AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------
FULL HOUSE RESORTS, INC.
-------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3391527
------------------------------- ----------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
DEADWOOD GULCH RESORT, HIGHWAY 85 SOUTH
DEADWOOD, SOUTH DAKOTA 57732
-------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
OPTION AGREEMENT BETWEEN FULL HOUSE RESORTS, INC. AND ALLEN E. PAULSON
OPTION AGREEMENT BETWEEN FULL HOUSE RESORTS, INC. AND WILLIAM P. MCCOMAS
OPTION AGREEMENT BETWEEN FULL HOUSE RESORTS, INC. AND RONALD K. RICHEY
-------------------------------------------------------------------------------
(FULL TITLE OF THE PLAN)
-------------------
WILLIAM R. JACKSON
EXECUTIVE VICE PRESIDENT - CORPORATE FINANCE
DEADWOOD GULCH RESORT, HIGHWAY 85 SOUTH
DEADWOOD, SOUTH DAKOTA 57732
---------------------------------------------------
(Name and address of agent for service)
(605) 578-1294
---------------------------------------------------
(Telephone number, including area code, of agent for service)
COPY TO:
PAUL BERKOWITZ, ESQ.
GREENBERG, TRAURIG, HOFFMAN,
LIPOFF, ROSEN & QUENTEL, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
(305) 579-0827
-------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE MAXIMUM AGGREGATE REGISTRATION FEE
PER SHARE (1) OFFERING PRICE(1)
- ------------------------------------------ -------------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
COMMON STOCK, 750,000 $3.375 $2,531,250 $767.05
$.0001 PAR VALUE.................... SHARES
====================================================================================================================================
</TABLE>
<PAGE>
II-1
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Registrant hereby incorporates by reference into this
Registration Statement the following documents or portions thereof as indicated:
(a) the Registrant's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1996;
(b) all other reports filed by the Registrant pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act") since the end of fiscal year
1996; and
(c) the descriptions of the Registrant's Common Stock and
related matters set forth under the captions "Description
of Capital Stock" and "Dividend Policy" in the
Registrant's Registration Statement on Form SB-2 (File
No. 33-61580) filed under the Securities Act of 1933, as
amended (the "Act"), including any amendments to such
descriptions in such Registration Statement.
In addition, all documents subsequently filed by the
Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated herein by reference
and to be a part hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant has authority under Section 145 of the Delaware General
Corporation Law to indemnify its directors and officers to the extent provided
for in such statute. The Registrant's Certificate of Incorporation provides that
the Registrant shall indemnify and advance expenses on behalf of its officers
and directors to the fullest extent not prohibited by law. The Registrant has
also entered into agreements with certain of its officers and directors wherein
it has agreed to indemnify each of them to the fullest extent permitted by law.
The provisions of the Delaware General Corporation Law that authorize
indemnification do not eliminate the duty of care of directors and officers. In
general, directors and officers will avoid liability only if they acted in good
faith and in a manner reasonably believed to be in or not opposed to the best
interest of a corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
At present, there is no pending litigation or proceeding involving a
director or officer of the Registrant as to which indemnification is being
sought.
In October 1994, Full House filed an action for declaratory relief in
Mississippi, seeking a determination by the court that no relationship exists
between it and Lone Star Casino Corporation regarding the potential acquisition
of a riverboat casino on the Mississippi gulf coast (FULL HOUSE RESORTS, INC. V.
LONE STAR CASINO CORPORATION V. ALLEN E. PAULSON, Second Judicial District of
the Chancery Court of Harrison County, Mississippi). Lone Star filed a
counterclaim alleging breaches of fiduciary duty, breach of contract, conspiracy
to breach contract and to breach fiduciary duty and common law fraud. The trial
court granted summary judgment in favor of all defendants on that counterclaim,
and Lone Star's appeal of that judgment is currently pending in the Mississippi
appellate court. A decision is expected by the end of 1997. The Registrant is
currently paying for Mr. Paulson's defense.
II-1
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS
See "Exhibit Index" on page II-4 below.
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of San Diego, State of California on May 12, 1997.
FULL HOUSE RESORTS, INC.
By: /s/ William R. Jackson
-------------------------
William R. Jackson
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints and William R. Jackson his true
and lawful attorney-in-fact, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments, including any post-effective
amendments, to this Registration Statement, and to file the same, with exhibits
thereto, and other documents to be filed in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact or their substitutes, each acting alone, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Allen E. Paulson
- ---------------------- Chairman and Chief May 12, 1997
Allen E. Paulson Executive Officer
Director
/s/ William P. McComas
- ----------------------
William P. McComas Director May 12, 1997
/s/ Ronald K. Richey
- ---------------------- Director May 12, 1997
Ronald K. Richey
/s/ Robert L. Kelley
- ---------------------- President and Chief
Robert L. Kelley Operating Officer May 12, 1997
/s/ William R. Jackson
- ---------------------- Executive Vice President May 12, 1997
William R. Jackson Corporate Finance
II-3
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.1 Registrant's Amended and Restated Articles of
Incorporation (1)
4.2 Registrant's Amended and Restated Bylaws (2)
4.3 Option Agreement Between Full House Resorts, Inc.
and Allen E. Paulson; Option Agreement Between Full
House Resorts, Inc. and William P. McComas; and
Option Agreement Between Full House Resorts, Inc. and
Ronald K. Richey
5.1 Opinion of Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A. (contained in its opinion filed
as Exhibit 5.1 hereto)
24.1 Power of Attorney is included in the Signatures
section of this Registration Statement
- ----------------------------
(1) Incorporated by reference to Exhibit 3.1 filed with the Registrant's
Registration Statement on Form SB-2 (File No. 33-61580).
(2) Incorporated by reference to Exhibit 3.2 filed with the Registrant's
Registration Statement on Form SB-2 (File No. 33-61580).
II-4
FULL HOUSE RESORTS, INC.
