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ATTACHMENT A
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AMERICAN WAGERING, INC.
2001 STOCK OPTION PLAN
American Wagering, Inc. (the "Company") hereby establishes
and adopts the American Wagering, Inc. 2001 Stock Option Plan, as
set forth in this document.
1. Purpose. The Plan is intended to recognize the
contributions made to the Company or an Affiliate (as
hereinafter defined) by employees of the Company or any
Affiliate, members of the Board of Directors of the Company
or any Affiliate, and certain consultants and advisors to
the Company or any Affiliate, to provide such persons with
additional incentive to devote themselves to the future
success of the Company or any Affiliate and to improve the
ability of the Company or an Affiliate to attract, retain
and motivate individuals upon whom the Company's sustained
growth and financial success depend by providing such
persons with an opportunity to acquire or increase their
proprietary interest in the Company through receipt of
rights to acquire the Company's Common Stock, $.01 par value
(the "Common Stock").
2. Definitions. Unless the context clearly indicates otherwise,
the following terms shall have the following meanings:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Affiliate" means a corporation which is a parent corporation
or a subsidiary corporation with respect to the Company within
the meaning of Section 424(e) or (f) of the Code.
(c) "Board of Directors" means the Board of Directors of the Company.
(d) "Change of Control" shall have the meaning set forth in Section 9
of the Plan.
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(e) "Code" means the Internal Revenue Code of 1986, as
amended.
(f) "Committee" means the Board of Directors or, if
applicable, the committee designated by the Board of
Directors in accordance with the provisions of
Section 3 of the Plan.
(g) "Disability" shall mean, in the case of an Optionee
who is covered by a disability policy or plan paid
for or provided by the Company, a condition which
entitles the Optionee to benefits under the policy
or plan or, if there is no such policy or plan
covering the Optionee, "Disability" shall have the
meaning set forth in Section 22(e)(3) of the Code.
(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(i) "Fair Market Value" shall have the meaning set forth
in Section 8(b) of the Plan.
(j) "ISO" means an Option granted under the Plan which
is an "incentive stock option" within the meaning of
Section 422(b) of the Code.
(k) "Non-qualified Stock Option" means an Option granted
under the Plan which is not intended to qualify, or
otherwise does not qualify, as an ISO.
(l) "Option" means either an ISO or a Non-qualified
Stock Option granted by the Company under the Plan.
(m) "Optionee" means a person to whom an Option has been
granted under the Plan.
(n) "Option Document" means the written document
described in Section 8 of the Plan evidencing the
Option and setting forth the terms and conditions
upon which the Option is granted and upon which it
may be exercised.
(o) "Option Price" means the price at which Shares may
be purchased upon exercise of an Option, as
determined pursuant to Section 8(b) of the Plan.
(p) "Person" means any individual, corporation,
partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or
government (including any agency or political
subdivision thereof).
(q) "Plan" means the American Wagering, Inc. 2001 Stock
Option Plan.
(r) "Shares" means the shares of Common Stock of the
Company which are the subject of Options, except as
the same may be modified pursuant to the terns of
Section 10 of the Plan.
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3. Administration of the Plan.
(a) Committee. The Plan shall be administered by the
Board of Directors or a committee, either existing
or newly formed, appointed by the Board of Directors
which is intended, but not required, to be composed
of two or more "outside directors" within the
meaning of Section 162(m) of the Code. Members of
the Committee shall serve at the pleasure of the
Board of Directors which shall also fill any
vacancies in the membership of the Committee.
(b) Meetings. The Committee shall hold meetings at such
times and places as it may determine and shall keep
minutes of its meetings. A majority of the
Committee shall constitute a quorum thereof, and
acts approved at a meeting or acts approved in
writing by a majority of the members of the
Committee shall be the valid acts of the Committee.
(c) Grants. The Committee shall from time to time, in
its discretion, direct the Company to grant Options
pursuant to the terms of the Plan. The Committee
shall have plenary authority to (i) determine the
Optionees to whom, the times at which, and the price
at which Options shall be granted, (ii) determine
the type of Option to be granted and the number of
Shares subject thereto, and (iii) approve the form
and terms and conditions of the Option Documents;
all subject, however, to the express provisions of
the Plan. In making such determinations, the
Committee shall take into account the nature of the
Optionee's services and responsibilities, the
Optionee's present and potential contribution to the
Company's success and such other factors as the
Committee may deem relevant. The interpretation and
construction by the Committee of any provisions of
the Plan or of any Option granted under the Plan,
and of any Option Document, shall be final, binding
and conclusive.
