**Exhibit 10.1**

 

**BALLY TECHNOLOGIES, INC.2010 LONG TERM INCENTIVE PLAN**

 

The Bally Technologies, Inc. 2010 Long Term Incentive Plan (the “Plan”)is an amendment and restatement of the Bally Technologies, Inc. 2001 LongTerm Incentive Plan and was established by the Board of Directors (the “Board”)of Bally Technologies, Inc. (the “Company”) on October 1, 2009,subject to approval by the Company’s stockholders at a meeting of the Company’sstockholders or by written consent in accordance with the laws of the State ofNevada, which approval must be obtained within twelve (12) months of theadoption of this Plan by the Board.  ThePlan will continue in effect until terminated by the Board in accordance withthe terms of the Plan.

 

**1.****                                     ****PURPOSEOF THE PLAN**

** **

The Plan is intended to encourage stock ownership by directors,employees and designated paid consultants of the Company and its subsidiaries(collectively, the “Subsidiaries” and individually, a “Subsidiary”), in orderto increase their proprietary interest in the success of the Company and toencourage them to remain in the employ of the Company or a Subsidiary.

 

Options granted under the Plan may be either Incentive Stock Options orNonstatutory Stock Options; the term “Option” when used hereinafter refers toeither Incentive Stock Options or Nonstatutory Stock Options, or both.  Restricted Stock and Restricted Stock Unitsawarded under the Plan are subject to restrictions as determined in eachspecific case by the Board or by a duly appointed committee of the Board (the “Committee”).  Stock Appreciation Rights and IncentiveBonuses may also be granted under the Plan. The term “Award” when used hereinafter collectively refers to Options,Stock Appreciation Rights, Restricted Stock, Restricted Stock Units awarded underthe Plan.

 

**2.****                                     ****ADMINISTRATION**

** **

*Administration of the Plan*.  The Plan is administered by the Board or, ifthe Board so determines, by the Committee, provided that except as otherwiseprovided below, in the case of Awards to directors or officers subject to Section 16of the Securities Exchange Act of 1934 (the “Exchange Act”), the Committee hasexclusive responsibility for and authority to administer the Plan unless theBoard expressly determines otherwise. The membership of the Committee consists of not less than two members ofthe Board and will be constituted, if possible, to permit the Plan to complywith Rule 16b-3 promulgated under the Exchange Act or any successor rule (“Rule 16b-3”)and with the requirements of Section 162(m) of the Internal RevenueCode of 1986, as amended (the “Code”). Duly authorized actions of the Committee constitute actions of the Boardfor the purposes of the Plan and its administration.  The Board or the Committee, as applicable,has authority in its sole discretion:

 

·**                 **to determinewhich directors, employees and consultants, to which of such directors,employees and consultants, if any, Awards shall be granted hereunder and thetiming of any such Awards;

 

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·**                 **to grant Awardsto directors, employees and consultants and determine the terms and conditionsthereof, including the number of shares of Stock or amount of cash subject toAwards and the exercise or purchase price of such shares and the circumstancesunder which Awards become exercisable, vested or payable or are forfeited orexpire, which terms may but need not be conditioned upon the passage of time,continued employment, the satisfaction of performance criteria, the occurrenceof certain events, or other factors;

 

·**                 **to determinethe base price of any Stock Appreciation Right, the Incentive Stock OptionPrice or the Nonstatutory Stock Option Price (both as defined below) of, andthe number of shares of Stock (as defined below) to be covered by, StockAppreciation Rights and Options granted under the Plan;

 

·**                 **to establishand verify the extent of satisfaction of any performance goals or otherconditions applicable to the grant, issuance, exercisability, vesting, paymentand/or ability to retain any Award;

 

·**                 **to prescribeand amend the terms of the agreements or other documents evidencing Awards madeunder this Plan (which need not be identical) and the terms of or form of anydocument or notice required to be delivered to the Company by holders of Awardsunder this Plan;

 

·**                 **to approvecorrections in the documentation or administration of any Award;

 

·**                 **to require orpermit elections and/or consents under this Plan to be made by means of suchelectronic media as the Committee may prescribe;

 

·**                 **to interpretthe Plan, to prescribe, amend and rescind rules and regulations relatingto it, and to define terms not otherwise defined herein; and

 

·**                 **to make allother determinations which the Board or Committee, as applicable, deemnecessary or advisable for the administration of the Plan.

 

*Reserved Authority of the Board*.  The Committee has all the powers and dutiesset forth above, as well as any additional powers and duties that the Board maydelegate to it; provided, however, that the Board expressly retains the right (i) todetermine whether the shares of Stock reserved for issuance upon the exerciseand/or payment in respect of Awards granted under the Plan shall be issuedshares or unissued shares, (ii) to appoint the members of the Committee,and (iii) to terminate or amend the Plan. The Board may from time to time appoint members of the Committee insubstitution for or in addition to members previously appointed, may fillvacancies in the Committee, and may discharge the Committee.

 

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**3.****                                     ****COMMONSTOCK SUBJECT TO THE PLAN**

 

*Limitation on Number of Shares*.  The number of shares which may be issuedpursuant to all Awards granted under the Plan is limited to an aggregate of12,050,000 shares of the common stock, $.10 par value, of the Company (the “Stock”).  The shares reserved for issuance pursuant tothe Plan may consist either of authorized but previously unissued shares ofStock, or of issued shares of Stock which have been reacquired by the Company,as determined from time to time by the Board. If any Option or Stock Appreciation Right granted under the Planexpires, terminates or is canceled for any reason without having been exercisedin full, or any other Award is forfeited for any reason, the shares of Stockallocable to the unexercised portion of the Option or Stock Appreciation Rightor to the forfeited portion of the Award may again be made subject to an Optionor Award under the Plan.  Notwithstandingthe foregoing, Stock subject to an Award may not again be made available forissuance under the Plan if such Stock is: (i) Stock that was subject to astock-settled Stock Appreciation Right and was not issued upon the netsettlement or net exercise of such Stock Appreciation Right; (ii) Stockused to pay the exercise price of an Option; (iii) Stock delivered to orwithheld to pay the withholding taxes related to an Award; or (iv) Stockrepurchased on the open market with the proceeds of an Option exercise.

