Exhibit 10.1
 
LIGHTNING GAMING, INC.
2007 EQUITY INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
 
This INCENTIVE STOCK OPTION AGREEMENT (this “Option Agreement”), dated as of the
____ day of ________________ (the “Grant Date”), is between Lightning Gaming,
Inc., a Nevada corporation (the “Company”), and _______________ (the
“Optionee”), a key employee of the Company or of a “Related Corporation,” as
defined in the Lightning Gaming, Inc. 2007 Equity Incentive Plan (the “Plan”).
 
WHEREAS, the Company desires to give the Optionee the opportunity to purchase
shares of common stock of the Company (“Common Stock”) in accordance with the
provisions of the Plan, a copy of which is attached hereto;
 
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth
and for other good and valuable consideration, the parties hereto, intending to
be legally bound hereby, agree as follows:
 
1.           Grant of Option Subject to the Plan.  The Company hereby grants to
the Optionee the right and option (the “Option”) to purchase all or any part of
an aggregate of ________ shares of Common Stock. The Option is in all respects
limited and conditioned as hereinafter provided, and is subject in all respects
to the terms and conditions of the Plan now in effect and as it may be amended
from time to time (but only to the extent that such amendments apply to
outstanding options). Such terms and conditions are incorporated herein by
reference, made a part hereof, and shall control in the event of any conflict
with any other terms of this Option Agreement. The Option granted hereunder is
intended to be an incentive stock option (“ISO”) meeting the requirements of the
Plan and section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”), and not a nonqualified stock option (“NQSO”).
 
The Optionee acknowledges that he or she has received a copy of the Plan
together with, or prior to receipt of, this Option Agreement and that he or she
has fully reviewed the Plan.
 
2.           Exercise Price.  The exercise price of the shares of Common Stock
covered by this Option shall be $____ per share. It is the determination of the
“Committee” (as defined in the Plan) that on the Grant Date the exercise price
was not less than the greater of (i) 100% (110% for an Optionee who owns more
than 10% of the total combined voting power of all shares of stock of the
Company or of a Related Corporation (a “More-Than-10% Owner”)) of the “Fair
Market Value” (as defined in the Plan) of a share of Common Stock, or (ii) the
par value of a share of Common Stock.
 
3.           Term.  Unless earlier terminated pursuant to any provision of the
Plan or this Option Agreement, this Option shall expire on
______________________ (the “Expiration
 

 
1

--------------------------------------------------------------------------------

 

Date”), which date is not more than 10 years (five years in the case of a
More-Than-10% Owner) from the Grant Date. This Option shall not be exercisable
on or after the Expiration Date.
 
4.           Exercise of Option.  The Optionee shall have the right to purchase
from the Company, on and after the following vesting dates, the following number
of shares of Common Stock subject to the Option, provided the Optionee has not
terminated his or her service as of the applicable vesting date:
 
Date Installment Becomes
Exercisable (Vesting Date)
 
Number of Shares
                       

 
Notwithstanding the above, the Option shall be fully vested on the date of a
Change in Control. A Change in Control shall be deemed to occur for this purpose
if:
 
(i)           A person, including a “group” as such term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes the
beneficial owner, directly or indirectly, of 50.1% or more of the total voting
power or fair market value of stock of the Company.
 
(ii)           There is a sale of all or substantially all the assets of the
Company.
 
(iii)           There is a merger or consolidation of the Company as a result of
which the individuals and entities who were the beneficial owners of the stock
of the Company do not beneficially own, immediately after such merger or
consolidation, directly or indirectly, 50.1% or more of the total voting power
and fair market value of the stock resulting from such merger or consolidation
in substantially the same proportion as their ownership of the stock of the
Company prior to such merger or consolidation.
 
The Committee may accelerate any vesting date of the Option, in its discretion,
if it deems such acceleration to be desirable. Once the Option becomes vested,
it will remain vested and exercisable until it is exercised or until it
terminates.
 
5.           Method of Exercising Option. Subject to the terms and conditions of
this Option Agreement and the Plan, the Option may be exercised by written
notice to the Company at its principal office, which is presently located at 106
Chelsea Parkway, Boothwyn, Pennsylvania 19061. The form of such notice is
attached hereto and shall state the election to exercise the Option and the
number of whole shares with respect to which it is being exercised; shall be
signed by the person or persons so exercising the Option; and shall be
accompanied by payment of the full exercise price of such shares. Only full
shares will be issued.
 

