This Notice and the
accompanying Information Statement are being furnished to the stockholders of Entertainment Gaming Asia Inc., a Nevada corporation
(the “Company,” “we,” “us,” or “our”), to notify stockholders of the actions taken
by our Board of Directors (the “Board”) by unanimous written consent on April 29, 2016 and by the holder of a majority
of the issued and outstanding shares of the Company’s common stock by written consent dated June 15, 2016, approving (1)
a one-time stock option exchange program (the “Option Exchange”), to permit the Company to cancel certain stock options
held by our directors, employees and certain other persons, referred to in this Information Statement as “Eligible Participants,”
in exchange for new, or replacement, options, and (2) the 2016 Amended and Restated Stock Incentive Plan (the “2016 Plan”),
which amends and restates the 2008 Stock Incentive Plan (the “2008 Plan”) to, among other things, permit the Board
to re-price outstanding equity awards without stockholder approval, to implement certain requirements of the Rules Governing the
Listing of Securities on The Hong Kong Stock Exchange Limited and to make certain other administrative changes to the 2008 Plan.
The primary purpose
of the Option Exchange is to increase the retention and motivational value of the outstanding equity awards held by Eligible Participants
by providing such individuals the opportunity to exchange equity awards which are significantly underwater, i.e., the exercise
price is significantly greater than the current market trading price of our common stock. The Option Exchange is expected to close
and any replacement options will be issued in the third quarter of 2016, but no earlier than 20 calendar days after the Company
mails this Notice and accompanying Information Statement to stockholders.
In addition, we are
amending the 2008 Plan, which was originally adopted by the Board and approved by the stockholders in September 2008. The 2016
Plan also implements certain requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
(“HK Listing Rules”), to which the Company is subject due to the ownership of a majority of the Company’s common
stock by EGT Entertainment Holding Limited, the indirect wholly-owned subsidiary of Melco International Development Limited (“Melco”),
a Hong Kong company listed on the main board of the Stock Exchange of Hong Kong Limited (“HKSE”), in addition to certain
other administrative changes. The 2016 Plan is expected to become effective in the third quarter of 2016, but no earlier than 20
calendar days after the Company mails this Notice and the accompanying Information Statement to stockholders.
As the matters set
forth in this Information Statement have been duly authorized and approved by the written consent of the holder of more than a
majority of our voting securities, your vote or consent is not requested or required to approve these matters. The Information
Statement is provided solely for your information, and also serves the purpose of informing stockholders of the matters described
herein pursuant to Section 14(c) of the Securities Exchange Act of 1934, as amended, and the rules and regulations prescribed thereunder,
including Regulation 14C, and serves as the notice required by Section 78.320 of the Nevada Revised Statutes (the “NRS”)
of the taking of a corporate action without a meeting by less than unanimous written consent of our stockholders. You do not need
to do anything in response to this Notice and the Information Statement.
ITEM 2
APPROVAL OF AMENDED AND RESTATED STOCK INCENTIVE PLAN
Introduction
On April 29, 2016,
the Board approved, upon recommendation of the Compensation Committee, the 2016 Plan, which amends and restates the 2008 Plan to
conform the 2016 Plan to the requirements of The Stock Exchange of Hong Kong Limited by the Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited (“HK Listing Rules”), among other changes, which became applicable to the
Company following Melco's acquisition of a majority interest in the Company.
Set forth below are
the summary of the amendments made to the 2008 Plan by the 2016 Plan and the summary of the material terms of the 2016 Plan. The
summary of the 2016 Plan is not intended to be exhaustive and is qualified in its entirety by the terms of the 2016 Plan, a copy
of which is attached hereto as Appendix A. Except as otherwise defined herein, the terms in capital letters herein shall have the
same meaning as defined in the 2016 Plan
Amendments Made to the 2008 Plan by
the 2016 Plan
The 2016 Plan will
permit the Board to re-price equity incentive grants without requiring stockholder approval. The 2016 Plan requires that the exercise
price of an option must also not be less than the higher of (i) 100% of the Fair Market Value (as defined in the 2016 Plan) of
one share of Common Stock on the date on which the Committee (as defined in the 2016 Plan) approves the grant and (ii) the average
Fair Market Value of one share of Common Stock for the five business days immediately preceding the date on which the Committee
approves the grant.
Additionally, for so
long as Melco International Development Limited remains the majority shareholder and remains listed on The Stock Exchange of Hong
Kong Limited (the “HKSE”):
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any proposed grant of options to any director, chief executive or substantial shareholder (as those
terms are defined in the HK Listing Rules) of Melco International Development Limited will be subject to the approval of the independent
non-executive directors of Melco International Development Limited;
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any proposed grant of options to a substantial shareholder (as that term is defined in the HK Listing
Rules) or an independent non-executive director of Melco International Development Limited, or any of their respective associates
(as defined in the HK Listing Rules) that would result in in the grant of over 0.1% of the shares of our common stock outstanding
and having an aggregate Fair Market Value in excess of HK$5 million will be subject to approval by the shareholders of Melco International
Development Limited;
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the maximum number of shares of our common stock which may be issued upon exercise of all options
to be granted under the 2016 Plan and all other of our employee stock option plans shall not exceed 10% of the shares of our common
stock outstanding on the date Melco International Development Limited approves the 2016 Plan. This limit may be renewed or exceeded
only upon prior approval of the shareholders of Melco International Development Limited;
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the overall limit on the number of shares of our common stock which may be issued upon exercise
of all outstanding option grants yet to be exercised must not exceed 30% of the shares of our common stock outstanding from time
to time;
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with respect to option grants after the effective date of the 2016 Plan, the total number of shares
of our common stock issued and to be issued upon exercise of such options granted to any eligible recipient in any 12-month period
must not exceed 1% of the shares of our common stock outstanding at the relevant time, without approval by the shareholders of
Melco International Development Limited;
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2016 Plan
General
The 2016 Plan is intended
to advance the interests of our Company and our stockholders by enabling us to attract and retain qualified individuals through
opportunities for equity participation, and to reward those individuals who contribute to the achievement of our economic objectives.
The 2016 Plan allows us to award eligible recipients incentive awards, consisting of:
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options to purchase shares of our common stock, which may be “incentive options” that
qualify as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code;
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non-statutory stock options” that do not qualify as incentive options;
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restricted stock awards” which are shares of common stock that are subject to certain forfeiture
and transferability restrictions; and
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performance stock awards” which are shares of common stock that may be subject to the future
achievement of certain performance criteria or be free of any performance or vesting.
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All of our employees
and any subsidiary employees (including officers and directors who are also employees), as well as all of our non-employee directors
and other consultants, advisors and other persons who provide services to us will be eligible to receive incentive awards under
the 2016 Plan.
Shares that are issued
under the 2016 Plan or that are subject to outstanding incentive awards reduce the number of shares remaining available under the
2016 Plan. Any shares subject to an incentive award that lapses, expires, is forfeited, terminates unexercised or unvested,
or is settled or paid in cash or other consideration will automatically again become available for issuance under the 2016 Plan.
If the exercise price
of any option or any associated tax withholding obligations are paid by a participant’s tender or attestation as to ownership
of shares (as described below), or if tax withholding obligations are satisfied by the Company withholding shares otherwise issuable
upon exercise of an option, only the net number of shares issued will reduce the number of shares remaining available under the
2016 Plan.
In the event of any
reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination
of shares, rights offering, divestiture or extraordinary dividend (including a spin-off) or any other similar change in the corporate
structure or shares of the Company, appropriate adjustment will be made to:
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the number and kind of securities available for issuance under the 2016 Plan; and
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in order to prevent dilution or enlargement of the rights of participants, the number, kind and,
where applicable, the exercise price of securities subject to outstanding incentive awards.
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Administration
The 2016 Plan will
be administered by our Committee (as defined in the 2016 Plan).
The Committee has the
authority to determine all necessary or desirable provisions of incentive awards, including, the eligible recipients who will be
granted one or more incentive awards under the 2016 Plan, the nature and extent of the incentive awards to be made to each participant,
the time or times when incentive awards will be granted, the duration of each incentive award, and payment or vesting restrictions
and other conditions. However, all grants of incentive awards under the 2016 Plan will require the ratification of the full
Board. The Committee has the authority to pay the economic value of any incentive award in the form of cash, common stock or any
combination of both, and may amend or modify the terms of outstanding incentive awards so long as the amended or modified terms
are permitted under the 2016 Plan and any affected participant has consented to the amendment or modification.
The 2016 Plan will
became effective on July 18, 2016 and, unless terminated earlier, the 2016 Plan will terminate at midnight on July 17, 2026.
Incentive awards outstanding at the time the 2016 Plan is terminated may continue to be exercised, or become free of restriction,
according to their terms. The Board may suspend or terminate the 2016 Plan or any portion of the 2016 Plan at any time, and
may amend the 2016 Plan from time to time to conform incentive awards to any change in applicable laws or regulations or in any
other respect that the Board may deem to be in our best interests. However, no amendments to the 2016 Plan will be effective
without stockholder approval if it is required under Section 422 of the Internal Revenue Code or the rules of the NASDAQ,
or, if Melco International Development Limited is the majority shareholder of the Company and has its shares listed on the HKSE,
if it is required by the HK Listing Rules.
