INTERNATIONAL GAME TECHNOLOGY

1

1.1

In this Scheme the following words and expressions bear the following meanings, namely:-

 

(i)

whose earnings from the office or employment which makes him an Employee are (or would be if there were any) general earnings to which section 15 of the Act applies and those general earnings are (or would be if there were any) earnings for a tax year in which the individual is ordinarily resident in the UK; and

 

(ii)

who will have been so employed by a company in the Group for a continuous period of at least one year on the date on which the Board makes its Invitation for Applications under Rule 2.1. For the avoidance of doubt periods of service with any such company prior to its joining the Group shall be disregarded and a Qualified Person who takes maternity leave under the provisions of Part VIII of the Employment Rights Act 1996 and exercises her right to return to work under that Act shall not be deemed to cease to be in the employment of the Company by virtue of taking that maternity leave and the period of maternity leave shall count towards the period of continuous employment;

1.2

In this Scheme (unless the context requires otherwise):-

1.2.1

any reference to any statute or statutory provisions shall be construed as including a reference to any modification, re-enactment or extension of such statute or statutory provision for the time being in force, to any subordinate legislation made under the same and to any former statutes or statutory provisions which is consolidated or re-enacted;

1.2.2

the singular includes a reference to the plural and vice versa;

1.2.3

the masculine gender shall include the feminine gender;

1.2.4

references to the exercise of an Option shall where the context so allows include the exercise of an Option in part.

1.3

The Scheme shall be governed by and construed in accordance with the law of England and Wales.

1.4

Any words and expressions used in these rules shall so far as is consistent with the context have the same meanings as in Schedule 3.

2

2.1

The Board may at any time after the Adoption Date, subject to any restrictions imposed under the US Securities and Exchange Commission Rules, invite Applications under the Scheme from Qualified Persons by sending them Invitations.

2.2

Each Invitation shall be in writing and shall specify:-

2.2.1

the Exercise Price (or the time and manner in which the Exercise Price will be communicated to Qualified Persons which time must be prior to the Date of Grant);

2.2.2

the last date by which Applications must be received (which shall be neither earlier than 14 days nor later than 21 days after the date of the Invitation);

2.2.3

whether the Board has decided to allow Qualified Persons to choose, for the purpose of determining the number of Shares over which an Option is to be granted, whether the payment under the Savings Contract is to be taken as including a bonus available under such Savings Contract (and, if so, which bonus) or no bonus at all; and

2.2.4

whether it is open to the Qualified Person to choose between Savings Contracts of different durations and Bonus Dates falling on different anniversaries of the commencement of the Savings Contract and, if so, which Savings Contracts and which Bonus Dates;

2.3

Each Invitation shall be accompanied by such documents relating to the Savings Contract as the Savings Authority may prescribe and an Application which shall provide for the Qualified Person to state:-

2.3.1

the monthly savings contribution (being a multiple of £1 and not less than the minimum amount specified in the Savings Contract, provided that the minimum amount so specified is not lower than permitted by paragraph 25(3)(b) of the Act (as amended or replaced from time to time)) which he wishes to make under the related Savings Contract;

2.3.2

that his proposed monthly savings contribution under the Savings Contract, when added to any monthly savings contributions then being made under any other savings contract linked to an option granted under the Scheme or any other scheme approved under Schedule 3 to the Act will not exceed the maximum permitted under Rule 4.2;

2.3.3

if he may choose whether the Repayment under the Savings Contract be taken to include a bonus or no bonus for the purpose described in Rule 2.2.3, his choice in that respect; and

2.3.4

if he may choose between Savings Contracts of different durations or Bonus Dates falling on different anniversaries of the commencement of the Savings Contract, his choice in that respect;

 

and to authorise the Board to enter on the form of Savings Contract such monthly savings contribution (not exceeding the maximum stated on the Application) as shall be determined pursuant to Rule 3 below.

2.4

Not later than the date specified in the Invitation as the last date for receipt of an Application, each person who was a Qualified Person on the date of the Invitation may, by the return of a duly completed Application complying with the requirements of this Rule 2 as specified on the Application, apply for an Option.  A person may only submit one Application for an Option of any particular duration in response to each Invitation which he receives, but he may apply for Options of different durations, if the Invitation so permits.  If he receives more than one Invitation relating to Options proposed to be granted on the same Date of Grant, he may submit only one Application for an Option of any particular duration in response to both or all of them, but he may apply for Options of different durations, if the Invitation(s) so permit(s).

