Procedures for Consideration

The Nominating, Governance and Compliance Committee initially evaluates a prospective nominee on the basis of their resume and other background information that has been made available. A member of the Nominating, Governance and Compliance Committee will contact for further review those candidates who the committee believes are qualified, may fulfill a specific Board need and would otherwise make a strong contribution to the Board. If, after discussions with the candidate and other reviews and consideration as may be necessary or appropriate, the Nominating, Governance and Compliance Committee believes that it has identified a qualified candidate, it will make a recommendation to the Board, which ultimately determines each slate of director nominees to be proposed to stockholders and ultimately determines when and how to fill vacant Board seats between stockholder elections.

Candidates Recommended by Stockholders

The policy of our Nominating, Governance and Compliance Committee is to consider recommendations for candidates for director nominees that are properly submitted by stockholders. Any stockholder recommendations for consideration by the Nominating, Governance and Compliance Committee should include the candidate’s name; biographical information; business and residence addresses; resume; information regarding any relationships between the candidate and the Company within the last three years; a description of all arrangements between the candidate and the recommending stockholder and any other person by which the candidate is being recommended; a written indication of the candidate’s willingness to serve on the Board; any other information required to be provided under the section of this document entitled “Other Matters – Stockholder Proposals”, the Company’s bylaws and applicable securities laws and regulations; and a written indication of willingness to provide such other information as the Nominating, Governance and Compliance Committee may reasonably request. The Nominating, Governance and Compliance Committee suggests that any stockholder recommendations address, among other matters, how the candidate would qualify for service as a director based on the following criteria in particular: independence, judgment, leadership ability, expertise in the industry, experience developing and analyzing business strategies, financial literacy and risk management skills. There are no differences in the manner in which the Nominating, Governance and Compliance Committee evaluates candidates for director recommended by a stockholder, and other director candidates. The Nominating, Governance and Compliance Committee identifies candidates for future Board openings on an ongoing basis in the ordinary course of its business, and any candidates recommended by stockholders would be considered in addition to other candidates known to the Nominating, Governance and Compliance Committee.

Procedures for Contacting Directors

The Board has established a process for stockholders to send communications to the Board. Stockholders may communicate with the Board or with a specific director at any time by writing to Inspired Entertainment, Inc., 250 West 57th Street, Suite 415, New York, New York 10107, Attention: Company Secretary, or calling +1 (646) 565-3861. We review all messages received and forward messages that reasonably appear to be communications from a stockholder intended to be made to one or more directors about a matter of stockholder interest. Such messages are forwarded as soon as practicable to the particular director to whom they are addressed or, if not so addressed, to the Chairman of the Nominating, Governance and Compliance Committee. Because other appropriate avenues of communication exist for matters that are not of stockholder interest, such as general business complaints or employee grievances, communications that do not relate to matters of stockholder interest are not forwarded to directors.

Environmental, Social and Governance (“ESG”) Principles

The Company believes that environmental and social responsibility as well as human capital management (including diversity) and corporate governance are important policy considerations that are in the interest of our stockholders, as reflected in our Code of Conduct and related policies. The Board:Company reports to the Nominating, Governance and Compliance Committee on all ESG-related matters.

Environmental—the Company is committed to operating in an environmentally responsible manner to reduce its impact on climate change, conserve natural resources and comply with environmental regulations. It does this by:

Social—the Company is committed to being a socially responsible employer, which includes fostering an environment of diversity and inclusion across its business, empowering women and minorities and operating ethically. It does this by:

Governance—the Company is committed to building a culture dedicated to ethical business behavior and responsible corporate activity. We believe strong corporate governance is the foundation to delivering on our commitments. It does this by:

This is also part of a shared philosophy by the Compensation Committee, which drives the effort to refine and improve alignment of management and stockholder interest.interests.

Stock Ownership Guidelines - On February 9, 2022, in order to further encourage ownership and require executives to have a vested interest as owners of the Company, the Board updated its stock ownership guidelines to align the financial interests of the executives and non-employee directors with our stockholders by requiring them to acquire and maintain a meaningful ownership interest in our Common Stock at levels sufficient to assure our stockholders of their commitment to long-term value creation.

According to the guidelines, our named executive officers and the non-employee members of our Board are required to hold shares of our common stock with a value at least equal to the following multiple of their annual base salary or cash retainer:

Under the ownership guidelines, shares counting toward satisfaction of these guidelines include shares owned outright or indirectly held including by a member of the individual’s immediate family member residing in the same household and including through 401(k) plans and shares held in trust for the benefit of the individual and/or the individual’s family as well as shares underlying restricted stock units.

Clawback Policy – The Compensation Committee expects to adopt a compensation recovery policy in accordance with Nasdaq’s final rules implementing Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), following the adoption of such rules. All current and historic long- and short-term incentive plans adopted by the Compensation Committee contain certain clawback provisions providing that awards will be subject to reduction, cancellation, forfeiture, repayment or recoupment for any reason including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error or to the extent necessary to comply with any clawback, forfeiture or other similar policy adopted by the Board or the Compensation Committee and as in effect from time to time.

Audit Committee Report*

The Audit Committee meets regularly with the Company’s management and its independent registered public accounting firm to consider the adequacy of the Company’s internal controls and the objectivity of its financial reporting. In addition, the Audit Committee meets regularly with the Company’s independent registered public accounting firm alone to review the foregoing matters. The Audit Committee selects the Company’s independent registered public accounting firm and periodically reviews their performance and independence.

The Audit Committee reviewed and discussed the Company’s audited financial statements for the fiscal year ended December 31, 20202022 with management, and discussed with the Company’s independent registered public accounting firm the matters required to be discussed by applicable rules of the Public Company Accounting Oversight Board (the “PCAOB”). Additionally, the Audit Committee reviewed the written disclosures and letter from our independent registered public accounting firm required by the rules of the PCAOB and discussed the independence of the independent registered public accounting firm under applicable PCAOB and SEC requirements. Based upon such reviews and discussions, the Audit Committee recommended to the Board that the Company’s audited financial statements for the year ended December 31, 20202022 be included in the Company’s Annual Report on Form 10-K for such year, for filing with the SEC.

Respectfully submitted,

Audit Committee of the Board of Directors

/s/ John M. Vandemore, Chairman

/s/ Michael R. Chambrello

/s/ Desirée G. RogersIra H. Raphaelson

Code of Ethics

We have adopted a Code of Ethics applicable to our directors, officers and employees. Copies of our Code of Ethics and our Audit Committee, Compensation Committee and Nominating, Governance and Compliance Committee charters are available on our website at www.inseinc.com. Amendments to, or waivers for any of our principal executive officers from the requirements of, our Code of Ethics, if any, will be disclosed on our website at www.inseinc.com or in our reports filed with the SEC.

Insider Trading Policy

Under our insider trading policy, all employees (including officers) and members of the Board are prohibited from purchasing shares on margin, from engaging in short sales, and from buying or selling puts, calls or other derivatives in respect of our securities. Although we discourage speculative hedging transactions, we do permit long-term hedging transactions that are designed to protect the individual’s investment in our securities. Any hedge must be for at least six months and relate to stock or options held by the individual. All hedging transactions must be pre-cleared pursuant to our insider trading policy. The Company has not approved any hedging transactions and does not expect to do so.

Employees certify their receipt of on-boarding and periodic training in the foregoing as well as other corporate controls policies.

EXECUTIVE COMPENSATION

Executive Compensation Oversight and Objectives

Our executive compensation program is overseen by the Compensation Committee of the Board (the “Committee”“Compensation Committee”). The Compensation Committee has developed the following goals for our executive compensation program:

As reflected inDuring 2022, the Company’s quarterly financial disclosures and Annual Report on Form 10-K, management provided the Company a strong start to 2020. From January 1, 2020 to March 23, 2020, the Company was fully operational; integrating a number of entities acquired from the transaction with Novomatic (UK) Limited, which also included a re-financing; increasing its employee base and office space four-fold in Kochi (India) thereby expanding its development capabilities, and preparing to open the new office space in Burton on Trent, East Midlands U.K., as part of a consolidation of three U.K. properties within the same location. Revenues and cost-savings were producing positive cash flow according to a management-developed and Board-approved strategy and budget.

On March 11, 2020, the World Health Organization declared COVID-19 to be a global pandemic, changing the world as much of the worldwide leisure sector was effectively shut down. From mid-March 2020 to mid-June 2020, the retail venues in the UK, Italy and Greece which were responsible for generating much of the Company’s revenue were closed through government-mandated shutdowns. Effectively, these government ordered closures shut off as much as 80% of the Company’s expected revenue.

Like management, the Committee focused its efforts to ensure that the business would remain viable throughout the pandemic and to thrive post-pandemic. As detailed further below, those efforts included:Compensation Committee:

Management also focused on seeking to grow the online aspects of the business and successfully securing timely receipt of VAT-related revenue from customers arising out of a UK tax-ruling that created a rebate of VAT. These efforts manage and preserve cash and human capital allowed the Company to navigate the year and begin 2021 again poised for growth.

In March 2020, the Committee, with recommendations from management, took the following actions in response to the pandemic:

The venues in which the Company operates in the UK consist mainly of licensed betting offices and motorway service areas which have been treated by the UK Government as “non-essential retail” for restriction purposes and pubs, holiday parks, bingo, casinos and bowling alleys which have been treated as “leisure venues”. Throughout the government closure process, the leisure venues have been the last venues to have restrictions eased.

Between mid-June and the end of October, non-essential retail venues in the UK began to open again (with leisure venues following in early-July) but were subject to national tier systems and curfew restrictions which meant different parts of the UK were subject to some retail venue closures or were subject to restricted opening hours and/or dwell times. In Greece and Italy, the venues in which the Company operates were all re-opened by mid-June.

In August 2020, the Committee approved removing certain employees from furlough to accommodate the reopening of venues and resolved to restore base salary pay levels for management effective with first payroll cycle from October 1, 2020 (other than for those executives with contracts and had executed consents to the reductions in March 2020). For the executives who consented to reduction in base salary pay in March 2020, the Committee restored the contracted base pay level effective with first payroll cycle from October 1, 2020, but reserved its ability to re-invoke the already executed consents to reduce pay levels again. The Board, on recommendation from the Committee, accepted its regular compensation for the quarter ended September 30^th without reduction.

The Committee also undertook a restructuring of the LTIP program for 2020 in light of the limited number of shares remaining in the shareholder approved 2018 Omnibus Incentive Plan (the “2018 Plan”), economic conditions generally, and the desire to use the shares in the 2018 Plan allocated by the Committee to the LTIP to achieve maximum likelihood of retention in uncertain economic conditions by approving awards of restricted stock units (“RSUs”) for executive officers and other eligible participants at reduced levels compared to prior years. The number of RSUs to be awarded, based on a percentage of base salary (100% for the named executive officers), was determined by using a share price of $6.17 to measure the stock value (which was the highest price in February 2020 when LTIP awards had historically been awarded) rather than using the market price on the date of grant which was $3.58. The vesting schedule of the awards is – 25% on June 30, 2021, 25% on December 31, 2021 and 50% on December 31, 2022.

During August 2020, the Company faced the dual tasks of reopening and preparing for a predicted “second wave” of infections and government shutdowns, Because of the continued efficacy of Mr. Weil’s leadership, the Compensation Committee also resolved to refocus its efforts on concluding a new contract with Mr. Weil in order to ensure Mr. Weil’s continued leadership of the Company and to achieve the Committee’s aim to bring his legacy contract provisions into greater alignment with current market practices. The Company and Mr. Weil negotiated and entered into a new five-year contract (with an option for an additional year) on October 9, 2020, the terms of which are summarized below. The new contract, like the proposed but withdrawn agreement of January 2020, included the removal of the most favored nation clause and reduction of severance payment features of Mr. Weil’s original contract, and included an increase in Mr. Weil’s short term incentive opportunity. Unlike the 2020 version, the 2021 version did not include an increase in base salary and included a lesser amount of sign-on stock award, 750,000 RSUs which are dependent on shareholder approval of the proposed new LTIP included in this proxy statement.

At the end of October 2020, each of the UK and Italian Governments imposed another national lockdown closing all retail venues, with a full lockdown in Greece following at the beginning of November. In Italy this lockdown remains in place. In the UK, the month of December saw a return to the tier system (with a new tier across some regions which was equivalent to lockdown with all venues closed) but another national lockdown was imposed at the beginning of January that is being lifted in stages beginning April 12, 2021. In Greece, for certain venues the lockdown has remained in place since November while others are subject to curfews and regional lockdowns.

In light of the re-imposed lockdowns, in November 2020 the Committee determined to take another reduction of 25% in the Board’s cash retainer, reducing the payments for November and December by 25% as the base salary levels reductions for all employees (including management with contracts) were reimposed in November and remain at reduced levels. The Company also re-instituted a company-wide furlough of employees involved in the aspects of the business which were closed.

Compensation Consultant

The Compensation Committee retained Frederic W. Cook & Co., Inc. (“FW CookCook”) as its independent compensation consultant in July 2019. Representatives of FW Cook regularly attend Compensation Committee meetings and communicate with the Chair of the Compensation Committee outside ofbetween meetings. FW Cook reports directly to the Compensation Committee and the Compensation Committee oversees the fees paid for its services. FW Cook provides the Compensation Committee with independent and objective guidance on a variety of matters related to our executive and director compensation programs and general compensation and benefits matters. FW Cook does not provide any consulting services to the Company beyond its role as a consultant to the Compensation Committee. The Compensation Committee conducts an assessment of the independence of its compensation consultant annually, pursuant to SEC rules and, following its most recent assessment, concluded that no conflict of interest exists that would prevent FW Cook from serving as an independent consultant to the Compensation Committee. During 2020,2022, FW Cook provided the following services to the Compensation Committee: (1) assisted with the development of terms for employment arrangements with Mr. Weil, Mr. Silvers, and Mr. Pierce,prepared a compensation risk assessment; (2) reviewed the Company’s shortshort- and long-term incentive plan designs,plans for 2022; (3) prepared a compensation risk assessmentadvised the Compensation Committee regarding stock ownership guidelines; and (4) reportedadvised the Compensation Committee (in conjunction with Aon Plc) in relation to the creation of new levels of participation in the short- and long-term incentive plans, with FW Cook also advising as to impact on marketshare availability.

Compensation Risk Assessment

We believe that the performance goals and legislative trendsincentive plan structures generally established under the Company’s executive, annual and long-term incentive programs are not reasonably likely to have a material adverse effect on the Company. Additionally, the Compensation Committee works with management to ensure that compensation incentives are structured in a manner to minimize risk of non-compliance. The approved goals under our incentive programs are consistent with our financial operating plans and strategies, and these programs are discussed and reviewed by the Compensation Committee as well as with an independent compensation consultant. The Company’s compensation systems are balanced, rewarding both short-term and long-term performance, and its performance goals are team-oriented rather than individually focused, and include measurable factors and objective criteria. The Compensation Committee is actively engaged in setting executive compensation including compensation trends in light of the COVID-19 pandemic. In addition,systems, monitoring those systems during the first quarter of 2021, FW Cook assistedyear and using discretion in making rewards, as necessary. Both in reliance on its independent compensation consultant’s report and on its own judgments, the Compensation Committee in redesigning/updatingbelieves that the proposed 2021 LTIP programCompany’s compensation policies and share request set forthpractices for shareholder consideration herein.its employees do not encourage risk taking that is reasonably likely to have a material adverse effect on the Company.

Named Executive Officers

The named executive officers of the Company (the “Named Executive Officers”) for 20202022 were as follows:

Executive Compensation Elements

The principal elements of the compensation program for our named executive officersNamed Executive Officers consist of:

Base Salary

Base salary levels are reviewed by the Compensation Committee on an annual basis and as circumstances warrant. In determining base salary levels, the Compensation Committee considers market competitive information, internal pay equity, individual responsibilities and performance assessments.

Temporary Salary Reduction Letters (COVID-19 mitigation)Incentive-based Compensation

Expansion of eligible participants

Since 2016, a relatively small number of senior managers within the Company (approximately 50) have been eligible to receive a combination of short-term cash bonus awards based on company and, for certain participants, business segment performance, as well as long-term stock-based compensation by way of awards of restricted stock units, which are both time and performance based, as further described below, and which were each designed with the benefit of advice from independent compensation consultants.

In light of the fiercely competitive post-pandemic labor market, management retained Aon Plc (“Aon”), an independent consultant recommended by the Compensation Committee’s independent compensation consultant, to undertake a competitive compensation analysis on the Company. The Compensation Committee during February 2022 considered Aon’s analysis and recommendation, which revealed peer companies’ more extensive use of both long- and short-term incentive plans as part of total direct compensation that put the Company at increased risk of loss of key personnel at the levels below existing participants. The Compensation Committee agreed with management’s recommendation that the incentives were needed to ensure that the Company retains employees who, despite being in critical, technical roles, could be at risk of leaving the Company given the competitive landscape. The Compensation Committee then consulted with FW Cook regarding an appropriate mix of short- and long-term incentives for the group and the levels at which to add them to best conserve cash, manage shares available for distribution under the LTIP, and best align employee and stockholder interests.

Accordingly, the Compensation Committee determined to add a further layer of the management team as eligible participants to the long- and short-term incentive plans (comprising approximately 180 employees) in addition to the original senior management team of approximately 50 employees, an increase of approximately 360%, albeit with a lower percentage payout such that this addition did not exponentially increase costs or share usage. While the Compensation Committee and management will continue to review the absolute and relative to peer company compensation of this additional tier of employees, the Compensation Committee determined to remove the group from the automatic annual cost of living increase they had been receiving.

Overview of Short- and Long-Term Incentive Plans

The Company’s short-term incentive plan (STIP) is based on attainment of an Adjusted Earnings Before Interest, Tax, Depreciation, Amortization and Bonus (“Adjusted EBITDAB”) target. The STIP for 2022 had various target eligibility levels across multiple tiers of management levels ranging from 10% to 120% of base salary depending on business segment performance, corporate performance and, except with respect to the Office of the Executive Chair (which only has objective criteria), measurements against specific individual performance objectives.

The Company’s long-term incentive plan (LTIP) contemplates an aggregate award of restricted stock units with a value equal to a percentage of base salary depending on management levels and ranging from 10% to 100%. Half of the awards are time vested and half are subject to performance criteria. The time-vested restricted stock units vest as to 1/3 in each year beginning in the year of grant, and performance-based restricted stock units vest on December 31 of the third year after the grant, provided that such shares are earned by meeting the performance criteria set at the time of the grant for the initial year. The performance criteria is based on an Adjusted EBITDAB target. While the LTIP allows for a “maximum” earnout of the performance share portion up to 200% of eligibility, no above-target opportunity was offered in either the 2021 or 2022 awards (i.e., payouts were capped at 100% of target).

Short-Term Cash Bonus Awards

2022 Short-Term Cash Bonus Awards

As part of the Company’s efforts to manage its cash flow by reason of the business effects of the COVID-19 pandemic, each of the named executive officers and other members of the Office of the Executive Chairman (“OEC”) and other personnel of the Company consented to a temporary reduction in base salary calculated on a percentage basis on each of the tiered stacks of the executive’s salary ranging from 0% for the portion under £25,000 (approximately $30,623) to 33.3% for the portion over £300,000 (approximately $367,469). The percentage reductions, and the temporary reduced base salaries, are, as follows for the named executive officers and other member of the OEC:

Lorne Weil (Executive Chairman): 25%

Brooks Pierce (President and Chief Operating Officer): 21%

Daniel Silvers (Executive Vice President and Chief Strategy Officer): 17.22%

Stewart Baker (Executive Vice President and Chief Financial Officer): 16%

Carys Damon (General Counsel): 16%

Each of the above persons has entered into a letter agreement with the Company with respect to the reduction of their base salaries. Other than for approximately five weeks (October 2020 and a portion of November 2020), the salary reductions have been in place since April 1, 2020.

Short-Term Cash Awards

As part of a short-term incentive plan (“STIP”)STIP adopted by the Compensation Committee, the named executive officers were eligible to receive performance-based cash bonuses for 20202022 based on a formula that involved attainment of the Company’s financial performance metrics. The target bonus opportunity for MessrsMr. Weil for 2022 was equal to 120% of his base salary and his maximum bonus opportunity was equal to 240% of his base salary. Messrs. Pierce and Silvers had a target bonus opportunity for 2020 was2022 equal to 100% of their base salaries and thetheir maximum bonus opportunity was equal to 200% of their base salaries. The target bonus opportunity for Mr. Weil for 2020 was equal to 120% of his base salary and the maximum bonus opportunity was equal to 240% of his base salary.

