Document:

<PAGE>

                                                                   EXHIBIT 10.72

                                 GRANT AGREEMENT

                           PERFORMANCE UNITS AGREEMENT

         THIS AGREEMENT, dated as of August 1, 2004 ("Grant Date") is made by
and between PEABODY ENERGY CORPORATION, a Delaware corporation (the "Company"),
and the undersigned employee of the Company or a Subsidiary (as defined below)
or Affiliate (as defined below) of the Company ("Grantee").

         WHEREAS, the Company wishes to afford the Grantee the opportunity to
participate in future increases in Company value;

         WHEREAS, the Company wishes to carry out the Plan (as hereinafter
defined), the terms of which are hereby incorporated by reference and made a
part of this Agreement; and

         WHEREAS, the Committee (as hereinafter defined), appointed to
administer the Plan, has determined that it would be to the advantage and best
interest of the Company and its stockholders to grant the Performance Units
provided for herein to the Grantee as an incentive for increased efforts during
his term of office with the Company or its Subsidiaries or Affiliates, and has
advised the Company thereof and instructed the undersigned officers to issue
said Performance Units;

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties, hereto do hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Whenever the following terms are used in this Agreement, they shall
have the meaning specified in the Plan or below unless the context clearly
indicates to the contrary.

Section 1.1 - "Affiliate", as applied to any Person, shall mean any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract or otherwise.

Section 1.2 - "Board of Directors" or "Board" shall mean the Board of Directors
of the Company.

Section 1.3 - "Cause" shall mean (i) any material and uncorrected breach by
Grantee of the terms of his employment agreement with the Company, if any,
including, but not limited to, engaging in action in violation of any
restrictive covenants therein, (ii) any willful fraud or

<PAGE>

dishonesty of Grantee involving the property or business of the Company, (iii) a
deliberate or willful refusal or failure of Grantee to comply with any major
corporate policy of the Company which is communicated to Grantee in writing or
(iv) Grantee's conviction of, or plea of nolo contendere to, any felony if such
conviction shall result in his imprisonment; provided that with respect to
clauses (i), (ii) or (iii) above, Grantee shall have 10 days following written
notice of the conduct which is the basis for the potential termination for Cause
within which to cure such conduct in order to prevent termination for Cause by
the Company.

Section 1.4 - "Change of Control" shall mean:

         (a) any Person (other than a Person holding securities representing 10%
or more of the combined voting power of the Company's outstanding securities as
of May 22, 2001, the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any company owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company), becomes the beneficial
owner, directly or indirectly, of securities of the Company, representing 50% or
more of the combined voting power of the Company's then-outstanding securities;
or

         (b) during any period of twenty-four consecutive months (not including
any period prior to May 22, 2001), individuals, who at the beginning of such
period constitute the Board (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the Board; provided, however, that the
Incumbent Board shall be deemed to include any new director, whose election by
the Board or nomination for election by the Company's shareholders was approved
by a vote of at least three-fourths ( 3/4) of the directors then still in office
who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved; provided further that the
Incumbent Board shall be deemed to exclude (A) any director nominated by a
Person who has entered into an agreement with the Company to effect a
transaction described in Section 1.4(a), (c) or (d) and (B) any director
nominated by any Person (including the Company) who publicly announces an
intention to take or to consider taking actions (including, but not limited to,
an actual or threatened proxy contest) which if consummated would constitute a
Change in Control); or

         (c) the consummation of any merger, consolidation, plan of arrangement,
reorganization or similar transaction or series of transactions in which the
Company is involved; provided, however, that a Change of Control shall not
include any transaction or series of transactions as a result of which the
shareholders of the Company immediately prior thereto continue to own, in
substantially the same proportions as their ownership immediately prior to such
transaction(s), more than 50% of the combined voting power of the securities of
the Company or such surviving entity (or the parent, if any) outstanding
immediately after such transaction(s) (either by remaining outstanding or by
being converted into voting securities of the surviving entity); or

         (d) the shareholders of the Company approve a plan of complete
liquidation of the Company or the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a liquidation of the
Company into a wholly owned subsidiary.

                                       2
<PAGE>

For purposes of this Section 1.5, "Person" (including a "group"), has the
meaning as such term is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (or any successor section thereto).

Section 1.5 - "Committee" shall mean the Compensation Committee of the Company,
duly appointed by the Board as the Administrator under Section 2 of the Plan.

Section 1.6 - "Common Stock" shall mean the common stock of the Company, par
value $0.01.

Section 1.7 - "Disability" shall mean Grantee's absence from the full-time
performance of Grantee's duties pursuant to a reasonable determination made in
accordance with the Company's disability plan that Grantee is disabled as a
result of incapacity due to physical or mental illness that lasts, or is
reasonably expected to last, for at least six months.

Section 1.8 - "FMV per Share" shall mean the average of the closing prices of
the shares of Common Stock for the 28 calendar days immediately preceding the
Determination Date (as defined below), or, with respect to the Grant Date, the
average of the closing prices of the shares of Common Stock for the 28 calendar
days immediately following the Grant Date; notwithstanding the foregoing, in the
event of a Change of Control, "FMV per Share" shall mean the per share value of
equity based on amounts paid in the Change of Control.

Section 1.9 - "Good Reason" shall mean (i) a reduction by the Company in
Grantee's Base Salary, (ii) a material reduction in the aggregate program of
employee benefits and perquisites to which Grantee is entitled (other than a
reduction which affects all executives), (iii) relocation by more than 50 miles
from Grantee's workplace, (iv) any material diminution or material adverse
change in Grantee's duties, responsibilities or reporting relationships, which
causes Grantee to fall below the level of the executive team, or (v) a material
decline in Grantee's Bonus opportunity.

Section 1.10 - "Incentive Amount" shall mean the dollar amount payable to
Grantee hereunder with respect to the Performance Units, if any, as calculated
in Article IV.

Section 1.11 - "Performance Units" shall mean the units granted on a performance
basis under this Agreement. The value of each Performance Unit shall be equal to
the FMV per Share as of the Grant Date or the relevant Determination Date (as
defined below).

Section 1.12 - "Person" shall mean an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature.

Section 1.13 - "Plan" shall mean the Peabody Energy Corporation Long-Term Equity
Incentive Plan, as from time to time amended.

Section 1.14 - Pronouns - The masculine pronoun shall include the feminine and
neuter, and the singular the plural, where the context so indicates.

Section 1.15 - "Recapitalization Event" shall mean a recapitalization,
reorganization, stock dividend or other special corporate restructuring which
results in an extraordinary distribution to

                                       3
<PAGE>

the stockholders of cash and/or securities through the use of leveraging or
otherwise but which does not result in a Change of Control.

Section 1.16 - "Retirement" shall mean normal retirement at or after age 55 with
at least ten (10) years of service with the Company.

Section 1.17 - "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations, or group of
commonly controlled corporations, other than the last corporation in the
unbroken chain then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

Section 1.18 - "Termination of Employment" shall mean a termination of the
Grantee's employment with the Company (regardless of the reason therefor).

                                   ARTICLE II

                           GRANT OF PERFORMANCE UNITS

Section 2.1 - Grant of Performance Units. For good and valuable consideration,
the Company shall grant to the Grantee such number of Performance Units as set
forth on the signature page hereof (based on such FMV per Share as of the Grant
Date as set forth on the signature page hereof) upon the terms and conditions
set forth in this Agreement.

Section 2.2 - No Obligation of Employment. Nothing in this Agreement or in the
Plan shall confer upon the Grantee any right to continue in the employ of the
Company or any Subsidiary or Affiliate or shall interfere with or restrict in
any way the rights of the Company and its Subsidiaries or Affiliates, which are
hereby expressly reserved, to terminate the employment of the Grantee at any
time for any reason whatsoever, with or without Cause.

Section 2.3 - Adjustments in Performance Units. In the event that shares of
Common Stock are, from time to time, changed into or exchanged for a different
number or kind of shares of the Company or other securities of the Company by
reason of a merger, consolidation, recapitalization event, reclassification,
stock split, stock dividend, combination of shares, or otherwise, the Committee
shall make an appropriate and equitable adjustment in the number and kind of
Performance Units, or other consideration payable hereunder, and the applicable
FMV per Share. Any such adjustment made by the Committee shall be final and
binding upon the Grantee, the Company and all other interested persons.

                                   ARTICLE III

                          VESTING OF PERFORMANCE UNITS

Section 3.1 - Performance Units. Unless otherwise provided in this Article III,
the Performance Units shall vest on the 15th of each calendar month, in equal
monthly increments, over the period beginning on the Grant Date and ending on
December 31, 2006 (the "Performance Cycle").

                                       4
<PAGE>

Section 3.2 - Effect of Certain Events. Notwithstanding Section 3.1, during the
Performance Cycle, upon the earliest of: (1) a Termination of Employment on
account of death, Disability or Retirement before the close of business on
December 31, 2005, (2) a Termination of Employment by the Company without Cause,
or by the Grantee for Good Reason, (3) a Change of Control, or (4) a
Recapitalization Event, (i) the Performance Units shall not continue to vest,
(ii) any and all Performance Units which remain unvested shall terminate
immediately, and (iii) the Grantee shall be entitled to the Incentive Amount
calculated pursuant to Section 4.1 hereof with respect to vested Performance
Units. Notwithstanding Section 3.1, during the Performance Cycle, upon the
earlier of: (1) a Termination of Employment by the Company for Cause, and (2) a
Termination of Employment by the Grantee without Good Reason, (i) all
Performance Units shall terminate, and (ii) the Grantee shall not be entitled to
any Incentive Amount hereunder (unless such Incentive Amount previously became
due hereunder). In the event of a Termination of Employment on or after the
close of business on December 31, 2005, as a result of Retirement during the
Performance Cycle prior to the occurrence of any other event mentioned in this
Section 3.2, the Performance Units shall continue to vest in accordance with the
provisions of this Article III, and such Retirement shall not trigger an
accelerated payment of the Incentive Amount under Article IV hereof.