2.5

An Application for an Option shall be in writing and shall be accompanied by such documents relating to the Savings Contract as the Savings Authority may prescribe, and the valid completion and return of such documents shall be a precondition of the grant of an Option.

2.6

Each Application shall be deemed to be for an Option over the largest whole number of Ordinary Shares which can be bought at the Exercise Price with the expected Repayments under the related Savings Contract at the appropriate Bonus Date taking into account the Qualified Person’s choice under Rule 2.3.3.

3

3.1

No Option shall be granted to any director or employee who has ceased to be a Qualified Person at the Date of Grant.

3.2

Subject to Rules 3.1 and 3.3, the Board shall grant an Option to each Qualified Person who has submitted a valid Application in respect of the number of Shares for which he is deemed to have applied within 30 days of the date by reference to which the relevant Exercise Price was fixed.  If, in applying the scaling down provisions contained in Rule 3.3, Options cannot be granted within the 30 day period referred to in this Rule 3.2, the Options may be granted within 40 days of the date by reference to which the relevant Exercise Price was fixed.

3.3

If valid Applications are received for a total number of Shares in excess of any maximum number of Shares determined by the Board pursuant to Rule 2.2 or any limitation under Rule 4, the Board shall scale down Applications by taking the following steps (or by such other procedure agreed by the Board in advance with HMRC) until the number of Shares applied for equals or is less than the number of Shares available:-

3.3.1

by deeming each choice under Rule 2.3.3 to include a bonus to be a choice to include no bonus in the Repayment;

3.3.2

by reducing the monthly savings contributions pro rata (and consequently the number of Shares applied for) provided that the monthly savings contributions of a Qualified Person shall not be reduced below the minimum amount specified in the Savings Contract;

3.3.3

by selecting Applications by lot, each based on a monthly savings contribution of the minimum specified in the Savings Contract and the inclusion of no bonus in the Repayment.

 

If after applying the above steps the number of Shares available is still insufficient to enable an Option based on the minimum monthly contributions specified in the Savings Contract to be granted to each Qualified Person whose Application so remains, no Options shall be granted.

3.4

Each Application shall be deemed to have been modified or withdrawn in accordance with the provisions of Rule 3.3 and the Board shall complete each Savings Contract proposal form to reflect any reduction in monthly savings contributions resulting therefrom.

3.5

Options shall be evidenced by the execution of a deed of grant by the Company.  A single deed of grant may be executed in favour of any number of Qualified Persons. As soon as possible after Options have been granted the Company shall issue to each Option Holder an Option Certificate executed by the Company in such manner as the Board may from time to time prescribe.  Each Option Certificate shall specify the Date of Grant of the Option, the number of Shares over which the Option is granted and the Exercise Price.  If any Option Certificate shall be worn out, defaced, destroyed or lost, it may be renewed on such evidence being provided as the Board may reasonably require.

3.6

No amount shall be paid in respect of the grant of an Option but the maintenance of the Savings Contract by the Option Holder shall be a condition of the continuance of the Option provided that the discontinuance of a Savings Contract with a view to the exercise of an Option will not preclude the Option Holder from exercising that Option.

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4.1

No Options shall be granted hereunder later than 10 years after the Adoption Date.

4.2

Contributions made by an Option Holder under his Savings Contract shall not be less than the minimum amount per month specified in the Savings Contract and shall be made in multiples of £1 per month.  The maximum payments an Option Holder may make under his Savings Contract (when aggregated with the monthly payments being made under any other Savings Contracts entered into by the Option Holder and at that date still outstanding) shall be £250 per month or such other amount as may be specified in paragraph 25 of Schedule 3 of the Act from time to time.

4.3

Shares issued pursuant to the exercise of Options granted under this Scheme shall be charged against the applicable share limits of the Company’s 2002 Stock Incentive Plan (or any applicable share limit of any similar successor plan thereto), and no Options shall be granted hereunder that would exceed any such share limit.

5

 

Each Option is to be an Option to subscribe for or acquire Shares in the Company at a price per Share determined by the Board but in any event not less than the higher of:-

 

(i)

the nominal value of such Share; and

 

(ii)

80 per cent. (or such other percentage as may be specified in paragraph 28 of Schedule 3 to the Act from time to time) of the market value of a Share (as agreed with the Shares Valuation Division of HMRC).

