APPENDIX A - Filed pursuant to Schedule 14A, Item 10, in
connection with the Proxy Statement for the Annual Meeting of
Shareholders of Showboat, Inc. to be held on May 30, 1996.
SHOWBOAT, INC.
1989 DIRECTORS' STOCK OPTION PLAN
AS AMENDED AND RESTATED JANUARY 30, 1996
1. Purpose
The Showboat, Inc. 1989 Directors' Stock Option Plan
(the "Plan") is intended to promote the interests of
Showboat, Inc. (the "Corporation") and its subsidiaries by
offering members of the Board of Directors of the Corporation who
are not employed as regular salaried officers or employees of the
Corporation or any of its subsidiaries (hereinafter referred to
as "Non-Employee Directors" or "Optionees") the opportunity to
participate in a stock option plan in order to encourage Non-
Employee Directors to take a long term view of the affairs of the
Corporation; to attract and retain new top-notch Non-Employee
Directors; and to aid in rewarding Non-Employee Directors for
their services to the Corporation.
2. Administration
The Plan shall be administered by a Committee (the
"Committee") of not less than two Non-Employee Directors of the
Corporation selected by, and serving at the pleasure of, its
Board of Directors (the "Board"). The Committee shall not have
any discretion to determine or vary any matters which are fixed
under the terms of the Plan including, without limitation, which
individuals shall receive option awards, how many shares of the
Corporation's stock shall be subject to each such option award,
what the exercise price of stock covered by an option shall be,
and what means of payment shall be acceptable.
The Committee shall have the authority to otherwise
interpret the Plan and make all determinations necessary or
advisable for its administration.
The Committee's decisions under the Plan shall be
subject to approval of the Board.
3. Eligibility
Only Non-Employee Directors will be eligible to be
granted awards.
4. Stock Subject to the Plan
The stock from which awards may be granted shall be the
Corporation's $1.00 par value Common Stock ("Common Stock").
When options are exercised, the Corporation may either issue
authorized but unissued shares of Common Stock or
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transfer issued shares of Common Stock held in its treasury. The
total number of shares of Common Stock which may be granted as
stock options shall not exceed 120,000. If an option expires, or
is otherwise terminated prior to its exercise, the Common Stock
covered by such an option immediately prior to such expiration or
other termination shall continue to be available for grant under
the Plan.
5. Grant and Amount of Options
5.1 Initial Grant of Options
The date of the initial option grant for a Non-Employee
Director serving his or her term upon approval of the Plan
shall be the date that the Plan is approved by the
shareholders. The date of the initial option grant for a
Non-Employee Director commencing his or her term shall be
the date that he or she is elected to the Board of Directors
by the shareholders at any special or annual meeting;
provided however, that if an Employee Director becomes a Non-
Employee Director, the initial grant of options for such Non-
Employee Director shall be made at the next special or
annual shareholders' meeting, even if such Non-Employee
Director is not a candidate for election to the Board of
Directors. The initial option grant shall be to purchase
5,000 shares of Common Stock (subject to adjustment pursuant
to Section 7).
5.2 Annual Grant of Options
All annual awards of options shall be granted
immediately following the close of the annual shareholder's
meeting , with the first annual grant effective at the 1990
annual shareholder's meeting. The annual awards of such
option grants will be to purchase 1,000 shares of Common
Stock (subject to adjustment pursuant to Section 7), and
such awards will be granted each year until the shares
reserved for the Plan, under Section 4, are exhausted or the
Plan otherwise expires.
5.3 Transition Provision for the January 30, 1996
Amendments
Under the Plan, as amended and restated February 25,
1993, for 1995 certain Optionees did not receive an annual
award of options ("1995 Optionees"). Therefore, because the
Plan has been amended by the shareholders to provide for
continuing and uninterrupted annual grants of options for
the term of the Plan, the 1995 Optionees are granted,
immediately following the close of the 1996 annual
shareholders' meeting, an annual award of options for 1995
(at the same exercise price established for the other
Optionees who received an annual award of options for 1996),
in addition to the regular annual award of options to be
granted following the close of the 1996 annual shareholders'
meeting.
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6. Terms and Conditions of Options
Options shall be designated non-qualified options or
not qualified as Incentive Stock Options under Section 422A of
the Internal Revenue Code of 1954, as amended (the "Code"), and
shall be evidenced by written instruments approved by the
Committee. Such instruments shall conform to the following terms
and conditions.