In August 2020,adopting the budget and bonus structure for 2022, the Compensation Committee resolved not to revisedetermined, with the STIP budget in light of COVID-19, but rather to exercise its discretion in evaluating management performance after the conclusionfull support of the 2020executive team, that the impact on the Company’s cash flow from pandemic-related market conditions should be mitigated through adoption of a second austerity budget with an Adjusted EBITDA target of $87.7M (based on prevailing exchange rate on approval date), which was a significant increase over 2019 actual performance period. The Committee also resolved(which was the last year prior to eliminate any above-target bonus opportunity for 2020 (awards, if any, would not exceed 100%the start of target on a group metric). The Committee outlined the following factors that it would assess for 2020 to determine STIP payouts:COVID-19 pandemic).

In February 2021,2023, the Compensation Committee reviewed the 2022 performance of the executive officers and other eligible employees. In view of the Company’s financial performance (as measured by Adjusted EBITDAB), which exceeded prior expectations (being an overachievement by 8%), the Compensation Committee determined, on management’s recommendation, to award bonuses under the STIP to the named executive officers and all bonus-eligible employees in amountsapprove awards equal to approximately 80.8%135% of theireach eligible participant’s target award eligibility based on (i)opportunity for the level of attainment of the Company financial performance metrics (as measured by adjusted EBITDA, with allowable adjustments for one-time events under the criteria laid out in such plan) (ii) the various revenue generation and cost saving steps initiated by management during the pandemic (iii) the unprecedented nature of national closures and travel restrictions affecting the company’s business as well as the entire segment of the economy (iii) the factors set out byyear. In making these awards, the Compensation Committee in August 2020.

The actual payment of 2020 bonuses under the STIP is being deferred as part of the COVID-19 pandemic remediation package proposed by management and approved by the Board. The Committee stipulated that payments can only be made if the Company retains ten timesexercised its negative discretion to reduce the amount of the STIP payment in cash on hand after each payment.awards from the amount due under the plan owing to overperformance which would have equated to a payout of 154%, ensuring that the amount of bonus versus the amount returned to stockholders was reasonably allocated for the overperformance achieved.

Long-Term Equity Awards

As part of2022 Awards

At its March 2020 review of the Company’s COVID-19 pandemic response,February 2022 meeting, the Compensation Committee determined, among other actions, notresolved to approve LTIP grants at that time for 2020 from shares remainingaward RSUs to management (having an aggregate award value equal to approximately 100% of base salary in the 2018 Plan; notcase of the Named Executive Officers, subject to create an LTIP structure for 2021-2023;certain caps in the case of Mr. Weil), half of which will be time vested and not to seek approvalhalf of which will have performance criteria, with time vested shares vesting 1/3 each year beginning in year of grant, and performance shares vesting on December 31 of the third year after the grant, provided that such shares are earned by meeting the performance criteria set at the 2020 annual meetingtime of the grant for additional shares.the initial year.

In August 2020,continuing to carefully manage the Company’s share issuances, the Compensation Committee determined to approve formula awards of RSUs but on a reduced scale, as discussed above, such that the Committee used a share price of $6.17 to measure the stock value (which was the highest price in February 2020 when LTIP awards had historically been awarded) rather than using the market price on the date of grant which was $3.58.

The Committee also approved sign-on equity awards to Mr. Pierce in February 2020 and to Mr. Weil in October 2020 as part of their new employment agreements, as described below.

In February 2021, the Committee and the Board determined to adopt a new LTIP, the Inspired Entertainment, Inc. 2021 Omnibus Incentive Plan (the “2021 Plan”), subject to approval by our stockholders at the Annual Meeting (see “Proposal Number Two—Adoption of the Inspired Entertainment, Inc. 2021 Omnibus Incentive Plan”).

The Committee also determined that, with respect to LTIP awards to be made as formula awards for fiscal 2021year 2022 under the Company’s 2021 Omnibus Incentive Plan if approved by stockholders,(the “2021 Plan”), the Company would calculate the value of the stockour Common Stock at the higher of (i) the closing price based on the twenty-day average preceding the grant date of an award or (ii) the twenty-day average preceding the previous year’s highhighest price for our common stock,Common Stock, but in any event at a price no lower than $7.00. Additionally, untilIn order to ensure that the 2021 Plan would have sufficient shares for three years, the Compensation Committee, with the support of management, eliminated the ability of LTIP participants to earn more than 100% of the target for awards granted in 2021 and 2022, setting the 100% level as the “maximum”. As set out above, the Compensation Committee expanded the eligible participants to include the same group of eligible participants that it had added to the STIP.

In February 2022, the Compensation Committee set the LTIP performance metric using the Adjusted EBITDA target of $87.7M (based on prevailing exchange rate on approval date), which was a significant increase over the Company’s actual achievement in 2019, the last pre-COVID year.

The Compensation Committee set the strike price of the Common Stock for the formula awards at $14.37, which was the highest of (i) $12.96, which was the 20-day average stockthrough the grant date (February 14, 2022), (ii) the 20-day average preceding the highest price exceeds $10.00 for a one-year period,2021, which was $14.37, and (iii) the floor of $7.00, which the Compensation Committee had committed to enforce when the 2021 Plan was approved by the Company’s stockholders.

The Compensation Committee believed that the foregoing approach aligned with stockholder interests, and both (i) conserved the number of shares underlying equity grants to ensure that there were sufficient shares under the 2021 Plan to award LTIP through 2023 and (ii) provided the Compensation Committee with the ability to expand the number of participants in order to retain an especially skilled labor pool.

The Compensation Committee determined thatat its February 2023 meeting to award the maximum LTIP award opportunity would beperformance metric for 2022 at 100% of their target award eligibility to the Named Executive Officers and other eligible employees based on the prior upside opportunity wouldlevel of attainment of the Company financial performance metrics (as measured by Adjusted EBITDAB). These awards remain subject to a service vesting period through December 2024.

2023 Awards

In February 2023, the Compensation Committee also resolved to award RSUs to management (having an aggregate award value equal to approximately 100% of base salary in the case of the Named Executive Officers, subject to certain caps in the case of Mr. Weil), half of which will be eliminated. These actions were takentime vested and half of which will have performance criteria, with time-vested shares vesting 1/3 each year beginning in year of grant, and performance shares vesting on December 31 of the third year after the grant, provided that such shares are earned by meeting the performance criteria set at the time of the grant for the initial year. Given that awards for 2021 and 2022 had eliminated the ability for participants to carefully managebe awarded over target of 100%, the Compensation Committee determined to reinstate the ability to achieve maximum of 200% for performance awards (150% of aggregate award value).

The Company calculated the value of the Common Stock for the formula awards at $15.00, which was the highest of (i) $15.00, which was the 20-day average through the grant date (February 14, 2023), (ii) the 20-day average preceding the highest price for 2021, which was $13.51, and (iii) the floor of $7.00, which the Compensation Committee had committed to enforce when the 2021 Plan was approved by the Company’s share usage.stockholders.

On April 2, 2023, the Compensation Committee approved the Inspired Entertainment, Inc. 2023 Omnibus Incentive Plan (the “2023 Plan”), the effectiveness of which is subject to stockholder approval at the Annual Meeting.

Personal Benefits

The executive officers of the Company who are U.S.-based (Messrs. Weil Pierce and Silvers)Pierce) are offered life insurance and health insurance and participation in a broad-based 401(k) plan that provides matching contributions of up to 4% of compensation (subject to IRS annual maximums). Mr. Pierce, who prior to the COVID-19 pandemic, divided his time between the U.S. and the U.K., previously received a $25,000 annual allowance to offset the cost of his dual location employment (which allowance was suspended as part of the COVID-19 pandemic response), received tax equalization relating to his dual employment in the U.K. and was provided with access to a Company-leased apartment in the U.K., the lease for which expired in July 2020.

The executive officers of the Company who are U.K. basedU.K.-based (Mr. Baker and Ms. Damon), receive U.K. market-related benefits, including executive-tiered health insurance, life insurance a car allowance and a defined contribution pension scheme carrying a 15% employer contribution. The amounts payable as a car allowance and under this pension scheme were similarly reduced as part of the Company’s COVID-19 pandemic response.

Employment Agreements, including Termination and Change in Control Provisions

The employment service agreements entered into with our named executive officersNamed Executive Officers establish the overall framework for each such officer’s compensation, including base salary and target and maximum bonus amounts.

Streamlining of Office of the Executive Chair

The agreementCompensation Committee, as part of its ongoing work with onesenior management, determined to streamline strategic oversight and create efficiencies by reconfiguring the Office of our named executive officers (Mr. Silvers) is a legacy agreement originating in the business combination. New AgreementsExecutive Chair. The Compensation Committee took the following actions (i) re-assigned responsibility for Company strategy to Messrs. Weil and Pierce, with Mr. Silvers, the former Chief Strategy Officer, stepping down from his role (ii) promoted Mr. Pierce to President and Chief Executive Officer and (iii) made amendments to Mr. Weil and Mr. Weil were entered into during 2020Pierce’s employment agreements with marginal salary and Mr. Silvers’ agreement was modifiedtarget bonus opportunity increases and entirely performance-based RSU awards in partlight of the extra responsibilities assumed as well as to secure their tenure with the most favorable treatment clause.Company through to 2027 and 2026, respectively.

The reconfiguration of the Office of the Executive Chairman is anticipated to result in an increase in EBITDA of $1.0M per annum.

Employment Agreement with A. Lorne Weil, Executive Chairman

On October 9, 2020, the Company entered into a newan employment agreement with A. Lorne Weil, the Company’s Executive Chairman, which replaced his prior agreement. The new employment agreement was amended June 21, 2021 and subsequently amended in a second addendum dated January 12, 2023. The agreement, as amended, has an effective date of January 1, 2020 and a five-year term ending on December 31, 20242027 with a mutual option for a sixth year.no optional extension.

Under the second addendum, Mr. Weil’s base salary rate was increased from $750,000 to $800,000, effective January 1, 2023, which he elected to defer until April 1, 2023 (though the full $800,000 rate will be used for the purposes of $750,000 per year was retained.STIP and LTIP calculations for 2023). Mr. Weil’s opportunity to earn an annual target bonus was increased from 100% tois 120% of his annual salary and his maximum bonus opportunity was increased from 200% tois 240% of his annual salary. Mr. Weil will remainis eligible to receive formula awards of RSUs under the Company’s LTIP program in amounts up to 75,00080,000 RSUs for any fiscal year.year (increased from 75,000 as of January 1, 2023).

Mr. Weil’s employment agreement provides for special equity grants – he was awarded 100,000 RSUs under the 2018 Omnibus Incentive Plan upon execution of the agreement (such RSUs are scheduledin October 2020 (subject to vest ona time-based service condition through June 30, 2021), and would receivereceived an additional 750,000 RSUs (the “750,000 Sign-On RSUs”) under the 2021 Plan, subject to stockholder approval of the 2021 Plan. In the event stockholders do not approvePlan which was obtained at the 2021 Plan,Annual Meeting of Stockholders. The 750,000 RSUs, as modified under the sections of Mr. Weil’sfirst addendum to his employment agreement, providing for the 750,000 Sign-On RSUs will not become effective, but the remainder of the agreement would remain in force. The 750,000 Sign-On RSUs, to be awarded to Mr. Weil upon approval by stockholders of the 2021 Plan, consist of the following three types of equity awards:were as follows:

Mr. Weil was awarded a further special equity grant under the second addendum, subject to deferred settlement such that any suchapproval by the stockholders of the Company of the 2023 Plan at the Annual Meeting, of an aggregate of 250,000 RSUs, as to which 125,000 are Adjusted EBITDA Based RSUs that vest would notmay be settled until terminationearned in one-third increments for each of Mr. Weil’s services or, if earlier, uponthe calendar years from 2025 to 2027, and 125,000 are Stock Price Based RSUs that may be earned in one-quarter increments by meeting certain stock price targets (as measured over a “changeconsecutive 45-day calendar period) ranging from a price target of $15.00 to $22.50. The stock price target applicable to the first increment was achieved in control” as specified in the 2021 Plan. Mr. Weil’s employment agreement was clarified on April 12, 2021 to note that settlement would occur in accordance with the 2021 Plan’s provisions.February 2023.

In the event the Company elects to terminate Mr. Weil’s employment without cause, or if Mr. Weil’sWeil terminates his employment for good reason, Mr. Weil would receive his salary and target bonus amount through the earlier of (i) his contract termination date and (ii) eighteen months (or thirty months if the termination constituted a “change in control termination event” as defined), he would receive a prorated target bonus for the year of termination and his unvested equity awards (excluding his 750,000 special sign-on RSUs (as to which 387,500 remains unvested) and the 750,000 Sign-On RSUs)250,000 RSUs under the second addendum) would remain outstanding subject to potential vesting in accordance with the time, performance or other conditions applicable to the awards. With respect to the 750,000 Sign-Onspecial sign-on RSUs and the additional 250,000 RSUs, if Mr. Weil’s employment terminates prior to the end of the agreement, the unvested portion would lapse in circumstances other than death, a “change in control termination event” or if the Company’s stock is no longer publicly traded, in which case all or a portion of the outstanding balance would vest.

In addition, in accordance with the terms of Mr. Weil’s agreement, term life insurance coverage was obtained in December 2020 in order to provide Mr. Weil with a death in service benefit equal to four times his base salary, which is equivalent to the coverage offered to other executives of the Company under a group policy. The annual cost of the coverage to the Company is approximately $74,000.

Under the employment agreement, Mr. Weil will remain subject to certain covenants, including, among other things, a covenant not to enter into a directly competing business or solicit employees of the Company for a period of eighteen months after termination of his employment (or twelve months in the event of a “change in control termination event”), as well as a covenant not to disclose certain confidential information of the Company.

Employment Agreement with Brooks H. Pierce, President and Chief OperatingExecutive Officer

On February 17, 2020, the Company entered into a newan employment agreement with Brooks H. Pierce, the Company’s President and Chief Executive Officer, which replaced his prior agreement. The employment agreement was amended on July 21, 2021 and on January 13, 2023 when the Company promoted Mr. Pierce from his role as President and Chief Operating Officer.Officer to serve as President and Chief Executive Officer, extending his duties to include oversight for the corporate strategy of the Company reporting directly to the Company’s Board and Mr. Weil. The Agreementagreement, as amended, has a four-year term with a mutual option for a fifth year, unless terminated earlier by the Company or Mr. Pierce pursuant to the terms of the Agreement.employment through December 31, 2026.

EffectiveUnder the second amendment, Mr. Pierce’s base salary rate was increased from $525,000 to $585,000, effective January 1, 2020, Mr. Pierce receives a2023, which he elected to defer until April 1, 2023 (though, the full rate of $585,000 will be used for the purposes of STIP and LTIP calculations for 2023), and his annual bonus opportunity was increased from 100% to 110% of base salary of $500,000. In addition, Mr. Pierce has the opportunity to earn an annualas a target bonus equaland from 200% to 100%220% of his annualbase salary and an annualas a maximum bonus equal to 200% of his annual salary.bonus. Mr. Pierce is also eligible to receive incentive and equity-based compensation and any other benefits determined by the Compensation Committee, of the Board, including participation in the Company’s long-term incentive plan available for senior executives.

In addition, subject

Mr. Pierce’s agreement provided for him to the conditions set forth in the agreement, Mr. Pierce receivedreceive a special sign-on equity grant of an aggregate of 200,000 RSUs (which was awarded on February 17, 2020), one-half in the form of whichtime-based RSUs (vesting as to 75,000 RSUs shall vest on December 31, 2022 and 25,000 RSUs shall vest on December 31, 2023,2023) and one-half in each case provided that Mr. Pierce remains employed by the Company pursuant to the agreement on such date, and the remainingform of performance-based RSUs shall be earned on a basis of 25,000(25,000 RSUs per year for the years 2020 through 2023, based on the Company’s achievement of annual adjusted EBITDA targets. Intargets). He received an additional special sign-on grant in July 2021 in connection with an amendment to extend the eventterm of mutual extensionhis agreement, which covers an aggregate of 75,000 time-based RSUs that are scheduled to vest on December 31, 2024.

Subject to approval by the stockholders of the contract for a fifth year,Company of the 2023 Plan at the Annual Meeting, Mr. Pierce shallwill receive a further 50,000grant of 125,000 Adjusted EBITDA Based RSUs, half of which may be earned in connection with2025 and the remaining half of which may be earned in 2026 based on the Company achieving targets based on adjusted EBITDA for such extension, whichyears. Any earned RSUs will vest as to: (i) one half on December 31, 2024 provided thatthe last day of the performance period, if Mr. Pierce remainsis then employed on that date, and (ii)by the remaining 25,000 RSUs based upon Company’s achievement of annual adjusted EBITDA targets and vesting on December 31, 2024.Company.

In the event the Company elects to terminate the agreement other than for cause, or if Mr. Pierce terminates the agreement for good reason, Mr. Pierce shallwill receive accrued benefits, a salary for 12 months and a prorated bonus for the year of termination (or 18 months in the event of a change in control transaction, plus 1.5 times target bonus), and his outstanding equity awards shallwill vest in accordance with the terms set forth in the agreement.

Under the employment agreement, Mr. Pierce will remain subject to certain covenants, including, among other things, a covenant not to enter into a directly competing business or solicit employees of the Company for a period of one year after termination of his employment, as well as a covenant not to disclose certain confidential information of the Company.

Employment AgreementArrangements with Daniel B. Silvers, former Executive Vice President and Chief Strategy Officer

On December 14, 2016,Effective January 10, 2023, Mr. Silvers entered into an employment agreement to join the Companystepped down from his position as Executive Vice President and Chief Strategy Officer effective upon the closing of the Business Combination.Company. Pursuant to Mr. Silvers’ employment agreement dated December 14, 2016, as amended, he receives an annualMr. Silvers was entitled to receive a base salary at a rate of $385,000 per year, a target annual bonus of not less than 100% of his base salary and a maximum annual bonus of 200% of his base salary, subject to performance goals determined by the Compensation Committee. Mr. Silvers issalary. He was also entitled to reimbursement for private medical insurance.

Effective January 31, 2020,insurance and to severance benefits described below. Following his resignation, and in accordance with the Company entered into an amendment to Mr. Silvers’ agreement to (i) delete oneterms of the provisions in Mr. Silvers’his employment agreement that provided he would receive salary and other benefits and perquisites at levels that were more favorable than those respective levels offered to other executives of(including the Company, subject to certain exceptions, and (ii) clarify that certain provisions relating to Mr. Silvers’ right to incentive and equity (or equity-based) compensation and other benefits at levels and on terms that are no less favorable than those respective levels offered to other executives of the Company, subject to certain exceptions, does not apply to equity grants made to an executive (either current or prospective) of the Company upon the signing of a new employment contract with the Company.

Mr. Silvers’ employment agreement does not have a set term,three-month notice period thereunder) and his employmentseparation and release agreement with the Company is non-exclusive. The agreement may be terminated without cause on three months’ written notice by either party. Upon termination by the Company without cause or bydated January 10, 2023, Mr. Silvers for good reason (as such terms are defined in the agreement), Mr. Silvers would be entitled towill receive: (i) a pro-rated maximum annual bonus for the year in2023 (calculated based on 100 out of 365 days which includes the termination occurred,notice period under his agreement), (ii) continued payment of his salary for the two-year period following the termination date (or three years if termination occurs within two years, of a change in control, as defined), (iii) two times his maximum annual bonus (or three times if termination occurs within(payable over a period of two years of a change in control)years) and (iv) acceleration of 100% vesting of all incentivehis equity awards including with respect to the formula awards he received for 2023 during the notice period. The Company also agreed to continue to reimburse his private health care benefits and equity compensation toinsurance as it currently does under his employment agreement until the earlier of (a) the date on which he is entitled at the termination date.in receipt of healthcare benefits from another employer (other than Matthews Lane Capital Partners LLC) or (b) 18 months.

Under the employment agreement, Mr. Silvers will remainremains subject to certain covenants,terms and conditions of his employment agreement, including, among other things, a covenant not to enter into a competing business, for any period after termination of his employment during which he receives certain specified termination payments, as well as a covenant not to disclose certain confidential information of the Company.

