall establish and communicate to
the Participant at the time that such offer is made.
(g) FORM, MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to
the terms and conditions and within the limitations of the Plan, an Option shall
be evidenced by such form of agreement or grant as is approved by the Committee,
and the Committee may modify, extend or renew outstanding Options granted under
the Plan (provided that the rights of a Participant are not reduced without his
consent), or accept the surrender of outstanding Options (up to the extent not
theretofore exercised) and authorize the granting of new Options in substitution
therefor (to the extent not theretofore exercised).
(h) DEFERRED DELIVERY OF COMMON SHARES. The Committee may in its
discretion permit Participants to defer delivery of Common Stock acquired
pursuant to a Participant's exercise of an Option in accordance with the terms
and conditions established by the Committee.
(i) OTHER TERMS AND CONDITIONS. Options may contain such other
provisions, which shall not be inconsistent with any of the foregoing terms of
the Plan, as the Committee shall deem appropriate including, without limitation,
permitting "reloads" such that the same number of Options are granted as the
number of Options exercised, shares used to pay for the exercise price of
Options or shares used to pay withholding taxes ("Reloads"). With respect to
Reloads, the exercise price of the new Stock Option shall be the Fair Market
Value on the date of the "reload" and the term of the Stock Option shall be the
same as the remaining term of the Options that are exercised, if applicable, or
such other exercise price and term as determined by the Committee.
6.4 TERMINATION OF EMPLOYMENT. The following rules apply with regard to
Options upon the Termination of Employment or Termination of Consultancy of a
Participant:
(a) TERMINATION BY REASON OF DEATH. If a Participant's Termination of
Employment or Termination of Consultancy is by reason of death, any Stock Option
held by such Participant, unless otherwise determined by the Committee at grant
or, if no rights of the Participant's estate are reduced, thereafter, may be
exercised, to the extent exercisable at the Participant's death, by the legal
representative of the estate, at any time within a period of one (1) year from
the date of such death, but in no event beyond the expiration of the stated term
of such Stock Option.
(b) TERMINATION BY REASON OF DISABILITY. If a Participant's Termination
of Employment or Termination of Consultancy is by reason of Disability, any
Stock Option held by such Participant, unless otherwise determined by the
Committee at grant or, if no rights of the Participant are reduced, thereafter,
may be exercised, to the extent exercisable at the Participant's termination, by
the Participant (or the legal representative of the Participant's estate if the
Participant dies after termination) at any time within a period of one (1) year
from the date of such termination, but in no event beyond the expiration of the
stated term of such Stock Option.
(c) TERMINATION BY REASON OF RETIREMENT. If a Participant's Termination
of Employment or Termination of Consultancy is by reason of Retirement, any
Stock Option held by such Participant, unless otherwise determined by the
Committee at grant, or, if no rights of the Participant are reduced, thereafter,
shall be fully vested and may thereafter be exercised by the Participant at any
time within a period of one (1) year from the date of such termination, but in
no event beyond the expiration of the stated term of such Stock Option;
provided, however, that, if the Participant dies within such exercise period,
any unexercised Stock Option
71
held by such Participant shall thereafter be exercisable, to the extent to which
it was exercisable at the time of death, for a period of one (1) year (or such
other period as the Committee may specify at grant or, if no rights of the
Participant's estate are reduced, thereafter) from the date of such death, but
in no event beyond the expiration of the stated term of such Stock Option.
(d) INVOLUNTARY TERMINATION WITHOUT CAUSE OR TERMINATION FOR GOOD
REASON. If a Participant's Termination of Employment or Termination of
Consultancy is by involuntary termination without Cause or for Good Reason, any
Stock Option held by such Participant, unless otherwise determined by the
Committee at grant or, if no rights of the Participant are reduced, thereafter,
may be exercised, to the extent exercisable at termination, by the Participant
at any time within a period of ninety (90) days from the date of such
termination, but in no event beyond the expiration of the stated term of such
Stock Option.
(e) TERMINATION WITHOUT GOOD REASON. If a Participant's Termination of
Employment or Termination of Consultancy is voluntary but without Good Reason
and occurs prior to, or more than ninety (90) days after, the occurrence of an
event which would be grounds for Termination of Employment or Termination of
Consultancy by the Company for Cause (without regard to any notice or cure
period requirements), any Stock Option held by such Participant, unless
otherwise determined by the Committee at grant or, if no rights of the
Participant are reduced, thereafter, may be exercised, to the extent exercisable
at termination, by the Participant at any time within a period of thirty (30)
days from the date of such termination, but in no event beyond the expiration of
the stated term of such Stock Option.
