Document:

Exhibit
        4.1

      

      SPECTRE
        GAMING, INC.

      1999
        NON-QUALIFIED STOCK OPTION PLAN

      

      SECTION
        1.

      DEFINITIONS

      

      As
        used
        herein, the following terms shall have the meanings indicated below:

      

      (a)
        "Committee" shall mean a Committee of two or more directors who shall be
        appointed by and serve at the pleasure of the Board. As long as the Company's
        securities are registered pursuant to Section 12 of the Securities Exchange
        Act
        of 1934, as amended, then, to the extent necessary for compliance with Rule
        16b-3, or any successor provision, each of the members of the Committee shall
        be
        a "non-employee director." For purposes of this Section 1(a), "non-employee
        director" shall have the same meaning as set forth in Rule 16b-3, or any
        successor provision, as then in effect, of the General Rules and Regulations
        under the Securities Exchange Act of 1934, as amended.

       

      (b)
        The
        "Company" shall mean Spectre Gaming, Inc., a Minnesota corporation.

       

      (c)
        "Fair
        Market Value" as of any day shall mean (i) if such stock is reported by the
        Nasdaq National Market or Nasdaq SmallCap Market or is listed upon an
        established stock exchange or exchanges, the reported closing price of such
        stock by the Nasdaq National Market or Nasdaq SmallCap Market or on such
        stock
        exchange or exchanges on such date or, if no sale of such stock shall have
        occurred on such date, on the next preceding day on which there was a sale
        of
        stock; (ii) if such stock is not so reported by the Nasdaq National Market
        or
        Nasdaq SmallCap Market or listed upon an established stock exchange, the
        average
        of the closing "bid" and "asked" prices quoted by the National Quotation
        Bureau,
        Inc. (or any comparable reporting service) on such date or, if there are
        no
        quoted "bid" and "asked" prices on such date, on the next preceding date
        for
        which there are such quotes; or (iii) if such stock is not publicly traded
        as of
        such date, the per share value as determined by the Board, or the Committee,
        in
        its sole discretion by applying principles of valuation with respect to the
        Company's Common Stock.

       

      (d)
        The
        "Internal Revenue Code" is the Internal Revenue Code of 1986, as amended
        from
        time to time.

       

      (e)
        "Option Stock" shall mean Common Stock of the Company (subject to adjustment
        as
        described in Section 12) reserved for options pursuant to this
        Plan.

       

      (f)
        The
        "Optionee" means an officer or director (including an Outside Director) of
        the
        Company or any Subsidiary to whom a non-qualified stock option has been
        granted.

       

      (g
        )
        "Outside Director" shall mean members of the Board who are not employees
        of the
        Company or any Subsidiary.

       

      (h)
        "Parent" shall mean any corporation which owns, directly or indirectly in
        an
        unbroken chain, fifty percent (50%) or more of the total voting power of
        the
        Company's outstanding stock.

       

      (i)
        The
        "Plan" means the Spectre Gaming, Inc. 1999 Non-qualified Stock Option Plan,
        as
        amended hereafter from time to time, including the form of Option Agreements
        as
        they may be modified by the Board from time to time. 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (j)
        A
        "Subsidiary" shall mean any corporation of which fifty percent (50%) or more
        of
        the total voting power of outstanding stock is owned, directly or indirectly
        in
        an unbroken chain, by the Company.

      

      SECTION
        2.

      PURPOSE

      

      The
        purpose of the Plan is to promote the success of the Company and its
        Subsidiaries by facilitating the retention of competent personnel and by
        furnishing incentive to officers and directors upon whose efforts the success
        of
        the Company and its Subsidiaries will depend to a large degree. It is the
        intention of the Company to carry out the Plan through the granting of
        "non-qualified stock options."

      

      SECTION
        3.

      EFFECTIVE
        DATE OF PLAN

      

      The
        Plan
        shall be effective as of January 20, 1999, the date of adoption by the Board
        of
        Directors.

      

      SECTION
        4.

      ADMINISTRATION

      

      The
        Plan
        shall be administered by the Board of Directors of the Company (hereinafter
        referred to as the "Board") or by a Committee which may be appointed by the
        Board from time to time (collectively referred to as the "Administrator").
        The
        Administrator shall have all of the powers vested in it under the provisions
        of
        the Plan, including but not limited to exclusive authority (where applicable
        and
        within the limitations described in the Plan) to determine, in its sole
        discretion, whether a non-qualified stock option shall be granted, the
        individuals to whom, and the time or times at which, options shall be granted,
        the number of shares subject to each option and the option price and terms
        and
        conditions of each option. The Administrator shall have full power and authority
        to administer and interpret the Plan, to make and amend rules, regulations
        and
        guidelines for administering the Plan, to prescribe the form and conditions
        of
        the respective stock option agreements (which may vary from Optionee to
        Optionee) evidencing each option and to make all other determinations necessary
        or advisable for the administration of the Plan. The Administrator's
        interpretation of the Plan, and all actions taken and determinations made
        by the
        Administrator pursuant to the power vested in it hereunder, shall be conclusive
        and binding on all parties concerned. 

       

      No
        member
        of the Board or the Committee shall be liable for any action taken or
        determination made in good faith in connection with the administration of
        the
        Plan. In the event the Board appoints a Committee as provided hereunder,
        any
        action of the Committee with respect to the administration of the Plan shall
        be
        taken pursuant to a majority vote of the Committee members or pursuant to
        the
        written resolution of all Committee members.

      

      SECTION
        5.

      PARTICIPANTS

      

      The
        Administrator shall from time to time, at its discretion and without approval
        of
        the shareholders, designate those officers and directors (including Outside
        Directors) of the Company or of any Subsidiary to whom non-qualified stock
        options shall be granted. The Administrator may grant additional non-qualified
        stock options under this Plan to some or all participants then holding options
        or may grant options solely or partially to new participants. In designating
        participants, the Administrator shall also determine the number of shares
        to be
        optioned to each such participant. The Board may from time to time designate
        individuals as being ineligible to participate in the Plan. 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SECTION
        6.

      STOCK

      

      The
        Stock
        to be optioned under this Plan shall consist of authorized but unissued shares
        of Option Stock. Three hundred thousand (300,000) shares of Option Stock
        shall
        be reserved and available for options under the Plan; provided, however,
        that
        the total number of shares of Option Stock reserved for options under this
        Plan
        shall be subject to adjustment as provided in Section 12 of the Plan. In
        the
        event that any outstanding option under the Plan for any reason expires or
        is
        terminated prior to the exercise thereof, the shares of Option Stock allocable
        to the unexercised portion of such option shall continue to be reserved for
        options under the Plan and may be optioned hereunder. 

      

      SECTION
        7.

      DURATION
        OF PLAN

      

      Non-qualified
        stock options may be granted pursuant to the Plan from time to time after
        the
        effective date of the Plan and until the Plan is discontinued or terminated
        by
        the Board. Any non-qualified stock option granted prior to the termination
        of
        the Plan by the Board shall remain in full force and effect until the expiration
        of the option as specified in the written stock option agreement and shall
        remain subject to the terms and conditions of this Plan. 