Summaries of the employment agreements with the other members of the OEC, who are U.K.-based, are as follows:

Employment Agreement with Stewart F.B. Baker, Executive Vice President and Chief Financial Officer

Mr. Baker serves as our Chief Financial Officer pursuant to an employment agreement dated March 23, 2017, as amended on October 24, 2017, with Inspired Gaming (UK) Limited, our subsidiary. Mr. Baker’s base salary rate is £230,000. Each party is required to give 12 months’ notice to terminate the agreement; provided the Company may in its discretion elect to terminate with immediate effect by paying to Mr. Baker the salary contractually due to him in respect of the notice period or, if less, the notice period still outstanding. Mr. Baker is subject to a covenant not to enter into a competing business for a period of twelve months after the date of termination of his employment.

Employment Agreement with Carys Damon, General Counsel

On January 29, 2013, the Company entered into an employment agreement with Carys Damon, the Company’s General Counsel, as amended or supplemented from time to time to reflect salary rate changes and other matters. The agreement does not have a fixed term. Ms. Damon’s base salary rate is £230,000. Each party is required to give six months’ notice to terminate the agreement; provided the Company may in its discretion elect to terminate with immediate effect by paying to Ms. Damon the salary contractually due to her in respect of the notice period or, if less, the notice period still outstanding. Ms. Damon is subject to a covenant not to enter into a competing business for a period of six months after the date of termination of her employment.

Indemnification Agreements

The Company has entered into indemnification agreements with all of its directors and executive officers pursuant to which such individuals are indemnified by the Company to the fullest extent permitted under Delaware law.

Summary Compensation Table

The following table sets forth information concerning compensation awarded to, earned by or paid to our named executive officers.Named Executive Officers for the years specified.

The stock awards for 2018 consist of formula awards of time-based as well as RSUs issued to Messrs. Weil and Silvers in connection with the cancellation of the awards of performance-based restricted stock they received in 2017. The values shown reflect the grant date fair value of the awards computed in accordance with FASB ASC Topic 718 by multiplying the number of shares subject to the awards by the closing price of the common stock on the grant date and, in the case of the awards issued in connection with the cancellation of their awards received in 2017, reflect the incremental value attributable to the new awards relative to the value of the prior awards. For additional information, see our consolidated financial statements included in our Annual Report on Form 10-K for the year ended September 30, 2018.

Outstanding Equity Awards at 20202022 Fiscal Year-End

The following table sets forth information concerning outstanding equity awards made to our named executive officersNamed Executive Officers as of December 31, 2020.2022.

Pay Versus Performance

Pursuant to Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information regarding “compensation actually paid”, as defined in Item 402(v), and certain financial performance of the Company. In accordance with SEC rules, the “compensation actually paid” amounts shown in the table below for each applicable year reflect certain adjustments to the values reported in the Summary Compensation Table of the proxy statement as described in the footnotes to the following table.

¹ We have provided an additional year of pay versus performance disclosure (2020) in this table (only two years of disclosure (2021-2022) is required for a smaller reporting company) in order to provide additional context as to the relationship to our executive pay versus company performance.

² The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Weil in the “Total” column of the Summary Compensation Table for each applicable year. Refer to “Executive Compensation – Summary Compensation Table.” Mr. Weil was our Principal Executive Officer (PEO) for all applicable years.

³ The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Weil, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Weil during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to determine the “compensation actually paid” amounts reported above for Mr. Weil:

PEO – Adjustments to Summary Compensation Total to Determine Compensation Actually Paid

⁴ The dollar amounts reported in column (d) represent the average of the amounts reported for our Named Executive Officers (NEOs), other than our PEO, in the “Total” column of the Summary Compensation Table in each applicable year. Our NEOs, other than our PEO, were as follows — for 2020 and 2022, Mr. Pierce and Mr. Silvers; and for 2021, Mr. Pierce and Mr. Baker.

⁵ The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs, other than our PEO, as a group, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to such persons during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Weil) for each year to determine the compensation actually paid, using the same methodology described above in Note 3:

NEOs (other than the PEO) – Adjustments to Summary Compensation Total to Determine Average Compensation Actually Paid

⁶ Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period.

⁷ The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year.

⁸ Adjusted EBITDA, a non-GAAP financial measure, is defined as net income (loss) excluding depreciation and amortization, interest expense, interest income and income tax expense, and other additional exclusions and adjustments. Such additional excluded amounts include stock-based compensation U.S. GAAP charges where the associated liability is expected to be settled in stock, and changes in the value of earnout liabilities and income and expenditure in relation to legacy portions of the business (being those portions where trading no longer occurs) including closed defined benefit pension schemes. Additional adjustments are made for items considered outside the normal course of business, including (1) restructuring costs, which include charges attributable to employee severance, management changes, restructuring, dual running costs, costs related to facility closures and integration costs, (2) merger and acquisition costs and (3) gains or losses not in the ordinary course of business. This does not include any adjustments related to COVID-19. While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Adjusted EBITDA is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the company to link compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to Company performance. For a discussion of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA, see pages 52 – 55 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Analysis of the Information Presented in the Pay versus Performance Table

The Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table.

Compensation Actually Paid and Cumulative TSR

The following graph illustrates the amount of “compensation actually paid” (“CAP”) to Mr. Weil and the average amount of CAP to the Company’s NEOs as a group (excluding Mr. Weil) relative to the Company’s cumulative total shareholder return (TSR) over the three years presented in the table. A significant portion of the CAP is comprised of equity awards, with special sign-on awards granted in the 2021 year to Mr. Weil, Mr. Pierce and Mr. Baker as part of new employment agreements or extensions. Approximately 50% of the sign-on RSUs awarded to Mr. Weil were conditioned on attainment of stock price targets and approximately 25% were conditioned on attainment of Adjusted EBITDA targets.

Compensation Actually Paid and Net Income

As demonstrated by the following table, the amount of CAP to Mr. Weil and the average amount of CAP to the Company’s NEOs as a group (excluding Mr. Weil) is not aligned with the Company’s net income over the three years presented in the table. The Company has not used net income as a performance measure in the overall executive compensation program.

Compensation Actually Paid and Adjusted EBITDA

The Company utilizes Adjusted EBITDA when setting goals for the Company’s annual performance bonuses and for the performance-based RSUs that are awarded to the NEOs. Approximately 51% of the value of total compensation awarded for target level performance to the NEOs is in the form of performance-based bonuses and restricted stock units tied to Adjusted EBITDA.

Director Compensation

The Company’s non-employee directors receive annual cash retainers and annual grants of RSUsdirector compensation program was as follows in the amounts set forth below:2022:

With respect to the annual awards of RSUs for 2020,2022, the number of RSUs granted was determined by dividing the award value (as shown in the table) by the closing price of the Company’s stock on the grant date.

The annual awards of RSUs are granted as of thedate (the first business day of the calendar year andyear). The RSUs vest in four equal installments, one-quarter on the date of grant and the remaining three quarters on the first day of each calendar quarter (i.e., April 1, July 1 and October 1). The RSUs areDirectors may elect whether or not settled until a director leaves the Board.they wish to defer settlement of vested RSUs.

The compensation paid during 2020 to individuals who served as non-employee directors is shown below which, with respect to the amount of cash retainers, reflects reductions in connection with the Company’s COVID-19 mitigation measures.for 2022:

As of December 31, 2020,2022, the aggregate stock awards, consisting of RSUs, held by our non-employee directors were as follows:

Securities Authorized for Issuance under Equity Compensation Plans

As of December 31, 2020,2022, we had the following equity compensation plans, under which the indicated number of securities were issuable upon the exercise of outstanding awards, and the indicated number of securities remained available for future issuance:

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information known as of April 1, 2021,March 31, 2023, the Record Date, regarding the beneficial ownership of our common stock by:

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if the person possesses sole or shared voting or investment power over that security, including options, warrants or RSUs that are currently exercisable or convertible or exercisable or convertible within 60 days of the date as of which information is provided.

The beneficial ownership of our common stock is based on 23,218,32326,263,070 shares of common stock outstanding as of the Record Date.

Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all shares of common stock beneficially owned by them. In addition, unless otherwise indicated, the address for each person named below is c/o Inspired Entertainment, Inc., 250 West 57th Street, Suite 415, New York, NY 10107.

Name of Beneficial Owner		Number of Shares of Common Stock (1)				Percent of Class
The Landgame Trust (Evan Davis, Trustee)			6,451,547	(2)			27.79	%
MIHI LLC			4,023,750	(3)			16.61	%
HG Vora Special Opportunities Master Fund, Ltd.			4,150,000	(4)			17.57	%
683 Capital Management, LLC			2,163,126	(5)			8.86	%
A. Lorne Weil			5,361,594	(6)			19.13	%
Michael R. Chambrello			18,542	(7)			*
Ira H. Raphaelson			38,000	(8)			*
Desiree G. Rogers			23,611	(9)			*
Steven M. Saferin			26,557	(10)			*
Katja Tautscher			2,100	(11)			*
John M. Vandemore			35,743	(12)			*
Brooks H. Pierce			131,255	(13)			*
Daniel B. Silvers			196,207	(14)			*
All current directors and executive officers as a group (11 persons)			5,953,654	(15)			20.89	%

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Name of Beneficial Owner		Number of Shares of Common Stock (1)				Percent of Class
MIHI LLC			3,023,750	(2)			11.51	%
683 Capital Management, LLC			2,100,000	(3)			8.00	%
Cannell Capital LLC			1,749,826	(4)			6.66	%
BlackRock, Inc.			1,413,863	(5)			5.38	%
A. Lorne Weil			2,648,295	(6)			9.61	%
Michael R. Chambrello			55,131	(7)			*
Ira H. Raphaelson			55,594	(8)			*
Desiree G. Rogers			39,142	(9)			*
Steven M. Saferin			43,624	(10)			*
Katja Tautscher			16,648	(11)			*
John M. Vandemore			52,827	(12)			*
Brooks H. Pierce			311,802	(13)			1.18	%
Daniel B. Silvers			266,202	(14)			1.01	%
All current directors and executive officers as a group (10 persons)			3,461,015	(15)			12.38	%

 

*	Less than 1 percent
(1)	Derivative securities such as options, warrants and RSUs that are exercisable or convertible into shares of common stock within 60 days of the date as of which information is provided in this table are deemed to be beneficially owned and outstanding for purposes of computing the ownership of the person holding such securities but are not deemed to be outstanding for purposes of computing the ownership of any other person. The shares that were issued pursuant to grants of restricted stock under our 2016 Long-Term Incentive Plan are included in the outstanding shares of common stock (such shares carry voting rights but remain subject to vesting requirements including based on satisfaction of stock price performance targets).

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(2)	According to a Schedule 13D/A filed on December 23, 2020, (i) the shares are held in a trust for the benefit of Landgame S.à r.l, a Luxembourg societe a responsabilite limitee, pursuant to a trust agreement dated December 23, 2020 by and between Landgame S.à r.l, and Evan Davis as trustee (the “Landgame Trust”); (ii) each of Mr. Davis, Landgame S.à r.l, Vitruvian I Luxembourg S.à r.l, VIP I Nominees Limited and Vitruvian Partners LLP may be deemed to beneficially own or otherwise exercise dispositive powers with respect to the shares in the Landgame Trust; and (iii) Mr. Davis is party to a voting agreement with the Company dated December 23, 2020 which provides that the shares held by The Landgame Trust will be voted at meetings of the Company’s stockholders in proportion to the votes of all other stockholders of the Company represented in person or by proxy at the meeting (i.e., mirror voting). The address of Mr. Davis is 15 East Levering Mill Road, Bala Cynwyd, PA 19004.
(3)	According to a Schedule 13G filed on January 3, 2017, Macquarie Group Limited is the ultimate indirect parent of MIHI LLC and may be deemed to beneficially own or otherwise exercise dispositive powers with respect to the shares held by MIHI LLC. Includes 1,000,000 shares underlying 2,000,000 warrants. The principal business address oflisted in the Schedule 13G for Macquarie Group Limited is 50 Martin Place Sydney, New South Wales, Australia, and the business address listed for MIHI LLC is 125 West 55th Street, New York, NY 10019.
(3)	According to a Schedule 13G/A filed on February 14, 2023, 683 Capital Management, LLC, 683 Capital Partners, LP and Ari Zweiman, the Managing Member of 683 Capital Management, LLC, have shared voting dispositive power with respect to the shares. The business address listed for such persons in the Schedule 13G/A is 3 Columbus Circle, Suite 2205, New York, NY 10019.
(4)	According to a Schedule 13G/A filed on February 14, 2019, HG Vora13, 2023, Cannell Capital Management, LLC as investment manager forand J. Carlo Cannell, the Fund, may be deemed to beneficially own or otherwise exerciseManaging Member of Cannell Capital LLC, have shared voting and dispositive powerspower with respect to the shares held by the Fund. Includes 400,000 shares underlying 800,000 warrants.shares. The business address of HG Vora Capital Management, LLClisted for such persons in the 13G is 330 Madison Avenue, 23rd Floor, New York, NY 10017.245 Meriwether Circle, Alta, WY 83414.
(5)	According to a Schedule 13G/A13G filed on February 16, 2021, Ari Zweiman, the Managing Member of 683 Capital Management, LLC, may be deemed to beneficially own or otherwise exercise dispositive powers3, 2023, BlackRock, Inc. has sole voting power with respect to the1,400,428 shares directly held by 683 Capital Management, LLC. Includes 1,194,045 shares underlying warrants.and sole dispositive power with respect to 1,413,863 shares. The business address for 683 Capital Management, LLClisted in the Schedule 13G is 3 Columbus Circle, Suite 2205,55 East 52nd Street, New York, NY 10019.10055.
(6)	Includes 2,050,000 shares underlying 4,100,000 warrants and 926,2721,288,772 shares subject to vested RSUs held by Mr. Weil. Also includes 476,308896,179 shares and 1,834,615 shares underlying 3,669,230 warrants held by Hydra Industries Sponsor LLC (the “Hydra Sponsor”) as to which Mr. Weil has sole voting and dispositive power and may be deemed to beneficially own such shares. Mr. Weil is the managing directormember of the Hydra Sponsor, whose membership interests are owned by Mr. Weil and Mr. Weil’s children or trusts for their benefit.
(7)	ReflectsIncludes 10,070 shares held by the Denise M. Chambrello Revocable Trust, as to which Mr. Chambrello and his spouse are co-trustees. Also includes 22,555 shares subject to vested RSUs.RSUs and 2,141 RSUs scheduled to vest within 60 days.
(8)	Reflects 100Includes 42,716 shares subject to vested RSUs and vested RSUs.2,141 scheduled to vest within 60 days.
(9)	ReflectsIncludes 37,196 shares subject to vested RSUs.RSUs and 1,946 scheduled to vest within 60 days.
(10)	Reflects 500Includes 40,683 shares 275 shares underlying 550 warrantssubject to vested RSUs and vested RSUs.2,141 scheduled to vest within 60 days.
(11)	ReflectsIncludes 14,702 shares subject to vested RSUs.RSUs and 1,946 scheduled to vest within 60 days.
(12)	Reflects 1,000Includes 49,686 shares subject to vested RSUs and vested RSUs.2,141 scheduled to vest within 60 days.
(13)	Includes 90,390 shares held by the Brooks H. Pierce 2022 Grantor Retained Annuity Trust with respect to which Mr. Pierce is the trustee. Also includes 100,000 shares subject to vested RSUs.
(14)	IncludesMr. Silvers left the Company in January 2023. The holdings shown include 150,000 shares subject to vested RSUs.RSUs that are scheduled to settle in July 2023. Mr. Silvers also holds 84,659 RSUs that are scheduled to settle between December 2023 and December 2025.
(15)	Includes an aggregate of 1,393,9501,671,310 shares subject to vested RSUs and 12,456 shares subject to RSUs that are vested or scheduled to vest within 60 days, an aggregate of 3,884,615 shares underlying warrants that Mr. Weil may be deemed to beneficially own and 275 shares underlying warrants held by Mr. Saferin.days.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On December 23, 2016, we entered into a Stockholders Agreement with the sponsors of our initial public offering and certain stockholders in connection with the closing of our Business Combination. The Stockholders Agreement provided, among other things, that following the consummation of the Business Combination the Board shall initially be composed of seven directors, of whom (i) three shall be designated by Landgame S.à.r.l, reduced to two at such time as Landgame and its affiliates hold less than 30% but at least 15% of the outstanding shares, and to one at such time as Landgame and its affiliates hold less than 15% but at least 5% of the outstanding shares; (ii) one shall be the Company’s Chief Executive Officer; (iii) one shall be designated by the Hydra Sponsor, until such time as the Hydra Sponsor holds less than 5% of the outstanding shares; and (iv) two shall be designated jointly by the Macquarie Sponsor and the Hydra Sponsor, until such time as the Macquarie Sponsor and the Hydra Sponsor in the aggregate hold less than 5% of the outstanding shares. Landgame S.à.r.l had the right to designate directors to the Board under the Stockholders Agreement until December 23, 2020 when it entered into a termination agreement with respect thereto in connection with its agreement to transfer legal title of its shares to the Landgame Trust. Currently, the Hydra Sponsor designee is Mr. Weil; and the joint Macquarie Sponsor and Hydra Sponsor designees are Messrs. Chambrello and Raphaelson. Under the Stockholders Agreement, we are obligated, subject to certain requirements, to nominate, and use all reasonable efforts to cause to be elected as directors, the individuals designated as described above.

The trustee of The Landgame Trust entered into a voting agreement with the Company dated December 23, 2020 which provides that the trustee shall vote shares held by The Landgame Trust, or authorize a proxy or proxies to vote such shares, in proportion to the votes of all other stockholders of the Company represented in person or by proxy at each meeting of the stockholders of the Company (i.e., mirror voting). In determining the vote of such other stockholders, abstentions or “broker non-votes” with respect to any matter shall not be deemed to have been voted with respect to such matter.

HG Vora Special Opportunities Master Fund, Inc., a stockholder of the Company that owns approximately 16.3% of our outstanding common stock and warrants to purchase additional shares, purchased promissory notes issued by a subsidiary of the Company in the aggregate principal amount of $140 million in connection with the refinancing of our debt facilities in August 2018. The promissory notes were repaid on October 1, 2019 in connection with a subsequent refinancing and entry into a new senior facilities agreement (see Note 13 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020). The interest expense payable with respect to the promissory notes during 2019 amounted to approximately $12.3 million, and the repayment of the promissory notes included an exit payment premium in the amount of $4.2 million for repayment on an early basis. HG Vora is also a stockholder and investor in Leisure Acquisition Corp., a special purpose acquisition company affiliated with two members of our management (Messrs. Weil and Silvers).

Macquarie Corporate Holdings Pty Limited (U.K. Branch) (“Macquarie U.K.”) is one of the lending parties under our senior facilities agreement dated September 27, 2019, as amended and restated on June 25, 2020 which includes senior secured term loans and a revolving credit facility (see Note 13 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020). The portion of the total loans of $313.3 million under these facilities held by Macquarie U.K. at December 31, 2020 was $30.7 million and the interest expense payable to Macquarie U.K. during 2020 amounted to approximately $2.2 million. Macquarie UK received $300,000 of the total $3.1 million of amendment fees paid in connection with the amendment to the credit facility. Macquarie U.K.’s affiliate, MIHI LLC, which was a co-sponsor of our initial public offering, owns approximately 13.1% of our common stock and warrants to purchase additional shares, and is a party to the Stockholders Agreement under which it and the Hydra Sponsor are permitted to jointly designate two directors to the Board.

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Nicholas Weil, the son of A,A. Lorne Weil, our Executive Chairman, serves as Head of Business Development, U.S. Lotteries, for our subsidiary Inspired Gaming (USA) Inc. For 2022, Nicholas Weil was paid a base salary of approximately $118,840 during 2020 (reflecting COVID-19 related reductions from his regular salary rate of $127,500)$150,000 and he was awarded a bonus for 2020 under the Company’s STIP in the amount of $35,799.$20,250. He received 5,1662,609 RSUs under the Company’s equity award program for 2020.2022.

 

On December 31, 2021, the Company entered into a consultancy agreement with Richard Weil, the brother of A. Lorne Weil, our Executive Chairman, under which he received a success fee in the amount of $130,000 for services he provided in connection with our acquisition of Sportech Lotteries, LLC. Under the agreement, as extended in November 2022, he will provide consulting services relating to the lottery in the Dominican Republic through to June 30, 2023 at a rate of $10,000 per month and, with respect to such services, the aggregate amount incurred by the Company in consulting fees for the year ended December 31, 2022 was $120,000.