--------------------------------------
STOCK OPTION AGREEMENT
1. GRANT OF OPTION. Effective the third day of March, 1997,
Full House Resorts, Inc., a Delaware corporation (the "Company"), hereby grants
to Allen E. Paulson (the "Optionee") a non-qualified stock option (the "Option")
to acquire 250,000 shares (the "Shares") of Common Stock, $0.01 par value per
share (the "Common Stock").
2. EXERCISE PRICE. The exercise price per share of the Shares
subject to this Option is $3.375.
3. EXERCISABILITY OF OPTION. The Option is immediately
exercisable with respect to 50,000 Shares. Commencing on April 9, 1997 and on
each of the three succeeding anniversaries of that date and so long as the
Optionee has continuously been in the service of the Company as a director from
the date of grant, the Optionee shall become entitled to exercise the Option
with respect to an additional 50,000 Shares. Notwithstanding the foregoing, any
remaining portion of the Option shall become immediately fully exercisable:
(a) if there occurs any transaction (which shall
include a series of transactions occurring within 60 days or
occurring pursuant to a plan), that has the result that
stockholders of the Company immediately before such
transaction cease to own at least 51% of the voting stock of
the Company or of any entity that results from the
participation of the Company in a reorganization,
consolidation, merger, liquidation or any other form of
corporate transaction;
(b) if the stockholders of the Company shall approve
a plan of merger, consolidation, reorganization, liquidation
or dissolution in which the Company does not survive (unless
the approved merger, consolidation, reorganization,
liquidation or dissolution is subsequently abandoned); or
(c) if the stockholders of the Company shall approve
a plan for the sale, lease, exchange or other disposition of
all or substantially all the property and assets of the
Company (unless such plan is subsequently abandoned).
4. EXERCISE OF OPTIONS. The Option shall be deemed exercised
when (i) the Company has received written notice of such exercise in accordance
with the terms of the Option, (ii) full payment of the aggregate option price of
the Shares as to which the Option is exercised has been made, and (iii)
arrangements that are satisfactory to the Company's Board of Directors (the
"Board") in its sole discretion have been made for the Optionee's payment to the
Company of the amount that is necessary for the Company to withhold in
accordance with applicable Federal or state tax withholding requirements. Unless
further limited by the Board, the option price of any Shares purchased shall be
paid (1) in cash, (2) by certified or official bank
<PAGE>
check, (3) by money order, (4) with Shares owned by the Optionee that have been
owned by the Optionee for more than 6 months on the date of surrender or such
other period as may be required to avoid a charge to the Company's earnings for
financial accounting purposes, (5) by authorization for the Company to withhold
Shares issuable upon exercise of the Option, (6) by arrangement with a broker
that is acceptable to the Board where payment of the Option price is made
pursuant to an irrevocable direction to the broker to deliver all or part of the
proceeds from the sale of the Option Shares to the Company in payment of the
Option price, or (7) any combination of the foregoing. The Board in its sole
discretion may accept a personal check in full or partial payment of any Shares.
If the exercise price is paid in whole or in part with Shares, the value of the
Shares surrendered shall be their Fair Market Value (as defined below) on the
date the Option is exercised. For purposes of this Option, "Fair Market Value"
shall mean the "Closing Price" (as defined below) of the Common Stock on the
business day immediately preceding the date of transfer, unless the Board in its
sole discretion shall determine otherwise in a fair and uniform manner. For the
purpose of determining Fair Market Value, the "Closing Price" of the Common
Stock on any business day shall be, if the Common Stock is quoted on the
National Association of Securities Dealers Automated Quotations System, or any
similar system of automated dissemination of quotations of securities prices in
common use, the last reported sale price of Common Stock for such day on such
system, or if such source is not applicable, the mean between the high bid and
low asked quotations for the Common Stock as reported by the National Quotation
Bureau, Incorporated if at least two securities dealers have inserted both bid
and asked quotations for Common Stock on at least five of the ten preceding
days. If neither such source is applicable, then Fair Market Value shall be
determined in good faith by the Board in a fair and uniform manner. The Company
in its sole discretion may, on an individual basis or pursuant to a general
program established in connection with this Option, and subject to applicable
law, lend money to the Optionee, guarantee a loan to the Optionee, or otherwise
assist the Optionee to obtain the cash necessary to exercise all or a portion of
the Option granted hereunder or to pay any tax liability of the Optionee
attributable to such exercise. If the exercise price is paid in whole or part
with Optionee's promissory note, such note shall (i) provide for full recourse
to the maker, (ii) be collateralized by the pledge of the Shares that the
Optionee purchases upon exercise of such Option, (iii) bear interest at a rate
no less than the prime rate of the Company's principal lender, and (iv) contain
such other terms as the Board in its sole discretion shall reasonably require.
The Optionee shall not be deemed to be a holder of any Shares subject to an
Option unless and until a stock certificate or certificates for such Shares are
issued to such person(s) under the terms of this Option. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as expressly provided
in Section 6 hereof.
5. TERMINATION OF OPTION. This Option shall terminate, and in
no event be exercisable, after March 2, 2007. In addition, any unexercised
portion of this Option shall automatically and without notice terminate and
become null and void at the time of the earliest to occur of the following:
(a) 90 days after the date on which the Optionee's
service as a director of the Company is terminated for any
reason other than as set forth in subsections
2
<PAGE>
(b), (c) and (d) immediately below;
(b) immediately upon the termination of the
Optionee's service as a director for "Cause", which shall mean
for purposes of this Option the termination of the Optionee's
service as a director for reason of the Optionee's willful
misconduct or gross negligence.
(c) twelve months after the date on which the
Optionee's service as a director is terminated by reason of
mental or physical disability (within the meaning of Internal
Revenue Code Section 22(e)) as determined by a medical doctor
satisfactory to the Board; or
(d) (i) twelve months after the date of the
Optionee's death or (ii) three months after the date of the
Optionee's death if such death shall occur during the twelve
month period specified in Subsection (c) hereof.