      

      SECTION
        8.

      PAYMENT

      

      Optionees
        may pay for shares upon exercise of options granted pursuant to this Plan
        with
        cash, personal check, certified check, Common Stock of the Company valued
        at
        such Stock's then Fair Market Value, or such other form of payment as may
        be
        authorized by the Administrator. The Administrator may, in its sole discretion,
        limit the forms of payment available to the Optionee and may exercise such
        discretion any time prior to the termination of the option granted to the
        Optionee or upon any exercise of the option by the Optionee. 

       

      With
        respect to payment in the form of Common Stock of the Company, the Administrator
        may require advance approval or adopt such rules as it deems necessary to
        assure
        compliance with Rule 16b-3, or any successor provision, as then in effect,
        of
        the General Rules and Regulations under the Securities Exchange Act of 1934,
        if
        applicable.

       

      SECTION
        9.

      TERMS
        AND
        CONDITIONS OF NON-QUALIFIED STOCK OPTIONS

      

      Each
        non-qualified stock option granted pursuant to this Section 9 shall be evidenced
        by a written Option Agreement. The Option Agreement shall be in such form
        as may
        be approved from time to time by the Administrator and may vary from Optionee
        to
        Optionee; provided, however, that each Optionee and each Option Agreement
        shall
        comply with and be subject to the following terms and conditions:

       

      (a)
        Number of Shares and Option Price. The Option Agreement shall state the total
        number of shares covered by the non-qualified stock option. Unless otherwise
        determined by the Administrator, the option price per share shall be one
        hundred
        percent (100%) of the Fair Market Value of the Common Stock per share on
        the
        date the Administrator grants the option; provided, however, that the option
        price may not be less than eighty-five percent (85%) of the Fair Market Value
        of
        the Common Stock per share on the date of grant. 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (b)
        Term
        and Exercisability of Non-qualified Stock Option. The term during which any
        non-qualified stock option granted under the Plan may be exercised shall
        be
        established in each case by the Administrator. The Option Agreement shall
        state
        when the non-qualified stock option becomes exercisable and shall also state
        the
        maximum term during which the option may be exercised. In the event a
        non-qualified stock option is exercisable immediately, the manner of exercise
        of
        the option in the event it is not exercised in full immediately shall be
        specified in the stock option agreement. The Administrator may accelerate
        the
        exercisability of any non-qualified stock option granted hereunder which
        is not
        immediately exercisable as of the date of grant. 

       

      (c)
        Withholding. The Company or its Subsidiary shall be entitled to withhold
        and
        deduct from future wages of the Optionee all legally required amounts necessary
        to satisfy any and all withholding and employment-related taxes attributable
        to
        the Optionee's exercise of a non-qualified stock option. In the event the
        Optionee is required under the Option Agreement to pay the Company, or make
        arrangements satisfactory to the Company respecting payment of, such withholding
        and employment-related taxes, the Administrator may, in its discretion and
        pursuant to such rules as it may adopt, permit the Optionee to satisfy such
        obligation, in whole or in part, by electing to have the Company withhold
        shares
        of Common Stock otherwise issuable to the Optionee as a result of the option's
        exercise equal to the amount required to be withheld for tax purposes. Any
        stock
        elected to be withheld shall be valued at its Fair Market Value, as of the
        date
        the amount of tax to be withheld is determined under applicable tax law.
        The
        Optionee's election to have shares withheld for this purpose shall be made
        on or
        before the date the option is exercised or, if later, the date that the amount
        of tax to be withheld is determined under applicable tax law. Such election
        shall be approved by the Administrator and otherwise comply with such rules
        as
        the Administrator may adopt to assure compliance with Rule 16b-3, or any
        successor provision, as then in effect, of the General Rules and Regulations
        under the Securities Exchange Act of 1934, if applicable.

       

      (d)
        Other
        Provisions. The Option Agreement authorized under this Section 9 shall contain
        such other provisions as the Administrator shall deem advisable. 

      

      SECTION
        10.

      TRANSFER
        OF OPTION

      

      The
        Administrator may, in its sole discretion, permit the Optionee to transfer
        any
        or all non-qualified stock options to any member of the Optionee's "immediate
        family" as such term is defined in Rule 16a-1(e) promulgated under the
        Securities Exchange Act of 1934, or any successor provision, or to one or
        more
        trusts whose beneficiaries are members of such Optionee's "immediate family"
        or
        partnerships in which such family members are the only partners; provided,
        however, that the Optionee receives no consideration for the transfer and
        such
        transferred non-qualified stock option shall continue to be subject to the
        same
        terms and conditions as were applicable to such non-qualified stock option
        immediately prior to its transfer.

      

      SECTION
        11.

      RECAPITALIZATION,
        SALE, MERGER, EXCHANGE

      OR
        LIQUIDATION

      

      In
        the
        event of an increase or decrease in the number of shares of Common Stock
        resulting from a subdivision or consolidation of shares or the payment of
        a
        stock dividend or any other increase or decrease in the number of shares
        of
        Common Stock effected without receipt of consideration by the Company, the
        number of shares of Option Stock reserved under Section 6 hereof and the
        number
        of shares of Option Stock covered by each outstanding option and the price
        per
        share thereof shall be automatically adjusted to reflect such change. Additional
        shares which may be credited pursuant to such adjustment shall be subject
        to the
        same restrictions as are applicable to the shares with respect to which the
        adjustment relates.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Unless
        otherwise provided in the stock option agreement, in the event of an acquisition
        of the Company through the sale of substantially all of the Company's assets
        and
        the consequent discontinuance of its business or through a merger,
        consolidation, exchange, reorganization, reclassification, extraordinary
        dividend, divestiture or liquidation of the Company (collectively referred
        to as
        a "transaction"), all outstanding options shall become immediately exercisable,
        whether or not such options had become exercisable prior to the transaction;
        provided, however, that if the acquiring party seeks to have the transaction
        accounted for on a "pooling of interests" basis and, in the opinion of the
        Company's independent certified public accountants, accelerating the
        exercisability of such options would preclude a pooling of interests under
        generally accepted accounting principles, the exercisability of such options
        shall not accelerate. In addition to the foregoing, or in the event a pooling
        of
        interests transaction precludes the acceleration of the exercisability of
        outstanding options, the Board may provide for one or more of the following:
        

       

      (a)
        the
        complete termination of this Plan and cancellation of outstanding options
        not
        exercised prior to a date specified by the Board (which date shall give
        Optionees a reasonable period of time in which to exercise the options prior
        to
        the effectiveness of such transaction);

       

      (b)
        that
        Optionees holding outstanding non-qualified options shall receive, with respect
        to each share of Option Stock subject to such options, as of the effective
        date
        of any such transaction, cash in an amount equal to the excess of the Fair
        Market Value of such Option Stock on the date immediately preceding the
        effective date of such transaction over the option price per share of such
        options; provided that the Board may, in lieu of such cash payment, distribute
        to such Optionees shares of stock of the Company or shares of stock of any
        corporation succeeding the Company by reason of such transaction, such shares
        having a value equal to the cash payment herein; or

       

      (c)
        the
        continuance of the Plan with respect to the exercise of options which were
        outstanding as of the date of adoption by the Board of such plan for such
        transaction and provide to Optionees holding such options the right to exercise
        their respective options as to an equivalent number of shares of stock of
        the
        corporation succeeding the Company by reason of such transaction.

