Document:

exv10w1

 

Exhibit 10.1

INTERNATIONAL GAME TECHNOLOGY

2002 STOCK INCENTIVE PLAN

As Amended March 7, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	I.	 	THE PLAN	 	1
	 
	 	1.1	 	Purpose	 	1
	 
	 	1.2	 	Administration and Authorization; Power and Procedure	 	1
	 
	 	1.3	 	Participation	 	3
	 
	 	1.4	 	Shares Available for Awards; Share Limits	 	3
	 
	 	1.5	 	Grant of Awards	 	4
	 
	 	1.6	 	Award Period	 	4
	 
	 	1.7	 	Limitations on Exercise and Vesting of Awards	 	4
	 
	 	1.8	 	Acceptance of Notes to Finance Exercise	 	5
	 
	 	1.9	 	No Transferability	 	6
	II.	 	EMPLOYEE OPTIONS	 	7
	 
	 	2.1	 	Grants	 	7
	 
	 	2.2	 	Option Price	 	7
	 
	 	2.3	 	Limitations on Grant and Terms of Incentive Stock Options	 	7
	 
	 	2.4	 	Limits on 10% Holders	 	8
	III.	 	STOCK APPRECIATION RIGHTS	 	8
	 
	 	3.1	 	Grants	 	8
	 
	 	3.2	 	Exercise of Stock Appreciation Rights	 	8
	 
	 	3.3	 	Payment	 	9
	 
	 	3.4	 	Limited Stock Appreciation Rights	 	9
	IV.	 	RESTRICTED STOCK AWARDS	 	9
	 
	 	4.1	 	Grants	 	9
	 
	 	4.2	 	Restrictions	 	10
	 
	 	4.3	 	Return to the Corporation	 	11
	V.	 	PERFORMANCE SHARE AWARDS AND STOCK BONUSES	 	11
	 
	 	5.1	 	Grants of Performance Share Awards	 	11
	 
	 	5.2	 	Special Performance-Based Share Awards	 	11
	 
	 	5.3	 	Grants of Stock Bonuses	 	13
	 
	 	5.4	 	Deferred Payments	 	13

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	VI.	 	OTHER PROVISIONS	 	13
	 
	 	6.1	 	Rights of Eligible Employees, Participants and Beneficiaries	 	13
	 
	 	6.2	 	Adjustments; Acceleration	 	14
	 
	 	6.3	 	Effect of Termination of Employment	 	15
	 
	 	6.4	 	Compliance with Laws	 	16
	 
	 	6.5	 	Tax Withholding	 	16
	 
	 	6.6	 	Plan Amendment, Termination and Suspension	 	17
	 
	 	6.7	 	Privileges of Stock Ownership	 	17
	 
	 	6.8	 	Effective Date of the Plan	 	18
	 
	 	6.9	 	Term of the Plan	 	18
	 
	 	6.10	 	Governing Law; Construction; Severability	 	18
	 
	 	6.11	 	Captions	 	18
	 
	 	6.12	 	Effect of Change of Subsidiary, Division, or Unit Status	 	19
	 
	 	6.13	 	Non-Exclusivity of Plan	 	19
	VII.	 	NON-EMPLOYEE DIRECTOR OPTIONS	 	19
	 
	 	7.1	 	Participation	 	19
	 
	 	7.2	 	Annual Option Grants	 	19
	 
	 	7.3	 	Option Price	 	19
	 
	 	7.4	 	Option Period and Exercisability	 	20
	 
	 	7.5	 	Termination of Directorship	 	20
	 
	 	7.6	 	Adjustments	 	20
	 
	 	7.7	 	Acceleration Upon a Change in Control Event	 	21
	VIII.	 	DEFINITIONS	 	21
	 
	 	8.1	 	Definitions	 	21

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INTERNATIONAL GAME TECHNOLOGY

2002 STOCK INCENTIVE PLAN

As Amended March 7, 2006

I. THE PLAN

1.1 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.

1.2 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 eligibility and, from among those persons determined to be 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;

     (vii) to adjust the number of shares of Common Stock subject to any Award, adjust the
price of any or all outstanding Awards or otherwise change previously imposed terms and
conditions, in such circumstances as the Committee may deem appropriate, in each case
subject to Sections 1.4 and 6.6, and provided that in no case (except due to an adjustment
contemplated by Section 6.2 or any repricing that may be approved by stockholders) shall
such an adjustment constitute a repricing (by amendment, cancellation and regrant, exchange
or other means) of the per share exercise or base price of any Option or Stock Appreciation
Right; and

     (viii) 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, Non-Employee Directors shall be eligible for the Nonqualified Stock
Option grants contemplated by Article VII and the provisions of Article VII 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.
Neither the Board nor the Committee, nor any member thereof or person acting at the direction
thereof, shall be liable for any act, omission, interpretation, construction or determination made
in good faith in connection with this Plan (or any Award made under this Plan), and all such
persons shall be entitled to indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including, without limitation, attorneys’ fees) arising or
resulting therefrom to the fullest extent permitted by law and/or under any directors and officers
liability insurance coverage that may be in effect from time to time. 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.

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1.3 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 be eligible to receive the Nonqualified Stock Options granted automatically without action of
the Committee under the provisions of Article VII but shall not be eligible for any other Awards
under this Plan.

1.4 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. Subject to adjustment as provided in or pursuant to this Section 1.4 or Section
6.2:

     (a) Aggregate Share Limits. The maximum number of shares of Common Stock that may be
delivered pursuant to all Awards granted under this Plan, other than Nonqualified Stock Options
granted to Non-Employee Directors pursuant to Article VII, shall not exceed 32,800,0001
shares of Common Stock. The maximum number of shares of Common Stock that may be delivered
pursuant to all Nonqualified Stock Options granted to Non-Employee Directors pursuant to Article
VII shall not exceed 1,200,000 shares of Common Stock.

     (b) Individual Limits. The maximum number of shares of Common Stock subject to Options and
Stock Appreciation Rights that are granted under this Plan during any fiscal year to any individual
shall not exceed 4,000,000 shares. Additional limits are in Section 5.2(c).

     (c) Incentive Stock Option Limit. The maximum number of shares of Common Stock that may be
delivered pursuant to Options intended as Incentive Stock Options granted under this Plan shall not
exceed 32,800,000.

     (d) Full-Value Awards. Shares issued in respect of any “Full-Value Award” granted under this
Plan shall be counted against the aggregate share limits set forth in Section 1.4(a) above as four
(4) shares for every one (1) share actually issued in connection with such Award. (For example, if
a Stock Bonus of 100 shares of Common Stock is granted under this Plan, 400 shares shall be charged
against the applicable share limit in Section 1.4(a) in connection with that Award.) For this
purpose, a “Full-Value Award” means any Award under this Plan that is not either: (1) a
delivery of shares in respect of compensation earned but deferred, (2) a delivery of shares in
respect of Option grants, or (3) a delivery of shares in respect of Stock Appreciation Right grants
(provided that the exercise price per share of Common Stock under the related

 

			
	1	 	The current aggregate share limit is
23,800,000 shares. Shareholders are being asked to approve an amendment to the
Plan that would increase the aggregate share limit by an additional 9,000,000
shares so that the new aggregate share limit for the Plan would be 32,800,000
shares.

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Award, if applicable, or the initial share value specified in such Stock Appreciation Right
grant is not less than the fair market value of a share of Common Stock on the date of
grant).2

     (e) 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 limit under Section 1.4(a) or other any other limit set forth
above in this Section 1.4. 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 shall again, except to the extent prohibited by law, be available
for subsequent Awards under this Plan and shall not count against the applicable limit under
Section 1.4(a) or any other limit set forth above in this Section 1.4. In instances where a Stock
Appreciation Right or other Award is settled in cash or any form other than shares of Common Stock,
no shares shall be counted against the applicable limit under Section 1.4(a) or any other limit set
forth above in this Section 1.4. The payment of cash dividends and dividend equivalents in
conjunction with outstanding Awards shall not be counted against the shares available for issuance
under this Plan. Any shares that are issued by the Company, and any awards that are granted by, or
become obligations of, the Company, through the assumption by the Company or an affiliate of, or in
substitution for, outstanding awards previously granted by an acquired company (or previously
granted by a predecessor employer (or direct or indirect parent thereof) in the case of persons
that become employed by the Company (or a subsidiary or affiliate) in connection with a business or
asset acquisition or similar transaction) shall not be counted against the shares available for
issuance under this Plan.