Notwithstanding the foregoing, the Board or the Board in its sole
discretion may by giving written notice (the "Cancellation Notice") cancel,
effective upon the date of the consummation of any corporate transaction
described in Subsections 3(a), (b) or (c) hereof, any Option that remains
unexercised on such date. Such Cancellation Notice shall be given a reasonable
period of time prior to the proposed date of such cancellation and may be given
either before or after approval of such corporate transaction.
6. ADJUSTMENT OF SHARES
(a) If at any time while an unexercised portion of the Option
is outstanding, there shall be any increase or decrease in the number of issued
and outstanding shares of Common Stock through the declaration of a stock
dividend or through any recapitalization resulting in a stock split-up,
combination or exchange of shares of Common Stock, then and in such event
appropriate adjustment shall be made in the number of Shares and the exercise
price per Share thereof then subject to the Option, so that the same percentage
of the Company's issued and outstanding shares of Common Stock shall remain
subject to purchase at the same aggregate exercise price.
(b) The Board may change the terms of the Option when, in the
Board's sole discretion, such adjustments become appropriate by reason of a
corporate transaction described in Subsections 3(a), (b), or (c) hereof.
(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to the number of or
exercise price of Shares then subject to the Option.
(d) Without limiting the generality of the foregoing, the
existence of the
3
<PAGE>
Option shall not affect in any manner the right or power of the Company to make,
authorize or consummate (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business; (ii) any merger or consolidation of the Company; (iii) any issue by
the Company of debt securities or preferred or preference stock that would rank
above the Shares subject to outstanding Options; (iv) the dissolution or
liquidation of the Company; (v) any sale, transfer or assignment of all or any
part of the assets or business of the Company; or (vi) any other corporate act
or proceeding, whether of a similar character or otherwise or would otherwise
prohibit the registration of the Common Stock with the United States Securities
and Exchange Commission.
7. ISSUANCE OF SHARES.
(a) Notwithstanding any other provision of this Option, the
Company shall not be obligated to issue any Shares unless it is advised by
counsel of its selection that it may do so without violation of the applicable
Federal and state laws pertaining to the issuance of securities, and may require
any stock so issued to bear a legend, may give its transfer agent instructions,
and may take such other steps, as in its judgment are reasonably required to
prevent any such violation.
(b) As a condition of any sale or issuance of Shares upon
exercise of the Option, the Board may require such agreements or undertakings,
if any, as the Board may deem necessary or advisable to assure compliance with
any such law or regulation including, but not limited to, the following:
(i) a representation and warranty by the Optionee to
the Company, at the time any portion of the Option is
exercised, that he is acquiring the Shares to be issued to him
for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to
be bound by any legends that are, in the opinion of the Board,
necessary or appropriate to comply with the provisions of any
securities law deemed by the Board to be applicable to the
issuance of the Shares and are endorsed upon the Share
certificates.
8. WITHHOLDING OR DEDUCTION FOR TAXES. If at any time
specified herein for the making of any issuance or delivery of Shares to the
Optionee, any law or regulation of any governmental authority having
jurisdiction in the premises shall require the Company to withhold, or to make
any deduction for, any taxes or take any other action in connection with the
issuance or delivery then to be made, such issuance or delivery shall be
deferred until such withholding or deduction shall have been provided for by the
Optionee or beneficiary, or other appropriate action shall have been taken.
9. TRANSFERABILITY OF OPTIONS AND SHARES.
(a) Unless the Board's prior written consent is obtained and
the transaction does not violate the requirements of Rule 16b-3 promulgated
under the Exchange Act 1934, as
4
<PAGE>
amended (the "Exchange Act"), or would otherwise prohibit the registration of
the Common Stock on Form S-8, the Option shall not be subject to alienation,
assignment, pledge, charge or other transfer other than by the Optionee by will
or the laws of descent and distribution, and any attempt to make any such
prohibited transfer shall be void. The Option shall be exercisable during the
Optionee's lifetime only by the Optionee, or in the case where the Option has
been assigned or otherwise transferred with the Board's prior written consent,
only by the assignee consented to by the Board.
(b) Unless the Board's prior written consent is obtained and
the transaction does not violate the requirements of Rule 16b-3 promulgated
under the Exchange Act, no Shares acquired by the Optionee may be sold,
assigned, pledged or otherwise transferred prior to the expiration of the
six-month period following the date on which the Option was granted.
10. SECTION 83(B) ELECTION. If as a result of exercising all
or any part of this Option, an Optionee receives Shares that are subject to a
"substantial risk of forfeiture" and are not "transferable" as those terms are
defined for purposes of Section 83(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), then such Optionee may elect under Section 83(b) of the
Code to include in the Optionee's gross income, for the Optionee's taxable year
in which the Shares are transferred to the Optionee, the excess of the Fair
Market Value of such Shares at the time of transfer (determined without regard
to any restriction other than one that by its terms will never lapse), over the
amount paid for the Shares. If the Optionee makes the Section 83(b) election
described above, the Optionee shall (i) make such election in a manner that the
Board determines in its reasonable judgment to be satisfactory, (ii) provide the
Company with a copy of such election, (iii) agree to promptly notify the Company
if any Internal Revenue Service or state tax agent, on audit or otherwise,
questions the validity or correctness of such election or of the amount of
income reportable on account of such election, and (iv) agree to such tax
withholding as the Board may reasonably require in its sole and absolute
discretion.
11. LAW GOVERNING. This Agreement shall be governed in
accordance with the internal laws of the State of Delaware.
12. INTERPRETATION. The Optionee accepts this Option subject
to all the terms and provisions of this Agreement. The undersigned Optionee
hereby accepts as binding, conclusive and final all decisions or interpretations
of the Board upon any questions arising this Agreement.
