INTERNATIONAL GAME TECHNOLOGY
1993 STOCK OPTION PLAN
(Amended and Restated Effective as of August 27, 1996)
(Composite Plan Document Incorporating Amendments 1998-I and 1998-II)
I. THE PLAN
.1 Purpose
The purpose of this Plan is to promote the success of the Company by
providing an additional means through the grant of Awards to attract, motivate,
retain and reward key employees, including officers, whether or not directors,
of the Company with Awards and incentives for high levels of individual
performance and improved financial performance of the Company and to attract,
motivate and retain experienced and knowledgeable independent directors through
the benefits provided under Article VII. "Corporation" means International Game
Technology, a Nevada corporation, and "Company" means the Corporation and its
Subsidiaries, collectively. These terms and other capitalized terms are defined
in Article VIII.
.2 Administration and Authorization; Power and Procedure
(a) Committee. This Plan shall be administered by and all Awards to Eligible
Employees shall be authorized by the Committee. Action of the Committee with
respect to the administration of this Plan shall be taken pursuant to a majority
vote or by written consent of its members.
(b) Plan Awards; Interpretation; Powers of Committee. Subject to the express
provisions of this Plan, the Committee shall have the authority:
(i) to determine from among those persons eligible the particular Eligible
Employees who will receive any Awards;
(ii) to grant Awards to Eligible Employees, determine the price at which
securities will be offered or awarded and the amount of securities to
be offered or awarded to any of such individuals, and determine the
other specific terms and conditions of such Awards consistent with the
express limits of this Plan, and establish the installments (if any) in
which such Awards shall become exercisable or shall vest, or determine
that no delayed exercisability or vesting is required, and establish
the events of termination or reversion of such Awards;
(iii) to approve the forms of Award Agreements (which need not be identical
either as to type of Award or as among Participants);
(iv) to construe and interpret this Plan and any agreements defining the
rights and obligations of the Company and Participants under this Plan,
further define the terms used in this Plan, and prescribe, amend and
rescind rules and regulations relating to the administration of this
Plan;
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(v) to cancel, modify, or waive the Corporation's rights with respect to,
or modify, discontinue, suspend, or terminate any or all outstanding
Awards held by Eligible Employees, subject to any required consent
under Section 6.6;
(vi) to accelerate or extend the exercisability or extend the term of any or
all such outstanding Awards within the maximum ten-year term of Awards
under Section 1.6; and
(vii) to make all other determinations and take such other action as
contemplated by this Plan or as may be necessary or advisable for the
administration of this Plan and the effectuation of its purposes.
Notwithstanding the foregoing, the provisions of Article VII relating to
Non-Employee Director Options shall be automatic and, to the maximum extent
possible, self-effectuating.
(c) Binding Determinations. Any action taken by, or inaction of, the
Corporation, any Subsidiary, the Board or the Committee relating or pursuant to
this Plan shall be within the absolute discretion of that entity or body and
shall be conclusive and binding upon all persons. No member of the Board or
Committee, or officer of the Corporation or any Subsidiary, shall be liable for
any such action or inaction of the entity or body, of another person or, except
in circumstances involving bad faith of himself or herself. Subject only to
compliance with the express provisions hereof, the Board and Committee may act
in their absolute discretion in matters within their authority related to this
Plan.
(d) Reliance on Experts. In making any determination or in taking or not taking
any action under this Plan, the Committee or the Board, as the case may be, may
obtain and may rely upon the advice of experts, including professional advisors
to the Corporation. No director, officer or agent of the Company shall be liable
for any such action or determination taken or made or omitted in good faith.
(e) Delegation. The Committee may delegate ministerial, non-discretionary
functions to a third-party administrator or to individuals who are officers or
employees of the Company.
.3 Participation
Awards may be granted by the Committee only to those persons that the
Committee determines to be Eligible Employees. An Eligible Employee who has been
granted an Award may, if otherwise eligible, be granted additional Awards if the
Committee shall so determine. Non-Employee Directors shall not be eligible to
receive any Options except for Nonqualified Stock Options granted automatically
without action of the Committee under the provisions of Article VII.
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.4 Shares Available for Awards; Share Limits
Subject to the provisions of Section 6.2, the capital stock that may be
delivered under this Plan shall be shares of the Corporation's authorized but
unissued Common Stock and any shares of its Common Stock held as treasury
shares. The shares may be delivered for any lawful consideration.
(a) Share Limits. The maximum number of shares of Common Stock that may be
delivered pursuant to all Awards, including Incentive Stock Options, granted to
Eligible Employees under this Plan shall not exceed 8,000,000 shares. The
maximum number of shares of Common Stock that may be delivered to Non-Employee
Directors in respect of Options granted under the provisions of Article VII
shall not exceed 500,000 shares. The maximum number of shares of Common Stock
subject to Options and Stock Appreciation Rights that are granted during any
calendar year to any individual shall not exceed 1,000,000 shares. The maximum
number of shares of Common Stock that may be delivered to Participants in
respect of time-based Restricted Stock Awards and Stock Bonuses granted, for
nominal or no consideration other than the amount of the par value thereof,
under the provisions of Article IV and Section 5.3, respectively, shall not
exceed 500,000 shares in the aggregate. The limit in the foregoing sentence
shall not apply to shares delivered in respect of compensation earned but
deferred. Each of the foregoing numerical limits shall be subject to adjustment
as contemplated by Section 6.2.
(b) Share Reservation; Replenishment and Reissue of Unvested Awards. No Award
may be granted under this Plan unless, on the date of grant, the sum of (i) the
maximum number of shares issuable at any time pursuant to such Award, plus (ii)
the number of shares that have previously been issued pursuant to Awards granted
under this Plan, other than reacquired shares available for reissue consistent
with any applicable legal limitations, plus (iii) the maximum number of shares
that may be issued at any time after such date of grant pursuant to Awards that
are outstanding on such date, does not exceed the applicable share limit(s)
under Section 1.4(a). Shares that are subject to or underlie Awards which expire
or for any reason are cancelled or terminated, are forfeited, fail to vest, or
for any other reason are not paid or delivered under this Plan, as well as
reacquired shares, shall again, except to the extent prohibited by law, be
available for subsequent Awards under the Plan. Except as limited by law, if an
Award is or may be settled only in cash, such Award need not be counted against
any of the limits under this Section 1.4.
.5 Grant of Awards
Subject to the express provisions of this Plan, the Committee shall
determine the number of shares of Common Stock subject to each Award, the price
(if any) to be paid for the shares or the Award and, in the case of Performance
Share Awards, in addition to matters addressed in Section 1.2(b), the specific
objectives, goals and performance criteria (such as an increase in sales, market
value, earnings or book value over a base period, the years of service before
vesting, the relevant job classification or level of responsibility or other
factors) that further define the terms of the Performance Share Award. Each
Award shall be evidenced by an Award Agreement signed by the Corporation and, if
required by the Committee, by the Participant. The Award Agreement shall set
forth the material terms and conditions of the Award established by the
Committee consistent with the specific provisions of this Plan.