Termination, suspension
or amendment of the 2016 Plan will not adversely affect any outstanding incentive award without the consent of the affected participant,
except for adjustments in the event of changes in capitalization or a “change in control,” discussed below.
In general, no right
or interest in any incentive award may be assigned or transferred by a participant, except by will or the laws of descent and distribution,
or subjected to any lien or encumbrance. However, the Committee may permit a participant to transfer of all or a portion of a non-statutory
stock option, other than for value, to certain family members or related family trusts, foundations or partnerships. Any permitted
transferee of a non-statutory stock option will remain subject to all the terms and conditions of the incentive award applicable
to the participant.
Options
The exercise price
of a stock option may not be less than the higher of (i) 100% of the Fair Market Value (as defined in the 2016 Plan) of one share
of Common Stock on the date on which the Committee approves the grant and (ii) the average Fair Market Value of one share of Common
Stock for the five business days immediately preceding the date on which the Committee approves the grant.
In general, the 2016
Plan requires a participant to pay an option’s exercise price in cash. The Committee may, however, allow exercise payments
to be made, in whole or in part, by delivery of a broker exercise notice (pursuant to which a broker or dealer is irrevocably instructed
to sell enough shares or loan the optionee enough money to pay the exercise price and to remit such sums to the Company), by tender
or attestation as to ownership of shares of common stock that have been held for the period of time necessary to avoid a charge
to the Company’s earnings for financial reporting purposes and that are otherwise acceptable to the Committee, or by a combination
of such methods. Any shares of common stock tendered or covered by an attestation will be valued at their Fair Market Value
on the exercise date.
The aggregate fair
market value of shares of common stock with respect to which incentive stock options may become exercisable by a participant for
the first time during any calendar year (and under all “incentive stock option” plans of the Company or any subsidiary)
may not exceed $100,000. Any incentive stock options in excess of this amount will be treated as non-statutory stock options.
Options may be exercised
in whole or in part and the Committee may impose conditions or restrictions to the exercisability of an option, including that
the participant remain continuously employed by the Company or a subsidiary for a certain period. An option may not remain
exercisable after 10 years from its date of grant (or five years from its date of grant if the participant beneficially owns
more than 10% of our outstanding stock).
Restricted Stock Awards
A restricted stock
award is an award of common stock vesting at such times and in such installments as may be determined by the Committee and, until
it vests, that is subject to restrictions on transferability and the possibility of forfeiture. Restricted stock awards may be
subject to any restrictions or vesting conditions that the Committee deems appropriate, including that the participant remains
continuously employed by the Company or a subsidiary for a certain period.
Unless the Committee
determines otherwise, any dividends or distributions (other than regular quarterly cash dividends) paid with respect to shares
of common stock subject to the unvested portion of a restricted stock award will be subject to the same restrictions as the shares
to which such dividends or distributions relate. Holders of restricted stock awards will have the same voting rights as holders
of unrestricted common stock.
Performance Stock Awards
A performance stock
award is an award of common stock that may be subject to the future achievement of specified performance criteria determined by
the Committee or be free of any performance or vesting conditions. The Committee may select one criterion or multiple criteria
for measuring performance, which may be based on Company or business unit performance or the individual performance of the participant
or any other measure.
Change in Control of the Company
In the event a “change
in control” of the Company occurs:
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all options that have been granted will become immediately exercisable in full and will remain
exercisable for the remainder of their terms,
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all outstanding restricted stock awards that have been granted will become immediately fully vested
and non-forfeitable, and
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any conditions to the issuance of shares pursuant to performance stock awards that have been granted
will lapse.
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The Committee may also
determine that some or all participants holding outstanding options will receive shares or a cash payment equal to the excess of
the Fair Market Value of the option shares immediately prior to the effective date of the change in control over the exercise price
per share of the options (or, in the event that there is no excess, that such options will be terminated).
For purposes of the
2016 Plan a “Change in Control” of the Company generally occurs if:
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all or substantially all of our assets are sold, leased, exchanged or transferred to any successor;
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our stockholders approve any plan or proposal to liquidate or dissolve the Company;
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any successor, other than a bona fide underwriter in a securities offering, becomes the beneficial
owner of 25% or more, but not 50% or more, of our outstanding securities ordinarily having the right to vote at elections of directors,
unless the transaction has been approved in advance by “continuity directors,” who are members of our Board on the
effective date of the 2016 Plan or whose nomination for election meets certain approval requirements related to continuity with
our current Board; or
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more than 50% of our outstanding securities ordinarily having the right to vote at elections of
directors (regardless of any approval by the continuity directors);
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we are a party to a merger or consolidation that results in our stockholders beneficially owning
securities representing
(
i) 50% or more, but not more than 80%,
of the combined voting power of the surviving corporation’s then outstanding securities, unless such merger or consolidation
has been approved in advance by our continuity directors, or (ii) less than 50% of the combined voting power of the surviving
corporation’s then outstanding securities (regardless of any approval by our continuity directors); or
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the continuity directors cease to constitute at least 50% or above of our Board.
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Effect of Termination of Employment
or Other Service
Upon the termination of service of a non-employee
director (for any reason) (i) all outstanding options then held by such director shall remain outstanding, first become exercisable
according to the vesting schedule in place at the time of termination of service and remain exercisable for their term and (ii)
all of such director’s restricted stock awards and performance stock awards that have not vested as of such termination of
service will be terminated and forfeited.
If a participant (other
than a non-employee director) ceases to be employed by (or provide services to) the Company and all subsidiaries, all of the participant’s
incentive awards will terminate as set forth below (unless modified by the Committee in its discretion as described below).
Upon termination due
to death or disability, all outstanding options then vested will become immediately exercisable in full and will remain exercisable
for a period of twelve months (but in no event after the expiration date of the option), and all unvested restricted stock and
performance stock awards be terminated and forfeited.
Upon termination for
any reason other than death or disability (including retirement), all outstanding options will cease to be exercisable and will
be terminated and forfeited, and all unvested restricted stock and performance stock awards will be terminated and forfeited.
In connection with
a participant’s termination otherwise than for cause, the Committee may, in its sole discretion, cause the participant’s
options to become or continue to become exercisable and restricted stock awards and performance stock awards to vest and/or continue
to vest or become free of restrictions.
U.S. Income Tax Consequences
The following description
of the federal income tax consequences under the laws of the United States is based on current statutes, regulations and interpretations,
all of which are subject to change, possibly with retroactive effect. The description does not include state or local income tax
consequences. In addition, the description is not intended to address specific tax consequences applicable to an individual participant
who receives an incentive award.
Incentive Stock
Options
. There will not be any federal income tax consequences to either the participant or the Company as a result
of the grant of an incentive option under the Incentive Plan.
A participant’s
exercise of an incentive option also will not result in any federal income tax consequences to the Company or the participant,
except that (i) an amount equal to the excess of the fair market value of the shares acquired upon exercise of the incentive
option, determined at the time of exercise, over the amount paid for the shares by the participant will be includable in the participant’s
alternative minimum taxable income for purposes of the alternative minimum tax, and (ii) the participant may be subject to
an additional excise tax if any amounts are treated as excess parachute payments (as discussed below). Special rules will
apply if previously acquired shares of common stock are permitted to be tendered or attested to in payment of an option exercise
price.
If a participant disposes
of the shares acquired upon exercise of the incentive option, the federal income tax consequences will depend upon how long the
participant held the shares. If the participant held the shares for at least two years after the date of grant and at least one
year after the date of exercise (the “holding period requirements”), then the participant will recognize a long-term
capital gain or loss. The amount of the long-term capital gain or loss will be equal to the difference between (i) the amount
the participant realized on disposition of the shares, and (ii) the option price at which the participant acquired the shares.
The Company is not entitled to any compensation expense deduction under these circumstances.
If the participant
does not satisfy both of the above holding period requirements (a “disqualifying disposition”), then the participant
will be required to report as ordinary income, in the year the participant disposes of the shares, the amount by which the lesser
of (i) the fair market value of the shares at the time of exercise of the incentive option or (ii) the amount realized
on the disposition of the shares, exceeds the option price for the shares. The Company will be entitled to a compensation expense
deduction in an amount equal to the ordinary income includable in the taxable income of the participant, subject to the limitations
of Section 162(m) of the Internal Revenue Code (the “Code”). This compensation income may be subject to withholding.
The remainder of the gain recognized on the disposition, if any, or any loss recognized on the disposition, will be treated as
long-term or short-term capital gain or loss, depending on the holding period.
Non-Statutory Stock
Options
. Neither the participant nor the Company incurs any federal income tax consequences as a result of the grant
of a non-statutory option. Upon exercise of a non-statutory option, a participant will recognize ordinary income, subject to withholding,
on the date of exercise in an amount equal to the difference between (i) the fair market value of the shares purchased, determined
on the date of exercise, and (ii) the consideration paid for the shares. The participant may be subject to an additional excise
tax if any amounts are treated as excess parachute payments (see explanation below). Special rules will apply if previously
acquired shares of common stock are permitted to be tendered in payment of an option exercise price.