                                   ARTICLE IV

                           PAYMENT OF INCENTIVE AMOUNT

Section 4.1 - Determination of Incentive Amount. The Incentive Amount payable to
the Grantee hereunder shall be determined on the earliest to occur of the
following events (the "Determination Date"): (i) December 31, 2006; (ii) a
Termination of Employment on account of death, Disability or Retirement before
the close of business on December 31, 2005, (iii) a Termination of Employment by
the Company without Cause, or by the Grantee for Good Reason, (iv) a Change of
Control, or (v) a Recapitalization Event. Except as set forth in the immediately
following sentence, any subsequent occurrence of an event described in Article
III hereof shall not constitute a Determination Date, and no additional payment
shall be made to the Grantee hereunder. Notwithstanding anything herein to the
contrary, a Termination of Employment on or after the close of business on
December 31, 2005, as a result of Retirement during the Performance Cycle shall
not constitute a Determination Date for purposes hereof and no payment of an
Incentive Amount shall be made under this Article IV solely as a result of such
Retirement. The Incentive Amount shall be equal to the sum of:

(A) Fifty percent (50%) times the number of Performance Units that are vested as
of the Determination Date pursuant to Article III hereof, multiplied by the FMV
per Share as of the Determination Date, and further multiplied by the percentage
specified in Exhibit A hereto with respect to the achievement of such applicable
EBITDA ROIC targets as set forth in Exhibit A hereto; plus

(B) Fifty percent (50%) times number of Performance Units that are vested as of
the Determination Date pursuant to Article III hereof, multiplied by the FMV per
Share as of the Determination Date, and further multiplied, in the event the
Determination Date is December 31, 2006, by the applicable percentage based on
the matrix below (the "Applicable Percentage"):

                                       5
<PAGE>

                              Applicable Percentage

<Table>
<Caption>
TS R PERCEN 75%ILE - S&P TILE

<S>        <C>     <C>      <C>     <C>      <C>      <C>      <C>      <C>     <C>      <C>
75%ile     80%     100%     100%    100%     100%     100%     100%     100%    100%     100%
                                                                                         ------
70%ile     72%     100%     100%    100%     100%     100%     100%     100%    100%     100%

65%ile     64%      94%     100%    100%     100%     100%     100%     100%    100%     100%

60%ile     56%      86%      96%    100%     100%     100%     100%     100%    100%     100%

55%ile     48%      78%      88%     98%     100%     100%     100%     100%    100%     100%

50%ile     40%      70%      80%     90%     100%     100%     100%     100%    100%     100%
                                             -------
45%ile     33%      63%      73%     83%      93%     100%     100%     100%    100%     100%

40%ile     27%      57%      67%     77%      87%     100%     100%     100%    100%     100%

35%ile     20%      50%      60%     70%      80%     100%     100%     100%    100%     100%
                    ------
30%ile      0%      30%      40%     50%      60%      84%      96%     100%    100%     100%
           =====================================================================================
           35%ile   40%ile   45%ile  50%ile   55%ile   65%ile   70%ile   75%ile  80%ile  100%ile
           =====================================================================================
                                        TSR PERCENTILE - INDUSTRY
</Table>

where:

"TSR Percentile - Industry" represents the Company's average total shareholder
return (based on the average of the closing prices of the shares of Common Stock
for the 4 weeks immediately preceding the Determination Date) expressed as a
percentage of an industry peer group index (weighted at 60% of the total award
opportunity hereunder), which peer group shall include such companies as shall
be selected by the Committee in its sole discretion from time to time; and

"TSR Percentile - S&P" represents the Company's average total shareholder return
(based on the closing price of the shares of Common Stock on the Determination
Date) expressed as a percentage of the Standard & Poor 400 Mid Cap Index
(weighted at 40% of the total award opportunity hereunder).

Notwithstanding the foregoing, in the event the Company's average total
shareholder return as of the applicable Determination Date (based on the average
of the closing prices of the shares of Common Stock for the 4 weeks immediately
preceding the Determination Date) is negative, (i) no Incentive Amount shall be
paid hereunder if the TSR Percentile - Industry (as defined above) is less than
fifty percent (50%) as of that same date, and (ii) the Applicable Percentage
shall not exceed seventy-five percent (75%) if the TSR Percentile - Industry (as
defined above) equals or exceeds fifty percent (50%) as of that same date.

Section 4.2 - Form and Time of Payment. The Incentive Amount shall be paid to
the Grantee in a lump sum in cash as soon as practicable after the Determination
Date; provided, however,

                                       6
<PAGE>

that the Committee, in its sole discretion, may decide to pay the Incentive
Amount in Common Stock based on the FMV per Share as of the applicable
Determination Date.

Section 4.3 - Conditions to Issuance of Stock Certificates. In the event the
Committee decides to pay the Incentive Amount in Common Stock under Section 4.2,
the shares of Common Stock deliverable upon payment of the Incentive Amount may
be either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock deliverable hereunder
prior to fulfillment of all of the following conditions:

                  (a) The obtaining of approval or other clearance from any
         state or federal governmental agency which the Committee shall, in its
         absolute discretion, determine to be necessary or advisable; and

                  (b) The lapse of such reasonable period of time following the
         Determination Date as the Committee may from time to time establish for
         reasons of administrative convenience.

Section 4.4 - Rights as Stockholder. The Grantee shall not be, nor have any of
the rights or privileges of, a stockholder of the Company in respect of any
shares of Common Stock deliverable hereunder unless and until certificates
representing such shares shall have been issued by the Company to the Grantee.

                                   ARTICLE V

                                  MISCELLANEOUS

Section 5.1 - Administration. The Committee shall have the power to interpret
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret or revoke any such rules. All actions taken and all interpretations
and determinations made by the Committee shall be final and binding upon the
Grantee, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Performance
Units. In its absolute discretion, the Board of Directors may at any time and
from time to time exercise any and all rights and duties of the Committee under
the Plan and this Agreement.

Section 5.2 - Performance Units Not Transferable. Neither the Performance Units
nor any interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Grantee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
however, that this Section 5.2 shall not prevent transfers by will or by the
applicable laws of descent and distribution.

                                       7
<PAGE>

Section 5.3 - Withholding. No later than the date as of which an amount payable
hereunder first becomes includible in the Grantee's gross income for tax
purposes, the Grantee shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any applicable withholding
taxes.

Section 5.4 - Notices. Any notice to be given under the terms of this Agreement
to the Company shall be addressed to the Company in care of its Secretary, and
any notice to be given to the Grantee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Grantee shall, if
the Grantee is then deceased, be given to the Grantee's personal representative
if such representative has previously informed the Company of his status and
address by written notice under this Section 5.4. Any notice hereunder shall be
delivered personally, faxed, or mailed by certified mail, return receipt
requested, or delivered by overnight courier service.

Section 5.5 - Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Agreement.

Section 5.6 - Applicability of Plan. The Performance Units and the shares of
Common Stock issued to the Grantee, if any, shall be subject to all of the terms
and provisions of the Plan, to the extent applicable to the Performance Units
and such shares. In the event of any conflict between this Agreement and the
Plan, the terms of the Plan shall control.

Section 5.7 - Amendment. This Agreement may be amended only by a writing
executed by the parties hereto which specifically states that it is amending
this Agreement.

Section 5.8 - Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be resolved by arbitration. Arbitrators
shall be selected, and arbitration shall be conducted, in accordance with the
rules of the American Arbitration Association. The Company shall pay any legal
fees in connection with such arbitration in the event that the Grantee prevails
on a material element of his claim or defense.

Section 5.9 - Governing Law. The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflicts of
laws.

                                       8
<PAGE>

         IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.

                                  PEABODY ENERGY CORPORATION

                                  /s/ ROBERT B. KARN, III
                                  ----------------------------------
                                  ROBERT B. KARN, III

                                  Compensation Committee Chairman & Director

/s/ IRL F. ENGELHARDT             Aggregate number of Performance Units: 46,861
-------------------------         FMV per Share as of Grant Date: $53.35
IRL F. ENGELHARDT

Chairman & CEO

Date: November 22, 2004

                                       9
<PAGE>

                                    EXHIBIT A

                               EBITDA ROIC TARGETS

For purposes of calculating the portion of the Incentive Amount described in
Section 4.1(A), the following percentage rates shall apply:

<Table>
<Caption>
                                        ENTRY            TARGET
                                        -----            ------
<S>                                     <C>               <C>
EBITDA ROIC TARGETS                     16.9%             18.8%
PERCENT OF AWARD EARNED                   60%              100%
</Table>

For purposes of the chart above:

(1) EBITDA shall mean income from continuing operations before deducting early
debt extinguishment costs, net interest expense, income taxes, minority
interests, asset retirement obligation expense and depreciation, depletion and
amortization; and

(2) ROIC shall mean EBITDA divided by Average Total Capital, where Average Total
Capital is determined based on 13-month average debt, plus 13-month average
equity, plus 13-month average accounts receivable securitization less 13-month
average cash. The 13-month period referred to in the immediately preceding
sentence shall be the period of 13 consecutive calendar months ending with the
calendar month immediately preceding the relevant Determination Date, as
described in Section 4.1.

                                       10<PAGE>

                                                                   EXHIBIT 10.17

                          INTERNATIONAL GAME TECHNOLOGY
                            2002 STOCK INCENTIVE PLAN
                         DIRECTOR STOCK OPTION AGREEMENT

      THIS DIRECTOR STOCK OPTION AGREEMENT (this "OPTION AGREEMENT") by and
between INTERNATIONAL GAME TECHNOLOGY, a Nevada corporation (the "CORPORATION"),
and ________________________ (the "PARTICIPANT") evidences the nonqualified
stock option (the "OPTION") granted by the Corporation to the Participant as to
the number of shares of the Corporation's Common Stock first set forth below.

NUMBER OF SHARES OF COMMON STOCK:(1) _________  AWARD DATE:  ____________

EXERCISE PRICE PER SHARE:(1)  $__________       EXPIRATION DATE:(1,2) __________

VESTING(1,2) The Option shall become vested in 33-1/3% installments of the total
number of shares of Common Stock subject to the Option over three years as
provided in Section 7.4 of the Plan.