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.6 Award Period
Each Award and all executory rights or obligations under the related
Award Agreement shall expire on such date (if any) as shall be determined by the
Committee, but in the case of Options or other rights to acquire Common Stock
not later than ten (10) years after the Award Date.
.7 Limitations on Exercise and Vesting of Awards
(a) Exercise. Unless the Committee expressly provides otherwise, no Award shall
be exercisable or shall vest until at least six months after the initial Award
Date, and once exercisable an Award shall remain exercisable until the
expiration or earlier termination of the Award.
(b) Procedure. Any exercisable Award shall be deemed to be exercised when the
Secretary of the Corporation receives written notice of such exercise from the
Participant, together with the required any payment made in accordance with
Section 2.2(b) or 7.3, as the case may be.
(c) Fractional Shares/Minimum Issue. Fractional share interests shall be
disregarded, but may be accumulated. The Committee, however, may determine in
the case of Eligible Employees that cash, other securities or other property
will be paid or transferred in lieu of any fractional share interests. No fewer
than 100 shares may be purchased on exercise of any Award at one time unless the
number purchased is the total number at the time available for purchase under
the Award.
.8 Acceptance of Notes to Finance Exercise
The Corporation may, with the Committee's approval, accept one or more
notes from any Eligible Employee in connection with the exercise or receipt of
any outstanding Award; provided that any such note shall be subject to the
following terms and conditions:
(a) The principal of the note shall not exceed the amount required to be paid to
the Corporation upon the exercise or receipt of one or more Awards under the
Plan and the note shall be delivered directly to the Corporation in
consideration of such exercise or receipt.
(b) The initial term of the note shall be determined by the Committee; provided
that the term of the note, including extensions, shall not exceed a period of 10
years.
(c) The note shall provide for full recourse to the Participant and shall bear
interest at a rate determined by the Committee but not less than the applicable
imputed interest rate specified by the Code.
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(d) If the employment of the Participant terminates, the unpaid principal
balance of the note shall become due and payable on the 10th business day after
such termination; provided, however, that if a sale of such shares would cause
such Employee Participant to incur liability under Section 16(b) of the Exchange
Act, the unpaid balance shall become due and payable on the 10th business day
after the first day on which a sale of such shares could have been made without
incurring such liability assuming for these purposes that there are no other
transactions by the Employee Participant subsequent to such termination.
(e) If required by the Committee or by applicable law, the note shall be secured
by a pledge of any shares or rights financed thereby in compliance with
applicable law.
(f) The terms, repayment provisions, and collateral release provisions of the
note and the pledge securing the note shall conform with applicable rules and
regulations of the Federal Reserve Board as then in effect.
.9 No Transferability
(a) Limit On Exercise and Transfer. Unless otherwise expressly provided in (or
pursuant to) this Section 1.9, by applicable law and by the Award Agreement, as
the same may be amended, (i) all Awards are non-transferable and shall not be
subject in any manner to sale, transfer, anticipation, alienation, assignment,
pledge, encumbrance or charge; Awards shall be exercised only by the
Participant; and (ii) shares issuable pursuant to an Award shall be delivered
only to (or for the account of) the Participant.
(b) Exceptions. The Committee may permit Awards to be exercised by certain
persons or entities related to the Participant, including but not limited to
members of the Participant's family, charitable institutions, or trusts or other
entities whose beneficiaries or beneficial owners are members of the
Participant's family and/or charitable institutions, or to such other persons or
entities as may be approved by the Committee, pursuant to such conditions and
procedures as the Committee may establish. Any permitted transfer shall be
subject to the condition that the Committee receive evidence satisfactory to it
that the transfer is being made for estate and/or tax planning purposes on a
gratuitous or donative basis and without consideration (other than nominal
consideration).
(c) Further Exceptions to Limits On Transfer. The exercise and transfer
restrictions in Section 1.9(a) shall not apply to:
(i) transfers to the Corporation,
(ii) the designation of a beneficiary to receive benefits in the event of
the Participant's death or, if the Participant has died, transfers to
or exercise by the Participant's beneficiary, or, in the absence of a
validly designated beneficiary, transfers by will or the laws of
descent and distribution,
(iii) transfers pursuant to a QDRO if approved or ratified by the Committee,
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(iv) if the Participant has suffered a Total Disability, permitted transfers
or exercises on behalf of the Participant by his or her legal
representative, or
(v) the authorization by the Committee of "cashless exercise" procedures
with third parties who provide financing for the purpose of (or who
otherwise facilitate) the exercise of Awards consistent with applicable
laws and the express authorization of the Committee.
(d) Limitations on Incentive Stock Options and Restricted Stock Awards.
Notwithstanding the foregoing, Incentive Stock Options and Restricted Stock
Awards shall be subject to any and all applicable transfer restrictions under
the Code.
II. EMPLOYEE OPTIONS
.1 Grants
One or more Options may be granted under this Article to any Eligible
Employee. Each Option granted may be either an Option intended to be an
Incentive Stock Option, or an Option not so intended, and such intent shall be
indicated in the applicable Option Agreement.
.2 Option Price
(a) Pricing Limits. The purchase price per share of the Common Stock covered by
each Option shall be determined by the Committee at the time of the Option is
granted, but in the case of Incentive Stock Options shall not be less than 100%
(110% in the case of a Participant who owns or is deemed to own under Section
424(d) of the Code more than 10% of the total combined voting power of all
classes of stock of the Corporation) of the Fair Market Value of the Common
Stock on the Award Date.
(b) Payment Provisions. The purchase price of any shares purchased on exercise
of an Option granted under this Article shall be paid in full at the time of
each purchase in one or a combination of the following methods: (i) in cash or
by electronic funds transfer; (ii) by check payable to the order of the
Corporation; (iii) if authorized by the Committee or specified in the applicable
Option Agreement, by a promissory note of the Participant consistent with the
requirements of Section 1.8; (iv) by notice and third party payment in such
manner as may be authorized by the Committee; or (v) by the delivery of shares
of Common Stock of the Corporation already owned by the Participant, provided,
however, that the Committee may in its absolute discretion limit the
Participant's ability to exercise an Option by delivering such shares. Shares of
Common Stock used to satisfy the exercise price of an Option shall be valued at
their Fair Market Value on the date of exercise.
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.3 Limitations on Grant and Terms of Incentive Stock Options
(a) $100,000 Limit. To the extent that the aggregate "Fair Market Value" of
stock with respect to which Incentive Stock Options first become exercisable by
a Participant in any calendar year exceeds $100,000, taking into account both
Common Stock subject to Incentive Stock Options under this Plan and stock
subject to Incentive Stock Options under all other plans of the Company or any
parent corporation, such options shall be treated as nonqualified stock options.
For this purpose, the "Fair Market Value" of the stock subject to options shall
be determined as of the date the options were optioned. In reducing the number
of options treated as Incentive Stock Options to meet the $100,000 limit, the
most recently granted options shall be reduced first. To the extent a reduction
of simultaneously granted options is necessary to meet the $100,000 limit, the
Committee may, in the manner and to the extent permitted by law, designate which
shares of Common Stock are to be treated as shares acquired pursuant to the
exercise of an Incentive Stock Option.