(d) Exculpation. No member of the Committee or of the
Board of Directors shall be personally liable in
such capacity for monetary damages for any action
taken or any failure to take any action in
connection with the administration of the Plan or
the granting of Options under the Plan, unless such
member breaches or fails to perform the duties of
his office under the Nevada law, and the breach or
failure to perform constitutes self-dealing, willful
misconduct or recklessness. This provision,
however, does not apply to the responsibility or
liability of a member pursuant to any criminal
statute, or to the liability of a member for the
payment of the Company's taxes pursuant to local,
state or federal law.
(e) Indemnification. Service on the Committee shall
constitute service as a member of the Board of
Directors. Each member of the Committee shall be
entitled without further act on his part to
indemnity from the Company to the fullest extent
provided by applicable law and the Company's
Certificate of Incorporation and/or By-laws in
connection with or arising out of any action, suit
or proceeding with respect to the administration of
the Plan or the
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granting of Options thereunder in
which he or she may be involved by reason of his or
her being or having been a member of the Committee,
whether or not he or she continues to be a member of
the Committee at the time of the action, suit or
proceeding.
(f) Limitations on Grants of Options to Consultants and
Advisors. With respect to the grant of Options to
consultants and advisors, bona fide services must be
rendered by consultants and advisors, and such
services must not be in connection with a capital
raising transaction.
4. Grants under the Plan. Grants under the Plan may be in the
form of a Non-qualified Stock Option, an ISO or a
combination thereof, at the discretion of the Committee.
More than one Option may be granted to any individual, and
each such grant may include Options which are intended to be
ISOs and Options which are not intended to be ISOs, but only
on the terms and subject to the conditions and restrictions
of the Plan.
5. Eligibility. All employees and members of the Board of
Directors of, and consultants and advisors to, the Company
or an Affiliate shall be eligible to receive Options
hereunder.
6. Shares Subject to Plan. The aggregate maximum number of
Shares for which Options may be granted during any 12 month
period pursuant to the Plan shall be the greater of: (1) $1
million in aggregate exercise price, (2) an aggregate
exercise price equal to 15% of the Company's total assets,
or (3) 15% of the issued and outstanding Common Stock of the
Company, including shares previously issued under this Plan
or other stock option plans created by the Company, subject
to adjustment as provided in Section 10 of the Plan. The
Shares shall be issued from either authorized and unissued
Common Stock or Common Stock held in or hereafter acquired
for the treasury of the Company. If an Option terminates or
expires without having been fully exercised for any reason,
the Shares for which the Option was not exercised may again
be the subject of further Option grants under the Plan.
7. Effectiveness; Term of the Plan. The Plan shall become
effective (the "Effective Date") as of August 9, 2001, the
date on which it was adopted by the Board of Directors. If
the Plan is not approved by vote of a majority of the
outstanding voting stock of the Company on or before
December 31, 2002, no option granted pursuant to the Plan
shall be an ISO and all Options granted under the Plan shall
remain outstanding but shall not be treated as ISOs. No
Option may be granted under the Plan after August 8, 2011 or
the earlier termination of the Plan.
8. Option Documents and Terms. Each Option granted under the
Plan shall be an ISO unless the Option shall specifically be
designated as a Non-qualified Stock Option at the time of
grant. If any ISO is determined for any reason not to
qualify as an incentive stock option within the meaning of
Section 422 of the Code, such Option shall be treated as a
Non-qualified Stock Option for all purposes under the
provisions of the Plan. The grant of each Option under the
Plan shall be evidenced by one or more Option Documents in
such form as the Committee shall from time to time approve,
which Option Documents shall be executed by the Company as
promptly as possible following such grant. Each
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Option Document shall comply with and be subject to the following
terms and conditions and such other terms and conditions as
the Committee shall from time to time require which are not
inconsistent with the terms of the Plan, and the Option
Document shall expressly state the provisions of the Plan or
incorporate them by reference.