(f) OTHER TERMINATION. Unless otherwise determined by the Committee at
grant or, if no rights of the Participant are reduced, thereafter, if a
Participant's Termination of Employment or Termination of Consultancy is for any
reason other than death, Disability, Retirement, Good Reason, involuntary
termination without Cause or voluntary termination as provided in subsection (e)
above, any Stock Option held by such Participant shall thereupon terminate and
expire as of the date of termination, provided that (unless the Committee
determines a different period upon grant or, if no rights of the Participant are
reduced, thereafter) in the event the termination is for Cause or is a voluntary
termination without Good Reason within ninety (90) days after occurrence of an
event which would be grounds for Termination of Employment or Termination of
Consultancy by the Company for Cause (without regard to any notice or cure
period requirement), any Stock Option held by the Participant at the time of
occurrence of the event which would be grounds for Termination of Employment or
Termination of Consultancy by the Company for Cause shall be deemed to have
terminated and expired upon occurrence of the event which would be grounds for
Termination of Employment or Termination of Consultancy by the Company for
Cause.
ARTICLE VII.
RESTRICTED STOCK AWARDS
7.1 AWARDS OF RESTRICTED STOCK. Shares of Restricted Stock may be
issued to Eligible Employees or Consultants either alone or in addition to other
Awards granted under the Plan. The Committee shall determine the eligible
persons to whom, and the time or times at which, grants of Restricted Stock will
be made, the number of shares to be awarded, the price (if any) to be paid by
the recipient (subject to Section 7.2), the time or times within which such
Awards may be subject to forfeiture, the vesting schedule and rights to
acceleration thereof, and all other terms and conditions of the Awards.
7.2 AWARDS AND CERTIFICATES. The prospective Participant selected to
receive a Restricted Stock Award shall not have any rights with respect to such
Award, unless and until such Participant has delivered a fully executed copy of
the applicable agreement evidencing the Award (the "Restricted Stock Award
Agreement") to the Company and has otherwise complied with the applicable terms
and conditions of such Award. Further, such Award shall be subject to the
following conditions:
(a) PURCHASE PRICE. The purchase price of Restricted Stock shall be
fixed by the Committee. Subject to Section 4.3, the purchase price for shares of
Restricted Stock may be zero to the extent permitted by applicable law.
72
(b) ACCEPTANCE. Awards of Restricted Stock must be accepted within a
period of sixty (60) days (or such shorter period as the Committee may specify
at grant) after the Award date, by executing a Restricted Stock Award Agreement
and by paying whatever price (if any) the Committee has designated thereunder.
(c) LEGEND. Each Participant receiving a Restricted Stock Award shall
be issued a stock certificate in respect of such shares of Restricted Stock,
unless the Committee elects to use another system, such as book entries by the
transfer agent, as evidencing ownership of a Restricted Stock Award. Such
certificate shall be registered in the name of such Participant, and shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the following form:
"The anticipation, alienation, attachment, sale, transfer, assignment,
pledge, encumbrance or charge of the shares of stock represented hereby
are subject to the terms and conditions (including forfeiture) of the
iGames Entertainment, Inc. (the "Company") Amended and Restated 2003
Stock Incentive Plan and an Agreement entered into between the
registered owner and the Company, dated _________ __, 200_. Copies of
such Plan and Agreement are on file at the principal office of the
Company."
(d) CUSTODY. The Committee may require that any stock certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
Award, the Participant shall have delivered a duly signed stock power, endorsed
in blank, relating to the Common Stock covered by such Award.
7.3 RESTRICTIONS AND CONDITIONS ON RESTRICTED STOCK AWARDS. The shares
of Restricted Stock awarded pursuant to this Plan shall be subject to Article X
and the following restrictions and conditions:
(a) RESTRICTION PERIOD; VESTING AND ACCELERATION OF VESTING. The
Participant shall not be permitted to Transfer shares of Restricted Stock
awarded under this Plan during a period set by the Committee (the "Restriction
Period") commencing with the date of such Award, as set forth in the Restricted
Stock Award agreement and such agreement shall set forth a vesting schedule and
any events which would accelerate vesting of the shares of Restricted Stock.
Within these limits, based on service, or other criteria determined by the
Committee, the Committee may provide for the lapse of such restrictions in
installments in whole or in part, or may accelerate the vesting of all or any
part of any Restricted Stock Award.
(b) RIGHTS AS STOCKHOLDER. Except as provided in this subsection (b)
and subsection (a) above and as otherwise determined by the Committee, the
Participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a holder of shares of Common Stock of the Company including,
without limitation, the right to receive any dividends, the right to vote such
shares and, subject to and conditioned upon the full vesting of shares of
Restricted Stock, the right to tender such shares. Notwithstanding the
foregoing, the payment of dividends shall be deferred until, and conditioned
upon, the expiration of the applicable Restriction Period, unless the Committee,
in its sole discretion, specifies otherwise at the time of the Award.