At the time of a subsequent
sale or disposition of any shares of common stock obtained upon exercise of a non-statutory option, any gain or loss will be a
capital gain or loss. The capital gain or loss will be long-term or short-term capital gain or loss, depending on the holding period.
In general, the Company
will be entitled to a compensation expense deduction, subject to the limitations of Section 162(m), in connection with the
exercise of a non-statutory option for any amounts includable in the taxable income of the participant as ordinary income, provided
the Company complies with any applicable withholding requirements.
Restricted Stock
Awards
. With respect to shares issued pursuant to a restricted stock award that are subject to a substantial risk of
forfeiture, a participant may file an election under Section 83(b) of the Code within 30 days after the shares are transferred
to include as ordinary income in the year of transfer an amount equal to the fair market value of the shares received on the date
of transfer (determined as if the shares were not subject to any risk of forfeiture). The Company will receive a corresponding
tax deduction, provided that proper withholding is made and the award is not otherwise subject to the limitations of Section 162(m).
If a Section 83(b) election is made, the participant will not recognize any additional income when the restrictions on
the shares issued in connection with the stock award lapse. At the time any such shares are sold or disposed of, any gain or loss
will be treated as long-term or short-term capital gain or loss, depending on the holding period from the date of receipt of the
restricted stock award.
A participant who does
not make a Section 83(b) election within 30 days of the transfer of a restricted stock award that is subject to a substantial
risk of forfeiture will recognize ordinary income at the time of the lapse of the restrictions in an amount equal to the then fair
market value of the shares, less any amount paid for the shares. The Company will receive a corresponding tax deduction, provided
that proper withholding is made and the award is not otherwise subject to the limitations of Section 162(m). At the time of
a subsequent sale or disposition of any shares of common stock issued in connection with a restricted stock award as to which the
restrictions have lapsed, any gain or loss will be treated as long- term or short-term capital gain or loss, depending on the holding
period from the date the restrictions lapse.
Excise Tax on Parachute
Payments
. The Code imposes a 20% excise tax on the recipient of “excess parachute payments,” as defined in
the code, and denies tax deductibility to the Company on excess parachute payments. Generally, parachute payments are payments
in the nature of compensation to employees of a company who are officers, stockholders, or highly-compensated individuals, which
payments are contingent upon a change in ownership or effective control of the company, or in the ownership of a substantial portion
of the assets of the company. For example, acceleration of the exercisability of options or the vesting of restricted stock
awards upon a change in control of a company may constitute parachute payments, and in certain cases, “excess parachute payments.”
Excess parachute payments are generally parachute payments equal to or exceeding the recipient’s average compensation from
a company over the preceding five years.
New Plan Benefits
.
The grant of awards under the 2016 Plan is discretionary and neither the number of shares subject to awards nor the types of awards
under the Incentive Plan to any particular eligible recipient(s) or group(s) of eligible recipients is presently determinable.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The table below sets
forth the beneficial ownership of our common stock as of the date of this Information Statement by:
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All of our directors and executive officers, individually;
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All of our directors and executive officers, as a group;
and
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All persons who beneficially owned more than 5% of our
outstanding common stock.
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The beneficial ownership
of each person was calculated based on 14,464,220 shares of our common stock outstanding as of May 31, 2016, according to the recorded
ownership listings as of that date, the beneficial ownership reports filed by 5% beneficial owners with the SEC and the verifications
we solicited and received from each director and executive officer. The SEC has defined “beneficial ownership” to mean
more than ownership in the usual sense. For example, a person has beneficial ownership of a share not only if he owns it in the
usual sense, but also if he has the power (solely or shared) to vote, sell or otherwise dispose of the share. Beneficial ownership
also includes the number of shares that a person has the right to acquire within 60 days of March 15, 2016, pursuant to the
exercise of options or warrants or the conversion of notes, debentures or other indebtedness, but excludes stock appreciation rights.
Two or more persons might count as beneficial owners of the same share. Unless otherwise noted, the address of the following persons
listed below is Unit C1, Ground Floor, Koon Wah Building, No. 2, Yuen Shun Circuit, Yuen ChauKok, Shatin, New Territories, Hong
Kong.
Name
of Director or Executive Officer
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Shares(1)
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Percentage
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Clarence (Yuk Man) Chung
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867,766
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(2)
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5.9
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%
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Traci Mangini
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47,501
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(3)
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*
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Vincent L. DiVito
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48,648
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(4)
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*
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John W. Crawford, J.P.
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50,671
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(5)
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*
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Anthony (Kanhee) Tyen
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41,875
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(6)
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*
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Samuel (Yuen Wai) Tsang
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41,875
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(7)
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*
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Dennis (Chi Wai) Tam
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NIL
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-
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All directors and executive officers
as a group (7 persons)
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1,098,336
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7.3
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%
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* Denotes less than 1%
Name and Address of 5% Holders
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Shares (1)
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Percentage
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EGT Entertainment Holding Limited
38/F, The Centrium
60 Wyndham Street
Central, Hong Kong
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9,378,074
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(8)
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64.8
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%
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(1) Unless otherwise noted, the persons identified in this table
have sole voting and sole investment power with regard to the shares beneficially owned by them.
(2) Includes 277,500 shares issuable upon the exercise of stock
options.
(3) Includes 41,251 shares issuable upon the exercise of stock
options.
(4) Includes 30,938 shares issuable upon the exercise of stock
options.
(5) Includes 36,250 shares issuable upon the exercise of stock
options.
(6) Includes 34,375 shares issuable upon the exercise of stock
options.
(7) Includes 34,375 shares issuable upon the exercise of stock
options.
(8) The shares are owned directly by EGT Entertainment
Holding Limited, which is an indirect wholly-owned subsidiary of Melco International Development Limited. Melco is the indirect
beneficial owner of the reported securities.
WHERE YOU CAN FIND MORE INFORMATION
The Company files annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other information with
the SEC. You may obtain such SEC filings from the SEC’s website at http://www.sec.gov. You can also read and copy these materials
at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information about the operation
of the SEC’s public reference room by calling the SEC at 1-800-SEC-0330.
INCORPORATION BY REFERENCE
The SEC allows us to
“incorporate by reference” information we file with it into this Information Statement, which means that we can disclose
important information to you by referring you to other documents. The information incorporated by reference is an important part
of this Information Statement.
We incorporate by reference
the documents listed below:
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Item 6—Selected Financial Data, Item 7—Management’s Discussion and Analysis of
Financial Condition and Results of Operations, Item 7A—Quantitative and Qualitative Disclosures About Market Risk, Item 8—Financial
Statements and Supplementary Data, Item 10—Directors, Executive Officers and Corporate Governance—Committee Interlocks
and Insider Participation and Item 11—Executive Compensation of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2015 filed with the SEC on March 30, 2016, including our audited consolidated financial statements as of and for the
fiscal year ended December 31, 2015; and
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You may request a copy
of this filing incorporated by reference in this Information Statement, other than an exhibit to these filings unless we have specifically
incorporated that exhibit by reference into this filing, without charge, by written or telephonic request directed to Unit C1,
G/F., Koon Wah Building, No. 2 Yuen Shun Circuit, YuenChauKok, Shatin, New Territories, Hong Kong, attention: Chief Financial Officer.
Our telephone number at that address is + 852-3147-6600.
Any statement contained
in a document incorporated or deemed to be incorporated by reference in this Information Statement will be deemed modified, superseded
or replaced for purposes of this Information Statement to the extent that a statement contained in this Information Statement or
in any subsequently filed document that also is or is deemed to be incorporated by reference in this Information Statement modifies,
supersedes or replaces such statement.
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS
SHARING AN ADDRESS
If hard copies of the
materials are requested, we will send only one Information Statement and other corporate mailings to stockholders who share a single
address unless we received contrary instructions from any stockholder at that address. This practice, known as “householding,”
is designed to reduce our printing and postage costs. However, the Company will deliver promptly upon written or oral request a
separate copy of the Information Statement to a stockholder at a shared address to which a single copy of the Information Statement
was delivered. You may make such a written or oral request by (a) sending a written notification stating (i) your name, (ii) your
shared address and (iii) the address to which the Company should direct the additional copy of the Information Statement, to the
Company at Unit C1, G/F., Koon Wah Building, No. 2 Yuen Shun Circuit, Yuen ChauKok, Shatin, New Territories, Hong Kong, attention:
Chief Financial Officer.
If multiple stockholders
sharing an address have received one copy of this Information Statement or any other corporate mailing and would prefer the Company
to mail each stockholder a separate copy of future mailings, you may send notification to or call the Company’s principal
executive offices. Additionally, if current stockholders with a shared address received multiple copies of this Information Statement
or other corporate mailings and would prefer the Company to mail one copy of future mailings to stockholders at the shared address,
notification of such request may also be made by mail or telephone to the Company’s principal executive offices.
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By Order of the Board of Directors,
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/s/ Clarence Chung
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Clarence Chung
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Chief Executive Officer
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APPENDIX A
Entertainment Gaming Asia Inc. Amended
and Restated Stock Incentive Plan
ENTERTAINMENT
GAMING ASIA INC.