Policies and Procedures for Related Person Transactions

 

Our Audit Committee must review and approve any related person transaction we propose to enter into. Our Audit Committee charter details the policies and procedures relating to transactions that may present actual, potential or perceived conflicts of interest and may raise questions as to whether such transactions are consistent with the best interest of the company and our stockholders. A summary of such policies and procedures is as follows:

 

Any potential related party transaction that is brought to the Audit Committee’s attention will be analyzed by the Audit Committee, in consultation with outside counsel or members of management, as appropriate, to determine whether the transaction or relationship does, in fact, constitute a related party transaction. At each of its meetings, the Audit Committee will be provided with the details of each new, existing or proposed related party transaction, including the terms of the transaction, the business purpose of the transaction, and the benefits to us and to the relevant related party.

 

In determining whether to approve a related party transaction, the Audit Committee must consider, among other factors, the following factors to the extent relevant:

 

	●	whether the terms of the transaction are fair to us and on the same basis as would apply if the transaction did not involve a related party;
	●	whether there are business reasons for us to enter into the transaction;
	●	whether the transaction would impair the independence of an outside director; and
	●	whether the transaction would present an improper conflict of interest for any director or executive officer.

 

Any member of the Audit Committee who has an interest in the transaction under discussion must abstain from voting on the approval of the transaction, but may, if so requested by the Chairman of the Audit Committee, participate in some or all of the Compensation Committee’s discussions of the transaction. Upon completion of its review of the transaction, the Audit Committee may determine to permit or to prohibit the transaction.

 

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PROPOSALS TO BE VOTED ON:

PROPOSAL NUMBER ONE—ELECTION OF DIRECTORS

 

Director Nominees

 

The Board proposes the election of the following seven individuals to serve on the Board until the 20222024 annual meeting of stockholders or until their respective successors are duly elected and qualified: A. Lorne Weil, Michael R. Chambrello, Ira H. Raphaelson, Desiree G. Rogers, Steven M. Saferin, Katja Tautscher and John M. Vandemore. Each of these individuals currently serves on the Company’s seven-member Board.

 

UnderPursuant to a stockholders agreement dated December 23, 2016 by and among the Stockholders Agreement,Company, the sponsors of the Company’s initial public offering and certain other parties, Mr. Weil is the designeedesignated director of the Hydra Sponsor; and Messrs. Chambrello and Raphaelson are the joint designees of the Macquarie Sponsor and Hydra Sponsor are Messrs. Chambrello and Raphaelson. In December 2020, Landgame S.à.r.l, which previously had the right to designate director nominees under the Stockholders Agreement, executed a termination agreement pursuant to which it terminated all its rights under the Stockholders Agreement. See “Certain Relationships and Related Transactions” for a description of the Stockholders Agreement and certain other information.Sponsor.

 

Brief statements as to each nominee’s background and a statement as to why the Board considers such nominee to be qualified and recommends such nominee for election are set forth above under the heading “Directors, Executive Officers and Corporate Governance.” Each nominee has advised us that he or she is willing to be named as a director nominee and to serve as a director if elected.

 

Vote Required for Approval

 

Assuming there is a quorum, the directors will be elected by a plurality of the votes cast.

 

Recommendation of the Board

 

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF THE SEVEN DIRECTOR NOMINEES TO SERVE ON THE BOARD UNTIL THE 20222024 ANNUAL MEETING OF STOCKHOLDERS OR UNTIL THEIR RESPECTIVE SUCCESSORS ARE DULY ELECTED AND QUALIFIED.

 

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PROPOSAL NUMBER TWO—APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

As required by the SEC’s proxy rules, we are seeking, on an advisory basis, a stockholder vote for approval with respect to compensation awarded to our Named Executive Officers and we are asking for your advisory vote on the following resolution (“say-on-pay vote” resolution):

“RESOLVED, that the stockholders approve the compensation paid to the Named Executive Officers, as disclosed in the proxy statement for the Annual Meeting pursuant to the compensation disclosure rules of the SEC, including the compensation discussion, the summary compensation table and related compensation tables and other related disclosure.”

Information with respect to Named Executive Officer compensation is described in more detail in the section of this proxy statement entitled “Executive Compensation.”

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS.

 

PROPOSAL NUMBER TWO—THREE— APPROVAL OF THE INSPIRED ENTERTAINMENT, INC.
2021 2023 OMNIBUS INCENTIVE PLAN

 

The Proposal

 

On April 12, 2021,10, 2023, our Board adopted, subject to stockholder approval at the Annual Meeting, the Inspired Entertainment, Inc. 20212023 Omnibus Incentive Plan (the “2021“2023 Plan”). A copy of the 20212023 Plan is annexed as Annex A to this proxy statement.

 

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Reasons for the 20212023 Plan

 

The 20182021 Omnibus Incentive Plan (the “2018“2021 Plan”) is the only stockholder approved equity plan under which awards can currently be made. The 2021 Plan was intended to provide for anticipated rewards through December 31, 2023 and has been used, consistent with the Compensation Committee’s plan submission to seek stockholder approval of the 2023 Plan at the Annual Meeting, to provide sufficient shares to support grants over three years of LTIP awards to employees (for 2021, 2022 and 2023), as well as grants to members of the Office of the Executive Chairman to secure new contracts, funding for 50,000 chairman’s shares each year to employees who have demonstrated outstanding commitment to the Company’s core principles, three years of non-employee directors’ share awards, and shares for new hires and retention. As of April 9, 2021,10, 2023, only 221,799279,232 shares remain available for grant under the 2021 Plan, which includes shares that have rolled over from the Company’s predecessor plan (the 2018 Plan. Since adoptionPlan) which was frozen in May 2021.

The Company is requesting stockholder approval of 2,700,000 additional shares under the 20182023 Plan we completedto cover the acquisitionthree years to the end of the Gaming Technology Group of Novomatic UK in October 2019 and our operations have grown significantly. Accordingly, our2026. Our Board believes that the approval of the 20212023 Plan by our stockholders is essential to our ability to continue to grow our business, hire critical talent and retain and motivate executives, employees, non-employee directors, consultants, advisors and non-employee directors.advisors. Our Board believes that ourthe Company’s interests and the interests of our stockholders will be advanced if we can continue to offer equity incentive awards that further our long-term business objectives in a manner aligned with our shareholders’ interests.objectives. The Board also took into consideration the following:

●	Expanding Our Equity Participation Consistent with the Company’s Growth: As our operations have grown significantly, the Company has broadened the number of employees eligible to receive LTIP awards. Since adoption of the 2021 Plan, our employee LTIP participation has increased by approximately 360% (of the overall employee population, 16% are now LTIP eligible);
●	Expected Duration: The 2023 Plan is intended to provide for anticipated equity grants through December 31, 2026, including awarding the 375,000 sign-on RSUs pursuant to the terms of our new employment agreements with each of Mr. Weil, our Executive Chairman, and Mr. Pierce, our President and Chief Executive Officer;
●	2023 vs. 2021 Share Request: The 2,700,000 new share request under the 2023 Plan is approximately 7% lower than the 2021 new share request of 2,900,000; and
●	2023 vs. 2021 Dilution Levels: Our fully diluted overhang as of December 31, 2022 (inclusive of the new share request) of 17.1% under the 2023 Plan is less than the corresponding 20.9% fully diluted overhang as of December 31, 2020 under the 2021 Plan.

 

The 2021 Plan is intendedCompensation Committee would retain broad discretion with respect to provide for anticipated rewards through December 31,its ability to grant equity incentive awards under the 2023 including awarding the 750,000 Sign-On RSUs pursuant to the termsPlan. Accordingly, as part of our new employment agreement with Mr. Weil,effort to carefully manage our Executive Chairman.ongoing share usage, the Compensation Committee intends to implement the following grant procedures:

●

Unless otherwise determined by the Compensation Committee in unusual circumstances, any annual equity awards granted under the 2023 Plan to employees and non-employee directors will be converted from target award values to a corresponding number of shares underlying awards using the higher of (x) the twenty trading day average closing price of the immediately preceding year’s high closing price of our Common Stock and (y) the twenty trading day average closing price of the Common Stock before the date of grant, but in any event at a price no lower than 80% of the price at which restricted stock units were granted for the immediately preceding year’s annual LTIP awards (which was $12).

●

Further, the Compensation Committee retains full discretion to manage the volume of share utilization in order to ensure that the amount of RSUs authorized under the Plan will adequately cover all proposed uses during the three years intended to be covered by the Plan. Consequently, in the event the Common Stock price on the date of grant would result in the issuance of equity awards greater than the contemplated per year usage, the Compensation Committee may reduce such equity awards to amounts that it deems to be in the best interest of our stockholders and reasonable to 2023 Plan participants. The Compensation Committee may do so by utilizing any number of mechanisms, including one or more of the following approaches: use of capped share amounts, a higher stock price for purposes of determining the number of shares, pro-ration and limits on the maximum number of shares issuable pursuant to an earnout of performance awards.

 

If our stockholders approve the 20212023 Plan, itthe 2023 Plan would become effective on the date of such approval and would replace the 20182021 Plan, except that outstanding awards subject to the 20182021 Plan would remain governed by the terms of the 20182021 Plan and applicable grant agreements. If our stockholders do not approve the 20212023 Plan, the 20182021 Plan will remain in effect in its current form, andbut we will not have sufficient shares available to grant an appropriate level of equity awards in the next annual award cycle.cycle in 2024.

 

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Governance Highlights

 

The 20212023 Plan continues to incorporate numerous governance best practices“best practices” as determined by ISS from the 20182021 Plan, including:

 

	☑	No “liberal share recycling” of any awards.
	☑	Minimum 100% fair market value exercise price for options and SARs.
	☑	No “liberal” change in control definition or automatic “single-trigger” change in control vesting.
	☑	No “evergreen” share increases or automatic “reload” awards.
	☑	No tax gross-ups.

Additionally, the following corporate governance best practices have been added to the 2021 Plan:

		Clarified that dividends
	☑	Dividends and dividend equivalent rights, if any, on all awards will beare subject to the same vesting requirements as the underlying award and will only be paid at the time those vesting requirements are satisfied. Additionally, clarified that thereThere are no dividends or dividend equivalents on options or SARs.
	☑	No repricing of options or SARs and no cash buyout of underwater options and SARs without shareholderstockholder approval, except for equitable adjustments in connection with certain corporate transactions.
	☑	Provides that allAll awards shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy as in effect from time to time; and (ii) applicable law.
		Provides a default settlement timing provision for vested RSUs.
	☑	Subject to the enhancements noted above and certain other conforming or administrative changes, the 20212023 Plan is substantially similar to the 20182021 Plan.

 

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Impact on Dilution and Fully-Diluted Overhang

 

Our Board recognizes the impact of dilution on our shareholdersstockholders and has evaluated this share request carefully in the context of the need to motivate, retain and ensure that our leadership team and key employees are focused on our strategic priorities.priorities and provide flexibility in making strategic talent acquisitions as the management team achieved 2022 results that brought market segment recognition in both absolute and post-pandemic conditions. If the 2023 Plan is approved, the total fully-diluted overhang as of December 31, 2020,2022, would be approximately 20.9%.17.1% — a significant reduction in the dilutive effect of the 2021 Plan. In this context, fully-diluted overhang is calculated as the sum of unvested awards outstanding under all prior plans plus the shares available for grant under the 2021 Plan plus the 2,700,000 proposed increase to the share reserve under the 20212023 Plan (numerator) divided by the sum of the numerator and basic common shares outstanding, with all data effective as of December 31, 2020.2022. The calculation excludes 1,373,022 vested but unsettled restricted stockshare units outstanding under the Company’s prior equity plans.LTIPs, which were granted to members of the Office of the Executive Chairman and to our non-employee directors and will settle when a participant’s services terminate or in the event of a change-in-control. Our Board believes that the proposed share reserve represents a reasonable amount of potential equity dilution to accommodate our long-term strategic and growth priorities.

 

Expected Duration of the Share Reserve

 

We expect that the share reserve under the 20212023 Plan, if this proposal is approved by our shareholders,stockholders, will be sufficient for equity-based incentive awards for approximately three years.years through to December 31, 2026. Expectations regarding future share usage could be impacted by a number of factors, such as award type mix; hiring and promotion activity at the executive level; the rate at which shares are returned to the 20212023 Plan’s reserve under permitted addbacks; the future performance of our stock price; the consequences of acquiring other companies; and other factors. While we believe that the assumptions we used are reasonable, future share usage may differ from current expectations.

 

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Key Stock Plan Data

 

The following table sets forth information regarding stock-settled equity awards granted over each of the last three years:

 

		2020				2019				2018				3-Year Avg.
Stock Options/Stock Appreciation Rights (SARs) Granted			0				0				0				—
Target Number of Stock-Settled Restricted Shares/Units Granted			1,117,039				746,522				737,078				—
Weighted-Average Basic Common Shares Outstanding			22,399,333				21,892,964				20,859,407				—
Share Usage Rate			5.0	%			3.4	%			3.5	%			4.0	%

Our three-year average share usage rate of 4.0% is below the 75^th percentile of our peer group practice¹, which is 4.6%. Additionally, as part of our effort to carefully manage our share usage, the Compensation Committee has committed to the following:

	●	Any annual equity awards granted to employees will be converted from target award values to a number of shares using the higher of the twenty-day average closing price preceding the grant date of an award or the twenty-day average closing price preceding the previous year’s high price for our common stock, but in any event at a price no lower than $7.00.
	●	Until the Company’s average closing stock price exceeds $10.00 for a one-year period, the maximum payout opportunity under annual employee equity awards will be capped at 100% of target.

¹ The peer group was developed in 2019 includes the following comparably sized companies in similar industries: Agilysys, Inc., Avid Technology, Inc., Everi Holdings Inc., Glu Mobile Inc., Golden Entertainment, Inc., IMAX Corporation, PlayAGS, Inc., Rosetta Stone Inc., Synchronoss Technologies, Inc., and TiVo Corporation

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		2022				2021				2020				3-Year Avg.
Stock Options/Stock Appreciation Rights (SARs) Granted			0				0				0				—
Target Number of Stock-Settled Restricted Shares/Units Granted			543,178				1,728,236				1,117,039				—
Weighted-Average Basic Common Shares Outstanding			26,446,374				22,897,997				22,399,333				—
Share Usage Rate			2.1	%			7.5	%			5.0	%			4.9	%

 

The following table sets forth certain overhang information as of December 31, 20202022 with respect to the Company’s equity compensation plans:

 

Stock Options/SARs Outstanding			0
Total Unvested Stock-Settled Full-Value Awards Outstanding			2,773,2341,647,544
—Excludes 1,373,0221,703,142 Vested but Unsettled Awards			—
Shares Available for Grant under 20182021 Plan *			267,3111,002,805
Proposed Increase to Share Reserve under 20212023 Plan			2,900,0002,700,000
Basic Common Shares Outstanding			22,430,47525,909,516

 

* For reference purposes, the remaining shares available for grant under the 20182021 Plan is denoted as of fiscal year end. The number of shares to be rolled-over into the 20212023 Plan will be equal to the actual number of shares which remain available for grant under the 20182021 Plan as of the effective date of the 20212023 Plan. Upon shareholderstockholder approval of the 20212023 Plan, no further awards will be made under the 20182021 Plan.

 

As of December 31, 2020,2022, our fully-diluted overhang was 11.9%9.3%, which would increase to 20.9%17.1% upon shareholderstockholder approval of the proposed share reserve under the 20212023 Plan. This overhang compares above the 75^th percentile of our peer group, which is 17.7%. However, our overhang as of December 31, 2020 includes 1,092,633 shares of restricted stock or units that are subject to satisfaction of stock price targets of $15.00 and $17.50 that will either vest as of December 23, 2021 or will be forfeited and are not eligible to be added back to the share reserve. Excluding these stock price target awards, our overhang would be 17.8%, which is near the 75^th percentile of our peer group.

 

As of April 9, 2021,11, 2023, the per-share closing price of our common stockCommon Stock as reported on the Nasdaq was $9.26.$12.08.

 

The material terms of the 20212023 Plan are summarized below. This summary of the 20212023 Plan is not intended to be a complete description of the Plan, and is qualified in its entirety by the actual text of the 20212023 Plan to which reference is made, which is attached to this proxy statement as Annex A.

 

PurposeAdministration

 

The 2021 Plan is designed to assist us in attracting and retaining key personnel and to provide a means whereby certain employees, officers, managers, directors, consultants and advisors of the Company and its affiliates can acquire and maintain an equity interest in the Company, or be paid incentive compensation, which may be measured by reference to the value of shares of our common stock, thereby strengthening their commitment to the welfare of the Company and its affiliates, and aligning the interests of such individuals with those of our stockholders.

Administration

The 20212023 Plan is administered by the Compensation Committee, which has the authority to designate participants, grant awards, determine the types of awards and the number of shares of common stock to be covered by awards, determine the terms and conditions of any awards, construe and interpret the 20212023 Plan and related award agreements, accelerate the vesting of any outstanding awards and make other decisions and determinations for the administration of the 20212023 Plan. To the extent permitted by applicable law, the Compensation Committee is generally permitted to delegate certain of its authority under the 20212023 Plan to our board of directors,the Board, or to a special committee consisting of one or more members of our board of directorsthe Board who may be officers of the Company. However, the Compensation Committee may not delegate its authority to a member of our board of directorsthe Board who is an executive officer of the Company with regard to the participation of, or the timing, pricing or amount of an award to, an officer, director or other person subject to Section 16 of the Securities Exchange Act.Act of 1934, as amended (the “Exchange Act”).

 

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Shares Available for Issuance under the 20212023 Plan

 

Under the 20212023 Plan, we would be authorized to issue grants for equity awards with respect to 2,900,0002,700,000 shares, plus the shares which, as of the effective date, are available for grant under the 20182021 Plan and that are subject to outstanding awards under the 20182021 Plan and its predecessor plan (2018 Plan) that would again become available for grant as a result of cancellations or other terminations.

 

If any award granted under the 2023 Plan, the 2021 Plan or the 2018 Plan expires or is canceled, forfeited, or settled in cash, the undelivered shares will again become available for awards under the 20212023 Plan. Shares

The 2023 Plan does not permit “liberal” share recycling. Accordingly, any shares subject to an award will not be again available for issuance under the 20212023 Plan if such shares are (i) delivered to or withheld by the Company to pay withholding taxes with respect to any awards, (ii) subject to an option or stock appreciation right and were not issued upon the net settlement or exercise of such option or stock appreciation right, or(iii) delivered to the Company to pay the purchase price related to an outstanding option or stock appreciation right.right, or (iv) repurchased by the Company with option exercise proceeds. Shares that are forfeited, cancelled, expire unexercised, or are settled in cash will be available again for awards under the 2023 Plan.

 

Awards and the shares of common stock authorized under the 20212023 Plan, are subject to adjustment as described below under “Changes in Capital Structure and Similar Events.”

 

Limits on Awards

 

A director who is not an employee of ours or an affiliate may not be granted awards denominated in shares of our common stock,Common Stock, the aggregate grant date of grant fair market value of which exceeds, in any calendar year, $250,000; provided, that the foregoing limitation shallwill not apply to any award made pursuant to an election by a director to receive an award in lieu of all or a portion of the annual and/or committee retainers or other cash fees payable to such director.

 

Eligibility

 

Participants in the 20212023 Plan will consist of such officers, other employees, non-employee directors, consultants, and advisors of the Company or its affiliates, as selected by the Compensation Committee in its sole discretion. As of the date hereof, there are approximately 1,500 employees, including officers, who would be eligible to participate in the 20212023 Plan, if selected by the Compensation Committee. There are currently six non-employee directors and one consultant who would be eligible to participate in the 20212023 Plan.

 

Grants of Awards

 

Pursuant to the 20212023 Plan, the Compensation Committee may grant awards of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, and stock bonus awards. No awards may be granted under the 20212023 Plan following the 10th anniversary of the effective date of the 2021 Plan was adopted by the Board.2023 Plan.

 

Stock Options.Options. The 20212023 Plan allows the grant of both incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and non-qualified stock options.

The Compensation Committee notes that under existing relevant tax laws in the US, the award of options would accelerate the utilization of authorized shares and is therefore not deemed a desirable use of the allotments sought under the Plan. Though tax laws change, the Compensation Committee has not issued options incentives since the formation of the company and does not intend to do so at this time. A stock option granted under the 20212023 Plan provides a participant with the right to purchase, within a specified period of time, a stated number of shares of common stock at the price specified in the applicable award agreement. The exercise price applicable to a stock option will be set by the Compensation Committee at the time of grant and, except with respect to substitute awards granted in connection with a corporate transaction, will not be less than the fair market value of the underlying shares of common stock on the date of grant (or not less than 110% of the fair market value of the underlying shares in the case of an incentive stock option if the recipient is a 10% stockholder of the Company).