 

*Adjustments of Number of Shares*.  In the event of a change in the common stockof the Company that is limited to a change in the designation thereof to “CapitalStock” or other similar designation, or to a change in the par value thereof,or from par value to no par value, without increase or decrease in the numberof issued shares, the shares resulting from any such change are deemed to bethe common stock for purposes of the Plan.

 

**4.****                                     ****ELIGIBILITY**

** **

Awards may be granted under the Plan to paid consultants, directors andemployees of the Company or a Subsidiary designated by the Board or theCommittee, provided that Incentive Stock Options may be awarded only to regularfull-time employees of the Company or a Subsidiary (including employees whoserve as officers or directors).  As usedin the Plan, “paid consultant” means a natural person who is an independentcontractor retained to perform continuing and substantial services for theCompany or any subsidiary, and designated as a paid consultant by the Board orthe Committee, except that no individual shall be designated a “paid consultant”for purposes of this Plan if such individual is engaged in promoting ormaintaining a market in the securities of the Company, or in any other capacitythat would result in the Form S-8 registration statement being ineffectiveas to any Awards made to such individual. Any person granted an Award under the Plan (a “Grantee”) remainseligible to receive one or more additional grants thereafter, notwithstandingthat Options or Stock Appreciation Rights previously granted to such personremain unexercised in whole or in part, or that the applicable restrictions onany Restricted Stock or Restricted Stock Units issued to such person have notlapsed.

 

**5.****                                     ****STOCKOPTIONS**

** **

*In General*.  The Plan authorizes the Board or theCommittee to grant Options that qualify as incentive stock Options pursuant to Section 422of the Code (“Incentive Stock Options”), or Options that do not so qualify (“NonstatutoryStock Options”).  Each Option grantedunder the Plan is evidenced by a written and executed Option agreement whichwill specify whether the Option granted therein is an Incentive Stock Option ora Nonstatutory Stock Option.

 

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*Incentive Stock Options*.  Each stock Option agreement covering anIncentive Stock Option granted under the Plan and any amendment thereof, otherthan an amendment to convert an Incentive Stock Option into a NonstatutoryStock Option, will conform to the following provisions and may contain otherterms and provisions consistent with the requirements of the Plan as the Boardor the Committee deem appropriate:

 

*Option Price*.  The purchase price of each of the shares ofStock subject to an Incentive Stock Option (the “Incentive Stock Option Price”)will be a stated price which is not less than the fair market value of suchshare of Stock, determined in accordance with Section 11 below, or the parvalue of such share if greater, as of the date such Incentive Stock Option isgranted; provided, however, that if an employee, at the time an Incentive StockOption is granted to him or her, owns stock representing more than 10 percentof the total combined voting power of all classes of stock of the Company or ofthe parent corporation (as defined in Section 424(e) of the Code), ifany, of the Company or of any of the Subsidiaries (or, under Section 424(d) ofthe Code, is deemed to own stock representing more than 10 percent of the totalcombined voting power of all such classes of stock, by reason of the ownershipof such classes of stock, directly or indirectly, by or for any brother,sister, spouse, ancestor, or lineal descendent of such employee, or by or forany corporation, partnership, estate or trust of which such employee is astockholder, partner or beneficiary), then the Incentive Stock Option Price ofeach share of Stock subject to such Incentive Stock Option will be at least 110percent of the fair market value of such share of Stock, as determined inaccordance with Section 11 below.

 

*Term*.  Incentive Stock Options granted under thePlan will be exercisable for the periods determined by the Board or theCommittee at the time of grant of each Incentive Stock Option, but in no eventis an Incentive Stock Option exercisable after the expiration of ten years fromthe date of grant; provided, however, that an Incentive Stock Option granted toany employee as to whom the Incentive Stock Option Price of each share of Stocksubject thereto is required to be 110 percent of the fair market value of theshare of Stock pursuant to the preceding paragraph will not be exercisableafter the expiration of five years from the date of grant.  Each Incentive Stock Option granted under thePlan is also subject to earlier termination as provided in the Plan.

 

*Exercise*.  Generally under the Plan, Incentive StockOptions may be exercised in whole or in installments, to the extent, and at thetime or times during the terms thereof, as determined by the Board or theCommittee at the time of grant of each Option.

 

Incentive Stock Options granted under the Plan are exercisable only bydelivery to the Company of written notice of exercise, which states the numberof shares with respect to which such Incentive Stock Option is exercised, thedate of grant of the Incentive Stock Option, the aggregate purchase price forthe shares with respect to which the Incentive Stock Option is exercised andthe effective date of such exercise, which date may not be earlier than thedate the notice is received by the Company nor later than the date upon whichthe Incentive Stock Option expires.  Thewritten notice of exercise must be sent together with the full Incentive StockOption Price of the shares purchased, which may be paid in cash or in shares ofany class of issued and outstanding stock of the Company held by the Optionholder, whether preferred or 

 

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common, or partly in cash and partly in such shares of stock.  If any portion of the Incentive Stock OptionPrice is paid in shares of stock of the Company, the shares will be valued attheir fair market value, as determined in accordance with Section 11below, as of the effective date of exercise of the Incentive Stock Option.  The delivery of shares of stock upon exerciseof an Incentive Stock Option shall be subject to such restrictions as the Boardor the Committee may determine to be appropriate, including, withoutlimitation, a requirement that such shares be held by an agent designated bythe Company until sold or otherwise disposed of by the Option holder, to assurethat the Company is advised of any disposition of such shares by the Optionholder within two years of the date of grant of the Incentive Stock Option orwithin one year after the date of exercise of the Incentive Stock Option.

 

In general, an Incentive Stock Option granted under the Plan remainsoutstanding and is exercisable only so long as the person to whom the IncentiveStock Option was granted remains an officer or employee of the Company, theparent corporation, if any, of the Company, or any of the Subsidiaries.  All Incentive Stock Options granted under thePlan are nontransferable, except by will or the laws of descent anddistribution, and are exercisable during the lifetime of the person to whomgranted only by such person (or his duly appointed, qualified, and actingpersonal representative).

 

No Incentive Stock Option may be exercised as to fewer than 100 sharesof Stock at any one time without the consent of the Board or the Committee,unless the number of shares to be purchased upon the exercise is the totalnumber of shares at the time available for purchase under the Incentive StockOption.