     (f) Section 162(m). Adjustments to the share limit set forth in Section 1.4(a) as well as the
other limits set forth above are subject to any applicable limitations under Section 162(m) of the
Code with respect to Awards intended as performance-based compensation thereunder.

1.5 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.

 

			
	2	 	The Plan currently limits the number of
shares that may be delivered pursuant to Full-Value Awards to 2,205,000.
Shareholders are being asked to approve an amendment to the Plan that would
replace this limit with the new share-counting rules for Full-Value Awards
described in this Section 1.4(d).

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1.6 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.

1.7 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 any
required 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 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.

1.8 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 this 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.
	 
	 	(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
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

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	 	 	 	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 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.

1.9 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; (ii) Awards shall be exercised only by the
Participant; and (iii) amounts payable or 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 (for example, in connection with the cancellation or
termination of the Award),

     (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,

     (iv) if the Participant has suffered a 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

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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

2.1 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.

2.2 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 the Option is granted, but in no case shall such
purchase price be less than 100% (110% in the case of an Option intended as an Incentive Stock
Option granted to a Participant described in Section 2.4) 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. Any shares of Common Stock used to satisfy the exercise
price of an Option that were initially acquired upon exercise of a stock option must have been
owned by the Participant for at least six months prior to such use.

     In addition to the payment methods described above, the Committee may, in its discretion,
provide that an Option can be exercised in accordance with such cashless exercise procedures as the
Committee may adopt in the circumstances.

2.3 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

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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.

2.4 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.

III. STOCK APPRECIATION RIGHTS

3.1 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.

3.2 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
and settled in the form of Common Stock (as opposed to cash or other property), the number of
underlying shares as to which the exercise related shall be counted against the applicable share
limit(s) under Section 1.4 as opposed to only counting the number of shares actually issued. (For
purposes of clarity, if a Stock Appreciation Right relates to 100,000 shares

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and is exercised at a time when the payment due to the Participant with respect to such
exercise is 15,000 shares, 100,000 shares shall be charged against the applicable share limit(s)
under Section 1.4 with respect to such exercise.) See Section 1.4(e) as to Stock Appreciation
Rights paid in a form other than a Common Stock payment. The number of shares subject to a Stock
Appreciation Right, and the related Option (if any), of a Participant shall be reduced by the
number of underlying shares as to which the Stock Appreciation Right is exercised.

     (c) Stand-Alone Stock Appreciation Rights. A Stock Appreciation Right granted independently
of any other Award shall be exercisable pursuant to the terms of the Award Agreement.

3.3 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.

3.4 Limited Stock Appreciation Rights

     The Committee may grant to any Eligible Employee Stock Appreciation Rights exercisable only
upon or in respect of a change in control or any other specified event (“Limited SARs”) and such
Limited SARs may relate to or operate in tandem or combination with or substitution for Options,
other Stock Appreciation Rights or other Awards (or any combination thereof), and may be payable in
cash or shares based on the spread between the base price of the Stock Appreciation Right and a
price based upon the Fair Market Value of the shares during a specified period or at a specified
time within a specified period before, after or including the date of such event.

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IV. RESTRICTED STOCK AWARDS

4.1 Grants

     (a) Restricted Stock. 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), the extent (if any) to which and the time (if ever) at which the Participant shall be
entitled to dividends, voting and other rights in respect of the shares prior to vesting and the
restrictions (which may be based on performance criteria, the passage of time or such other facts
as the Committee may provide or any combination thereof) 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 (if in
certificate form) 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.

     (b) Stock Units. The Committee may, in its discretion, authorize and grant to any Eligible
Employee a Stock Unit Award or the crediting of Stock Units for services rendered or to be rendered
or in lieu of other compensation, consistent with other applicable terms of this Plan, may permit
an Eligible Employee to irrevocably elect to defer by means of Stock Units or receive in Stock
Units all or a portion of any Award hereunder, or may grant Stock Units in lieu of, in exchange
for, in respect of, or in addition to any other Compensation or Award under this Plan. The
specific terms, conditions, and provisions relating to each Stock Unit grant or election, including
the applicable vesting and payout provisions of the Stock Units and the form of payment to be made
at or following the vesting thereof, shall be set forth in or pursuant to the applicable agreement
or Award and any relevant Company deferred compensation plan, in form substantially as approved by
the Committee.

     (c) Payouts. The Committee in the applicable Award Agreement or the relevant Company deferred
compensation plan may permit the Participant to elect the form and time of payout of vested Stock
Units on such conditions or subject to such procedures as the Committee may impose, and may permit
restricted stock or Stock Unit offsets or other provision for payment of any applicable taxes that
may be due on the crediting, vesting or payment in respect of the Stock Units.

4.2 Restrictions

     (a) Pre-Vesting Restraints. Except as provided in Section 4.1 and 1.9, restricted shares
comprising any Restricted Stock Award and rights in respect to Stock Unit Awards may not be sold,
assigned, transferred, pledged or otherwise disposed of or encumbered, either

10

 

voluntarily or involuntarily, until the restrictions on such shares (or units in the case of a
Stock Unit Award) have lapsed and the shares have become vested (or amounts paid in respect of the
Stock Units).

     (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.
Restricted Stock Awards and Stock Unit Awards may include dividend equivalent rights to the extent
authorized by the Committee.

     (c) Cash Payments. If the Participant shall have paid or received cash (including any
payments in respect of dividends) in connection with the Restricted Stock Award or Stock Unit
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 or Stock Units which cease to be
eligible for vesting.

4.3 Return to the Corporation

     Unless the Committee otherwise expressly provides, restricted shares or Stock Units 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 or cancelled, as the case may be,
in such manner and on such terms as the Committee shall therein provide.

V. PERFORMANCE SHARE AWARDS AND STOCK BONUSES

5.1 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.

11

 

5.2 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 on a consolidated, segment, subsidiary, business division, channel or
other operating group basis, may be granted under this Plan. Any Qualifying Option or Qualifying
Stock Appreciation Right shall be subject only to the requirements of Section 5.3(a) in order for
such Award to satisfy the requirements for “performance-based compensation” under Section 162(m) of
the Code.

     (a) Eligible Class. The eligible class of persons for Performance-Based Awards under this
Section 5.2 shall be key employees (including officers) of the Company.

     (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 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 this Plan to the
contrary, the maximum number of shares of Common Stock which may be delivered pursuant to
Performance-Based Awards (other than Qualifying Options and Qualifying Stock Appreciation Rights
which shall be subject to the limit set forth in Section 1.4(b)) that are granted to any one
Participant in any one fiscal year shall not exceed 4,000,000 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 fiscal year as Performance-Based Awards shall not
exceed $3,000,000.

     (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

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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.

5.3 Grants of Stock Bonuses.

     The Committee may grant a Stock Bonus to any Eligible Employee to reward exceptional or
special services, contributions or achievements, or issue Common Stock for past services in the
ordinary course, the value of which shall be determined by the Committee, 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.

5.4 Deferred Payments.

     The Committee may authorize for the benefit of any Eligible Employee 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

6.1 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.

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     (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.

6.2 Adjustments; Acceleration

     (a) Adjustments. Upon or in contemplation of any reclassification, recapitalization, stock
split (including a stock split in the form of a stock dividend) or reverse stock split; any merger,
combination, consolidation, or other reorganization; any spin-off, split-up, or similar
extraordinary dividend distribution (“spin-off”) in respect of the Common Stock (whether in the
form of securities or property); any exchange of Common Stock or other securities of the
Corporation, or any similar, unusual or extraordinary corporate transaction in respect of the
Common Stock; or a sale of all or substantially all the assets of the Corporation as an entirety
(“asset sale”); then the Committee shall, in such manner, to such extent (if any) and at such time
as it deems appropriate and equitable in the circumstances:

     (1) proportionately adjust any or all of (i) the number and type of shares of Common
Stock (or other securities) that 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) (subject to limitations under Section 6.10(c)) the
performance standards appropriate to any outstanding Awards, or

     (2) make provision for a cash payment or for the assumption, substitution or exchange
of any or all outstanding share-based Awards or the cash, securities or property deliverable
to the holder of any or all outstanding share-based Awards, based upon the

14

 

distribution or consideration payable to holders of the Common Stock upon or in respect
of such event.

The Committee may adopt such valuation methodologies for outstanding Awards as it deems reasonable
in the event of a cash or property settlement and, in the case of Options, Stock Appreciation
Rights or similar rights, but without limitation on other methodologies, may base such settlement
solely upon the excess if any of the amount payable upon or in respect of such event over the
exercise or strike price of the Award. In any of such events, the Committee may take such action
prior to such event to the extent that the Committee deems the action necessary to permit the
Participant to realize the benefits intended to be conveyed with respect to the underlying shares
in the same manner as is or will be available to stockholders generally.