(b) Option Period. Each Incentive Stock Option and all rights thereunder shall
expire no later than ten years after the Award Date.
(c) Other Code Limits. There shall be imposed in any Award Agreement relating to
Incentive Stock Options such terms and conditions as from time to time are
required in order that the Option be an "incentive stock option" as that term is
defined in Section 422 of the Code.
.4 Limits on 10% Holders
No Incentive Stock Option may be granted to any person who, at the time
the Option is granted, owns (or is deemed to own under Section 424(d) of the
Code) shares of outstanding Common Stock possessing more than 10% of the total
combined voting power of all classes of stock of the Corporation, unless the
exercise price of such Option is at least 110% of the Fair Market Value of the
stock subject to the Option and such Option by its terms is not exercisable
after the expiration of five years from the date such Option is granted.
.5 Cancellation and Regrant/Waiver of Restrictions
Subject to Section 1.4 and Section 6.6 and the specific limitations on
Options contained in this Plan, the Committee from time to time may authorize,
generally or in specific cases only, for the benefit of any Eligible Employee,
any adjustment in the exercise price, the number of shares subject to or the
term of, an Option granted under this Article by cancellation of an outstanding
Option and a subsequent regranting of an Option, by amendment, by substitution
of an outstanding Option, by waiver or by other legally valid means. Such
amendment or other action may result among other changes in an exercise price
which is higher or lower than the exercise or purchase price of the original or
prior Option, provide for a greater or lesser number of shares subject to the
Option, or provide for a longer or shorter vesting or exercise period.
III. STOCK APPRECIATION RIGHTS
.1 Grants
In its discretion, the Committee may grant a Stock Appreciation Right
to any Eligible Employee either concurrently with the grant of another Award or
in respect of an outstanding Award, in whole or in part, or independently of any
other Award. Any Stock Appreciation Right granted in connection with an
Incentive Stock Option shall contain such terms as may be required to comply
with the provisions of Section 422 of the Code and the regulations promulgated
thereunder, unless the holder otherwise agrees.
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.2 Exercise of Stock Appreciation Rights
(a) Exercisability. Unless the Award Agreement or the Committee otherwise
provides, a Stock Appreciation Right related to another Award shall be
exercisable at such time or times, and to the extent, that the related Award
shall be exercisable.
(b) Effect on Available Shares. To the extent that a Stock Appreciation Right is
exercised, the number of underlying shares of Common Stock therefore subject to
a related Award shall be charged against the maximum amount of Common Stock that
may be delivered pursuant to Awards under this Plan. The number of shares
subject to the Stock Appreciation Right and the related Option of the
Participant shall be reduced by the number of underlying shares as to which the
exercise related, unless the Award Agreement otherwise provides.
(c) Stand-Alone SARs. A Stock Appreciation Right granted independently of any
other Award shall be exercisable pursuant to the terms of the Award Agreement
but in no event earlier than six months after the Award Date, except in the case
of death or Total Disability.
.3 Payment
(a) Amount. Unless the Committee otherwise provides, upon exercise of a Stock
Appreciation Right and the attendant surrender of an exercisable portion of any
related Award, the Participant shall be entitled to receive payment of an amount
determined by multiplying
(i) the difference obtained by subtracting the exercise price per share of
Common Stock under the related Award (if applicable) or the initial
share value specified in the Award from the Fair Market Value of a
share of Common Stock on the date of exercise of the Stock Appreciation
Right, by
(ii) the number of shares with respect to which the Stock Appreciation Right
shall have been exercised.
(b) Form of Payment. The Committee, in its sole discretion, shall determine the
form in which payment shall be made of the amount determined under paragraph (a)
above, either solely in cash, solely in shares of Common Stock (valued at Fair
Market Value on the date of exercise of the Stock Appreciation Right), or partly
in such shares and partly in cash, provided that the Committee shall have
determined that such exercise and payment are consistent with applicable law. If
the Committee permits the Participant to elect to receive cash or shares (or a
combination thereof) on such exercise, any such election shall be subject to
such conditions as the Committee may impose.
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IV. RESTRICTED STOCK AWARDS
.1 Grants
The Committee may, in its discretion, grant one or more Restricted
Stock Awards to any Eligible Employee. Each Restricted Stock Award Agreement
shall specify the number of shares of Common Stock to be issued to the
Participant, the date of such issuance, the consideration for such shares (but
not less than the minimum lawful consideration under applicable state law) by
the Participant, the extent to which the Participant shall be entitled to
dividends, voting and other rights in respect of the shares prior to vesting and
the restrictions imposed on such shares and the conditions of release or lapse
of such restrictions. Such restrictions shall not lapse earlier than 12 months
after the Award Date, except to the extent the Committee may otherwise provide.
Stock certificates evidencing shares of Restricted Stock pending the lapse of
the restrictions ("restricted shares") shall bear a legend making appropriate
reference to the restrictions imposed hereunder and shall be held by the
Corporation or by a third party designated by the Committee until the
restrictions on such shares shall have lapsed and the shares shall have vested
in accordance with the provisions of the Award and Section 1.7. Upon issuance of
the Restricted Stock Award, the Participant may be required to provide such
further assurance and documents as the Committee may require to enforce the
restrictions.
.2 Restrictions
(a) Pre-Vesting Restraints. Except as provided in Section 4.1 and 1.9,
restricted shares comprising any Restricted Stock Award may not be sold,
assigned, transferred, pledged or otherwise disposed of or encumbered, either
voluntarily or involuntarily, until the restrictions on such shares have lapsed
and the shares have become vested.
(b) Dividend and Voting Rights. Unless otherwise provided in the applicable
Award Agreement, a Participant receiving a Restricted Stock Award shall be
entitled to cash dividend and voting rights for all shares issued even though
they are not vested, provided that such rights shall terminate immediately as to
any restricted shares which cease to be eligible for vesting.
(c) Cash Payments. If the Participant shall have paid or received cash
(including any dividends) in connection with the Restricted Stock Award, the
Award Agreement shall specify whether and to what extent such cash shall be
returned (with or without an earnings factor) as to any restricted shares which
cease to be eligible for vesting.
.3 Return to the Corporation
Unless the Committee otherwise expressly provides, restricted shares
that remain subject to restrictions at the time of termination of employment or
are subject to other conditions to vesting that have not been satisfied by the
time specified in the applicable Award Agreement shall not vest and shall be
returned to the Corporation in such manner and on such terms as the Committee
shall therein provide.
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V. PERFORMANCE SHARE AWARDS AND STOCK BONUSES
.1 Grants of Performance Share Awards.
