SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
FULL HOUSE RESORTS, INC.
(Name of Registrant as Specified in Its Charter)
FULL HOUSE RESORTS, INC.
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
FULL HOUSE RESORTS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 8, 1999
To the Stockholders
of Full House Resorts, Inc.:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of
Full House Resorts, Inc., ("Full House"), will be held at 1:00 p.m., local time,
on June 8, 1999, at the Four Seasons Hotel, 3950 Las Vegas Blvd. S., Las Vegas,
Nevada, 89109, for the following purposes:
1. To elect five (5) directors to the Board of Directors of Full
House to hold office until the next Annual Meeting of
Stockholders of Full House following their election or until
their successors are duly elected and qualified;
2. To approve an amendment to the Company's 1992 Incentive Plan
to increase the number of shares of common stock for which
options may be granted under such plan;
3. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent accountants for 1999; and
4. To transact such other business as may properly come before
the Annual Meeting and any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on April 30,
1999 as the record date for determining those stockholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournments or postponements
thereof.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO BE PRESENT, ALL STOCKHOLDERS ARE URGED TO PROMPTLY EXECUTE
AND RETURN THE ENCLOSED PROXY CARD. STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY
NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN
PERSON. PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED POSTAGE PAID, PRE-ADDRESSED ENVELOPE.
By Order of the Board of Directors
Megan G. McIntosh
Las Vegas, Nevada Secretary
May 7, 1999
1999 ANNUAL MEETING OF STOCKHOLDERS
OF
FULL HOUSE RESORTS, INC.
-----------------------
PROXY STATEMENT
-----------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Full House Resorts, Inc. ("Full House" or "the
Company"), of Proxies from the holders of the Common Stock of Full House, par
value $.0001 per share (the "Common Stock"), for use at the 1999 Annual Meeting
of Stockholders of Full House to be held on June 8, 1999, or at any
adjournment(s) or postponement(s) thereof (the "Annual Meeting"), pursuant to
the enclosed Notice of Annual Meeting.
The approximate date that this Proxy Statement and the enclosed proxy
are first being sent to stockholders is May 7, 1999. Stockholders should review
the information provided herein in conjunction with the 1998 Annual Report on
Form 10-KSB of Full House, a copy of which report accompanies this Proxy
Statement.
The Company's principal executive offices are located at 2300 W. Sahara
Ave., Las Vegas, Nevada 89102, and its telephone number is (702) 221-7800.
INFORMATION CONCERNING PROXY
The enclosed Proxy is solicited on behalf of the Board of Directors of
Full House. The giving of a Proxy does not preclude the right to vote in person
should any stockholder giving the Proxy so desire. Stockholders have an
unconditional right to revoke their Proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Secretary
of the Company a written revocation or duly executed Proxy bearing a later date;
however, no such revocation will be effective until written notice of the
revocation is received by Full House at or prior to the Annual Meeting.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted in favor of the election of the five nominees for director named
below; in favor of the amendment to the Company's 1992 Incentive Plan; in favor
of the option grant to Lee Iacocca; in favor of the ratification of the
appointment of Deloitte & Touche LLP; and with discretion on any other matters
as may properly come before the Annual Meeting. In the event a stockholder
specifies a different choice by means of the enclosed proxy, his shares will be
voted in accordance with the specification so made.
2
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Stockholders and the enclosed Proxy is to be borne
by the Company. In addition to soliciting Proxies by mail, directors and
employees of the Company, without additional compensation, may solicit proxies
personally and / or by other appropriate means. It is anticipated that banks,
brokers and other custodians, nominees and fiduciaries will forward Proxy
soliciting material to their principals and that the Company will reimburse such
persons for their expenses in so doing
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on April 30, 1999
as the record date (the "Record Date") for determining stockholders entitled to
notice of and to vote at the Annual Meeting. As of the Record Date, there were
10,340,380 shares of Common Stock issued and outstanding, each of which is
entitled to be voted at the Annual Meeting. Each share of Common Stock is
entitled to one vote on each matter submitted to stockholders for approval at
the Annual Meeting. In addition, there were 700,000 shares of the Series 1992-1
Preferred Stock outstanding (the "Preferred Stock"), each of which is entitled
to vote together as a group with the Common Stock, on all matters coming before
the Annual Meeting.
The attendance, in person or by proxy, of the holders of 40% of the
aggregate of the outstanding shares of Common Stock and Preferred Stock entitled
to vote at the Annual Meeting is necessary to constitute a quorum. Directors are
elected by a plurality vote of the aggregate of the shares of Common Stock and
Preferred Stock represented in person or by proxy at the Annual Meeting. The
affirmative vote of the majority of the aggregate of the shares of Common Stock
and Preferred Stock represented in person or by proxy at the Annual Meeting will
be required for the approval of any other matters that may be submitted to a
vote of the stockholders, unless the matter is one for which a greater vote is
required by law or by the Certificate of Incorporation or Bylaws of the Company.