       

      The
        Board
        may restrict the rights of or the applicability of this Section 12 to the
        extent
        necessary to comply with Section 16(b) of the Securities Exchange Act of
        1934,
        the Internal Revenue Code or any other applicable law or regulation. The
        grant
        of an option pursuant to the Plan shall not limit in any way the right or
        power
        of the Company to make adjustments, reclassifications, reorganizations or
        changes of its capital or business structure or to merge, exchange or
        consolidate or to dissolve, liquidate, sell or transfer all or any part of
        its
        business or assets.

      

      SECTION
        12.

      SECURITIES
        LAW COMPLIANCE

      

      No
        shares
        of Common Stock shall be issued pursuant to the Plan unless and until there
        has
        been compliance, in the opinion of Company's counsel, with all applicable
        legal
        requirements, including without limitation, those relating to securities
        laws
        and stock exchange listing requirements. As a condition to the issuance of
        Option Stock to Optionee, the Administrator may require Optionee to (i)
        represent that the shares of Option Stock are being acquired for investment
        and
        not resale and to make such other representations as the Administrator shall
        deem necessary or appropriate to qualify the issuance of the shares as exempt
        from the Securities Act of 1933 and any other applicable securities laws,
        and
        (ii) represent that Optionee shall not dispose of the shares of Option Stock
        in
        violation of the Securities Act of 1933 or any other applicable securities
        laws.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      As
        a
        further condition to the grant of any non-qualified stock option or the issuance
        of Option Stock to Optionee, Optionee agrees to the following: 

       

      (a)
        In
        the event the Company advises Optionee that it plans an underwritten public
        offering of its Common Stock in compliance with the Securities Act of 1933,
        as
        amended, and the underwriter(s) seek to impose restrictions under which certain
        shareholders may not sell or contract to sell or grant any option to buy
        or
        otherwise dispose of part or all of their stock purchase rights of the
        underlying Common Stock, Optionee will not, for a period not to exceed 180
        days
        from the prospectus, sell or contract to sell or grant an option to buy or
        otherwise dispose of any non-qualified stock option granted to Optionee pursuant
        to the Plan or any of the underlying shares of Common Stock without the prior
        written consent of the underwriter(s) or its representative(s). 

       

      (b)
        In
        the event the Company makes any public offering of its securities and determines
        in its sole discretion that it is necessary to reduce the number of issued
        but
        unexercised stock purchase rights so as to comply with any states securities
        or
        Blue Sky law limitations with respect thereto, the Board of Directors of
        the
        Company shall have the right (i) to accelerate the exercisability of any
        non-qualified stock option and the date on which such option must be exercised,
        provided that the Company gives Optionee prior written notice of such
        acceleration, and (ii) to cancel any options or portions thereof which Optionee
        does not exercise prior to or contemporaneously with such public
        offering.

       

      (c)
        In
        the event of a transaction (as defined in Section 12 of the Plan) which is
        treated as a "pooling of interests" under generally accepted accounting
        principles, Optionee will comply with Rule 145 of the Securities Act of 1933
        and
        any other restrictions imposed under other applicable legal or accounting
        principles if Optionee is an "affiliate" (as defined in such applicable legal
        and accounting principles) at the time of the transaction, and Optionee will
        execute any documents necessary to ensure compliance with such rules.

       

      The
        Company reserves the right to place a legend on any stock certificate issued
        upon exercise of an option granted pursuant to the Plan to assure compliance
        with this Section 12.

      

      SECTION
        13.

      RIGHTS
        AS
        A SHAREHOLDER

      

      An
        Optionee (or the Optionee's successor or successors) shall have no rights
        as a
        shareholder with respect to any shares covered by an option until the date
        of
        the issuance of a stock certificate evidencing such shares. No adjustment
        shall
        be made for dividends (ordinary or extraordinary, whether in cash, securities
        or
        other property), distributions or other rights for which the record date
        is
        prior to the date such stock certificate is actually issued (except as otherwise
        provided in Section 11 of the Plan).

      

      SECTION
        14.

      AMENDMENT
        OF THE PLAN

      

      The
        Board
        may from time to time, insofar as permitted by law, suspend or discontinue
        the
        Plan or revise or amend it in any respect; provided, however, that no such
        revision or amendment, except as is authorized in Section 11, shall impair
        the
        terms and conditions of any option which is outstanding on the date of such
        revision or amendment to the material detriment of the Optionee without the
        consent of the Optionee. Notwithstanding the foregoing, no such revision
        or
        amendment shall (i) materially increase the number of shares subject to the
        Plan
        except as provided in Section 11 hereof, (ii) change the designation of the
        class of employees eligible to receive options, (iii) decrease the price
        at
        which options may be granted, or (iv) materially increase the benefits accruing
        to Optionees under the Plan without the approval of the shareholders of the
        Company but only if such approval is required for compliance with the
        requirements of any applicable law or regulation.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SECTION
        15.

      NO
        OBLIGATION TO EXERCISE OPTION

      

      The
        granting of an option shall impose no obligation upon the Optionee to exercise
        such option. Further, the granting of an option hereunder shall not impose
        upon
        the Company or any Subsidiary any obligation to retain the Optionee in its
        employ for any period.Exhibit
        4.2

      

      SPECTRE
        GAMING, INC.

      

      2004
        STOCK OPTION PLAN

      

      1.
        Purpose. The purpose of the 2004 Stock Option Plan (the "Plan") of Spectre
        Gaming, Inc., a Minnesota corporation (the "Company"), is to increase
        shareholder value and to advance the interests of the Company by furnishing
        a
        variety of economic incentives (variously referred to hereinafter as the
        "Incentives") designed to attract, retain and motivate employees, directors
        and
        consultants. Incentives may consist of opportunities to purchase or receive
        shares of the Company's common stock, $0.01 par value (the "Common Stock"),
        monetary payments, or both, on terms and conditions determined under this
        Plan.

      

      2.
        Administration.

      

      2.1
        The
        Plan shall be administered by a committee of the Company's board of directors
        (the "Committee"). The Committee shall consist of not less than two directors
        of
        the Company who shall be appointed from time to time by the Company's board
        of
        directors. Each member of the Committee shall qualify both as a "non-employee
        director" within the meaning of Rule 16b-3 of the Securities Exchange Act
        of
        1934, as amended (together with the rules and regulations promulgated
        thereunder, the "Exchange Act"), and as an "outside director" as defined
        in
        Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
        The Committee shall have complete discretion and authority to determine all
        provisions of all Incentives awarded under the Plan (consistent with the
        terms
        of the Plan), interpret the Plan, and make any other determination which
        it
        believes necessary and advisable for the proper administration of the Plan.
        The
        Committee's decisions and matters relating to the Plan shall be final and
        conclusive for the Company and its participants. No member of the Committee
        will
        be liable for any action or determination made in good faith with respect
        to the
        Plan or any Incentives granted under the Plan. The Committee will also have
        the
        authority under the Plan to amend or modify the terms of any outstanding
        Incentives in any manner; provided, however, that any such amended or modified
        terms are permitted by the Plan as then in effect, and any recipient of an
        Incentive adversely affected by such amended or modified terms has consented
        to
        such amendment or modification. No amendment or modification to an Incentive,
        however, whether pursuant to this Section 2 or any other provisions of the
        Plan,
        will be deemed to be a re-grant of such Incentive for purposes of this Plan.
        If
        at any time there is no Committee, then for purposes of the Plan the term
        "Committee" shall mean the Company's board of directors.