(c) LAPSE OF RESTRICTIONS. If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock subject to such Restriction
Period, the certificates for such shares shall be delivered to the Participant.
All legends shall be removed from said certificates at the time of delivery to
the Participant except as otherwise required by applicable law.
(d) TERMINATION OF EMPLOYMENT OR TERMINATION OF CONSULTANCY FOR
RESTRICTED STOCK. Subject to the applicable provisions of the Restricted Stock
Award agreement and this Plan, upon a Participant's Termination of Employment or
Termination of Consultancy for any reason during the relevant Restriction
Period, all Restricted Stock still subject to restriction will vest or be
forfeited in accordance with the terms and conditions established by the
Committee at grant or thereafter.
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ARTICLE VIII.
STOCK APPRECIATION RIGHTS
8.1 TANDEM STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be
granted in conjunction with all or part of any Stock Option (a "Reference Stock
Option") granted under this Plan ("Tandem Stock Appreciation Rights"). In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Reference Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of the grant
of such Reference Stock Option.
8.2 TERMS AND CONDITIONS OF TANDEM STOCK APPRECIATION RIGHTS. Tandem
Stock Appreciation Rights shall be subject to such terms and conditions, not
inconsistent with the provisions of this Plan, as shall be determined from time
to time by the Committee, including Article X and the following:
(a) TERM. A Tandem Stock Appreciation Right or applicable portion
thereof granted with respect to a Reference Stock Option shall terminate and no
longer be exercisable upon the termination or exercise of the Reference Stock
Option, except that, unless otherwise determined by the Committee, in its sole
discretion, at the time of grant, a Tandem Stock Appreciation Right granted with
respect to less than the full number of shares covered by the Reference Stock
Option shall not be reduced until and then only to the extent the exercise or
termination of the Reference Stock Option causes the number of shares covered by
the Tandem Stock Appreciation Right to exceed the number of shares remaining
available and unexercised under the Reference Stock Option.
(b) EXERCISABILITY. Tandem Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Reference
Stock Options to which they relate shall be exercisable in accordance with the
provisions of Article VI and this Article VIII.
(c) METHOD OF EXERCISE. A Tandem Stock Appreciation Right may be
exercised by an optionee by surrendering the applicable portion of the Reference
Stock Option. Upon such exercise and surrender, the Participant shall be
entitled to receive an amount determined in the manner prescribed in this
Section 8.2. Stock Options that have been so surrendered, in whole or in part,
shall no longer be exercisable to the extent the related Tandem Stock
Appreciation Rights have been exercised.
(d) PAYMENT. Upon the exercise of a Tandem Stock Appreciation Right a
Participant shall be entitled to receive up to, but no more than, an amount in
cash and/or Common Stock (as chosen by the Committee in its sole discretion)
equal in value to the excess of the Fair Market Value of one share of Common
Stock over the option price per share specified in the Reference Stock Option
multiplied by the number of shares in respect of which the Tandem Stock
Appreciation Right shall have been exercised, with the Committee having the
right to determine the form of payment.
(e) DEEMED EXERCISE OF REFERENCE STOCK OPTION. Upon the exercise of a
Tandem Stock Appreciation Right, the Reference Stock Option or part thereof to
which such Stock Appreciation Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in Article IV of the Plan
on the number of shares of Common Stock to be issued under the Plan.
8.3 NON-TANDEM STOCK APPRECIATION RIGHTS. Non-Tandem Stock Appreciation
Rights may also be granted without reference to any Stock Options granted under
this Plan.
8.4 TERMS AND CONDITIONS OF NON-TANDEM STOCK APPRECIATION RIGHTS.
Non-Tandem Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of this Plan, as shall be
determined from time to time by the Committee, including Article X and the
following:
(a) TERM. The term of each Non-Tandem Stock Appreciation Right shall be
fixed by the Committee, but shall not be greater than ten (10) years after the
date the right is granted.
(b) EXERCISABILITY. Non-Tandem Stock Appreciation Rights shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee at grant. If the
74
Committee provides, in its discretion, that any such right is exercisable
subject to certain limitations (including, without limitation, that it is
exercisable only in installments or within certain time periods), the Committee
may waive such limitation on the exercisability at any time at or after grant in
whole or in part (including, without limitation, that the Committee may waive
the installment exercise provisions or accelerate the time at which rights may
be exercised), based on such factors, if any, as the Committee shall determine,
in its sole discretion.