      The Option is granted under the International Game Technology 2002 Stock
Incentive Plan (the "PLAN") and subject to the Terms and Conditions of Director
Stock Option (the "TERMS") attached to this Option Agreement (incorporated
herein by this reference) and to the Plan. The Option has been granted to the
Participant in addition to, and not in lieu of, any other form of compensation
otherwise payable or to be paid to the Participant. The Option is not and shall
not be deemed to be an incentive stock option within the meaning of Section 422
of the Code. Capitalized terms are defined in the Plan if not defined herein.
The parties agree to the terms of the Option set forth herein. The Participant
acknowledges receipt of a copy of the Terms, the Plan, and the Prospectus for
the Plan.

"PARTICIPANT"                             INTERNATIONAL GAME TECHNOLOGY,
                                          a Nevada corporation
_________________________________
Signature
                                          By:_________________________________
_________________________________
Print Name                                Print Name:  David D. Johnson

_________________________________         Title:  Sr. V.P., General Counsel
Address

_________________________________
City, State, Zip Code

----------

(1)   Subject to adjustment under Section 7.6 of the Plan.

(2)   Subject to early termination pursuant to Section 4 of this Option
      Agreement.

<PAGE>

                  TERMS AND CONDITIONS OF DIRECTOR STOCK OPTION

1.    VESTING; LIMITS ON EXERCISE.

      As set forth on the cover page of this Option Agreement, the Option shall
vest and become exercisable in percentage installments of the aggregate number
of shares of Common Stock subject to the Option. The Option may be exercised
only to the extent the Option is vested and exercisable.

      -     Cumulative Exercisability. To the extent that the Option is vested
            and exercisable, the Participant has the right to exercise the
            Option (to the extent not previously exercised), and such right
            shall continue, until the expiration or earlier termination of the
            Option.

      -     No Fractional Shares. Fractional share interests shall be
            disregarded, but may be cumulated.

      -     Minimum Exercise. No fewer than 100(1) shares of Common Stock may be
            purchased at any one time, unless the number purchased is the total
            number at the time exercisable under the Option.

2.    CONTINUANCE OF SERVICE REQUIRED; NO SERVICE COMMITMENT.

      The vesting schedule requires continued service through each applicable
vesting date as a condition to the vesting of the applicable installment of the
Option and the rights and benefits under this Option Agreement. Service for only
a portion of the vesting period with respect to a vesting installment, even if
services are provided for a substantial portion of that period, will not entitle
the Participant to any proportionate vesting or avoid or mitigate a termination
of rights and benefits upon or following a termination of services as provided
in Section 4 below.

      Nothing contained in this Option Agreement or the Plan constitutes an
employment or service commitment by the Corporation or any Subsidiary, confers
upon the Participant any right to remain in the service of the Corporation or
any Subsidiary, interferes in any way with the right of the Corporation or any
Subsidiary at any time to terminate such service, or affects the right of the
Corporation or any Subsidiary to increase or decrease the Participant's other
compensation.

3.    METHOD OF EXERCISE OF OPTION.

      The Option shall be exercisable by the delivery to the Secretary of the
Corporation of a written notice stating the number of shares of Common Stock to
be purchased pursuant to the Option (or by completion of such other
administrative exercise procedures as the Committee may require from time to
time) and accompanied by:

      -     payment in full for the Exercise Price of the shares to be purchased
            (A) in cash or by electronic funds transfer to the Corporation, (B)
            by check payable to the order of the Corporation, or (C) by delivery
            to the Corporation of shares of Common Stock already owned by the
            Participant, valued at their Fair Market Value on the exercise date,
            provided, however, that any shares acquired directly from the
            Corporation (upon exercise of a stock option or otherwise) must have
            been owned by the Participant for at least six (6) months before the
            date of such exercise, and in each case subject to such specific
            procedures or directions as the Committee may establish; and

      -     any written statements or agreements required pursuant to Section
            6.4 of the Plan.

4.    EARLY TERMINATION OF OPTION.

      The Option, to the extent not previously exercised, and all other rights
in respect thereof, whether vested and exercisable or not, shall terminate and
become null and void prior to the Expiration Date in the event that either: (1)
the Participant ceases to be a member of the Board of Directors and the Option
terminates pursuant to Section 7.5 of the Plan; or (2) the Option terminates
pursuant to Section 7.7 of the Plan.

5.    NON-TRANSFERABILITY AND OTHER RESTRICTIONS.

      The Option and any other rights of the Participant under this Option
Agreement or the Plan are nontransferable and exercisable only by the
Participant, except as set forth in Section 1.9 of the Plan.

                                       1
<PAGE>

6.    NOTICES.

      Any notice to be given under the terms of this Option Agreement shall be
in writing and addressed to the Corporation at its principal office to the
attention of the Secretary, and to the Participant at the address reflected or
last reflected on the Corporation's records. Any notice shall be delivered in
person or shall be enclosed in a properly sealed envelope, addressed as
aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government. Any such notice shall be given only
when received, but if the Participant is no longer a member of the Board of
Directors, notice to the Participant by the Corporation shall be deemed to have
been duly given as of the date mailed in accordance with the foregoing
provisions of this Section 6.

7.    PLAN.

      The Option and all rights of the Participant under this Option Agreement
are subject to, and the Participant agrees to be bound by, all of the terms and
conditions of the Plan, incorporated herein by this reference. In the event of a
conflict or inconsistency between the terms and conditions of this Option
Agreement and of the Plan, the terms and conditions of the Plan shall govern.
The Participant agrees to be bound by the terms of the Plan and of this Option
Agreement. The Participant acknowledges reading and understanding the Plan, the
Plan Prospectus, and this Option Agreement. Unless otherwise expressly provided
in other sections of this Option Agreement, provisions of the Plan that confer
discretionary authority on the Board or the Committee do not and shall not be
deemed to create any rights in the Participant unless such rights are expressly
set forth herein or are otherwise in the sole discretion of the Board or the
Committee so conferred by appropriate action of the Board or the Committee under
the Plan after the date hereof.

8.    ENTIRE AGREEMENT.

      This Option Agreement (including these Terms) and the Plan together
constitute the entire agreement and supersede all prior understandings and
agreements, written or oral, of the parties hereto with respect to the subject
matter hereof. The Plan and this Option Agreement may be amended pursuant to
Section 6.6 of the Plan. Such amendment must be in writing and signed by the
Corporation. The Corporation may, however, unilaterally waive any provision
hereof in writing to the extent such waiver does not adversely affect the
interests of the Participant hereunder, but no such waiver shall operate as or
be construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.

9.    GOVERNING LAW.

      This Option Agreement and the rights of the parties hereunder and with
respect to the Option shall be shall be governed by and construed and enforced
in accordance with the laws of the State of Nevada without regard to conflict of
law principles thereunder. The parties, as well as any of their successors,
employees, or representatives, irrevocably agree to the exclusive jurisdiction
of the Courts of the State of Nevada (or such judicial district of a court of
the United States as shall include same) for the determination of all matters
arising hereunder or with respect to the Option. In the event of litigation with
respect to any such matter, the prevailing party shall be entitled to recover
such party's costs of the action, including reasonable attorneys fees.

(Remainder of Page Intentionally Left Blank)

                                       2
<PAGE>

                          INTERNATIONAL GAME TECHNOLOGY
                            2002 STOCK INCENTIVE PLAN
                        INCENTIVE STOCK OPTION AGREEMENT

      THIS INCENTIVE STOCK OPTION AGREEMENT (this "OPTION AGREEMENT") by and
between INTERNATIONAL GAME TECHNOLOGY, a Nevada corporation (the "CORPORATION"),
and _____________ (the "PARTICIPANT") evidences the incentive stock option (the
"OPTION") granted by the Corporation to the Participant as to the number of
shares of the Corporation's Common Stock first set forth below.

NUMBER OF SHARES OF COMMON STOCK:(1) ______      AWARD DATE: _________________

EXERCISE PRICE PER SHARE:(1)  $_____   EXPIRATION DATE:(1,2) ______________

VESTING(1,2) The Option shall become vested as to ____% of the total number of
shares of Common Stock subject to the Option on each of the ____ through _____
anniversaries of the Award Date.

      The Option is granted under the International Game Technology 2002 Stock
Incentive Plan (the "PLAN") and subject to the Terms and Conditions of Incentive
Stock Option (the "TERMS") attached to this Option Agreement (incorporated
herein by this reference) and to the Plan. The Option has been granted to the
Participant in addition to, and not in lieu of, any other form of compensation
otherwise payable or to be paid to the Participant. The Option is intended as an
incentive stock option within the meaning of Section 422 of the Code (an "ISO").
Capitalized terms are defined in the Plan if not defined herein. The parties
agree to the terms of the Option set forth herein. The Participant acknowledges
receipt of a copy of the Terms, the Plan, and the Prospectus for the Plan.

"PARTICIPANT"                      INTERNATIONAL GAME TECHNOLOGY,
                                   a Nevada corporation
________________________________
Signature
                                   By:__________________________________
________________________________
Print Name                         Print Name:  David D. Johnson

________________________________   Title: Senior Vice President, General Counsel
Address

________________________________
City, State, Zip Code

----------

(1)   Subject to adjustment under Section 6.2 of the Plan.

(2)   Subject to early termination pursuant to Section 4 of this Option
      Agreement.

                                       1
<PAGE>

                 TERMS AND CONDITIONS OF INCENTIVE STOCK OPTION

1.    VESTING; LIMITS ON EXERCISE.

      As set forth on the cover page of this Option Agreement, the Option shall
vest and become exercisable in percentage installments of the aggregate number
of shares of Common Stock subject to the Option. The Option may be exercised
only to the extent the Option is vested and exercisable.

      -     Cumulative Exercisability. To the extent that the Option is vested
            and exercisable, the Participant has the right to exercise the
            Option (to the extent not previously exercised), and such right
            shall continue, until the expiration or earlier termination of the
            Option.

      -     No Fractional Shares. Fractional share interests shall be
            disregarded, but may be cumulated.

      -     Minimum Exercise. No fewer than 100(1) shares of Common Stock may be
            purchased at any one time, unless the number purchased is the total
            number at the time exercisable under the Option.

      -     ISO Value Limit. If the aggregate fair market value of the shares
            with respect to which ISOs (whether granted under the Option or
            otherwise) first become exercisable by the Participant in any
            calendar year exceeds $100,000, as measured on the applicable Award
            Dates, the limitations of Section 2.3.1 of the Plan shall apply and
            to such extent the Option will be rendered a Nonqualified Stock
            Option.