13. NOTICES. Any notice under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered personally or
when deposited in the United States mail, registered, postage prepaid, and
addressed, in the case of the Company, to the Company's Secretary at Highway 85
South, P.O. Box 643, Deadwood, South Dakota 57732 or if the Company should move
its principal office, to such principal office, and, in the case of the
Optionee, to the Optionee's last permanent address as shown on the Company's
records, subject to the right of either party to designate some other address at
any time hereafter in a notice satisfying the requirements of this Section.
5
<PAGE>
Please acknowledge receipt of this Agreement by signing the
enclosed copy of this Agreement in the space provided below and returning it
promptly to the Secretary of the Company.
FULL HOUSE RESORTS, INC.
By:__________________________________
Robert L. Kelley, President
Accepted and Agreed:
OPTIONEE
_________________________________
Allen E. Paulson
6
<PAGE>
FULL HOUSE RESORTS, INC.
--------------------------------------
STOCK OPTION AGREEMENT
1. GRANT OF OPTION. Effective the third day of March, 1997,
Full House Resorts, Inc., a Delaware corporation (the "Company"), hereby grants
to William P. McComas (the "Optionee") a non-qualified stock option (the
"Option") to acquire 250,000 shares (the "Shares") of Common Stock, $0.01 par
value per share (the "Common Stock").
2. EXERCISE PRICE. The exercise price per share of the Shares
subject to this Option is $3.375.
3. EXERCISABILITY OF OPTION. The Option is immediately
exercisable with respect to 50,000 Shares. Commencing on April 9, 1997 and on
each of the three succeeding anniversaries of that date and so long as the
Optionee has continuously been in the service of the Company as a director from
the date of grant, the Optionee shall become entitled to exercise the Option
with respect to an additional 50,000 Shares. Notwithstanding the foregoing, any
remaining portion of the Option shall become immediately fully exercisable:
(a) if there occurs any transaction (which shall
include a series of transactions occurring within 60 days or
occurring pursuant to a plan), that has the result that
stockholders of the Company immediately before such
transaction cease to own at least 51% of the voting stock of
the Company or of any entity that results from the
participation of the Company in a reorganization,
consolidation, merger, liquidation or any other form of
corporate transaction;
(b) if the stockholders of the Company shall approve
a plan of merger, consolidation, reorganization, liquidation
or dissolution in which the Company does not survive (unless
the approved merger, consolidation, reorganization,
liquidation or dissolution is subsequently abandoned); or
(c) if the stockholders of the Company shall approve
a plan for the sale, lease, exchange or other disposition of
all or substantially all the property and assets of the
Company (unless such plan is subsequently abandoned).
4. EXERCISE OF OPTIONS. The Option shall be deemed exercised
when (i) the Company has received written notice of such exercise in accordance
with the terms of the Option, (ii) full payment of the aggregate option price of
the Shares as to which the Option is exercised has been made, and (iii)
arrangements that are satisfactory to the Company's Board of Directors (the
"Board") in its sole discretion have been made for the Optionee's payment to the
Company of the amount that is necessary for the Company to withhold in
accordance with applicable Federal or state tax withholding requirements. Unless
further limited by the Board, the option price of any Shares purchased shall be
paid (1) in cash, (2) by certified or official bank
<PAGE>
check, (3) by money order, (4) with Shares owned by the Optionee that have been
owned by the Optionee for more than 6 months on the date of surrender or such
other period as may be required to avoid a charge to the Company's earnings for
financial accounting purposes, (5) by authorization for the Company to withhold
Shares issuable upon exercise of the Option, (6) by arrangement with a broker
that is acceptable to the Board where payment of the Option price is made
pursuant to an irrevocable direction to the broker to deliver all or part of the
proceeds from the sale of the Option Shares to the Company in payment of the
Option price, or (7) any combination of the foregoing. The Board in its sole
discretion may accept a personal check in full or partial payment of any Shares.
If the exercise price is paid in whole or in part with Shares, the value of the
Shares surrendered shall be their Fair Market Value (as defined below) on the
date the Option is exercised. For purposes of this Option, "Fair Market Value"
shall mean the "Closing Price" (as defined below) of the Common Stock on the
business day immediately preceding the date of transfer, unless the Board in its
sole discretion shall determine otherwise in a fair and uniform manner. For the
purpose of determining Fair Market Value, the "Closing Price" of the Common
Stock on any business day shall be, if the Common Stock is quoted on the
National Association of Securities Dealers Automated Quotations System, or any
similar system of automated dissemination of quotations of securities prices in
common use, the last reported sale price of Common Stock for such day on such
system, or if such source is not applicable, the mean between the high bid and
low asked quotations for the Common Stock as reported by the National Quotation
Bureau, Incorporated if at least two securities dealers have inserted both bid
and asked quotations for Common Stock on at least five of the ten preceding
days. If neither such source is applicable, then Fair Market Value shall be
determined in good faith by the Board in a fair and uniform manner. The Company
in its sole discretion may, on an individual basis or pursuant to a general
program established in connection with this Option, and subject to applicable
law, lend money to the Optionee, guarantee a loan to the Optionee, or otherwise
assist the Optionee to obtain the cash necessary to exercise all or a portion of
the Option granted hereunder or to pay any tax liability of the Optionee
attributable to such exercise. If the exercise price is paid in whole or part
with Optionee's promissory note, such note shall (i) provide for full recourse
to the maker, (ii) be collateralized by the pledge of the Shares that the
Optionee purchases upon exercise of such Option, (iii) bear interest at a rate
no less than the prime rate of the Company's principal lender, and (iv) contain
such other terms as the Board in its sole discretion shall reasonably require.
The Optionee shall not be deemed to be a holder of any Shares subject to an
Option unless and until a stock certificate or certificates for such Shares are
issued to such person(s) under the terms of this Option. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as expressly provided
in Section 6 hereof.
