1994 STOCK OPTION PLAN
(as amended and restated through June 1, 1997)
SECTION 1. Purpose; Definitions
The name of this plan is the GTECH Holdings Corporation 1994 Stock Option Plan
(the "Plan"). The purpose of the Plan is to enable officers and other key
employees of GTECH Holdings Corporation (the "Company") and its Affiliates to
own shares of stock in the Company, participate in the shareholder value which
has been created, and have a mutuality of interest with other shareholders,
and to enable the Company to attract, retain and motivate key employees.
For the purposes of the Plan the following terms shall be defined as set forth
below:
(a) "Affiliate" means any corporation which is a subsidiary of
the Company within the definition of "subsidiary
corporation" under Section 424(f) of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means (i) the willful failure by the Participant to
perform substantially his duties as an employee of the
Company (other than due to physical or mental illness) after
reasonable notice to the Participant of such failure, (ii)
the Participant's engaging in serious misconduct that is
injurious to the Company, (iii) the Participant's having
been convicted of, or entered a plea of nolo contendere to a
crime that constitutes a felony, (iv) the breach by the
Participant of any written covenant or agreement with the
Company not to disclose any information pertaining to the
Company or not to compete or interfere with the Company, or
(v) abuse of illegal drugs or other controlled substances,
or habitual intoxication.
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
(e) "Committee" means the Committee referred to in Section 2
below. If at any time no Committee shall be in office, then
the functions of the Committee specified in the Plan shall
be exercised by the Board.
(f) "Company" means GTECH Holdings Corporation, a corporation
organized under the laws of the State of Delaware, or any
successor organization.
(g) "Disability" means permanent and total disability as
determined under the Company's long-term disability program.
(h) "Fair Market Value" means, as of any given date,
the mean of the highest and lowest quoted selling prices of
the Stock on the New York Stock Exchange (consolidated
trading) or such other method of determining Fair Market
Value as shall be authorized by the Code, or the rules and
regulations thereunder, and adopted by the Committee.
(i) "Incentive Stock Option" means any Stock Option intended to
be and designated as an "Incentive Stock Option" within the
meaning of Section 422 of the Code.
(j) "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
(k) "Participant" means a key employee to whom a grant is made
under the Plan.
(l) "Plan" means the GTECH Holdings Corporation 1994 Stock
Option Plan, as hereinafter amended from time to time.
(m) "Retirement" means retirement from active employment with
the Company and any Affiliates with the consent of the Board
or in accordance with the retirement policies of the Company.
(n) "Rules" means the regulations promulgated under Section 16
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(o) "Securities Broker" means a registered securities broker
acceptable to the Company who agrees to effect the cashless
exercise of an Option pursuant to paragraph 5(d) below.
(p) "Stock" means the Common Stock $.01 par value per share, of
the Company.
(q) "Stock Option" or "Option" means any Incentive or
Non-Qualified Stock Option to purchase shares of Stock
granted pursuant to Section 5 below.
In addition, the terms "Change-in-Control" and "Incumbent Director" shall have
meanings set forth, respectively, in Section 6.
SECTION 2. Administration
The Plan shall be administered by a Committee of not fewer than two (2)
"non-employee directors" (within the meaning of Rule 16b-3(b) (3) under the
Exchange Act, or any successor thereto) of the Company who are also "outside
directors" (within the meaning of Treasury Regulation Section 1.162-27(e) (3),
or any successor thereto), who shall be appointed by the Board of Directors of
the Company and who shall serve at the pleasure of the Board.
The Committee shall have the authority to grant Stock Options to eligible
employees, pursuant to the terms of the Plan.
In particular, the Committee shall have the authority, subject to the terms of
the Plan, to:
(a) select the officers and other key employees of the Company
and its Affiliates to whom Stock Options may from time to
time be granted hereunder;
(b) determine whether and to what extent Incentive Stock Options
and Non-Qualified Stock Options or any combination thereof,
are to be granted hereunder;
(c) determine the number of shares to be covered by each such
grant hereunder; and to
(d) determine the terms and conditions of any grant hereunder
including, but not limited to: the share price, any
restriction or limitation regarding, or any vesting
acceleration or forfeiture relating to, any Stock Option or
the shares of Stock relating thereto, based on such factors
as the Committee shall determine, in its sole discretion,
from time to time.