2.    CONTINUANCE OF EMPLOYMENT REQUIRED; NO EMPLOYMENT COMMITMENT.

      The vesting schedule requires continued employment through each applicable
vesting date as a condition to the vesting of the applicable installment of the
Option and the rights and benefits under this Option Agreement. Employment for
only a portion of the vesting period with respect to a vesting installment, even
if employed for a substantial portion of that period, will not entitle the
Participant to any proportionate vesting or avoid or mitigate a termination of
rights and benefits upon or following a termination of employment as provided in
Section 4 below.

      Nothing contained in this Option Agreement or the Plan constitutes an
employment or service commitment by the Corporation or any Subsidiary, affects
the Participant's status as an employee at will who is subject to termination
without cause, confers upon the Participant any right to remain employed by the
Corporation or any Subsidiary, interferes in any way with the right of the
Corporation or any Subsidiary at any time to terminate such employment, or
affects the right of the Corporation or any Subsidiary to increase or decrease
the Participant's other compensation.

3.    METHOD OF EXERCISE OF OPTION.

      The Option shall be exercisable by the delivery to the Secretary of the
Corporation of a written notice stating the number of shares of Common Stock to
be purchased pursuant to the Option (or by completion of such other
administrative exercise procedures as the Committee may require from time to
time) and accompanied by:

      -     payment in full for the Exercise Price of the shares to be
            purchased, in cash or by electronic funds transfer to the
            Corporation, or by check payable to the order of the Corporation,
            subject to such specific procedures or directions as the Committee
            may establish;

      -     satisfaction of the tax withholding provisions of Section 6.5 of the
            Plan; and

      -     any written statements or agreements required pursuant to Section
            6.4 of the Plan.

The Committee also may, but is not required to, authorize a non-cash payment
alternative specified below at or prior to the time of exercise. In which case,
the Exercise Price and/or applicable withholding taxes, to the extent so
authorized, may be paid in full or in part by delivery to the Corporation of:

      -     shares of Common Stock already owned by the Participant, valued at
            their Fair Market Value on the exercise date, provided, however,
            that any shares acquired directly from the Corporation (upon
            exercise of a stock option or otherwise) must have been owned by the
            Participant for at least six (6) months before the date of such
            exercise; and/or

                                       2
<PAGE>

      -     irrevocable instructions to a broker to, upon exercise of the
            Option, promptly sell a sufficient number of shares of Common Stock
            acquired upon exercise of the Option and deliver to the Corporation
            the amount necessary to pay the Exercise Price (and, if applicable,
            the amount of any related tax withholding obligations); and/or

      -     a note meeting the requirements of Section 1.8 of the Plan (or, in
            the case of tax loans, Section 6.5(b) of the Plan).

The Option will qualify as an ISO only if it meets all of the applicable
requirements of the Code. The Option may be rendered a Nonqualified Stock Option
if the Committee permits the use of one or more of the non-cash payment
alternatives referenced above.

4.    EARLY TERMINATION OF OPTION.

      The Option, to the extent not previously exercised, and all other rights
in respect thereof, whether vested and exercisable or not, shall terminate and
become null and void prior to the Expiration Date in the event that either: (1)
the Participant ceases to be employed by the Corporation or a Subsidiary, except
as expressly provided below; or (2) the Option terminates pursuant to Section
6.2 of the Plan.

      -     If the Participant ceases to be employed by the Corporation or a
            Subsidiary other than due to the Participant's death, Total
            Disability or a termination of employment by the Corporation or a
            Subsidiary for Cause (as defined below), then the unvested portion
            of the Option shall terminate upon such termination of employment
            and the then-vested portion of the Option shall (subject to earlier
            termination pursuant to Section 6.2 of the Plan and subject to the
            maximum ten-year term of the Option) continue to be exercisable only
            for three months after such termination of employment, at which time
            such remaining portion of the Option shall terminate.

      -     If the Participant ceases to be employed by the Corporation or a
            Subsidiary due to the Participant's death or Total Disability, then
            the unvested portion of the Option shall terminate upon such
            termination of employment and the then-vested portion of the Option
            shall (subject to earlier termination pursuant to Section 6.2 of the
            Plan and subject to the maximum ten-year term of the Option)
            continue to be exercisable only for one year after such termination
            of employment, at which time such remaining portion of the Option
            shall terminate.

      -     The Option (whether or not vested) shall terminate immediately if
            the Participant's employment is terminated by the Corporation or a
            Subsidiary for Cause (as defined below).

      -     The foregoing termination of employment rules are subject to Section
            6.12 of the Plan.

      Notwithstanding any post-termination exercise period provided for herein
or in the Plan, the Option will qualify as an ISO only if it is exercised within
the applicable exercise periods for ISOs under, and meets all of the other
requirements of, the Code. If the Option is not exercised within the applicable
exercise periods for ISOs or does not meet such other requirements, the Option
will be rendered a Nonqualified Stock Option.

      For purposes of this Section 4, the term "Cause" means a termination of
employment based upon a finding by the Corporation, acting in good faith and
based on its reasonable belief at the time, that the Participant:

      (1)   has been negligent in the discharge of his or her duties to the
            Corporation or one of its affiliates (the term "affiliate" for
            purposes of this definition shall include, without limitation, each
            Subsidiary), has refused to perform stated or assigned duties or is
            incompetent in or (other than be reason of a disability or analogous
            condition) incapable of performing those duties; or

      (2)   has been dishonest or committed or engaged in an act of
            embezzlement, fraud, or theft, a breach of confidentiality, an
            unauthorized disclosure or use of inside information, customer
            lists, trade secrets or other confidential information; or

      (3)   has breached a fiduciary duty, or violated any other duty, law,
            rule, regulation or policy of the Corporation or an affiliate; or
            has been convicted of, or plead guilty or nolo contendere to, a
            felony or misdemeanor (other than minor traffic violations or
            similar offences); or

                                       3
<PAGE>

      (4)   has breached any of the provisions of any agreement with the
            Corporation or an affiliate; or

      (5)   has improperly induced a vendor or customer to break or terminate
            any contract with the Corporation or an affiliate or induced a
            principal for whom the Corporation or an affiliate acts as agents to
            terminate such agency relationship.

A termination for Cause shall be deemed to occur (subject to reinstatement upon
a contrary final determination by the Committee) on the date on which the
Corporation first delivers written notice to the Participant of a finding of
termination for Cause.

5.    NON-TRANSFERABILITY AND OTHER RESTRICTIONS.

      The Option and any other rights of the Participant under this Option
Agreement or the Plan are nontransferable and exercisable only by the
Participant, except as set forth in Section 1.9 of the Plan.

6.    NOTICES.

      Any notice to be given under the terms of this Option Agreement shall be
in writing and addressed to the Corporation at its principal office to the
attention of the Secretary, and to the Participant at the address reflected or
last reflected on the Corporation's payroll records. Any notice shall be
delivered in person or shall be enclosed in a properly sealed envelope,
addressed as aforesaid, registered or certified, and deposited (postage and
registry or certification fee prepaid) in a post office or branch post office
regularly maintained by the United States Government. Any such notice shall be
given only when received, but if the Participant is no longer an Eligible
Person, notice to the Participant by the Corporation shall be deemed to have
been duly given as of the date mailed in accordance with the foregoing
provisions of this Section 6.

7.    PLAN.

      The Option and all rights of the Participant under this Option Agreement
are subject to, and the Participant agrees to be bound by, all of the terms and
conditions of the Plan, incorporated herein by this reference. In the event of a
conflict or inconsistency between the terms and conditions of this Option
Agreement and of the Plan, the terms and conditions of the Plan shall govern.
The Participant agrees to be bound by the terms of the Plan and of this Option
Agreement. The Participant acknowledges reading and understanding the Plan, the
Plan Prospectus, and this Option Agreement. Unless otherwise expressly provided
in other sections of this Option Agreement, provisions of the Plan that confer
discretionary authority on the Board or the Committee do not and shall not be
deemed to create any rights in the Participant unless such rights are expressly
set forth herein or are otherwise in the sole discretion of the Board or the
Committee so conferred by appropriate action of the Board or the Committee under
the Plan after the date hereof.

8.    ENTIRE AGREEMENT.

      This Option Agreement (including these Terms) and the Plan together
constitute the entire agreement and supersede all prior understandings and
agreements, written or oral, of the parties hereto with respect to the subject
matter hereof. The Plan and this Option Agreement may be amended pursuant to
Section 6.6 of the Plan. Such amendment must be in writing and signed by the
Corporation. The Corporation may, however, unilaterally waive any provision
hereof in writing to the extent such waiver does not adversely affect the
interests of the Participant hereunder, but no such waiver shall operate as or
be construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.

9.    GOVERNING LAW.

      This Option Agreement and the rights of the parties hereunder and with
respect to the Option shall be shall be governed by and construed and enforced
in accordance with the laws of the State of Nevada without regard to conflict of
law principles thereunder. The parties, as well as any of their successors,
employees, or representatives, irrevocably agree to the exclusive jurisdiction
of the Courts of the State of Nevada (or such judicial district of a court of
the United States as shall include same) for the determination of all matters
arising hereunder or with respect to the Option. In the event of litigation with
respect to any such matter, the prevailing party shall be entitled to recover
such party's costs of the action, including reasonable attorneys fees.

                                       4
<PAGE>

10.   NOTICE OF EARLY DISPOSITION.

      The Participant agrees to give prompt written notice to the Corporation of
any sale or other transfer of any shares of Common Stock acquired upon exercise
of the Option that occurs before the later of (A) one year after the date that
the Participant acquires the shares upon exercise of the Option, or (B) two
years after the Award Date set forth on the cover page of this Option Agreement.