     (b) Acceleration of Awards Upon Change in Control. As to any Eligible Employee, 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
Awards 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 and Stock Units shall immediately vest free of
restrictions, and (iii) each Performance Share Award shall become payable to the Participant. 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. Without limiting the generality of the foregoing, the Committee may deem an acceleration
to occur immediately prior to the applicable event and/or reinstate the original terms of an Award
if an event giving rise to acceleration does not occur.

     (c) Possible Early Termination of Accelerated Awards. If any Option or other right to acquire
Common Stock under this Plan has been fully accelerated as permitted by Section 6.2(b) or Section
7.7 but is not exercised prior to (i) a dissolution of the Corporation, or (ii) an 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 Board or the Committee through a plan or reorganization or otherwise for the survival,
substitution, assumption, exchange or other settlement of such Option or right.

     (d) Possible Rescission of Acceleration. If the vesting of an Award has been accelerated
expressly in anticipation of an event or upon stockholder approval of an event and the Committee or
the Board later determines that the event will not occur, the Committee may rescind the effect of
the acceleration as to any then outstanding and unexercised or otherwise unvested Awards.

6.3 Effect of Termination of Employment

     (a) General. 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

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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 the 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.

     (b) Effect on Unvested Awards. Unless otherwise provided in the applicable Award Agreement
and subject to Section 6.12 and the other provisions of this Plan, a Restricted Stock Award, Stock
Appreciation Right, Performance Share Award, Stock Unit Award or other Award, to the extent such
Award has not vested as of the termination of the Participant’s employment shall terminate on the
date the Participant ceases to be employed by the Company without further payment or benefit of any
kind; and any Option theretofore outstanding shall terminate.

     (c) Events Not Deemed Terminations of Service. Unless Company policy or the Committee
otherwise provides, the employment relationship shall not be considered terminated in the case of
(a) sick leave, (b) military leave, or (c) any other leave of absence authorized by the Company or
the Committee; provided that unless reemployment upon the expiration of such leave is guaranteed by
contract or law, such leave is for a period of not more than 90 days. In the case of any Eligible
Employee on an approved leave of absence, continued vesting of the Award while on leave from the
employ of the Company may be suspended until the employee returns to service, unless the Committee
otherwise provides or applicable law otherwise requires. In no event shall an Award be exercised
after the expiration of the term set forth in the Award Agreement.

6.4 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, the acceptance or promissory notes and/or 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 and accounting requirements.

6.5 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

16

 

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 in a consistent
manner at their Fair Market Value or at the sales price in accordance with authorized procedures
for cashless exercises, necessary to satisfy the minimum applicable withholding obligation on
exercise, vesting or payment. In the event shares are withholding to satisfy tax withholding
obligations, in no event shall the number of shares withheld exceed the number required to satisfy
the minimum required withholding.

     (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.

6.6 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. Without limiting the generality of the
foregoing, the Board may, at any time, amend any or all of the provisions of Article VII relating
to Nonqualified Stock Option grants to Non-Employee Directors. 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. To the extent then required under Sections 162, 422 or 424 of the
Code or any other applicable law, or deemed necessary or advisable by the Board, any amendment to
this Plan shall be subject to stockholder approval.

     (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
this 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

17

 

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.

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 stockholder for which a record date is prior to such date of delivery.

6.8 Effective Date of the Plan

     The effective date of this Plan shall be the date that it is first approved by the Board (the
“Effective Date”).

6.9 Term of the Plan

     No Award shall be granted after the close of business on the day before the tenth anniversary
of 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.

6.10 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 the Awards and
transactions permitted by Awards be interpreted in a manner that, in the case of
Participants who are or may be subject to Section 16 of the Exchange Act, satisfies
the applicable requirements for exemptions under Rule 16b-3. Notwithstanding the
foregoing, the Corporation shall have no liability to any Participant for Section 16
consequences of Awards or events under Awards.

     (2) Section 162(m). It is the further intent of the Corporation that (to the
extent the Corporation or Awards under this Plan may be or become subject to
limitations on deductibility under Section 162(m) of the Code), Options or Stock
Appreciation Rights granted with an exercise or base price not less than Fair Market
Value on the date of grant and Awards under Section 5.2 of this Plan that are
granted to or held by a person subject to Section 162(m) of the Code will

18

 

qualify as performance-based compensation or otherwise be exempt from
deductibility limitations under Section 162(m) of the Code, to the extent that the
authorization of the Award (or the payment thereof, as the case may be) satisfies
any applicable administrative requirements thereof.

6.11 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 this Plan or any provision thereof.

6.12 Effect of Change of Subsidiary, Division, or Unit 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. A
termination of employment shall also be deemed to occur if an employee is employed in a Company
division or business unit and, in connection with the sale, spin-off or other divestiture of that
division or unit, the employee’s employment is terminated and the employee does not otherwise
continue as an employee of the Company. In the event of a sale, spin-off, or other divestiture of
a Subsidiary, Company division or business unit, each employee who incurs a termination of
employment in connection therewith (as determined by the Committee in its sole discretion) in
accordance with either of the two preceding sentences shall be deemed to have been fully vested in
his or her Awards immediately prior to such termination.

6.13 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

7.1 Participation

     Options under this Article VII shall be made only to Non-Employee Directors.

7.2 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 40,000 shares.

     (b) Subsequent Annual Options. In each calendar year during the term of this Plan, commencing
in 2003, there shall be granted automatically (without any action by the Committee

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or the Board) a Nonqualified Stock Option to purchase 24,000 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).

     (c) Maximum Number of Shares. Annual grants that would otherwise exceed the maximum number of
shares under Section 1.4 shall be prorated within such limitation.

7.3 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.

7.4 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 as follows:

     (a) the first installment shall vest on the earlier of (i) the first anniversary of
the applicable Award Date or (ii) the Corporation’s annual meeting of stockholders that
occurs in the year following the year in which the Award Date occurs;

     (b) the second installment shall vest on the earlier of (i) the second anniversary of
the applicable Award Date or (ii) the Corporation’s annual meeting of stockholders that
occurs in the second year following the year in which the Award Date occurs;

     (c) the third installment shall vest on the earlier of (i) the third anniversary of
the applicable Award Date or (ii) the Corporation’s annual meeting of stockholders that
occurs in the third year following the year in which the Award Date occurs.

7.5 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.

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7.6 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
(or, if stockholder approval of such agreement is not required, by the Board), and (c) such
adjustment is consistent with adjustments to Options held by persons other than executive officers
or directors of the Corporation.

7.7 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

8.1 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.

21

 

     (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:

     (1) The dissolution or liquidation of the Corporation (other than in the
context of a transaction that does not constitute a Change in Control event under
clause (2) below);

     (2) Consummation of a merger, consolidation, or other reorganization, with or
into, or the sale of all or substantially all of the Corporation’s business and/or
assets to, one or more entities that are not Subsidiaries (a “Business
Combination”), as a result of which less than 50% of the outstanding voting
securities of the surviving or resulting entity or a parent (“Successor Entity”)
thereof immediately after the reorganization are, or will be, owned by stockholders
of the Corporation immediately before the Business Combination (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) 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, other than (i) an acquisition directly from the Company, (ii)
an acquisition by the Company, or (iii) an acquisition by an employee benefit plan
(or related trust) sponsored or maintained by the Company or a Successor Entity; or

     (4) 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 a majority 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), but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to

22

 

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.

     (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 one or more committees appointed by the Board to
administer all or certain aspects of this Plan, each committee to be comprised solely of one or
more directors or such number as may be required under applicable law. Each member of a Committee
in respect of any decision with respect to an Award intended to satisfy the requirements of Section
162(m) of the Code must satisfy the requirements of “outside director” status within the meaning of
Section 162(m) of the Code; provided, however, that the failure to satisfy such requirement shall
not affect the validity of the action of any committee otherwise duly authorized and acting in the
matter. As to Awards, grants or other transactions that are authorized only by a committee and
that are intended to be exempt under Rule 16b-3, the requirements of Rule 16b-3(d)(1) with respect
to committee action must also be satisfied.

     (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

23

 

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.

     (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) “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.

     (x) “Participant” shall mean an Eligible Employee who has been granted an Award under this
Plan or a Non-Employee Director who has received a Nonqualified Stock Option under Article VII.

     (y) “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.