(c) METHOD OF EXERCISE. Subject to whatever installment exercise and
waiting period provisions apply under subsection (b) above, Non-Tandem Stock
Appreciation Rights may be exercised in whole or in part at any time during the
option term, by giving written notice of exercise to the Company specifying the
number of Non-Tandem Stock Appreciation Rights to be exercised.
(d) PAYMENT. Upon the exercise of a Non-Tandem Stock Appreciation Right
a Participant shall be entitled to receive, for each right exercised, up to, but
no more than, an amount in cash and/or Common Stock (as chosen by the Committee
in its sole discretion) equal in value to the excess of the Fair Market Value of
one share of Common Stock on the date the right is exercised over the Fair
Market Value of one (1) share of Common Stock on the date the right was awarded
to the Participant.
8.5 LIMITED STOCK APPRECIATION RIGHTS. The Committee may, in its sole
discretion, grant Tandem and Non-Tandem Stock Appreciation Rights either as a
general Stock Appreciation Right or as a Limited Stock Appreciation Right.
Limited Stock Appreciation Rights may be exercised only upon a Change in Control
(to the extent provided in an Award agreement granting such Limited Stock
Appreciation Rights) or the occurrence of such other event as the Committee may,
in its sole discretion, designate at the time of grant or thereafter. Upon the
exercise of Limited Stock Appreciation Rights, except as otherwise provided in
an Award agreement, the Participant shall receive in cash or Common Stock, as
determined by the Committee, an amount equal to the amount (1) set forth in
Section 8.2(d) with respect to Tandem Stock Appreciation Rights or (2) set forth
in Section 8.4(d) with respect to Non-Tandem Stock Appreciation Rights.
8.6 TERMINATION OF EMPLOYMENT OR TERMINATION OF CONSULTANCY. The
following rules apply with regard to Stock Appreciation Rights upon the
Termination of Employment or Termination of Consultancy of a Participant:
(a) TERMINATION BY DEATH. If a Participant's Termination of Employment
or Termination of Consultancy is by reason of death, any Stock Appreciation
Right held by such Participant, unless otherwise determined by the Committee at
grant or if no rights of the Participant's estate are reduced, thereafter, may
be exercised, to the extent exercisable at the Participant's death, by the legal
representative of the estate, at any time within a period of one (1) year from
the date of such death or until the expiration of the stated term of such Stock
Appreciation Right, whichever period is the shorter.
(b) TERMINATION BY REASON OF DISABILITY. If a Participant's Termination
of Employment or Termination of Consultancy is by reason of Disability, any
Stock Appreciation Right held by such participant, unless otherwise determined
by the Committee at grant or, if no rights of the Participant are reduced,
thereafter, may be exercised, to the extent exercisable at the Participant's
termination, by the Participant (or the legal representative of the
Participant's estate if the Participant dies after termination) at any time
within a period of one (1) year from the date of such termination or until the
expiration of the stated term of such Stock Appreciation Right, whichever period
is the shorter.
(c) TERMINATION BY REASON OF RETIREMENT. If a Participant's Termination
of Employment or Termination of Consultancy is by reason of Retirement, any
Stock Appreciation Right held by such Participant, unless otherwise determined
by the Committee at grant or, if no rights of the Participant are reduced,
thereafter, shall be fully vested and may thereafter be exercised by the
Participant at any time within a period of one (1) year from the date of such
termination or until the expiration of the stated term of such right, whichever
period is the shorter; provided, however, that, if the Participant dies within
such one (1) year period, any unexercised Non-Tandem Stock Appreciation Right
held by such Participant shall thereafter be exercisable, to the extent to which
it was exercisable at the time of death, for a period of one (1) year (or such
other period as the Committee may specify at grant or if no rights of the
Participant are reduced, thereafter) from the date of such death or until the
expiration of the stated term of such right, whichever period is the shorter.
75
(d) INVOLUNTARY TERMINATION WITHOUT CAUSE OR TERMINATION FOR GOOD
REASON. If a Participant's Termination of Employment or Termination of
Consultancy is by involuntary termination without Cause or for Good Reason, any
Stock Appreciation Right held by such participant, unless otherwise determined
by the Committee at grant or if no rights of the participant are reduced,
thereafter, may be exercised, to the extent exercisable at termination, by the
Participant at any time within a period of ninety (90) days from the date of
such termination or until the expiration of the stated term of such right,
whichever period is shorter.
(e) TERMINATION WITHOUT GOOD REASON. If a Participant's Termination of
Employment or Termination of Consultancy is voluntary but without Good Reason
and occurs prior to, or more than ninety (90) days after, the occurrence of an
event which would be grounds for Termination of Employment or Termination of
Consultancy by the Company for Cause (without regard to any notice or cure
period requirements), any Stock Appreciation Right held by such Participant,
unless greater or lesser exercise rights are provided by the Committee at the
time of grant or, if no rights of the participant are reduced, thereafter, may
be exercised, to the extent exercisable at termination, by the Participant at
any time within a period of thirty (30) days from the date of such termination,
but in no event beyond the expiration of the stated term of such Stock
Appreciation Right.