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Stock options will vest in accordance with the terms of the applicable award agreement. The maximum term of a stock option granted under the 20212023 Plan is 10 years from the date of grant (or five years in the case of an incentive stock option if the recipient is a 10% stockholder of the Company). Payment of the exercise price of a stock option may be made in a manner approved by the Compensation Committee, which may include any of the following payment methods: cash, check (subject to collection), cash equivalent and/or vested shares of common stockCommon Stock (valued at fair market value on the date of exercise), pursuant to a broker- assistedbroker-assisted cashless exercise in accordance with procedures approved by the Compensation Committee, pursuant to a delivery of a notice of “net exercise” (whereby the Company withholds from the delivery of shares for which the option is exercised shares having a fair market value equal to the aggregate exercise price of the option), or in any other form of consideration approved by the Compensation Committee.

 

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A maximum of 1,450,0002,700,000 shares may be granted in the form of incentive stock options under the 20212023 Plan.

 

Stock Appreciation Rights.Rights. A stock appreciation right is a conditional right to receive an amount equal to the value of the appreciation in the shares of common stock over a specified period. Stock appreciation rights may be granted in connection with an option, and may be settled in shares of common stock, cash, other securities or property or a combination thereof, as determined by the Compensation Committee. The base price applicable to a stock appreciation right will be set by the Compensation Committee at the time of grant and, except with respect to substitute awards granted in connection with a corporate transaction, will not be less than the fair market value of a share of common stock on the date of grant. The maximum term of a stock appreciation right granted in connection with an option shallwill be the maximum term for the corresponding option, and for a stock appreciation right granted independent of an option is a period determined by the Compensation Committee, but no longer than 10 years from the date of grant.

 

Restricted Stock.Stock. An award of restricted stock is a grant of shares of common stock which are subject to a substantial risk of forfeiture during a restricted period established in the applicable award agreement. Except as otherwise provided in an award agreement, holders of restricted stock will generally have the right to vote the shares during the period of restriction and to receive dividends subject to vesting and forfeiture to the same degree as the shares of restricted stock to which such dividends relate.

 

Restricted Stock Units.Units. A restricted stock unit (“RSU”) is a notional unit representing the right to receive one share of common stock at a future date, subject(or, to satisfaction of the conditions of the restricted stock unit award established by the Compensation Committeeextent specified in the applicable award agreement.agreement, the cash value of one share) on a specified settlement date. Unless otherwise set forth in an award agreement, an award as to which the applicable conditions have been satisfied will be settled in shares of common stock, upon a participant’s termination of service (including due to death or disability) or, if earlier, a change in control; provided, the Compensation Committee may, in its discretion, and subject to the requirements of Section 409A of the Code, elect to pay cash or part cash and part shares of common stock in lieu of delivering only shares of common stock in respect of such award. Unless otherwise set forth in an award agreement, a participant will not be entitled to any dividends with respect to the restricted stock units prior to settlement. Unless otherwise set forth in an award agreement, a participant will not be entitled to any dividends with respect to the restricted stock units prior to settlement.

 

Stock Bonus Awards.Awards. The 20212023 Plan authorizes the Compensation Committee to grant other awards that may be denominated in, payable in, valued in, or otherwise related to shares of the Company’s common stock.Common Stock. Any such award shallwill be subject to such conditions not inconsistent with the 20212023 Plan as are set forth in the award agreement. Changes in

No Dividends or Dividend Equivalents on Unvested Awards

In no event will dividends or dividend equivalents be paid with respect to options or stock appreciation rights under the Capital Structure2023 Plan. Further, notwithstanding anything to the contrary, with respect to full-value awards, if such award provides for a right to dividends or dividend equivalents, any dividends or dividend rights will be subject to the same vesting requirements as the underlying award and Similar Events.will only be paid at the time those vesting requirements are satisfied.

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Changes in Capital Structure and Similar Events

 

In the event of any dividend or other distribution (whether in the form of cash, common stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, amalgamation, consolidation, split-up, split-off, combination, repurchase or exchange of common stock or other securities, issuance of warrants or other rights to acquire shares of common stock or other securities of the Company, or other similar corporate transaction or event (including, without limitation, a change in control (as defined in the 20212023 Plan)) that affects our common stock, or (b) unusual or nonrecurring events (including, without limitation, a change in control) affecting the Company, any affiliate, or our financial statements or the financial statements of any affiliate, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, such that in either case an adjustment is determined by the Compensation Committee in its sole discretion to be necessary or appropriate in order to prevent dilution or enlargement of rights, then the Compensation Committee shallwill make any such adjustments that, in its sole discretion, are equitable and consistent with the requirements of applicable law.

 

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Change in Control

 

Except to the extent provided in an award agreement or otherwise by the Compensation Committee in accordance with its authority under the 20212023 Plan, in the event of a participant’s termination of employment or service without cause by the Company or an affiliate within the twelve (12) month period immediately following a change in control (such that the participant’s awards would otherwise be cancelled), the following shallwill apply:

 

● any unvested options and stock appreciation rights held by the participant shallwill become vested and exercisable on the effective date of such termination; and

 

● the restricted period applicable to any unvested restricted stock, restricted stock units or other awards held by the participant shallwill expire (including without limitation any applicable performance conditions) and such awards shallwill be deemed vested on the effective date of such termination.

 

The Compensation Committee shallwill also have discretion, in the event of a change in control, and subject to the terms of any applicable award agreement and compliance with the requirements of Section 409A of the Internal Revenue Code, of 1986, as amended, to accelerate the vesting, payment or right to exercise of any award effective immediately upon the occurrence of the change in control and cause the restrictions and forfeiture conditions applicable to any award to lapse and deem such awards fully vested and any performance conditions imposed with respect to awards to be fully achieved.

 

Prohibition on Repricing

 

The 20212023 Plan provides that, except in connection with certain changes in capital structure and similar corporate events, the Compensation Committee shallwill not, without the approval of the Company’s stockholders, (a) lower the exercise price of an option or stock appreciation right, (b) cancel an option or stock appreciation right when the exercise price per share exceeds the fair market value of one share in exchange for cash or another Award,award, or (c) take any other action with respect to an option or stock appreciation right that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which the shares of Common Stock are listed.

 

Clawback and Repayment

 

All awards shallwill be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy as in effect from time to time; and (ii) applicable law. Further, to the extent that a participant receives any amount in excess of the amount that the participant should otherwise have received under the terms of the award for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), the participant shallwill be required to repay any such excess amount to the Company.

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Non-Transferability of Awards

 

Except as otherwise permitted by the Compensation Committee, awards are non-transferable other than by will or the laws of descent and distribution and restricted stock is generally non-transferable. For the avoidance of doubt, awards may not be transferred to an unrelated third party for consideration.

 

Termination and Amendment

 

The Board may amend, alter, suspend, discontinue or terminate the 20212023 Plan at any time, except that no amendment may, without stockholder approval, (a) change the eligibility requirements under the 20212023 Plan or (b) violate the stockholder approval requirements of the national securities exchange on which the shares of common stockCommon Stock are principally listed. The Compensation Committee may amend the terms of any award granted under the 20212023 Plan, provided that any such amendment that would materially and adversely affect the rights of any participant shallwill not be effective without the consent of the affected participant. The 20212023 Plan shallwill expire on the tenth anniversary of approval by stockholders.

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Material U.S. Federal Income Tax Consequences

 

The following is a brief discussion of the U.S. federal income tax consequences for awards granted under the 20212023 Plan. The 20212023 Plan is not subject to the requirements of the Employee Retirement Income Security Act of 1974, as amended, and it is not, nor is it intended to be, qualified under Section 401(a) of the Code. This discussion is based on current law, is not intended to constitute tax advice, and does not address all aspects of U.S. federal income taxation that may be relevant to a particular participant in light of his or her personal circumstances, and does not describe foreign, state, or local tax consequences, which may be substantially different. Holders of awards under the 20212023 Plan are encouraged to consult with their own tax advisors.

 

Non-Qualified Stock Options and Stock Appreciation Rights.Rights. With respect to non-qualified stock options and stock appreciation rights, (i) no income is recognized by a participant at the time the award is granted; (ii) generally, at exercise, ordinary income is recognized by the participant in an amount equal to the difference between the exercise or base price paid for the shares and the fair market value of the shares on the date of exercise (or, in the case of a cash-settled stock appreciation right, the cash received), and the Company is generally entitled to a tax deduction in the same amount subject to applicable tax withholding requirements; and (iii) upon a subsequent sale of the stock received on exercise, appreciation (or depreciation) after the date of exercise is treated as either short- termshort-term or long-term capital gain (or loss) depending on how long the shares have been held, and no deduction will be allowed to the Company as a result of such sale.

 

Incentive Stock Options.Options. No income is recognized by a participant upon the grant or exercise of an incentive stock option. However, such participant will generally be required to include the excess of the fair market value of the shares at exercise over the exercise price in his or her alternative minimum taxable income. If shares are issued to a participant pursuant to the exercise of an incentive stock option, and if no sale or taxable disposition of such shares is made by such participant within two years after the date of grant or within one year after the transfer of such shares to such participant, then (i) upon sale of such shares, any amount realized in excess of the exercise price will be taxed to such participant as a long-term capital gain, and any loss sustained will be a long-term capital loss, and (ii) no deduction will be allowed to the Company for federal income tax purposes.

 

If shares acquired upon the exercise of an incentive stock option are disposed of prior to the expiration of either of the holding periods described above, generally (i) the participant will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of such shares at exercise (or, if less, the amount realized on the disposition of such shares) over the exercise price paid for such shares and (ii) the Company will generally be entitled to deduct such amount for federal income tax purposes. Any gain (or loss) recognized by the participant upon a subsequent sale or taxable exchange of the shares will be taxed as short-term or long-term capital gain (or loss), depending on the applicable holding period, and no deduction will be allowed by the Company.

 

Subject to certain exceptions for disability or death, if an incentive stock option is exercised more than three months following termination of employment, the exercise of the stock option will generally be taxed as the exercise of a non-qualified stock option.

 

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Restricted Stock.Stock. Unless a participant makes a valid Section 83(b) election as described below, such participant will generally not recognize federal taxable income when he or she receives a grant of restricted stock, and the Company will not be entitled to a deduction until the stock is transferable by the participant or is otherwise no longer subject to a substantial risk of forfeiture. When the stock is either transferable or is no longer subject to a substantial risk of forfeiture, the participant will recognize ordinary income in an amount equal to the fair market value of the shares at that time (less any amounts paid for the shares), and generally, the Company will be entitled to a deduction in the same amount. Any gain or loss recognized by the participant upon a later disposition of the common stock will be capital gain or loss. A participant’s holding period for purposes of determining whether that capital gain or loss is long-term or short-term will be counted from the date the stock became transferable or ceased to be subject to a substantial risk of forfeiture.

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A participant may elect to recognize ordinary income at the time that a restricted stock award is granted in an amount equal to the fair market value of the shares subject to the award (less any amounts paid for such shares) at the time of grant, determined without regard to certain restrictions. This election is referred to as a Section 83(b) election. In that event, the Company will be entitled to a corresponding deduction in the same year. Any gain or loss recognized by the participant upon a later disposition of the shares will be capital gain or loss. A participant’s holding period for purposes of determining whether that capital gain or loss is long-term or short-term will be counted from the date of the original transfer to the participant. The participant may not claim a credit for any tax previously paid on stock that is later forfeited.

 

Restricted Stock Units.Units. If a participant is granted an award of restricted stock units, he or she will not be required to recognize any taxable income at the time of grant or at the time that the award vests. Upon distribution of shares or cash in respect of a restricted stock units, the fair market value of those shares or the amount of that cash will be taxable to the participant as ordinary income and the Company will receive a deduction equal to the income recognized thereby. The subsequent disposition of shares acquired pursuant to an award of restricted stock units will result in capital gain or loss (based on the difference between the price received on disposition and the market value of the shares at the time of their distribution). The capital gain tax rate will depend on a number of factors, including the length of time the participant held the shares prior to selling them.

 

Stock Bonus Awards.Awards. A participant will have taxable compensation equal to the difference between the fair market value of the shares on the date the common shares of Common Stock subject to the award is transferred to the participant over the amount the participant paid for such shares, if any. The companyCompany will be able to deduct, at the same time as it is recognized by the participant, the amount of taxable compensation to the participant for Federal income tax purposes.

 

Withholding.Withholding. At the time a participant is required to recognize ordinary compensation income resulting from an award, such income will be subject to federal and applicable state and local income tax and applicable tax withholding requirements with respect to an employee participant.

 

Section 162(m) of the Internal Revenue Code.Code. Section 162(m) of the Internal Revenue Code generally limits to $1 million the amount that a publicly held corporation is allowed each year to deduct for the compensation paid to each of the corporation’s chief executive officer, the corporation’s chief financial officer and certain other current and former executive officers of the corporation.

 

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New Plan Benefits

 

The following table summarizes the aggregate grants approved by the Compensation Committee, subject to approval by the Company’s stockholders, to each of the named executive officers,Named Executive Officers, all current executive officers as a group, all current directors who are not executive officers as a group, and all other participants as a group, as of April 9, 2021.11, 2023. Such awards consist solely of the 750,000 Sign-On375,000 sign-on RSUs to be awarded pursuant to each of Mr. Weil’s and Mr. Pierce’s amended employment agreement.

Name and Position

Time Based RSUs (1)

Adjusted EBITDA Based RSUs (2)

Stock Price Based RSUs (3)

A. Lorne Weil Executive Chairman

250,000

250,000

250,000

Brooks H. Pierce President and Chief Operating Officer

Daniel B. Silvers Executive VP and Chief Strategy Officer

Executive Group

250,000

250,000

250,000

Non-Executive Director Group

Non-Executive Employee Group

 

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Name and Position		Adjusted EBITDA Based RSUs (1)				Stock Price Based RSUs (2)
A. Lorne Weil Executive Chairman			125,000				125,000
Brooks H. Pierce President and Chief Executive Officer			125,000
Daniel B. Silvers Former Executive VP & Chief Strategy Officer
Executive Group			250,000				125,000
Non-Executive Director Group
Non-Executive Employee Group

 

(1)	The Time Based RSUs would vest in the following increments subject to Mr. Weil’s continued employment through the vesting date – 85,000 RSUs on December 31, 2022; 80,000 RSUs on December 31, 2023; and 85,000 RSUs on December 31, 2024.
(2)(1)	The number of Adjusted EBITDA Based RSUs reflect the target number of RSUs which is the maximum number eligible to vest based on the performance level attained. Each year in the period of 20212025 to 2024,2027, Mr. Weil will have the opportunity to earn a one-third tranche of approximately 41,666 of such Adjusted EBITDA Based RSUs. Each year in the period of 2025 to 2026, Mr. Pierce will have the opportunity to earn a tranche of 62,500 of such Adjusted EBITDA Based RSUs. For a year in which the Compensation Committee determines that the performance level has been attained in excess of the 100% target amount, with respect to Mr. Weil, such excess EBITDA will be applied to the subsequent year in determining whether the subsequent year’s target has been met.
(3)	(2)	The Stock Price Based RSUs are earned by meeting the stock price targets as determined by the average closing price of the Company’s common stock for any consecutive 45 calendar day period commencing on the effective date of Mr. Weil’s employment agreement (i.e., January 1, 2020)2023). The tranches are as follows – 80,00031,250 RSUs at $6.25; 85,000$15.00; 31,250 RSUs at $8.25; and 85,000$17.50; 31,250 RSUs at $15.00.$20.00; and 31,250 RSUs at $22.50. The stock price targetstarget applicable to the first two tranches weretranche was met — $6.25$15.00 in December 2020 and $8.25 in March 2021. Compared to the closing stock price of $3.49 on October 9, 2020, the date that the Company entered into the employment agreement with Mr. Weil, the stock price targets required growth of 79%, 136%, and 330%, respectively.
	February 2023.

Because future awards under the 20212023 Plan are in the discretion of the Compensation Committee and will also depend on the fair market value of the shares at various future dates, it is not possible to determine additional benefits that may be received if the 20212023 Plan is approved by stockholders. In addition, please see “Long-Term Equity Awards” section above for a description of the RSUs approved as formula awards to our executive officers in August 2020February 2022 and please see “Director Compensation” section above for a description of the equity grant program for our non-employee directors.

 

Vote Required for Approval

 

Assuming there is a quorum at the Annual Meeting, this proposal will be approved if the majority of the votes cast in respect of such proposal by the stockholders present in person or represented by proxy are “for” votes.

 

Recommendation of the Board

 

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE INSPIRED ENTERTAINMENT, INC. 20212023 OMNIBUS INCENTIVE PLAN.

 

4043

 

PROPOSAL NUMBER THREE—FOUR—RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITOR

 

Our Audit Committee charter provides that the Audit Committee is responsible for appointing the Company’s independent auditor. The Audit Committee has appointed MarcumKPMG LLP (“KPMG”) to serve as the Company’s independent auditor for our fiscal year ending December 31, 20212023 and recommends that the Company’s stockholders ratify the appointment. Previously, Marcum LLP (“Marcum”) served as the Company’s independent auditor.

 

We expect representatives ofNeither KPMG LLP nor Marcum LLPis expected to be present athave a representative attend the Annual Meeting. They will have the opportunity to make a statement, if they desire to do so, and will be available to respond to appropriate questions from stockholders.

 

If this proposal is not approved at the Annual Meeting, our Audit Committee will reconsider the selection of Marcum LLP,KPMG, but may determine that continued retention is in our Company’s and our stockholders’ best interests. Even if the appointment is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time if it determines a change would be in our Company’s and our stockholders’ best interests.

 

Change in Independent Registered Public Accounting Firm

As previously disclosed in our Current Report on Form 8-K filed with the SEC on March 23, 2023, on March 17, 2023, the Company dismissed Marcum as the Company’s registered public accounting firm effective as of that date and approved the engagement of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2023. These decisions were approved by the Audit Committee. Marcum served as our independent registered public accounting firm since 2016.

The audit reports of Marcum on the Company’s financial statements as of and for the years ended December 31, 2022 and 2021 contained no adverse opinion or disclaimer of opinion nor were any such reports qualified or modified as to uncertainty, audit scope or accounting principle. The audit report of Marcum on the effectiveness of internal control over financial reporting as December 31, 2022 indicates that the company did not maintain effective internal control over financial reporting as at December 31, 2022 and 2021 because of the effect of material weaknesses as described below.

During the fiscal years ended December 31, 2022 and 2021 and through March 17, 2023, there were no (i) disagreements with Marcum on any matter or accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which connects with its reports; or (ii) “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K, except that Marcum advised the Company that the following material weaknesses existed. As of December 31, 2021, the Company had not established an effective control environment due to the ineffective design and implementation of certain process controls, including management review controls. As of December 31, 2022, the Company had internal control deficiencies due to (i) IT program and data changes affecting the Company’s financial IT applications and underlying accounting records, not being identified, tested, authorized, and implemented appropriately to validate that data produced by its relevant IT system(s) was complete and accurate, (ii) one aspect of the Company’s cash collection process related to the completeness and accuracy (risk of understatement) of the Company’s recording of cash collection amounts relating to the Company’s holiday park business, in that the process for reviewing and approving cash receipts was not consistently documented or implemented, and (iii) the design and operation of the Company’s contract review and approval process in relation to certain contract amendments.

We provided Marcum with a copy of the disclosures made in our Current Report on Form 8-K filed with the SEC on March 23, 2023 (the “Form 8-K”) and requested that Marcum furnish us with a letter addressed to the SEC stating whether or not Marcum agrees with our statements. A copy of the letter, furnished by Marcum in response to that request, was filed as Exhibit 16.1 to the Form 8-K.

During the fiscal years ending December 31, 2022 and 2021, and through March 18, 2023, the Company has not consulted KPMG regarding (i) application of accounting principles to any specified transaction, either completed or proposed, (ii) the type of audit opinion that might be rendered on the Company’s financial statements, or (iii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv)) of Regulation S-K or a reportable event (as defined in Item 304(a)(1)(v) of Regulation 8-K).