The Committee shall be responsible for the administration of the Plan. The
Committee, by majority action thereof, is authorized to prescribe, amend, and
rescind rules and regulations relating to the Plan, to provide for conditions
deemed necessary or advisable to protect the interests of the Company, and to
make all other determinations (including, without limitation, whether a
Participant has incurred a Disability) necessary or advisable for the
administration and interpretation of the Plan in order to carry out its
provisions and purposes. Determinations, interpretations, or other actions
made or taken by the Committee pursuant to the provisions of the Plan shall be
final, binding, and conclusive for all purposes and upon all persons including
the Company and Plan participants.
SECTION 3. Authorized Shares and Adjustments
(a) Stock Subject to Plan. The stock to be subject or related
to grants under the Plan shall be shares of the Company's
Stock and may be either shares held in the treasury of the
Company or authorized and unissued shares. Subject to
adjustment in accordance with paragraph 3(b) below, up to an
aggregate maximum of 1,800,000 shares shall be authorized
for Stock Options under the Plan, any or all of which may be
granted in the form of Incentive Stock Options; provided
however, that in any calendar year in which the Plan is in
existence, Stock Options granted to any one Participant in
the Plan may not cover more than 12 1/2% of the total shares
of Stock authorized under the Plan.
Any shares of Stock subject to a Stock Option which expires
or otherwise terminates for any reason whatever (including,
without limitation, the surrender thereof) without having
been exercised, shall continue to be available for the
granting of Options under the Plan, provided, however, that
(i) if a Stock Option is cancelled, the shares covered by
the cancelled Stock Option shall be counted against the
maximum number of shares specified in this paragraph 3(a)
for which Stock Options may be granted to an individual
Participant, and (ii) if the exercise price of a Stock
Option is reduced after the date of grant (otherwise than
pursuant to paragraph 3(b) below), the transaction shall be
treated as a cancellation of the original Stock Option and
the grant of a new Stock Option for purposes of counting the
maximum number of shares for which Stock Options may be
granted to an individual Participant.
(b) Capital Adjustments. The number of shares which may be
issued under the Plan, the maximum number of shares with
respect to which Stock Options may be granted to any
individual Participant under the Plan, both as stated in
paragraph 3(a) above, the number of shares issuable upon
exercise of outstanding Stock Options under the Plan (as
well as the Option exercise price per share under such
outstanding Options), shall, subject to the applicable
provisions of Section 424(a) of the Code, be adjusted, as
may be deemed appropriate by the Committee, to reflect any
stock dividend, stock split, share combination, or similar
change in the capitalization of the Company.
In the event of a corporate transaction (as that term is
described in Section 424(a) of the Code and the Treasury
Regulations issued thereunder as, for example, a merger,
consolidation, acquisition of property or stock,
reorganization, or liquidation), each outstanding Stock
Option shall be assumed by the surviving or successor
corporation; provided, however, that, in the event of a
proposed corporate transaction, the Committee may terminate
all or a portion of the outstanding Stock Options if it
determines that such termination is in the best interests of
the Company. If the Committee decides to terminate
outstanding Stock Options, the Committee shall give each
Participant holding a Stock Option to be terminated not less
than fourteen days' notice prior to any such termination by
reason of such a corporate transaction, and any such Stock
Option which is to be so terminated may be exercised (to the
extent that it is then exercisable or to any greater extent
as the Committee, in its sole discretion, shall determine)
up to and including the date immediately preceding such
termination.
The Committee also, in its discretion, may change the terms
of any outstanding Stock Option to reflect any such
corporate transaction, provided that, in the case of
Incentive Stock Options, such change is excluded from the
definition of a "modification" under Section 424(h) of the
Code.
SECTION 4. Eligibility
Officers and other key employees of the Company and its Affiliates (but
excluding members of the Committee, any person who serves only as a director
of the Company and/or of its Affiliates and Messrs. Guy B. Snowden and Victor
Markowicz) who are responsible for or contribute to the management, growth
and/or profitability of the business of the Company and/or its Affiliates and
who are selected by the Committee are eligible for grants under the Plan.
Selection of an employee for a grant at any time does not give an employee the
right to receive any additional grants in the future, unless such employee is
again selected by the Committee.
SECTION 5. Stock Options
The Committee shall have the authority to grant any optionee Incentive Stock
Options, Non-Qualified Stock Options, or both types of Stock Options. To the
extent that any Stock Option does not qualify as an Incentive Stock Option, it
shall constitute a separate Non-Qualified Stock Option. Any Stock Option
granted under the Plan shall be in such form as the Committee may from time to
time approve.