A properly executed proxy marked "WITHHOLD AUTHORITY" with respect to
the election of one or more directors will not be voted with respect to the
director or directors indicated, although it will be counted for purposes of
determining whether there is a quorum. For each other item to be acted upon at
the meeting, a properly executed proxy marked "ABSTAIN" will not be voted on
such matters, although it will be counted for purposes of determining whether
there is a quorum. Accordingly, an abstention will have the effect of a vote
AGAINST the matter in question, whereas shares not voted due to the failure of a
broker to exercise his discretionary authority are not tabulated for purposes of
determining whether a proposal has been approved.
3
SECURITY OWNERSHIP
The following table sets forth, as of April 26, 1999, information with
respect to the beneficial ownership of the Common Stock by (i) each person known
by Full House to beneficially own more than 5% of the outstanding shares of
Common Stock, (ii) each director of Full House, (iii) the executive officers of
Full House named in the Summary Compensation Table, and (iv) all directors and
executive officers of Full House as a group.
NAME AND ADDRESS SHARES OF COMMON PERCENTAGE OF
OF BENEFICIAL OWNER STOCK OWNED(1) COMMON STOCK
- ------------------- ----------------- OUTSTANDING(2)
--------------
William P. McComas (3) 1,140,037(4)(5) 10.8%
James C. Gilstrap (3) 10,500(5) *
Lee A. Iacocca (3) 1,306,471(4)(5)(7) 12.3%
LKL Family Limited Partnership 1,306,471(5) 12.3%
10900 Wilshire Boulevard., Suite 520
Los Angeles, California 90024
Ronald K. Richey (3) 262,200(5) 2.5%
Gregg R. Giuffria (3) 163,333(6) 1.6%
Michael P. Shaunnessy (3) 44,000(6) *
Allen E. Paulson 2,460,000(4)(8) 23.8%
6001 Clubhouse Drive
P. O. Box 9660
Rancho Santa Fe, California 92067
All Officers and Directors 2,936,541(9) 26.2%
as a Group (7 Persons)
* Less than 1%
(1) Shares are considered beneficially owned, for purposes of this table
only, if held by the person indicated as beneficial owner, or if such
person, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise, has or shares the power to
vote, to direct the voting of and/or dispose of or to direct the
disposition of, such security, or if the person has a right to acquire
beneficial ownership within 60 days, unless otherwise indicated in
these footnotes.
(2) Based on 10,340,380 shares of Common Stock outstanding. Any securities
outstanding which are subject to presently exercisable options or
warrants are deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by such person,
but are not deemed to be outstanding for the purpose of computing the
percentage of the class owned by any other person.
(3) The address for Messrs. , McComas, Gilstrap, Iacocca, Richey, Giuffria
and Shaunnessy is c/o Full House Resorts, 2300 W. Sahara, Suite 450,
Las Vegas, NV. 89102
(4) Pursuant to an Option Agreement dated December 29, 1995, Messrs.
McComas, Iacocca and Paulson have granted an option to GTECH
Corporation to purchase their shares of Common Stock should they
propose to transfer the same.
4
(5) Includes options to purchase 200,000, 10,000, 250,000 and 170,000
shares of Common Stock for Messrs. McComas, Gilstrap, Iacocca and
Richey, respectively.
(6) Includes options to purchase 163,333 and 44,000 shares of Common Stock
for Messrs. Giuffria and Shaunnessy, respectively.
(7) Includes 1,056,471 shares held by the LKL Family Limited Partnership of
which Lee A. Iacocca is the General Partner.
(8) Includes 2,000,636 shares held by the Allen E. Paulson Living Trust of
which Mr. Paulson is the trustee.
(9) Includes 847,333 shares of Common Stock which may be purchased upon
exercise of currently exercisable options
5
PROPOSAL 1
ELECTION OF DIRECTORS; NOMINEES
The Bylaws of Full House provide that the number of directors
constituting the Board of Directors shall be fixed from time to time by the
Board of Directors. The Board of Directors has fixed at five the number of
directors that will constitute the Board for the ensuing year.
Each Director elected at the Annual Meeting will serve for a term
expiring at the 2000 Annual Meeting of Stockholders of Full House or when his
successor has been duly elected and qualified. Each of the current members of
the Board of Directors, consisting of William P. McComas, James C. Gilstrap, Lee
A. Iacocca, Ronald K. Richey, and Gregg R. Giuffria has been nominated by the
Company to be re-elected as a Director at the Annual Meeting.