The Committee may, in its discretion, grant Performance Share Awards to
Eligible Employees based upon such factors as the Committee shall deem relevant
in light of the specific type and terms of the award. An Award Agreement shall
specify the maximum number of shares of Common Stock (if any) subject to the
Performance Share Award, the consideration (but not less than the minimum lawful
consideration) to be paid for any such shares as may be issuable to the
Participant, the duration of the Award and the conditions upon which delivery of
any shares or cash to the Participant shall be based. The amount of cash or
shares or other property that may be deliverable pursuant to such Award shall be
based upon the degree of attainment over a specified period (a "performance
cycle") as may be established by the Committee of such measure(s) of the
performance of the Company (or any part thereof) or the Participant as may be
established by the Committee. The Committee may provide for full or partial
credit, prior to completion of such performance cycle or the attainment of the
performance achievement specified in the Award, in the event of the
Participant's death, or Total Disability, a Change in Control Event or in such
other circumstances as the Committee consistent with Section 6.10(c)(2), if
applicable, may determine.
.2 Special Performance-Based Share Awards.
Without limiting the generality of the foregoing, and in addition to
Options and Stock Appreciation Rights granted under other provisions of this
Plan which are intended to satisfy the exception for "performance-based
compensation" under Section 162(m) of the Code (with such Awards hereinafter
referred to as a "Qualifying Option" or a "Qualifying Stock Appreciation Right,"
respectively), other performance-based awards within the meaning of Section
162(m) of the Code ("Performance-Based Awards"), whether in the form of
restricted stock, performance stock, phantom stock, Cash-Based Awards, or other
rights, the grant, vesting, exercisability or payment of which depends on the
degree of achievement of the Performance Goals relative to preestablished
targeted levels for the Corporation or the Corporation and one or more of its
Subsidiaries, may be granted under this Plan. Any Qualifying Option or
Qualifying Stock Appreciation Right shall be subject only to the requirements of
subsections (a) and (c) below in order for such Awards to satisfy the
requirements for Performance-Based Awards under this Section 5.2. With the
exception of any Qualifying Option or Qualifying Stock Appreciation Right, an
Award that is intended to satisfy the requirements of this Section 5.2 shall be
designated as a Performance-Based Award at the time of grant.
(a) Eligible Class. The eligible class of persons for Performance-Based Awards
under this Section shall be the executive officers of the Corporation.
(b) Performance Goal Alternatives. The specific performance goals for
Performance-Based Awards granted under this Section (other than Qualifying
Options and Qualifying Stock Appreciation Rights) shall be, on an absolute or
relative basis, one or more of the Performance Goals, as selected by the
Committee in its sole discretion. The Committee shall establish in the
applicable Award Agreement the specific performance target(s) relative to the
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Performance Goal(s) which must be attained before the compensation under the
Performance-Based Award becomes payable. The specific targets shall be
determined within the time period permitted under Section 162(m) of the Code
(and any regulations issued thereunder) so that such targets are considered to
be preestablished and so that the attainment of such targets is substantially
uncertain at the time of their establishment. The applicable performance
measurement period may not be less than one nor more than 10 years.
(c) Maximum Performance-Based Award. Notwithstanding any other provision of the
Plan to the contrary, the maximum number of shares of Common Stock which may be
delivered pursuant to options, stock appreciation rights, restricted stock or
other share-based awards that are granted as Performance-Based Awards to any
Participant in any calendar year shall not exceed 1,000,000 shares, either
individually or in the aggregate, subject to adjustment as provided in Section
6.2. Awards that are cancelled during the year shall be counted against this
limit to the extent required by Section 162(m) of the Code. In addition, the
aggregate amount of compensation to be paid to any Participant in respect of any
Cash-Based Awards that are granted during any calendar year as Performance-Based
Awards shall not exceed $1,000,000.
(d) Committee Certification. Before any Performance-Based Award under this
Section 5.2 (other than Qualifying Options or Qualifying Stock Appreciation
Rights) is paid, the Committee must certify in writing that the Performance
Goal(s) and any other material terms of the Performance-Based Award were
satisfied; provided, however, that a Performance-Based Award may be paid without
regard to the satisfaction of the applicable Performance Goal in the event of a
Change in Control Event in accordance with Section 6.2(d).
(e) Terms and Conditions of Awards. The Committee will have the discretion to
determine the restrictions or other limitations of the individual Awards granted
under this Section 5.2 including the authority to reduce Awards, payouts or
vesting or to pay no Awards, in its sole discretion, if the Committee preserves
such authority at the time of grant by language to this effect in its
authorizing resolutions or otherwise.
(f) Adjustments for Changes in Capitalization and other Material Changes. In the
event of a change in corporate capitalization, such as a stock split or stock
dividend, or a corporate transaction, such as a merger, consolidation, spinoff,
reorganization or similar event, or any partial or complete liquidation of the
Corporation, or any similar event consistent with regulations issued under
Section 162(m) of the Code including, without limitation, any material change in
accounting policies or practices affecting the Corporation and/or the
Performance Goals or targets, then the Committee may make adjustments to the
Performance Goals and targets relating to outstanding Performance-Based Awards
to the extent such adjustments are made to reflect the occurrence of such an
event; provided, however, that adjustments described in this subsection may be
made only to the extent that the occurrence of an event described herein was
unforeseen at the time the targets for a Performance-Based Award were
established by the Committee.
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.3 Grants of Stock Bonuses.
The Committee may grant a Stock Bonus to any Eligible Employee to
reward exceptional or special services, contributions or achievements in the
manner and on such terms and conditions (including any restrictions on such
shares) as determined from time to time by the Committee. The number of shares
so awarded shall be determined by the Committee. The Award may be granted
independently or in lieu of a cash bonus.
.4 Deferred Payments.
The Committee may authorize for the benefit of any Eligible Person the
deferral of any payment of cash or shares that may become due or of cash
otherwise payable under this Plan, and provide for accredited benefits thereon
based upon such deferment, at the election or at the request of such
Participant, subject to the other terms of this Plan. Such deferral shall be
subject to such further conditions, restrictions or requirements as the
Committee may impose, subject to any then vested rights of Participants.
VI. OTHER PROVISIONS
.1 Rights of Eligible Employees, Participants and Beneficiaries
(a) Employment Status. Status as an Eligible Employee shall not be construed as
a commitment that any Award will be granted under this Plan to an Eligible
Employee or to Eligible Employees generally.
(b) No Employment Contract. Nothing contained in this Plan (or in any other
documents related to this Plan or to any Award) shall confer upon any Eligible
Employee or other Participant any right to continue in the employ or other
service of the Company or constitute any contract or agreement of employment or
other service, nor shall interfere in any way with the right of the Company to
change such person's compensation or other benefits or to terminate the
employment of such person, with or without cause, but nothing contained in this
Plan or any document related hereto shall adversely affect any independent
contractual right of such person without his or her consent thereto.
(c) Plan Not Funded. Awards payable under this Plan shall be payable in shares
or from the general assets of the Corporation, and no special or separate
reserve, fund or deposit shall be made to assure payment of such Awards. No
Participant, Beneficiary or other person shall have any right, title or interest
in any fund or in any specific asset (including shares of Common Stock, except
as expressly otherwise provided) of the Company by reason of any Award
hereunder. Neither the provisions of this Plan (or of any related documents),
nor the creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and any Participant,
Beneficiary or other person. To the extent that a Participant, Beneficiary or
other person acquires a right to receive payment pursuant to any Award
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.
