ACRES GAMING INCORPORATED
1993 STOCK OPTION AND INCENTIVE PLAN
The purpose of the Acres Gaming Incorporated 1993 Stock Option and
Incentive Plan (the "Plan") is to promote the growth and profitability of
Acres Gaming Incorporated (the "Company") and its Affiliates by providing its
key employees and consultants with an incentive to achieve long-term
corporate objectives, to attract and retain persons of outstanding
competence, and to provide such persons with an equity interest in the
Company.
1. STOCK SUBJECT TO PLAN. An aggregate of 1,000,000 shares (the
"Shares") of the Common Stock, par value $.01 per share ("Common Stock") of
the Company may be subject to awards granted under the Plan. Such Shares may
be authorized but unissued Common Stock or authorized and issued Common Stock
that has been or may be acquired by teh Company. Shares that are subject to
an award which expires or is terminated unexercised, or which are reacquired
by the Company upon the forfeiture of restricted Shares, shall again be
available for issuance under the Plan.
2. ADMINISTRATION.
A. COMMITTEE. The Plan shall be administered by the
Compensation Committee (the "Committee") of the Board of Directors of
the Company (the "Board"). The Committee shall be comprised of the
entire Board or, if the Board so determines, of two or more members of
the Board.
B. POWERS AND DUTIES. The Committee shall have the
authority to make rules and regulations governing the administration of
the Plan; to select the eligible employees and consultants to whom
awards shall be granted; to determine the type, amount, size, and terms
of awards; to determine the time when awards shall be granted; to
determine whether any restrictions shall be placed on Shares purchased
pursuant to any option or issued pursuant to any award; and to make all
other determinations necessary or advisable for the administration of
the Plan. The Committee's determinations need not be uniform, and may be
made by it selectively among persons who are eligible to receive awards
under the Plan, whether or not such persons are similarly situated. All
interpretations, decisions, or determinations made by the Committee
pursuant to the Plan shall be final and conclusive.
3. ELIGIBILITY. Any employee of or consultant to the Company or of
any of its Affiliates shall be eligible to receive awards under the Plan. A
person who has been granted an award under this Plan, or under any
predecessor plan, may be granted additional awards if the Committee shall so
determine. Except to the extent otherwise provided in the agreement
evidencing an award, the granting of an award under this Plan shall not
affect any outstanding award previously granted under this Plan or under any
other plan of the Company or any Affiliate. For purposes of the Plan, the
term "Affiliate" shall mean any "parent corporation" or "subsidiary
corporation" of the Company, as those terms are defined in Sections 424(e)
and 424(f) of the Internal Revenue Code of 1986, as amended.
4. AWARDS. The Committee may make awards to eligible persons in the
form of stock options which are intended to qualify as "Incentive Stock
Options" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended, or stock options which are not intended to so qualify
("Nonqualified Options"), or awards of restricted stock, or any combination
thereof.
5. STOCK OPTIONS. A stock option granted pursuant to the Plan shall
entitle the optionee, upon exercise, to purchase Shares at a specified price
during a specified period. Options shall be subject to such terms and
conditions as the Committee shall from time to time approve; PROVIDED, that
each option shall be subject to the following requirements:
A. TYPE OF OPTION. Each option shall be identified in the
agreement pursuant to which it is granted as an Incentive Stock Option
or as a Nonqualified Option, as the case may be.
B. TERM. No option shall be exercisable more than 121 months
after the date on which it is granted.
C. PAYMENT. The purchase price of Shares subject to an option
shall be payable in full at the time the option is exercised. Payment
may be made in cash, in shares of Common Stock having an aggregate fair
market value on the date of exercise which is not less than the option
price, or by a combination of cash and such shares, as the Committee may
determine, and subject to such terms and conditions as the Committee
deems appropriate.
D. PURCHASE PRICE OF NONQUALIFIED OPTIONS. The purchase price
of Shares that are subject to Nonqualified Options shall also be
determined by the Committee at the time such Options are granted, but in
no event shall such purchase price be less than 85% of the fair market
value of such shares on the date of the grant.
E. OPTIONS NOT TRANSFERABLE. Options shall not be transferable
except to the extent permitted by the agreement evidencing such option;
PROVIDED, that in no event shall any option be transferable by the
optionee, other than by will or the laws of descent and distribution.
Options shall be exercisable during an optionee's lifetime only by such
optionee. If, pursuant to the agreement evidencing any option, such
option remains exercisable after the optionee's death, it may be
exercised, to the extent permitted by such agreement, by the personal
representative of the optionee's estate or by any person who acquired
the right to exercise such option by bequest, inheritance, or otherwise
by reason of the optionee's death.