Fees Paid to Independent Registered Public Accounting Firm

 

Marcum LLP audited our financial statements for the fiscal years ended December 31, 20202021 and December 31, 2019.2022. The aggregate fees billed to us for services provided by Marcum LLP arewere as follows:

 

		Twelve Months Ended December 31, 2020				Twelve Months Ended December 31, 2019				Twelve Months Ended December 31, 2022				Twelve Months Ended December 31, 2021
Audit fees (1)		$	685,000			$	986,860			$	1,182,000			$	1,573,000
Audit-related fees (2)			—				—				—				—
Tax and other fees (3)			—				—				—				—
Total		$	685,000			$	986,860			$	1,182,000			$	1,573,000

 

(1)	Audit fees include (i) fees associated with the audits of our consolidated financial statements; (ii) reviews of our interim quarterly consolidated financial statements and (iii) comfort letters, consents and other items related to Securities and Exchange Commission matters.

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(2)	No audit-related fees were paid.
(3)	No tax-related fees or other fees were paid.

 

Pre-Approval Policy

 

Our Audit Committee has pre-approved all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof.

 

Vote Required for Approval

 

Assuming there is a quorum, this proposal will be approved if the majority of the votes cast in respect of such proposal by the stockholders present in person or represented by proxy are “for” votes.

 

Recommendation of the Board

 

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF MARCUMKPMG LLP AS THE INDEPENDENT AUDITOR OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021.2023.

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OTHER MATTERS

 

The Company knows of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the stockholders at the Annual Meeting, it is the intention of the persons named on the proxy card to vote the shares represented by them on such matters according to their best judgment.

 

Stockholder Proposals

 

Stockholders may present proper proposals for inclusion in our proxy statement and for consideration at next year’s annual meeting of stockholders by submitting their proposals in writing to our Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our proxy statement for our 20222024 annual meeting of stockholders, our Secretary must receive the written proposal at our principal executive offices not later than December 13, 2021.15, 2023. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Stockholder proposals should be addressed to Inspired Entertainment, Inc., 250 West 57th Street, Suite 415, New York, New York 10107, Attention: Company Secretary.

 

Our bylaws also provide notice procedures for stockholders to nominate a person as a director and to propose business to be considered by stockholders at a meeting. In addition to other applicable requirements, stockholders wishing to nominate a candidate for director or to propose other business at the 20212024 annual meeting of stockholders must ensure written notice is received by our Secretary at Inspired Entertainment, Inc., 250 West 57th Street, Suite 415, New York, New York 10107, not less than 90 or more than 120 days prior to the one-year anniversary of the date of the preceding year’s annual meeting of stockholders (between January 11, 202210, 2024 and February 10, 2022)9, 2024). However, if the date of the 20222024 annual meeting of stockholders is advanced more than 45 days prior to, or delayed by more than 45 days after, the anniversary of the preceding year’s annual meeting of stockholders, then, to be timely, notice by the stockholder must be delivered not earlier than the 120^th day prior to such annual meeting of stockholders or later than the close of business on the later of (i) the 90th day prior to such annual meeting of stockholders or (ii) the 10th day following the day on which public announcement of the date of such meeting is first made. The public announcement of an adjournment of an annual meeting shallwill not commence a new time period for the giving of a stockholder’s notice as described in this section. The notice must include all of the information required by the Company’s Bylaws.

 

To be in proper written form, a stockholder’s notice to the Company Secretary with respect to any business (other than nominations) must set forth as to each such matter such stockholder proposes to bring before the annual meeting (a) a brief description of the matter desired to be brought before the annual meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event such business includes a proposal to amend our bylaws, the language of the proposed amendment) and the reasons for conducting such business at the annual meeting, (b) the name and address of the stockholder of record and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (c) the class or series and number of shares of our capital stock that are owned beneficially and of record by such stockholder and by the beneficial owner, if any, on whose behalf the proposal is made, (d) a description of all arrangements or understandings between such stockholder and the beneficial owner, if any, on whose behalf the proposal is made, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder, (e) any material interest of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made in such business and (f) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. The foregoing notice requirements shallwill be deemed satisfied by a stockholder as to any proposal (other than nominations) if the stockholder has notified us of such stockholder’s intention to present such proposal at an annual meeting in compliance with Rule 14a-8 (or any successor thereof) under the Exchange Act and such stockholder has complied with the requirements of such rule for inclusion of such proposal in a proxy statement prepared by us to solicit proxies for such annual meeting. Notwithstanding the foregoing provisions of this section, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting to present the proposed business, such proposed business shallwill not be transacted, notwithstanding that proxies in respect of such matter may have been received by the Company.

 

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To be in proper written form, a stockholder’s notice to the Company Secretary to nominate directors must set forth (i) as to each person whom the stockholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class or series and number of shares of capital stock of the Company that are owned beneficially or of record by the person and (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and (ii) as to the stockholder giving the notice (A) the name and record address of such stockholder and the name and address of the beneficial owner, if any, on whose behalf the nomination is made, (B) the class or series and number of shares of capital stock of the Company that are owned beneficially and of record by such stockholder and the beneficial owner, if any, on whose behalf the nomination is made, (C) a description of all arrangements or understandings relating to the nomination to be made by such stockholder among such stockholder, the beneficial owner, if any, on whose behalf the nomination is made, each proposed nominee and any other person or persons (including their names), (D) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (E) any other information relating to such stockholder and the beneficial owner, if any, on whose behalf the nomination is made that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. Notwithstanding the foregoing provisions of this section, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting to present the nomination, such nomination shallwill be disregarded, notwithstanding that proxies in respect of such nomination may have been received by the Company.

 

In addition to the requirements described above, a stockholder shallmust also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the foregoing matters. We may refuse to acknowledge any stockholder proposal not made in compliance with the foregoing procedures.

In addition to satisfying the advance notice requirements under the Company’s Bylaws as described above, to comply with the SEC’s universal proxy rules, a person who intends to solicit proxies in support of director nominees other than the Company’s nominees must provide notice to the Company that sets forth the information required by SEC Rule 14a-9(b) under the Exchange Act. Such notice must be received no later than 60 calendar days prior to the anniversary of the previous year’s annual meeting. For any such director nominee to be included on our proxy card for the 2024 annual meeting of stockholders, the Company’s Secretary must receive notice under SEC Rule 14a-19 no later than March 11, 2024.

 

Householding Information

 

Unless we have received contrary instructions, we may send a single copy of our proxy materials to any household at which two or more stockholders reside if we believe the stockholders are members of the same family. This process, known as “householding,” reduces the volume of duplicate information received at any one household and helps to reduce our expenses. If you prefer to receive multiple sets of our proxy materials at the same address this year or in future years; or, if you share an address with another stockholder and would like to receive only a single set of our proxy materials, please request a change in your delivery preferences as follows:

 

	●	If you are a record holder, you should contact us at our offices at Inspired Entertainment, Inc., 250 West 57th Street, Suite 415, New York, New York 10107, Attn: Company Secretary; or
	●	If you are a beneficial owner, you should contact the bank, broker or other nominee that holds theyour shares.

 

Where You Can Find More Information

 

We file annual and quarterly reports and other reports and information with the SEC. These reports and other information can be accessed over the Internet free of charge at the SEC’s website at www.sec.gov or at our website at www.inseinc.com. Our website also contains our Code of Ethics and our Board committee charters.

 

If you have questions about thethis Proxy Statement or require assistance voting your shares, please contact us by telephone or in writing:

 

Corporate Secretary

Inspired Entertainment, Inc.

250 West 57th Street, Suite 415

New York, New York 10107

Tel: (646) 565-3861

 

4346

 

ANNEX A

 

INSPIRED ENTERTAINMENT, INC.

20212023 OMNIBUS INCENTIVE PLAN

1. Purpose. The purpose of the Inspired Entertainment, Inc. 20212023 Omnibus Incentive Plan is to supersede the 20182021 Plan and to provide a means through which the Company and its Affiliates may attract and retain key personnel and to provide a means whereby directors, officers, managers, employees, consultants and advisors of the Company and its Affiliates can acquire and maintain an equity interest in the Company, or be paid incentive compensation, which may (but need not) be measured by reference to the value of Common Shares, thereby strengthening their commitment to the welfare of the Company and its Affiliates and aligning their interests with those of the Company’s stockholders.

 

2. Definitions. The following definitions shall be applicable throughout this Plan:

 

(a) “Affiliate” means (i) any person or entity that directly or indirectly controls, is controlled by or is under common control with the Company and/or (ii) to the extent provided by the Committee, any person or entity in which the Company has a significant interest as determined by the Committee in its discretion. The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of voting or other securities, by contract or otherwise.

 

(b) “Award” means, individually or collectively, any Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, and Stock Bonus Award granted under this Plan.

 

(c) “Award Agreement” means an agreement, made andor other instrument or document, including an electronic communication, delivered in accordance with Section 14(a) of this Plan evidencing the grant of an Award hereunder.

 

(d) “Board” means the Board of Directors of the Company.

 

(e) “Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in New York City are authorized or obligated by federal law or executive order to be closed.

 

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(f) “Cause” shall have the meaning set forth in the applicable Award Agreement or Participant Agreement, provided that if the applicable Award Agreement or Participant Agreement does not contain such a definition, “Cause” shall mean, (1) the Participant’s plea of nolo contendere to, conviction of or indictment for, any crime (whether or not involving the Company or its Affiliates) (i) constituting a felony or (ii) that has, or could reasonably be expected to result in, an adverse impact on the performance of the Participant’s duties to the Company or an Affiliate, or otherwise has, or could reasonably be expected to result in, an adverse impact on the business or reputation of the Company or its Affiliates, (2) conduct of the Participant, in connection with his or her employment or service, that has resulted, or could reasonably be expected to result, in material injury to the business or reputation of the Company or its Affiliates, (3) any material violation of the Award Agreement, the Participant Agreement, or any policies of the Company or an Affiliate, including, but not limited to, the Inspired Entertainment, Inc. Code of Ethics, those policies relating to sexual harassment or the disclosure or misuse of confidential information, or those policies set forth in the manuals or statements of policy of the Company or Affiliate; (4) the Participant’s act(s) of gross negligence or willful misconduct in the course of his or her employment or service with the Company or Affiliate; (5) misappropriation by the Participant of any assets or business opportunities of the Company or its Affiliates; (6) embezzlement or fraud committed by the Participant, at the Participant’s direction, or with the Participant’s prior actual knowledge; or (7) willful neglect in the performance of the Participant’s duties for the Company or Affiliate or willful or repeated failure or refusal to perform such duties. If, subsequent to the termination of a Participant for any reason other than by the Company or Affiliate for Cause, it is discovered that the Participant’s employment or service could have been terminated for Cause, such Participant’s employment or service shall, at the discretion of the Committee, be deemed to have been terminated by the Company or Affiliate for Cause for all purposes under the Plan, and the Participant shall be required to repay to the Company all amounts received by him or her in respect of any Award following such termination that would have been forfeited under the Plan had such termination been by the Company or Affiliate for Cause.

 

(g) “Change in Control” shall, in the case of a particular Award, unless the applicable Award Agreement states otherwise or contains a different definition of “Change in Control,” be deemed to occur upon:

 

(i) A change in ownership or control of the Company affected through a transaction or series of transactions (other than an offering of Common Shares to the general public through a registration statement filed with the Securities and Exchange Commission or similar non-U.S. regulatory agency or pursuant to a Non-Control Transaction) whereby any “person” (as defined in Section 3(a)(9) of the Exchange Act) or any two or more persons deemed to be one “person” (as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), other than the Company or any of its Affiliates, an employee benefit plan sponsored or maintained by the Company or any of its Affiliates (or its related trust), or any underwriter temporarily holding securities pursuant to an offering of such securities, directly or indirectly acquire “beneficial ownership” (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of the Company’s securities eligible to vote in the election of the Board (the “Company Voting Securities”);

 

(ii) The date, within any consecutive twenty-four (24) month period commencing on or after the Effective Date, upon which individuals who constitute the Board as of the Effective Date (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a director subsequent to the Effective Date whose election or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then constituting the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such individual is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest (including, but not limited to, a consent solicitation) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board;

 

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(iii) The consummation of a merger, consolidation, share exchange, or similar form of corporate transaction involving the Company or any of its Affiliates that requires the approval of the Company’s stockholders (whether for such transaction, the issuance of securities in the transaction or otherwise) (a “Reorganization”), unless immediately following such Reorganization (1) more than fifty percent (50%) of the total voting power of (A) the corporation resulting from such Reorganization (the “Surviving Company”) or (B) if applicable, the ultimate parent corporation that has, directly or indirectly, beneficial ownership of one hundred percent (100%) of the voting securities of the Surviving Company (the “Parent Company”), is represented by Company Voting Securities that were outstanding immediately prior to such Reorganization (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Reorganization), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among holders thereof immediately prior to such Reorganization, (2) no person, other than an employee benefit plan sponsored or maintained by the Surviving Company or the Parent Company (or its related trust), is or becomes the beneficial owner, directly or indirectly, of fifty percent (50%) or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Company, or if there is no Parent Company, the Surviving Company, and (3) at least a majority of the members of the board of directors of the Parent Company, or if there is no Parent Company, the Surviving Company, following the consummation of such Reorganization are members of the Incumbent Board at the time of the Board’s approval of the execution of the initial agreement providing for such Reorganization (any Reorganization which satisfies all of the criteria specified in clauses (1), (2), and (3) above shall be a “Non-Control Transaction”); or

 

(iv) The sale or disposition, in one transaction or a series of related transactions, of all or substantially all of the assets of the Company to any “person” (as defined in Section 3(a)(9) of the Exchange Act) or to any two or more persons deemed to be one “person” (as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than the Company’s Affiliates.

 

Notwithstanding the foregoing, (x) a Change in Control shall not be deemed to occur solely because any person acquires beneficial ownership of fifty percent (50%) or more of the Company Voting Securities as a result of an acquisition of Company Voting Securities by the Company that reduces the number of Company Voting Securities outstanding; provided that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increase the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control shall then be deemed to occur, and (y) with respect to the payment of any amount that constitutes a deferral of compensation subject to Section 409A of the Code payable upon a Change in Control, a Change in Control shall not be deemed to have occurred, unless the Change in Control constitutes a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company under Section 409A(a)(2)(A)(v) of the Code.

 

(h) “Code” means the Internal Revenue Code of 1986, as amended, and any successor thereto. References in this Plan to any section of the Code shall be deemed to include any regulations or other interpretative guidance under such section, and any amendments or successor provisions to such section, regulations or guidance.

 

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(i) “Committee” means a committee of at least two non-employee directors as the Board may appoint to administer this Plan or, if no such committee has been appointed by the Board, the Board. Unless altered by an action of the Board, the Committee shall be the Compensation Committee of the Board.

 

(j) “Common Shares” means the common stock, par value $0.0001 per share, of the Company (and any stock or other securities into which such common shares may be converted or into which they may be exchanged).

 

(k) “Company” means Inspired Entertainment, Inc., and its successors and assigns.

 

(l) “Date of Grant” means the date on which the granting of an Award is authorized, or such other date as may be specified in such authorization.

 

(m) “Disability” means a “permanent and total” disability incurred by a Participant while in the employ of the Company or an Affiliate. For this purpose, a permanent and total disability shall mean that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

 

(n) “Effective Date” means May 11, 2021.10, 2023.

 

(o) “Eligible Director” means a person who is (i) a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, and (ii) “independent” for purposes of applicable stock exchange listing requirements.

 

(p) “Eligible Person” means any (i) individual employed by the Company or an Affiliate; provided, however, that no such employee covered by a collective bargaining agreement shall be an Eligible Person unless and to the extent that such eligibility is set forth in such collective bargaining agreement or in an agreement or instrument relating thereto; (ii) director of the Company or an Affiliate; or (iii) consultant or advisor to the Company or an Affiliate, provided that if the Securities Act applies such persons must be eligible to be offered securities registrable on Form S-8 under the Securities Act.

 

(q) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any reference in this Plan to any section of (or rule promulgated under) the Exchange Act shall be deemed to include any rules, regulations or other interpretative guidance under such section or rule, and any amendments or successor provisions to such section, rules, regulations or guidance.

 

(r) “Exercise Price” has the meaning given such term in Section 7(b) of this Plan.

 

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(s) “Fair Market Value” means, as of any date when Common Shares are listed on one or more national securities exchanges, the closing price reported on the principal national securities exchange on which such Common Shares are listed and traded on the Date of Grant or, if the closing price is not reported on such date, the closing price reported on the most recent date prior to the Date of Grant. If Common shares are not listed on a national securities exchange, Fair Market Value will be determined by such other method as the Committee determines in good faith to be reasonable and in compliance with Code Section 409A.

 

(t) “Immediate Family Members” shall have the meaning set forth in Section 14(b) of this Plan.

 

(u) “Incentive Stock Option” means an Option that is designated by the Committee as an incentive stock option as described in Section 422 of the Code and otherwise meets the requirements set forth in this Plan.

 

(v) “Indemnifiable Person” shall have the meaning set forth in Section 4(e) of this Plan.

(w) “Nonqualified Stock Option” means an Option that is not designated by the Committee as an Incentive Stock Option.

 

(x)(w) “Option” means an Award granted under Section 7 of this Plan.

 

(y)(x) “Option Period” has the meaning given such term in Section 7(c) of this Plan.

 

(z)(y) “Participant” means an Eligible Person who has been selected by the Committee to participate in this Plan and to receive an Award pursuant to Section 6 of this Plan.

 

(aa)(z) “Participant Agreement” means an employment or other services agreement between a Participant and the Company or an Affiliate that describes the terms and conditions of such Participant’s employment or service with the Company or an Affiliate and is in effect as of the date the Committee approves the grant of the applicable Award to the Participant.

 

(bb)(aa) “Performance Criteria” means any of the following factors: (i) revenue; (ii) sales; (iii) profit (net profit, gross profit, operating profit, economic profit, profit margins or other corporate profit measures); (iv) earnings (EBIT, EBITDA, earnings per share, or other corporate earnings measures); (v) net income (before or after taxes, operating income or other income measures); (vi) cash (cash flow, cash generation or other cash measures); (vii) stock price or performance; (viii) total stockholder return (stock price appreciation plus reinvested dividends divided by beginning share price); (ix) economic value added; (x) return measures (including, but not limited to, return on assets, capital, equity, investments or sales, and cash flow return on assets, capital, equity, or sales); (xi) market share; (xii) improvements in capital structure; (xiii) expenses (expense management, expense ratio, expense efficiency ratios or other expense measures); (xiv) business expansion or consolidation (acquisitions and divestitures); (xv) internal rate of return or increase in net present value; (xvi) working capital targets relating to inventory and/or accounts receivable; (xvii) inventory management; (xviii) service or product delivery or quality; (xix) customer satisfaction; (xx) employee retention; (xxi) safety standards; (xxii) productivity measures; (xxiii) cost reduction measures; (xxiv) strategic plan development and implementation; and (xxv) any other objective or subjective measures determined by the Committee from time to time.

 

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(cc)(bb) “Permitted Transferee” shall have the meaning set forth in Section 14(b)15(b) of this Plan.

 

(dd)(cc) “Person” has the meaning given such term in the definition of “Change in Control.”

 

(ee)(dd) “Plan” means this Inspired Entertainment, Inc. 2023 Omnibus Incentive Plan, as amended from time to time.

(ee) “Prior Plan” means the Inspired Entertainment, Inc. 2018 Omnibus Incentive Plan and 2021 Omnibus Incentive Plan, as amended from time to time.

 

(ff) “Prior Plan” means the Inspired Entertainment, Inc. 2018 Omnibus Incentive Plan, as amended from time to time.

(gg) “Restricted Period” means the period of time determined by the Committee during which an Award is subject to restrictions or, as applicable, the period of time within which performance is measured for purposes of determining whether an Award has been earned.

 

(hh)(gg) “Restricted Stock Unit” means an unfunded and unsecured promise to deliver Common Shares, cash, other securities or other property, subject to certain restrictions (including, without limitation, a requirement that the Participant remain continuously employed or provide continuous services for a specified period of time), granted under Section 9 of this Plan.

 

(ii)(hh) “Restricted Stock” means Common Shares, subject to certain specified restrictions (including, without limitation, a requirement that the Participant remain continuously employed or provide continuous services for a specified period of time), granted under Section 9 of this Plan.

 

(jj)(ii) “SAR Period” has the meaning given such term in Section 8(c) of this Plan.