11.   OTHER RESTRICTIONS.

      In consideration of the granting of this Option, the Participant agrees
that for a period of one (1) year after he or she ceases to be employed by the
Corporation or a Subsidiary, the Participant will not own, manage, control or
associate with as an agent, officer, employee, investor, lender, or otherwise
with any business entity which competes worldwide with the business of the
Corporation or any of its Subsidiaries in the design, manufacture and/or
distribution of coin-operated gaming or amusement devices and/or lottery
devices, systems or tickets; nor shall the Participant at any time after his or
her employment by the Corporation or a Subsidiary terminates disclose, discuss,
copy or otherwise use or suffer to be used, in any manner, in competition with
or contrary to the interests of the Corporation or any of its Subsidiaries, the
customer lists, product research, engineering data or other trade secrets of the
Corporation or any of its Subsidiaries. The Corporation and the Participant
specifically agree that the scope of the foregoing provisions in this Section 11
are reasonable and fair. Should, however, a court of competent jurisdiction deem
the foregoing provisions of this Section 11 to be impermissibly overbroad, it is
the desire and intention of the parties that such provisions be enforced as to
the greatest extent permitted under applicable law.

(Remainder of Page Intentionally Left Blank)

                                       5
<PAGE>

                          INTERNATIONAL GAME TECHNOLOGY
                            2002 STOCK INCENTIVE PLAN
                       NONQUALIFIED STOCK OPTION AGREEMENT

      THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "OPTION AGREEMENT") by and
between INTERNATIONAL GAME TECHNOLOGY, a Nevada corporation (the "CORPORATION"),
and ______________ (the "PARTICIPANT") evidences the nonqualified stock option
(the "OPTION") granted by the Corporation to the Participant as to the number of
shares of the Corporation's Common Stock first set forth below.

NUMBER OF SHARES OF COMMON STOCK:(1) _______    AWARD DATE:  _________________

EXERCISE PRICE PER SHARE:(1)      $_____  EXPIRATION DATE:(1,2) _______________

VESTING(1,2) The Option shall become vested as to ____% of the total number of
shares of Common Stock subject to the Option on each of the ____ through ____
anniversaries of the Award Date.

      The Option is granted under the International Game Technology 2002 Stock
Incentive Plan (the "PLAN") and subject to the Terms and Conditions of
Nonqualified Stock Option (the "TERMS") attached to this Option Agreement
(incorporated herein by this reference) and to the Plan. The Option has been
granted to the Participant in addition to, and not in lieu of, any other form of
compensation otherwise payable or to be paid to the Participant. The Option is
not and shall not be deemed to be an incentive stock option within the meaning
of Section 422 of the Code. Capitalized terms are defined in the Plan if not
defined herein. The parties agree to the terms of the Option set forth herein.
The Participant acknowledges receipt of a copy of the Terms, the Plan, and the
Prospectus for the Plan.

"PARTICIPANT"                     INTERNATIONAL GAME TECHNOLOGY,
                                  a Nevada corporation
_______________________________
Signature
                                  By:__________________________________
_______________________________
Print Name                        Print Name: David D. Johnson

_______________________________   Title: Senior Vice President., General Counsel
Address

_______________________________
City, State, Zip Code

----------

(1)   Subject to adjustment under Section 6.2 of the Plan.

(2)   Subject to early termination pursuant to Section 4 of this Option
      Agreement.

                                       1
<PAGE>

                TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION

1.    VESTING; LIMITS ON EXERCISE.

      As set forth on the cover page of this Option Agreement, the Option shall
vest and become exercisable in percentage installments of the aggregate number
of shares of Common Stock subject to the Option. The Option may be exercised
only to the extent the Option is vested and exercisable.

      -     Cumulative Exercisability. To the extent that the Option is vested
            and exercisable, the Participant has the right to exercise the
            Option (to the extent not previously exercised), and such right
            shall continue, until the expiration or earlier termination of the
            Option.

      -     No Fractional Shares. Fractional share interests shall be
            disregarded, but may be cumulated.

      -     Minimum Exercise. No fewer than 100(1) shares of Common Stock may be
            purchased at any one time, unless the number purchased is the total
            number at the time exercisable under the Option.

2.    CONTINUANCE OF EMPLOYMENT REQUIRED; NO EMPLOYMENT COMMITMENT.

      The vesting schedule requires continued employment through each applicable
vesting date as a condition to the vesting of the applicable installment of the
Option and the rights and benefits under this Option Agreement. Employment for
only a portion of the vesting period with respect to a vesting installment, even
if employed for a substantial portion of that period, will not entitle the
Participant to any proportionate vesting or avoid or mitigate a termination of
rights and benefits upon or following a termination of employment as provided in
Section 4 below.

      Nothing contained in this Option Agreement or the Plan constitutes an
employment or service commitment by the Corporation or any Subsidiary, affects
the Participant's status as an employee at will who is subject to termination
without cause, confers upon the Participant any right to remain employed by the
Corporation or any Subsidiary, interferes in any way with the right of the
Corporation or any Subsidiary at any time to terminate such employment, or
affects the right of the Corporation or any Subsidiary to increase or decrease
the Participant's other compensation.

3.    METHOD OF EXERCISE OF OPTION.

      The Option shall be exercisable by the delivery to the Secretary of the
Corporation of a written notice stating the number of shares of Common Stock to
be purchased pursuant to the Option (or by completion of such other
administrative exercise procedures as the Committee may require from time to
time) and accompanied by:

      -     payment in full for the Exercise Price of the shares to be
            purchased, in cash or by electronic funds transfer to the
            Corporation, or by check payable to the order of the Corporation,
            subject to such specific procedures or directions as the Committee
            may establish;

      -     satisfaction of the tax withholding provisions of Section 6.5 of the
            Plan; and

      -     any written statements or agreements required pursuant to Section
            6.4 of the Plan.

The Committee also may, but is not required to, authorize a non-cash payment
alternative specified below at or prior to the time of exercise. In which case,
the Exercise Price and/or applicable withholding taxes, to the extent so
authorized, may be paid in full or in part by delivery to the Corporation of:

      -     shares of Common Stock already owned by the Participant, valued at
            their Fair Market Value on the exercise date, provided, however,
            that any shares acquired directly from the Corporation (upon
            exercise of a stock option or otherwise) must have been owned by the
            Participant for at least six (6) months before the date of such
            exercise; and/or

      -     irrevocable instructions to a broker to, upon exercise of the
            Option, promptly sell a sufficient number of shares of Common Stock
            acquired upon exercise of the Option and deliver to the Corporation
            the amount necessary to pay the Exercise Price (and, if applicable,
            the amount of any related tax withholding obligations); and/or

                                       2
<PAGE>

      -     a note meeting the requirements of Section 1.8 of the Plan (or, in
            the case of tax loans, Section 6.5(b) of the Plan).

4.    EARLY TERMINATION OF OPTION.

      The Option, to the extent not previously exercised, and all other rights
in respect thereof, whether vested and exercisable or not, shall terminate and
become null and void prior to the Expiration Date in the event that either: (1)
the Participant ceases to be employed by the Corporation or a Subsidiary, except
as expressly provided below; or (2) the Option terminates pursuant to Section
6.2 of the Plan.

      -     If the Participant ceases to be employed by the Corporation or a
            Subsidiary other than due to the Participant's death, Total
            Disability or a termination of employment by the Corporation or a
            Subsidiary for Cause (as defined below), then the unvested portion
            of the Option shall terminate upon such termination of employment
            and the then-vested portion of the Option shall (subject to earlier
            termination pursuant to Section 6.2 of the Plan and subject to the
            maximum ten-year term of the Option) continue to be exercisable only
            for three months after such termination of employment, at which time
            such remaining portion of the Option shall terminate.

      -     If the Participant ceases to be employed by the Corporation or a
            Subsidiary due to the Participant's death or Total Disability, then
            the unvested portion of the Option shall terminate upon such
            termination of employment and the then-vested portion of the Option
            shall (subject to earlier termination pursuant to Section 6.2 of the
            Plan and subject to the maximum ten-year term of the Option)
            continue to be exercisable only for one year after such termination
            of employment, at which time such remaining portion of the Option
            shall terminate.

      -     The Option (whether or not vested) shall terminate immediately if
            the Participant's employment is terminated by the Corporation or a
            Subsidiary for Cause (as defined below).

      -     The foregoing termination of employment rules are subject to Section
            6.12 of the Plan.

      For purposes of this Section 4, the term "Cause" means a termination of
employment based upon a finding by the Corporation, acting in good faith and
based on its reasonable belief at the time, that the Participant:

      (1)   has been negligent in the discharge of his or her duties to the
            Corporation or one of its affiliates (the term "affiliate" for
            purposes of this definition shall include, without limitation, each
            Subsidiary), has refused to perform stated or assigned duties or is
            incompetent in or (other than be reason of a disability or analogous
            condition) incapable of performing those duties; or

      (2)   has been dishonest or committed or engaged in an act of
            embezzlement, fraud, or theft, a breach of confidentiality, an
            unauthorized disclosure or use of inside information, customer
            lists, trade secrets or other confidential information; or

      (3)   has breached a fiduciary duty, or violated any other duty, law,
            rule, regulation or policy of the Corporation or an affiliate; or
            has been convicted of, or plead guilty or nolo contendere to, a
            felony or misdemeanor (other than minor traffic violations or
            similar offences); or

      (4)   has breached any of the provisions of any agreement with the
            Corporation or an affiliate; or

      (5)   has improperly induced a vendor or customer to break or terminate
            any contract with the Corporation or an affiliate or induced a
            principal for whom the Corporation or an affiliate acts as agents to
            terminate such agency relationship.

A termination for Cause shall be deemed to occur (subject to reinstatement upon
a contrary final determination by the Committee) on the date on which the
Corporation or a Subsidiary first delivers written notice to the Participant of
a finding of termination for Cause.

5.    NON-TRANSFERABILITY AND OTHER RESTRICTIONS.

      The Option and any other rights of the Participant under this Option
Agreement or the Plan are nontransferable and exercisable only by the
Participant, except as set forth in Section 1.9 of the Plan.

                                       3
<PAGE>

6.    NOTICES.

      Any notice to be given under the terms of this Option Agreement shall be
in writing and addressed to the Corporation at its principal office to the
attention of the Secretary, and to the Participant at the address reflected or
last reflected on the Corporation's payroll records. Any notice shall be
delivered in person or shall be enclosed in a properly sealed envelope,
addressed as aforesaid, registered or certified, and deposited (postage and
registry or certification fee prepaid) in a post office or branch post office
regularly maintained by the United States Government. Any such notice shall be
given only when received, but if the Participant is no longer an Eligible
Person, notice to the Participant by the Corporation shall be deemed to have
been duly given as of the date mailed in accordance with the foregoing
provisions of this Section 6.