(f) OTHER TERMINATION. Unless otherwise determined by the Committee at
grant, or, if no rights of the Participant are reduced thereafter, if a
Participant's Termination of Employment or Termination of Consultancy is for any
reason other than death, Disability, Retirement, Good Reason, involuntary
termination without Cause or voluntary termination as provided in subsection (e)
above, any Stock Appreciation Right held by such Participant shall thereupon
terminate or expire as of the date of termination, provided, that (unless the
Committee determines a different period upon grant, or, if no rights of the
Participant are reduced, thereafter) in the event the termination is for Cause
or is a voluntary termination as provided in subsection (e) above, within ninety
(90) days after occurrence of an event which would be grounds for Termination of
Employment or Termination of Consultancy by the Company for Cause (without
regard to any notice or cure period requirement), any Stock Appreciation Right
held by the Participant at the time of the occurrence of the event which would
be grounds for Termination of Employment or Termination of Consultancy by the
Company for Cause shall be deemed to have terminated and expired upon occurrence
of the event which would be grounds for Termination of Employment or Termination
of Consultancy by the Company for Cause.
ARTICLE IX.
NON-EMPLOYEE DIRECTOR AWARDS
9.1 OPTIONS. The terms of this Article IX shall apply only to Options
granted to non-employee directors.
9.2 GRANTS.
(a) INITIAL STOCK OPTION GRANT. Subject to the terms of the Plan, each
non-employee director of the Company who, as of December 31, 2003, has not
previously been granted Options under the Plan, shall be granted Non-Qualified
Stock Options to purchase Common Stock with a value of $12,000.00 pro-rated for
directors who have served less than a year since their initial grant as of
December 31, 2003, or, if later, as of the date the non-employee director begins
service as a director on the Board.
(b) SUBSEQUENT STOCK OPTION GRANTS. Upon the date of each Annual
Meeting of Stockholders, each non-employee director shall be granted
Non-Qualified Stock Options to purchase Common Stock with a value of $12,000.00
(or a pro rata portion thereof if the director did not serve the entire year
since the date of the last annual meeting). These options shall vest in full on
the date of the third Annual Meeting of Stockholders held following the date of
the grant, provided that the non-employer director is a director on the Board on
that date.
9.3 NON-QUALIFIED STOCK OPTIONS. Stock Options granted under this
Article IX shall be Non-Qualified Stock Options.
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9.4 TERMS OF OPTIONS. Options granted under this Article shall be
subject to the following terms and conditions and shall be in such form and
contain such additional terms and conditions, not inconsistent with terms of
this Plan, as the Committee shall deem desirable:
(a) OPTION PRICE. The purchase price per share of Common Stock
deliverable upon the exercise of an Option granted pursuant to Section 9.2 shall
be 100% of the Fair Market Value of such Common Stock (110% of the Fair Market
Value if the non-employee director is a Ten Percent Stockholder) at the time of
the grant of the Option (the "Purchase Price"), or the par value of the Common
Stock, whichever is greater.
(b) EXERCISABILITY. Except as otherwise provided herein, twenty-five
percent (25%) of any Option granted under Section 9.2(a) shall be exercisable on
or after each of the four anniversaries following the date of grant.
(c) METHOD FOR EXERCISE. A non-employee director electing to exercise
one or more Options shall give written notice of exercise to the Company
specifying the number of shares to be purchased. Common Stock purchased pursuant
to the exercise of Options shall be paid for at the time of exercise in cash or
by delivery of unencumbered Common Stock owned by the non-employee director or a
combination thereof or by such other method as approved by the Board.
(d) OPTION TERM. Except as otherwise provided herein, if not previously
exercised each Option shall expire upon the tenth anniversary of the date of the
grant thereof.
9.5 TERMINATION OF DIRECTORSHIP. The following rules apply with regard
to Options upon the Termination of Directorship:
(a) DEATH, DISABILITY OR OTHERWISE CEASING TO BE A DIRECTOR OTHER THAN
FOR CAUSE. Except as otherwise provided herein, upon the Termination of
Directorship, on account of Disability, death, Retirement, resignation, failure
to stand for reelection or failure to be reelected or otherwise other than as
set forth in (b) below, all outstanding Options then exercisable and not
exercised by the Participant prior to such Termination of Directorship shall
remain exercisable, to the extent exercisable at the Termination of
Directorship, by the Participant or, in the case of death, by the Participant's
estate or by the person given authority to exercise such Options by his or her
will or by operation of law, for the remainder of the stated term of such
Options.