5. TERMINATION OF OPTION. This Option shall terminate, and in
no event be exercisable, after March 2, 2007. In addition, any unexercised
portion of this Option shall automatically and without notice terminate and
become null and void at the time of the earliest to occur of the following:
(a) 90 days after the date on which the Optionee's
service as a director of the Company is terminated for any
reason other than as set forth in subsections
2
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(b), (c) and (d) immediately below;
(b) immediately upon the termination of the
Optionee's service as a director for "Cause", which shall mean
for purposes of this Option the termination of the Optionee's
service as a director for reason of the Optionee's willful
misconduct or gross negligence.
(c) twelve months after the date on which the
Optionee's service as a director is terminated by reason of
mental or physical disability (within the meaning of Internal
Revenue Code Section 22(e)) as determined by a medical doctor
satisfactory to the Board; or
(d) (i) twelve months after the date of the
Optionee's death or (ii) three months after the date of the
Optionee's death if such death shall occur during the twelve
month period specified in Subsection (c) hereof.
Notwithstanding the foregoing, the Board or the Board in its sole
discretion may by giving written notice (the "Cancellation Notice") cancel,
effective upon the date of the consummation of any corporate transaction
described in Subsections 3(a), (b) or (c) hereof, any Option that remains
unexercised on such date. Such Cancellation Notice shall be given a reasonable
period of time prior to the proposed date of such cancellation and may be given
either before or after approval of such corporate transaction.
6. ADJUSTMENT OF SHARES
(a) If at any time while an unexercised portion of the Option
is outstanding, there shall be any increase or decrease in the number of issued
and outstanding shares of Common Stock through the declaration of a stock
dividend or through any recapitalization resulting in a stock split-up,
combination or exchange of shares of Common Stock, then and in such event
appropriate adjustment shall be made in the number of Shares and the exercise
price per Share thereof then subject to the Option, so that the same percentage
of the Company's issued and outstanding shares of Common Stock shall remain
subject to purchase at the same aggregate exercise price.
(b) The Board may change the terms of the Option when, in the
Board's sole discretion, such adjustments become appropriate by reason of a
corporate transaction described in Subsections 3(a), (b), or (c) hereof.
(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to the number of or
exercise price of Shares then subject to the Option.
(d) Without limiting the generality of the foregoing, the
existence of the
3
<PAGE>
Option shall not affect in any manner the right or power of the Company to make,
authorize or consummate (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business; (ii) any merger or consolidation of the Company; (iii) any issue by
the Company of debt securities or preferred or preference stock that would rank
above the Shares subject to outstanding Options; (iv) the dissolution or
liquidation of the Company; (v) any sale, transfer or assignment of all or any
part of the assets or business of the Company; or (vi) any other corporate act
or proceeding, whether of a similar character or otherwise or would otherwise
prohibit the registration of the Common Stock with the United States Securities
and Exchange Commission.
7. ISSUANCE OF SHARES.
(a) Notwithstanding any other provision of this Option, the
Company shall not be obligated to issue any Shares unless it is advised by
counsel of its selection that it may do so without violation of the applicable
Federal and state laws pertaining to the issuance of securities, and may require
any stock so issued to bear a legend, may give its transfer agent instructions,
and may take such other steps, as in its judgment are reasonably required to
prevent any such violation.
(b) As a condition of any sale or issuance of Shares upon
exercise of the Option, the Board may require such agreements or undertakings,
if any, as the Board may deem necessary or advisable to assure compliance with
any such law or regulation including, but not limited to, the following:
(i) a representation and warranty by the Optionee to
the Company, at the time any portion of the Option is
exercised, that he is acquiring the Shares to be issued to him
for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to
be bound by any legends that are, in the opinion of the Board, necessary or
appropriate to comply with the provisions of any securities law deemed by the
Board to be applicable to the issuance of the Shares and are endorsed upon the
Share certificates.
8. WITHHOLDING OR DEDUCTION FOR TAXES. If at any time
specified herein for the making of any issuance or delivery of Shares to the
Optionee, any law or regulation of any governmental authority having
jurisdiction in the premises shall require the Company to withhold, or to make
any deduction for, any taxes or take any other action in connection with the
issuance or delivery then to be made, such issuance or delivery shall be
deferred until such withholding or deduction shall have been provided for by the
Optionee or beneficiary, or other appropriate action shall have been taken.
9. TRANSFERABILITY OF OPTIONS AND SHARES.
(a) Unless the Board's prior written consent is obtained and
the transaction does not violate the requirements of Rule 16b-3 promulgated
under the Exchange Act 1934, as
4
<PAGE>
amended (the "Exchange Act"), or would otherwise prohibit the registration of
the Common Stock on Form S-8, the Option shall not be subject to alienation,
assignment, pledge, charge or other transfer other than by the Optionee by will
or the laws of descent and distribution, and any attempt to make any such
prohibited transfer shall be void. The Option shall be exercisable during the
Optionee's lifetime only by the Optionee, or in the case where the Option has
been assigned or otherwise transferred with the Board's prior written consent,
only by the assignee consented to by the Board.
(b) Unless the Board's prior written consent is obtained and
the transaction does not violate the requirements of Rule 16b-3 promulgated
under the Exchange Act, no Shares acquired by the Optionee may be sold,
assigned, pledged or otherwise transferred prior to the expiration of the
six-month period following the date on which the Option was granted.
10. SECTION 83(B) ELECTION. If as a result of exercising all
or any part of this Option, an Optionee receives Shares that are subject to a
"substantial risk of forfeiture" and are not "transferable" as those terms are
defined for purposes of Section 83(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), then such Optionee may elect under Section 83(b) of the
Code to include in the Optionee's gross income, for the Optionee's taxable year
in which the Shares are transferred to the Optionee, the excess of the Fair
Market Value of such Shares at the time of transfer (determined without regard
to any restriction other than one that by its terms will never lapse), over the
amount paid for the Shares. If the Optionee makes the Section 83(b) election
described above, the Optionee shall (i) make such election in a manner that the
Board determines in its reasonable judgment to be satisfactory, (ii) provide the
Company with a copy of such election, (iii) agree to promptly notify the Company
if any Internal Revenue Service or state tax agent, on audit or otherwise,
questions the validity or correctness of such election or of the amount of
income reportable on account of such election, and (iv) agree to such tax
withholding as the Board may reasonably require in its sole and absolute
discretion.