7.    PLAN.

      The Option and all rights of the Participant under this Option Agreement
are subject to, and the Participant agrees to be bound by, all of the terms and
conditions of the Plan, incorporated herein by this reference. In the event of a
conflict or inconsistency between the terms and conditions of this Option
Agreement and of the Plan, the terms and conditions of the Plan shall govern.
The Participant and agrees to be bound by the terms of the Plan and of this
Option Agreement. The Participant acknowledges reading and understanding the
Plan, the Plan Prospectus, and this Option Agreement. Unless otherwise expressly
provided in other sections of this Option Agreement, provisions of the Plan that
confer discretionary authority on the Board or the Committee do not and shall
not be deemed to create any rights in the Participant unless such rights are
expressly set forth herein or are otherwise in the sole discretion of the Board
or the Committee so conferred by appropriate action of the Board or the
Committee under the Plan after the date hereof.

8.    ENTIRE AGREEMENT.

      This Option Agreement (including these Terms) and the Plan together
constitute the entire agreement and supersede all prior understandings and
agreements, written or oral, of the parties hereto with respect to the subject
matter hereof. The Plan and this Option Agreement may be amended pursuant to
Section 6.6 of the Plan. Such amendment must be in writing and signed by the
Corporation. The Corporation may, however, unilaterally waive any provision
hereof in writing to the extent such waiver does not adversely affect the
interests of the Participant hereunder, but no such waiver shall operate as or
be construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.

9.    GOVERNING LAW.

      This Option Agreement and the rights of the parties hereunder and with
respect to the Option shall be shall be governed by and construed and enforced
in accordance with the laws of the State of Nevada without regard to conflict of
law principles thereunder. The parties, as well as any of their successors,
employees, or representatives, irrevocably agree to the exclusive jurisdiction
of the Courts of the State of Nevada (or such judicial district of a court of
the United States as shall include same) for the determination of all matters
arising hereunder or with respect to the Option. In the event of litigation with
respect to any such matter, the prevailing party shall be entitled to recover
such party's costs of the action, including reasonable attorneys fees.

10.   OTHER RESTRICTIONS.

      In consideration of the granting of this Option, the Participant agrees
that for a period of one (1) year after he or she ceases to be employed by the
Corporation or a Subsidiary, the Participant will not own, manage, control or
associate with as an agent, officer, employee, investor, lender, or otherwise
with any business entity which competes worldwide with the business of the
Corporation or any of its Subsidiaries in the design, manufacture and/or
distribution of coin-operated gaming or amusement devices and/or lottery
devices, systems or tickets; nor shall the Participant at any time after his or
her employment by the Corporation or a Subsidiary terminates disclose, discuss,
copy or otherwise use or suffer to be used, in any manner, in competition with
or contrary to the interests of the Corporation or any of its Subsidiaries, the
customer lists, product research, engineering data or other trade secrets of the
Corporation or any of its Subsidiaries. The Corporation and the Participant
specifically agree that the scope of the foregoing provisions in this Section 10
are reasonable and fair. Should, however, a court of competent jurisdiction deem
the foregoing provisions of this Section 10 to be impermissibly overbroad, it is
the desire and intention of the parties that such provisions be enforced as to
the greatest extent permitted under applicable law.

                                       4
<PAGE>

                          INTERNATIONAL GAME TECHNOLOGY
                            2002 STOCK INCENTIVE PLAN
                        RESTRICTED STOCK AWARD AGREEMENT

      THIS RESTRICTED STOCK AWARD AGREEMENT (this "AWARD AGREEMENT") is dated as
of ___________________, by and between INTERNATIONAL GAME TECHNOLOGY, a Nevada
corporation (the "CORPORATION"), and ___________________ (the "GRANTEE").

                               W I T N E S S E T H

      WHEREAS, the Corporation maintains the International Game Technology 2002
Stock Incentive Plan (the "PLAN"); and

      WHEREAS, the Corporation desires to grant to the Grantee, and the Grantee
desires to accept, a restricted stock award (the "AWARD") upon the terms and
conditions set forth herein and in the Plan.

      NOW THEREFORE, in consideration of services rendered and to be rendered by
the Grantee, and the mutual promises made herein and the mutual benefits to be
derived therefrom, the parties agree as follows:

      1.    DEFINED TERMS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Plan.

      2.    GRANT. Subject to the terms of this Award Agreement, the Corporation
hereby grants to the Grantee a Restricted Stock Award with respect to an
aggregate of _______ shares of Common Stock (the "RESTRICTED STOCK").

      3.    VESTING. Subject to Section 8 below, the Award shall vest, and
restrictions (other than those set forth in Section 6.4 of the Plan) shall
lapse, with respect to ________ (___th) of the total number of shares of
Restricted Stock (subject to adjustment under Section 6.2(a) of the Plan) on
each of _____________, _____________, ____________, ______________ and
__________________.

      4.    CONTINUANCE OF EMPLOYMENT. The vesting schedule requires continued
employment or service through each applicable vesting date as a condition to the
vesting of the applicable installment of the Award and the rights and benefits
under this Award Agreement. Employment or service for only a portion of the
vesting period, even if a substantial portion, will not entitle the Grantee to
any proportionate vesting or avoid or mitigate a termination of rights and
benefits upon or following a termination of employment or services as provided
in Section 8 below or under the Plan.

      Nothing contained in this Award Agreement or the Plan constitutes an
employment or service commitment by the Corporation or any Subsidiary, affects
the Grantee's status as an employee at will who is subject to termination
without cause, confers upon the Grantee any right to remain employed by or in
service to the Corporation or any Subsidiary, interferes in any way with the
right of the Corporation or any Subsidiary at any time to terminate such
employment or

<PAGE>

services, or affects the right of the Corporation or any Subsidiary to increase
or decrease the Grantee's other compensation or benefits. Nothing in this
paragraph, however, is intended to adversely affect any independent contractual
right of the Grantee under any written employment agreement with the
Corporation.

      5.    DIVIDEND AND VOTING RIGHTS. After the Award Date, the Grantee shall
be entitled to cash dividends and voting rights with respect to the shares of
Restricted Stock subject to the Award even though such shares are not vested,
provided that such rights shall terminate immediately as to any shares of
Restricted Stock that are forfeited pursuant to Section 8.

      6.    RESTRICTIONS ON TRANSFER. Prior to the time that they have become
vested pursuant to Section 3, neither the Restricted Stock, nor any interest
therein, amount payable in respect thereof, or Restricted Property (as defined
in Section 9 hereof) may be sold, assigned, transferred, pledged or otherwise
disposed of, alienated or encumbered, either voluntarily or involuntarily. The
transfer restrictions in the preceding sentence shall not apply to (a) transfers
to the Corporation, or (b) transfers by will or the laws of descent and
distribution.

      7.    STOCK CERTIFICATES.

            (a)   Book Entry Form. The Corporation shall, in its discretion,
issue the shares of Restricted Stock subject to the Award either: (a) in
certificate form as provided in Section 7(b) below; or (b) in book entry form,
registered in the name of the Grantee with notations regarding the applicable
restrictions on transfer imposed under this Award Agreement.

            (b)   Certificates to be Held by Corporation; Legend. Any
certificates representing shares of Restricted Stock that may be delivered to
the Grantee by the Corporation prior to vesting shall be immediately redelivered
by the Grantee to the Corporation to be held by the Corporation until the
restrictions on such shares shall have lapsed and the shares shall thereby have
become vested or the shares represented thereby have been forfeited hereunder.
Such certificates shall bear the following legend:

      "The ownership of this certificate and the shares of stock evidenced
      hereby and any interest therein are subject to substantial restrictions on
      transfer under an Agreement entered into between the registered owner and
      International Game Technology. A copy of such Agreement is on file in the
      office of the Secretary of International Game Technology."

            (c)   Delivery of Certificates Upon Vesting. Promptly after the
vesting of any shares of Restricted Stock pursuant to Section 3 and the
satisfaction of any and all related tax withholding obligations pursuant to
Section 10, the Corporation shall, as applicable, either remove the notations on
any shares of Restricted Stock issued in book entry form which have vested or
deliver to the Grantee a certificate or certificates evidencing the number of
shares of Restricted Stock which have vested (or, in either case, such lesser
number of shares as may be permitted pursuant to Section 10). The Grantee (or
the Beneficiary or Personal Representative of the Grantee in the event of the
Grantee's death or incapacity, as the case may be) shall deliver to the
Corporation any representations or other documents or assurances as the
Corporation may deem necessary or reasonably desirable to ensure compliance with
all applicable legal and regulatory requirements. The shares so delivered shall
no longer be restricted shares hereunder.

<PAGE>

            (d)   Stock Power; Power of Attorney. Concurrent with the execution
and delivery of this Award Agreement, the Grantee shall deliver to the
Corporation an executed stock power in the form attached hereto as Exhibit A, in
blank, with respect to the Restricted Stock. The Grantee, by acceptance of the
Award, shall be deemed to appoint, and does so appoint by execution of this
Award Agreement, the Corporation and each of its authorized representatives as
the Grantee's attorney(s)-in-fact to effect any transfer of unvested, forfeited
shares (or shares otherwise reacquired by the Corporation hereunder) to the
Corporation as may be required pursuant to the Plan or this Award Agreement and
to execute such documents as the Corporation or such representatives deem
necessary or advisable in connection with any such transfer.

      8.    EFFECT OF TERMINATION OF EMPLOYMENT.

            (a)   Forfeiture after Certain Events. The Grantee's shares of
Restricted Stock shall be forfeited to the extent such shares have not become
vested upon the first date the Grantee is no longer employed by the Corporation
or one of its Subsidiaries, regardless of the reason for the termination of the
Grantee's employment, whether with or without cause, voluntarily or
involuntarily. If the Grantee is employed by a Subsidiary and that entity ceases
to be a Subsidiary, such event shall be deemed to be a termination of employment
of the Grantee for purposes of this Award Agreement, unless the Grantee
otherwise continues to be employed by the Corporation or another of its
Subsidiaries following such event.