Each Stock Option shall be evidenced by a Stock Option (i.e., Grant) agreement
that shall specify the type of Option granted, the exercise price, the
duration of the Option, the number of shares of Stock to which the Option
pertains, and such other terms and conditions not inconsistent with the Plan
as the Committee shall determine.
Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised,
so as to disqualify the Plan under Section 422 of the Code, or, without the
consent of the optionee(s), so as to disqualify any Incentive Stock Option
under such Section 422.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem
appropriate:
(a) Option Price. The option exercise price per share of Stock
shall be determined by the Committee at the time of grant
but shall be not less than the 100% of the Fair Market Value
of the Stock on the date of grant. However, any Incentive
Stock Option granted to any optionee who, at the time such
Option is granted, owns more than 10% of the voting power of
all classes of stock of the Company or of a "Parent" or
"Subsidiary" corporation (as such terms are defined in the
Code and the regulations promulgated thereunder), shall have
an exercise price not less than 110% of Fair Market Value
per share on date of the grant.
(b) Option Term. The term of each Stock Option shall be fixed
by the Committee, but no Stock Option shall be exercisable
more than ten years after the date the Option is granted.
However, any Incentive Stock Option granted to any optionee
who, at the time the option is granted owns more than 10% of
the voting power of all classes of Stock of the Company, or
of a Parent or Subsidiary corporation, may not have a term
of more than five years. No Option may be exercised by any
person after expiration of the term of such Option.
(c) Exercisability. Subject to Section 7 below, Stock Options
shall be exercisable at such time or times (including on an
accelerated basis) and subject to such terms and conditions
as shall be determined by the Committee at or after grant;
provided however, that except as provided in paragraph 5(f)
or Section 6 below, unless otherwise determined by the
Committee at or after grant, no Stock Option shall be
exercisable during the six months following the date of the
granting of such Option. Only full shares shall be issued
under the Plan, and any fractional share which might
otherwise be issuable upon the exercise of an Option granted
under the Plan shall be forfeited.
(d) Method of Exercise. Subject to the terms and conditions
established by the Committee under paragraph 5(c) above,
Stock Options may be exercised, in whole or in part to the
extent exercisable, at any time and from time to time during
the option exercise period, by giving written notice of
exercise to the Company specifying the number of shares to
be purchased.
Such notice shall be accompanied by payment in full of the
purchase price, either by certified or bank check, or such
other instrument as the Committee may accept. As determined
by the Committee, in its sole discretion, at or after grant,
payment in full or in part may also be made in the form of
unrestricted Stock already owned by the optionee; provided
however, that in the case of an Incentive Stock Option, the
right to make a payment in the form of currently owned
shares may be authorized only at the time such Option is
granted.
If payment of the option exercise price of a Stock Option is
made in whole or in part in the form of stock already owned
by the Participant, the Company may require that the Stock
be owned by the Participant for a period of time so that
such payment would not result in a charge to the Company's
earnings as a result of the exercise. Such provision also
may be used by the Company to prevent a pyramid exercise.
As soon as practicable after receipt of a written exercise
notice and full payment of the exercise price, the Company
shall deliver to the Participant a certificate or
certificates representing the acquired shares of Stock.
Notwithstanding the foregoing, the Committee, in its sole
discretion, may permit a "cashless exercise" of an Option.
Any such cashless exercise shall be effected by the
Participant delivering to the Securities Broker instructions
to sell a sufficient number of shares of Common Stock to
cover the costs and expenses associated therewith.
(e) Transferability of Options. No Stock Option shall be
transferable by the optionee other than by will or by the
laws of descent and distribution, and all Stock Options
shall be exercisable, during such optionee's lifetime, only
by the optionee, except to the extent otherwise permitted by
the Committee and, in the case of Stock Options intended to
be Incentive Stock Options, under the applicable provisions
of Code Section 422 and the regulations promulgated
thereunder.
A transferred Stock Option shall continue to be subject to
the same terms and conditions as were applicable to such
Stock Option immediately prior to transfer, and the original
optionee shall remain subject to tax withholding under
paragraph 8(d) below with respect to such Stock Option.
Further, the events of termination of employment of
paragraphs 5(f) and (g) below shall continue to be applied
with respect to the original optionee, following which
events the transferred Stock Option shall be exercisable by
the transferee only to the extent, and for the periods
specified in, said paragraphs 5(f) and (g).