F. INCENTIVE STOCK OPTIONS. If an option is an Incentive Stock
Option, it shall be subject to the following additional requirements:
i. Incentive Stock Options may be granted only to persons
who are employees of the Company or of an Affiliate,
ii. The purchase price of Shares that are subject to an
Incentive Stock Option shall not be less than 100% of the fair
market value of such Shares at the time the option is granted, as
determined in good faith by the Committee.
iii. The aggregate fair market value (determined at the time
the option is granted) of the Shares with respect to which
Incentive Stock Options are
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exercisable by the Optionee for the first time during any calendar
year, under this Plan or any other plan of the Company or any
Affiliate, shall not exceed $100,000.
iv. An Incentive Stock Option shall not be exercisable more
than ten years after the date on which it is granted.
v. The purchase price of Shares that are subject to an
Incentive Stock Option granted to an employee who, at the time such
option is granted, owns 10% or more of the total combined voting
power of all classes of stock of the Company or of any Affiliate
shall not be less than 110% of the fair market value of such Shares
on the date such option is granted, and such option may not be
exercisable more than five years after the date on which it is
granted. For the purposes of this subparagraph, the rules of
Section 424(d) of the Code shall apply in determining the stock
ownership of any employee.
Subject to the foregoing, options may be made exercisable in one or more
installments, upon the happening of certain events, upon the fulfillment of
certain conditions, or upon such other terms and conditions as the Committee
shall determine.
6. RESTRICTED STOCK. Restricted stock awards granted pursuant to the
Plan shall entitle the holder to receive Shares, subject to forfeiture if
specified conditions are not satisfied at the end of a specified period.
Restricted stock awards shall be subject to such terms and conditions as the
Committee shall from time to time approve; PROVIDED, that each award shall be
subject to the following requirements:
A. RESTRICTED PERIOD. The Committee shall establish a period
(the "Restricted Period") at any time an award is granted during which
the holder will not be permitted to sell, transfer, pledge, encumber, or
assign the Shares subject to the award. The Committee may provide for
the lapse of restrictions in installments, or upon the occurrence of
certain events, where deemed appropriate. Any attempt by a holder to
dispose of restricted Shares in a manner contrary to the applicable
restrictions shall be void, and of no force and effect.
B. RIGHTS DURING THE RESTRICTED PERIOD. Except to the extent
otherwise provided in this paragraph 6 or under the terms of any restricted
stock agreement, during the Restricted Period, the holder of restricted Shares
shall have all of the rights of a stockholder in the Company with respect to
such Shares, including the right to vote the Shares and to receive dividends
and other distributions with respect to the Shares; PROVIDED, that all stock
dividends, stock rights, and stock issued upon split-ups or reclassifications
of Shares shall be subject to the same restrictions as the Shares with respect
to which such stock dividends, rights, or additional stock are issued, and may
be held in custody as provided below in this paragraph 6 until the restrictions
thereon shall have lapsed.
C. FORFEITURES. Except to the extent otherwise provided in the
restricted stock agreement, all Shares then subject to any restriction
shall be forfeited to the
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Company without further obligation of the Company to the holder thereof,
and all rights of the holder with respect to such Shares shall
terminate, if the holder shall cease to be an employee of or consultant
to the Company and its Affiliates, or if any condition established by
the Committee for the release of any restriction shall not have
occurred, prior to the expiration of the Restricted Period.
D. CUSTODY. The Committee may provide that the certificates
evidencing restricted Shares shall be held in custody by a bank or other
institution, or by the Company or any Affiliate, until the restrictions
thereon have lapsed, and may require that the holder of any restricted
Shares shall have delivered to the Company one or more stock powers,
endorsed in blank, relating to the restricted Shares as a condition of
receiving the award.
E. CERTIFICATES. A recipient of a restricted stock award shall
be issued a certificate or certificates evidencing the Shares subject to
such award. Such certificates shall be registered in the name of the
recipients, and may bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such award, which legend shall
be in substantially the following form:
"The transferability of this certificate and the shares
represented hereby are subject to the terms and
conditions (including forfeiture) of the Acres Gaming
Incorporated 1993 Stock Option and Incentive Plan and an
Agreement entered into between the registered owner and
Acres Gaming Incorporated. Copies of such Plan and
Agreement are on file in the offices of Acres Gaming
Incorporated.
F. GIFTS, ETC. Notwithstanding any other provision of this
paragraph 6, the Committee may permit a gift of restricted stock to the
holder's spouse, child, stepchild, grandchild, or legal dependent, or to
a trust whose sole beneficiary or beneficiaries shall be the holder
and/or any one of such persons: PROVIDED, that the donee shall have
entered into an agreement with the Company pursuant to which it agrees
that the restricted stock shall be subject to the same restrictions in
the hands of such donee as it was in the hands of the donor.