     (z) “Performance Goals” shall mean earnings per share, or Cash Flow, or total stockholder
return, or revenue growth, or operating income, or net earnings (before or after interest, taxes,
depreciation and/or amortization), or return on equity or on assets or on net investment, or cost
containment or reduction, or any combination thereof.

     (aa) “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.

     (bb) “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.

24

 

     (cc) “Plan” shall mean this 2002 Stock Incentive Plan.

     (dd) “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.

     (ee) “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.

     (ff) “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.

     (gg) “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.

     (hh) “Rule 16b-3” shall mean Rule 16b-3 as promulgated by the Commission pursuant to the
Exchange Act.

     (ii) “Section 16 Person” shall mean a person subject to Section 16(a) of the Exchange Act.

     (jj) “Securities Act” shall mean the Securities Act of 1933, as amended from time to time.

     (kk) “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.

     (ll) “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.

     (mm) “Stock Unit” shall mean a bookkeeping entry which serves as a unit of measurement
relative to a share of Common Stock for purposes of determining the payment, in Common Stock or
cash, of an Award, including a deferred benefit or right under this Plan. Stock Units are not
outstanding shares and do not entitle a Participant to any dividend, voting or other rights in
respect of any Common Stock represented thereby or acquirable thereunder. Stock Units, may,
however, by express provision in the applicable Award Agreement, entitle a Participant to dividend
equivalent rights, as defined by the Committee.

25

 

     (nn) “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.

     (oo) “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.

26exv10w2

 

Exhibit 10.2

INTERNATIONAL GAME TECHNOLOGY

EMPLOYEE STOCK PURCHASE PLAN

(Amended and Restated Effective as of December 8, 2005)

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	1. PURPOSE
	 	 	1	 
	2. DEFINITIONS
	 	 	1	 
	3. ELIGIBILITY
	 	 	4	 
	4. STOCK SUBJECT TO THIS PLAN; SHARE LIMITATIONS
	 	 	4	 
	5. OFFERING PERIODS
	 	 	5	 
	6. PARTICIPATION
	 	 	5	 
	7. METHOD OF PAYMENT OF CONTRIBUTIONS
	 	 	5	 
	8. GRANT OF OPTION
	 	 	6	 
	9. EXERCISE OF OPTION
	 	 	7	 
	10. DELIVERY
	 	 	8	 
	11. TERMINATION OF EMPLOYMENT; CHANGE IN ELIGIBLE STATUS
	 	 	8	 
	12. ADMINISTRATION
	 	 	9	 
	13. DESIGNATION OF BENEFICIARY
	 	 	10	 
	14. TRANSFERABILITY
	 	 	11	 
	15. USE OF FUNDS; INTEREST
	 	 	11	 
	16. REPORTS
	 	 	12	 
	17. ADJUSTMENTS OF AND CHANGES IN THE STOCK
	 	 	12	 
	18. POSSIBLE EARLY TERMINATION OF PLAN AND OPTIONS
	 	 	13	 
	19. TERM OF PLAN; AMENDMENT OR TERMINATION
	 	 	13	 
	20. NOTICES
	 	 	14	 
	21. CONDITIONS UPON ISSUANCE OF SHARES
	 	 	14	 
	22. PLAN CONSTRUCTION
	 	 	14	 
	23. EMPLOYEES’ RIGHTS
	 	 	15	 
	24. MISCELLANEOUS
	 	 	15	 
	25. TAX WITHHOLDING
	 	 	16	 
	26. NOTICE OF SALE
	 	 	16	 

 

 

INTERNATIONAL GAME TECHNOLOGY

EMPLOYEE STOCK PURCHASE PLAN

(Amended and Restated Effective as of December 8, 2005)

     The following constitute the provisions of the International Game Technology Employee Stock
Purchase Plan (the “Plan”). The Plan was first adopted by the Board of Directors (the “Board”) of
International Game Technology, a Nevada corporation (the “Corporation”) on February 26, 1987. The
Plan was approved by the Corporation’s stockholders on February 16, 1988. This amendment to and
restatement of the Plan is effective as of December 8, 2005.

	1.	 	PURPOSE
	 
	 	 	The purpose of this Plan is to assist Qualified Employees in acquiring a stock ownership
interest in the Corporation pursuant to a plan which is intended to qualify as an “employee
stock purchase plan” under Section 423 of the Code. This Plan is also intended to encourage
Qualified Employees to remain in the employ of the Corporation (and those Subsidiaries which
may be designated by the Committee as “Participating Subsidiaries”).
	 
	2.	 	DEFINITIONS
	 
	 	 	Capitalized terms used herein which are not otherwise defined shall have the following
meanings.

	 	 	 	“Account” means the bookkeeping account maintained by the Corporation, or by a
recordkeeper on behalf of the Corporation, for a Participant pursuant to Section
7(a).
	 
	 	 	 	“Board” means the Board of Directors of the Corporation.
	 
	 	 	 	“Code” means the Internal Revenue Code of 1986, as amended from time to time.
	 
	 	 	 	“Committee” means the committee appointed by the Board to administer this Plan
pursuant to Section 12.
	 
	 	 	 	“Common Stock” means the Common Stock, without par value, of the Corporation.
	 
	 	 	 	“Company” means, collectively, the Corporation and its Subsidiaries.
	 
	 	 	 	“Compensation” means (1) if the Qualified Employee is a salaried employee, the
Qualified Employee’s regular salary from the Corporation (or the Participating
Subsidiary that employs the Qualified Employee, as applicable) for the relevant
period of time, or (2) if the Qualified Employee is not a salaried employee, the
Qualified Employee’s regular gross pay from the Corporation (or the Participating
Subsidiary that employs the Qualified Employee, as applicable) for the Qualified
Employee’s regularly scheduled work week(s) during the relevant period of time.
Compensation includes any amounts contributed as salary reduction contributions

1

 

	 	 	 	to a plan qualifying under Section 401(k), 125 or 129 of the Code. Any other form
of remuneration is excluded from Compensation, including (but not limited to) the
following: overtime payments, sales commissions, prizes, awards, relocation or
housing allowances, stock option exercises, stock appreciation rights, restricted
stock exercises, performance awards, auto allowances, tuition reimbursement and
other forms of imputed income, bonuses, incentive compensation, special payments,
fees and allowances. Notwithstanding the foregoing, Compensation shall not include
any amounts deferred under or paid from any nonqualified deferred compensation plan
maintained by the Company.
	 	 	 	“Contributions” means the bookkeeping amounts credited to the Account of a
Participant pursuant to this Plan, equal in amount to the amount of Compensation
that the Participant has elected to contribute for the purchase of Common Stock
under and in accordance with this Plan.
	 
	 	 	 	“Corporation” means International Game Technology, a Nevada corporation, and its
successors.
	 
	 	 	 	“Effective Date” means February 26, 1987, the original effective date of this Plan.
This amendment to and restatement of the Plan is effective as of December 8, 2005.
	 
	 	 	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time.
	 
	 	 	 	“Exercise Date” means, with respect to an Offering Period, the last day of that
Offering Period.
	 
	 	 	 	“Fair Market Value” on any date means: (i) if the Common Stock is listed or admitted
to trade on a national securities exchange, the closing price of a share of Common
Stock on the Composite Tape, as published in the Western Edition of The Wall Street
Journal, of the principal national securities exchange on which such stock is so
listed or admitted to trade, on such date, or, if there is no trading of the Common
Stock on such date, then the closing price of a share of Common Stock as quoted on
such Composite Tape on the next preceding date on which there was trading in such
shares; (ii) if the Common Stock is not listed or admitted to trade on a national
securities exchange, the last/closing price for a share of Common 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 Common 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 a
share of Common Stock on such date, as furnished by the NASD or a similar
organization; or (iv) if the Common 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 Common Stock are not furnished by the
NASD or a similar

2

 

	 	 	 	organization, the value as established by the Committee at such time for purposes of
this Plan.
	 	 	 	“Grant Date” means the first day of each Offering Period, as determined by the
Committee and announced to potential Qualified Employees; provided, however, that no
Grant Date may occur on or before the Exercise Date for the immediately preceding
Offering Period.
	 
	 	 	 	“Offering Period” means the twelve-consecutive month period commencing on each Grant
Date; provided, however, that the Committee may declare, as it deems appropriate and
in advance of the applicable Offering Period, (i) a shorter (not to be less than
three months) Offering Period or a longer (not to exceed 27 months) Offering Period.
	 
	 	 	 	“Option” means the stock option to acquire Shares granted to a Participant pursuant
to Section 8.
	 