AMENDED AND RESTATED STOCK INCENTIVE
PLAN
APPROVED BY SHAREHOLDERS OF THE COMPANY
ON JULY 18, 2016
APPROVED BY SHAREHOLDERS OF MELCO ON
JUNE 13, 2016
1.
Purpose
of Plan
.
The purpose of the
Entertainment Gaming Asia Inc. 2008 Amended and Restated Stock Incentive Plan (the “Plan”) is to advance the interests
of Entertainment Gaming Asia Inc. (the “Company”) and its stockholders by enabling the Company and its Subsidiaries
to attract and retain qualified individuals through opportunities for equity participation in the Company, and to reward those
individuals who contribute to the Company’s achievement of its economic objectives.
2.
Definitions
.
The following terms
will have the meanings set forth below, unless the context clearly otherwise requires:
2.1. “
Board
”
means the Company’s Board of Directors.
2.2. “
Broker
Exercise Notice
” means a written notice pursuant to which a Participant, upon exercise of an Option, irrevocably instructs
a broker or dealer to sell a sufficient number of shares or loan a sufficient amount of money to pay all or a portion of the exercise
price of the Option and/or any related withholding tax obligations and remit such sums to the Company and directs the Company to
deliver stock certificates to be issued upon such exercise directly to such broker or dealer or their nominee.
2.3. “
Cause
”
means (i) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, in each case related to
the Company or any Subsidiary, (ii) any unlawful or criminal activity of a serious nature, (iii) any intentional and deliberate
breach of a duty or duties that, individually or in the aggregate, are material in relation to the Participant’s overall
duties, (iv) any material breach of any confidentiality or noncompete agreement entered into with the Company or any Subsidiary,
or (v) with respect to a particular Participant, any other act or omission that constitutes “cause” as may be defined
in any employment, consulting or similar agreement between such Participant and the Company or any Subsidiary.
2.4. “
Change
in Control
” means an event described in Section 11.1 of the Plan.
2.5. “
Code
”
means the Internal Revenue Code of 1986, as amended.
2.6. “
Committee
”
has the meaning as ascribed to such term in Section 3.1of the Plan.
2.7. “
Common
Stock
” means the common stock of the Company, par value $0.001 per share, or the number and kind of shares of stock or
other securities into which such Common Stock may be changed in accordance with Section 4.3 of the Plan.
2.8. “
Disability
”
means the permanent and total disability of the Participant within the meaning of Section 22(e)(3) of the Code.
2.9. “
Effective
Date
” means the date of approval of the Plan by the Company’s stockholders as provided in Section 15.2.
2.10. “
Eligible
Recipients
” means (i) all employees, officers and directors of the Company or any Subsidiary (or prospective employees,
officers and directors provided that the grant of an Incentive Award to any such prospective employee, officer or director shall
be conditional upon the proposed appointment taking effect) and (ii) any other person who has a relationship with the Company or
any Subsidiary, such as a consultant or an adviser to the Company or any Subsidiary.
2.11. “
Exchange
Act
” means the Securities Exchange Act of 1934, as amended.
2.12. “
Fair
Market Value
” means, with respect to the Common Stock, as of any date: (i) the mean between the reported high and
low sale prices of the Common Stock at the end of the regular trading session if the Common Stock is listed, admitted to unlisted
trading privileges, or reported on any national securities exchange or on the NASDAQ Global Select or Global Market on such date
(or, if no shares were traded on such day, as of the next preceding day on which there was such a trade); or (ii) if the Common
Stock is not so listed, admitted to unlisted trading privileges, or reported on any national exchange or on the NASDAQ Global Select
or Global Market, the closing bid price as of such date at the end of the regular trading session, as reported by the Nasdaq Capital
Market, OTC Bulletin Board, the National Quotation Bureaus, Inc., or other comparable service; or (iii) if the Common Stock is
not so listed or reported, such price as the Committee determines in good faith in the exercise of its reasonable discretion.
2.13. “
HK
Listing Rules
” means the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as such
rules may be amended from time to time;
2.14. “
HKSE
”
means The Stock Exchange of Hong Kong Limited and any successor stock exchange;
2.15. “
Incentive
Award
” means an Option, Restricted Stock Award or Performance Stock Award granted to an Eligible Recipient pursuant to
the Plan.
2.16. “
Incentive
Stock Option
” means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan
that qualifies as an “incentive stock option” within the meaning of Section 422 of the Code.
2.17. “
Individual
Limit
” has the meaning given in Section 4.4(f).
2.18. “
Melco
”
means Melco International Development Limited, a company established under the Laws of Hong Kong and having its shares listed on
the HKSE and being the parent company of the Company as at the Melco Approval Date.
2.19. “
Melco
Approval Date
” has the meaning given in Section 15.3.
2.20. “
Non-Statutory
Stock Option
” means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan
that does not qualify as an Incentive Stock Option.
2.21. “
Option
”
means an Incentive Stock Option or a Non-Statutory Stock Option.
2.22. “
Options
Limit
” has the meaning given in Section 4.4(d).
2.23. “Options
Mandate Limit” has the meaning given in Section 4.4(a).
2.24. “
Participant
”
means an Eligible Recipient who receives one or more Incentive Awards under the Plan.
2.25. “
Performance
Criteria
” means the performance criteria that may be used by the Committee in granting Performance Stock Awards contingent
upon achievement of such performance goals as the Committee may determine in its sole discretion. The Committee may select one
criterion or multiple criteria for measuring performance, and the measurement may be based upon Company, Subsidiary or business
unit performance, or the individual performance of the Eligible Recipient, either absolute or by relative comparison to other companies,
other Eligible Recipients or any other external measure of the selected criteria.
2.26. “
Performance
Stock Awards
” means an award of Common Stock granted to an Eligible Recipient pursuant to Section 8 of the Plan and which
may be subject to the future achievement of Performance Criteria or be free of any performance or vesting conditions.
2.27. “
Previously
Acquired Shares
” means shares of Common Stock that are already owned by the Participant or, with respect to any Incentive
Award, that are to be issued upon the grant, exercise or vesting of such Incentive Award.
2.28. “
Restricted
Stock Award
” means an award of Common Stock granted to an Eligible Recipient pursuant to Section 7 of the Plan that is
subject to the restrictions on transferability and the risk of forfeiture imposed by the provisions of such Section 7.
2.29. “
Retirement
”
means normal or approved early termination of employment or service other than by death, disability or termination for cause.
2.30. “
Securities
Act
” means the Securities Act of 1933, as amended.
2.31. “
Subsidiary
”
means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant
equity interest, as determined by the Committee.
3.
Plan
Administration
.
3.1.
Administration
by the Board or a Committee of the Board
. The Plan will be administered by the Board or by a committee of the Board to which
the Board delegates power to administer the Plan. So long as the Company has a class of its equity securities registered under
Section 12 of the Exchange Act, any committee administering the Plan will consist solely of two or more members of the Board who
are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act. Such a committee, if established,
will act by majority approval of the members (unanimous approval with respect to action by written consent), and a majority of
the members of such a committee will constitute a quorum. Any Incentive Awards granted by such a committee, if established, including
any amendments or modifications thereto, shall require, and be granted subject to, ratification by the full Board. As used in the
Plan, “Committee” will refer to the Board or to such a committee, if established. To the extent consistent with applicable
corporate law of the Company’s jurisdiction of incorporation, the Committee may delegate to any officers of the Company the
duties, power and authority of the Committee under the Plan pursuant to such conditions or limitations set forth in this Section
3.1 and as the Committee may otherwise establish; provided, however, that only the Committee may exercise such duties, power and
authority with respect to Eligible Recipients who are subject to Section 16 of the Exchange Act. The Committee may exercise its
duties, power and authority under the Plan in its sole and absolute discretion without the consent of any Participant or other
party, unless the Plan specifically provides otherwise. Each determination, interpretation or other action made or taken by the
Committee pursuant to the provisions of the Plan will be conclusive and binding for all purposes and on all persons, and no member
of the Committee will be liable for any action or determination made in good faith with respect to the Plan or any Incentive Award
granted under the Plan.
3.2.
Authority
of the Committee
.
(a) In
accordance with and subject to the provisions of the Plan, the Committee will have the authority to determine all provisions of
Incentive Awards as the Committee may deem necessary or desirable and as consistent with the terms of the Plan, including, without
limitation, the following: (i) the Eligible Recipients to be selected as Participants; (ii) the nature and extent of the Incentive
Awards to be made to each Participant (including the number of shares of Common Stock to be subject to each Incentive Award, any
exercise price, the manner in which Incentive Awards will vest or become exercisable and whether Incentive Awards will be granted
in tandem with other Incentive Awards) and the form of written agreement, if any, evidencing such Incentive Award; (iii) the time
or times when Incentive Awards will be granted; (iv) the duration of each Incentive Award, provided that the exercise period in
respect of Options must not be more than 10 years from the date of grant of the Option; (v) the performance targets, if any, that
must be achieved before Incentive Awards can vest or be exercised; (vi) the amount, if any, payable on application or acceptance
of an Incentive Award and the period within which payments or calls must or may be made or loans for such purposes must be repaid;
and (vii) the restrictions and other conditions to which the payment, vesting or exercise of Incentive Awards may be subject. In
addition, the Committee will have the authority under the Plan in its sole discretion to pay the economic value of any Incentive
Award in the form of cash, Common Stock or any combination of both.