<PAGE>
.2 Adjustments; Acceleration
(a) Adjustments. If there shall occur any extraordinary dividend or other
extraordinary distribution in respect of the Common Stock (whether in the form
of cash, Common Stock, other securities, or other property), or any
reclassification, recapitalization, stock split (including a stock split in the
form of a stock dividend), reverse stock split, reorganization, merger,
combination, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Common Stock or other securities of the Corporation, or there shall
occur any other like corporate transaction or event in respect of the Common
Stock on a sale of substantially all the assets of the Corporation as an
entirety, then the Committee shall, in such manner and to such extent (if any)
as it deems appropriate and equitable (1) proportionately adjust any or all of
(i) the number and type of shares of Common Stock (or other securities) which
thereafter may be made the subject of Awards (including the specific maxima and
numbers of shares set forth elsewhere in this Plan), (ii) the number, amount and
type of shares of Common Stock (or other securities or property) subject to any
or all outstanding Awards, (iii) the grant, purchase, or exercise price of any
or all outstanding Awards, (iv) the securities, cash or other property
deliverable upon exercise of any outstanding Awards, or (v) the performance
standards appropriate to any outstanding Awards, or (2) in the case of an
extraordinary dividend or other distribution, recapitalization,
reclassification, merger, reorganization, consolidation, combination, sale of
assets, split up, exchange, or spin off, make provision for a cash payment or
for the substitution or exchange of any or all outstanding Awards or the cash,
securities or property deliverable to the holder of any or all outstanding
Options based upon the distribution or consideration payable to holders of the
Common Stock of the Corporation upon or in respect of such event; provided,
however, in each case, that with respect to Incentive Stock Options, no such
adjustment shall be made which would cause the Plan to violate Section 424(a) of
the Code or any successor provisions thereto.
(b) Acceleration of Awards Upon Change in Control. As to any Eligible Employee
Participant, unless prior to a Change in Control Event the Committee determines
that, upon its occurrence, there shall be no acceleration of benefits under
Awards or determines that only certain or limited benefits under Options shall
be accelerated and the extent to which they shall be accelerated, and/or
establishes a different time in respect of such Change in Control Event for such
acceleration, then upon the occurrence of a Change in Control Event (i) each
Option and Stock Appreciation Right shall become immediately exercisable, (ii)
Restricted Stock shall immediately vest free of restrictions, and (iii) each
Performance Share Award shall become payable to the Participant; provided,
however, that in no event shall any Award be accelerated as to any Section 16
Person to a date less than six months after the Award Date of such Award. The
Committee may override the limitations on acceleration in this Section 3.2(b) by
express provision in the Award Agreement and may accord any Eligible Employee a
right to refuse any acceleration, whether pursuant to the Award Agreement or
otherwise, in such circumstances as the Committee may approve. Any acceleration
of Awards shall comply with applicable regulatory requirements, including,
without limitation, Section 422 of the Code.
<PAGE>
(c) Possible Early Termination of Accelerated Awards. If any Option or other
right to acquire Common Stock under this Plan (other than under Article VII) has
been fully accelerated as permitted by Section 6.2(b) but is not exercised prior
to (i) a dissolution of the Corporation, or (ii) a reorganization event
described in Section 6.2(a) that the Corporation does not survive, or (iii) the
consummation of an event described in Section 6.2(a) that results in a Change in
Control Event approved by the Board, such Option or right shall thereupon
terminate, subject to any provision that has been expressly made by the
Committee for the survival, substitution, exchange or other settlement of such
Option or right.
.3 Effect of Termination of Employment
The Committee shall establish in respect of each Award granted to an
Eligible Employee the effect of a termination of employment on the rights and
benefits thereunder and in so doing may make distinctions based upon the cause
of termination. In addition, in the event of, or in anticipation of, a
termination of employment with the Company for any reason, other than discharge
for cause, the Committee may, in its discretion, increase the portion of the
Participant's Award available to the Participant, or Participant's Beneficiary
or Personal Representative, as the case may be, or, subject to the provisions of
Section 1.6, extend the exercisability period upon such terms as the Committee
shall determine and expressly set forth in or by amendment to the Award
Agreement.
.4 Compliance with Laws
This Plan, the granting and vesting of Awards under this Plan and the
offer, issuance and delivery of shares of Common Stock and/or the payment of
money under this Plan or under Awards granted hereunder are subject to
compliance with all applicable federal and state laws, rules and regulations
(including, but not limited to, state and federal securities laws and federal
margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Corporation, be
necessary or advisable in connection therewith. Any securities delivered under
this Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Corporation, provide such assurances and
representations to the Corporation as the Corporation may deem necessary or
desirable to assure compliance with all applicable legal requirements.
.5 Tax Withholding
(a) Cash or Shares. Upon any exercise, vesting or payment of any Award or upon
the disposition of shares of Common Stock acquired pursuant to the exercise of
an Incentive Stock Option prior to satisfaction of the holding period
requirements of Section 422 of the Code, the Company shall have the right at its
option to (i) require the Participant (or Personal Representative or
Beneficiary, as the case may be) to pay or provide for payment of the amount of
any taxes which the Company may be required to withhold with respect to such
Award event or payment or (ii) deduct from any amount payable in cash the amount
of any taxes which the Company may be required to withhold with respect to such
cash payment. In any case where a tax is required to be withheld in connection
with the delivery of shares of Common Stock under this Plan, the Committee may
in its sole discretion grant (either at the time of the Award is granted or
thereafter) to the Participant the right to elect, pursuant to such rules and
subject to such conditions as the Committee may establish, to have the
Corporation reduce the number of shares to be delivered by (or otherwise
reacquire) the appropriate number of shares valued at their then Fair Market
Value, to satisfy such withholding obligation.
<PAGE>
(b) Tax Loans. The Committee may, in its discretion, authorize a loan to an
Eligible Employee in the amount of any taxes which the Company may be required
to withhold with respect to shares of Common Stock received (or disposed of, as
the case may be) pursuant to a transaction described in subsection (a) above.
Such a loan shall be for a term, at a rate of interest and pursuant to such
other terms and conditions as the Committee, under applicable law, may establish
and such loan need not comply with the provisions of Section 1.8.
.6 Plan Amendment, Termination and Suspension
(a) Board Authorization. The Board may, at any time, terminate or, from time to
time, amend, modify or suspend this Plan, in whole or in part. No Awards may be
granted during any suspension of this Plan or after termination of this Plan,
but the Committee shall retain jurisdiction as to Awards then outstanding in
accordance with the terms of this Plan.
(b) Stockholder Approval. Any amendment that would (i) materially increase the
benefits accruing to Participants under this Plan, (ii) materially increase the
aggregate number of securities that may be issued under this Plan, or (iii)
materially modify the requirements as to eligibility for participation in this
Plan, shall be subject to stockholder approval only to the extent then required
by Section 422 of the Code or any other applicable law, or deemed necessary or
advisable by the Board.
(c) Amendment to Awards. Without limiting any other express authority of the
Committee under but subject to the express limits of this Plan, the Committee by
agreement or resolution may waive conditions of or limitations on Awards to
Eligible Employees that the Committee in the prior exercise of its discretion
has imposed, without the consent of a Participant, and may make other changes to
the terms and conditions of Awards that do not affect in any manner materially
adverse to the Employee Participant, his or her rights and benefits under an
Award.