	 	 	 	“Option Price” means the per share exercise price of an Option as determined in
accordance with Section 8(b).
	 
	 	 	 	“Parent” means any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation in which each corporation (other than the
Corporation) owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one or more of the other corporations in the chain.
	 
	 	 	 	“Participant” means a Qualified Employee who has elected to participate in this Plan
and who has filed a valid and effective Subscription Agreement to make Contributions
pursuant to Section 6.
	 
	 	 	 	“Participating Subsidiary” has the meaning given to such term in Section 19(c).
	 
	 	 	 	“Plan” means this International Game Technology Employee Stock Purchase Plan, as
amended from time to time.
	 
	 	 	 	“Qualified Employee” means any employee of the Corporation, or of any Subsidiary
which has been designated in writing by the Committee as a “Participating
Subsidiary” (including any Subsidiaries which have become such after the date that
this Plan is approved by the stockholders of the Corporation). Notwithstanding the
foregoing, “Qualified Employee” shall not include any employee: (i) who has not as
of the Grant Date completed at least 90 days of continuous full-time employment with
the Company; or (ii) whose customary employment is for 20 hours per week or less; or
(iii) whose customary employment is for not more than five months in a calendar
year.
	 
	 	 	 	“Rule 16b-3” means Rule 16b-3 as promulgated by the Commission under Section 16, as
amended from time to time.

3

 

	 	 	 	“Section 16” means Section 16 of the Exchange Act.
	 
	 	 	 	“Share” means a share of Common Stock.
	 
	 	 	 	“Subscription Agreement” means the written agreement filed by a Qualified Employee
with the Corporation pursuant to Section 6 to participate in this Plan.
	 
	 	 	 	“Subsidiary” means any corporation in an unbroken chain of corporations (beginning
with the Corporation) in which each corporation (other than the last corporation)
owns stock possessing 50% or more of the total combined voting power of all classes
of stock in one or more of the other corporations in the chain.

	3.	 	ELIGIBILITY
	 
	 	 	Any person employed as a Qualified Employee as of a Grant Date shall be eligible to
participate in this Plan during the Offering Period in which such Grant Date occurs, subject
to the Qualified Employee satisfying the requirements of Section 6.
	 
	4.	 	STOCK SUBJECT TO THIS PLAN; SHARE LIMITATIONS

	 	(a)	 	The maximum number of Shares that may be delivered pursuant to Options granted
under this Plan is 12,600,000* Shares (after giving effect to the
Corporation’s stock splits affecting the Common Stock through the July 2003
four-for-one stock split), subject to adjustments pursuant to Section 17. In the event
that all of the shares of Common Stock made available under this Plan are subscribed
prior to the expiration of this Plan, this Plan shall terminate at the end of that
Offering Period and the shares available shall be allocated for purchase by
Participants in that Offering Period on a pro-rata basis determined with respect to
Participants’ Account balances.
	 
	 	(b)	 	The maximum number of Shares that any one individual may acquire upon exercise
of his or her Option with respect to any one Offering Period is 12,000, subject to
adjustments pursuant to Section 17 (the “Individual Limit”); provided, however, that
the Committee may amend such Individual Limit, effective no earlier than the first
Offering Period commencing after the adoption of such amendment, without stockholder
approval. The Individual Limit shall be proportionately adjusted for any Offering
Period of less than 12 months, and may, at the discretion of the Committee, be
proportionately increased for any Offering Period of greater than 12 months.
	 
	 	(c)	 	Shares that are subject to or underlie Options, which 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 shall again, except to the extent prohibited by law,
be available for subsequent Options under this Plan.

 

			
	 	 	* Reflects the December 2003 amendment approved
by the Board to increase the Share limit by 3,000,000 Shares, which amendment
is subject to approval by stockholders at the 2004 annual meeting of
stockholders.

4

 

	5.	 	OFFERING PERIODS
	 
	 	 	During the term of this Plan, the Corporation will grant Options to purchase Shares in each
Offering Period to all Participants in that Offering Period. Each Option shall become
effective on the Grant Date of the Offering Period with respect to which the Option was
granted. The term of each Option shall be the duration of the related Offering Period and
shall end on the Exercise Date of that Offering Period. Offering Periods shall continue
until this Plan is terminated in accordance with Section 18 or 19, or, if earlier, until no
Shares remain available for Options pursuant to Section 4.
	 
	6.	 	PARTICIPATION

	 	(a)	 	A Qualified Employee may become a participant in this Plan by completing a
Subscription Agreement on a form approved by and in a manner prescribed by the
Committee (or its delegate). To become effective, a Subscription Agreement must be
signed by the Qualified Employee and be filed with the Corporation at the time
specified by the Committee, but in all cases prior to the start of the Offering Period
with respect to which it is to become effective, and must set forth a stated amount
(or, if the Committee so provides, a whole percentage) of the Qualified Employee’s
Compensation to be credited to the Participant’s Account as Contributions each pay
period.
	 
	 	(b)	 	Notwithstanding the foregoing, a Participant may not elect to contribute more
than ten percent (10%) of his or her Compensation during any one pay period and, in the
case of a Contribution that is expressed as a stated amount, may not elect to
contribute less than $10.00 for any one pay period as Plan Contributions; provided,
however, that the Committee may establish different maximum and/or minimum limits on
Contributions for any Offering Period prior to the start of such Offering Period. The
Committee also may prescribe other limits, rules or procedures for Contributions.
	 
	 	(c)	 	Subscription Agreements shall contain the Qualified Employee’s authorization
and consent to the Company’s withholding from his or her Compensation the amount of his
or her Contributions. A Qualified Employee’s Subscription Agreement, and his or her
participation election and withholding consent therein, shall be effective only with
respect to the related Offering Period, and such Qualified Employee must timely file a
new Subscription Agreement for each Offering Period in which he or she wishes to
participate; provided, however, that the Committee may provide in advance of an
Offering Period that Subscription Agreements, and participation elections and
withholding consents therein, shall remain valid for subsequent Offering Periods,
subject to such rules and procedures as the Committee may prescribe.

7. METHOD OF PAYMENT OF CONTRIBUTIONS

	 	(a)	 	The Corporation shall maintain on its books, or cause to be maintained by a
recordkeeper, an Account in the name of each Participant. The percentage of

5

 

	 	 	 	Compensation elected to be applied as Contributions by a Participant shall be
deducted from such Participant’s Compensation on each payday during the period for
payroll deductions set forth below and such payroll deductions shall be credited to
that Participant’s Account as soon as administratively practicable after such date.
A Participant may not make any additional payments to his or her Account. A
Participant’s Account shall be reduced by any amounts used to pay the Option Price
of Shares acquired, or by any other amounts distributed pursuant to the terms
hereof.
	 
	 	(b)	 	Subject to such other rules as the Committee may adopt, payroll deductions with
respect to an Offering Period shall commence as of the first payday which coincides
with or immediately follows the applicable Grant Date and shall end on the last payday
which coincides with or immediately precedes the applicable Exercise Date, unless
sooner terminated by the Participant as provided in this Section 7 or until his or her
participation terminates pursuant to Section 11.
	 
	 	(c)	 	Unless otherwise provided by the Committee in advance of an Offering Period, a
Participant may not increase or decrease the level of his or her Contributions during
an Offering Period (other than a termination of Contributions as contemplated by
Section 7(d)).
	 
	 	(d)	 	A Participant may terminate his or her Contributions during an Offering Period
(and receive a distribution of the balance of his or her Account in accordance with
Section 11) by completing and filing with the Corporation, in such form and on such
terms as the Committee (or its delegate) may prescribe, a written withdrawal form which
shall be signed by the Participant. Such termination shall be effective as soon as
administratively practicable after its receipt by the Corporation. A withdrawal
election pursuant to this Section 7(d) with respect to an Offering Period shall only be
effective, however, if it is received by the Corporation prior to the Exercise Date of
that Offering Period (or such earlier deadline that the Committee may reasonably
require to process the withdrawal prior to the applicable Exercise Date). Partial
withdrawals of Accounts, and other modifications or suspensions of Subscription
Agreements are not permitted.
	 
	 	(e)	 	During leaves of absence approved by the Corporation or a Participating
Subsidiary and meeting the requirements of Regulation Section 1.421-7(h)(2) under the
Code, a Participant may continue participation in this Plan by cash payments to the
Corporation on his normal paydays equal to the reduction in his Plan Contributions
caused by his leave.