      

      2.2
        In
        the event of (i) any reorganization, merger, consolidation, recapitalization,
        liquidation, reclassification, stock dividend, stock split, combination of
        shares, rights offering, extraordinary dividend or divestiture, including
        a
        spinoff, or any other similar change in corporate structure or shares, (ii)
        any
        purchase, acquisition, sale or disposition of a significant amount of assets
        or
        a significant business, (iii) any change in accounting principles or practices,
        or (iv) any other similar change, in each case with respect to the Company
        or
        any other entity whose performance is relevant to the grant or vesting of
        an
        Incentive, the Committee (or, if the Company is not the surviving corporation
        in
        any such transaction, the board of directors of the surviving corporation)
        may,
        without the consent of any affected recipient of an Incentive, amend or modify
        the vesting criteria of any outstanding Incentive based, in whole or in part,
        on
        the financial performance of the Company (or any subsidiary or division thereof)
        or such other entity so as equitably to reflect such event, with the desired
        result that the criteria for evaluating such financial performance of the
        Company or such other entity will be substantially the same (in the sole
        discretion of the Committee or the board of directors of the surviving
        corporation) following such event as prior to such event; provided, however,
        that the amended or modified terms are permitted by the Plan as then in
        effect.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      3.
        Eligible Participants. Employees of the Company or its subsidiaries, including
        officers and employees of the Company or its subsidiaries), directors and
        consultants, advisors or other independent contractors who provide services
        to
        the Company or its subsidiaries, including members of any advisory board,
        shall
        become eligible to receive Incentives under the Plan when designated by the
        Committee. Participants may be designated individually or by groups or
        categories (for example, by pay grade) as the Committee deems appropriate.
        Participation by Company officers or its subsidiaries and any performance
        objectives relating to such officers must be approved by the Committee.
        Participation by others and any performance objectives relating to others
        may be
        approved by groups or categories (for example, by pay grade) and authority
        to
        designate participants who are not officers and to set or modify such
        performance objectives may be delegated.

      

      4.
        Types
        of Incentives. Incentives under the Plan may be granted in any combination
        of
        the following forms: (a) incentive stock options and non-statutory stock
        options
        under Section 6; (b) stock-appreciation rights ("SARs") under Section 7;
        (c)
        stock awards under Section 8; (d) restricted stock under Section 8; and (e)
        performance shares under Section 9. 

      

      5.
        Shares
        Subject to the Plan.

      

      5.1
        Subject to adjustment as provided in Section 10.6, the number of shares of
        Common Stock which may be issued under the Plan shall not exceed 2,000,000
        shares of Common Stock. Shares of Common Stock issued under the Plan or that
        are
        currently subject to outstanding Incentives will be applied to reduce the
        maximum number of shares of Common Stock remaining available for issuance
        under
        the Plan.

      

      5.2
        To
        the extent that cash in lieu of shares of Common Stock is delivered upon
        the
        exercise of an SAR pursuant to Section 7.4, the Company shall be deemed,
        for
        purposes of applying the limitation on the number of shares, to have issued
        the
        greater of the number of shares of Common Stock which it was entitled to
        issue
        upon such exercise or upon the exercise of any related option. In the event
        that
        a stock option or SAR granted hereunder expires or is terminated or canceled
        unexercised or unvested as to any shares of Common Stock, such shares may
        again
        be issued under the Plan either pursuant to stock options, SARs or otherwise.
        In
        the event that shares of Common Stock are issued hereunder as restricted
        stock
        or pursuant to a stock award and thereafter are forfeited or reacquired by
        the
        Company pursuant to rights reserved upon issuance thereof, such forfeited
        and
        reacquired shares may again be issued under the Plan, either as restricted
        stock, pursuant to stock awards or otherwise. The Committee may also determine
        to cancel, and agree to the cancellation of, stock options in order to make
        a
        participant eligible for the grant of a stock option at a lower price than
        the
        option to be canceled.

      

      6.
        Stock
        Options. A stock option is a right to purchase shares of Common Stock from
        the
        Company. The Committee may designate whether an option is to be considered
        an
        incentive stock option or a non-statutory stock option. To the extent that
        any
        incentive stock option granted under the Plan ceases for any reason to qualify
        as an "incentive stock option" for purposes of Section 422 of the Code, such
        incentive stock option will continue to be outstanding for purposes of the
        Plan
        but will thereafter be deemed to be a non-statutory stock option. Each stock
        option granted by the Committee under this Plan shall be subject to the
        following terms and conditions:

      

      6.1
        Price. The option price per share shall be determined by the Committee, subject
        to adjustment under Section 10.6.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      6.2
        Number. The number of shares of Common Stock subject to the option shall
        be
        determined by the Committee, subject to adjustment as provided in Section
        10.6.
        The number of shares of Common Stock subject to a stock option shall be reduced
        in the same proportion that the holder thereof exercises a SAR if any SAR
        is
        granted in conjunction with or related to the stock option. No individual
        may
        receive options to purchase more than 1,000,000 shares in any year.

      

      6.3
        Term
        and Time for Exercise. Subject to earlier termination as provided in Section
        10.4, the term of each stock option shall be determined by the Committee
        but
        shall not exceed ten (10) years and one day from the date of grant. Each
        stock
        option shall become exercisable at such time or times during its term as
        shall
        be determined by the Committee at the time of grant. The Committee may in
        its
        discretion accelerate the exercisability of any stock option. Subject to
        the
        foregoing and with the approval of the Committee, all or any part of the
        shares
        of Common Stock with respect to which the right to purchase has accrued may
        be
        purchased by the Company at the time of such accrual or at any time or times
        thereafter during the term of the option. 