The Board of Directors has no reason to believe that any of the
nominees will refuse to act or be unable to accept election; however, in the
event that any of the nominees is unable to accept election or if any other
unforeseen contingencies should arise, each proxy that does not direct otherwise
will be voted for the remaining nominees, if any, and for such other person(s)
as may be designated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION
OF ALL THE DIRECTOR NOMINEES LISTED IN PROPOSAL 1 ABOVE.
DIRECTORS AND EXECUTIVE OFFICERS
The names, ages and positions of all directors and executive officers
of Full House as of April 26, 1999 are listed below, followed by a brief account
of their business experience during the past five years.
NAME AGE POSITIONS
---- --- ---------
William P. McComas 72 Chairman and Chief Executive Officer
James C. Gilstrap 63 Director
Lee A. Iacocca 74 Director
Ronald K. Richey 72 Director
Gregg R. Giuffria 47 Director, President and Chief Operating Officer
Michael P. Shaunnessy 45 Executive Vice President - Finance
Megan G. McIntosh 43 Secretary
6
WILLIAM P. MCCOMAS served as interim President of Full House Resorts
between October 7, 1997 and April 9, 1998 and became Chairman of the Board and
Chief Executive Officer on March 5, 1998. Mr. McComas has been a Director of the
Company since November, 1992. He has been President of McComas Properties, Inc.,
a California real estate development company since January 1984. Mr. McComas and
companies controlled by him have owned or developed several hotels and resorts,
including Marina Bay Resort, Fort Lauderdale, Florida; Ocean Colony Hotel and
Resort, Half Moon Bay, California; Residence Inn by Marriott, Somers Point, New
Jersey; and five Holiday Inns located in Des Moines, Iowa; San Angelo, Texas;
Suffern, New York; Niagara Falls, New York; and Fort Myers, Florida.
JAMES C. GILSTRAP has been a Director of the Company since March 10,
1998. He has been Co-chairman of the Board of Directors of CardioDynamics
International Corporation since June 1996 and served as Chairman of the Board
from February 1995 to June 1996. Mr. Gilstrap has for more than the past five
years managed a portfolio of personal investments. He is a retired Partner of
Jefferies & Company, where he served as Senior Executive Vice President, and a
Member of the Executive Committee. He is a past President of the Dallas
Securities Dealers and served as a member of the Board of Governors of the
National Association of Securities Dealers. Mr. Gilstrap founded the 1,700
member PGA West Members Association, of which he is President. Mr. Gilstrap is
also an accomplished horseman, competing in major polo tournaments throughout
the world and representing the United States on winning teams in open
competition against the best players in the world.
LEE A. IACOCCA has been a Director of the Company since April 8, 1998.
In March 1998, he assumed the role of Acting Chairman of Koo Koo Roo, Inc.,
which operates 52 restaurants, including Hamburger Hamlet restaurants and the
Arrosto Coffee Company. In 1997, he founded EV Global Motors, to design, market
and distribute the next generation of electric vehicles. Mr. Iacocca is former
Chief Executive Officer and Chairman of the Board of Directors of Chrysler
Corporation, retiring from those positions in 1992. He retired as a Chrysler
Director in September 1993 and continued to serve as a consultant to Chrysler
until 1994. He is Chairman of the Iacocca Foundation, a philanthropic
organization dedicated to educational projects and the advancement of diabetes
research, and is Chairman of the Committee for Corporate Support of Joslin
Diabetes Foundation. Mr. Iacocca is also Chairman Emeritus of the Statue of
Liberty - Ellis Island Foundation and serves on the Advisory Board of Reading Is
Fundamental, the nation's largest reading motivation program.
RONALD K. RICHEY has been a Director of the Company since April 9,
1996. He was Chairman of Torchmark Corporation, an insurance holding company
from August 1986 until his retirement from Torchmark in March 1998. Mr. Richey
was Chief Executive Officer of that company from December 1984 until his
retirement. From December 1984 through August 1986, he was President of
Torchmark Corporation. Mr. Richey is an attorney and a member of the Oklahoma
Bar Association.
GREGG R. GIUFFRIA was appointed to the Board on September 24, 1998 to
fill the vacancy created by the death of Robert L. Brock. He has been serving
Full House as President since April 10, 1998 and as Vice President of Corporate
Development since December 1997. Mr. Giuffria also owns American Laser Cutting,
Inc., a state-of-the-art industrial laser facility in Las Vegas which
specializes in gaming manufacturing uses, and was an independent gaming
consultant from 1996 to 1997. He headed Corporate Development for Casino Data
Systems, Inc. from 1995 to 1996, with responsibilities for
7
design and development of innovative technology in new casino games. Mr.