 
 
 
2

--------------------------------------------------------------------------------

 

The exercise price shall be paid to the Company -
 
(a)           in cash, or by check (acceptable to the Company), bank draft, or
money order;
 
(b)           through the delivery of shares of Common Stock previously acquired
by the Optionee;
 
(c)           in shares of Common Stock newly acquired by the Optionee upon the
exercise of the Option; or
 
(d)           in any combination of (a), (b), or (c) above.
 
In the event the exercise price is paid, in whole or in part, with shares of
Common Stock, the portion of the exercise price so paid shall be equal to the
Fair Market Value of the Common Stock surrendered on the date of exercise. In
the event the exercise price is paid with shares of Common Stock newly acquired
or with shares acquired through exercise of an ISO which have not been held for
a period of not less than the holding period described in section 422(a)(1) of
the Code, a disqualifying disposition shall result.
 
Upon receipt of notice of exercise and payment, the Company shall deliver a
certificate or certificates representing the shares with respect to which the
Option is so exercised. The Optionee shall obtain the rights of a shareholder
upon receipt of the certificate(s) representing such Common Stock.
 
Such certificate(s) shall be registered in the name of the person so exercising
the Option (or, if the Option is exercised by the Optionee and if the Optionee
so requests in the notice exercising the Option, shall be registered in the name
of the Optionee and the Optionee’s spouse jointly, with right of survivorship),
and shall be delivered as provided above to, or upon the written order of, the
person exercising the Option. In the event the Option is exercised by any person
after the death or “Disability” (as defined in the Plan) of the Optionee, the
notice shall be accompanied by appropriate proof of the right of such person to
exercise the Option. All shares that are purchased upon exercise of the Option
as provided herein shall be fully paid and non-assessable.
 
6.           Shares to be Purchased for Investment. Unless the Company has
notified the Optionee that a registration statement covering the shares to be
acquired upon the exercise of the Option has become effective under the
Securities Act of 1933, as amended (the “Act”), and the Company has not
thereafter notified the Optionee that such registration statement is no longer
effective, it shall be a condition to any exercise of this Option that the
shares acquired upon such exercise be acquired for investment and not with a
view to distribution, and the person effecting such exercise shall submit to the
Company a certificate of such investment intent, together with such other
evidence supporting the same as the Company may request. The Company shall be
entitled to restrict the transferability of the shares issued upon any such
exercise to the extent necessary to avoid a risk of violation of the Act (or of
any rules or regulations promulgated
 

 
 
3

--------------------------------------------------------------------------------

 

thereunder), or of any state laws or regulations. Such restrictions may, at the
option of the Company, be noted or set forth in full on the share certificates.
 
7.           Non-Transferability of Option. This Option is not assignable or
transferable, in whole or in part, by the Optionee other than by will or by the
laws of descent and distribution.  During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee or, in the event of his or her
Disability, by his or her guardian or legal representative.
 
8.           Termination of Employment.  If the Optionee’s employment with the
Company and all Related Corporations is terminated prior to the Expiration Date,
for any reason, other than for “Cause” (as defined in the Plan), death or
Disability, this Option may be exercised by the Optionee, to the extent of the
number of shares with respect to which the Optionee could have exercised it
immediately before such termination of employment, at any time prior to the
earlier of (i) the Expiration Date or (ii) three months after such termination
of employment. Any part of the Option that was not exercisable immediately
before the Optionee’s termination of employment shall terminate at that time. In
the event the Optionee’s employment is terminated for Cause, this Option
(regardless of the extent to which it was then exercisable) shall terminate in
its entirety on the date of such termination of employment.
 
9.           Disability.  If the Optionee incurs a Disability during his or her
employment and, prior to the Expiration Date, the Optionee’s employment is
terminated as a consequence of such Disability, this Option may be exercised by
the Optionee or by the Optionee’s legal representative, to the extent of the
number of shares with respect to which the Optionee could have exercised it
immediately before such termination of employment, at any time prior to the
earlier of (i) the Expiration Date or (ii) one year after such termination of
employment. Any part of the Option that was not exercisable immediately before
the Optionee’s termination of employment shall terminate at that time.
 