(b) The
Committee will have the authority under the Plan to amend or modify the terms of any outstanding Incentive Award in any manner,
including, without limitation, the authority to modify the number of shares or other terms and conditions of an Incentive Award,
extend the term of an Incentive Award, accelerate the exercisability or vesting or otherwise terminate any restrictions relating
to an Incentive Award, accept the surrender of any outstanding Incentive Award or, to the extent not previously exercised or vested,
authorize the grant of new Incentive Awards in substitution for surrendered Incentive Awards; provided, however that the amended
or modified terms are permitted by the Plan as then in effect and that any Participant adversely affected by such amended or modified
terms has consented to such amendment or modification.
(c) 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 spin-off) or any other change
in corporate structure or shares; (ii) any purchase, acquisition, sale, disposition or write-down of a significant amount of assets
or a significant business; (iii) any change in accounting principles or practices, tax laws or other such laws or provisions affecting
reported results; 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 Award, 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 Participant,
amend or modify the vesting criteria (including Performance Criteria) of any outstanding Incentive Award that is based in whole
or in part on the financial performance of the Company (or any Subsidiary or division or other subunit 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.
(d) To
the extent the authority under this Section 3.2 or otherwise in the Plan is exercised by a committee of the Board to which the
Board delegates power, any decision made or action taken by such committee shall require ratification by the full Board, unless
the Board determines otherwise.
3.3.
Proposed
Grant of Options to Director, Chief Executive or Substantial Shareholder of Melco
.
In addition to
the terms and conditions set forth elsewhere in the Plan, from and after the Effective Date and for so long as Melco is the parent
company of the Company and Melco has its shares listed on the HKSE:
(a) Any
proposed grant of Options to any director, chief executive or substantial shareholder (as those terms are respectively defined
in the HK Listing Rules) of Melco shall be subject to the approval of the independent non-executive directors of Melco (excluding
any independent non-executive director of Melco who is the proposed Participant in respect of the Option).
(b) Where
any grant of Options to a substantial shareholder (as that term is defined in the HK Listing Rules) of Melco or an independent
non-executive director of Melco, or any of their respective associates (as defined in the HK Listing Rules), would result in the
shares of Common Stock issued and to be issued upon exercise of all Options already granted and to be granted (including Options
exercised, cancelled and outstanding) to such person in the 12 month period up to and including the date of such grant:
(i) representing
in aggregate over 0.1% of the shares of Common Stock outstanding; and
(ii) having
an aggregate value, based on the Fair Market Value of the shares of Common Stock on the date of grant of the relevant Options,
in excess of HK$5 million,
such grant of Options shall be
subject to approval by the shareholders of Melco (voting by way of poll). The grantee, his associates and all core connected persons
(as defined in the HK Listing Rules) of Melco shall abstain from voting at such general meeting, except that any such persons may
vote against the relevant resolution at the general meeting provided that his intention to do so has been stated in the circular
to be sent to the shareholders of Melco in connection therewith. The date of grant for the purpose of sub-Section 3.3(b)(ii) is
the business day in Hong Kong on which the Committee resolves to grant the relevant Options under Section 6 of the Plan.
4.
Shares
Available for Issuance
.
4.1.
Maximum
Number of Shares Available; Certain Restrictions on Awards
. Subject to adjustment as provided in Section 4.3 of the Plan, the
maximum number of shares of Common Stock that will be available for issuance under the Plan will be 1,250,000. The shares available
for issuance under the Plan may, at the election of the Committee, be either treasury shares or shares authorized but unissued,
and, if treasury shares are used, all references in the Plan to the issuance of shares will, for corporate law purposes, be deemed
to mean the transfer of shares from treasury.
4.2.
Accounting
for Incentive Awards
. Shares of Common Stock that are issued under the Plan or that are subject to outstanding Incentive Awards
will be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under the Plan; provided,
however, that shares subject to an Incentive Award that lapses, expires, is forfeited (including issued shares forfeited under
a Restricted Stock Award) or for any reason is terminated unexercised or unvested or is settled or paid in cash or any form other
than shares of Common Stock will, subject to Sections 4.4(a) and (b) , automatically again become available for issuance under
the Plan. To the extent that the exercise price of any Option and/or associated tax withholding obligations are paid by tender
or attestation as to ownership of Previously Acquired Shares, or to the extent that such tax withholding obligations are satisfied
by withholding of shares otherwise issuable upon exercise of the Option, only the number of shares of Common Stock issued net of
the number of shares tendered, attested to or withheld will be applied to reduce the maximum number of shares of Common Stock remaining
available for issuance under the Plan.
4.3.
Adjustments
to Shares and Incentive Awards
.
(a) In
the event of any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock
split, combination of shares, reduction of capital, rights issue, capitalization issue or any other change in the corporate structure
or shares of the Company, the Committee (or, if the Company is not the surviving corporation in any such transaction, the board
of directors of the surviving corporation) will make appropriate adjustment (which determination will be conclusive) as to the
number and kind of securities or other property (including cash) available for issuance or payment under the Plan and, in order
to prevent dilution or enlargement of the rights of Participants, the number and kind of securities or other property (including
cash) subject to outstanding Incentive Awards and the exercise price of outstanding Options. An adjustment under this Section 4.3(a)
in respect of Options must give the Participant holding the relevant Options the same proportion of the equity capital of the Company
as that to which the Participant was previously entitled, before the event giving rise to the adjustment, but no such adjustment
may be made to the extent that a share of Common Stock would be issued at less than its par value (if any).
(b) After
the Effective Date and for so long as Melco is the parent company of the Company and Melco has its shares listed on the HKSE, in
respect of any adjustment made under Section 4.3(a) in respect of Options, other than an adjustment made on a capitalization issue,
an independent financial adviser or Melco’s auditor must confirm to the directors of Melco that the adjustment satisfies
the requirement set forth above that the adjustment gives the Participant holding the relevant Options the same proportion of the
equity capital of the Company as that to which the Participant was previously entitled before the event giving rise to the adjustment.
A capitalization issue for the purposes of the Plan means an offer of new shares of Common Stock, credited as fully paid up from
the Company’s reserves, to existing shareholders in proportion to the respective numbers of shares of Common Stock held by
them.
4.4.
Additional
Restrictions on the Maximum Number of Shares Available for Subscription Upon Exercise of Options Issued under the Plan
.
Without prejudice
to the overall limit on the maximum number of shares of Common Stock available for issuance under the Plan prescribed by Section
4.1, from and after the Effective Date and for so long as Melco is the parent company of the Company and Melco has its shares listed
on the HKSE:
(a) The
shares of Common Stock which may be issued upon exercise of all Options to be granted under the Plan and all other employee stock
option plans of the Company shall not exceed 10% of the shares of Common Stock outstanding on the Melco Approval Date, being 1,446,422
shares of Common Stock (the “
Options Mandate Limit
”), subject to renewal of the Options Mandate Limit as referred
to in Section 4.4(b). Options lapsed in accordance with the terms of the Option or the Plan shall no longer be counted towards
the Options Mandate Limit as the same may be renewed from time to time.
(b) The
Company may renew the Options Mandate Limit at any time subject to prior approval by a resolution of shareholders of Melco. However,
the Options Mandate Limit as renewed shall not exceed 10% of the shares of Common Stock outstanding as at the date of the aforesaid
Melco shareholders’ approval. Options previously granted under the Plan and under any other employee stock option plans (including
those outstanding, cancelled or lapsed in accordance with the Plan or other employee stock option plans, or exercised) shall not
be counted towards the Options Mandate Limit as renewed. A circular with the relevant information as required under the HK Listing
Rules must be sent to shareholders of Melco in connection with the meeting at which their approval will be sought.
(c) The
Company may also seek separate Melco shareholders’ approval for granting Options beyond the Options Mandate Limit, as the
same may be renewed from time to time, to Eligible Recipients specifically identified by the Company before the aforesaid Melco
shareholders’ meeting where such approval is sought. A circular with the relevant information as required under the HK Listing
Rules shall be sent to shareholders of Melco containing, amongst other information, a generic description of the identified Eligible
Recipients, the number and terms of the Options to be granted, the purpose of granting Options to the identified Eligible Recipients,
and how those Options serve such purpose.
(d) The
overall limit on the number of shares of Common Stock which may be issued upon exercise of all outstanding Options granted and
yet to be exercised under the Plan and all other employee stock option plans of the Company must not exceed 30% of the shares of
Common Stock outstanding from time to time (the “
Options Limit
”). No Options may be granted under the Plan at
any time if such grant would result in the Options Limit being exceeded.
(e) If
the Company conducts a stock consolidation or stock split after the Options Mandate Limit has been approved by a resolution of
shareholders of Melco, the maximum number of shares of Common Stock that may be issued upon exercise of all Options to be granted
under all of the employee stock option plans of the Company under the Options Mandate Limit as a percentage of the total number
of issued shares of Common Stock at the date immediately before and after such consolidation or subdivision shall be the same.