	8.	 	GRANT OF OPTION

	 	(a)	 	On each Grant Date, each Qualified Employee who is a Participant during that
Offering Period shall be granted an Option to purchase a number of Shares. The Option
shall be exercised on the Exercise Date. The number of Shares subject to the Option
shall be determined by dividing the Participant’s Account balance as

6

 

	 	 	 	of the applicable Exercise Date by the Option Price, subject to the limits of
Section 8(c).
	 	(b)	 	The Committee shall establish the method for determining the Option Price per
Share of the Shares subject to an Option for an Offering Period prior to the start of
that Offering Period in accordance with this Section 8(b). The Committee may provide
prior to the start of an Offering Period that the Option Price for that Offering Period
shall be determined by applying a discount amount (not to exceed 15%) to either (1) the
Fair Market Value of a Share on the Grant Date of that Offering Period, or (2) the Fair
Market Value of a Share on the Exercise Date of that Offering Period, or (3) the lesser
of the Fair Market Value of a Share on the Grant Date of that Offering Period or the
Fair Market Value of a Share on the Exercise Date of that Offering Period.
Notwithstanding anything to the contrary in the preceding provisions of this Section
8(b), in no event shall the Option Price per Share be less than the par value of a
Share.
	 
	 	(c)	 	Notwithstanding anything else contained herein, the maximum number of Shares
subject to an Option for an Offering Period shall be subject to the Individual Limit in
effect on the Grant Date of that Offering Period (subject to adjustment pursuant to
Section 17) and any person who is otherwise a Qualified Employee shall not be granted
any Option (or any Option granted shall be subject to compliance with the following
limitations) or other right to purchase Shares under this Plan to the extent:

	 	(1)	 	it would, if exercised, cause the person to own
stock (within the meaning of Section 423(b)(3) of the Code) possessing
5% or more of the total combined voting power or value of all classes
of stock of the Corporation, or of any Parent, or of any Subsidiary; or
	 
	 	(2)	 	such Option causes such individual to have
rights to purchase stock under this Plan and any other plan of the
Corporation, any Parent, or any Subsidiary which is qualified under
Section 423 of the Code which accrue at a rate which exceeds $25,000 of
the fair market value of the stock of the Corporation, of any Parent,
or of any Subsidiary (determined at the time the right to purchase such
Stock is granted, before giving effect to any discounted purchase price
under any such plan) for each calendar year in which such right is
outstanding at any time.

	 	 	 	For purposes of the foregoing, a right to purchase stock accrues when it first
become exercisable during the calendar year. In determining whether the stock
ownership of a Qualified Employee equals or exceeds the 5% limit set forth above,
the rules of Section 424(d) of the Code (relating to attribution of stock ownership)
shall apply, and stock which the Qualified Employee may purchase under outstanding
options shall be treated as stock owned by the Qualified Employee.

7

 

	9.	 	EXERCISE OF OPTION

	 	(a)	 	Unless a Participant withdraws pursuant to Section 7(d) or the Participant’s
Plan participation is terminated as provided in Section 11, his or her Option for the
purchase of shares shall be exercised automatically on the Exercise Date for that
Offering Period, without any further action on the Participant’s part, and the maximum
number of whole Shares subject to such Option (subject to the Individual Limit set
forth in Section 4(b) and the limitations contained in Section 8(c)) shall be purchased
at the Option Price with the balance of such Participant’s Account.
	 
	 	(b)	 	If any amount which is not sufficient to purchase a whole Share remains in a
Participant’s Account after the exercise of his or her Option on the Exercise Date:
(1) such amount shall be credited to such Participant’s Account for the next Offering
Period, if he or she is then a Participant; or (2) if such Participant is not a
Participant in the next Offering Period, or if the Committee so elects, such amount
shall be refunded to such Participant as soon as administratively practicable after
such date. If the share limit of Section 4(a) is reached, any amount that remains in a
Participant’s Account after the exercise of his or her Option on the Exercise Date to
purchase the number of shares that he or she is allocated shall be refunded to the
Participant as soon as administratively practicable after such date. If any amount
which exceeds the limits of Section 8(c) remains in a Participant’s Account after the
exercise of his or her Option on the Exercise Date, such amount shall be refunded to
the Participant as soon as administratively practicable after such date.

	10.	 	DELIVERY
	 
	 	 	As soon as administratively practicable after the Exercise Date, the Corporation shall
deliver to each Participant a certificate representing the Shares purchased upon exercise of
his or her Option. The Corporation may make available an alternative arrangement for
delivery of Shares to a recordkeeping service. The Committee (or its delegate), in its
discretion, may either require or permit the Participant to elect that such certificates be
delivered to such recordkeeping service. In the event the Corporation is required to obtain
from any commission or agency authority to issue any such certificate, the Corporation will
seek to obtain such authority. If the Corporation is unable to obtain from any such
commission or agency authority which counsel for the Corporation deems necessary for the
lawful issuance of any such certificate or other delivery of such Shares, or if for any
other reason the Corporation cannot issue or deliver Shares and satisfy Section 21, the
Corporation shall be relieved from liability to any Participant except that the Corporation
shall return to each Participant to whom such shares cannot be issued or delivered the
amount of the balance credited to his or her Account that would have otherwise been used for
the purchase of such shares.

8

 

	11.	 	TERMINATION OF EMPLOYMENT; CHANGE IN ELIGIBLE STATUS

	 	(a)	 	Except as provided in Section 11(b) below, if a Participant ceases to be an
Eligible Employee for any reason (including, without limitation, due to the
Participant’s death, disability, quit, resignation or retirement, or due to a layoff or
other termination of employment with or without cause), or if the Participant elects to
withdraw from the Plan pursuant to Section 7(d), at any time prior to the last day of
an Offering Period in which he or she participates, such Participant’s Account shall be
paid to him or her (or, in the event of the Participant’s death, to the person or
persons entitled thereto under Section 13) in cash, and such Participant’s Option and
participation in the Plan shall automatically terminate as of the time that the
Participant ceased to be a Qualified Employee.
	 
	 	(b)	 	If a Participant (1) ceases to be a Qualified Employee during an Offering
Period but remains an employee of the Company through the Exercise Date (for example,
and without limitation, due to a change in the Participant’s employer from the
Corporation or a Participating Subsidiary to a non-Participating Subsidiary, if the
Participant’s employer ceases to maintain the Plan as a Participating Subsidiary but
otherwise continues as a Subsidiary, or if the Participant’s customary level of
employment no longer satisfies the requirements set forth in the definition of
Qualified Employee), or (2) during an Offering Period commences a sick leave, military
leave, or other leave of absence approved by the Company, and the leave meets the
requirements of Treasury Regulation Section 1.421-7(h)(2) and the Participant is an
employee of the Company or on such leave as of the applicable Exercise Date, such
Participant’s Contributions shall cease (subject to Section 7(e)), and the
Contributions previously credited to the Participant’s Account for that Offering Period
shall be used to exercise the Participant’s Option as of the applicable Exercise Date
in accordance with Section 9 (unless the Participant makes a timely withdrawal election
in accordance with Section 7(d), in which case such Participant’s Account shall be paid
to him or her in cash in accordance with Section 11(a)).
	 
	 	(c)	 	A Participant’s termination from Plan participation precludes the Participant
from again participating in this Plan during that Offering Period. However, such
termination shall not have any effect upon his or her ability to participate in any
succeeding Offering Period, provided that the applicable eligibility and participation
requirements are again then met. A Participant’s termination from Plan participation
shall be deemed to be a revocation of that Participant’s Subscription Agreement and
such Participant must file a new Subscription Agreement to resume Plan participation in
any succeeding Offering Period.

	12.	 	ADMINISTRATION

	 	(a)	 	The Board shall appoint the Committee, which shall be composed of not less than
two members of the Board. The Board may, at any time, increase or decrease the number
of members of the Committee, may remove from membership on the Committee all or any
portion of its members, and may appoint such person or

9

 

	 	 	 	persons as it desires to fill any vacancy existing on the Committee, whether caused
by removal, resignation, or otherwise. The Board may also, at any time, assume the
administration of all or a part of this Plan, in which case references (or relevant
references in the event the Board assumes the administration of only certain aspects
of this Plan) to the “Committee” shall be deemed to be references to the Board.
Action of the Committee with respect to this Plan shall be taken pursuant to a
majority vote or by the unanimous written consent of its members. No member of the
Committee shall be entitled to act on or decide any matter relating solely to
himself or herself or solely to any of his or her rights or benefits under this
Plan.
	 	(b)	 	Subject to the express provisions of this Plan, the Committee shall supervise
and administer this Plan and shall have the full authority and discretion: (1) to
construe and interpret this Plan and any agreements defining the rights and obligations
of the Corporation, any Subsidiary, and Participants under this Plan; (2) to further
define the terms used in this Plan; (3) to prescribe, amend and rescind rules and
regulations relating to the administration of this Plan; and (4) 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 or the effectuation of its
purposes. The Committee may delegate ministerial, non-discretionary functions to
individuals who are officers or employees of the Corporation or a Subsidiary.
	 
