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 Xxxxx X. Xxxxxxx (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
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
(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
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 Xxxxxxxx Xxx 0000, as
4
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, X.X. Xxx 000, Xxxxxxxx, Xxxxx Xxxxxx 00000 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
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:__________________________________
Xxxxxx X. Xxxxxx, President
Accepted and Agreed:
OPTIONEE
_________________________________
Xxxxx X. Xxxxxxx
6
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 Xxxxxxx X. XxXxxxx (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
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
(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
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 Xxxxxxxx Xxx 0000, as
4
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, X.X. Xxx 000, Xxxxxxxx, Xxxxx Xxxxxx 00000 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
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:__________________________________
Xxxxxx X. Xxxxxx, President
Accepted and Agreed:
OPTIONEE
_____________________________________
Xxxxxxx X. XxXxxxx
6
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 Xxxxxx X. Xxxxxx (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
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;
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(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
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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 Xxxxxxxx Xxx 0000, as amended (the "Exchange Act"), or would otherwise
prohibit the registration of the Common
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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, X.X. Xxx 000, Xxxxxxxx, Xxxxx Xxxxxx 00000 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.
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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:____________________________________
Xxxxxx X. Xxxxxx, President
Accepted and Agreed:
OPTIONEE
____________________________________
Xxxxxx X. Xxxxxx
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