      

      6.4
        Manner of Exercise. Subject to the conditions contained in this Plan and
        in the
        agreement with the recipient evidencing such option, a stock option may be
        exercised, in whole or in part, by giving written notice to the Company,
        specifying the number of shares of Common Stock to be purchased and accompanied
        by the full purchase price for such shares. The exercise price shall be payable
        (a) in United States dollars upon exercise of the option and may be paid
        by
        cash; uncertified or certified check; or bank draft; (b) at the discretion
        of
        the Committee, by delivery of shares of Common Stock already owned by the
        participant in payment of all or any part of the exercise price, which shares
        shall be valued for this purpose at the Fair Market Value (as defined in
        Section
        10.13 below) on the date such option is exercised; or (c) at the discretion
        of
        the Committee, by instructing the Company to withhold from the shares of
        Common
        Stock issuable upon exercise of the stock option shares of Common Stock in
        payment of all or any part of the exercise price and/or any related
        withholding-tax obligations, which shares shall be valued for this purpose
        at
        the Fair Market Value or in such other manner as may be authorized from time
        to
        time by the Committee. Any shares of Common Stock delivered by a participant
        pursuant to clause (b) above must have been held by the participant for a
        period
        of not less than six (6) months prior to the exercise of the option, unless
        otherwise determined by the Committee. Prior to the issuance of shares of
        Common
        Stock upon the exercise of a stock option, a participant shall have no rights
        as
        a shareholder with respect to shares of Common Stock issuable under such
        stock
        option. Except as otherwise provided in the Plan, no adjustment will be made
        for
        dividends or distributions declared as of a record date preceding the date
        on
        which a participant becomes the holder of record of shares of Common Stock
        acquired upon exercise of a stock option, except as the Committee may determine
        in its sole discretion.

      

      6.5
        Incentive Stock Options. Notwithstanding anything in the Plan to the contrary,
        the following additional provisions shall apply to the grant of stock options
        which are intended to qualify as incentive stock options (as such term is
        defined in Section 422 of the Code):

      

      (a)
        The
        aggregate Fair Market Value (determined as of the time the option is granted)
        of
        the shares of Common Stock with respect to which incentive stock options
        are
        exercisable for the first time by any participant during any calendar year
        (under the Plan and any other incentive stock-option plans of the Company
        or any
        subsidiary or parent corporation of the Company) shall not exceed $100,000.
        The
        determination will be made by taking incentive stock options into account
        in the
        order in which they were granted.

      

      (b)
        Any
        certificate for an incentive stock option authorized under the Plan shall
        contain such other provisions as the Committee shall deem advisable, but
        shall
        in all events be
        consistent with and contain all provisions required in order to qualify the
        options as incentive stock options.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (c)
        All
        incentive stock options must be granted within ten (10) years from the earlier
        of the date on which this Plan was adopted by board of directors or the date
        this Plan was approved by the Company's shareholders. 

      

      (d)
        Unless sooner exercised, all incentive stock options shall expire no later
        than
        ten (10) years after the date of grant. No incentive stock option may be
        exercisable after ten (10) years from its date of grant (or five (5) years
        from
        its date of grant if, at the time of grant, the participant owns, directly
        or
        indirectly, more than ten percent (10%) of the total combined voting power
        of
        all classes of stock of the Company or any parent or subsidiary corporation
        of
        the Company).

      

      (e)
        The
        exercise price for a share of Common Stock under an incentive stock options
        shall be not less than one hundred percent (100%) of the Fair Market Value
        of
        one share of Common Stock on the date of grant; provided, however, that the
        exercise price shall be one hundred ten percent (110%) of the Fair Market
        Value
        if, at the time the incentive stock option is granted, the participant owns,
        directly or indirectly, more than ten percent (10%) of the total combined
        voting
        power of all classes of stock of the Company or any parent or subsidiary
        corporation of the Company.

      

      7.
        Stock-Appreciation Rights. An SAR is a right to receive, without payment
        to the
        Company, a number of shares of Common Stock, cash, or any combination thereof,
        the amount of which is determined pursuant to the formula set forth in Section
        7.4. An SAR may be granted (a) with respect to any stock option granted under
        this Plan, either concurrently with the grant of such stock option or at
        such
        later time as determined by the Committee (as to all or any portion of the
        shares of Common Stock subject to the stock option), or (b) alone, without
        reference to any related stock option. Each SAR granted by the Committee
        under
        this Plan shall be subject to the following terms and conditions: 

      

      7.1
        Number; Exercise Price. Each SAR granted to any participant shall relate
        to such
        number of shares of Common Stock as shall be determined by the Committee,
        subject to adjustment as provided in Section 10.6. In the case of an SAR
        granted
        with respect to a stock option, the number of shares of Common Stock to which
        the SAR pertains shall be reduced in the same proportion that the holder
        of the
        option exercises the related stock option. The exercise price of an SAR will
        be
        determined by the Committee, in its discretion, at the date of grant but
        may not
        be less than one hundred percent (100%) of the Fair Market Value of one share
        of
        Common Stock on the date of grant.

      

      7.2
        Duration. Subject to earlier termination as provided in Section 10.4, the
        term
        of each SAR shall be determined by the Committee but shall not exceed ten
        (10)
        years and one day from the date of grant. Unless otherwise provided by the
        Committee, each SAR shall become exercisable at such time or times, to such
        extent and upon such conditions as the stock option, if any, to which it
        relates
        is exercisable. The Committee may in its discretion accelerate the
        exercisability of any SAR.

      

      7.3
        Exercise. An SAR may be exercised, in whole or in part, by giving written
        notice
        to the Company, specifying the number of SARs which the holder wishes to
        exercise. Upon receipt of such written notice, the Company shall, within
        ninety
        (90) days thereafter, deliver to the exercising holder certificates for the
        shares of Common Stock or cash, or both, as determined by the Committee,
        to
        which the holder is entitled pursuant to Section 7.4. 

      

      7.4
        Payment. Subject to the right of the Committee to deliver cash in lieu of
        shares
        of Common Stock (which, as it pertains to Company officers and directors,
        shall
        comply with all requirements of the Exchange Act), the number of shares of
        Common Stock which shall be issuable upon the exercise of an SAR shall be
        determined by dividing:

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (a)
        the
        number of shares of Common Stock as to which the SAR is exercised multiplied
        by
        the amount of the appreciation in such shares (i.e., the amount by which
        the
        Fair Market Value of the shares of Common Stock subject to the SAR on the
        exercise date exceeds (1) in the case of an SAR related to a stock option,
        the
        exercise price of the shares of Common Stock under the stock option or (2)
        in
        the case of an SAR granted alone and without reference to a related stock
        option, an amount which shall be determined by the Committee at the time
        of
        grant, subject to adjustment under Section 10.6); by

      

      (b)
        the
        Fair Market Value of a share of Common Stock on the exercise date. 

      

      In
        lieu
        of issuing shares of Common Stock upon the exercise of a SAR, the Committee
        may
        elect to pay the holder of the SAR cash equal to the Fair Market Value on
        the
        exercise date of any or all of the shares which would otherwise be issuable.
        No
        fractional shares of Common Stock shall be issued upon the exercise of an
        SAR;
        instead, the holder of the SAR shall be entitled to receive a cash adjustment
        equal to the same fraction of the Fair Market Value of a share of Common
        Stock
        on the exercise date or to purchase the portion necessary to make a whole
        share
        at its Fair Market Value on the date of exercise. 