6.1 Option Price
The option price shall be the greater of $7.625 per
share or 100% of the fair market value of the shares of
Common Stock under option. The fair market value per share
shall be the mean of the high and the low prices of the
Common Stock on the Consolidated Trading Tape on that day
or, if no sale of Common Stock is recorded on such Tape on
that day, then on the next preceding day on which there was
such a sale. The option price shall be paid (i) in cash or
(ii) in shares of Common Stock of the Corporation having a
fair market value equal to such option price or (iii) in a
combination of cash and shares of Common Stock. The fair
market value of shares of Common Stock delivered to the
Corporation pursuant to the immediately preceding sentence
shall be determined on the basis of the mean of the high and
low price for a share of Common Stock on the Consolidated
Trading Tape on the day of exercise or, if there was no such
sale on the day of exercise, on the day next preceding the
day of exercise on which there was such a sale.
6.2 Exercise and Term of Options
Each option shall be exercisable in full one year after
the date of grant.
Except in special circumstances, each option shall
expire the latter of the tenth anniversary of the date of
its grant or two years after the Non-Employee Director
retires.
After becoming exercisable, each installment shall
remain exercisable until expiration or termination of the
option. After becoming exercisable an option may be
exercised by the Optionee from time to time, in whole or in
part, up to the total number of shares with respect to which
it is then exercisable. The Committee may provide that
payment of the option exercise price may be made following
delivery of the certificate for the exercised shares.
Upon the exercise of a stock option, the purchase price
will be payable in full in cash or its equivalent in
property acceptable to the Corporation. In the discretion
of the Committee, the purchase price may be paid by the
assignment and delivery to the Corporation of shares of
Common Stock or a combination of cash and such shares equal
in value to the purchase price. Any shares of Common Stock
so assigned and delivered to the Corporation in payment or
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partial payment of the purchase price will be valued at Fair
Market Value on the exercise date. Upon the exercise of a
non-qualified stock option, the corporation shall withhold
from the shares of Common Stock to be issued to the eligible
Optionee the number of shares necessary to satisfy the
Corporation's obligation to withhold Federal taxes, such
determination to be based on the shares' Fair Market Value
on the date of exercise.
6.3 Termination of Directorship
If an Optionee ceases, other than by reason of death or
retirement, to be elected to serve on the Board of
Directors, all options granted to such Optionee and
exercisable on the date of termination of Directorship shall
expire on the earlier of (i) the tenth anniversary after
the date of grant or (ii) one year after the day such
Optionee's term ends.
6.4 Exercise Upon Death of Optionee
If an Optionee dies, the option may be exercised, to
the extent of the number of shares that the Optionee could
have exercised on the date of such death, by the Optionee's
estate, personal representative or beneficiary who acquires
the option by will or by the laws of descent and
distribution. Such exercise may be made at any time prior
to the earlier of (i) the tenth anniversary after the date
of grant or (ii) the third anniversary of such Optionee's
death. On the earlier of such dates, the option shall
terminate. The Committee may approve all cash payments to
the estate of an Optionee if circumstances warrant such a
decision.
6.5 Assignability
No option shall be assignable or transferable by the
Optionee except by will or by the laws of descent and
distribution and during the lifetime of the Optionee the
option shall be exercisable only by such Optionee.
7. Capital Adjustments
The number and price of shares of Common Stock covered
by each award of options and the total number of shares that
may be granted under the Plan shall be proportionally adjusted
to reflect, as deemed equitable and appropriate by the
Committee and subject to any required action by shareholders,
any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or
exchange of shares or other similar corporate change.
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8. Change of Control
Notwithstanding the provisions of Section 6, in the
event of a change of control, all vesting on all unexercised
stock options will accelerate to the change of control date.
For purposes of this Plan, a "Change of Control" of the
Corporation shall be deemed to have occurred at such time as
(a) any "person" (as the term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
("Exchange Act") becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing 25.0% or more of the
combined voting power of the Corporation's outstanding
securities ordinarily having the right to vote at the election
of directors; or (b) individuals who constitute the Board of
Directors on the date hereof (the "Incumbent Board") cease for
any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date
hereof whose election was approved by at least a majority of
the directors comprising the Incumbent Board, or whose
nomination for election was approved by a majority of the Board
of Directors of the Corporation serving under an Incumbent
Board, shall be, for purposes of this clause (b), considered as
he or she were a member of the Incumbent Board; or
(c) merger, consolidation or sale of all or substantially all
the assets of the Corporation occurs, unless such merger or
consolidation shall have been affirmatively recommended to the
Corporation's stockholders by a majority of the Incumbent
Board; or (d) a proxy statement soliciting proxies from
stockholders of the Corporation by someone other than the
current management of the Corporation seeking shareholder
approval of a plan or reorganization, merger or consolidation
of the Corporation with one or more corporations as a result of
which the outstanding shares of the Corporation's securities
are actually exchanged for or converted into cash or property
or securities not issued by the Corporation unless the
reorganization, merger or consolidation shall have been
affirmatively recommended to the Corporation's shareholders by
a majority of the Incumbent Board.