 

(kk)(jj) “Securities Act” means the Securities Act of 1933, as amended, and any successor thereto. Reference in this Plan to any section of the Securities Act shall be deemed to include any rules, regulations or other official interpretative guidance under such section, and any amendments or successor provisions to such section, rules, regulations or guidance.

 

(ll)(kk) “Stock Appreciation Right” or “SAR” means an Award granted under Section 8 of this Plan which meets all of the requirements of Section 1.409A-1(b)(5)(i)(B) of the Treasury Regulations.

 

(mm)(ll) “Stock Bonus Award” means an Award granted under Section 10 of this Plan.

 

(nn)(mm) “Strike Price” means, except as otherwise provided by the Committee in the case of Substitute Awards, (i) in the case of a SAR granted in tandem with an Option, the Exercise Price of the related Option, or (ii) in the case of a SAR granted independent of an Option, the Fair Market Value on the Date of Grant.

 

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(oo)(nn) “Subsidiary” means, with respect to any specified Person:

 

(i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of outstanding Company Voting Securities (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

 

(ii) any partnership or limited liability company (or any comparable foreign entity) (a) the sole general partner or managing member (or functional equivalent thereof) or the managing general partner of which is such Person or Subsidiary of such Person or (b) the only general partners or managing members (or functional equivalents thereof) of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

 

(pp)(oo) “Substitute Award” has the meaning given such term in Section 5(e).

 

(qq)(pp) “Treasury Regulations” means any regulations, whether proposed, temporary or final, promulgated by the U.S. Department of Treasury under the Code, and any successor provisions.

 

3. Effective Date; Duration. The Plan shall be effective as of the Effective Date, subject to approval by the stockholders of the Company, which approval shall be within twelve (12) months after the date this Plan is adopted by the Board. The expiration date of this Plan, on and after which date no Awards may be granted hereunder, shall be the tenth anniversary of the Effective Date; provided, however, that such expiration shall not affect Awards then outstanding, and the terms and conditions of this Plan shall continue to apply to such Awards. Upon effectiveness of the Plan, no further awards will granted under the Prior Plan.

 

4. Administration.

 

(a) The Committee shall administer this Plan. To the extent required to comply with the provisions of Rule 16b-3 promulgated under the Exchange Act (if the Board is not acting as the Committee under this Plan), it is intended that each member of the Committee shall, at the time he takes any action with respect to an Award under this Plan, be an Eligible Director. However, the fact that a Committee member shall fail to qualify as an Eligible Director shall not invalidate any Award granted by the Committee that is otherwise validly granted under this Plan. The acts of a majority of the members present at any meeting at which a quorum is present or acts approved in writing by a majority of the Committee shall be deemed the acts of the Committee. Whether a quorum is present shall be determined based on the Committee’s charter as approved by the Board.

 

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(b) Subject to the provisions of this Plan and applicable law, the Committee shall have the sole and plenary authority, in addition to other express powers and authorizations conferred on the Committee by this Plan and its charter, to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Common Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award, including, without limitation, vesting terms and conditions for any Award hereunder which may include the achievement of any Performance Criteria selected by the Committee; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Common Shares, other securities, other Awards or other property, or canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances the delivery of cash, Common Shares, other securities, other Awards or other property and other amounts payable with respect to an Award shall be made; (vii) interpret, administer, reconcile any inconsistency in, settle any controversy regarding, correct any defect in and/or complete any omission in this Plan and any instrument or agreement relating to, or Award granted under, this Plan; (viii) establish, amend, suspend, or waive any rules and regulations and appoint such agents as the Committee shall deem appropriate for the proper administration of this Plan; (ix) accelerate the vesting or exercisability of, payment for or lapse of restrictions on, Awards; and (x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of this Plan.

 

(c) The Committee may, by resolution, expressly delegate to a special committee, consisting of one or more directors who may but need not be officers of the Company, the authority, within specified parameters as to the number and types of Awards, to (i) designate officers and/or employees of the Company or any of its Affiliates to be recipients of Awards under this Plan, and (ii) to determine the number of such Awards to be received by any such Participants; provided, however, that such delegation of duties and responsibilities may not be made with respect to grants of Awards to persons subject to Section 16 of the Exchange Act. The acts of such delegates shall be treated as acts of the Committee, and such delegates shall report regularly to the Board and the Committee regarding the delegated duties and responsibilities and any Awards granted.

 

(d) Unless otherwise expressly provided in this Plan, all designations, determinations, interpretations, and other decisions under or with respect to this Plan or any Award or any documents evidencing Awards granted pursuant to this Plan shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all persons or entities, including, without limitation, the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any stockholder of the Company.

 

(e) No member of the Board, the Committee, delegate of the Committee or any employee, advisor or agent of the Company or the Board or the Committee (each such person, an “Indemnifiable Person”) shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect to this Plan or any Award hereunder. Each Indemnifiable Person shall be indemnified and held harmless by the Company against and from (and the Company shall pay or reimburse on demand for) any loss, cost, liability, or expense (including court costs and attorneys’ fees) that may be imposed upon or incurred by such Indemnifiable Person in connection with or resulting from any action, suit or proceeding to which such Indemnifiable Person may be a party or in which such Indemnifiable Person may be involved by reason of any action taken or omitted to be taken under this Plan or any Award Agreement and against and from any and all amounts paid by such Indemnifiable Person with the Company’s approval, in settlement thereof, or paid by such Indemnifiable Person in satisfaction of any judgment in any such action, suit or proceeding against such Indemnifiable Person, provided, that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to an Indemnifiable Person to the extent that a final judgment or other final adjudication (in either case not subject to further appeal) binding upon such Indemnifiable Person determines that the acts or omissions of such Indemnifiable Person giving rise to the indemnification claim resulted from such Indemnifiable Person’s bad faith, fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the Company’s Certificate of Incorporation or Bylaws. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which any such Indemnifiable Person may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such Indemnifiable Persons or hold them harmless.

 

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(f) Notwithstanding anything to the contrary contained in this Plan, the Board may, in its sole discretion, at any time and from time to time, grant Awards and administer this Plan with respect to such Awards. In any such case, the Board shall have all the authority granted to the Committee under this Plan.

 

5. Grant of Awards; Shares Subject to this Plan; Limitations.

 

(a) The Committee may, from time to time, grant Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, and/or Stock Bonus Awards to one or more Eligible Persons. Subject to Section 5(b) and Section 11 of this Plan, the Committee is authorized to deliver under this Plan an aggregate of 2,900,0002,700,000 Common Shares plus the number of Common Shares available for grant under the Prior Plan as of the Effective Date. Notwithstanding the foregoing, a director of the Company or an Affiliate who is not an employee of the Company or an Affiliate may not be granted Awards denominated in Common Shares, the aggregate Date of Grant Fair Market Value of which exceeds, in any calendar year, $250,000; provided, that the foregoing limitation shall not apply to any Award made pursuant to an election by a director to receive an Award in lieu of all or a portion of the annual and/or committee retainers and annual meeting fee payable to such director.

 

(b) Common Shares underlying Awards under this Plan or, after the Effective Date, awards under theany Prior Plan, that are forfeited, cancelled, expire unexercised, or are settled in cash shall be available again for Awards under this Plan. Notwithstanding the foregoing, the following Common Shares shall not be available again for Awards under the Plan: (i) shares tendered or held back upon the exercise of an Option or settlement of an Award to cover the Exercise Price of an Award; (ii) shares that are used or withheld to satisfy tax withholding obligations of the Participant; andParticipant with respect to an Award; (iii) shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the SAR upon exercise thereof.thereof; and (iv) shares purchased on the open market using cash proceeds from the exercise of Options.

 

(c) Awards that do not entitle the holder thereof to receive or purchase Common Shares shall not be counted against the aggregate number of Common Shares available for Awards under the Plan.

 

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(d) Common Shares delivered by the Company in settlement of Awards may be authorized and unissued shares, shares held in the treasury of the Company, shares purchased on the open market or by private purchase, or any combination of the foregoing.

 

(e) Subject to compliance with Section 1.409A-3(f) of the Treasury Regulations, Awards may, in the sole discretion of the Committee, be granted under this Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired by the Company or with which the Company combines (“Substitute Awards”). The number of Common Shares underlying any Substitute Awards shall be counted against the aggregate number of Common Shares available for Awards under this Plan; provided, however that Common Shares issued under Substitute Awards granted in substitution for awards previously granted by an entity that is acquired by or merged with the Company or an Affiliate shall not be counted against the aggregate number of Common Shares available for Awards under the Plan.

 

(f) After the Effective Date, notwithstanding any other provision of the Plan to the contrary, with respect to any Award that provides for or includes a right to dividends or dividend equivalents, if dividends are declared during the period that an equity Award is outstanding, such dividends (or dividend equivalents) shall either (i) not be paid or credited with respect to such Award or (ii) be accumulated but remain subject to vesting requirement(s) to the same extent as the applicable Award and shall only be paid at the time or times such vesting requirement(s) are satisfied. In no event shall dividends or dividend equivalents be paid with respect to Options or Stock Appreciation Rights.

 

6. Eligibility. Participation shall be limited to Eligible Persons who have entered into an Award Agreement or who have received written notification from the Committee, or from a person designated by the Committee, that they have been selected to participate in this Plan.

 

7. Options.

 

(a) Generally. Each Option granted under this Plan shall be evidenced by an Award Agreement (whether in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)). Each Option so granted shall be subject to the conditions set forth in this Section 7, and to such other conditions not inconsistent with this Plan as may be reflected in the applicable Award Agreement. All Options granted under this Plan shall be Nonqualified Stock Options unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option. Notwithstanding any designation of an Option, to the extent that the aggregate Fair Market Value of Common Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company or any Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonqualified Stock Options. Incentive Stock Options shall be granted only to Eligible Persons who are employees of the Company and its Affiliates, and no Incentive Stock Option shall be granted to any Eligible Person who is ineligible to receive an Incentive Stock Option under the Code. No Option shall be treated as an Incentive Stock Option unless this Plan has been approved by the stockholders of the Company in a manner intended to comply with the stockholder approval requirements of Section 422(b)(1) of the Code, provided that any Option intended to be an Incentive Stock Option shall not fail to be effective solely on account of a failure to obtain such approval, but rather such Option shall be treated as a Nonqualified Stock Option unless and until such approval is obtained. In the case of an Incentive Stock Option, the terms and conditions of such grant shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code. If for any reason an Option intended to be an Incentive Stock Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option or portion thereof shall be regarded as a Nonqualified Stock Option appropriately granted under this Plan. A maximum of 1,450,0002,700,000 Common Shares may be granted in the form of Incentive Stock Options.

 

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(b) Exercise Price. The exercise price (“Exercise Price”) per Common Share for each Option (excluding an Option that is granted as a Substitute Award) shall not be less than 100% of the Fair Market Value of such share determined as of the Date of Grant; provided, however, that in the case of an Incentive Stock Option granted to an employee who, at the time of the grant of such Option, owns shares representing more than 10% of the voting power of all classes of shares of the Company or any Affiliate, the Exercise Price per share shall not be less than 110% of the Fair Market Value per share on the Date of Grant.

 

(c) Vesting and Expiration. Options shall vest and become exercisable in such manner and on such date or dates determined by the Committee and as set forth in the applicable Award Agreement, and shall expire after such period, not to exceed ten (10) years from the Date of Grant, as may be determined by the Committee (the “Option Period”); provided, however, that the Option Period shall not exceed five (5) years from the Date of Grant in the case of an Incentive Stock Option granted to a Participant who on the Date of Grant owns shares representing more than 10% of the voting power of all classes of shares of the Company or any Affiliate. Unless otherwise provided by the Committee in an Award Agreement:

 

(i) an Option shall vest and become exercisable with respect to one-third of the Common Shares subject to such Option on each of the first three anniversaries of the Date of Grant; provided, however, that the Committee may designate a purchase price below Fair Market Value on the date of grant if the Option is granted in substitution for a stock option previously granted by an entity that is acquired by or merged with the Company or an Affiliate;

 

(ii) the unvested portion of an Option shall expire upon termination of employment or service of the Participant granted the Option, and the vested portion of such Option shall remain exercisable for:

 

(A) one year following termination of employment or service by reason of such Participant’s death or Disability (with the determination of Disability to be made by the Committee on a case by case basis), but not later than the expiration of the Option Period; and

 

(B) 90 calendar days following termination of employment or service for any reason other than such Participant’s death or Disability, and other than such Participant’s termination of employment or service for Cause, but not later than the expiration of the Option Period; and

 

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(iii) both the unvested and the vested portion of an Option shall immediately expire upon the termination of the Participant’s employment or service by the Company for Cause.

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Notwithstanding the foregoing provisions of Section 7(c) and consistent with the requirements of applicable law, the Committee, in its sole discretion, may extend the post-termination of employment period during which a Participant may exercise vested Options.

 

(d)(a) Method of Exercise and Form of Payment. No Common Shares shall be delivered pursuant to the exercise of an Option until payment in full of the Exercise Price therefor is received by the Company and the Participant has paid to the Company an amount equal to any applicable federal, state, local and/or foreign income and employment taxes withheld. Options that have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with the terms of the Award Agreement accompanied by payment of the Exercise Price. The Exercise Price shall be payable (i) in cash, check (subject to collection), cash equivalent and/or vested Common Shares valued at the Fair Market Value at the time the Option is exercised (including, pursuant to procedures approved by the Committee, by means of attestation of ownership of a sufficient number of Common Shares in lieu of actual delivery of such shares to the Company); provided, however, that such Common Shares are not subject to any pledge or other security interest; and (ii) by such other method as the Committee may permit in accordance with applicable law, in its sole discretion, including without limitation: (A) in other property having a fair market value (as determined by the Committee in its discretion) on the date of exercise equal to the Exercise Price or (B) if there is a public market for the Common Shares at such time, by means of a broker-assisted “cashless exercise” pursuant to which the Company is delivered a copy of irrevocable instructions to a stockbroker to sell the Common Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the Exercise Price or (C) by a “net exercise” method whereby the Company withholds from the delivery of the Common Shares for which the Option was exercised that number of Common Shares having a Fair Market Value equal to the aggregate Exercise Price for the Common Shares for which the Option was exercised. Any fractional Common Shares shall be settled in cash.

 

(e)(b) Notification upon Disqualifying Disposition of an Incentive Stock Option. Each Participant awarded an Incentive Stock Option under this Plan shall notify the Company in writing immediately after the date he makes a disqualifying disposition of any Common Shares acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including, without limitation, any sale) of such Common Shares before the later of (A) two years after the Date of Grant of the Incentive Stock Option or (B) one year after the transfer of such Common Shares to the Participant pursuant to his exercise of the Incentive Stock Option. The Company may, if determined by the Committee and in accordance with procedures established by the Committee, retain possession of any Common Shares acquired pursuant to the exercise of an Incentive Stock Option as agent for the applicable Participant until the end of the period described in the preceding sentence.

 

(f)(c) Compliance with Laws, etc. Notwithstanding the foregoing, in no event shall a Participant be permitted to exercise an Option in a manner that the Committee determines would violate the Sarbanes-Oxley Act of 2002, if applicable, or any other applicable law or the applicable rules and regulations of the Securities and Exchange Commission or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded.

 

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8. Stock Appreciation Rights.

 

(a) Generally. Each SAR granted under this Plan shall be evidenced by an Award Agreement (whether in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)). Each SAR so granted shall be subject to the conditions set forth in this Section 8, and to such other conditions not inconsistent with this Plan as may be reflected in the applicable Award Agreement. Any Option granted under this Plan may include tandem SARs (i.e., SARs granted in conjunction with an Award of Options under this Plan). The Committee also may award SARs to Eligible Persons independent of any Option.

 

(b) Exercise Price. Price. The ExerciseStrike Price per Common Share for each OptionSAR (excluding a SAR that is granted in connection withas a SARSubstitute Award) shall not be less than 100% of the applicable Fair Market Value of such share determined as of the Date of Grant; provided, however, that the Committee may designate a purchase price below Fair Market Value on the date of grant if the SAR is granted in substitution for an appreciation right previously granted by an entity that is acquired by or merged with the Company or an Affiliate.share.

 

(c) Vesting and Expiration. A SAR granted in connection with an Option shall become exercisable and shall expire according to the same vesting schedule and expiration provisions as the corresponding Option. A SAR granted independent of an Option shall vest and become exercisable and shall expire in such manner and on such date or dates determined by the Committee and shall expire after such period, not to exceed ten years, as may be determined by the Committee (the “SAR Period). Unless otherwise provided by the Committee in an Award Agreement:

 

(i) a SAR shall vest and become exercisable with respect to one-third of the Common Shares subject to such SAR on each of the first three anniversaries of the Date of Grant;

 

(ii) the unvested portion of a SAR shall expire upon termination of employment or service of the Participant granted the SAR, and the vested portion of such SAR shall remain exercisable for:

 

(A) one year following termination of employment or service by reason of such Participant’s death or Disability (with the determination of Disability to be made by the Committee on a case by case basis), but not later than the expiration of the SAR Period; and

 

(B) 90 calendar days following termination of employment or service for any reason other than such Participant’s death or Disability, and other than such Participant’s termination of employment or service for Cause, but not later than the expiration of the SAR Period; and

 

(iii) both the unvested and the vested portion of a SAR shall expire immediately upon the termination of the Participant’s employment or service by the Company for Cause.

 

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(d) Method of Exercise. SARs that have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with the terms of the Award, specifying the number of SARs to be exercised and the date on which such SARs were awarded. Notwithstanding the foregoing, if on the last day of the Option Period (or in the case of a SAR independent of an Option, the SAR Period), the Fair Market Value exceeds the Strike Price, the Participant has not exercised the SAR or the corresponding Option (if applicable), and neither the SAR nor the corresponding Option (if applicable) has expired, such SAR shall be deemed to have been exercised by the Participant on such last day and the Company shall make the appropriate payment therefor.

 

(e) Payment. Upon the exercise of a SAR, the Company shall pay to the Participant an amount equal to the number of Common Shares subject to the SAR that are being exercised multiplied by the excess, if any, of the Fair Market Value of one Common Share on the exercise date over the Strike Price, less an amount equal to any applicable federal, state, local and non-U.S. income and employment taxes withheld. The Company shall pay such amount in cash, in Common Shares valued at Fair Market Value, or any combination thereof, as determined by the Committee. Any fractional Common Share shall be settled in cash.

 

9. Restricted Stock and Restricted Stock Units.

 

(a) Generally. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an Award Agreement (whether in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)). Each such grant shall be subject to the conditions set forth in this Section 9, and to such other conditions not inconsistent with this Plan as may be reflected in the applicable Award Agreement. Restricted Stock and Restricted Stock Units shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, for example, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock). These restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of performance goals or otherwise, as the Committee determines at the time of the grant of an Award or thereafter. Except as otherwise provided in an Award Agreement, a Participant shall have none of the rights of a stockholder with respect to Restricted Stock Units until such time as Common Shares are paid in settlement of such Awards.

 

(b) Restricted Accounts; Escrow or Similar Arrangement. Unless otherwise determined by the Committee, upon the grant of Restricted Stock, a book entry in a restricted account shall be established in the Participant’s name at the Company’s transfer agent and, if the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than held in such restricted account pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (i) an escrow agreement satisfactory to the Committee, if applicable, and (ii) the appropriate share power (endorsed in blank) with respect to the Restricted Stock covered by such agreement. If a Participant shall fail to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and blank share power within the amount of time specified by the Committee, the Award shall be null and void ab initio. Subject to the restrictions set forth in this Section 9 and the applicable Award Agreement, the Participant generally shall have the rights and privileges of a stockholder as to such Restricted Stock, including without limitation the right to vote such Restricted Stock and the right to receive dividends, if applicable. To the extent shares of Restricted Stock are forfeited, any share certificates issued to the Participant evidencing such shares shall be returned to the Company, and all rights of the Participant to such shares and as a stockholder with respect thereto shall terminate without further obligation on the part of the Company.

 

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(c) Vesting; Acceleration of Lapse of Restrictions. Unless otherwise provided by the Committee in an Award Agreement: (i) the Restricted Period shall lapse with respect to one-third of the Restricted Stock and Restricted Stock Units on each of the first three anniversaries of the Date of Grant; and (ii) the unvested portion of Restricted Stock and Restricted Stock Units shall terminate and be forfeited upon the termination of employment or service of the Participant granted the applicable Award.

 

(d) Delivery of Restricted Stock and Settlement of Restricted Stock Units.