      

      8.
        Stock
        Awards and Restricted Stock. A stock award consists of the transfer by the
        Company to a participant of shares of Common Stock, without other payment
        therefor, as additional compensation for services rendered to the Company.
        The
        participant receiving a stock award will have all voting, dividend, liquidation
        and other rights with respect to the shares of Common Stock issued to a
        participant as a stock award under this Section 8 upon the participant becoming
        the holder of record of such shares. A share of restricted stock consists
        of
        shares of Common Stock which are sold or transferred by the Company to a
        participant at a price determined by the Committee (which price shall be
        at
        least equal to the minimum price required by applicable law for the issuance
        of
        a share of Common Stock) and subject to restrictions on their sale or other
        transfer by the participant, which restrictions and conditions may be determined
        by the Committee as long as such restrictions and conditions are not
        inconsistent with the terms of the Plan. The transfer of Common Stock pursuant
        to stock awards and the transfer and sale of restricted stock shall be subject
        to the following terms and conditions:

      

      8.1
        Number of Shares. The number of shares to be transferred or sold by the Company
        to a participant pursuant to a stock award or as restricted stock shall be
        determined by the Committee.

      

      8.2
        Sale
        Price. The Committee shall determine the price, if any, at which shares of
        restricted stock shall be sold or granted to a participant, which may vary
        from
        time to time and among participants and which may be below the Fair Market
        Value
        of such shares of Common Stock at the date of sale. 

      

      8.3
        Restrictions. All shares of restricted stock transferred or sold hereunder
        shall
        be subject to such restrictions as the Committee may determine, including
        without limitation any or all of the following:

      

      (a)
        a
        prohibition against the sale, transfer, pledge or other encumbrance of the
        shares of restricted stock, such prohibition to lapse at such time or times
        as
        the Committee shall determine (whether in annual or more frequent installments,
        at the time of the death, disability or retirement of the holder of such
        shares,
        or otherwise);

      

      (b)
        a
        requirement that the holder of shares of restricted stock forfeit, or (in
        the
        case of shares sold to a participant) resell back to the Company at his or
        her
        cost, all or a part of such shares in the event of termination of his or
        her
        employment or consulting engagement during any period in which such shares
        are
        subject to restrictions; or

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (c)
        such
        other conditions or restrictions as the Committee may deem
        advisable.

      

      In
        order
        to enforce the restrictions imposed by the Committee pursuant to Section
        8.3,
        the participant receiving restricted stock shall enter into an agreement
        with
        the Company setting forth the conditions of the grant. Shares of restricted
        stock shall be registered in the name of the participant and deposited, together
        with a stock power endorsed in blank, with the Company unless otherwise
        determined by the Committee. Each such certificate shall bear a legend in
        substantially the following form:

      

      THE
        TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES
        OF
        COMMON STOCK REPRESENTED BY IT ARE SUBJECT
        TO THE TERMS AND CONDITIONS (INCLUDING CONDITIONS
        OF FORFEITURE) CONTAINED IN THE 2004 STOCK
        OPTION PLAN OF SPECTRE GAMING, INC. (THE "COMPANY"),
        AND AN AGREEMENT ENTERED INTO BETWEEN
        THE REGISTERED OWNER AND THE COMPANY. A COPY
        OF
        THE 2004 STOCK OPTION PLAN AND THE AGREEMENT
        IS AVAILABLE FROM THE COMPANY UPON REQUEST.

      

      8.4
        End
        of Restrictions. Subject to Section 10.5, at the end of any time period during
        which the shares of restricted stock are subject to forfeiture and restrictions
        on transfer, such shares will be delivered free of all restrictions to the
        participant or to the participant's legal representative, beneficiary or
        heir.

      

      8.5
        Shareholder. Subject to the terms and conditions of the Plan, each participant
        receiving restricted stock shall have all the rights of a shareholder with
        respect to shares of stock during any period in which such shares are subject
        to
        forfeiture and restrictions on transfer, including without limitation the
        right
        to vote such shares. Dividends paid in cash or property other than Common
        Stock
        with respect to shares of restricted stock shall be paid to the participant
        currently. Unless the Committee determines otherwise in its sole discretion,
        any
        dividends or distributions (including regular quarterly cash dividends) paid
        with respect to shares of Common Stock subject to the restrictions set forth
        above will be subject to the same restrictions as the shares to which such
        dividends or distributions relate. In the event the Committee determines
        not to
        pay dividends or distributions currently, the Committee will determine in
        its
        sole discretion whether any interest will be paid on such dividends or
        distributions. In addition, the Committee in its sole discretion may require
        such dividends and distributions to be reinvested (and in such case the
        participant consents to such reinvestment) in shares of Common Stock that
        will
        be subject to the same restrictions as the shares to which such dividends
        or
        distributions relate.

      

      9.
        Performance Shares. A performance share consists of an award which shall
        be paid
        in shares of Common Stock, as described below. The grant of a performance
        share
        shall be subject to such terms and conditions as the Committee deems
        appropriate, including the following:

      

      9.1
        Performance Objectives. Each performance share will be subject to performance
        objectives respecting the Company or one of its operating units to be achieved
        by the participant before the end of a specified period. The Committee shall
        determine the terms and conditions of each grant and the number of performance
        shares granted. If the performance objectives are achieved, the participant
        will
        be paid in shares of Common Stock or cash as determined by the Committee.
        If
        such objectives are not met, each grant of performance shares may provide
        for
        lesser payments in accordance with formulas established in the
        award.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      9.2
        Not
        Shareholder. The grant of performance shares to a participant shall not create
        any rights in such participant as a shareholder of the Company, until the
        payment of shares of Common Stock with respect to an award. 

      

      9.3
        No
        Adjustments. No adjustment shall be made in performance shares granted on
        account of cash dividends which may be paid or other rights which may be
        issued
        to the holders of Common Stock prior to the end of any period for which
        performance objectives were established.

      

      9.4
        Expiration of Performance Share. If any participant's employment or consulting
        engagement with the Company is terminated for any reason other than normal
        retirement, death or disability prior to the achievement of the participant's
        stated performance objectives, all the participant's rights on the performance
        shares shall expire and terminate unless otherwise determined by the Committee.
        In the event of termination of employment or consulting by reason of death,
        disability, or normal retirement, the Committee, in its own discretion may
        determine what portions, if any, of the performance shares should be paid
        to the
        participant.

      

      10.
        General.

      

      10.1
        Effective Date. The Plan will become effective upon approval by the Company's
        board of directors; and the ability of the Company to make grants of incentive
        stock options hereunder will become effective upon approval of the Company's
        shareholders within one year of the date of this Plan's adoption by the
        Board.

      

      10.2
        Duration. The Plan shall remain in effect until all Incentives granted under
        the
        Plan have either been satisfied by the issuance of shares of Common Stock
        or the
        payment of cash or have been terminated under the terms of the Plan and all
        restrictions imposed on shares of Common Stock in connection with their issuance
        under the Plan have lapsed. No Incentives may be granted under the Plan after
        the tenth anniversary of the date the Plan is approved by the shareholders
        of
        the Company.