	 	(c)	 	Any action taken by, or inaction of, the Corporation, any Subsidiary, the Board
or the Committee relating or pursuant to this Plan and within its authority hereunder
or under applicable law shall be within the absolute discretion of that entity or body
and shall be conclusive and binding upon all persons.
	 
	 	(d)	 	Neither the Board nor any Committee, nor any member thereof or person acting at
the direction thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with this Plan, and all
such persons shall be entitled to indemnification and reimbursement by the Corporation
in respect of any claim, loss, damage or expense (including, without limitation,
attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law
and/or under any directors and officers liability insurance coverage that may be in
effect from time to time.
	 
	 	(e)	 	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 Corporation or any Participating Subsidiary shall be liable for
any such action or determination taken or made or omitted in good faith.

10

 

	13.	 	DESIGNATION OF BENEFICIARY
	 
	 	 	If the Committee permits beneficiary designations with respect to this Plan, then each
Participant may file, on a form and in a manner prescribed by the Committee (or its
delegate), a written designation of a beneficiary who is to receive any Shares or cash from
or with respect to such Participant’s Account under this Plan in the event of such
Participant’s death. If a Participant is married and the designated beneficiary is not
solely his or her spouse, spousal consent shall be required for such designation to be
effective unless it is established (to the satisfaction of the Committee or its delegate)
that there is no spouse or that the spouse cannot be located. The Committee may rely on the
last designation of a beneficiary filed by a Participant in accordance with this Plan.
Beneficiary designations may be changed by the Participant (and his or her spouse, if
required) at any time on forms provided and in the manner prescribed by the Committee (or
its delegate).
	 
	 	 	If a Participant dies with no validly designated beneficiary under this Plan who is living
at the time of such Participant’s death (or in the event the Committee does not permit
beneficiary designations under this Plan), the Corporation shall deliver all Shares and/or
cash payable pursuant to the terms hereof to the executor or administrator of the estate of
the Participant, or if no such executor or administrator has been appointed, the
Corporation, in its discretion, may deliver such Shares and/or cash to the spouse or to any
one or more dependents or relatives of the Participant, or if no spouse, dependent or
relative is known to the Corporation, then to such other person as the Corporation may
designate.
	 
	 	 	If a Participant’s death occurs before the end of an Offering Period or subsequent to the
end of an Offering Period but prior to the delivery to him or her or for his or her benefit
of any Shares deliverable under the terms of this Plan, and the Corporation has notice of
the Participant’s death, then any Shares purchased for that Offering Period and any
remaining balance of such Participant’s Account shall be paid to such beneficiary (or such
other person entitled to such payment pursuant to this Section 13). If the Committee
permits beneficiary designations with respect to this Plan, any such designation shall have
no effect with respect to Shares purchased and actually delivered (or credited, as the case
may be) to or for the benefit of the Participant.
	 
	14.	 	TRANSFERABILITY
	 
	 	 	Neither Contributions credited to a Participant’s Account nor any Options or rights with
respect to the exercise of Options or right to receive Shares under this Plan may be
anticipated, alienated, encumbered, assigned, transferred, pledged or otherwise disposed of
in any way (other than by will, the laws of descent and distribution, or as provided in
Section 13) by the Participant. Any such attempt at anticipation, alienation, encumbrance,
assignment, transfer, pledge or other disposition shall be without effect and all amounts
shall be paid and all shares shall be delivered in accordance with the provisions of this
Plan. Amounts payable or Shares deliverable pursuant to this Plan shall be paid or
delivered only to the Participant or, in the event of the Participant’s death, to the
Participant’s beneficiary pursuant to Section 13.

11

 

	15.	 	USE OF FUNDS; INTEREST
	 
	 	 	All Contributions received or held by the Corporation under this Plan will be included in
the general assets of the Corporation and may be used for any corporate purpose.
Notwithstanding anything else contained herein to the contrary, no interest will be paid to
any Participant or credited to his or her Account under this Plan (in respect of Account
balances, refunds of Account balances, or otherwise). Amounts payable under this Plan shall
be payable in Shares or from the general assets of the Corporation and, except for any
Shares that may be reserved on the books of the Corporation for issuance with respect to
this Plan, no special or separate reserve, fund or deposit shall be made to assure payment
of amounts that may be due with respect to this Plan.
	 
	16.	 	REPORTS
	 
	 	 	Statements shall be provided to Participants as soon as administratively practicable
following each Exercise Date. Each Participant’s statement shall set forth, as of such
Exercise Date, that Participant’s Account balance immediately prior to the exercise of his
or her Option, the Option Price, the number of whole Shares purchased and his or her
remaining Account balance, if any.
	 
	17.	 	ADJUSTMENTS OF AND CHANGES IN THE STOCK
	 
	 	 	Upon or in contemplation of any reclassification, recapitalization, stock split (including a
stock split in the form of a stock dividend), or reverse stock split; any merger,
combination, consolidation, or other reorganization; split-up, spin-off, or any similar
extraordinary dividend distribution in respect of the Common Stock (whether in the form of
securities or property); any exchange of Common Stock or other securities of the
Corporation, or any similar, unusual or extraordinary corporate transaction in respect of
the Common Stock; or a sale of substantially all the assets of the Corporation as an
entirety occurs; then the Committee shall, in such manner, to such extent (if any) and at
such time as it deems appropriate and equitable in the circumstances:

	 	(a)	 	proportionately adjust any or all of (i) the number and type of Shares (or
other securities) that thereafter may be made the subject of Options (including the
specific maxima and numbers of shares set forth elsewhere in this Plan), (ii) the
number, amount and type of Shares (or other securities or property) subject to any or
all outstanding Options, (iii) the Option Price of any or all outstanding Options, or
(iv) the securities, cash or other property deliverable upon exercise of any
outstanding Options, or
	 
	 	(b)	 	make provision for a cash payment or for the substitution or exchange of any or
all outstanding Options for cash, securities or property to be delivered to the holder
of any or all outstanding Options based upon the distribution or consideration payable
to holders of the Common Stock upon or in respect of such event.

	 	 	The Committee may adopt such valuation methodologies for outstanding Options as it deems
reasonable in the event of a cash or property settlement and, without limitation on

12

 

	 	 	other methodologies, may base such settlement solely upon the excess (if any) of the amount
payable upon or in respect of such event over the Option Price of the Option.
	 	 	In any of such events, the Committee may take such action sufficiently prior to such event
to the extent that the Committee deems the action necessary to permit the Participant to
realize the benefits intended to be conveyed with respect to the underlying shares in the
same manner as is or will be available to stockholders generally.
	 
	18.	 	POSSIBLE EARLY TERMINATION OF PLAN AND OPTIONS
	 
	 	 	Upon a dissolution of the Corporation, or any other event described in Section 17 that the
Corporation does not survive or does not survive as a publicly-traded company in respect of
its Common Stock, as the case may be, the Plan and, if prior to the last day of an Offering
Period, any outstanding Option granted with respect to that Offering Period shall terminate,
subject to any provision that has been expressly made by the Board for the survival,
substitution, assumption, exchange or other settlement of the Plan and Options. In the
event a Participant’s Option is terminated pursuant to this Section 18 without a provision
having been made by the Board for a substitution, exchange or other settlement of the
Option, such Participant’s Account shall be paid to him or her in cash without interest.
	 
	19.	 	TERM OF PLAN; AMENDMENT OR TERMINATION

	 	(a)	 	This Plan shall become effective as of the Effective Date. No new Offering
Periods shall commence on or after February 28, 2015 (after giving effect to the
amendment approved by the Corporation’s stockholders at the 2005 annual meeting of
stockholders which extended the term of this Plan) and this Plan shall terminate as of
the Exercise Date immediately following such date unless sooner terminated pursuant to
Section 4, Section 18, or this Section 19.
	 