            (b)   Return of Shares. Upon the occurrence of any forfeiture of
shares of Restricted Stock hereunder, such unvested, forfeited shares and
related Restricted Property shall, without payment of any consideration by the
Corporation for such transfer, be automatically transferred to the Corporation,
without any other action by the Grantee, or the Grantee's Beneficiary or
Personal Representative, as the case may be. The Corporation may exercise its
powers under Section 7(d) hereof and take any other action necessary or
advisable to evidence such transfer. The Grantee, or the Grantee's Beneficiary
or Personal Representative, as the case may be, shall deliver any additional
documents of transfer that the Corporation may request to confirm the transfer
of such unvested, forfeited shares and related Restricted Property to the
Corporation.

      9.    ADJUSTMENTS UPON SPECIFIED EVENTS. Upon the occurrence of certain
events relating to the Corporation's stock contemplated by Section 6.2(a) of the
Plan, the Committee will make adjustments if appropriate in the number and kind
of securities that may become vested under an Award. If any adjustment is made
under Section 6.2(a) of the Plan, the restrictions applicable to the shares of
Restricted Stock shall continue in effect with respect to any consideration or
other securities (the "RESTRICTED PROPERTY" and, for the purposes of this Award
Agreement, "Restricted Stock" shall include "Restricted Property," unless the
context otherwise requires) received in respect of such Restricted Stock. Such
Restricted Property shall vest at such times and in such proportion as the
shares of Restricted Stock to which the Restricted Property is attributable
vest, or would have vested pursuant to the terms hereof if such shares of
Restricted Stock had remained outstanding. To the extent that the Restricted
Property includes any cash (other than regular cash dividends provided for in
Section 5 hereof), such cash shall be invested, pursuant to policies established
by the Committee, in interest bearing, FDIC-insured (subject to applicable
insurance limits) deposits of a depository institution selected

<PAGE>

by the Committee, the earnings on which shall be added to and become a part of
the Restricted Property.

      10.   TAX WITHHOLDING. The Corporation shall reasonably determine the
amount of any federal, state, local or other income, employment, or other taxes
which the Corporation or any of its affiliates may reasonably be obligated to
withhold with respect to the grant, vesting, making of an election under Section
83(b) of the Internal Revenue Code of 1986, as amended (the "CODE"), or other
event with respect to the Restricted Stock. The Corporation may, in its sole
discretion, withhold and/or reacquire a sufficient number of shares of
Restricted Stock in connection with the vesting of such shares at their then
Fair Market Value (determined either as of the date of such withholding or as of
the immediately preceding trading day, as determined by the Corporation in its
discretion) to satisfy the amount of any such withholding obligations that arise
with respect to the vesting of such shares. The Corporation may take such
action(s) without notice to the Grantee and shall remit to the Grantee the
balance of any proceeds from withholding and/or reacquiring such shares in
excess of the amount reasonably determined to be necessary to satisfy such
withholding obligations. The Grantee shall have no discretion as to the
satisfaction of tax withholding obligations in such manner. If, however, the
Grantee makes an election under Section 83(b) of the Code with respect to the
Restricted Stock, if any other withholding event occurs with respect to the
Restricted Stock other than the vesting of such stock, or if the Corporation for
any reason does not satisfy the withholding obligations with respect to the
vesting of the Restricted Stock as provided above in this Section 10, the
Corporation shall be entitled to require a cash payment by or on behalf of the
Grantee and/or to deduct from other compensation payable to the Grantee the
amount of any such withholding obligations.

      11.   NOTICES. Any notice to be given under the terms of this Award
Agreement shall be in writing and addressed to the Corporation at its principal
office to the attention of the Secretary, and to the Grantee at the Grantee's
last address reflected on the Corporation's records, or at such other address as
either party may hereafter designate in writing to the other. Any such notice
shall be given only when received, but if the Grantee is no longer an employee
of the Corporation or one of its Subsidiaries, shall be deemed to have been duly
given by the Corporation when enclosed in a properly sealed envelope addressed
as aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government.

      12.   PLAN. The Award and all rights of the Grantee under this Award
Agreement are subject to, and the Grantee agrees to be bound by, all of the
terms and conditions of the provisions of the Plan, incorporated herein by this
reference. In the event of a conflict or inconsistency between the terms and
conditions of this Award Agreement and of the Plan, the terms and conditions of
the Plan shall govern. The Grantee agrees to be bound by the terms of the Plan
and of this Award Agreement. The Grantee acknowledges reading and understanding
the Plan, the Prospectus for the Plan, and this Award Agreement. Unless
otherwise expressly provided in other sections of this Award Agreement,
provisions of the Plan that confer discretionary authority on the Board or the
Committee do not (and shall not be deemed to) create any rights in the Grantee
unless such rights are expressly set forth herein or are otherwise in the sole
discretion of the Board or the Committee so conferred by appropriate action of
the Board or the Committee under the Plan after the date hereof.

<PAGE>

      13.   ENTIRE AGREEMENT. This Award Agreement and the Plan together
constitute the entire agreement and supersede all prior understandings and
agreements, written or oral, of the parties hereto with respect to the subject
matter hereof. The Plan and this Award Agreement may be amended pursuant to
Section 6.6 of the Plan. Such amendment must be in writing and signed by the
Corporation. The Corporation may, however, unilaterally waive any provision
hereof in writing to the extent such waiver does not adversely affect the
interests of the Grantee hereunder, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.

      14.   COUNTERPARTS. This Award Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

      15.   SECTION HEADINGS. The section headings of this Award Agreement are
for convenience of reference only and shall not be deemed to alter or affect any
provision hereof.

      16.   GOVERNING LAW. This Award Agreement and the rights of the parties
hereunder with respect to the Restricted Stock Award shall be governed by and
construed and enforced in accordance with the laws of the State of Nevada
without regard to conflict of law principles thereunder.

      IN WITNESS WHEREOF, the Corporation has caused this Award Agreement to be
executed on its behalf by a duly authorized officer and the Grantee has hereunto
set his or her hand as of the date and year first above written.

                              INTERNATIONAL GAME TECHNOLOGY,
                              A NEVADA CORPORATION

                              By:_____________________________________________

                              Print Name:  David D. Johnson

                              Its: Senior Vice President, General Counsel

                              GRANTEE

                              ________________________________________________
                              Signature

                              ________________________________________________
                              Print Name

<PAGE>

                                                                       EXHIBIT A

                                   STOCK POWER

      FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Award
Agreement between International Game Technology, a Nevada corporation (the
"Corporation"), and the individual named below (the "Individual") dated as of
_____________, 2003, the Individual hereby sells, assigns and transfers to the
Corporation, an aggregate ______________ shares of Common Stock of the
Corporation, standing in the Individual's name on the books of the Corporation
and represented by stock certificate number(s) ________________________
_____________________ to which this instrument is attached, and hereby
irrevocably constitutes and appoints __________________________________________
as his or her lawful attorney in fact and agent to transfer such shares on the
books of the Corporation, with full power of substitution in the premises.

Dated ______________________

                                            __________________________________
                                            Signature

                                            __________________________________
                                            Print Name

(Instruction: Please do not fill in any blanks other than the signature line.
The purpose of the assignment is to enable the Corporation to exercise its
rights set forth in the Restricted Stock Award Agreement in connection with the
forfeiture of any restricted shares subject thereto without requiring additional
signatures on the part of the Individual.)

<PAGE>

                          INTERNATIONAL GAME TECHNOLOGY
                            2002 STOCK INCENTIVE PLAN
                  UK STOCK OPTION SUB-PLAN ("THE UK SUB-PLAN")

                                OPTION AGREEMENT

      THIS INCENTIVE STOCK OPTION AGREEMENT (this "OPTION AGREEMENT") by and
between INTERNATIONAL GAME TECHNOLOGY, a Nevada corporation (the "CORPORATION"),
and ________________ (the "PARTICIPANT") evidences the incentive stock option
(the "OPTION") granted by the Corporation to the Participant as to the number of
shares of the Corporation's Common Stock first set forth below.

NUMBER OF SHARES OF COMMON STOCK:(1) _______        AWARD DATE:  _______________

EXERCISE PRICE PER SHARE:(1) $______    EXPIRATION DATE:(1,2)   ______________

VESTING(1,2) The Option shall become vested as to 20% of the total number of
shares of Common Stock subject to the Option on each of the first through fifth
anniversaries of the Award Date.

The Option is granted under the UK Sub-Plan to the International Game Technology
2002 Stock Incentive Plan (the "UK SUB-PLAN") and subject to the Terms and
Conditions of Incentive Stock Option (the "TERMS") attached to this Option
Agreement (incorporated herein by this reference) and to the UK Sub-Plan. The
Option has been granted to the Participant in addition to, and not in lieu of,
any other form of compensation otherwise payable or to be paid to the
Participant. The Option is intended to be an approved option for the purposes of
Schedule 9 to the United Kingdom Income and Corporation Taxes Act. Capitalized
terms are defined in the UK Sub-Plan if not defined herein. The parties agree to
the terms of the Option set forth herein. The Participant acknowledges receipt
of a copy of the Terms, the UK Sub-Plan, and the Prospectus for the UK Sub-Plan.

"PARTICIPANT"                         INTERNATIONAL GAME TECHNOLOGY,
                                      a Nevada corporation
__________________________________
Signature                             By:__________________________________

__________________________________    Print Name:  David D. Johnson
Print Name
                                      Title: Sr. V.P., General Counsel
__________________________________
Address

__________________________________
City, State, Zip Code

----------

(1)   Subject to adjustment under Section 6.2(a) of the Plan.

(2)   Subject to early termination pursuant to Section 4 of this Option
      Agreement.

                                       1
<PAGE>

                 TERMS AND CONDITIONS OF INCENTIVE STOCK OPTION

1.    VESTING; LIMITS ON EXERCISE.

      As set forth on the cover page of this Option Agreement, the Option shall
vest and become exercisable in percentage installments of the aggregate number
of shares of Common Stock subject to the Option. The Option may be exercised
only to the extent the Option is vested and exercisable.