 

The Board or the Committee may also permit Grantees (either on aselective or group basis) pay the Incentive Stock Option Price throughwithholding of shares of Stock otherwise issuable upon exercise of the Optionand/or to simultaneously exercise Options and sell the shares of the Stockthereby acquired pursuant to a “cashless exercise” arrangement or programselected by and approved of in all respects in advance by the Board or theCommittee.  Payment instruments shall bereceived by the Company subject to collection. The proceeds received by the Company upon exercise of any Option may beused by the Company for general corporate purposes.  Any portion of an Option that is exercisedmay not be exercised again.

 

*Nonstatutory Stock Options*.  Each stock Option agreement covering aNonstatutory Stock Option granted under the Plan and any amendment thereof willconform to the following provisions and may contain other terms and provisionsconsistent with the requirements of the Plan as the Board or the Committee deemappropriate:

 

*Option Price*.  The purchase price of each of the shares ofStock subject to a Nonstatutory Stock Option (the “Nonstatutory Stock OptionPrice”) will be a fixed price determined by the Board or the Committee at thetime of grant, which will not be less than the greater of the par value of suchshare, or 100 percent of the fair market value of such share, determined inaccordance with Section 11 below, on the date of the grant of theNonstatutory Stock Option.

 

*Term*.  Nonstatutory Stock Options granted under thePlan will be exercisable for the periods determined by the Board or theCommittee at the time of grant of each Nonstatutory Stock Option, but in no eventis a Nonstatutory Stock Option exercisable after the expiration of ten yearsfrom the time of grant. Each Nonstatutory Stock Option granted under the Planwill also be subject to earlier termination as provided in the Plan.

 

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*Exercise*.  Generally, under the Plan, Nonstatutory StockOptions may be exercised in whole or in installments to the extent, and at thetime or times during the terms thereof, as determined by the Board or theCommittee at the time of grant of each Option.

 

Nonstatutory Stock Options granted under the Plan are exercisable onlyby delivery to the Company of written notice of exercise, which states thenumber of shares with respect to which such Nonstatutory Stock Option isexercised, the date of grant of the Nonstatutory Stock Option, the aggregatepurchase price for the shares with respect to which the Nonstatutory StockOption is exercised and the effective date of such exercise, which date may notbe earlier than the date the notice is received by the Company nor later thanthe date upon which the Nonstatutory Stock Option expires.  The written notice of exercise must be senttogether with the full Nonstatutory Stock Option Price of the shares purchased,which may be paid in cash or in shares of any class of issued and outstandingstock of the Company held by the Option holder, whether preferred or common, orpartly in cash and partly in such shares of stock.  If any portion of the Nonstatutory StockOption Price is paid in shares of stock of the Company, the shares will bevalued at their fair market value, as determined in accordance with Section 11below, as of the effective date of exercise of the Nonstatutory Stock Option.

 

In general, a Nonstatutory Stock Option granted under the Plan remainsoutstanding and is exercisable only so long as the person to whom theNonstatutory Stock Option was granted remains either a director, employee orpaid consultant of the Company, the parent corporation, if any, of the Company,or any of the Subsidiaries.  A person isdeemed to be a paid consultant only so long as he or she continues to performand be compensated for substantial services for the Company, the parentcorporation, if any, of the Company, or a Subsidiary, as to which the determinationof the Board or the Committee, as applicable, will be binding andconclusive.  Unless the Board orCommittee determines otherwise, all Nonstatutory Stock Options granted underthe Plan will be nontransferable, except by will or the laws of descent anddistribution.

 

No Nonstatutory Stock Option may be exercised as to fewer than 100shares at any one time without the consent of the Board or the Committee,unless the number of shares to be purchased upon the exercise is the totalnumber of shares at the time available for purchase under the NonstatutoryStock Option.

 

The Board or the Committee may also permit Grantees (either on aselective or group basis) to pay the Nonstatutory Stock Option Price throughwithholding of shares of Stock otherwise issuable upon exercise of the Optionand/or to simultaneously exercise Options and sell the shares of the Stockthereby acquired pursuant to a “cashless exercise” arrangement or programselected by and approved of in all respects in advance by the Board or the Committee.  Payment instruments shall be received by theCompany subject to collection.  Theproceeds received by the Company upon exercise of any Option may be used by theCompany for general corporate purposes. Any portion of an Option that is exercised may not be exercised again.

 

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**6.****                                     ****RESTRICTIONSAPPLICABLE TO RESTRICTED STOCK**

 

The Board or the Committee may place any restrictions it deemsappropriate on any shares of Stock awarded under this Section 6 (“RestrictedStock”) to an employee, director or paid consultant; provided, however, thatshares of Restricted Stock awarded under this Section 6 are subject tocertain restrictions including the following:

 

*Vesting*.  In general, other than with respect to Awardsto directors who are not also employees of the Company, the grant, issuance,retention, vesting and/or settlement of shares of Restricted Stock that isbased on performance criteria and level of achievement versus such criteriawill be subject to a performance period of not less than twelve months, and thegrant, issuance, retention, vesting and/or settlement of shares of RestrictedStock that is based solely upon continued employment or service and/or thepassage of time may not vest or be settled in full prior to three yearsfollowing its date of grant, but may be subject to pro-rata vesting over suchperiod, except that the Committee may provide for the satisfaction and/or lapseof all conditions under any such Award as set forth in Sections 12 and 13below, and the Committee may provide that any such restriction or limitationwill not apply in the case of an Award that is issued in payment or settlementof compensation that has been earned by the Grantee.  Any shares of Restricted Stock remaining subjectto forfeiture in accordance with the related vesting schedule arehereinafter referred to as “Unvested Shares.” Notwithstanding anything in this Plan to the contrary, the performancecriteria for any Restricted Stock that is intended to satisfy the requirementsfor “performance-based compensation” under Section 162(m) of the Codewill be a measure based on one or more Qualifying Performance Criteria selectedby the Committee and specified when the Award is granted.

 

*Delivery to Escrow*.  Unless the Board or the Committee determinesotherwise, upon issuance of a certificate evidencing such shares the recipientwill be required to deliver the certificate, endorsed in blank or with a dulyexecuted stock power attached, to the Secretary of the Company, or such otherperson or entity as the Board or the Committee may designate, to be held untilany vesting restrictions applicable thereto have lapsed or any Unvested Shareshave been forfeited.

