HONG KONG, June 13, 2016 /PRNewswire/ -- Entertainment
Gaming Asia Inc. (NASDAQ: EGT) announced today that its Board of
Directors has approved a voluntary stock option exchange program
for its employees, directors and certain others (the
"Participants"). The stock option exchange program would be
effected pursuant to a proposed new 2016 stock incentive plan,
which amends the Company's existing 2008 stock incentive plan to
bring it more in alignment with the Hong Kong Stock Exchange
listing rules, to which the Company's equity incentive plans are
subject as a result of the Company becoming a majority-owned
subsidiary of Melco International Development Limited. The new 2016
stock incentive plan is subject to the approval of the Company's
shareholders and the Company expects that the exchange program will
be approved, without a meeting of stockholders, by written consent
of the majority shareholder. The Company expects to effect the
options exchange in the third quarter of 2016, following the
effectiveness of the new 2016 stock incentive plan.
Under the terms of the program, the Participants would have the
opportunity to cancel their existing underwater outstanding stock
options (i.e., options with exercise prices that are higher than
the current market trading price of the Company's common stock) in
exchange for a replacement option grant for an equal number of
shares. The replacement options would have an exercise price of
$1.94, which is based on the higher
of: (i) 100% of the fair market value of the Company's common stock
on the Board approval date and (ii) 100% of the average fair market
value of one share of the Company's common stock for the five
business days immediately preceding the Board approval date.
The replacement options would have a ten-year term from the
option exchange date and would be subject to a new vesting
schedule. The replacement options would vest over three years,
vesting 50% on the first anniversary and 25% on each of the second
and third anniversaries of the option exchange date, subject to the
Participants remaining continuously in service with the
Company.
As of May 31, 2016, options to
purchase 766,851 shares of common stock are outstanding under the
Company's 2008 and other stock incentive plans. Options to purchase
484,781 of these shares, or approximately 3% of total shares
outstanding, are expected to be eligible for this exchange program.
The number of the Company's shares subject to outstanding options
would not change as a result of this option exchange.
The Company believes the option exchange program will provide
valuable incentive to retain certain individuals that are important
to its future success. Further, it serves to motivate the
Participants to contribute to the attainment of the Company's
business and financial objectives and, ultimately, the creation of
value for all of the shareholders.
The detailed terms and conditions of the amended stock incentive
plan and stock option exchange program will be contained in an
Information Statement to be mailed to the Company's shareholders
and to be filed with the Securities and Exchange Commission in
June 2016.
The exchange program is being structured to comply with FASB
Interpretation No. 44 "Accounting for Certain Transactions
Involving Stock Compensation". As a result of the option exchange,
the Company expects to incur additional non-cash compensation
expense attributable to the incremental fair value of the
replacement options granted to the Participants, measured as of the
date such awards are granted. The incremental compensation expense
associated with the replacement options would be recognized over
the expected life of the replacement options.
About Entertainment Gaming Asia Inc.
Entertainment
Gaming Asia Inc. (NASDAQ: EGT), an indirect, majority-owned
subsidiary of Melco International Development Limited, is
a gaming company in Pan-Asia engaged in the leasing of
electronic gaming machines to the gaming industry in Cambodia and the
Philippines and the development and operation of gaming
venues in Asia under its
"Dreamworld" brand. The Company is also developing a
free to play online social casino gaming platform for certain Asian
markets.
Forward Looking Statements
This press release
contains forward-looking statements concerning Entertainment Gaming
Asia within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Those forward-looking statements include
statements regarding the benefits of implementing the stock option
exchange program. Such statements are subject to certain risks and
uncertainties, and actual circumstances, events or results may
differ materially from those projected in such forward-looking
statements. Factors that could cause or contribute to differences
include, but are not limited to, the risk that the Company may not
achieve the expected benefits from the option exchange program and
those other risks set forth in the companies' respective annual
reports on Form 10-K for the year ended December 31, 2015 filed with the SEC and
subsequently filed reports. The companies caution readers not to
place undue reliance on any forward-looking statements and
they do not undertake, and specifically disclaim any
obligation to update or revise such statements to reflect new
circumstances or unanticipated events as they occur.
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SOURCE Entertainment Gaming Asia Inc.