	 	(b)	 	The Board may amend, modify or terminate this Plan at any time, in whole or in
part and without notice. Stockholder approval for any amendment or modification shall
not be required, except to the extent required by law or applicable stock exchange
rules, or required under Section 423 of the Code in order to preserve the intended tax
consequences of the Plan. No Options may be granted during any suspension of this Plan
or after the termination of this Plan, but the Committee will retain jurisdiction as to
Options then outstanding in accordance with the terms of this Plan. No amendment,
modification, or termination pursuant to this Section 19(b) shall, without written
consent of the Participant, affect in any manner materially adverse to the Participant
any rights or benefits of such Participant or obligations of the Corporation under any
Option granted under this Plan prior to the effective date of such change. Changes
contemplated by Section 17 or Section 18 shall not be deemed to constitute changes or
amendments requiring Participant consent.
	 
	 	(c)	 	Notwithstanding the amendment provisions of Section 19(b) and without limiting
the Board’s authority thereunder and without limiting the Committee’s authority

13

 

	 	 	 	pursuant to any other provision of this Plan, the Committee shall have the right (1)
to designate from time to time the Subsidiaries whose employees may be eligible to
participate in this Plan (including, without limitation, any Subsidiary that may
first become such after the date stockholders first approve this Plan) (each a
“Participating Subsidiary”), and (2) to change the service and other qualification
requirements set forth under the definition of Qualified Employee in Section 2
(subject to the requirements of Section 423(b) of the Code and applicable rules and
regulations thereunder). Any such change shall not take effect earlier than the
first Offering Period that starts on or after the effective date of such change.
Any such change shall not require stockholder approval.

	20.	 	NOTICES
	 
	 	 	All notices or other communications by a Participant to the Corporation contemplated by this
Plan shall be deemed to have been duly given when received in the form and manner specified
by the Committee (or its delegate) at the location, or by the person, designated by the
Committee (or its delegate) for that purpose.
	 
	21.	 	CONDITIONS UPON ISSUANCE OF SHARES
	 
	 	 	This Plan, the granting of Options under this Plan and the offer, issuance and delivery of
Shares 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 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. The person
acquiring any securities under this Plan will, if requested by the Corporation and as a
condition precedent to the exercise of his or her Option, provide such assurances and
representations to the Corporation as the Committee may deem necessary or desirable to
assure compliance with all applicable legal requirements.
	 
	22.	 	PLAN CONSTRUCTION

	 	(a)	 	It is the intent of the Corporation that transactions involving Options under
this Plan (other than “Discretionary Transactions” as that term is defined in Rule
16b-3(b)(1) promulgated by the Commission under Section 16 of the Exchange Act, to the
extent there are any Discretionary Transactions under this Plan), in the case of
Participants who are or may be subject to the prohibitions of Section 16 of the
Exchange Act, satisfy the requirements for exemption under Rule 16b-3(c) promulgated by
the Commission under Section 16 of the Exchange Act to the maximum extent possible.
Notwithstanding the foregoing, the Corporation shall have no liability to any
Participant for Section 16 consequences of Options or other events with respect to this
Plan.
	 
	 	(b)	 	This Plan and Options are intended to qualify under Section 423 of the Code.
Accordingly, all Participants are to have the same rights and privileges (within the
meaning of Section 423(b)(5) of the Code) under this Plan, subject to differences

14

 

	 	 	 	in Compensation among Participants and subject to the Contribution and share limits
of this Plan.
	 	(c)	 	If any provision of this Plan or of any Option would otherwise frustrate or
conflict with the intents expressed above, that provision to the extent possible shall
be interpreted so as to avoid such conflict. If the conflict remains irreconcilable,
the Committee may disregard the provision if it concludes that to do so furthers the
interest of the Corporation and is consistent with the purposes of this Plan as to such
persons in the circumstances.

	23.	 	EMPLOYEES’ RIGHTS

	 	(a)	 	Nothing in this Plan (or in any Subscription Agreement or other document
related to this Plan) will confer upon any Qualified Employee or Participant any right
to continue in the employ or other service of the Company, constitute any contract or
agreement of employment or other service or affect an employee’s status as an employee
at will, nor shall interfere in any way with the right of the Company to change such
person’s compensation or other benefits or to terminate his or her employment or other
service, with or without cause. Nothing contained in this Section 23(a), however, is
intended to adversely affect any express independent right of any such person under a
separate employment or service contract other than a Subscription Agreement.
	 
	 	(b)	 	No Participant or other person will have any right, title or interest in any
fund or in any specific asset (including Shares) of the Corporation or any Subsidiary
by reason of any Option hereunder. Neither the provisions of this Plan (or of any
Subscription Agreement or other document related to this Plan), nor the creation or
adoption of this Plan, nor any action taken pursuant to the provisions of this Plan
will create, or be construed to create, a trust of any kind or a fiduciary relationship
between the Corporation or any Subsidiary 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 this Plan, such right will be no greater than the right
of any unsecured general creditor of the Corporation.
	 
	 	(c)	 	A Participant will not be entitled to any privilege of stock ownership as to
any Shares not actually delivered to and held of record by the Participant. No
adjustment will be made for dividends or other rights as a shareholder for which a
record date is prior to such date of delivery.

	24.	 	MISCELLANEOUS

	 	(a)	 	This Plan, the Options, Subscription Agreements and other documents related to
this Plan shall be governed by, and construed in accordance with, the laws of the State
of Nevada. 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.

15

 

	 	(b)	 	Captions and headings are given to the sections of this Plan solely as a
convenience to facilitate reference. Such captions and headings shall not be deemed in
any way material or relevant to the construction of interpretation of this Plan or any
provision hereof.
	 
	 	(c)	 	The adoption of this Plan shall not affect any other Company compensation or
incentive plans in effect. Nothing in this Plan will limit or be deemed to limit the
authority of the Board or Committee (i) to establish any other forms of incentives or
compensation for employees of the Company (with or without reference to the Common
Stock), or (ii) to grant or assume options (outside the scope of and in addition to
those contemplated by this Plan) in connection with any proper corporate purpose; to
the extent consistent with any other plan or authority. Benefits received by a
Participant under an Option granted pursuant to this Plan shall not be deemed a part of
the Participant’s compensation for purposes of the determination of benefits under any
other employee welfare or benefit plans or arrangements, if any, provided by the
Corporation or any Subsidiary, except where the Committee or the Board (or the Board of
Directors of the Subsidiary that sponsors such plan or arrangement, as applicable)
expressly otherwise provides or authorizes in writing.

	25.	 	TAX WITHHOLDING
	 
	 	 	Notwithstanding anything else contained in this Plan herein to the contrary, the Corporation
may deduct from a Participant’s Account balance as of an Exercise Date, before the exercise
of the Participant’s Option is given effect on such date, the amount of taxes (if any) which
the Corporation reasonably determines it or any Subsidiary may be required to withhold with
respect to such exercise. In such event, the maximum number of whole shares subject to such
Option (subject to the other limits set forth in this Plan) shall be purchased at the
Exercise Price with the balance of the Participant’s Account (after reduction for the tax
withholding amount).
	 
	 	 	Should the Corporation for any reason be unable, or elect not to, satisfy its or any
Subsidiary’s tax withholding obligations in the manner described in the preceding paragraph
with respect to a Participant’s exercise of an Option, or should the Corporation or any
Subsidiary reasonably determine that it or an affiliated entity has a tax withholding
obligation with respect to a disposition of shares acquired pursuant to the exercise of an
Option prior to satisfaction of the holding period requirements of Section 423 of the Code,
the Corporation or Subsidiary, as the case may be, shall have the right at its option to (1)
require the Participant to pay or provide for payment of the amount of any taxes which the
Corporation or Subsidiary reasonably determines that it or any affiliate is required to
withhold with respect to such event or (2) deduct from any amount otherwise payable to or
for the account of the Participant the amount of any taxes which the Corporation or
Subsidiary reasonably determines that it or any affiliate is required to withhold with
respect to such event.

16

 

	26.	 	NOTICE OF SALE
	 
	 	 	Any person who has acquired shares under this Plan shall give prompt written notice to the
Corporation of any sale or other transfer of the shares if such sale or transfer occurs (1)
within the two-year period after the Grant Date of the Offering Period with respect to which
such shares were acquired, or (2) within the twelve-month period after the Exercise Date of
the Offering Period with respect to which such shares were acquired.

     IN WITNESS WHEREOF, the Corporation has caused its duly authorized officer to execute this
Plan on this 8th day of December, 2005.

	 	 	 	 	 
	 	INTERNATIONAL GAME TECHNOLOGY

 	 
	 	By:  	 	 
	 	 	David D. Johnson 	 
	 
		Its:	 Executive Vice President, General Counsel 	 
	 

17

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