 

*Legend*.  Unless the Board or the Committee determinesotherwise, each certificate evidencing Unvested Shares issued under the Planwill bear a legend to the effect that such shares are subject to potentialforfeiture and may not be sold, exchanged, transferred, pledged, hypothecatedor otherwise disposed of except in accordance with the terms of an agreementbetween the issuer and the registered owner.

 

**7.****                                     ****RESTRICTEDSTOCK UNITS**

 

The Committee may at any time and from time to time grant RestrictedStock Units under the Plan in such amounts as it determines.  Each Restricted Stock Unit shall entitle theGrantee to receive from the Company at the end of the vesting period applicableto such unit one share of Stock, unless the Grantee elects in a timely fashionprior to the end of the vesting period to defer the receipt of the shares ofStock subject to the Award of Restricted Stock Units.  Each grant of Restricted Stock Units shall beevidenced by an Award Agreement which shall specify the applicable restrictionson such units including the following:

 

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*Vesting*.  In general, other than with respect to Awardsto directors who are not also employees of the Company, the grant, issuance,retention, vesting and/or settlement of shares of Stock underlying an Award ofRestricted Stock Units that is based on performance criteria and level ofachievement versus such criteria will be subject to a performance period of notless than twelve months, and the grant, issuance, retention, vesting and/orsettlement of shares of Stock underlying an Award of Restricted Stock Unitsthat is based solely upon continued employment or service and/or the passage oftime may not vest or be settled in full prior to three years following its dateof grant, but may be subject to pro-rata vesting over such period, except thatthe Committee may provide for the satisfaction and/or lapse of all conditionsunder any such Award as set forth in Sections 12 and 13 below, and theCommittee may provide that any such restriction or limitation will not apply inthe case of an Award that is issued in payment or settlement of compensationthat has been earned by the Grantee.  AnyRestricted Stock Units that have not yet vested in accordance with the relatedvesting schedule are hereinafter referred to as “Unvested Units.”  Notwithstanding anything in this Plan to thecontrary, the performance criteria for any Restricted Stock Units that isintended to satisfy the requirements for “performance-based compensation” underSection 162(m) of the Code will be a measure based on one or moreQualifying Performance Criteria selected by the Committee and specified whenthe Award is granted.

 

**8.****                                     ****STOCKAPPRECIATION RIGHTS**

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The grant of Stock Appreciation Rights under the Plan is subject to thefollowing terms and conditions and any additional terms and conditions, notinconsistent with the express terms and provisions of the Plan, as the Board orthe Committee sets forth in the relevant Award agreement:

 

*Stock Appreciation Rights*.  A Stock Appreciation Right is an Awardgranted with respect to a specified number of shares of Stock entitling theGrantee to receive an amount equal to the excess of (a) the fair marketvalue of a share of Stock on the date of exercise over (b) the fair marketvalue of a share of Stock on the date of grant of the Stock Appreciation Right(the “Base Price”) multiplied by the number of shares of Stock with respect towhich the Stock Appreciation Right has been exercised.  Fair market value is determined in accordancewith Section 11 below.

 

*Grant*.  A Stock Appreciation Right may be granted inaddition to any other Award under the Plan or in tandem with or independent ofany Nonstatutory Stock Option or Incentive Stock Option.

 

*Date of Exercisability*.  Unless otherwise provided in the Grantee’sAward agreement in respect of any Stock Appreciation Right, a StockAppreciation Right may be exercised by the Grantee, in accordance with andsubject to all of the procedures established by the Board or the Committee, inwhole or in part at any time and from time to time during its specifiedterm.  Notwithstanding the precedingsentence, in no event is a Stock Appreciation Right exercisable prior to theexercisability of any Non-Qualified Stock Option or Incentive Stock Option withwhich it is granted in tandem.  The Boardor the Committee may also provide, as set forth in the relevant Awardagreement, that some Stock Appreciation Rights will be automatically exercisedon one or more dates specified by the Board or the Committee.

 

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*Form of Payment*.  Upon exercise of a Stock Appreciation Right,payment may be made in cash, in Restricted Stock or in shares of unrestrictedStock, or in any combination thereof, as the Board or the Committee, in itssole discretion, determines and provides in the relevant Award agreement.

 

*Tandem Grant*.  The right of the Grantee to exercise a tandemStock Appreciation Right terminates to the extent the Grantee exercises theNon-Qualified Stock Option or the Incentive Stock Option to which the StockAppreciation Right is related.

 

**9.****                                     ****INCENTIVEBONUSES**

 

The grant of Incentive Bonuses under the Plan is subject to thefollowing terms and conditions and any additional terms and conditions, notinconsistent with the express terms and provisions of the Plan, as the Board orthe Committee sets forth in the relevant Award documentation:

 

*Incentive Bonuses*.  Each Incentive Bonus Award will confer uponthe Grantee the opportunity to earn a future payment tied to the level ofachievement with respect to one or more performance criteria established for aperformance period specified by the Committee.

 

*Performance Criteria*.  The Committee shall establish the performancecriteria and level of achievement versus these criteria that shall determinethe target, threshold and maximum amount payable under an Incentive Bonus,which criteria may be based on financial performance and/or personalperformance evaluations.  The Committeemay specify the percentage of the target Incentive Bonus that is intended tosatisfy the requirements for “performance-based compensation” under Section 162(m) ofthe Code.  Notwithstanding anything tothe contrary herein, the performance criteria for any portion of an IncentiveBonus that is intended by the Committee to satisfy the requirements for “performance-basedcompensation” under Section 162(m) of the Code shall be a measurebased on one or more Qualifying Performance Criteria selected by the Committeeand specified at the time the Incentive Bonus is granted.  The Committee shall certify the extent towhich any Qualifying Performance Criteria has been satisfied, and the amountpayable as a result thereof, prior to payment of any Incentive Bonus that isintended to satisfy the requirements for “performance-based compensation” underSection 162(m) of the Code.