(d) Limitations on Amendments to Plan and Awards. No amendment, suspension or
termination of the Plan or change of or affecting any outstanding Award shall,
without written consent of the Participant, affect in any manner materially
adverse to the Participant any rights or benefits of the Participant or
obligations of the Corporation under any Award granted under this Plan prior to
the effective date of such change. Changes contemplated by Section 6.2 shall not
be deemed to constitute changes or amendments for purposes of this Section 6.6.
.7 Privileges of Stock Ownership
Except as otherwise expressly authorized by the Committee or this Plan,
a Participant shall not be entitled to any privilege of stock ownership as to
any shares of Common Stock not actually delivered to and held of record by him
or her. No adjustment will be made for dividends or other rights as a
stockholders for which a record date is prior to such date of delivery.
<PAGE>
.8 Effective Date of the Plan
This Plan was originally effective as of September 22, 1992 ("Effective
Date"), the date of Board approval, and was subject to stockholder approval
within 12 months thereafter. The Plan is hereby amended and restated in its
entirety, effective as of August 27, 1996.
.9 Term of the Plan
No Award shall be granted more than ten years after the Effective Date
of this Plan (the "termination date"). Unless otherwise expressly provided in
this Plan or in an applicable Award Agreement, any Award granted prior to the
termination date may extend beyond such date, and all authority of the Committee
with respect to Awards hereunder, including the authority to amend an Award,
shall continue during any suspension of this Plan and in respect of outstanding
Awards on such termination date.
.10 Governing Law; Construction; Severability
(a) Choice of Law. This Plan, the Awards, all documents evidencing Awards and
all other related documents shall be governed by, and construed in accordance
with the laws of the State of Nevada.
(b) Severability. If any provision shall be held by a court of competent
jurisdiction to be invalid and unenforceable, the remaining provisions of this
Plan shall continue in effect.
(c) Plan Construction.
(1) Rule 16b-3. It is the intent of the Corporation that transactions in
and affecting Awards in the case of Participants who are or may be
subject to Section 16 of the Exchange Act satisfy any then applicable
requirements of Rule 16b-3 so that such persons will be entitled to the
benefits of Rule 16b-3 or other exemptive rules under Section 16 of the
Exchange Act in respect of these transactions and will not be subjected
to avoidable liability thereunder. If any provision of this Plan or of
any Award would otherwise frustrate or conflict with the intent
expressed above, that provision to the extent possible shall be
interpreted and deemed amended so as to avoid such conflict, but to the
extent of any remaining irreconcilable conflict with such intent as to
such persons in the circumstances, such provision shall be deemed void.
(2) Section 162(m). It is the further intent of the Company that Options
and Stock Appreciation Rights with an exercise or base price not less
than Fair Market Value on the date of grant and Performance Share
Awards under Section 5.2 of the Plan that are granted to or held by a
Section 16 Person shall qualify as performance-based compensation under
Section 162(m) of the Code, and this Plan shall be interpreted
consistent with such intent.
<PAGE>
.11 Captions
Captions and headings are given to the sections and subsections of this
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
.12 Effect of Change of Subsidiary Status
For purposes of this Plan and any Award hereunder, if an entity ceases
to be a Subsidiary a termination of employment shall be deemed to have occurred
with respect to each employee of such Subsidiary who does not continue as an
employee of another entity within the Company.
.13 Non-Exclusivity of Plan
Nothing in this Plan shall limit or be deemed to limit the authority of
the Board or the Committee to grant awards or authorize any other compensation,
with or without reference to the Common Stock, under any other plan or
authority.
VII. NON-EMPLOYEE DIRECTOR OPTIONS
.1 Participation
Options under this Article VII shall be made only to Non-Employee
Directors.
.2 Annual Option Grants
(a) Time of Initial Grant. After approval of this Plan by the stockholders of
the Corporation, if any person who is not then an officer or employee of the
Company shall become a director of the Corporation, there shall be granted
automatically to such person (without any action by the Board of Committee) a
Nonqualified Stock Option (the Award Date of which shall be the date such person
takes office) to purchase 10,000 shares.
(b) Subsequent Annual Options. In each calendar year during the term of the
Plan, commencing in 1994, there shall be granted automatically (without any
action by the Committee or the Board) a Nonqualified Stock Option to purchase
4,000 shares of Common Stock to each Non-Employee Director who is re-elected as
a director of the Corporation (the Award Date of which shall be the date of such
re-election). In addition, subject to stockholder approval at the 1997 Annual
Stockholders Meeting, each person who is a Non-Employee Director on August 27,
1996 shall be granted on a one-time basis without further action on Option to
purchase 2,000 shares of Common Stock (the Award Date of which shall be August
27, 1996, the date of Board approval of this amendment). Furthermore,
notwithstanding the first sentence of this subsection (b), but subject to
stockholder approval at the 1997 Annual Stockholders Meeting, in each calendar
year during the remaining term of the Plan, (commencing in 1997), the grant
described in the first sentence of this subsection shall not be made and instead
there shall be granted automatically (without any action by the Committee or the
Board) a Nonqualified Stock Option to purchase 6,000 shares of Common Stock to
each Non-Employee Director who is re-elected as a director of the Corporation
(the Award Date of which shall be the date of such re-election).
<PAGE>
(c) Maximum Number of Shares. Annual grants that would otherwise exceed the
maximum number of shares under Section 1.4(a) shall be prorated within such
limitation. A Non-Employee Director shall not receive more than 50,000 shares on
exercise of all Options optioned under this Section 7.2.
.3 Option Price
The purchase price per share of the Common Stock covered by each Option
granted pursuant to Section 7.2 hereof shall be 100% of the Fair Market Value of
the Common Stock on the Award Date. The exercise price of any Option granted
under this Article shall be paid in full at the time of each purchase in cash or
by check or in shares of Common Stock valued at their Fair Market Value on the
date of exercise of the Option, or partly in such shares and partly in cash,
provided that any such shares used in payment shall have been owned by the
Participant at least six months prior to the date of exercise.
.4 Option Period and Exercisability
Each Option granted under this Article VII and all rights or
obligations thereunder shall commence on the Award Date and expire ten years
thereafter and shall be subject to earlier termination as provided below. Each
Option granted under Section 7.2 shall become exercisable at the rate of 33-1/3%
per year, on the first, second and third anniversaries of the Award Date.
.5 Termination of Directorship
If a Non-Employee Director's services as a member of the Board of
Directors terminate by reason of death, Disability or Retirement, an Option
granted pursuant to this Article held by such Participant shall immediately
become and shall remain exercisable for two years after the date of such
termination or until the expiration of the stated term of such Option, whichever
first occurs. If a Non-Employee Director's services as a member of the Board of
Directors terminate for any other reason, any portion of an Option granted
pursuant to this Article which is not then exercisable shall terminate and any
portion of such Option which is then exercisable may be exercised within a
period of thirty (30) days after the date of such termination or until the
expiration of the stated term, whichever first occurs.