6

6.1

Subject to Rules 6.2 and 6.4 below, the Option Holder may only exercise the Option if:-

6.1.1

at the date of exercise the Option Holder is employed by or holds office with a company in the Group and is not an Excluded Person; and

6.1.2

the Option Period has commenced and not expired.

6.2

The Option shall, in the following circumstances, be exercisable earlier and otherwise than as aforesaid:-

6.2.1

if the Option Holder ceases to hold office or employment with a company in the Group by reason of injury, disability evidenced to the satisfaction of the Board or redundancy (within the meaning of the Employment Rights Act 1996) or by reason of retirement on reaching the Specified Age or any other age at which he is bound to retire in accordance with the terms of his contract of employment or by reason of the Option Holder ceasing to be a director or employee of a company in the Group because his employing company ceases to be a member of the Group or the business or part of the business in which he is employed is transferred outside the Group then he shall exercise the Option within six months of so ceasing provided that the Option may not be exercised more than six months after the relevant Bonus Date.  To the extent that an Option so exercisable is not exercised within that period it shall then lapse;

6.2.2

if the Option Holder dies before the commencement of the Option Period while still holding office or being employed by a company in the Group the Option must be exercised (if at all) within twelve months of his death by his legal personal representatives.  If the Option Holder dies during the Option Period while still holding office or being employed by a company in the Group then the Option may be exercised within twelve months after the relevant Bonus Date by his legal personal representatives.  To the extent that an Option so exercisable is not exercised within that period it shall then lapse;

6.2.3

if an Option Holder ceases to hold office or employment with a company in the Group more than three years after the Date of Grant for any reason except dismissal by his employer for dishonesty or fraud then he may exercise the Option within six months of so ceasing provided that the Option may not be exercised more than six months after the relevant Bonus Date.  To the extent that an Option so exercisable is not exercised within that period it shall then lapse;

6.2.4

if an Option Holder reaches the Specified Age, then he may exercise his Option within six months after attaining that age, whether or not he retires at that age provided that the Option may not be exercised more than six months after the relevant Bonus Date;

6.2.5

if any person obtains Control of the Company while the Option Holder holds office or is employed by a company in the Group as a result of:-

 

making a general offer to acquire all the shares in the Company which are of the same class as the Shares, or

 

consummation of a merger, consolidation, or other reorganization of the Company with or into one or more entities that are not subsidiaries of the Company under overseas legislation accepted by an officer of HMRC as being closely comparable to section 899 (or sections 979-982) of the Companies Act 2006.

 

the Option may be exercised within six months (or, where sections 979-982 of the Companies Act 2006 apply, for so long as the purchaser remains bound or entitled to acquire Shares) of either (1) the time when the person making the offer has obtained Control of the Company and any condition subject to which the offer is made has been satisfied or (2) the time the merger, consolidation or other reorganization is completed, as applicable, provided that in neither case may the Option be exercised more than six months after the relevant Bonus Date.  To the extent that an Option so exercisable is not exercised within such period, it shall then lapse;

6.2.6

if the Company passes a resolution for voluntary winding up, the Option may be exercised within six months of the passing of the resolution provided that the Option may not be exercised more than six months after the relevant Bonus Date.  To the extent that an Option so exercisable is not exercised within that period it shall then lapse;

6.2.7

for the purposes of Rule 6.2.5 a person shall be deemed to have obtained Control of the Company if he and others acting in concert with him have together obtained Control of it.

6.3

If an Option Holder ceases to hold office or employment with a company in the Group less than three years after the Date of Grant for any reason other than those set out in Rules 6.2.1 or 6.2.2 or more than three years after the date of grant for any reason other than those set out in Rules 6.2.1 to 6.2.3 the Option shall lapse.

6.4

No person shall be treated for the purposes of Rules 6.1, 6.2.1, 6.2.3 and 6.3 as ceasing to hold an office or employment with a company in the Group until he ceases to hold any office or employment in any company in the Group or an Associated Company. If, at the Bonus Date, the Option Holder holds an office or employment with a company which is a company over which the Company has Control or an Associated Company but which is not a member of the Group (or is a member of the Group which does not participate in the Scheme), then the Option Holder may exercise the Option during the Option Period.

6.5

Each Option is to be exercisable by an Option Holder once only in respect of all or any proportion of the Ordinary Shares comprised in the Option granted to him as adjusted in accordance with the provisions of the Scheme.