(f) With
regard to Option grants after the Effective Date, the total number of shares of Common Stock issued and to be issued upon exercise
of the Options granted to any Eligible Recipient (including both exercised and outstanding Options, whether vested or unvested)
in any 12-month period must not exceed 1% of the shares of Common Stock outstanding (the “
Individual Limit
”)
at the relevant time. Any further grant of Options after the Effective Date in excess of the Individual Limit shall be subject
to approval by a resolution of shareholders of Melco with such Eligible Recipient and his close associates (as such term is defined
in the HK Listing Rules) (or his associates (as such term is defined in the HK Listing Rules), if the Eligible Recipient is a connected
person (as such term is defined in the HK Listing Rules) of Melco) abstaining from voting. A circular with the relevant information
as required under the HK Listing Rules must be sent to the shareholders of Melco disclosing the identity of the Eligible Recipients
and the number and terms of the Options granted (including previously granted) and proposed to be granted to such Eligible Recipients.
The number and terms of Options to be granted to such Eligible Recipients shall be fixed before approval of Melco’s shareholders
is sought and the date of the meeting of the Committee for proposing such further grant shall be the date of grant for the purpose
of calculating the exercise price of the Options to be granted.
(g) The
maximum numbers of shares of Common Stock referred to in this Section 4.4 shall be adjusted, in such manner as the Committee determines
to be appropriate, fair and reasonable in the event of any alteration in the capital structure of the Company in accordance with
Section 4.3(a) whether by way of capitalization of profits or reserves, rights issue, consolidation, reclassification, reconstruction,
subdivision, reduction of capital or otherwise howsoever.
(h) For
the purpose of this Section 4, “rights issue” means an offer or issue of new shares or other securities made to existing
stockholders of the Company in proportion to their stockholdings and “capitalization issue” means an issue of new shares
or other securities free of charge (created or paid up by transferring funds from the Company’s reserves to its equity capital)
to existing stockholders of the Company in proportion to their stockholdings.
5.
Participation
.
Participants
in the Plan will be those Eligible Recipients who, in the judgment of the Committee, have contributed, are contributing or are
expected to contribute to the achievement of economic objectives of the Company or its Subsidiaries. Eligible Recipients may be
granted from time to time one or more Incentive Awards, singly or in combination or in tandem with other Incentive Awards, as may
be determined by the Committee in its sole discretion. Incentive Awards will be deemed to be granted as of the date specified in
the grant resolution of the Committee, which date will be the date of any related agreement with the Participant.
6.
Options
.
6.1.
Grant
.
An Eligible Recipient may be granted one or more Options under the Plan, and such Options will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. 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.
6.2.
Exercise
Price
.
(a) The
per share price to be paid by a Participant upon exercise of an Option will be determined by the Committee in its discretion at
the time of the Option grant approval by the Committee; provided, however, that such price will not be less than the higher of
(i) 100% of the Fair Market Value of one share of Common Stock on the date on which the Committee approves the grant of the relevant
Option, which must be a business day in the U.S. and (ii) the average Fair Market Value of one share of Common Stock for the five
business days in the U.S. immediately preceding the date on which the Committee approves the grant of the relevant Option. Notwithstanding
the above, if at the time such Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined
voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company, the per share price
to be paid shall be 110% of the Fair Market Value with respect to an Option. The aggregate fair market value of shares of
common stock with respect to which incentive stock options may become exercisable by a participant for the first time during any
calendar year (and under all “incentive stock option” plans of the Company or any subsidiary) may not exceed $100,000.
Any incentive stock options in excess of this amount will be treated as non-statutory stock options.
(b) For
so long as Melco is the parent company of the Company and Melco has its shares listed on the HKSE, if the Company resolves to seek
an additional listing (in addition to its existing NASDAQ listing) of its shares on the HKSE (either Main Board or GEM) or other
stock exchange, the exercise price of any Options granted after the Company has resolved to seek an additional listing and up to
the date of the additional listing must not be lower than the new issue price (if any) applicable to the additional listing. In
particular, in the event the Company applies for an additional listing, the exercise price of any Option granted during the period
of six months immediately preceding such application shall, upon listing] be automatically adjusted to the greater of the original
exercise price and the new issue price (if any) applicable to the additional listing. Any adjustment required by this Section 6.2(b)
shall be conditional on the additional listing being successfully completed and shall take effect on the date of completion of
the additional listing.
6.3.
Exercisability
and Duration
. An Option will become exercisable at such times and in such installments and upon such terms and conditions as
may be determined by the Committee in its sole discretion at the time of grant (including without limitation (i) the achievement
of one or more of the Performance Criteria (ii) that the Participant remain in the continuous employ or service of the Company
or a Subsidiary for a certain period) and/or (iii) the minimum period, if any, for which an Option must be held before it can be
exercised; provided, however, that if the Committee does not specify the expiration date of the Option, the expiration date shall
be 10 years from the date on which the Option was granted. In no case may an Option may be exercisable after 10 years from its
date of grant (five years from its date of grant in the case of an Incentive Stock Option if, at the time the Incentive Stock Option
is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock
of the Company or any parent or subsidiary corporation of the Company).
6.4.
Payment
of Exercise Price
. The total purchase price of the shares to be purchased upon exercise of an Option will be paid entirely
in cash (including check, bank draft or money order); provided, however, that the Committee, in its sole discretion and upon terms
and conditions established by the Committee, may allow such payments to be made, in whole or in part, (i) by tender of a Broker
Exercise Notice; (ii) by tender, or attestation as to ownership, of Previously Acquired Shares that have been held for the period
of time necessary to avoid a charge to the Company’s earnings for financial reporting purposes and that are otherwise acceptable
to the Committee, or (iii) by net issuance whereby “in the money” Options are cancelled and the spread is applied towards
the exercise of other Options, or by a combination of such methods. For purposes of such payment, Previously Acquired Shares tendered
or covered by an attestation and shares of Common Stock underlying net issuance Options will be valued at their Fair Market Value
on the exercise date.
6.5.
Manner
of Exercise
. An Option may be exercised by a Participant in whole or in part from time to time, subject to the conditions contained
in the Plan and in the agreement evidencing such Option, by delivery in person, by facsimile or electronic transmission or through
the mail of written notice of exercise to the Company at its principal office in either Las Vegas, Macau or Hong Kong by paying
in full the total exercise price for the shares of Common Stock to be purchased in accordance with Section 6.4 of the Plan.
6.6.
Cancellation
of Unexercised Options
. Options granted but not exercised during the period determined by the Committee under Section 6.3 for
the exercise of the relevant Options shall lapse on the expiry of that period and be cancelled.
7.
Restricted
Stock Awards
.
7.1.
Grant
.
An Eligible Recipient may be granted one or more Restricted Stock Awards under the Plan, and such Restricted Stock Awards will
be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee
in its sole discretion. The Committee may impose such restrictions or conditions, not inconsistent with the provisions of the Plan,
to the vesting of such Restricted Stock Awards as it deems appropriate, including, without limitation, (i) the achievement of one
or more of the Performance Criteria and/or (ii) that the Participant remain in the continuous employ or service of the Company
or a Subsidiary for a certain period.
7.2.
Rights
as a Stockholder; Transferability
. Except as provided in Sections 7.1, 7.3, 7.4 and 12.3 of the Plan, a Participant will have
all voting, dividend, liquidation and other rights with respect to shares of Common Stock issued to the Participant as a Restricted
Stock Award under this Section 7 upon the Participant becoming the holder of record of such shares as if such Participant were
a holder of record of shares of unrestricted Common Stock.
7.3.
Dividends
and Distributions
. Unless the Committee determines otherwise in its sole discretion (either in the agreement evidencing the
Restricted Stock Award at the time of grant or at any time after the grant of the Restricted Stock Award), any dividends or distributions
(other than regular quarterly cash dividends) paid with respect to shares of Common Stock subject to the unvested portion of a
Restricted Stock Award will be subject to the same restrictions as the shares to which such dividends or distributions relate.
The Committee will determine in its sole discretion whether any interest will be paid on such dividends or distributions.
7.4.
Enforcement
of Restrictions
. To enforce the restrictions referred to in this Section 7, the Committee may place a legend on the stock certificates
referring to such restrictions and may require the Participant, until the restrictions have lapsed, to keep the stock certificates,
together with duly endorsed stock powers, in the custody of the Company or its transfer agent, or to maintain evidence of stock
ownership, together with duly endorsed stock powers, in a certificateless book-entry stock account with the Company’s transfer
agent.
8.
Performance
Stock Awards
.
8.1. An
Eligible Recipient may be granted one or more Performance Stock Awards under the Plan, and the issuance of shares of Common Stock
pursuant to such Performance Stock Awards will be subject to such terms and conditions, if any, consistent with the other provisions
of the Plan, as may be determined by the Committee in its sole discretion, including, but not limited to, the achievement of one
or more of the Performance Criteria.
8.2.
Restrictions
on Transfers
. The right to receive shares of Performance Stock Awards on a deferred basis may not be sold, assigned,
transferred, pledged or otherwise encumbered, other than by will or the laws of descent and distribution.
9.
Effect
of Termination of Employment or Other Service
.
9.1.