 

(i) Upon the expiration of the Restricted Period with respect to any shares of Restricted Stock, the restrictions set forth in the applicable Award Agreement shall be of no further force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used, upon such expiration, the Company shall deliver to the Participant, or his beneficiary, without charge, the share certificate evidencing the shares of Restricted Stock that have not then been forfeited and with respect to which the Restricted Period has expired (rounded down to the nearest full share). Dividends, if any, that may have been withheld by the Committee and attributable to any particular share of Restricted Stock shall be distributed to the Participant in cash or, at the sole discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to the amount of such dividends, upon the release of restrictions on such shares of Restricted Stock and, if such shares of Restricted Stock are forfeited, the Participant shall have no right to such dividends.

 

(ii) Unless otherwise provided by the Committee in an Award Agreement, following the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, the Company shall deliver to the Participant, or his beneficiary, without charge, one Common Share for each such outstanding Restricted Stock Unit on the earliest to occur of (A) the Participant’s termination of service for any reason, provided that such termination constitutes a “separation from service” under Section 409A of the Code, (B) the Participant’s death, (C) the Participant’s termination of service on account of Disability, and (D) a Change in Control; provided, however, that the Committee may (i) elect, as set forth in its sole discretion and subjectan Award Agreement, to the requirements of Section 409A of the Code, elect to (i) pay cash or part cash and part Common ShareShares in lieu of delivering only Common Shares in respect of such Restricted Stock Units or (ii) defer the delivery of Common Shares (or cash or part Common Shares and part cash, as the case may be) beyond the 75^th day of the calendar year following the calendar year in which settlement is required if such delivery would result in a violation of applicable law until such time as is no longer the case. If a cash payment is made in lieu of delivering Common Shares, the amount of such payment shall be equal to the Fair Market Value of the Common Shares as of the applicable payment date, less an amount equal to any applicable federal, state, local and non-U.S. income and employment taxes withheld. Notwithstanding anything contained herein to the contrary, the Committee in an Award Agreement may, in a manner consistent with the applicable requirements of Section 409A of the Code, enable a Participant to elect to defer the date on which settlement of the Restricted Stock Units shall occur.

 

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10. Stock Bonus Awards. The Committee may issue unrestricted Common Shares, or other Awards denominated in Common Shares, under this Plan to Eligible Persons, either alone or in tandem with other awards, in such amounts as the Committee shall from time to time in its sole discretion determine. Each Stock Bonus Award granted under this Plan shall be evidenced by an Award Agreement (whether in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)). Each Stock Bonus Award so granted shall be subject to such conditions not inconsistent with this Plan as may be reflected in the applicable Award Agreement.

 

11. Changes in Capital Structure and Similar Events. In the event of (a) any extraordinary dividend or other distribution (whether in the form of cash, Common Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, amalgamation, consolidation, spin-off, split-up, split-off, combination, repurchase or exchange of Common Shares or other securities of the Company, issuance of warrants or other rights to acquire Common Shares or other securities of the Company, or other similar corporate transaction or event (including, without limitation, a Change in Control) that affects the Common Shares, or (b) unusual or nonrecurring events (including, without limitation, a Change in Control) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, such that in either case an adjustment is determined by the Committee in its sole discretion to be necessary or appropriate in order to prevent dilution or enlargement of rights, then the Committee shall make any such adjustments that are equitable, including without limitation any or all of the following:

 

(i) adjusting any or all of (A) the number of Common Shares or other securities of the Company (or number and kind of other securities or other property) that may be delivered in respect of Awards or with respect to which Awards may be granted under this Plan (including, without limitation, adjusting any or all of the limitations under Section 5 of this Plan) and (B) the terms of any outstanding Award, including, without limitation, (1) the number of Common Shares or other securities of the Company (or number and kind of other securities or other property) subject to outstanding Awards or to which outstanding Awards relate, (2) the Exercise Price or Strike Price with respect to any Award or (3) any applicable performance measures;

 

(ii) subject to the requirements of Section 409A of the Code, providing for a substitution or assumption of Awards, accelerating the exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time for exercise prior to the occurrence of such event; and

 

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(iii) subject to the requirements of Section 409A of the Code, canceling any one or more outstanding Awards and causing to be paid to the holders thereof, in cash, Common Shares, other securities or other property, or any combination thereof, the value of such Awards, if any, as determined by the Committee (which if applicable may be based upon the price per Common Share received or to be received by other stockholders of the Company in such event), including without limitation, in the case of an outstanding Option or SAR, a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the Common Shares subject to such Option or SAR over the aggregate Exercise Price or Strike Price of such Option or SAR, respectively (it being understood that, in such event, any Option or SAR having a per share Exercise Price or Strike Price equal to, or in excess of, the Fair Market Value of a Common Share subject thereto may be canceled and terminated without any payment or consideration therefor); provided, however, that in the case of any “equity restructuring” (within the meaning of the FASB Statement of Financial Accounting Standards No. 123 (revised 2004) or ASC Topic 718, or any successor thereto), the Committee shall make an equitable or proportionate adjustment to outstanding Awards to reflect such equity restructuring. Any adjustment in Incentive Stock Options under this Section 11 (other than any cancellation of Incentive Stock Options) shall be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code, and any adjustments under this Section 11 shall be made in a manner that does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.

 

12. Change in Control Provisions. Except to the extent provided in an Award Agreement or otherwise by the Committee in accordance with its authority under Section 4, in the event of a Participant’s termination of employment or service without Cause by the Company or an Affiliate within the twelve (12) month period immediately following a Change in Control (such that the Participant’s Awards would otherwise be cancelled (e.g., not be retained in accordance with Section 14(g)), notwithstanding any provision of this Plan to the contrary, with respect to all or any portion of the Participant’s particular outstanding Award or Awards, the following shall apply:

 

(a) any unvested Options and SARs held by the Participant shall become vested and exercisable on the effective date of such termination; and

 

(b) the Restricted Period applicable to any unvested Restricted Stock, Restricted Stock Units or other Awards held by the Participant shall expire (including without limitation any applicable performance conditions) and such Awards shall be deemed vested on the effective date of such termination.

 

The Committee shall also have discretion, in the event of a Change in Control, and subject to the terms of any applicable Award Agreement and compliance with the requirements of Section 409A of the Code, to accelerate the vesting, payment or right to exercise of any Award effective immediately upon the occurrence of the Change in Control and cause the restrictions and forfeiture conditions applicable to any Award to lapse and deem such Awards fully vested and any performance conditions imposed with respect to Awards to be fully achieved.

 

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13. Amendments and Termination.

 

(a) Amendment and Termination of this Plan. The Board may amend, alter, suspend, discontinue, or terminate this Plan or any portion thereof at any time; provided, that no such amendment, alteration, suspension, discontinuation or termination shall be made without stockholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to this Plan (including, without limitation, as necessary to comply with any rules or requirements of any national securities exchange or inter-dealer quotation system on which the Common Shares may be listed or quoted); and, provided, further, that any such amendment, alteration, suspension, discontinuance or termination that would materially and adversely affect the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be effective without the prior written consent of the affected Participant, holder or beneficiary.

 

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(b) Amendment of Award Agreements. The Committee may, to the extent consistent with the terms of any applicable Award Agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted or the associated Award Agreement, prospectively or retroactively; provided, however,, that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant with respect to any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant.

 

(c) Repricing Prohibition, Other than pursuant to Section 11, the Committee shall not without the approval of the Company’s stockholders (a) lower the exercise price of an Option or Stock Appreciation Right, (b) cancel an Option or Stock Appreciation Right when the option price per share exceeds the Fair Market Value of one share in exchange for cash or another Award (other than in connection with a Change in Control), or (c) take any other action with respect to an Option or Stock Appreciation Right that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which the Shares are listed.

 

14. General.

 

(a) Award Agreements. Each Award under this Plan shall be evidenced by an Award Agreement setting forth the terms and conditions applicable to the Award, which shall be delivered to the Participant (whether in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)) and shall specify the terms and conditions of the Award and any rules applicable thereto, including without limitation, the effect on such Award of the death, Disability or termination of employment or service of a Participant, or of such other events as may be determined by the Committee. The Company’s failure to specify any term of any Award in any particular Award Agreement shall not invalidate such term, provided such terms was duly adopted by the Board or the Committee..

 

(b) Nontransferability; Trading Restrictions.

 

(i) Each Award shall be exercisable only by a Participant during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or an Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.

 

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(ii) Notwithstanding the foregoing, the Committee may, in its sole discretion, permit Awards (other than Incentive Stock Options) to be transferred by a Participant subject to such rules as the Committee may adopt consistent with any applicable Award Agreement to preserve the purposes of this Plan, to: (A) any person who is a “family member” of the Participant, as such term is used in the instructions to Form S-8 under the Securities Act (collectively, the “Immediate Family Members”); (B) a trust solely for the benefit of the Participant and his Immediate Family Members; (C) a partnership or limited liability company whose only partners or stockholders are the Participant and his Immediate Family Members; or (D) any other transferee as may be approved either (I) by the Board or the Committee in its sole discretion, or (II) as provided in the applicable Award Agreement (each transferee described in clauses (A), (B), (C) and (D) above is hereinafter referred to as a “Permitted Transferee”); provided, that the Participant gives the Committee advance written notice describing the terms and conditions of the proposed transfer and the Committee notifies the Participant in writing that such a transfer would comply with the requirements of this Plan. For the avoidance of doubt, Awards may not be transferred to an unrelated third party for consideration.

 

(iii) The terms of any Award transferred in accordance with subparagraph (ii) above shall apply to the Permitted Transferee and any reference in this Plan, or in any applicable Award Agreement, to a Participant shall be deemed to refer to the Permitted Transferee, except that (A) Permitted Transferees shall not be entitled to transfer any Award, other than by will or the laws of descent and distribution; (B) Permitted Transferees shall not be entitled to exercise any transferred Option unless there shall be in effect a registration statement on an appropriate form covering the Common Shares to be acquired pursuant to the exercise of such Option if the Committee determines, consistent with any applicable Award Agreement, that such a registration statement is necessary or appropriate; (C) the Committee or the Company shall not be required to provide any notice to a Permitted Transferee, whether or not such notice is or would otherwise have been required to be given to the Participant under this Plan or otherwise; and (D) the consequences of the termination of the Participant’s employment by, or services to, the Company or an Affiliate under the terms of this Plan and the applicable Award Agreement shall continue to be applied with respect to the Participant, including, without limitation, that an Option shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in this Plan and the applicable Award Agreement.

 

(iv) The Committee shall have the right, either on an Award-by-Award basis or as a matter of policy for all Awards or one or more classes of Awards, to condition the delivery of vested Common Shares received in connection with such Award on the Participant’s agreement to such restrictions as the Committee may determine.

 

(c) Tax Withholding.

 

(i) A Participant shall be required to pay to the Company or any Affiliate, or the Company or any Affiliate shall have the right and is hereby authorized to withhold, from any cash, Common Shares, other securities or other property deliverable under any Award or from any compensation or other amounts owing to a Participant, the amount (in cash, Common Shares, other securities or other property) of any required withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under this Plan and to take such other action as may be necessary in the opinion of the Committee or the Company to satisfy all obligations for the payment of such withholding and taxes. In addition, the Committee, in its discretion, may make arrangements mutually agreeable with a Participant who is not an employee of the Company or an Affiliate to facilitate the payment of applicable income and self-employment taxes.

 

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(ii) Without limiting the generality of clause (i) above, the Committee may, in its sole discretion, permit a Participant to satisfy, in whole or in part, the foregoing withholding liability by (A) the delivery of Common Shares (which are not subject to any pledge or other security interest) owned by the Participant having a fair market value equal to such withholding liability or (B) having the Company withhold from the number of Common Shares otherwise issuable or deliverable pursuant to the exercise or settlement of the Award a number of shares with a fair market value equal to such withholding liability (but no more than the maximum individual statutory rate for the applicable tax jurisdiction).

 

(d) No Claim to Awards; No Rights to Continued Employment; Waiver. No employee of the Company or an Affiliate, or other person, shall have any claim or right to be granted an Award under this Plan or, having been selected for the grant of an Award, to be selected for a grant of any other Award. There is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant and may be made selectively among Participants, whether or not such Participants are similarly situated. Neither this Plan nor any action taken hereunder shall be construed as giving any Participant any right to be retained in the employ or service of the Company or an Affiliate, nor shall it be construed as giving any Participant any rights to continued service on the Board. The Company or any of its Affiliates may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under this Plan, unless otherwise expressly provided in this Plan or any Award Agreement. By accepting an Award under this Plan, a Participant shall thereby be deemed to have waived any claim to continued exercise or vesting of an Award or to damages or severance entitlement related to non-continuation of the Award beyond the period provided under this Plan or any Award Agreement, notwithstanding any provision to the contrary in any written employment contract or other agreement between the Company and its Affiliates and the Participant, whether any such agreement is executed before, on or after the Date of Grant.

 

(e) International Participants. With respect to Participants who reside or work outside of the United States of America, the Committee may in its sole discretion amend the terms of this Plan or outstanding Awards (or establish a sub-plan) with respect to such Participants in order to conform such terms with the requirements of local law or to obtain more favorable tax or other treatment for such Participants, the Company or its Affiliates.

 

(f) Designation and Change of Beneficiary. Unless otherwise provided by the Committee in an Award Agreement, each Participant may file with the Committee a written designation of one or more persons as the beneficiary(ies) who shall be entitled to receive the amounts payable with respect to an Award, if any, due under this Plan upon his death. A Participant may, from time to time, revoke or change his beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation filed with the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary designation is filed by a Participant, the beneficiary shall be deemed to be his spouse or, if the Participant is unmarried at the time of death, his estate. Upon the occurrence of a Participant’s divorce (as evidenced by a final order or decree of divorce), any spousal designation previously given by such Participant shall automatically terminate.

 

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(g) Termination of Employment/Service. Unless determined otherwise by the Committee at any point including following such event: (i) neither a temporary absence from employment or service due to illness, vacation or leave of absence nor a transfer from employment or service with the Company to employment or service with an Affiliate (or vice-versa) nor ceasing to serve in any office or capacity for the Company or its Affiliates while continuing to serve in one or more other offices or capacities for the Company or its Affiliates shall be considered a termination of employment or service with the Company or an Affiliate; and (ii) if a Participant’s employment with the Company and its Affiliates terminates, but such Participant continues to provide services to the Company and its Affiliates in a non-employee capacity (or vice-versa), such change in status shall not be considered a termination of employment with the Company or an Affiliate for purposes of this Plan unless the Committee, in its discretion, determines otherwise.

 

(h) No Rights as a Stockholder. Except as otherwise specifically provided in this Plan or any Award Agreement, no person shall be entitled to the privileges of ownership in respect of Common Shares that are subject to Awards hereunder until such shares have been issued or delivered to that person.

 

(i) Government and Other Regulations.

 

(i) The obligation of the Company to settle Awards in Common Shares or other consideration shall be subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell, and shall be prohibited from offering to sell or selling, any Common Shares pursuant to an Award unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel, satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the Common Shares to be offered or sold under this Plan. The Committee shall have the authority to provide that all certificates for Common Shares or other securities of the Company or any Affiliate delivered under this Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under this Plan, the applicable Award Agreement, the federal securities laws, or the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system upon which such shares or other securities are then listed or quoted and any other applicable federal, state, local or non-U.S. laws, and, without limiting the generality of Section 9 of this Plan, the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. Notwithstanding any provision in this Plan to the contrary, the Committee reserves the right to add any additional terms or provisions to any Award granted under this Plan that it in its sole discretion deems necessary or advisable in order that such Award complies with the legal requirements of any governmental entity to whose jurisdiction the Award is subject.

 

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(ii) The Committee may cancel an Award or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of Common Shares from the public markets, the Company’s issuance of Common Shares to the Participant, the Participant’s acquisition of Common Shares from the Company and/or the Participant’s sale of Common Shares to the public markets, illegal, impracticable or inadvisable. If the Committee determines to cancel all or any portion of an Award in accordance with the foregoing, unless doing so would violate Section 409A of the Code, the Company shall pay to the Participant an amount equal to the excess of (A) the aggregate Fair Market Value of the Common Shares subject to such Award or portion thereof canceled (determined as of the applicable exercise date, or the date that the shares would have been vested or delivered, as applicable), over (B) the aggregate Exercise Price or Strike Price (in the case of an Option or SAR, respectively) or any amount payable as a condition of delivery of Common Shares (in the case of any other Award). Such amount shall be delivered to the Participant as soon as practicable following the cancellation of such Award or portion thereof. The Committee shall have the discretion to consider and take action to mitigate the tax consequence to the Participant in cancelling an Award in accordance with this clause.

 

(j) Payments to Persons Other Than Participants. If the Committee shall find that any person to whom any amount is payable under this Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment due to such person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs the Company, be paid to his spouse, child, relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.

 

(k) Nonexclusivity of this Plan. Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options or other equity-based awards otherwise than under this Plan, and such arrangements may be either applicable generally or only in specific cases.

 

(l) No Trust or Fund Created. Neither this Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate, on the one hand, and a Participant or other person or entity, on the other hand. No provision of this Plan or any Award shall require the Company, for the purpose of satisfying any obligations under this Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Participants shall have no rights under this Plan other than as general unsecured creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other employees under general law.

 

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(m) Reliance on Reports. Each member of the Committee and each member of the Board shall be fully justified in acting or failing to act, as the case may be, and shall not be liable for having so acted or failed to act in good faith, in reliance upon any report made by the independent public accountant of the Company and/or its Affiliates and/or any other information furnished in connection with this Plan by any agent of the Company or the Committee or the Board, other than himself.

 

(n) Relationship to Other Benefits. No payment under this Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically provided in such other plan.

 

(o) Governing Law. The Plan shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of laws provisions.

 

(p) Severability. If any provision of this Plan or any Award or Award Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or entity or Award, or would disqualify this Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws in the manner that most closely reflects the original intent of the Award or the Plan, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of this Plan or the Award, such provision shall be construed or deemed stricken as to such jurisdiction, person or entity or Award and the remainder of this Plan and any such Award shall remain in full force and effect.

 

(q) Obligations Binding on Successors. The obligations of the Company under this Plan shall be binding upon any successor corporation or organization resulting from the merger, amalgamation, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.

 

(r) Expenses; Gender; Titles and Headings. The expenses of administering this Plan shall be borne by the Company and its Affiliates. Masculine pronouns and other words of masculine gender shall refer to both men and women. The titles and headings of the sections in this Plan are for convenience of reference only, and in the event of any conflict, the text of this Plan, rather than such titles or headings shall control.

 

(s) Other Agreements. Notwithstanding the above, the Committee may require, as a condition to the grant of and/or the receipt of Common Shares under an Award, that the Participant execute lock-up, stockholder or other agreements, as it may determine in its sole and absolute discretion.

 

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(t) Section 409A. The Plan and all Awards granted hereunder are intended to comply with, or otherwise be exempt from, the requirements of Section 409A of the Code. The Plan and all Awards granted under this Plan shall be administered, interpreted, and construed in a manner consistent with Section 409A of the Code to the extent necessary to avoid the imposition of additional taxes under Section 409A(a)(1)(B) of the Code. Notwithstanding anything in this Plan to the contrary, in no event shall the Committee exercise its discretion to accelerate the payment or settlement of an Award where such payment or settlement constitutes deferred compensation within the meaning of Section 409A of the Code unless, and solely to the extent that, such accelerated payment or settlement is permissible under Section 1.409A-3(j)(4) of the Treasury Regulations. If a Participant is a “specified employee” (within the meaning of Section 1.409A-1(i) of the Treasury Regulations) at any time during the twelve (12)-month period ending on the date of his termination of employment, and any Award hereunder subject to the requirements of Section 409A of the Code is to be satisfied on account of the Participant’s termination of employment, satisfaction of such Award shall be suspended until the date that is six (6) months after the date of such termination of employment. In no event shall the Company or any of its Affiliates be liable for any taxes, penalties, interest, or other expenses that may be incurred by a Participant under Section 409A of the Code.

 

(u) Clawback and Repayment. All Awards shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or Committee and as in effect from time to time; and (ii) applicable law. Further, to the extent that the Participant receives any amount in excess of the amount that the Participant should otherwise have received under the terms of the Award for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), the Participant shall be required to repay any such excess amount to the Company.

 

(v) Payments. Participants shall be required to pay, to the extent required by applicable law, any amounts required to receive Common Shares under any Award made under this Plan.

 

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FORM OF PROXY CARD (WHITE)