 

*Timing and Form of Payment*.  The Committee shall determine the timing ofpayment of any Incentive Bonus.  Paymentof the amount due under an Incentive Bonus may be made in cash, in RestrictedStock or in shares of unrestricted Stock, or in any combination thereof, as theBoard or the Committee, in its sole discretion, determines.

 

*Discretionary Adjustments*.  Notwithstanding satisfaction of anyperformance goals, the amount paid under an Incentive Bonus on account ofeither financial performance or personal performance evaluations may, to theextent specified in the Award documentation, be reduced, but not increased, bythe Committee on the basis of such further considerations as the Committeeshall determine.

 

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**10.****                              ****RIGHTSOF GRANTEES**

 

*Options; Stock Appreciation Rights*.  No holder of an Option or Stock AppreciationRight will be deemed to be the holder of, or to have any of the rights of aholder with respect to, any shares of Stock subject to such Option or StockAppreciation Right unless and until his or her Option or Stock AppreciationRight has been exercised pursuant to the terms thereof, the Company has issuedand delivered to the holder of the Option or Stock Appreciation Right the sharesof Stock as to which the holder has exercised his or her Option or StockAppreciation Right, and the holder’s name has been entered as a stockholder ofrecord on the books of the Company. Thereupon, such person shall have full voting and other ownership rightswith respect to such shares of Stock.

 

*Restricted Stock*.  Each recipient of a Restricted Stock Award isdeemed to be the registered owner of any Unvested Shares subject to such award,notwithstanding that such shares may be subject to restrictions and possibleforfeiture under the terms of the agreement pursuant to which they werereceived.  Unless and until all or aportion of the Unvested Shares are forfeited in accordance with the terms ofsuch agreement, the recipient thereof will have full voting rights with respectto such shares as well as the right to receive any and all distributionsthereon.

 

*Restricted Stock Units*.  No holder of a Restricted Stock Unit will bedeemed to be the holder of, or to have any of the rights of a holder withrespect to, any shares of Stock subject to such Restricted Stock Unit unlessand until the Company has issued and delivered to the holder of the RestrictedStock Unit the shares of Stock as to which the Award of Restricted Stock Unitshas vested, and the holder’s name has been entered as a stockholder of recordon the books of the Company.  Thereupon,such person shall have full voting and other ownership rights with respect tosuch shares of Stock.

 

**11.****                              ****DETERMINATIONOF FAIR MARKET VALUE**

 

For the purposes of the Plan, “fair market value” means the fair marketvalue of Stock, Awards or other property as determined in good faith by the Committeeor under procedures established by the Committee.  Unless otherwise determined by the Committee,the fair market value of Stock as of any given date shall be the closing saleprice per share of Stock reported on a consolidated basis for securities listedon the principal stock exchange or market on which Stock is traded on the dateas of which such value is being determined or, if there is no sale on theprincipal stock exchange or market that day, then on the last previous day onwhich a sale on the principal stock exchange or market was reported.Notwithstanding anything herein to the contrary, the Board or the Committee maydetermine the fair market value of a share of Stock on the basis of suchfactors as it deems appropriate, consistent with Section 409A of the Code,if it determines in good faith that the approach specified above does notproperly reflect the fair market value of such Stock.

 

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**12.****                              ****RETIREMENT,TERMINATION OF EMPLOYMENT OR DEATH OF HOLDERS OF AWARDS**

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*Retirement or Disability*.  If a Grantee retires from employment with theCompany or any of its Subsidiaries as a result of normal retirement (that is,termination of employment by the Grantee after he or she attains age sixty-five(65)), or terminates employment or service with the Company after becoming “permanentlydisabled” (as defined in the Bally Technologies, Inc. 401(k) Plan asin effect on the date of adoption of the Plan by the Board), any restrictionsthen applicable to his or her Award will lapse and it will thereafter beexercisable (in the case of Options and Stock Appreciation Rights) or vestedand transferable (in the case of Restricted Stock and Restricted Stock Units) inwhole or in part, by the person to whom granted (or his or her duly appointed,qualified, and acting personal representative) in the manner set forth inSections 5, 6, 7 and 8 above, at any time within the remaining term of theAward, unless otherwise determined by the Board or the Committee at the time ofgrant.

 

*Other Termination of Service or Employment*.  Except as determined by the Board or theCommittee at the time of grant, or as otherwise provided herein or in a Grantee’semployment agreement, (a) if a person to whom Restricted Stock has beenawarded under the Plan ceases to be either a director, employee or paidconsultant of the Company or a Subsidiary, any Unvested Shares of RestrictedStock held by the person are forfeited as of the last date he or she was eithera director, employee or paid consultant of the Company or a Subsidiary, (b) ifa person to whom Restricted Stock Units and/or an Incentive Bonuses have beenawarded under the Plan ceases to be either a director, employee or paid consultantof the Company or a Subsidiary, the unvested portion, if any, of such Awardsheld by the person are forfeited as of the last date he or she was either adirector, employee or paid consultant of the Company or a Subsidiary, and (c) ifa person to whom an Option or Stock Appreciation Right has been granted underthe Plan ceases to be either a director, employee or paid consultant of theCompany or a Subsidiary, such Option or Stock Appreciation Right will continueto be exercisable or transferable to the same extent that it was exercisable onthe last day on which he or she was either a director, employee or paidconsultant for a period of 60 days thereafter, whereupon such Option or StockAppreciation Right will terminate and not be exercisable thereafter; provided,however, that in the event of termination of employment, termination of serviceas a paid consultant, or removal from office as a director for Cause (asdefined below), any such Option or Stock Appreciation Right will terminate tendays after such termination of employment, service or removal from officerather than 60 days thereafter. Notwithstanding the immediately preceding sentence, the term duringwhich an Option or Stock Appreciation Right may be exercised shall not in anyevent extend beyond the remaining term of such Award as specified in connectionwith the grant thereof.  No Award madeunder the Plan will be affected by any change of duties or position of theperson to whom the Award was made or by any temporary leave of absence grantedto the person by the Company or any of its Subsidiaries.  For purposes of the Plan, “Cause” means (i) theGrantee being convicted of a felony, (ii) the Grantee willfully committingan act of embezzlement or malfeasance which is intended to materially enrichhimself or herself at the expense of the Company or any of its Subsidiaries oris otherwise intended to materially harm the Company, or (iii) the Granteebeing rejected for an applicable license or approval by a gaming regulatoryauthority having jurisdiction over the Company as a result of an explicitfinding of lack of suitability solely as a result of the Grantee’s commissionof a crime or an act of embezzlement or malfeasance.