11. LAW GOVERNING. This Agreement shall be governed in
accordance with the internal laws of the State of Delaware.
12. INTERPRETATION. The Optionee accepts this Option subject
to all the terms and provisions of this Agreement. The undersigned Optionee
hereby accepts as binding, conclusive and final all decisions or interpretations
of the Board upon any questions arising this Agreement.
13. NOTICES. Any notice under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered personally or
when deposited in the United States mail, registered, postage prepaid, and
addressed, in the case of the Company, to the Company's Secretary at Highway 85
South, P.O. Box 643, Deadwood, South Dakota 57732 or if the Company should move
its principal office, to such principal office, and, in the case of the
Optionee, to the Optionee's last permanent address as shown on the Company's
records, subject to the right of either party to designate some other address at
any time hereafter in a notice satisfying the requirements of this Section.
5
<PAGE>
Please acknowledge receipt of this Agreement by signing the
enclosed copy of this Agreement in the space provided below and returning it
promptly to the Secretary of the Company.
FULL HOUSE RESORTS, INC.
By:__________________________________
Robert L. Kelley, President
Accepted and Agreed:
OPTIONEE
_____________________________________
William P. McComas
6
<PAGE>
FULL HOUSE RESORTS, INC.
--------------------------------------
STOCK OPTION AGREEMENT
1. GRANT OF OPTION. Effective the third day of March, 1997,
Full House Resorts, Inc., a Delaware corporation (the "Company"), hereby grants
to Ronald K. Richey (the "Optionee") a non-qualified stock option (the "Option")
to acquire 250,000 shares (the "Shares") of Common Stock, $0.01 par value per
share (the "Common Stock").
2. EXERCISE PRICE. The exercise price per share of the Shares
subject to this Option is $3.375.
3. EXERCISABILITY OF OPTION. Commencing on April 9, 1997 and
on each of the four succeeding anniversaries of that date and so long as the
Optionee has continuously been in the service of the Company as a director from
the date of grant, the Optionee shall become entitled to exercise the Option
with respect to an additional 50,000 Shares. Notwithstanding the foregoing, any
remaining portion of the Option shall become immediately fully exercisable:
(a) if there occurs any transaction (which shall
include a series of transactions occurring within 60 days or
occurring pursuant to a plan), that has the result that
stockholders of the Company immediately before such
transaction cease to own at least 51% of the voting stock of
the Company or of any entity that results from the
participation of the Company in a reorganization,
consolidation, merger, liquidation or any other form of
corporate transaction;
(b) if the stockholders of the Company shall approve
a plan of merger, consolidation, reorganization, liquidation
or dissolution in which the Company does not survive (unless
the approved merger, consolidation, reorganization,
liquidation or dissolution is subsequently abandoned); or
(c) if the stockholders of the Company shall approve
a plan for the sale, lease, exchange or other disposition of
all or substantially all the property and assets of the
Company (unless such plan is subsequently abandoned).
4. EXERCISE OF OPTIONS. The Option shall be deemed exercised
when (i) the Company has received written notice of such exercise in accordance
with the terms of the Option, (ii) full payment of the aggregate option price of
the Shares as to which the Option is exercised has been made, and (iii)
arrangements that are satisfactory to the Company's Board of Directors (the
"Board") in its sole discretion have been made for the Optionee's payment to the
Company of the amount that is necessary for the Company to withhold in
accordance with applicable Federal or state tax withholding requirements. Unless
further limited by the Board, the option price of any Shares purchased shall be
paid (1) in cash, (2) by certified or official bank check, (3) by money order,
(4) with Shares owned by the Optionee that have been owned by the
<PAGE>
Optionee for more than 6 months on the date of surrender or such other period as
may be required to avoid a charge to the Company's earnings for financial
accounting purposes, (5) by authorization for the Company to withhold Shares
issuable upon exercise of the Option, (6) by arrangement with a broker that is
acceptable to the Board where payment of the Option price is made pursuant to an
irrevocable direction to the broker to deliver all or part of the proceeds from
the sale of the Option Shares to the Company in payment of the Option price, or
(7) any combination of the foregoing. The Board in its sole discretion may
accept a personal check in full or partial payment of any Shares. If the
exercise price is paid in whole or in part with Shares, the value of the Shares
surrendered shall be their Fair Market Value (as defined below) on the date the
Option is exercised. For purposes of this Option, "Fair Market Value" shall mean
the "Closing Price" (as defined below) of the Common Stock on the business day
immediately preceding the date of transfer, unless the Board in its sole
discretion shall determine otherwise in a fair and uniform manner. For the
purpose of determining Fair Market Value, the "Closing Price" of the Common
Stock on any business day shall be, if the Common Stock is quoted on the
National Association of Securities Dealers Automated Quotations System, or any
similar system of automated dissemination of quotations of securities prices in
common use, the last reported sale price of Common Stock for such day on such
system, or if such source is not applicable, the mean between the high bid and
low asked quotations for the Common Stock as reported by the National Quotation
Bureau, Incorporated if at least two securities dealers have inserted both bid
and asked quotations for Common Stock on at least five of the ten preceding
days. If neither such source is applicable, then Fair Market Value shall be
determined in good faith by the Board in a fair and uniform manner. The Company
in its sole discretion may, on an individual basis or pursuant to a general
program established in connection with this Option, and subject to applicable
law, lend money to the Optionee, guarantee a loan to the Optionee, or otherwise
assist the Optionee to obtain the cash necessary to exercise all or a portion of
the Option granted hereunder or to pay any tax liability of the Optionee
attributable to such exercise. If the exercise price is paid in whole or part
with Optionee's promissory note, such note shall (i) provide for full recourse
to the maker, (ii) be collateralized by the pledge of the Shares that the
Optionee purchases upon exercise of such Option, (iii) bear interest at a rate
no less than the prime rate of the Company's principal lender, and (iv) contain
such other terms as the Board in its sole discretion shall reasonably require.