10.           Death.  If the Optionee dies during his or her employment and
prior to the Expiration Date, or if the Optionee’s employment is terminated for
any other reason except Cause (as described in Paragraphs 8 and 9) and the
Optionee dies following his or her termination of employment but prior to the
earlier of (i) the Expiration Date, or (ii) the expiration of the period
determined under Paragraph 8 or 9 (as applicable to the Optionee) this Option
may be exercised, to the extent of the number of shares with respect to which
the Optionee could have exercised it on the date of his or her death by the
Optionee’s estate, personal representative or beneficiary who acquired the right
to exercise this Option by bequest or inheritance or by reason of the Optionee’s
death, at any time prior to the earlier of (i) the Expiration Date or (ii) one
year after the date of the Optionee’s death. Any part of the Option that was not
exercisable immediately before the Optionee’s death shall terminate at that
time.
 
11.           Disqualifying Disposition of Option Shares.  The Optionee agrees
to give written notice to the Company, at its principal office, if a
“disposition” of the shares acquired through exercise of the Option occurs at
any time within two years after the Grant Date or within one year after the
issuance to the Optionee of such shares. Optionee acknowledges that if such
disposition occurs, the Optionee generally will recognize ordinary income as of
the date the Option was exercised in an amount equal to the lesser of (i) the
Fair Market Value of the shares
 

 
 
4

--------------------------------------------------------------------------------

 

of Common Stock on the date of exercise minus the exercise price, or (ii) the
amount realized on disposition of such shares minus the exercise price. For
purposes of this Paragraph, the term “disposition” shall have the meaning
assigned to such term by section 424(c) of the Code.
 
12.           Rights as a Shareholder.  The issuance of a stock certificate
shall be conditioned upon the Optionee’s execution of any Shareholders Agreement
in effect at such time.
 
13.           Governing Law.  This Option Agreement shall be governed by the
applicable Code provisions to the maximum extent possible. Otherwise, the laws
of the State of Nevada (without reference to principles of conflict of laws)
shall govern the operation of, and the rights of the Optionee under, the Plan
and the Option.
 
IN WITNESS WHEREOF, this Option Agreement has been duly executed by the Company
and the Optionee as of the date first set forth above.
 
 
LIGHTNING GAMING, INC.:
 

By:  ______________________________     
Name:
Title:

OPTIONEE:

__________________________________
Name:

 

 
 
5

--------------------------------------------------------------------------------

 

LIGHTNING GAMING, INC.
2007 EQUITY INCENTIVE PLAN
 
Notice of Exercise of Incentive Stock Option
 
I hereby exercise the incentive stock option granted to me pursuant to the
Incentive Stock Option Agreement dated as of __________________, ___ (the
“Option”), by Lightning Gaming, Inc. (the “Company”), with respect to the
following number of shares of the Company’s common stock (“Shares”) covered by
the Option:
 
Number of Shares to be purchased:
 
Purchase price per Share:
 
Total purchase
price:                                                                                       $
 
____
A.
Enclosed is cash or my check, bank draft, or money order in the amount of
$_____________ in full/partial [circle one] payment for such Shares;

 
 
and/or

 
____
B.
Enclosed is/are
Share(s) with a total fair market value of $________ on the date hereof in
full/partial [circle one] payment for such Shares;

 
 
and/or

 
____
C.
I elect to satisfy the payment for Shares purchased hereunder by having the
Company withhold newly acquired Shares pursuant to the exercise of the Option
and recognize that this constitutes a disqualifying disposition of such Shares.

 
Please have the certificate or certificates representing the purchased Shares
registered in the following name or names*:
__________________________________________ and sent to
___________________________________________________.
 
If the condition in Paragraph 6 (“Shares to be Purchased for Investment”) of the
Incentive Stock Option Agreement related to the Shares purchased hereby is
applicable, the undersigned hereby certifies that the Shares purchased hereby
are being acquired for investment and not with a view to distribution of such
Shares.
 
 

 

 DATE:          Optionee’s Signature

 
 

--------------------------------------------------------------------------------

 
* Certificates may be registered in the name of the Optionee alone or in the
joint names (with right of survivorship) of the Optionee and his or her spouse.

 
 
 
6

 

--------------------------------------------------------------------------------