6.6

If, before the earliest time when, in accordance with the provisions of this Scheme, an Option Holder may exercise an Option he gives (or under the regulations governing the Savings Contract is deemed to have given) notice that he intends to stop paying contributions thereunder, such Option shall thereupon lapse.

6.7

Exercise of an Option is to be by application in writing addressed to the Company or to such other person as the Board shall direct and specifying the number of Shares in respect of which the Option is being exercised and accompanied by the Option Certificate, such application to be delivered or sent by prepaid post to the registered office for the time being of the Company or to such office as may from time to time be specified by the Board.  Exercise of the Option is conditional on receipt of the Exercise Price (which shall not exceed the sum obtained by way of Repayments). For this purpose any Repayment shall exclude the repayment of any contribution the due date for payment of which falls:-

6.7.1

more than one month after the date on which the Repayment is made, or

6.7.2

after the end of the period within which the Option may be exercised.

6.8

Subject to the regulations and enactments for the time being in force under any applicable national or foreign securities law and any rules, regulations and other requirements of any stock exchange or automated quotation system upon which the Shares may be listed or quoted and subject to compliance by the Option Holder with the terms of the Option the Company shall not later than thirty days after receipt of the application and the relevant Exercise Price make an allotment to the Option Holder of the number of Shares specified in the application at the Exercise Price (as adjusted in accordance with the provisions of the Scheme) and will (subject to the provisions of Rule 6.9) deliver to the Option Holder evidence of title to such Shares provided that instead of allotting and issuing the appropriate number of Shares the Company shall have the right to satisfy its obligations of allotment by (in whole or in part) procuring that some or all of the Shares are transferred by a third party to the relevant Option Holder.  For these purposes delivery or transfer to an Option Holder includes delivery or transfer to a nominee for the Option Holder provided that the Option Holder acquires the beneficial ownership of the Shares delivered or transferred.

6.9

The Company shall have no obligation to issue or deliver evidence of title for Shares under the Scheme prior to:-

6.9.1

obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

6.9.2

completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

7

7.1

Notwithstanding the provisions of Rule 6.2.5, if any company (“the Acquiring Company”) shall obtain Control of the Company as a result of:-

7.1.1

making a general offer to acquire the whole of the issued share capital of the Company which is made on a condition such that if it is satisfied the Acquiring Company will have Control of the Company;

7.1.2

making a general offer to acquire all the shares in the Company which are of the same class as the Shares

7.1.3

consummation of a merger, consolidation, or other reorganization of the Company with or into one or more entities that are not subsidiaries of the Company under overseas legislation accepted by an officer of HMRC as being closely comparable to section 899 (or sections 979-982) of the Companies Act 2006.

7.2

For the purposes of Rule 7.1 above the appropriate period means a period of six months beginning with the time when the Acquiring Company has obtained Control of the Company and (if applicable) any condition subject to which the offer is made is satisfied.

7.3

For the purposes of Rule 7.1 above the New Option shall be equivalent to the Old Option if the requirements of paragraph 39(4)(a) to (d) inclusive of Schedule 3 to the Act are met.

7.4

For the avoidance of doubt if the Option Holder does not release his rights pursuant to the provisions of this Rule or exercise his Option pursuant to the provisions of Rule 6.2.5 hereof within the periods permitted by those rules then all such Options held by him shall lapse.

7.5

If, in accordance with this Rule 7, an Old Option is released and a New Option granted, the New Option shall not be exercisable under Rule 6.2.5 by virtue of the event by reason of which the New Option was granted.

7.6

Notwithstanding the definitions contained in Rule 1, if a New Option is granted pursuant to the provisions of Rule 7.1, then for the purposes of that New Option references (directly or indirectly) in Rules 6 to 15 (inclusive) to the Company and Share shall respectively mean the Acquiring Company and a share in the capital of the Acquiring Company or of some other company which satisfies the provisions of paragraphs 18 to 22 of Schedule 3 to the Act (except that for the purposes of Rule 6, reference to the Company in the definition of the Group shall continue to refer to International Game Technology Corporation).