(a) Number of Option Shares. Each Option Document shall
state the number of Shares to which it pertains.
The maximum number of Shares for which Options may
be granted to any single Optionee in any calendar
year shall be 250,000 Shares, subject to adjustment
as set forth in Section 10.
(b) Option Price. Each Option Document shall, subject to
adjustment as provided in Section 10 of the Plan,
state the Option Price which, for a Non-qualified
Stock Option, may be less than, equal to, or greater
than the Fair Market Value of the Shares on the date
the Option is granted and, for an ISO, shall be at
least 100% of the Fair Market Value of the Shares on
the date the Option is granted as determined by the
Committee in accordance with this Section 8(b);
provided, however, that if an ISO is granted to an
Optionee who then owns, directly or by attribution
under Section 424(d) of the Code, stock possessing
more than ten percent of the total combined voting
power of all classes of stock of the Company or an
Affiliate, then the Option Price shall be at least
110% of the Fair Market Value of the Shares on the
date the Option is granted. If the Common Stock is
traded in a public market, the Fair Market Value per
share shall be, if the Common Stock is listed on a
national securities exchange or included in the
Nasdaq National Market, the last reported sale price
thereof on the relevant date, or, if the Common
Stock is not so listed or included, the mean between
the last reported "bid" and "asked" prices thereof
on the relevant date, as reported on Nasdaq or, if
not so reported, as reported by the National Daily
Quotation Bureau, Inc. or other quotation or
reporting system or as reported in a customary
financial reporting service, as applicable. If the
Common Stock is not traded in a public market on the
relevant date, the Fair Market Value shall be as
determined in good faith by the Committee.
(c) Exercise. An Option granted under the Plan may be
exercised in whole or in part to the extent then
exercisable under the terms of the Option Document
and this Plan, provided that no Option shall be
deemed to have been exercised prior to the receipt
by the Company of written notice of such exercise
(on such form or forms as the Committee may
prescribe for this purpose) and of payment in full
(except as otherwise provided in Section 8(d) of the
Plan) of the Option Price for the Shares to be
purchased.
(d) Medium of Payment. Upon exercise of an Option, the
aggregate Option Price for the Shares as to which
the Option is being exercised shall, in the
discretion of the Committee, be (i) paid in U.S.
funds by cash (including a check, draft or wire
transfer made payable to the order of the Company),
or delivery of stock certificates for Shares of the
Company's Common Stock, free of all liens, claims
and encumbrances of every kind, and endorsed in
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blank or accompanied by executed stock powers with
signatures guaranteed by a national bank or trust
company or a member of a national securities
exchange evidencing Shares which have been held for
more than six months (in which case the value of
such Shares shall be deemed to be their Fair Market
Value on the date of exercise of the Option), (ii)
paid on a deferred basis upon such terms and
conditions as the Committee in its discretion shall
provide, (iii) deemed to be paid provided the notice
of exercise of the Option is accompanied to the
Committee's satisfaction by a copy of irrevocable
instructions to a broker to promptly deliver to the
Company an amount of sales or loan proceeds
sufficient to pay the Option Price in full, or (iv)
a combination of the foregoing. If any part of the
Option Price is to be paid on a deferred basis, the
Shares with respect to which payment is deferred
shall be registered in the name of the Optionee, but
the certificate representing such Shares shall serve
as security to the Company for the payment of the
Option Price and shall not be delivered to the
Optionee until the Option Price for said Shares has
been paid in full.
(e) Termination of Options.
(i) No Option or any unexercised installment thereof shall be
exercisable after the first to occur of the following:
A. Expiration of the Option term specified in the Option Document
which, subject to earlier termination as hereinafter provided,
shall not exceed (1) ten years from the date of grant or (2)
five years from the date of grant of an ISO if the Optionee
on the date of grant owns, directly and/or by attribution under
Section 424(d) of the Code, stock possessing more than ten
percent of the total combined voting power of all classes
of stock of the Company or of an Affiliate;
B. Expiration of three months from the date the Optionee's employment
or service with the Company or its Affiliates terminates
for any reason other than Disability or death or as otherwise
specified in Subsection 8(e)(i)(D) or 8(e)(i)(E) below;
provided, however, that such Option was exercisable on the date
of termination of employment or service under the provisions
of the Option Document or the Committee specifically waives the
restrictions relating to exercisability, if any, contained in the
Option Document.