(f) Termination of Employment. Subject to Section 7 below, at
or after the date of grant, the Committee shall determine,
in its sole discretion, the extent to which any unexercised
Options held by the optionee shall be exercised during the
remaining term of such Options, including whether such
Options shall be exercised on an accelerated basis, in the
event an optionee's employment by the Company terminates by
reason of death, Disability, Retirement, or termination
without Cause; provided however, that the exercise period
for any Option shall not exceed the shorter of (i) one year
(or such shorter period required by Section 422 of the Code
in the case of Incentive Stock Options) from the date of
such termination or (ii) the stated term of such Stock
Option.
(g) Termination for Cause. Unless otherwise determined by the
Committee, in its sole discretion, if an optionee's
employment by the Company terminates for Cause, all
unexercised vested and non-vested outstanding Options held
by such optionee shall lapse and be forfeited.
(h) Incentive Stock Option Limitations. To the extent required
for "Incentive Stock Option" status under Section 422 of the
Code, the aggregate Fair Market Value (determined as of the
time of grant) of the Stock with respect to which Incentive
Stock Options granted are exercisable for the first time by
the optionee during any calendar year under the Plan and/or
any other stock option plan of the Company or a Parent or
Subsidiary of the Company (within the meaning of Section 424
of the Code) shall not exceed $100,000.
SECTION 6. Change-In-Control Provisions
(a) Impact of Event. In the event of a "Change-In-Control" as
defined in paragraph 6(b) below, unless otherwise determined
by the Committee at or after grant, but prior to the
occurrence of such Change-In-Control and subject to
paragraph 3(b) above, any and all Stock Options awarded
under the Plan not previously exercisable and vested shall
become fully vested and exercisable.
(b) Definition of "Change-In-Control." For purposes of
paragraph 6(a) above, a "Change-In-Control" means the
happening of any of the following:
(i) the members of the Board at the beginning of any
consecutive twenty-four calendar month period (the
"Incumbent Directors") cease for any reason other
than due to death to constitute at least a majority
of the members of the Board, provided that any
director whose election, or nomination for election
by the Company's stockholders, was approved by a
vote of at least a majority of the members of the
Board then still in office who were members of the
Board at the beginning of such twenty-four calendar
month period shall be deemed an Incumbent Director;
(ii) any "person," including a "group" (as such terms
are used in Sections 13(d) and (14(d) of Exchange
the Act, but excluding the Company, any of its
Affiliates or any employee benefit plan of the
Company or any of its Affiliates) is or becomes the
"beneficial owner" (as defined in Rule 13(d)(3)
under the Exchange Act), directly or indirectly, of
securities of the Company representing the greater
of 30% or more of the combined voting power of the
Company's then outstanding securities;
(iii) the stockholders of the Company shall approve a
definitive agreement (1) for the merger or other
business combination of the Company with or into
another corporation if (A) a majority of the
directors of the surviving corporation were not
directors of the Company immediately prior to the
merger or (B) the stockholders of the Company
immediately prior to the effective date of such
merger own less than 50% of the combined voting
power in the then outstanding securities in such
surviving corporation or (2) for the sale or other
disposition of all or substantially all of the
assets of the Company; or
(iv) the purchase of Stock pursuant to any tender or
exchange offer made by any "person, "including a
"group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than the
Company, any of its Affiliates or any employee
benefit plan of the Company or any of its
Affiliates, for 30% or more of the Stock of the
Company.
SECTION 7. Amendments and Termination
The Board may amend, alter, or discontinue the Plan at any time and from time
to time, but no amendment, alteration, or discontinuation shall be made which
would materially impair the rights of a Participant with respect to a Stock
Option which has been granted under the Plan, without the Participant's
consent, and no amendment shall be made which, without the approval of the
Company's stockholders:
(a) would, with respect to any amendment:
(i) materially increase the benefits accruing to
directors and officers, within the meaning of Rule
16a-1(f) under the Exchange Act (hereinafter
referred to as "Officers"), under the Plan;
(ii) materially increase the number of shares of Stock
which may be issued to directors and Officers under
the Plan; or
(iii) materially modify the requirements as to
eligibility for directors and Officers to
participate in the Plan;
(b) would, with respect to Incentive Stock Options:
(i) change the class of employees eligible to
participate in the Plan;
(ii) except as permitted under Section 3 above, increase
the maximum number of shares of Stock with respect
to which Incentive Stock Options may be granted
under the Plan; or
(iii) extend the duration of the Plan under Section 9
below with respect to any Incentive Stock Options
granted hereunder; or
(c) would require shareholder approval pursuant to Treasury
Regulation Section 1.162-27(e)(4)(vi), or any successor
thereto.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall materially impair the rights of any holder
without the holder's consent. Subject to paragraph 3(a) above, the Committee
may also substitute new Stock Options for previously granted Stock Options,
including previously granted Stock Options having higher option prices.