 

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*Death*.  Unless otherwise determined by the Board orthe Committee at the time of grant, (a) if a person to whom an Option orStock Appreciation Right has been granted under the Plan dies prior to theexpiration of the term of the Option or Stock Appreciation Right, the Option orStock Appreciation Right is exercisable by the estate of the Grantee, or by aperson who acquired the right to exercise such Option or Stock AppreciationRight by bequest or inheritance from the Grantee, at any time within two yearsafter the death of the person and prior to the date upon which such Option orStock Appreciation Right expires as specified in connection with the grantthereof, to the extent and in the manner exercisable by the Grantee at the dateof his or her death; (b) if a person to whom Restricted Stock has beenawarded under the Plan dies prior to the lapse of all restrictions applicableto such Restricted Stock, any Unvested Shares held by such person on the dateof his or her death will be forfeited; and (c) if a person to whom RestrictedStock Units and/or Incentive Bonuses have been awarded under the Plan dies, theunvested portion, if any, of such Awards held by the person on the date of hisor her death will be forfeited.

 

*Termination with Board Approval*.  If a Grantee ceases to be either a director,employee or paid consultant of the Company or a Subsidiary for any reason otherthan removal for Cause, and the Board or the Committee expressly determinesthat such termination of service or employment is in the best interests of theCompany, then an Option or Stock Appreciation Right awarded to the Granteeunder the Plan will be exercisable by the Grantee or by the estate of theGrantee, by a person who acquired the right to exercise such Option or StockAppreciation Right by bequest or inheritance from the Grantee or otherwise, foran additional period following termination of service or employment asdetermined by the Board or the Committee but in no event later than the dateupon which such Option or Stock Appreciation Right would have expired absentsuch termination of service or employment. Any such extended Option or Stock Appreciation Right will be exercisableonly to the extent and in the manner exercisable by the Grantee at the time ofsuch termination of service or employment.

 

*Incentive Stock Options*.  Notwithstanding anything herein to thecontrary or the provisions of any employment agreement, no Incentive StockOption shall be exercisable after the date that is (a) in the case of theGrantee’s termination of employment for any reason other than death ordisability, three months following such termination of employment, or (b) inthe case of the Grantee’s termination of employment due to death or Total andPermanent Disability (as defined in Code section 22(e)(3)), twelve monthsfollowing such termination of employment.

 

**13.****                              ****ADJUSTMENTS**

** **

*Changes in Capitalization*.  In the event of any change in the number ofshares of the outstanding Stock of the Company by reason of a stock split,stock dividend, combination or reclassification of shares, recapitalization, orsimilar event, the Board or the Committee will adjust proportionally (a) thenumber and kind of shares subject to the Plan, (b) the number and kind ofshares then subject to unexercised Options and Stock Appreciation Rights andoutstanding Awards of Restricted Stock and Restricted Stock Units and (c) theper share Incentive Stock Option Price, Nonstatutory Stock Option Price or BasePrice (as the case may be) of unexercised Options and Stock AppreciationRights.  Any such adjustment will be madewithout a change in the aggregate purchase price or aggregate Base Price of theshares of the Stock subject to the unexercised portion of any Option or StockAppreciation Right.

 

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*Merger Event*.  In the event of any merger, spin-off,split-off or other similar consolidation, reorganization or change affectingany class of stock of the Company (a “Merger Event”) subject to Awards madeunder the Plan, or any distribution (other than normal cash dividends) toholders of the stock, fair and equitable adjustment will be made in good faithby the Board or the Committee, including (without limitation) adjustments toavoid fractional shares, in respect of (a) all unexercised Options or StockAppreciation Rights and (b) all then outstanding Awards of RestrictedStock, Restricted Stock Units or Incentive Bonuses to give proper effect tosuch event and preserve the value, rights and benefits of such Awards;provided, however, that the Board or the Committee may, in the case of anyMerger Event pursuant to which the Company is not the surviving corporation andpursuant to which the former holders of the Stock do not hold, directly orindirectly, more than a majority of the voting securities of the resultingentity immediately after the Merger Event or in connection with any acquisitionby any person of more than 50 percent of the outstanding shares of the Stock,provide that each Option or Stock Appreciation Right holder will receive a cashpayment (in exchange for and in cancellation of such Option or StockAppreciation Right) equal to the difference (if greater than zero) between thevalue of the per share consideration received by the holders of the Stock inthe Merger Event or the acquisition and the purchase price or Base Price ofsuch Option or Stock Appreciation Right, multiplied by the number of shares ofthe Stock underlying such Option or Stock Appreciation Right (and if thedifference is equal to or less than zero, the Committee may provide that eachsuch holder will receive no payment, nor any other compensation, in exchangefor and in cancellation of any such Option or Stock Appreciation Right). In addition, in the event that (i) there occurs any Merger Eventpursuant to which all of the outstanding Stock held by the stockholders of theCompany is exchanged for any lawful consideration and (ii) within twelvemonths following the date of such Merger Event, a Grantee’s employment orservice with the Company is terminated either by the Company without Cause orby the Grantee for Good Reason (as defined below), then, effective immediatelyprior to such termination of employment or service, all vested andunexercisable Options or Stock Appreciation Rights held by the Grantee on thedate on which his or her employment or service terminated will become 100percent vested and exercisable, and all restrictions then applicable to Awardsof Restricted Stock and Restricted Stock Units held by the Grantee on the dateon which his or her employment or service terminated will lapse and such Awardswill thereafter be fully vested and transferable.  For purposes of the Plan, “Good Reason”means, unless otherwise provided in a Grantee’s employment agreement, (x) amaterial reduction in the Grantee’s base salary or (y) a materialreduction in the Grantee’s duties or responsibilities.