C. Expiration of one year from the date such employment or service with
the Company or its Affiliates terminates due to the Optionee's
Disability or death; provided, however, that such Option was
exercisable on the date of termination of employment or service
under the provisions of the Option Document or the Committee
specifically waives the restrictions relating to exercisability,
if any, contained in the Option Document. The determination of
whether the termination of the Optionee's employment or service
with the Company is due to Disability shall be made by the
Committee, and such determination shall be final and binding on
the Company and the Optionee;
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D. A finding by the Committee, after full consideration of the facts
presented on behalf of both the Company and the Optionee, that the
Optionee has breached his or her employment or service contract
with the Company or an Affiliate, or has been engaged in disloyalty
to the Company or an Affiliate, including, without limitation,
fraud, embezzlement, theft, commission of a felony or proven
dishonesty in the course of his or her employment or service, or
has committed an intentional or grossly negligent act detrimental
to the interests of the Company or an Affiliate. In such event, in
addition to immediate termination of the Option, the Optionee shall
automatically forfeit all Shares for which the Company has not yet
delivered the share certificates upon refund by the Company of the
Option Price of such Shares. Notwithstanding anything herein to the
contrary, the Company may withhold delivery of share certificates
pending the resolution of any inquiry that could lead to a finding
resulting in a forfeiture; or
E. The date, if any, set by the Board of Directors as an accelerated
expiration date in the event of a Change of Control.
(ii)Notwithstanding the Option termination provisions of Section 8(e)
(i), the Committee, in it sole discretion, may extend the period
during which all or any portion of an Option may be exercised to a date
no later than the Option term specified in the Option Document
pursuant to Section 8(e)(i)(A), provided that any change pursuant to
this Section 8(e)(ii) which would cause an ISO to become a Non-
qualified Stock Option may be made only with the consent of the
Optionee.
(f) Transfers. Except as otherwise provided by law, no Option granted under
the Plan may be transferred except by will or by the laws of descent
and distribution. During the lifetime of the person to whom an Option
is granted, such Option may be exercised only by him or her or his or
her guardian or legal representative. Notwithstanding the foregoing,
the Committee in its sole discretion may amend an outstanding Option to
permit the transfer of such Option, without payment of consideration,
to immediate family members of the Optionee or to trusts or partnerships
for such family members.
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(g) Limitation on ISO Grants. In no event shall the aggregate fair market
value of the Shares of Common Stock (determined at the time an ISO is
granted) with respect to which incentive stock options under all
incentive stock option plans of the Company or its Affiliates are
exercisable for the first time by the Optionee during any calendar
year exceed $100,000 or such greater sum as may here after be
permitted under Section 422 of the Code.
(h) Other Provisions. Subject to the provisions of the Plan, each Option
Document shall contain such other provisions including, without
limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option granted pursuant to
the Plan, additional restrictions upon the exercise of the Option or
additional limitations upon the term of the Option, as the Committee shall
deem advisable.
(i) Amendment. The Committee shall have the right to amend any Option
Document issued to an Optionee to the extent the terms to be amended are
within the Committee's discretion as provided in the Plan but subject
to the Optionee's consent if such amendment is not favorable to the
Optionee, except that the consent of the Optionee shall not be required
for any amendment made pursuant to Section 8(e)(i)(E) or Section 9 of
the Plan, as applicable.
9. Change of Control. In the event of a Change of Control (as
defined below), all Options then outstanding under the Plan
immediately shall become vested and exercisable in full;
provided that any acceleration of exercisability of options
under this Section 9 which would cause an ISO to become a
Non-Qualified Stock Option may be made only with the consent
of the Optionee. In addition, in the event of a Change of
Control, the Committee may take whatever other action with
respect to Options outstanding as it deems necessary or
desirable, including without limitation, accelerating the
expiration date of any Options. Any amendment to this
Section 9 which diminishes the rights of Optionees shall not
be effective with respect to Options outstanding at the time
of adoption of such amendment, whether or not such
outstanding Options are then exercisable.