The Optionee shall not be deemed to be a holder of any Shares subject to an
Option unless and until a stock certificate or certificates for such Shares are
issued to such person(s) under the terms of this Option. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as expressly provided
in Section 6 hereof.
5. TERMINATION OF OPTION. This Option shall terminate, and in
no event be exercisable, after April 8, 2007. In addition, any unexercised
portion of this Option shall automatically and without notice terminate and
become null and void at the time of the earliest to occur of the following:
(a) 90 days after the date on which the Optionee's
service as a director of the Company is terminated for any
reason other than as set forth in subsections (b), (c) and (d)
immediately below;
2
<PAGE>
(b) immediately upon the termination of the
Optionee's service as a director for "Cause", which shall mean
for purposes of this Option the termination of the Optionee's
service as a director for reason of the Optionee's willful
misconduct or gross negligence.
(c) twelve months after the date on which the
Optionee's service as a director is terminated by reason of
mental or physical disability (within the meaning of Internal
Revenue Code Section 22(e)) as determined by a medical doctor
satisfactory to the Board; or
(d) (i) twelve months after the date of the
Optionee's death or (ii) three months after the date of the
Optionee's death if such death shall occur during the twelve
month period specified in Subsection (c) hereof.
Notwithstanding the foregoing, the Board or the Board in its sole
discretion may by giving written notice (the "Cancellation Notice") cancel,
effective upon the date of the consummation of any corporate transaction
described in Subsections 3(a), (b) or (c) hereof, any Option that remains
unexercised on such date. Such Cancellation Notice shall be given a reasonable
period of time prior to the proposed date of such cancellation and may be given
either before or after approval of such corporate transaction.
6. ADJUSTMENT OF SHARES
(a) If at any time while an unexercised portion of the Option
is outstanding, there shall be any increase or decrease in the number of issued
and outstanding shares of Common Stock through the declaration of a stock
dividend or through any recapitalization resulting in a stock split-up,
combination or exchange of shares of Common Stock, then and in such event
appropriate adjustment shall be made in the number of Shares and the exercise
price per Share thereof then subject to the Option, so that the same percentage
of the Company's issued and outstanding shares of Common Stock shall remain
subject to purchase at the same aggregate exercise price.
(b) The Board may change the terms of the Option when, in the
Board's sole discretion, such adjustments become appropriate by reason of a
corporate transaction described in Subsections 3(a), (b), or (c) hereof.
(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to the number of or
exercise price of Shares then subject to the Option.
(d) Without limiting the generality of the foregoing, the
existence of the Option shall not affect in any manner the right or power of the
Company to make, authorize or
3
<PAGE>
consummate (i) any or all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business; (ii) any
merger or consolidation of the Company; (iii) any issue by the Company of debt
securities or preferred or preference stock that would rank above the Shares
subject to outstanding Options; (iv) the dissolution or liquidation of the
Company; (v) any sale, transfer or assignment of all or any part of the assets
or business of the Company; or (vi) any other corporate act or proceeding,
whether of a similar character or otherwise or would otherwise prohibit the
registration of the Common Stock with the United States Securities and Exchange
Commission.
7. ISSUANCE OF SHARES.
(a) Notwithstanding any other provision of this Option, the
Company shall not be obligated to issue any Shares unless it is advised by
counsel of its selection that it may do so without violation of the applicable
Federal and state laws pertaining to the issuance of securities, and may require
any stock so issued to bear a legend, may give its transfer agent instructions,
and may take such other steps, as in its judgment are reasonably required to
prevent any such violation.
(b) As a condition of any sale or issuance of Shares upon
exercise of the Option, the Board may require such agreements or undertakings,
if any, as the Board may deem necessary or advisable to assure compliance with
any such law or regulation including, but not limited to, the following:
(i) a representation and warranty by the Optionee to
the Company, at the time any portion of the Option is
exercised, that he is acquiring the Shares to be issued to him
for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to
be bound by any legends that are, in the opinion of the Board, necessary or
appropriate to comply with the provisions of any securities law deemed by the
Board to be applicable to the issuance of the Shares and are endorsed upon the
Share certificates.
8. WITHHOLDING OR DEDUCTION FOR TAXES. If at any time
specified herein for the making of any issuance or delivery of Shares to the
Optionee, any law or regulation of any governmental authority having
jurisdiction in the premises shall require the Company to withhold, or to make
any deduction for, any taxes or take any other action in connection with the
issuance or delivery then to be made, such issuance or delivery shall be
deferred until such withholding or deduction shall have been provided for by the
Optionee or beneficiary, or other appropriate action shall have been taken.
9. TRANSFERABILITY OF OPTIONS AND SHARES.
(a) Unless the Board's prior written consent is obtained and
the transaction does not violate the requirements of Rule 16b-3 promulgated
under the Exchange Act 1934, as amended (the "Exchange Act"), or would otherwise
prohibit the registration of the Common
4
<PAGE>
Stock on Form S-8, the Option shall not be subject to alienation, assignment,
pledge, charge or other transfer other than by the Optionee by will or the laws
of descent and distribution, and any attempt to make any such prohibited
transfer shall be void. The Option shall be exercisable during the Optionee's
lifetime only by the Optionee, or in the case where the Option has been assigned
or otherwise transferred with the Board's prior written consent, only by the
assignee consented to by the Board.
(b) Unless the Board's prior written consent is obtained and
the transaction does not violate the requirements of Rule 16b-3 promulgated
under the Exchange Act, no Shares acquired by the Optionee may be sold,
assigned, pledged or otherwise transferred prior to the expiration of the
six-month period following the date on which the Option was granted.