 

**14.****                              ****MAXIMUMAWARDS**

** **

The following maximum annual and other amounts are subject toadjustment under Section 13 above and are subject to the Plan maximumunder Section 3 above.  Eachindividual Grantee may not receive in any fiscal year Awards of Options, StockAppreciation Rights, Restricted Stock and/or Restricted Stock Units exceeding1,500,000 underlying shares of Stock. The maximum amount payable pursuant to that portion of an IncentiveBonus granted in any fiscal year to any Grantee under this Plan that isintended to satisfy the requirements for “performance-based compensation” underSection 162(m) of the Code shall not exceed ten million dollars($10,000,000).  No more than 1,400,000shares of Stock may be granted as Awards of Restricted Stock or RestrictedStock Units.  Notwithstanding theforegoing, to the extent that the aggregate fair market value of stock(determined at the time of grant of the Option) for which Incentive StockOptions first become exercisable by a Grantee during a calendar year (under allOption plans of the Company) exceeds $100,000, such Options shall be treated asOptions that are not Incentive Stock Options.

 

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**15.****                              ****QUALIFYINGPERFORMANCE CRITERIA**

** **

*General*.  The Committee may establish performancecriteria and level of achievement versus such criteria that shall determine thenumber of shares of Stock to be granted, retained, vested, issued or issuableunder or in settlement of or the amount payable pursuant to an Award, whichcriteria may be based on Qualifying Performance Criteria or other standards offinancial performance and/or personal performance evaluations.  In addition, the Committee may specify thatan Award or a portion of an Award is intended to satisfy the requirements for “performance-basedcompensation” under Section 162(m) of the Code, provided that theperformance criteria for such Award or portion of an Award that is intended bythe Committee to satisfy the requirements for “performance-based compensation”under Section 162(m) of the Code shall be a measure based on one ormore Qualifying Performance Criteria selected by the Committee and specified atthe time the Award is granted.  TheCommittee shall certify the extent to which any Qualifying Performance Criteriahas been satisfied, and the amount payable as a result thereof, prior topayment, settlement or vesting of any Award that is intended to satisfy therequirements for “performance-based compensation” under Section 162(m) ofthe Code.

 

*Qualifying Performance Criteria*.  For purposes of this Plan, the term “QualifyingPerformance Criteria” shall mean any one or more of the following performancecriteria, or derivations of such performance criteria, either individually,alternatively or in any combination, applied to either the Company as a wholeor to a business unit or Subsidiary, either individually, alternatively or inany combination, and measured either annually or cumulatively over a period ofyears, on an absolute basis or relative to a pre-established target, toprevious years’ results or to a designated comparison group, in each case asspecified by the Committee: (a) revenues; (b) earnings per share(basic or diluted), earnings from operations, earnings before or after taxes,earnings before or after interest, depreciation, amortization, incentives,service fees or extraordinary or special items; (c) net income or netincome per common share (basic or diluted); (d) return on assets, returnon net assets, return on investment, return on capital, or return on equity; (e) cashflow, free cash flow, cash flow return on investment, or net cash provided byoperations; (f) economic value created or added; (g) operating marginor profit margin; (h) stock price, dividends or total stockholder return;and (i) strategic business criteria, consisting of one or more objectivesbased on meeting specified market penetration or value added, market share,product development or introduction, geographic business expansion goals, costtargets, debt reduction, customer satisfaction, employee satisfaction,information technology, and goals relating to acquisitions or divestitures ofsubsidiaries, affiliates or joint ventures. To the extent consistent with Section 162(m) of the Code, theCommittee (i) may appropriately adjust any evaluation of performance undera Qualifying Performance Criteria to eliminate the effects of charges forrestructurings, discontinued operations, extraordinary items and all items ofgain, loss or expense determined to be extraordinary or unusual in nature orrelated to the disposal of a segment of a business or related to a change inaccounting principle all as determined in accordance with accounting principlesgenerally accepted in the United States of America, as well as the cumulativeeffect of accounting changes, in each case as determined in accordance withgenerally accepted accounting principles or identified in the Company’sfinancial statements 

 

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or notes to the financial statements, and (ii) may appropriatelyadjust any evaluation of performance under a Qualifying Performance Criteria toexclude any of the following events that occurs during a performance period: (1) assetwrite-downs, (2) litigation, claims, judgments or settlements, (3) theeffect of changes in tax law or other such laws or provisions affectingreported results, (4) accruals for reorganization and restructuringprograms and (5) accruals of any amounts for payment under this Plan orany other compensation arrangement maintained by the Company.

 

**16.****                              ****MANNEROF GRANT**

** **

Nothing contained in the Plan or in any resolution adopted by the Boardor any committee thereof or by the stockholders of the Company with respect tothe Plan, except as provided in the Plan, will constitute the granting of anAward under the Plan.  The granting of anAward under the Plan is deemed to occur only upon the date on which the Board orthe Committee approves the grant of the Award. Each Award granted under the Plan shall be evidenced by a writtenagreement, in the form determined by the Board or the Committee, signed by arepresentative of the Board or the Committee and the recipient thereof.

 

**17.****                              ****COMPLIANCEWITH LAWS AND REGULATIONS**

** **

The obligation of the Company to sell and deliver any shares of Stockunder the Plan is subject to all applicable laws, rules and regulations,and the obtaining of all approvals by governmental agencies deemed necessary orappropriate by the Board or the Committee. In general, the Board or the Committee may make such changes in the Planand include such terms in any Award agreement as may be necessary orappropriate, in the opinion of counsel to the Company, to comply with the rules andregulations of any governmental authority, or to obtain for employees grantedIncentive Stock Options the tax benefits under the applicable provisions of theCode and the regulations thereunder.

 

**18.****                              ****TAXWITHHOLDING**

** **

The Company or Subsidiary for which services are performed by adirector, employee or paid consultant granted an Award under the Plan has theright to deduct or otherwise effect a withholding of any tax (including,without limitation, any FICA (employment) tax required to be withheld underChapter 21 of the Code, any income tax required to be withheld underChapter 24 of the Code, and any similar tax imposed under state, local, orforeign law) required by federal, state, local or foreign laws to be withheldor otherwise deducted and paid with respect to the grant, vesting or exerciseof any Award; or, in lieu of such withholding, to require that the Grantee orperson holding such Award pay to the Company or such Subsidiary in cash (or, atthe sole discretion of the Board or the Committee, in the form of shares ofStock) the amount of any taxes required to be withheld or otherwise deductedand paid by the Company or its Subsidiary in connection with the grant, vestingor exercise of any Award.  The Companymay condition any delivery of stock certificates or other evidence of ownershipof shares of Stock on payment of the tax amounts referred to in this Section 18.