      

      10.3
        Non-Transferability of Incentives. No stock option, SAR, restricted stock
        or
        performance award may be transferred, pledged or assigned by the holder thereof
        (except, in the event of the holder's death, by will or the laws of descent
        and
        distribution to the limited extent provided in the Plan or the Incentive),
        or
        pursuant to a qualified domestic relations order as defined by the Code or
        Title
        I of the Employee Retirement Income Security Act, or the rules thereunder,
        and
        the Company shall not be required to recognize any attempted assignment of
        such
        rights by any participant. Notwithstanding the preceding sentence, stock
        options
        may be transferred by the holder thereof to Employee's spouse, children,
        grandchildren or parents (collectively, the "Family Members"), to trusts
        for the
        benefit of Family Members, to partnerships or limited liability companies
        in
        which Family Members are the only partners or shareholders, or to entities
        exempt from federal income taxation pursuant to Code Section 501(c)(3). During
        a
        participant's lifetime, a stock option may be exercised only by him or her,
        by
        his or her guardian or legal representative or by the transferees permitted
        by
        the preceding sentence

      

      10.4
        Effect of Termination or Death. In the event that a participant ceases to
        be an
        employee of or consultant to the Company, or the participant's other service
        with the Company is terminated, for any reason, including death, any Incentives
        may be exercised or shall expire at such times as may be determined by the
        Committee in its sole discretion in the agreement evidencing an Incentive.
        Notwithstanding the other provisions of this Section 10.4, upon a participant's
        termination of employment or other service with the Company and all
        subsidiaries, the Committee may, in its sole discretion (which may be exercised
        at any time on or after the date of grant, including following such
        termination), cause options and SARs (or any part thereof) then held by such
        participant to become or continue to become exercisable and/or remain
        exercisable following such termination of employment or service and restricted
        stock awards, performance shares and stock awards then held by such participant
        to vest and/or continue to vest or become free of transfer restrictions,
        as the
        case may be, following such termination of employment or service, in each
        case
        in the manner determined by the Committee; provided, however, that no Incentive
        may remain exercisable or continue to vest beyond its expiration date. Any
        incentive stock option that remains unexercised more than one (1) year following
        termination of employment by reason of death or disability or more than three
        (3) months following termination for any reason other than death or disability
        will thereafter be deemed to be a non-statutory stock option. 

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      10.5
        Additional Conditions. Notwithstanding anything in this Plan to the contrary:
        (a) the Company may, if it shall determine it necessary or desirable for
        any
        reason, at the time of award of any Incentive or the issuance of any shares
        of
        Common Stock pursuant to any Incentive, require the recipient of the Incentive,
        as a condition to the receipt thereof or to the receipt of shares of Common
        Stock issued pursuant thereto, to deliver to the Company a written
        representation of present intention to acquire the Incentive or the shares
        of
        Common Stock issued pursuant thereto for his or her own account for investment
        and not for distribution; and (b) if at any time the Company further determines,
        in its sole discretion, that the listing, registration or qualification (or
        any
        updating of any such document) of any Incentive or the shares of Common Stock
        issuable pursuant thereto is necessary on any securities exchange or under
        any
        federal or state securities law, or that the consent or approval of any
        governmental regulatory body is necessary or desirable as a condition of,
        or in
        connection with the award of any Incentive, the issuance of shares of Common
        Stock pursuant thereto, or the removal of any restrictions imposed on such
        shares, such Incentive shall not be awarded or such shares of Common Stock
        shall
        not be issued or such restrictions shall not be removed, as the case may
        be, in
        whole or in part, unless such listing, registration, qualification, consent
        or
        approval shall have been effected or obtained free of any conditions
        unacceptable to the Company. Notwithstanding any other provision of the Plan
        or
        any agreements entered into pursuant to the Plan, the Company will not be
        required to issue any shares of Common Stock under this Plan, and a participant
        may not sell, assign, transfer or otherwise dispose of shares of Common Stock
        issued pursuant to any Incentives granted under the Plan, unless (a) there
        is in
        effect with respect to such shares a registration statement under the Securities
        Act of 1933, as amended (the "Securities Act"), and any applicable state
        or
        foreign securities laws or an exemption from such registration under the
        Securities Act and applicable state or foreign securities laws, and (b) there
        has been obtained any other consent, approval or permit from any other
        regulatory body which the Committee, in its sole discretion, deems necessary
        or
        advisable. The Company may condition such issuance, sale or transfer upon
        the
        receipt of any representations or agreements from the parties involved, and
        the
        placement of any legends on certificates representing shares of Common Stock,
        as
        may be deemed necessary or advisable by the Company in order to comply with
        such
        securities law or other restrictions.

      

      10.6
        Adjustment. In the event of any recapitalization, stock dividend, stock split,
        combination of shares or other change in the Common Stock, the number of
        shares
        of Common Stock then subject to the Plan, including shares subject to
        restrictions, options or achievements of performance shares, shall be adjusted
        in proportion to the change in outstanding shares of Common Stock. In the
        event
        of any such adjustments, the purchase price of any option, the performance
        objectives of any Incentive, and the shares of Common Stock issuable pursuant
        to
        any Incentive shall be adjusted as and to the extent appropriate, in the
        discretion of the Committee, to provide participants with the same relative
        rights before and after such adjustment.

      

      10.7
        Incentive Plans and Agreements. Except in the case of stock awards or cash
        awards, the terms of each Incentive shall be stated in a plan or agreement
        approved by the Committee. The Committee may also determine to enter into
        agreements with holders of options to reclassify or convert certain outstanding
        options, within the terms of the Plan, as Incentive Stock Options or as
        non-statutory stock options and in order to eliminate SARs with respect to
        all
        or part of such options and any other previously issued options. 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      10.8
        Withholding.

      

      (a)
        The
        Company shall have the right to (i) withhold and deduct from any payments
        made
        under the Plan or from future wages of the participant (or from other amounts
        that may be due and owing to the participant from the Company or a subsidiary
        of
        the Company), or make other arrangements for the collection of, all legally
        required amounts necessary to satisfy any and all foreign, federal, state
        and
        local withholding and employment-related tax requirements attributable to
        an
        Incentive, or (ii) require the participant promptly to remit the amount of
        such
        withholding to the Company before taking any action, including issuing any
        shares of Common Stock, with respect to an Incentive. At any time when a
        participant is required to pay to the Company an amount required to be withheld
        under applicable income tax laws in connection with a distribution of Common
        Stock or upon exercise of an option or SAR, the participant may satisfy this
        obligation in whole or in part by electing (the "Election") to have the Company
        withhold from the distribution shares of Common Stock having a value up to
        the
        amount required to be withheld. The value of the shares to be withheld shall
        be
        based on the Fair Market Value of the Common Stock on the date that the amount
        of tax to be withheld shall be determined (the "Tax Date").

      

      (b)
        The
        Committee may disapprove of any Election, may suspend or terminate the right
        to
        make Elections, or may provide with respect to any Incentive that the right
        to
        make Elections shall not apply to such Incentive. An Election is
        irrevocable.

      

      (c)
        If a
        participant is a Company officer or director within the meaning of Section
        16 of
        the Exchange Act, then an Election is subject to the following additional
        restrictions: (a) no Election shall be effective for a Tax Date which occurs
        within six (6) months of the grant or exercise of the award, except that
        this
        limitation shall not apply in the event death or disability of the participant
        occurs prior to the expiration of the six-month period; and (b) the Election
        must be made either six months prior to the Tax Date or must be made during
        a
        period beginning on the third business day following the date of release
        for
        publication of the Company's quarterly or annual summary statements of sales
        and
        earnings and ending on the twelfth business day following such
        date.