(b) CAUSE. Upon removal, failure to stand for reelection or failure to
be renominated for Cause, or if the Company obtains or discovers information
after Termination of Directorship that such Participant had engaged in conduct
that would have justified a removal for Cause during such directorship, all
outstanding Options of such Participant shall immediately terminate and shall be
null and void.
(c) CANCELLATION OF OPTIONS. No Options that were not exercisable
during the period such person serves as a director shall thereafter become
exercisable upon a Termination of Directorship for any reason or no reason
whatsoever, and such Options shall terminate and become null and void upon a
Termination of Directorship.
9.6 CHANGES. The Awards to a non-employee director shall be subject to
Sections 4.2(a), (b) and (c) of the Plan and this Section 9.6, but shall not be
subject to Section 4.2(d).
9.7 If the Company shall not be the surviving corporation in any merger
or consolidation, or if the Company is to be dissolved or liquidated, then,
unless the surviving corporation assumes the Options or substitutes new Options
which are determined by the Board in its sole discretion to be substantially
similar in nature and equivalent in terms and value for Options then
outstanding, upon the effective date of such merger, consolidation, liquidation
or dissolution, any unexercised Options shall expire without additional
compensation to the holder thereof; provided, that, the Committee shall deliver
notice to each non-employee director at least twenty (20) days prior to the date
of consummation of such merger, consolidation, dissolution or liquidation which
would result in the expiration of the Options and during the period from the
date on which such notice of termination is delivered to the consummation of the
merger, consolidation, dissolution or liquidation, such Participant shall have
the right to exercise in full effective as of such consummation all Options that
are then outstanding (without regard to limitations on exercise otherwise
contained in the Options) but contingent on occurrence of the merger,
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consolidation, dissolution or liquidation, and, provided that, if the
contemplated transaction does not take place within a ninety (90) day period
after giving such notice for any reason whatsoever, the notice, accelerated
vesting and exercise shall be null and void and, if and when appropriate, new
notice shall be given as aforesaid.
ARTICLE X.
NON-TRANSFERABILITY
Except as provided in the last sentence of this Article X, no Stock
Option or Stock Appreciation Right granted to an Employee or Consultant shall be
Transferable by the Participant otherwise than by will or by the laws of descent
and distribution. All Stock Options and all Stock Appreciation Rights granted to
an Employee or Consultant shall be exercisable, during the Participant's
lifetime, only by the Participant. Tandem Stock Appreciation Rights shall be
Transferable, to the extent permitted above, only with the underlying Stock
Option. Shares of Restricted Stock under Article VII may not be Transferred
prior to the date on which shares are issued, or, if later, the date on which
any applicable restriction lapses. No Award shall, except as otherwise
specifically provided by law or herein, be Transferable in any manner, and any
attempt to Transfer any such Award shall be void, and no such Award shall in any
manner be liable for or subject to the debts, contracts, liabilities,
engagements or torts of any person who shall be entitled to such Award, nor
shall it be subject to attachment or legal process for or against such person.
All Stock Options granted to non-employee directors shall be Transferable solely
to such non-employee director's principal employer (other than the Company or an
Affiliate) at the time of grant if the terms of such non-employee director's
employment so require. Notwithstanding the foregoing, the Committee may
determine at the time of grant or thereafter, that a Non-Qualified Stock Option
that is otherwise not transferable pursuant to this Article X is transferable in
whole or part and in such circumstances, and under such conditions, as specified
by the Committee.
ARTICLE XI.
CHANGE IN CONTROL PROVISIONS
11.1 BENEFITS. In the event of a Change in Control of the Company (as
defined below), except as otherwise provided by the Committee upon the grant of
an Award, each Participant shall have the following benefits:
(a) Unless otherwise provided in the applicable award agreement, all
outstanding Options and the related Tandem Stock Appreciation Rights and
Non-Tandem Stock Appreciation Rights of such Participant granted prior to the
Change in Control shall be fully vested and immediately exercisable in their
entirety. The Committee, in its sole discretion, may provide for the purchase of
any such Stock Options by the Company for an amount of cash equal to the excess
of the Change in Control Price (as defined below) of the shares of Common Stock
covered by such Stock Options, over the aggregate exercise price of such Stock
Options. For purposes of this Section 11.1, "Change in Control Price" shall mean
the higher of (i) the highest price per share of Common Stock paid in any
transaction related to a Change in Control of the Company, or (ii) the highest
Fair Market Value per share of Common Stock at any time during the sixty (60)
day period preceding a Change in Control.