 

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** **

**19.****                              ****CERTAINLIMITATIONS ON AWARDS TO ENSURE COMPLIANCE WITH CODE SECTION 409A.**

** **

For purposes of this Plan, references to an award term or event(including any authority or right of the Company or a Participant) beingconsistent with Code Section 409A shall mean that the term or event willnot cause the Participant to be liable for payment of interest or a tax penaltyunder Code Section 409A. Other provisions of the Plan notwithstanding, theterms of any award including any authority of the Company and rights of theParticipant with respect to the award, shall be limited to those termspermitted under Code Section 409A, and any terms not permitted under Code Section 409Ashall be automatically modified and limited to the extent necessary to conformwith Code Section 409A. For this purpose, other provisions of the Plannotwithstanding, the Company shall have no authority to acceleratedistributions relating to 409A Awards in excess of the authority permittedunder Code Section 409A, and any distribution subject to Code Section 409A(a)(2)(A)(i) (separationfrom service) to a “key employee” as defined under Code Section 409A(a)(2)(B)(i),shall not occur earlier than the earliest time permitted under Code Section 409A(a)(2)(B)(i).Notwithstanding any other provisions of the Plan, the Company does notguarantee to any Participant or any other person that any Award intended to beexempt from Section 409A of the Code shall be so exempt, nor that anyAward intended to comply with Section 409A of the Code shall so comply,nor will the Company indemnify, defend or hold harmless any individual withrespect to the tax consequences of any such failure.

 

**20.****                              ****NOREPRICING WITHOUT STOCKHOLDER APPROVAL**

** **

Other than in connection with a change in the Company’s capitalization(as described in Section 13 above) the Option Price or Base Price of anOption or Stock Appreciation Right may not be reduced without stockholderapproval (including canceling previously awarded Options in exchange for cash,other Awards, or Options or Stock Appreciation Rights with an exercise pricethat is less than the exercise price of the original Award).

 

**21.****                              ****NONEXCLUSIVITYOF THE PLAN**

** **

Neither the adoption of the Plan by the Board nor the submission of thePlan to the stockholders of the Company for approval has any impact on existingqualified or nonqualified retirement, bonus or Option plans of the Company orcreates any limitations on the power of the Board to adopt any other incentivearrangements that it may deem desirable, including, without limitation, thegranting of stock Options, Stock Appreciation Rights, Restricted Stock,Restricted Stock Units or Incentive Bonuses otherwise than under the Plan, andsuch arrangements may be either applicable generally or only in specific cases.

 

**22.****                              ****AMENDMENT**

** **

The Board at any time, and from time to time, may amend the Plan,subject to any required regulatory approval and subject to the limitation that,except as provided above in Section 13, no amendment is effective unlessapproved within 12 months after the date of the adoption of such amendment bythe affirmative vote of the holders of a majority of the shares of the Company’sVoting Stock present in person or represented by proxy at a duly held meetingat 

 

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which a quorum is present (or by such greater vote as may be requiredby applicable law, regulation or provision of the certificate of incorporationor bylaws of the Company) if the amendment would, but for such approval,prevent the issuance of Incentive Stock Options under the Plan or cause thePlan to no longer comply with the requirements of Section 162(m) ofthe Code.

 

Except as provided in Section 13 above, rights and obligationsunder any Awards granted before amendment of the Plan may not be altered orimpaired by amendment of the Plan in any manner having a significant adverseeffect on a Grantee, except with the consent of the Grantee thereof.

 

**23.****                              ****TERMINATIONOR SUSPENSION**

** **

The Board at any time may suspend or terminate the Plan.  The Plan, unless sooner terminated, willterminate on the 10th anniversary of its adoption by the Board or its approvalby the stockholders of the Company, whichever is earlier, but such terminationwill not affect any Award theretofore granted. No Award may be granted under the Plan while the Plan is suspended orafter it is terminated.  In general, norights or obligations under any Award granted while the Plan is in effect willbe altered or impaired by suspension or termination of the Plan, except withthe consent of the person to whom the Award was granted.  Any Award granted under the Plan may beterminated by agreement between the holder thereof and the Company and, in lieuof the terminated Award, a new Award may be granted.

 

**24.****                              ****MISCELLANEOUS**

** **

Nothing contained in the Plan (or in any written Award agreement)obligates the Company or any Subsidiary to continue for any period to elect anyindividual as a director or to employ an employee or consultant to whom anAward has been granted, or interfere with the right of the Company or anySubsidiary to vary the terms of the person’s service or employment or reducethe person’s compensation.

 

**25.****                              ****EXCULPATIONAND INDEMNIFICATION**

** **

To the fullest extent permitted by applicable law and regulation, theCompany will indemnify and hold harmless the members of the Board and themembers of the Committee from and against any and all liabilities, costs, andexpenses incurred by them as a result of any act, or omission to act, inconnection with the performance of their duties, responsibilities, andobligations under the Plan, other than such liabilities, costs and expenses asmay result from the gross negligence, bad faith, willful misconduct, orcriminal acts of such persons.

 

**26.****                              ****GOVERNINGLAW**

** **

The Plan and all actions taken thereunder are governed by and construedin accordance with the laws of the State of Nevada, without reference to theprinciples of conflict of laws thereof.

 

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** **

**27.****                              ****UNFUNDEDPLAN**

** **

The Plan is unfunded and the Company is not required to segregate anyassets in connection with any Awards under the Plan.  Any liability of the Company to any personwith respect to any Award under the Plan or any Award agreement is based solelyupon the contractual obligations that may be created as a result of the Plan orany such Award or agreement.  No suchobligation of the Company will be deemed to be secured by any pledge of,encumbrance on, or other interest in, any property or asset of the Company orany Subsidiary.  Nothing contained in thePlan or any Award agreement will be construed as creating in respect of any Grantee(or beneficiary thereof or any other person) any equity or other interest ofany kind in any assets of the Company or any Subsidiary or creating a trust ofany kind or a fiduciary relationship of any kind between the Company, anySubsidiary and/or any such Grantee, any beneficiary thereof or any otherperson.

 

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