.6 Adjustments
Options granted under this Article VII shall be subject to adjustment
as provided in Section 6.2, but only to the extent that (a) such adjustment and
the Committee's action in respect thereof satisfy applicable law, (b) such
adjustment in the case of a Change in Control Event is effected pursuant to the
terms of a reorganization agreement approved by stockholders of the Corporation,
and (c) such adjustment is consistent with adjustments to Options held by
persons other than executive officers or directors of the Corporation.
<PAGE>
.7 Acceleration Upon a Change in Control Event
Upon the occurrence of a Change in Control Event, each Option granted
under Section 7.2 hereof shall become immediately exercisable in full. To the
extent that any Option granted under this Article VII is not exercised prior to
(i) a dissolution of the Corporation or (ii) a merger or other corporate event
that the Corporation does not survive, and no provision is (or consistent with
the provisions of Section 7.6 can be) made for the assumption, conversion,
substitution or exchange of the Option, the Option shall terminate upon the
occurrence of such event.
VIII. DEFINITIONS
.1 Definitions
(a) "Award" shall mean an award of any Option, Stock Appreciation Right,
Restricted Stock, Stock Bonus, Performance Share Award, Performance-Based Award,
Cash-Based Award, dividend equivalent or deferred payment right or other right
or security that would constitute a "derivative security" under Rule 16a-1(c) of
the Exchange Act, or any combination thereof, whether alternative or cumulative,
authorized by and granted under this Plan.
(b) "Award Agreement" shall mean any writing setting forth the terms of an Award
that has been authorized by the Committee.
(c) "Award Date" shall mean the date upon which the Committee took the action
granting an Award or such later date as the Committee designates as the Award
Date at the time of the Award or, in the case of Awards under Article VII, the
applicable dates set forth therein.
(d) "Award Period" shall mean the period beginning on an Award Date and ending
on the expiration date of such Award.
(e) "Beneficiary" shall mean the person, persons, trust or trusts designated by
a Participant or, in the absence of a designation, entitled by will or the laws
of the descent and distribution to receive the benefits specified in the Award
Agreement and under this Plan in the event of a Participant's death, and shall
mean the Participant's executor or administrator if no other Beneficiary is
designated and able to act under the circumstances.
(f) "Board" shall mean the Board of Directors of the Corporation.
(g) "Cash-Based Awards" shall mean Awards that, if paid, must be paid in cash
and that are neither denominated in nor have a value derived from the value of,
nor an exercise or conversion privilege at a price related to, shares of Common
Stock.
(h) "Cash Flow" shall mean cash and cash equivalents derived from either (i) net
cash flow from operations or (ii) net cash flow from operations, financings and
investing activities, as determined by the Committee at the time an Award is
granted.
(i) "Change in Control Event" shall mean any of the following:
<PAGE>
(1) Approval by the stockholders of the Corporation of the dissolution or
liquidation of the Corporation;
(2) Approval by the stockholders of the Corporation of an agreement to
merge or consolidate, or otherwise reorganize, with or into one or more
entities that are not Subsidiaries, as a result of which less than 50%
of the outstanding voting securities of the surviving or resulting
entity immediately after the reorganization are, or will be, owned by
stockholders of the Corporation immediately before such reorganization
(assuming for purposes of such determination that there is no change in
the record ownership of the Corporation's securities from the record
date for such approval until such reorganization and that such record
owners hold no securities of the other parties to such reorganization):
(3) Approval by the stockholders of the Corporation of the sale of
substantially all of the Corporation's business and/or assets to a
person or entity which is not a Subsidiary;
(4) Any "person (as such term is used in Section 13(d) and 14(d) of the
Exchange Act) (other than a person having such ownership at the time of
adoption of this Plan) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing more than 50% of the
combined voting power of the Corporation's then outstanding securities
entitled to then vote generally in the election of directors of the
Corporation; or
(5) During any period not longer than two consecutive years, individuals
who at the beginning of such period constituted the Board cease to
constitute at least a majority thereof, unless the election, or the
nomination for election by the Corporation's stockholders, of each new
Board member was approved by a vote of at least three-fourths of the
Board members then still in office who were Board members at the
beginning of such period (including for these purposes, new members
whose election or nomination was so approved).
(j) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(k) "Commission" shall mean the Securities and Exchange Commission.
(l) "Committee" shall mean the Board or a committee appointed by the Board to
administer this Plan, which committee shall be comprised only of two or more
directors or such greater number of directors as may be required under
applicable law, each of whom (i) in respect of any decision at a time when the
Participant affected by the decision may be subject to Section 162(m) of the
Code be an "outside director" within the meaning of Code Section 162(m) and (ii)
in respect of any decision at a time when the Participant affected by the
decision may be subject to Section 16 under the Exchange Act, shall be a
"Non-Employee Director" within the meaning of Rule 16b-3(b)(3).
<PAGE>
(m) "Common Stock" shall mean the Common Stock of the Corporation and such other
securities or property as may become subject to Awards, or become subject to
Awards, pursuant to an adjustment made under Section 6.2 of this Plan.
(n) "Company" shall mean, collectively, the Corporation and its domestic or
foreign Subsidiaries or divisions.
(o) "Corporation" shall mean International Game Technology, a Nevada
corporation, and its successors.
(p) "Eligible Employee" shall mean an officer (whether or not a director) or key
executive, administrative, managerial, production, marketing or sales employee
of the Company.
(q) "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
(r) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
(s) "Fair Market Value" or any date shall mean (i) if the stock is listed or
admitted to trade on a national securities exchange, the closing price of the
stock on the Composite Tape, as published in the Western Edition of The Wall
Street Journal, of the principal national securities exchange on which the stock
is so listed or admitted to trade, on such date, or, if there is no trading of
the stock on such date, then the closing price of the stock as quoted on such
Composite Tape on the next preceding date on which there was trading in such
shares; (ii) if the stock is not listed or admitted to trade on a national
securities exchange, the last price for the stock on such date, as furnished by
the National Association of Securities Dealers, Inc. ("NASD") through the NASDAQ
National Market Reporting System or a similar organization if the NASD is no
longer reporting such information, (iii) if the stock is not listed or admitted
to trade on a national securities exchange and is not reported on the National
Market Reporting System, the mean between the bid and asked price for the stock
on such date, as furnished by the NASD or a similar organization, or (iv) if the
stock is not listed or admitted to trade on a national securities exchange, is
not reported on the National Market Reporting System and if bid and asked prices
for the stock are not furnished by the NASD or a similar organization, the value
as established by the Committee at such time for purposes of this Plan.
(t) "Incentive Stock Option" shall mean an Option which is designated as an
incentive stock option within the meaning of Section 422 of the Code, the award
of which contains such provisions as are necessary to comply with that section.
(u) "Nonqualified Stock Option" shall mean an Option that is designated as a
Nonqualified Stock Option and shall include any Option intended as an Incentive
Stock Option that fails to meet the applicable legal requirements thereof. Any
Option granted hereunder that is not designated as an Incentive Stock Option
shall be deemed to be designated a Nonqualified Stock Option under this Plan and
not an incentive stock option under the Code.