10. SECTION 83(B) ELECTION. If as a result of exercising all
or any part of this Option, an Optionee receives Shares that are subject to a
"substantial risk of forfeiture" and are not "transferable" as those terms are
defined for purposes of Section 83(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), then such Optionee may elect under Section 83(b) of the
Code to include in the Optionee's gross income, for the Optionee's taxable year
in which the Shares are transferred to the Optionee, the excess of the Fair
Market Value of such Shares at the time of transfer (determined without regard
to any restriction other than one that by its terms will never lapse), over the
amount paid for the Shares. If the Optionee makes the Section 83(b) election
described above, the Optionee shall (i) make such election in a manner that the
Board determines in its reasonable judgment to be satisfactory, (ii) provide the
Company with a copy of such election, (iii) agree to promptly notify the Company
if any Internal Revenue Service or state tax agent, on audit or otherwise,
questions the validity or correctness of such election or of the amount of
income reportable on account of such election, and (iv) agree to such tax
withholding as the Board may reasonably require in its sole and absolute
discretion.
11. LAW GOVERNING. This Agreement shall be governed in
accordance with the internal laws of the State of Delaware.
12. INTERPRETATION. The Optionee accepts this Option subject
to all the terms and provisions of this Agreement. The undersigned Optionee
hereby accepts as binding, conclusive and final all decisions or interpretations
of the Board upon any questions arising this Agreement.
13. NOTICES. Any notice under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered personally or
when deposited in the United States mail, registered, postage prepaid, and
addressed, in the case of the Company, to the Company's Secretary at Highway 85
South, P.O. Box 643, Deadwood, South Dakota 57732 or if the Company should move
its principal office, to such principal office, and, in the case of the
Optionee, to the Optionee's last permanent address as shown on the Company's
records, subject to the right of either party to designate some other address at
any time hereafter in a notice satisfying the requirements of this Section.
5
<PAGE>
Please acknowledge receipt of this Agreement by signing the
enclosed copy of this Agreement in the space provided below and returning it
promptly to the Secretary of the Company.
FULL HOUSE RESORTS, INC.
By:____________________________________
Robert L. Kelley, President
Accepted and Agreed:
OPTIONEE
____________________________________
Ronald K. Richey
6
June 9,1997
Full House Resorts, Inc.
12555 High Bluff Drive, Suite 380
San Diego, California 92130
Re: Registration Statement on Form S-8 for Option Agreement
Between Full House Resorts, Inc. and Allen E. Paulson; Option
Agreement Between Full House Resorts, Inc. and William P.
McComas; and Option Agreement Between Full House Resorts, Inc.
and Ronald K. Richey.
Ladies and Gentlemen:
On the date hereof, Full House Resorts, Inc., a Delaware corporation
(the "Company"), sent for filing with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form S-8 (the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Act"). The
Registration Statement relates to the offering and sale by the Company of up to
750,000 shares of the Company's Common Stock, par value $.0001 per share (the
"Common Stock"), pursuant to stock options ("Options") granted or to be granted
under the option agreement between the Company and Allen E. Paulson, the option
agreement between the Company and William P. McComas, and the option agreement
between the Company and Ronald K. Richey. We have acted as counsel to the
Company in connection with the preparation and filing of the Registration
Statement.
In connection therewith, we have examined and relied upon the original
or a copy, certified to our satisfaction, of (i) the Articles of Incorporation
and Bylaws of the Company; (ii) records of
<PAGE>
Full House Resorts
June 9, 1997
Page 2
corporate proceedings of the Company authorizing the option agreement between
the Company and Allen E. Paulson, the option agreement between the Company and
William P. McComas, and the option agreement between the Company and Ronald K.
Richey; (iii) the Registration Statement and exhibits thereto; and (iv) such
other documents and instruments as we have deemed necessary for the expression
of the opinions herein contained. In making the foregoing examinations, we have
assumed the genuineness of all signatures and the authenticity of all documents
submitted to us as originals, and the conformity to original documents of all
documents submitted to us as certified or photostatic copies. As to various
questions of fact material to this opinion, we have relied, to the extent we
deemed reasonably appropriate, upon representations of officers or directors of
the Company and upon documents, records and instruments furnished to us by the
Company, without independently checking or verifying the accuracy of such
documents, records and instruments.
Based upon the foregoing examination, we are of the opinion that the
Company presently has available at least 750,000 shares of authorized and
unissued Common Stock from which the 750,000 shares of Common Stock proposed to
be sold pursuant to the exercise of Options granted under the option agreement
between the Company and Allen E. Paulson, the option agreement between the
Company and William P. McComas, and the option agreement between the Company and
Ronald K. Richey may be issued. In addition, assuming that the Company maintains
an adequate number of authorized but unissued shares of Common Stock available
for issuance to those persons who exercise their Options, and that the
consideration for the underlying shares of Common Stock issued pursuant to the
Options is actually received by the Company as provided in the option agreement
between the Company and Allen E. Paulson, the option agreement between the
Company and William P. McComas, and the option agreement between the Company and
Ronald K. Richey, we are of the opinion that the shares of Common Stock issued
pursuant to the exercise of Options granted under and in accordance with the
terms of the option agreement between the Company and Allen E. Paulson, the
option agreement between the Company and William P. McComas; and the option
agreement between the Company and Ronald K. Richey will be duly and validly
issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we come
within the category of persons whose consent is required by Section 7 of the Act
or the rules and regulations of the Commission thereunder.
Sincerely,
GREENBERG, TRAURIG, HOFFMAN,
LIPOFF, ROSEN & QUENTEL, P.A.
By: /S/BERKOWITZ
---------------------------------
Paul Berkowitz
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement of
Full House Resorts, Inc. on Form S-8 of our report dated March 7, 1997,
appearing in the Annual Report on Form 10-KSB of Full House Resorts, Inc.
for the year ended December 31, 1996.
DELOITTE & TOUCHE LLP
Reno, Nevada
June 9, 1997