9. Approvals
The issuance of shares pursuant to this Plan is
expressly conditioned upon obtaining all necessary approvals
from the Nevada Gaming Commission and the New Jersey Casino
Control Commission, and upon obtaining shareholder approval of
the Plan.
10. Effective Date of Plan and Amendments
The effective date of the Plan is August 22, 1989.
The Plan will become effective as of that date provided that
the Plan receives the approval of the holders of a majority of
the outstanding shares of Common Stock at the Corporation's
1990 Annual Meeting of Shareholders. If such approval is not
forthcoming, the Plan shall be null and void. The Plan
amendments, dated January 30, 1996, ("Amendments")
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will become effective as of that date provided that the
Amendments receive the approval of the holders of a majority of
the outstanding shares of Common Stock at the Corporation's
1996 Annual Meeting of Shareholders. If such approval is not
forthcoming, the Amendments shall be null and void.
11. Term; Amendment of Plan
This Plan shall expire on August 21, 1999 (except to
options outstanding on that date). The Board may terminate the
Plan at any time. The Board may amend the Plan at any time,
provided however, the provisions of Section 5 pertaining to the
amount of options to be granted and the timing of such option
grants and the provisions of Section 6.1 pertaining to the
option price of the Common Stock under option shall not be
amended more than once every six months, other than to comport
with changes in the Internal Revenue Code or the rules
thereunder. Further provided however, that, without the
approval of the holders of a majority of the outstanding shares
of Common Stock: the total number of shares that may be sold,
issued or transferred under the Plan may not be increased
(except by adjustment pursuant to Section 7); the provisions
of Section 3 regarding eligibility may not be modified; the
purchase price at which shares may be offered pursuant to
options may not be reduced (except by adjustment pursuant to
Section 7); and the expiration date of the Plan may not be
extended and no change may be made which would cause the Plan
not to comply with Rule 16b-3 of the Exchange Act. No action
of the Board or shareholders, however, may, without the consent
of an Optionee, alter or impair such Optionee's rights under
any option previously granted.
12. Withholding Taxes
The Corporation shall have the right to deduct
withholding taxes from any payments made pursuant to the Plan
or to make such other provisions as it deems necessary or
appropriate to satisfy its obligations to withhold Federal,
state or local income or other taxes incurred by reason of
payments or the issuance of shares of Common Stock under the
Plan. Whenever under the Plan, shares of Common Stock are to
be delivered upon exercise of an option, the Committee shall be
entitled to require as a condition of delivery that the grantee
remit an amount sufficient to satisfy all Federal, state and
other government withholding tax requirements related thereto.
13. Plan Not a Trust
Nothing contained in the Plan and no action taken
pursuant to the Plan shall create or be construed to create a
trust of any kind, or a fiduciary relationship, between the
Corporation and any Optionee, the executor, administrator or
other personal representative, or designated beneficiary of
such Optionee, or any other persons. Any reserves that may be
established by the Corporation in connection with the Plan
shall continue to be part of the general funds of the
Corporation and no individual or entity other than the
Corporation shall have any interest in such funds
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until paid to an Optionee. If and to the extent that any
Optionee or such Optionee's executor, administrator or other
personal representative, as the case may be, acquires a right
to receive any payment from the Corporation pursuant to the
Plan, such right shall be no greater than the right of an
unsecured general creditor of the Corporation.
14. Notices
Each Optionee shall be responsible for furnishing the
Committee with the current and proper address for the mailing
of notices and delivery of agreements, Common Stock and cash
pursuant to the Plan. Any notices required or permitted to be
given shall be deemed given if directed to the person to whom
addressed at such address and mailed by regular United States
mail, first-class and prepaid. If any item mailed to such
address is returned as undeliverable to the addressee, mailing
will be suspended until the Optionee furnishes the proper
address. This provision shall not be construed as requiring
the mailing of any notice or notification if such notice is not
required under the terms of the Plan or any applicable law.
15. Separability of Provisions
If any provision of this Plan shall be held invalid
or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be
construed and enforced as if such provision had not been
included.
16. Payment to Minors, etc.
Any benefit payable to or for the benefit of a minor,
an incompetent person or other person incapable of receipting
therefor shall be deemed paid when paid to such person's
guardian or to the party providing or reasonably appearing to
provide for the care of such person, and such payment shall
fully discharge the Committee, the Corporation and other
parties with respect thereto.
17. Headings and Captions
The headings and captions herein are provided for
reference and convenience only, shall not be considered part of
the Plan, and shall not be employed in the construction of the
Plan.
18. Controlling Law
This Plan shall be construed and enforced according to
the laws of the States of New Jersey and Nevada to the extent not
preempted by federal law, which shall otherwise control.
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