      -     Cumulative Exercisability. To the extent that the Option is vested
            and exercisable, the Participant has the right to exercise the
            Option (to the extent not previously exercised), and such right
            shall continue, until the expiration or earlier termination of the
            Option.

      -     No Fractional Shares. Fractional share interests shall be
            disregarded, but may be cumulated.

      -     Minimum Exercise. No fewer than 100(1) shares of Common Stock may be
            purchased at any one time, unless the number purchased is the total
            number at the time exercisable under the Option.

2.    CONTINUANCE OF EMPLOYMENT REQUIRED; NO EMPLOYMENT COMMITMENT.

      The vesting schedule requires continued employment through each applicable
vesting date as a condition to the vesting of the applicable installment of the
Option and the rights and benefits under this Option Agreement. Employment for
only a portion of the vesting period with respect to a vesting installment, even
if employed for a substantial portion of that period, will not entitle the
Participant to any proportionate vesting or avoid or mitigate a termination of
rights and benefits upon or following a termination of employment as provided in
Section 4 below.

      Nothing contained in this Option Agreement or the Plan constitutes an
employment or service commitment by the Corporation or any Subsidiary, affects
the Participant's status as an employee at will who is subject to termination
without cause, confers upon the Participant any right to remain employed by the
Corporation or any Subsidiary, interferes in any way with the right of the
Corporation or any Subsidiary at any time to terminate such employment, or
affects the right of the Corporation or any Subsidiary to increase or decrease
the Participant's other compensation.

      An Option may not be granted to an individual who is not an Eligible
Employee pursuant to the UK Sub-Plan at the date of the award and it should be
noted that status as an Eligible Employee shall not be construed as a commitment
that any Option under this Sub-Plan to such Eligible Employee or to Eligible
Employee generally.

3.    METHOD OF EXERCISE OF OPTION.

      The Option shall be exercisable by the delivery to the Secretary of the
Corporation of a written notice stating the number of shares of Common Stock to
be purchased pursuant to the Option (or by completion of such other
administrative exercise procedures as the Committee may require from time to
time) and accompanied by:

      -     payment in full for the Exercise Price of the shares to be
            purchased, in cash or by electronic funds transfer to the
            Corporation, or by check payable to the order of the Corporation,
            subject to such specific procedures or directions as the Committee
            may establish;

      -     satisfaction of the tax withholding provisions of Section 6.5 of the
            Plan as amended by the UK Sub-Plan; and

      -     any written statements or agreements required pursuant to Section
            6.4 of the Plan as amended by the UK Sub-Plan.

                                       2
<PAGE>

4.    EARLY TERMINATION OF OPTION.

      The Option, to the extent not previously exercised, and all other rights
in respect thereof, whether vested and exercisable or not, shall terminate and
become null and void prior to the Expiration Date in the event that either: (1)
the Participant ceases to be employed by the Corporation or a Subsidiary, except
as expressly provided below; or (2) the Option terminates pursuant to Section
6.2 of the Plan as amended by the UK Sub-Plan.

      -     If the Participant ceases to be employed by the Corporation or a
            Subsidiary other than due to the Participant's death, Total
            Disability or a termination of employment by the Corporation or a
            Subsidiary for Cause (as defined below), then the unvested portion
            of the Option shall terminate upon such termination of employment
            and the then-vested portion of the Option shall (subject to earlier
            termination pursuant to Section 6.2 of the Plan, as amended by the
            UK Sub-Plan, and subject to the maximum ten-year term of the Option)
            continue to be exercisable only for three months after such
            termination of employment, at which time such remaining portion of
            the Option shall terminate.

      -     If the Participant ceases to be employed by the Corporation or a
            Subsidiary due to the Participant's death or Total Disability, then
            the unvested portion of the Option shall terminate upon such
            termination of employment and the then-vested portion of the Option
            shall (subject to earlier termination pursuant to Section 6.2 of the
            Plan, as amended by the UK Sub-Plan and subject to the maximum
            ten-year term of the Option) continue to be exercisable only for one
            year after such termination of employment, at which time such
            remaining portion of the Option shall terminate.

      -     The Option (whether or not vested) shall terminate immediately if
            the Participant's employment is terminated by the Corporation or a
            Subsidiary for Cause (as defined below).

      -     The foregoing termination of employment rules are subject to Section
            6.12 of the Plan, as amended by the UK Sub-Plan.

      For purposes of this Section 4, the term "Cause" means a termination of
employment based upon a finding by the Corporation, acting in good faith and
based on its reasonable belief at the time, that the Participant:

      (1)   has been negligent in the discharge of his or her duties to the
            Corporation or one of its affiliates (the term "affiliate" for
            purposes of this definition shall include, without limitation, each
            Subsidiary), has refused to perform stated or assigned duties or is
            incompetent in or (other than be reason of a disability or analogous
            condition) incapable of performing those duties; or

      (2)   has been dishonest or committed or engaged in an act of
            embezzlement, fraud, or theft, a breach of confidentiality, an
            unauthorized disclosure or use of inside information, customer
            lists, trade secrets or other confidential information; or

      (3)   has breached a fiduciary duty, or violated any other duty, law,
            rule, regulation or policy of the Corporation or an affiliate; or
            has been convicted of, or plead guilty or nolo contendere to, a
            felony or misdemeanor (other than minor traffic violations or
            similar offences); or

      (4)   has breached any of the provisions of any agreement with the
            Corporation or an affiliate; or

      (5)   has improperly induced a vendor or customer to break or terminate
            any contract with the Corporation or an affiliate or induced a
            principal for whom the Corporation or an affiliate acts as agents to
            terminate such agency relationship.

A termination for Cause shall be deemed to occur (subject to reinstatement upon
a contrary final determination by the Committee) on the date on which the
Corporation first delivers written notice to the Participant of a finding of
termination for Cause.

5.    NON-TRANSFERABILITY AND OTHER RESTRICTIONS.

      The Option and any other rights of the Participant under this Option
Agreement or the Plan are nontransferable and exercisable only by the
Participant, except as set forth in Section 1.9 of the Plan.

                                       3
<PAGE>

6.    NOTICES.

      Any notice to be given under the terms of this Option Agreement shall be
in writing and addressed to the Corporation at its principal office to the
attention of the Secretary, and to the Participant at the address reflected or
last reflected on the Corporation's payroll records. Any notice shall be
delivered in person or shall be enclosed in a properly sealed envelope,
addressed as aforesaid, registered or certified, and deposited (postage and
registry or certification fee prepaid) in a post office or branch post office
regularly maintained by the United States Government. Any such notice shall be
given only when received, but if the Participant is no longer an Eligible
Person, notice to the Participant by the Corporation shall be deemed to have
been duly given as of the date mailed in accordance with the foregoing
provisions of this Section 6.

7.    PLAN.

      The Option and all rights of the Participant under this Option Agreement
are subject to, and the Participant agrees to be bound by, all of the terms and
conditions of the Plan, incorporated herein by this reference. In the event of a
conflict or inconsistency between the terms and conditions of this Option
Agreement and of the Plan, the terms and conditions of the Plan shall govern.
The Participant agrees to be bound by the terms of the Plan and of this Option
Agreement. The Participant acknowledges reading and understanding the Plan, the
Plan Prospectus, and this Option Agreement. Unless otherwise expressly provided
in other sections of this Option Agreement, provisions of the Plan that confer
discretionary authority on the Board or the Committee do not and shall not be
deemed to create any rights in the Participant unless such rights are expressly
set forth herein or are otherwise in the sole discretion of the Board or the
Committee so conferred by appropriate action of the Board or the Committee under
the Plan after the date hereof.

8.    ENTIRE AGREEMENT.

      This Option Agreement (including these Terms) and the Plan together
constitute the entire agreement and supersede all prior understandings and
agreements, written or oral, of the parties hereto with respect to the subject
matter hereof. The Plan and this Option Agreement may be amended pursuant to
Section 6.6 of the Plan. Such amendment must be in writing and signed by the
Corporation. The Corporation may, however, unilaterally waive any provision
hereof in writing to the extent such waiver does not adversely affect the
interests of the Participant hereunder, but no such waiver shall operate as or
be construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.

9.    GOVERNING LAW.

      This Option Agreement and the rights of the parties hereunder and with
respect to the Option shall be shall be governed by and construed and enforced
in accordance with the laws of the State of Nevada without regard to conflict of
law principles thereunder. The parties, as well as any of their successors,
employees, or representatives, irrevocably agree to the exclusive jurisdiction
of the Courts of the State of Nevada (or such judicial district of a court of
the United States as shall include same) for the determination of all matters
arising hereunder or with respect to the Option. In the event of litigation with
respect to any such matter, the prevailing party shall be entitled to recover
such party's costs of the action, including reasonable attorneys fees.

10.   NOTICE OF EARLY DISPOSITION.

      The Participant agrees to give prompt written notice to the Corporation of
any sale or other transfer of any shares of Common Stock acquired upon exercise
of the Option that occurs before the later of (A) one year after the date that
the Participant acquires the shares upon exercise of the Option, or (B) two
years after the Award Date set forth on the cover page of this Option Agreement.

11.   OTHER RESTRICTIONS.

      In consideration of the granting of this Option, the Participant agrees
that for a period of one (1) year after he or she ceases to be employed by the
Corporation or a Subsidiary, the Participant will not own, manage, control or
associate with as an agent, officer, employee, investor, lender, or otherwise
with any business entity which competes worldwide with the business of the
Corporation or any of its Subsidiaries in the design, manufacture and/or
distribution of coin-operated gaming or amusement devices and/or lottery
devices, systems or tickets; nor shall the Participant at any time after his or
her employment by the Corporation or a Subsidiary terminates disclose, discuss,
copy or otherwise use or suffer to be used, in any manner, in competition with
or contrary to the interests of the Corporation or any of its Subsidiaries, the
customer lists, product research, engineering data or other trade secrets of the
Corporation or any of its Subsidiaries. The Corporation and the Participant
specifically agree that the scope of

                                       4
<PAGE>

the foregoing provisions in this Section 11 are reasonable and fair. Should,
however, a court of competent jurisdiction deem the foregoing provisions of this
Section 11 to be impermissibly overbroad, it is the desire and intention of the
parties that such provisions be enforced as to the greatest extent permitted
under applicable law.

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                                       5

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