Termination
Due to Death or Disability
. Subject to Section 9.4 of the Plan, in the event a Participant’s employment or other service
with the Company and all Subsidiaries is terminated by reason of death or Disability:
(a) All
Options then vested and held by the Participant will remain exercisable for a period of twelve (12) months after such termination
(but in no event after the expiration date of any such Option) and all Options then held by such Participant that have not vested
shall be terminated and forfeited; and
(b) All
Restricted Stock Awards then held by the Participant that have not vested as of such termination will immediately be terminated
and forfeited; and
(c) All
outstanding Performance Stock Awards then held by the Participant that have not vested as of such termination will be terminated
and forfeited.
9.2.
Termination
Due to Retirement
. Subject to Sections 9.4 and 9.5 of the Plan, in the event a Participant’s employment or other service
with the Company and all Subsidiaries is terminated by reason of Retirement:
(a) All
outstanding Options then held by the Participant will cease to be exercisable and will be terminated and forfeited on termination
of the Participant’s employment or other service by reason of Retirement unless the Committee otherwise determines, in which
event the Options shall be exercisable to the extent and within such period as the Committee may determine ; and
(b) All
Restricted Stock Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited;
and
(c) All
outstanding Performance Stock Awards then held by the Participant that have not vested as of such termination will be terminated
and forfeited.
9.3.
Termination
for Reasons Other than Death, Disability or Retirement
. Subject to Sections 9.4 and 9.5 of the Plan, in the event a Participant’s
employment or other service is terminated with the Company and all Subsidiaries for any reason other than death, Disability or
Retirement, or a Participant is in the employ of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company (unless
the Participant continues in the employ of the Company or another Subsidiary):
(a) All
outstanding Options then held by the Participant will cease to be exercisable and will be terminated and forfeited on termination
of the Participant’s employment or other service or the employer Subsidiary ceasing to be a Subsidiary of the Company (as
the case may be) unless the Committee otherwise determines, in which event the options shall be exercisable to the extent and within
such period as the Committee may determine ; and
(b) All
Restricted Stock Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited;
and
(c) All
outstanding Performance Stock Awards then held by the Participant that have not vested as of such termination will be terminated
and forfeited.
9.4.
Modification
of Rights Upon Termination.
Notwithstanding the other provisions of this Section 9, upon the termination of service of a non-employee
director (for any reason) (i) all Options then held by such director that have vested as of the termination of service shall remain
exercisable for their term and all Options then held by such director that have not vested as of the termination of service shall
remain outstanding, first become exercisable according to the vesting schedule in place at the time of termination of service and
remain exercisable for their term and (ii) all of such director’s Restricted Stock Awards and Performance Stock Awards that
have not vested as of such termination of service will be terminated and forfeited. In addition, notwithstanding the other provisions
of this Section 9, including the prior sentence of this Section 9.4, upon a Participant’s termination of employment or other
service with the Company otherwise than for Cause, the Committee may, in its sole discretion (which may be exercised in connection
with the grant or after the date of grant, including following such termination), cause Options (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 and Performance Stock Awards then held by such Participant may vest and/or continue to
vest or become free of restrictions and conditions to issuance, as the case may be, following such termination of employment or
service, in each case in the manner determined by the Committee.
9.5.
Effects
of Actions Constituting Cause
. Notwithstanding anything in the Plan to the contrary, in the event that a Participant is determined
by the Committee, acting in its sole discretion, to have committed any action which would constitute Cause as defined in Section
2.3, irrespective of whether such action or the Committee’s determination occurs before or after termination of such Participant’s
employment or service with the Company or any Subsidiary, all rights of the Participant under the Plan and any agreements evidencing
an Incentive Award then held by the Participant shall terminate and be forfeited without notice of any kind. The Company may defer
the exercise of any Option or the vesting of any Restricted Stock Award for a period of up to ninety (90) days in order for the
Committee to make any determination as to the existence of Cause.
9.6.
Determination
of Termination of Employment or Other Service
. Unless the Committee otherwise determines in its sole discretion, a Participant’s
employment or other service will, for purposes of the Plan, be deemed to have terminated on the last actual working day on which
the Participant was physically at work or service with the Company or the Subsidiary for which the Participant provides employment
or service, whether salary is paid in lieu of notice or not, as determined by the Committee in its sole discretion.
10.
Payment
of Withholding Taxes
.
10.1.
General
Rules
. The Company is entitled to (a) withhold and deduct 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), or make other arrangements for the collection of, all
legally required amounts necessary to satisfy any and all federal, foreign, state and local withholding and employment-related
tax requirements attributable to an Incentive Award, including, without limitation, the grant, exercise or vesting of, or payment
of dividends with respect to, an Incentive Award or a disqualifying disposition of stock received upon exercise of an Incentive
Stock Option, or (b) 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 Award.
10.2.
Special
Rules
. The Committee may, in its sole discretion and upon terms and conditions established by the Committee, permit or require
a Participant to satisfy, in whole or in part, any withholding or employment-related tax obligation described in Section 10.1 of
the Plan by electing to tender, or by attestation as to ownership of, Previously Acquired Shares that have been held for the period
of time necessary to avoid a charge to the Company’s earnings for financial reporting purposes and that are otherwise acceptable
to the Committee, by delivery of a Broker Exercise Notice or a combination of such methods. For purposes of satisfying a Participant’s
withholding or employment-related tax obligation, Previously Acquired Shares tendered or covered by an attestation will be valued
at their Fair Market Value.
11.
Change
in Control
.
11.1. A
“Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs
has occurred:
(a) the
sale, lease, exchange or other transfer, directly or indirectly, of substantially all of the assets of the Company (in one transaction
or in a series of related transactions) to any Successor;
(b) the
approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company;
(c) any
Successor (as defined in Section 11.2 below), other than a Bona Fide Underwriter (as defined in Section 11.2 below), becomes after
the effective date of the Plan the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of (i) 25% or more, but not 50% or more, of the combined voting power of the Company’s outstanding securities
ordinarily having the right to vote at elections of directors, unless the transaction resulting in such ownership has been approved
in advance by the Continuity Directors (as defined in Section 11.2 below), or (ii) more than 50% of the combined voting power of
the Company’s outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval
by the Continuity Directors);
(d) a
merger or consolidation to which the Company is a party if the stockholders of the Company immediately prior to effective date
of such merger or consolidation have “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act),
immediately following the effective date of such merger or consolidation, of securities of the surviving corporation representing
(i) 50% or more, but not more than 80%, of the combined voting power of the surviving corporation’s then outstanding securities
ordinarily having the right to vote at elections of directors, unless such merger or consolidation has been approved in advance
by the Continuity Directors, or (ii) less than 50% of the combined voting power of the surviving corporation’s then
outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the Continuity
Directors); or
(e) the
Continuity Directors cease for any reason to constitute at least 50% or more of the Board.
11.2.
Change
in Control Definitions
. For purposes of this Section 11:
(a) “
Continuity
Directors
” of the Company will mean any individuals who are members of the Board on the effective date of the Plan and
any individual who subsequently becomes a member of the Board whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the Continuity Directors (either by specific vote or by approval
of the Company’s proxy statement in which such individual is named as a nominee for director without objection to such nomination).
(b) “
Bona
Fide Underwriter
” means an entity engaged in business as an underwriter of securities that acquires securities of the
Company through such entity’s participation in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition.
(c) “
Successor
”
means any individual, corporation, partnership, group, association or other “person,” as such term is used in Section
13(d) or Section 14(d) of the Exchange Act, other than the Company, any “affiliate” (as defined below) or any benefit
plan(s) sponsored by the Company or any affiliate that succeeds to, or has the practical ability to control (either immediately
or solely with the passage of time), the Company’s business directly, by merger, consolidation or other form of business
combination, or indirectly, by purchase of the Company’s outstanding securities ordinarily having the right to vote at the
election of directors or all or substantially all of its assets or otherwise. For this purpose, an “affiliate” is (i)
any corporation at least a majority of whose outstanding securities ordinarily having the right to vote at elections of directors
is owned directly or indirectly by the Company; (ii) any other form of business entity in which the Company, by virtue of a direct
or indirect ownership interest, has the right to elect a majority of the members of such entity’s governing body or (iii)
any entity that at the time of the approval of this Plan owns in excess of 25% of the Company’s common stock and its affiliates.
11.3.
Acceleration
of Vesting
. If a Change in Control of the Company occurs: (a) all Options that have been granted will become immediately exercisable
in full and will remain exercisable in accordance with their terms; (b) all Restricted Stock Awards that have been granted will
become immediately fully vested and non-forfeitable; and (c) any conditions to the issuance of shares of Common Stock pursuant
to Performance Stock Awards will lapse.
11.4.