7. AGREEMENTS. Each option or award granted pursuant to the Plan
shall be evidenced by an agreement setting forth the terms and conditions
upon which it is granted. Multiple options or awards may be evidenced by a
single agreement. Subject to the limitations set forth in the Plan, the
Committee may, with the consent of the person to whom an award has been
granted, amend any such agreement to modify the terms or conditions governing
the award evidenced thereby.
8. ADJUSTMENTS. In the event of any changes in the outstanding
Shares of Common Stock by reason of any stock dividend or split,
recapitalization, reclassification, combination, or exchange of Shares or
other similar corporate change, then if the Committee shall determine, in its
sole discretion, that such change necessarily or equitably requires an
adjustment in the number of shares subject to an award, in the option price
or value of an award, or in the maximum number of Shares subject to this
Plan, such adjustments shall be made by the
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Committee and shall be conclusive and binding for all purposes of this Plan.
No adjustment shall be made in connection with the issuance by the Company of
any warrants, rights, or options to acquire additional Common Stock or of
securities convertible into Common Stock.
9. MERGER, CONSOLIDATION, REORGANIZATION, LIQUIDATION, ETC. Subject to
the provisions of the agreement evidencing any award, if the Company shall
become a party to any corporate merger, consolidation, major acquisition of
property for stock, reorganization, or liquidation, the Board of Directors of
the Company shall have the power to make any arrangement it deems advisable
with respect to outstanding awards and in the number of Shares subject to
this Plan, which shall be binding for all purposes of this Plan, including,
but not limited to, the substitution of new awards for any awards then
outstanding, the assumption of any such awards, and the termination of such
awards.
10. EXPENSES OF PLAN. The expenses of administering this Plan shall be
borne by the Company and its Affiliates.
11. RELIANCE ON REPORTS. Each member of the Committee and each member
of the Board of Directors shall be fully justified in relying or acting in
good faith upon any report made by the independent public accountants of the
Company and its Affiliates and upon any other information furnished in
connection with this Plan by any person or persons other than himself. In no
event shall any person who is or shall have been a member of the Committee or
of the Board of Directors be liable for any determination made or other
action taken or omitted in reliance upon any such report or information, or
for any action taken or omitted, including the furnishing of information, in
good faith.
12. RIGHTS AS STOCKHOLDER. Except to the extent otherwise specifically
provided hereon, no recipient of any award shall have any rights as a
stockholder with respect to Shares sold or issued pursuant to the Plan until
certificates for such Shares have been issued to such person.
13. GENERAL RESTRICTIONS. Each award granted pursuant to the Plan
shall be subject to the requirement that if, in the opinion of the Committee:
a. the listing, registration, or qualification of any Shares
related thereto upon any securities exchange or under any state or
federal law;
b. the consent or approval of any regulatory body; or
c. an agreement by the recipient with respect to the disposition
of any such Shares;
is necessary or desirable as a condition of the issuance or sale of such
Shares, such award shall not be consummated unless and until such listing,
registration, qualification, consent, approval, or agreement is effected or
obtained in form satisfactory to the Committee.
14. EMPLOYMENT RIGHTS. Nothing in this Plan, or in any agreement
entered into hereunder, shall confer upon any person the right to continue to
serve as an employee of or
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consultant to the Company or an Affiliate, or affect the right of the Company
or Affiliate to terminate such person's service at any time, with or without
cause.
15. WITHHOLDING. If the Company proposes or is required to issue
Shares pursuant to the Plan, it may require the recipient to remit to it, or
may withhold from such award or from the recipient's other compensation, an
amount, in the form of cash or Shares, sufficient to satisfy any applicable
federal, state, or local tax withholding requirements prior to the delivery
of any certificates for such Shares.
16. AMENDMENTS. The Board of Directors of the Company may at any time,
and from time to time, amend the Plan in any respect, except that no
amendment that would:
a. materially increase the benefits accruing to participants under
the Plan;
b. increase the number of Shares available for issuance or sale
pursuant to the Plan (other than as permitted by paragraphs 8 and 9); or
c. materially modify the requirements as to eligibility for
participation in the Plan;
shall be made without the affirmative vote of stockholders holding at least a
majority of the voting stock of the Company represented in person or by proxy
at a duly held stockholders' meeting.
17. STOCKHOLDER APPROVAL. Any award granted under the Plan prior to
the date on which the Plan is approved by stockholders holding at least a
majority of the voting stock of the Company represented in person or by proxy
at a duly held stockholders' meeting shall be contingent upon such approval.
18. DURATION. No options or rights shall be granted under the Plan
after the earlier of: (a) the date on which the Plan is terminated by the
Board of Directors of the Company; or (b) July 20, 2003.
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