8

 

On any variation of the share capital of the Company (whether by way of capitalisation or rights issue or sub-division or consolidation of the Shares) the Exercise Price and the number of Shares comprised in an Option shall be varied in such manner as the Board shall determine and such decision of the Board shall be final and binding on the Option Holder and the Company provided that:-

8.1

no adjustment to the Exercise Price shall be made pursuant to the provisions of this Rule which would result in any Shares being issued unlawfully at a discount and if in the case of any such Shares such an adjustment would but for this proviso have so resulted the Exercise Price payable for such Shares shall be the nominal amount thereof; and

8.2

no variation to the number of Shares comprised in an Option or the Exercise Price thereof shall be made pursuant to any of the provisions contained in this Rule until an officer of HMRC has approved such variation.

9

 

Shares to be allotted pursuant to the exercise of any Option shall rank pari passu in all respects and as one class with the Shares in issue at the date of allotment but shall not rank for any dividend the record date of which precedes the date of exercise of the Option.

10

 

The Company shall at all times have available sufficient unissued Shares to meet any exercise of any Option taking into account any arrangements made by the Company to procure the transfer by a third party to the relevant Option Holder of Shares to satisfy (whether in full or in part) the exercise of any Option.

11

 

The Company shall use its reasonable endeavours to register the Shares allotted pursuant to the exercise of an Option with the SEC or to effect compliance with the registration, qualification and listing requirements of any other relevant national or foreign securities laws, stock exchange or automated quotation system.

12

12.1

No Option granted pursuant to this Scheme nor the benefit thereof may be transferred assigned charged or otherwise alienated save that nothing herein contained shall prohibit the transmission of an Option by operation of law.

12.2

If an Option Holder does or suffers an act or thing whereby he would or might be deprived of the legal or beneficial ownership of an Option that Option shall lapse immediately and the Board shall not knowingly permit its exercise.

13

13.1

Options granted under the Scheme and any profits or gains made as a result of such Options are not pensionable under any of the Group’s pension arrangements.

13.2

Participation in the Scheme does not:-

13.2.1

confer upon any person any right to participate in the Scheme at any time in the future either at all or on any particular basis;

13.2.2

confer upon any person any right to continue in employment with any member of the Group;

13.2.3

restrict the right of any member of the Group to terminate the employment of any Option Holder (without liability to any member of the Group) at any time with or without cause;

13.2.4

impose upon the Board any duty to exercise any power or discretion under the Scheme to the advantage of the Option Holder; or

13.2.5

impose upon any member of the Group or the Board or their representative agents and employees any liability whatsoever (whether in contract, tort, or otherwise howsoever) in connection with:

 

13.2.5.1

the loss of an Option Holder’s Option(s) under the Scheme;

 

13.2.5.2

the loss of an individual’s eligibility to be granted Option(s) under the Scheme; and/or

 

13.2.5.3

the manner in which any power or discretion under the Scheme is exercised or the failure or refusal of any person to exercise any power or discretion under the Scheme.

13.3

Options under the Scheme shall not afford to an Option Holder any additional right to compensation on the termination of his employment which would not have existed had the Scheme not existed and, accordingly, any individual who participates in the Scheme shall waive any rights to compensation or damages in consequence of the termination of his office or employment with a company in the Group for any reason whatsoever insofar as these rights arise or may arise from him ceasing to have rights under or be entitled to exercise any Option under the Scheme as a result of such termination or from the loss or diminution in value of such rights and/or entitlements notwithstanding any provision to the contrary in his contract of employment.

14

14.1

The decisions of the Board shall be final and binding in all matters relating to the Scheme.

14.2

The Board may at any time discontinue the grant of further Options or decide in any year not to grant any Options.  If the Scheme is discontinued the provisions of the Scheme shall nevertheless continue in full force and effect in relation to Options then subsisting.

14.3

The Board may amend any of the provisions of the Scheme in any way it thinks fit save that:-

14.3.1

(subject as herein provided) it may not modify the terms of an Option already granted except with the consent of the Option Holder;

14.3.2

it may not (except due to an adjustment contemplated by Rule 7 or any repricing that may be approved by shareholders) modify the terms of an Option in any manner that would constitute a repricing (by amendment, cancellation and regrant, exchange or other means) of the Exercise Price of the Option;

14.3.3

(where the Scheme is to remain approved) no amendment to a provision necessary to meet the requirements of Schedule 3 shall have effect until approved an officer of HMRC.

14.4

The Board shall have the power from time to time to make and vary such regulations (not being inconsistent with the Scheme) for the implementation and administration of the Scheme as it may think fit.

14.5

A person who is not a party to an Option has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Option but this does not affect any right or remedy of a third party which exists or is available apart from the Contracts (Rights of Third Parties) Act.

15