<PAGE>
(v) "Non-Employee Director" shall mean a member of the Board of Directors of the
Corporation who is not an officer or employee of the Company.
(w) "Non-Employee Director Participant" shall mean a Non-Employee Director who
has been granted an Option under the provisions of Article VII.
(x) "Option" shall mean an option to purchase Common Stock granted under this
Plan. The Committee shall designate any Option granted to an Eligible Employee
as a Nonqualified Stock Option or an Incentive Stock Option. Options granted
under Article VII shall be Nonqualified Stock Options.
(y) "Participant" shall mean an Eligible Employee who has been granted an Award
under this Plan and a Non-Employee Director who has been received an Option
under Article VII of this Plan.
(z) "Performance-Based Award" shall mean an Award of a right to receive shares
of Common Stock or other compensation (including cash) under Section 5.2, the
issuance or payment of which is contingent upon, among other conditions, the
attainment of performance objectives specified by the Committee.
(aa) "Performance Goals" shall mean EPS or ROE or Cash Flow or Total Stockholder
Return, and "Performance Goals" means any combination thereof.
(bb) "Performance Share Award" shall mean an Award of a right to receive shares
of Common Stock made in accordance with Section 5.1, the issuance or payment of
which is contingent upon, among other conditions, the attainment of performance
objectives specified by the Committee.
(cc) "Personal Representative" shall mean the person or persons who, upon the
disability or incompetence of a Participant, shall have acquired on behalf of
the Participant, by legal proceeding or otherwise, the power to exercise the
rights or receive benefits under this Plan and who shall have become the legal
representative of the Participant.
(dd) "Plan" shall mean this 1993 Stock Option Plan, as amended and restated.
(ee) "QDRO" shall mean a qualified domestic relations order as defined in
Section 414(p) of the Code or Title I, Section 206(d)(3) of ERISA (to the same
extent as if this Plan were subject thereto), or the applicable rules
thereunder.
(ff) "Restricted Stock Award" shall mean an award of a fixed number of shares of
Common Stock to the Participant subject, however, to payment of such
consideration, if any, and such forfeiture provisions, as are set forth in the
Award Agreement.
(gg) "Restricted Stock" shall mean shares of Common Stock awarded to a
Participant under this Plan, subject to payment of such consideration, if any,
and such conditions on vesting and such transfer and other restrictions as are
established in or pursuant to this Plan, for so long as such shares remain
unvested under the terms of the applicable Award Agreement.
<PAGE>
(hh) "Retirement" shall mean retirement with the consent of the Company, or in
the case of a Non-Employee Director, a retirement or resignation as a director
after at least eight years service as a director.
(ii) "ROE" shall mean consolidated net income of the Corporation (less preferred
dividends), divided by the average consolidated common shareholders equity.
(jj) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the Commission
pursuant to the Exchange Act.
(kk) "Section 16 Person" shall mean a person subject to Section 16(a) of the
Exchange Act.
(ll) "Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
(mm) "Stock Appreciation Right" shall mean a right to receive a number of shares
of Common Stock or an amount of cash, or a combination of shares and cash, the
aggregate amount or value of which is determined by reference to a change in the
Fair Market Value of the Common Stock that is authorized under this Plan.
(nn) "Stock Bonus" shall mean an Award of shares of Common Stock granted under
this Plan for no consideration other than past services and without restriction
other than such transfer or other restrictions as the Committee may deem
advisable to assure compliance with law.
(oo) "Subsidiary" shall mean any corporation or other entity a majority of whose
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Corporation.
(pp) "Total Disability" shall mean a "permanent and total disability within the
meaning of Section 22(e)(3) of the Code and (except in the case of a
Non-Employee Director) such other disabilities, infirmities, afflictions or
conditions as the Committee by rule may include.
(qq) "Total Stockholder Return" shall mean with respect to the Corporation or
other entities (if measures on a relative basis), the (i) change in the market
price of its common stock (as quoted in the principal market on which it is
traded as of the beginning and ending of the period) plus dividends and other
distributions paid, divided by (ii) the beginning quoted market price, all of
which is adjusted for any changes in equity structure, including but not limited
to stock splits and stock dividends.
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
1993 STOCK OPTION PLAN
(Amended and Restated Effective as of August 27, 1996)
(Composite Plan Document Incorporating Amendments 1998-I and 1998-II)
<PAGE>
TABLE OF CONTENTS
Page
-i-
I. THE PLAN..............................................................1
1.1 Purpose......................................................1
1.2 Administration and Authorization; Power and Procedure........1
1.3 Participation................................................2
1.4 Shares Available for Awards; Share Limits....................3
1.5 Grant of Awards..............................................3
1.6 Award Period.................................................4
1.7 Limitations on Exercise and Vesting of Awards................4
1.8 Acceptance of Notes to Finance Exercise......................4
1.9 No Transferability...........................................5
II. EMPLOYEE OPTIONS......................................................6
2.1 Grants.......................................................6
2.2 Option Price.................................................6
2.3 Limitations on Grant and Terms of Incentive Stock Options....6
2.4 Limits on 10% Holders........................................7
2.5 Cancellation and Regrant/Waiver of Restrictions..............7
III. STOCK APPRECIATION RIGHTS.............................................7
3.1 Grants.......................................................7
3.2 Exercise of Stock Appreciation Rights........................8
3.3 Payment......................................................8
IV. RESTRICTED STOCK AWARDS...............................................8
4.1 Grants.......................................................8
4.2 Restrictions.................................................9
4.3 Return to the Corporation....................................9
V. PERFORMANCE SHARE AWARDS AND STOCK BONUSES............................9
5.1 Grants of Performance Share Awards...........................9
5.2 Special Performance-Based Share Awards......................10
5.3 Grants of Stock Bonuses.....................................11
5.4 Deferred Payments...........................................11
VI. OTHER PROVISIONS.....................................................12
6.1 Rights of Eligible Employees, Participants and
Beneficiaries...............................................12
6.2 Adjustments; Acceleration...................................12
6.3 Effect of Termination of Employment.........................13
6.4 Compliance with Laws........................................14
6.5 Tax Withholding.............................................14
6.6 Plan Amendment, Termination and Suspension..................14
6.7 Privileges of Stock Ownership...............................15
6.8 Effective Date of the Plan..................................15
6.9 Term of the Plan............................................15
6.10 Governing Law; Construction; Severability...................16
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TABLE OF CONTENTS
(continued)
6.11 Captions....................................................16
6.12 Effect of Change of Subsidiary Status.......................16
6.13 Non-Exclusivity of Plan.....................................16
VII. NON-EMPLOYEE DIRECTOR OPTIONS........................................17
7.1 Participation...............................................17
7.2 Annual Option Grants........................................17
7.3 Option Price................................................17
7.4 Option Period and Exercisability............................18
7.5 Termination of Directorship.................................18
7.6 Adjustments.................................................18
7.7 Acceleration Upon a Change in Control Event.................18
VIII. DEFINITIONS..........................................................18
8.1 Definitions.................................................18
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