(b) Unless otherwise provided in the applicable award agreement, the
restrictions to which any shares of Restricted Stock of such Participant granted
prior to the Change in Control are subject shall lapse as if the applicable
Restriction Period had ended upon such Change in Control.
(c) Notwithstanding anything else herein, the Committee may, in its
sole discretion, provide for accelerated vesting of an Award (other than a grant
to a non-employee director pursuant to Article IX hereof), upon a Termination of
Employment during the Pre-Change in Control Period. Unless otherwise determined
by the Committee, the "Pre-Change in Control Period" shall mean the one hundred
eighty (180) day period prior to a Change in Control.
11.2 CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred:
(a) upon any "person" as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company, any trustee or other fiduciary
holding securities under any employee benefit plan of the Company, or any
company owned, directly or indirectly, by the stockholders of the Company in
substantially the
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same proportions as their ownership of Common Stock of the Company) becoming the
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing forty percent (40%) or more of the
combined voting power of the Company's then outstanding securities (including,
without limitation, securities owned at the time of any increase in ownership);
(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in paragraph (a), (c), or (d)
of this section) or a director whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a person other than the Board of Directors of the Company whose election by
the Board of Directors or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the two-year period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority of the Board of Directors;
(c) upon the merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than fifty percent (50%) of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;
provided, however, that a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
(other than those covered by the exceptions in (a) above) acquires more than
forty percent (40%) of the combined voting power of the Company's then
outstanding securities shall not constitute a Change in Control of the Company;
or
(d) upon the stockholder's of the Company approval of a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets other than
the sale of all or substantially all of the assets of the Company to a person or
persons who beneficially own, directly or indirectly, at least fifty percent
(50%) or more of the combined voting power of the outstanding voting securities
of the Company at the time of the sale.
ARTICLE XII.
TERMINATION OR AMENDMENT OF THE PLAN
12.1 TERMINATION OR AMENDMENT. Notwithstanding any other provision of
this Plan, the Board may at any time, and from time to time, amend, in whole or
in part, any or all of the provisions of the Plan, or suspend or terminate it
entirely, retroactively or otherwise; provided, however, that, unless otherwise
required by law or specifically provided herein, the rights of a Participant
with respect to Awards granted prior to such amendment, suspension or
termination, may not be impaired without the consent of such Participant and,
provided further, without the approval of the stockholders of the Company, if
and to the extent required by the applicable provisions of Rule 16b-3 or, if and
to the extent required, under the applicable provisions of Section 162(m) of the
Code, or with regard to Incentive Stock Options, Section 422 of the Code, no
amendment may be made which would (i) except as permitted in Section 4.1(a),
increase the aggregate number of shares of Common Stock that may be issued under
this Plan; (ii) increase the maximum individual Participant limitations for a
fiscal year under Section 4.1(b); (iii) change the classification of employees,
Consultants, and non-employee directors eligible to receive Awards under this
Plan; (iv) decrease the minimum option price of any Stock Option; (v) extend the
maximum option period under Section 6.3; (vi) change any rights under the Plan
with regard to non-employee directors; or (vii) require stockholder approval in
order for the Plan to continue to comply with the applicable provisions, if any,
of Rule 16b-3, Section 162(m) of the Code, any applicable state law, or, with
regard to Incentive Stock Options, Section 422 of the Code.
In no event may the Plan be amended without the approval of the
stockholders of the Company in accordance with the applicable laws or other
requirements to increase the aggregate number of shares of Common Stock that may
be issued under the Plan, decrease the minimum option price of any Stock Option,
or to make any other amendment that would require stockholder approval under the
rules of any exchange or system on which the Company's securities are listed or
traded at the request of the Company.
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The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Article IV above or as otherwise
specifically provided herein, no such amendment or other action by the Committee
shall impair the rights of any holder without the holder's consent.
ARTICLE XIII.
UNFUNDED PLAN
This Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments as to which a Participant has a fixed
and vested interest but which are not yet made to a Participant by the Company,
nothing contained herein shall give any such Participant any rights that are
greater than those of a general creditor of the Company.
ARTICLE XIV.
GENERAL PROVISIONS
14.1 LEGEND. The Committee may require each person receiving shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend that the Committee deems
appropriate to reflect any restrictions on Transfer. All certificates for shares
of Common Stock delivered under the Plan shall be subject to such stock transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Common Stock is then listed or any
national securities association system upon whose system the Common Stock is
then quoted, any applicable federal or state securities law, and any applicable
corporate law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
14.2 OTHER PLANS. Nothing contained in this Plan shall prevent the
Board from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
14.3 NO RIGHT TO EMPLOYMENT/DIRECTORSHIP. Neither this Plan nor the
grant of any Award hereunder shall give any Participant or other employee any
right with respect to continuance of employment by the Company or any Affiliate,
nor shall there be a limitation in any way on the right of the Company or any
Affiliate by which an employee is employed to terminate his employment at any
time. Neither this Plan nor the grant of any Award hereunder shall impose any
obligations on the Company to retain any Participant as a director nor shall it
impose on the part of any Participant any obligation to remain as a director of
the Company.