Cash
Payment
. If a Change in Control of the Company occurs, then the Committee, if approved by the Committee in its sole discretion
either in an agreement evidencing an Incentive Award at the time of grant or at any time after the grant of an Incentive Award,
and without the consent of any Participant affected thereby, may determine that:
(a) Some
or all Participants holding outstanding Options will receive, with respect to some or all of the shares of Common Stock subject
to such Options (“Option Shares”), either (i) as of the effective date of any such Change in Control, cash in an amount
equal to the excess of the Fair Market Value of such Option Shares on the last business day in the U.S. prior to the effective
date of such Change in Control over the exercise price per share of such Option Shares, (ii) immediately prior to such Change of
Control, a number of shares of Common Stock having an aggregate Fair Market Value equal to the excess of the Fair Market Value
of the Option Shares as of the last business day in the U.S. prior to the effective date of such Change in Control over the exercise
price per share of such Option Shares; or (iii) any combination of cash or shares of Common Stock with the amount of each component
to be determined by the Committee not inconsistent with the foregoing clauses (i) and (ii), as proportionally adjusted; and
(b) any
Options which, as of the effective date of any such Change in Control, are “underwater” (as defined in Section 3.2(d))
shall terminate as of the effective date of any such Change in Control; and
(c) some
or all Participants holding Performance Stock Awards will receive, with respect to some or all of the shares of Common Stock subject
to such Performance Stock Awards that remain subject to issuance based upon the future achievement of Performance Criteria as of
the effective date of any such Change in Control of the Company, cash in an amount equal the Fair Market Value of such shares immediately
prior to the effective date of such Change in Control.
11.5.
Limitation
on Change in Control Payments (U.S. Taxpayers Only)
. Notwithstanding anything in Section 11.3 or 11.4 of the Plan to the
contrary, if, with respect to a Participant, the acceleration of the exercisability of an Option as provided in Section 11.3
or the payment of cash or shares of Common Stock in exchange for all or part of an Option as provided in Section 11.4 (which acceleration
or payment could be deemed a “payment” within the meaning of Section 280G(b)(2) of the Code), together with any
other “payments” that such Participant has the right to receive from the Company or any corporation that is a member
of an “affiliated group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of
the Code) of which the Company is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2)
of the Code), then the “payments” to such Participant pursuant to Section 11.3 or 11.4 of the Plan will be reduced
to the largest amount as will result in no portion of such “payments” being subject to the excise tax imposed by Section
4999 of the Code; provided, however, that if a Participant is subject to a separate agreement with the Company or a Subsidiary
which specifically provides that payments attributable to one or more forms of employee stock incentives or to payments made in
lieu of employee stock incentives will not reduce any other payments under such agreement, even if it would constitute an excess
parachute payment, or provides that the Participant will have the discretion to determine which payments will be reduced in order
to avoid an excess parachute payment, then the limitations of this Section 11.4 will, to that extent, not apply.
12.
Rights
of Eligible Recipients and Participants; Transferability.
12.1.
Employment
or Service
. Nothing in the Plan will interfere with or limit in any way the right of the Company or any Subsidiary to terminate
the employment or service of any Eligible Recipient or Participant at any time, nor confer upon any Eligible Recipient or Participant
any right to continue in the employ or service of the Company or any Subsidiary.
12.2.
Rights
as a Stockholder
. As a holder of Incentive Awards (other than Restricted Stock Awards), a Participant will have no rights as
a stockholder unless and until such Incentive Awards are exercised for, or paid in the form of, shares of Common Stock and the
Participant becomes the holder of record of such shares. Except as otherwise provided in the Plan, no adjustment will be made for
dividends or distributions with respect to such Incentive Awards as to which there is a record date preceding the date the Participant
becomes the holder of record of such shares, except as the Committee may determine in its discretion. The rights conferred by the
shares of Common Stock are contained in the Company’s by-laws, articles of incorporation and the Nevada Revised Statutes.
12.3.
Restrictions
on Transfer
.
(a) Except
pursuant to testamentary will or the laws of descent and distribution or as otherwise expressly permitted by subsections (b) and
(c) below, no right or interest of any Participant in an Incentive Award prior to the exercise (in the case of Options) or vesting
(in the case of Restricted Stock Awards) of such Incentive Award will be assignable or transferable, or subjected to any lien,
during the lifetime of the Participant, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise.
(b) A
Participant will be entitled to designate a beneficiary to receive an Incentive Award upon such Participant’s death, and
in the event of such Participant’s death, payment of any amounts due under the Plan will be made to, and exercise of any
Options (to the extent permitted pursuant to Section 9 of the Plan) may be made by, such beneficiary. If a deceased Participant
has failed to designate a beneficiary, or if a beneficiary designated by the Participant fails to survive the Participant, payment
of any amounts due under the Plan will be made to, and exercise of any Options (to the extent permitted pursuant to Section 9 of
the Plan) may be made by, the Participant's legal representatives, heirs and legatees. If a deceased Participant has designated
a beneficiary and such beneficiary survives the Participant but dies before complete payment of all amounts due under the Plan
or exercise of all exercisable Options, then such payments will be made to, and the exercise of such Options may be made by, the
legal representatives, heirs and legatees of the beneficiary.
(c) Upon
a Participant’s request, the Committee may (subject, for so long as Melco is the parent company of the Company and Melco
has its shares listed on the HKSE, to complying with any applicable requirements of the HK Listing Rules and/or obtaining any necessary
waiver, consent or clearance from the HKSE so that the proposed transfer would not violate the HK Listing Rules) in its sole discretion,
permit a transfer of all or a portion of a Non-Statutory Stock Option, other than for value, to such Participant’s child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, any person sharing such Participant’s household (other than
a tenant or employee), a trust in which any of the foregoing have more than fifty percent of the beneficial interests, a foundation
in which any of the foregoing (or the Participant) control the management of assets, and any other entity in which these persons
(or the Participant) own more than fifty percent of the voting interests. Any permitted transferee will remain subject to all the
terms and conditions applicable to the Participant prior to the transfer. A permitted transfer may be conditioned upon such requirements
as the Committee may, in its sole discretion, determine, including, but not limited to execution and/or delivery of appropriate
acknowledgements, opinion of counsel, or other documents by the transferee.
12.4.
Non-Exclusivity
of the Plan
. Nothing contained in the Plan is intended to modify or rescind any previously approved compensation plans or programs
of the Company or create any limitations on the power or authority of the Board to adopt such additional or other compensation
arrangements as the Board may deem necessary or desirable.
13.
Securities
Law and Other Restrictions
.
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 Incentive Awards granted under the Plan, unless (a) there is in effect with respect to such shares a registration
statement under the Securities Act and any applicable securities laws of a state or foreign jurisdiction 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 U.S. or foreign 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.
14.
Plan
Amendment, Modification and Termination
.
The Board may suspend
or terminate the Plan or any portion thereof at any time, and may amend the Plan from time to time in such respects as the Board
may deem advisable in order that Incentive Awards under the Plan will conform to any change in applicable laws or regulations or
in any other respect the Board may deem to be in the best interests of the Company; provided, however, that no such amendments
to the Plan will be effective without approval of the Company’s stockholders if: (i) stockholder approval of the amendment
is then required pursuant to Section 422 of the Code or the rules of any stock exchange or the NASDAQ Global Select, Global or
Capital Market or similar regulatory body; or (ii) such amendment seeks to modify Section 3.2(d) hereof and provided further that,
for so long as Melco is the parent company of the Company and Melco has its shares listed on the HKSE (1) any requirements of the
HK Listing Rules which are applicable to any such amendment to the Plan must be complied with such that making the amendment would
not violate the HK Listing Rules, (2) those specific provisions of the Plan which relate to the matters set out in Rule 17.03 of
the HK Listing Rules cannot be altered to the advantage of the Participants, (3) no changes to the authority of the Committee under
this Section 14 to amend or modify the Plan shall be made without the prior approval of a resolution of shareholders of Melco,
(4) any amendments or modifications to the terms and conditions of the Plan which are of a material nature, or any change to the
terms of Options granted, must, to be effective, be approved by a resolution of shareholders of Melco, except where the amendments
or modifications take effect automatically under the existing terms of the Plan and (5) the amended or modified terms and conditions
of the Plan shall comply with the relevant requirements of Chapter 17 of the HK Listing Rules from time to time. No termination,
suspension or amendment of the Plan may adversely affect any outstanding Incentive Award 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
Sections 3.2(c), 4.3 and 11 of the Plan.
15.
Effective
Date and Duration of the Plan
.
15.1. The
Plan shall become effective as of the Effective Date.
15.2. The
amended and restated version of the Plan shall take effect on the date of approval of the amended and restated Plan by the Company’s
stockholders, which shall take place after the approval of the amended and restated plan by the shareholders of Melco in accordance
with Section 15.3.
15.3. No
Options shall be granted under the Plan unless and until the restated and amended Plan is approved by a resolution of shareholders
of Melco in accordance with the requirements of the HK Listing Rules (“
Melco Shareholders’ Approval
”),
provided always Options may be offered for grant at any time if and to the extent that the grant is conditional on the obtaining
of Melco Shareholders’ Approval.
15.4. The
Plan will terminate at midnight on July 17, 2026
and may be terminated prior to such time by Board action. No Incentive
Award will be granted after termination of the Plan. Incentive Awards outstanding upon termination of the Plan may continue to
be exercised, or become free of restrictions, according to their terms.
16.
Miscellaneous
.
16.1.
Governing
Law
. Except to the extent expressly provided herein or in connection with other matters of corporate governance and authority
(all of which shall be governed by the laws of the Company’s jurisdiction of incorporation), 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 Nevada notwithstanding the conflicts of laws principles
of any jurisdictions.
16.2.
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.