A "Change of Control" shall be deemed to have occurred upon
the earliest to occur of the following events: (a) the date
the stockholders of the Company (or the Board of Directors,
if stockholder action is not required) approve a plan or
other arrangement pursuant to which the Company will be
dissolved or liquidated; (b) the date the stockholders of
the Company (or the Board of Directors, if stockholder
action is not required) approve a definitive agreement to
sell or otherwise dispose of substantially all of the assets
of the Company; (c) the date the stockholders of the Company
(or the Board of Directors, if stockholder action is not
required) and the stockholders of the other constituent
corporation (or its board of directors if stockholder action
is not required) have approved a definitive agreement to
merge or consolidate the Company with or into such other
corporation other than, in either case, a merger or
consolidation of the Company in which holders of Shares of
Common Stock immediately prior to the merger or
consolidation will have at least a majority of the voting
power of the surviving corporation's voting securities
immediately after the merger or consolidation, which
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voting securities are to be held in the same proportion as such
holders' ownership of Common Stock immediately before the
merger or consolidation; (d) the date any entity, person or
group, within the meaning of Section 13(d)(3) or Section
14(d)(2) of the Exchange Act (other than (i) the Company or
any of its Affiliates or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
of its Affiliates, or (ii) any other person who, as of
August 9, 2001, shall have been the beneficial owner (within
the meaning of Rule 13d-3 promulgated under the Exchange
Act) of more than 30% of outstanding shares of Common
Stock), shall have become the beneficial owner of, or shall
have obtained voting control over, more than 30% of the
outstanding shares of Common Stock; or (e) the first day
after the date this Plan is effective when directors are
elected such that a majority of the Board of Directors shall
have been members of the Board of Directors for less than
two years, unless the nomination for election of each new
director who was not a director at the beginning of such
two-year period was approved by a vote of at least two-
thirds of the directors then still in office who were
directors at the beginning of such period.
10. Adjustments. In the event that a dividend shall be declared
upon the Common Stock payable in Shares of Common Stock or
if a stock split is declared with respect to the Common
Stock, the number of Shares of Common Stock then subject to
any Option outstanding under the Plan and the number of
Shares reserved for the grant of Options pursuant to the
Plan but not yet subject to an Option shall be adjusted by
adding to each such Share the number of shares which would
be distributable in respect thereof if such Shares had been
outstanding on the date fixed for determining the
stockholders of the Company entitled to receive such stock
dividend or stock split. In the event that the outstanding
shares of Common Stock shall be changed into or exchanged
for a different number or kind of shares of stock or other
securities of the Company or of another corporation, whether
through reorganization, recapitalization, stock split
combination of shares, merger, consolidation or otherwise,
there shall be substituted for each Share of Common Stock
subject to any such Option and for each Share of Common
Stock reserved for the grant of Options pursuant to the Plan
but not yet subject to an Option, the number and kind of
shares of stock or other securities into which each
outstanding share of Common Stock shall have been so changed
or for which each such share shall have been exchanged. In
the event there shall be any change, other than as specified
above in this Section 10, in the number or kind of
outstanding shares of Common Stock or of any stock or other
securities into which such Common Stock shall have been
changed or for which it shall have been exchanged, then if
the Board of Directors shall in its sole discretion
determine that such change equitably requires an adjustment
in the number or kind of Shares theretofore reserved for the
grant of Options pursuant to the Plan but not yet subject to
an Option and of the Shares then subject to Options, such
adjustment shall be made by the Board of Directors and shall
be effective and binding for all purposes of the Plan and of
each Option outstanding thereunder. In the case of any such
substitution or adjustment as provided for in this Section
10, the Option Price for each Share of stock or other
security which shall have been substituted for each Share of
Common Stock covered by an outstanding Option shall be
adjusted appropriately to reflect such substitution or
adjustment. No adjustment or substitution provided for in
this Section 10 shall require the Company to sell a
fractional share of Common Stock, and the total substitution
or adjustment with respect to each outstanding Option shall
be limited
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accordingly. Upon any adjustment made pursuant
to this Section 10, the Company will, upon request, deliver
to the Optionee a certificate of its Secretary setting forth
the Option Price thereafter in effect and the number and
kind of shares or other securities thereafter purchasable on
the exercise of such Option.