14.4 WITHHOLDING OF TAXES. The Company shall have the right to deduct
from any payment to be made to a Participant, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld. Upon the vesting of Restricted Stock, or upon
making an election under Code Section 83(b), a Participant shall pay all
required withholding to the Company. The Committee may permit any such
withholding obligation with regard to any Participant to be satisfied by
reducing the number of shares of Common Stock otherwise deliverable or by
delivering shares of Common Stock already owned. Any fraction of a share of
Common Stock required to satisfy such tax obligations shall be disregarded and
the amount due shall be paid instead in cash by the Participant.
14.5 LISTING AND OTHER CONDITIONS.
(a) As long as the Common Stock is listed on the OTC Bulletin Board or
any other national securities exchange or system sponsored by a national
securities association, the issue of any shares of Common Stock pursuant to an
Award shall be conditioned upon such shares being listed on such exchange or
system. The Company shall have no obligation to issue such shares unless and
until such shares are so listed, and the right to exercise any Option with
respect to such shares shall be suspended until such listing has been effected.
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(b) If at any time counsel to the Company shall be of the opinion that
any sale or delivery of shares of Common Stock pursuant to an Award is or may in
the circumstances be unlawful or result in the imposition of excise taxes on the
Company under the statutes, rules or regulations of any applicable jurisdiction,
the Company shall have no obligation to make such sale or delivery, or to make
any application or to effect or to maintain any qualification or registration
under the Securities Act of 1933, as amended, or otherwise with respect to
shares of Common Stock or Awards, and the right to exercise any Option shall be
suspended until, in the opinion of said counsel, such sale or delivery shall be
lawful or will not result in the imposition of excise taxes on the Company.
(c) Upon termination of any period of suspension under this Section
14.5, any Award affected by such suspension which shall not then have expired or
terminated shall be reinstated as to all shares available before such suspension
and as to shares which would otherwise have become available during the period
of such suspension, but no such suspension shall extend the term of any Option.
14.6 GOVERNING LAW. This Plan shall be governed and construed in
accordance with the laws of the state of incorporation of the Company
(regardless of the law that might otherwise govern under applicable principles
of conflict of laws).
14.7 CONSTRUCTION. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply. To the
extent applicable, the Plan shall be limited, construed and interpreted in a
manner so as to comply with the applicable requirements of Rule 16b-3 and
Section 162(m) of the Code; however, noncompliance with Rule 16b-3 or Section
162(m) of the Code shall have no impact on the effectiveness of a Stock Option
granted under the Plan.
14.8 OTHER BENEFITS. No Award payment under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries nor affect any benefits under any other benefit plan
now or subsequently in effect under which the availability or amount of benefits
is related to the level of compensation.
14.9 COSTS. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock pursuant to
any Awards hereunder.
14.10 NO RIGHT TO SAME BENEFITS. The provisions of Awards need not be
the same with respect to each Participant, and such Awards to individual
Participants need not be the same in subsequent years.
14.11 DEATH/DISABILITY. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require the agreement of the transferee to be bound by all of
the terms and conditions of the Plan.
14.12 SECTION 16(b) OF THE EXCHANGE ACT. All elections and transactions
under the Plan by persons subject to Section 16 of the Exchange Act involving
shares of Common Stock are intended to comply with any applicable condition
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
the Plan and the transaction of business thereunder.
14.13 SEVERABILITY OF PROVISIONS. If any provision of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and enforced
as if such provisions had not been included.
14.14 HEADINGS AND CAPTIONS. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of the
Plan, and shall not be employed in the construction of the Plan.
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ARTICLE XV.
TERM OF PLAN
No Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the earlier of the date the Plan is adopted or the date of
stockholder approval, but Awards granted prior to such tenth anniversary may
extend beyond that date.
ARTICLE XVI.
NAME OF PLAN
This Plan shall be known as the iGames Entertainment, Inc. Amended and
Restated 2003 Stock Incentive Plan.
ARTICLE XVII.
NOTICES
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business and
addressed to the attention of the person designated by the Company from time to
time as the Stock Option Administrator, and if to the holder of an Option, to
the address as appearing on the records of the Company.
Executed as of January 2, 2004.
iGAMES ENTERTAINMENT, INC.
/s/ Christopher M. Wolfington
-----------------------------
By: Christopher M. Wolfington
Chief Executive Officer
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