      

      10.9
        No
        Continued Employment, Engagement or Right to Corporate Assets. No participant
        under the Plan shall have any right, because of his or her participation,
        to
        continue in the employ of the Company for any period of time or to any right
        to
        continue his or her present or any other rate of compensation. Nothing contained
        in the Plan shall be construed as giving an employee, a consultant, such
        persons' beneficiaries or any other person any equity or interests of any
        kind
        in the assets of the Company or creating a trust of any kind or a fiduciary
        relationship of any kind between the Company and any such person.

      

      10.10
        Deferral Permitted. Payment of cash or distribution of any shares of Common
        Stock to which a participant is entitled under any Incentive shall be made
        as
        provided in the Incentive. Payment may be deferred at the option of the
        participant if provided in the Incentive.

      

      10.11
        Amendment of the Plan. The Board may amend, suspend or discontinue the Plan
        at
        any time; provided, however, that no amendments to the Plan will be effective
        without approval of the shareholders of the Company if shareholder approval
        of
        the amendment is then required pursuant to Section 422 of the Code or the
        rules
        of any stock exchange or Nasdaq or similar regulatory body. No termination,
        suspension or amendment of the Plan may adversely affect any outstanding
        Incentive without the consent of the affected participant; provided, however,
        that this sentence will not impair the right of the Committee to take whatever
        action it deems appropriate under Section 10.6 of the Plan. 

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      10.12
        Merger, Sale, Exchange or Liquidation. Unless otherwise provided in the
        agreement for an Incentive, in the event of an acquisition of the Company
        through the sale of substantially all of the Company's assets or through
        a
        merger, exchange, reorganization or liquidation of the Company or a similar
        event as determined by the Committee (collectively a "transaction"), the
        Committee shall be authorized, in its sole discretion, to take any and all
        action it deems equitable under the circumstances, including but not limited
        to
        any one or more of the following:

      

      (a)
        providing that the Plan and all Incentives shall terminate and the holders
        of
        (i) all outstanding vested options shall receive, in lieu of any shares of
        Common Stock they would be entitled to receive under such options, such stock,
        securities or assets, including cash, as would have been paid to such
        participants if their options had been exercised and such participant had
        received Common Stock immediately prior to such transaction (with appropriate
        adjustment for the exercise price, if any), (ii) performance shares and/or
        SARs
        that entitle the participant to receive Common Stock shall receive, in lieu
        of
        any shares of Common Stock each participant was entitled to receive as of
        the
        date of the transaction pursuant to the terms of such Incentive, if any,
        such
        stock, securities or assets, including cash, as would have been paid to such
        participant if such Common Stock had been issued to and held by the participant
        immediately prior to such transaction, and (iii) any Incentive under this
        Agreement which does not entitle the participant to receive Common Stock
        shall
        be equitably treated as determined by the Committee;

      

      (b)
        providing that participants holding outstanding vested Common Stock based
        Incentives shall receive, with respect to each share of Common Stock issuable
        pursuant to such Incentives as of the effective date of any such transaction,
        at
        the determination of the Committee, cash, securities or other property, or
        any
        combination thereof, in an amount equal to the excess, if any, of the Fair
        Market Value of such Common Stock on a date within ten days prior to the
        effective date of such transaction over the option price or other amount
        owed by
        a participant, if any, and that such Incentives shall be cancelled, including
        the cancellation without consideration of all options that have an exercise
        price below the per share value of the consideration received by the Company
        in
        the transaction;

      

      (c)
        providing that the Plan (or replacement plan) shall continue with respect
        to
        Incentives not cancelled or terminated as of the effective date of such
        transaction and provide to participants holding such Incentives the right
        to
        earn their respective Incentives on a substantially equivalent basis (taking
        into account the transaction and the number of shares or other equity issued
        by
        such successor entity) with respect to the equity of the entity succeeding
        the
        Company by reason of such transaction; or

      

      (d)
        providing that all unvested, unearned or restricted Incentives, including
        but
        not limited to restricted stock for which restrictions have not lapsed as
        of the
        effective date of such transaction, shall be void and deemed terminated,
        or, in
        the alternative, for the acceleration or waiver of any vesting, earning or
        restrictions on any Incentive.

      

      The
        Board
        may restrict the rights of participants or the applicability of this Section
        10.12 to the extent necessary to comply with Section 16(b) of the Securities
        Exchange Act of 1934, the Code or any other applicable law or regulation.
        The
        grant of an Incentive award pursuant to the Plan shall not limit in any way
        the
        right or power of the Company to make adjustments, reclassifications,
        reorganizations or changes of its capital or business structure or to merge,
        exchange or consolidate or to dissolve, liquidate, sell or transfer all or
        any
        part of its business or assets.

      

      10.13
        Definition of Fair Market Value. For purposes of this Plan, the "Fair Market
        Value" of a share of Common Stock at a specified date shall, unless otherwise
        expressly provided in this Plan, be the amount which the Committee or the
        Company's board of directors determines in good faith in the exercise of
        its
        reasonable discretion to be one hundred percent (100%) of the fair market
        value
        of such a share as of the date in question; provided, however, that
        notwithstanding the foregoing, if such shares are listed on a U.S. securities
        exchange or are quoted on the Nasdaq National Market System, Nasdaq SmallCap
        Stock Market ("Nasdaq"), or the Over-The-Counter Bulletin Board ("OTCBB"),
        then
        Fair Market Value shall be determined by reference to the last sale price
        of a
        share of Common Stock on such U.S. securities exchange or Nasdaq, or the
        average
        of the bid and ask price on the OTCBB, on the applicable date. If such U.S.
        securities exchange or Nasdaq is closed for trading on such date, or if the
        Common Stock does not trade on such date, then the last sale price used shall
        be
        the one on the date the Common Stock last traded on such U.S. securities
        exchange or Nasdaq.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      10.14
        Breach of Confidentiality, Assignment of Inventions, or Non-Compete Agreements.
        Notwithstanding anything in the Plan to the contrary, in the event that a
        participant materially breaches the terms of any confidentiality,
        assignment-of-inventions, or noncompete agreement entered into with the Company
        or any parent or subsidiary of the Company, whether such breach occurs before
        or
        after termination of such participant's employment or other service with
        the
        Company or any subsidiary, the Committee in its sole discretion may immediately
        terminate all rights of the participant under the Plan and any agreements
        evidencing an Incentive then held by the participant without notice of any
        kind.

      

      10.15
        Governing Law. The validity, construction, interpretation, administration
        and
        effect of the Plan and any rules, regulations and actions relating to the
        Plan
        will be governed by and construed exclusively in accordance with the laws
        of the
        State of Minnesota, notwithstanding the conflicts-of-law principles of Minnesota
        or any other jurisdiction.

      

      10.16
        Successors and Assigns. The Plan will be binding upon and inure to the benefit
        of the successors and permitted assigns of the Company and the participants
        in
        the Plan.

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