11. Amendment or Termination of the Plan. The Board of Directors
may terminate the Plan in whole or in part at any time or
amend the Plan from time to time in such manner as it may
deem advisable. Nevertheless, the Board of Directors of the
Company shall not (a) change the class of individuals
eligible to receive an ISO, (b) increase the maximum number
of Shares as to which Options may be granted (except as may
be automatically adjusted based on changes to the number of
issued and outstanding shares of the Company's Common Stock
at any given time) or (c) make any other change or amendment
to which stockholder approval is required in order to
satisfy the conditions set forth in Rule 16b-3 promulgated
under the Exchange Act, in each case without obtaining
approval, within twelve months before or after such action,
by vote of a majority of the votes cast at a duly called
meeting of the stockholders at which a quorum representing a
majority of all outstanding voting stock of the Company is,
either in person or by proxy, present and voting on the
matter. No amendment to the Plan, however, shall adversely
affect any outstanding Option in any material respect
without the consent of the Optionee.
12. No Commitment to Retain. The grant of an Option pursuant to
the Plan shall not be construed to imply or to constitute
evidence of any agreement, express or implied, on the part
of the Company or any Affiliate to retain the Optionee in
the employ or service of the Company or an Affiliate and/or
as a member of the Company's Board of Directors or in any
other capacity, and nothing in the Plan shall interfere with
or limit in any way the right of the Company or an Affiliate
to terminate the employment or service of an Optionee.
13. Withholding of Taxes. The Company shall deduct or withhold
an amount sufficient to satisfy all Federal, state and local
taxes required by law to be withheld with respect to any
grant or exercise of an Option or other transaction under
the Plan which gives rise to a withholding obligation and,
in so doing, the Company shall by agreement with the
Optionee or unilaterally take such action as it deems
necessary or prudent to protect the Company's interest with
respect to such withholding obligations. In the sole
discretion of the Committee, and subject to such conditions
or limitations as the Committee shall prescribe, an Optionee
may satisfy the withholding obligation, in whole or in part,
by electing to have the number of Shares to be issued upon
exercise of an Option reduced by a number of Shares having a
Fair Market Value equal to the desired withholding amount or
by surrendering to the Company Shares which the Optionee has
held for more than six months having an equivalent Fair
Market Value. If the method of payment for the Shares is
from a loan or sale by a broker of the Shares acquired on
exercise of the Option, the withholding obligation shall be
satisfied from the proceeds of such loan or sale.
14. Interpretation. It is the intent of the Company that
transactions under the Plan with respect to directors and
officers (within the meaning of Section 16(a) of the
Exchange Act) satisfy the conditions of Rule 16b-3
promulgated under the Exchange Act. To the
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extent that any provision of the Plan or action by the Committee would
result in a conflict with or fail to comply with any such
condition, such provision or action shall be deemed null and
void as applied to such transactions to the extent permitted
by applicable law and deemed advisable by the Company. In
addition, with respect to employees subject to Section
162(m) of the Code, transactions under the Plan are intended
to avoid the loss of a deduction under that Code section.
Accordingly, to the extent any provision of the Plan or
action by the Committee fails to comply with Section 162(m)
of the Code to avoid the loss of a deduction, it shall be
deemed null and void to the extent permitted by law and
deemed advisable by the Company.
15. Governing Law. The granting of Options and the issuance of
Shares under the Plan shall be subject to all applicable
laws and regulations and to such approvals by any
governmental agency or national securities exchanges as may
be required. To the extent not pre-empted by Federal law,
the Plan and all Option Documents hereunder shall be
construed in accordance with and governed by the laws of
Nevada.
IN WITNESS WHEREOF, the Company by its duly authorized
officer, has caused the Plan to be executed this 9th day of
August, 2001.
AMERICAN WAGERING, INC.
/s/ Victor Salerno
-------------------------------
By: Victor Salerno
Its: CEO/COO/Chairman of the Board
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