Subject to the above provisions, the Board shall have broad authority to amend
the Plan to take into account changes in applicable tax laws and accounting
rules, as well as other developments.
SECTION 8. General Provisions
(a) The Committee may require each person purchasing shares
pursuant to a Stock Option under the Plan to represent to
and agree with the Company in writing that the optionee or
Participant is acquiring the shares without a view to
distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.
All certificates for shares of Stock or other securities
delivered under the Plan shall be subject to such
stop-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other
requirements of the Exchange Act, any stock exchange upon
which the Stock is then listed, and any applicable Federal
or state securities law, and the Committee may cause a
legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
(b) Nothing contained in the Plan shall prevent the Board of
Directors from adopting other or additional compensation
arrangements, subject to stockholder approval if such
approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
(c) The adoption of the Plan and the receipt of grants hereunder
shall not confer upon any employee of the Company or any
Affiliate any right to continued employment with the Company
or any Affiliate, as the case may be, nor shall it interfere
in any way with the right of the Company or any Affiliate to
terminate the employment of any of its employees at any
time. Further, an optionee shall have no rights as a
shareholder of the Company with respect to any shares
covered by such person's Options until the issuance of a
stock certificate to him or her representing such shares.
(d) No later than the date as of which an amount first becomes
includible in the gross income of a Participant for Federal
income tax purposes with respect to any Stock Option under
the Plan, such Participant shall pay to the Company, or make
arrangements satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes of any kind
required by law to be withheld with respect to such amount.
Unless otherwise determined by the Committee, the minimum
required withholding obligations may be settled with Stock,
including Stock that is part of the Stock Option that gives
rise to the withholding requirement. The obligations of the
Company under the Plan shall be conditioned on such payment
or arrangements, and the Company shall, to the extent
permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the
Participant.
(e) At the time of grant of any Stock Option, the Committee may
provide that any shares of Stock received as a result of
such grant shall be subject to a right of first refusal,
pursuant to which the Participant shall be required to offer
to the Company any shares that the Participant wishes to
sell, with the price being the then Fair Market Value of the
Stock, subject to such other terms and conditions as the
Committee may specify at the time of grant.
(f) Each person who is or shall have been a member of the
Committee or of the Board shall be indemnified and held
harmless by the Company, to the fullest extent permissible
by Delaware Law, against and from any loss, cost, liability,
or expense that may be imposed upon or reasonably incurred
by such person in connection with or resulting from any
claim, action, suit, or proceeding to which such person may
be made a party or in which such person may be involved by
reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by such person
in settlement thereof, with the Company's approval, or paid
by such person in satisfaction of any judgement in any such
action, suit, or proceeding against such person, provided
such person shall give the Company an opportunity, at its
own expense, to handle and defend the same before such
person undertakes to handle and defend it on such person's
own behalf. The foregoing right of indemnification shall
not be exclusive and shall be independent of any other
rights of indemnification to which such persons may be
entitled under the Company's Certificate of Incorporation
or By-laws, by contract, as a matter of law, or otherwise.
(g) Nothing in the Plan shall be construed to limit the right of
the Company to establish other plans or to pay compensation
to its employees in cash or property, in a manner which is
not expressly authorized under the Plan.
(h) The granting of awards and the issuance of shares of Stock
shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
(i) Grants made and amounts received under the Plan shall not be
deemed compensation for purposes of calculating an
employee's rights under any employee benefit plan unless
otherwise expressly stated in such plan.
(j) The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with laws
of the State of Delaware.
SECTION 9. Effective Date and Duration of Plan
The Plan originally became effective on May 5, 1994 and was approved by
shareholders on July 12, 1994. As amended and restated hereby, the Plan shall
be effective on June 1, 1997. Unless earlier terminated as provided in the
Plan, the Plan shall terminate at 12:00 midnight on May 4, 2004, and no Stock
Option shall be granted under the Plan thereafter. However, termination of
the Plan shall not affect any Stock Options previously granted, which Stock
Options shall remain in effect in accordance with their terms and the terms of
the Plan.