Giuffria was President of American Leisure Technologies from 1992 to 1995, after
20 years in the music, film and publishing business. In January 1999, the
Company was advised by the U.S. Securities and Exchange Commission ("SEC") that
it is conducting an inquiry into trading of the Company's stock by Mr. Giuffria
for a period beginning prior to his association with the Company and continuing
for several weeks after he began providing consulting services to the Company.
The SEC has admonished that this inquiry is not to be construed as an indication
that any violations of federal securities laws have occurred. The Company and
Mr. Giuffria voluntarily provided all information requested, and are cooperating
fully with the SEC .
MICHAEL P. SHAUNNESSY joined the Company on July 1, 1998 as Executive
Vice President -Finance and Chief Financial Officer. Mr. Shaunnessy has over 15
years experience in the gaming industry. From 1995 to 1998 he was Vice President
- - Finance and Chief Accounting Officer of Primadonna Resorts, Inc. He was with
Aztar Corporation from 1983 to 1995, serving in senior financial positions at
properties in New Jersy and Nevada. Mr.Shaunnessy received his Masters in
Accountancy from Northern Illinois University in DeKalb, Illinois.
MEGAN G. MCINTOSH has been employed by Full House since December 1,
1994 and has been the Secretary of Full House since November 20, 1995. From
April 1991 until she joined Full House, Ms. McIntosh was an administrative
assistant for a civil engineering firm located in California. Prior to that
time, Ms. McIntosh was an administrative assistant for a real estate development
firm located in Southern California.
The officers of Full House are elected annually and serve at the
discretion of the Board of Directors.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company may receive a fee for
attendance at meetings of the Board of Directors, and are entitled to
reimbursement for reasonable expenses of such attendance. No fees for attendance
at meetings have been paid to date.
All non-employee directors are eligible to participate in the Company's
1992 Non-employee Director Stock Plan. However, no non-employee director is
eligible to receive options if at the time such option would otherwise be
granted, such non-employee director is directly or indirectly the beneficial
owner of more than ten percent of any class of equity security of the Company
which is registered pursuant to the Securities and Exchange Act of 1934, as
amended. Options to purchase 10,000 shares of Common Stock are granted pursuant
to the Plan immediately following each annual meeting of the Company's
stockholders at an exercise price equal to the Market Price at the date of
grant. The Market Price is the average of the "Fair Market Value" (as such term
is defined in the Plan) of the Common Stock for all trading days during the
thirty calendar days preceding the date on which the option is granted. Each
option is exercisable for a five-year period commencing six months after the
date of grant, and each such option expires five years and six months after the
date of grant.
8
THE BOARD AND ITS COMMITTEES
The Board has an Audit Committee and an Incentive Plan Committee. The
full Board administers the compensation program for executive officers.
The Audit Committee is comprised of Messrs. Richey, McComas and
Gilstrap, who serves as its chairman. This committee is responsible for
reviewing the audit scope, timing, and fee arrangements with the independent
public accountants; reviewing the audit findings and other information submitted
by such accountants; and presenting such information to the full Board.
Mr. Richey is the only current member of the Incentive Plan Committee.
Former director Mr. Robert L. Brock was a member of the Incentive Plan Committee
until his death in June of 1998. Mr. McComas served on this committee until he
assumed the role of President and COO in October 1997.
During 1998, the Board of Directors held six meetings. Each person who
was a director attended all of the Board meetings except that Mr. Gilstrap was
unable to attend two meetings. The Audit Committee and the Incentive Plan
Committee each held one meeting at which all members were present.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
directors and executive officers of Full House, and persons who own more than
ten percent of the outstanding Common Stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock. Such persons are required by SEC
regulation to furnish Full House with copies of all such reports they file.
To the knowledge of Full House, based solely on a review of the copies
of such reports furnished to Full House and written representations that no
other reports were required, the officers, directors and greater than ten
percent beneficial owners of Full House have timely complied with all applicable
Section 16(a) filing requirements except for the initial report of ownership on
Form 3 for Messrs. Giuffria and Shaunnessy, which were filed late.
9
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid or accrued
by the Company for services rendered during each year presented, for the Chief
Executive, Operating, and Financial Officers of the Company, as well as two
former executive officers (collectively, "Named Executive Officers"), for
services in all capacities to the Company and its subsidiaries. No other
executive officer received over $100,000 in annual salary and bonus in 1998.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION NUMBER OF
------------------- OTHER SECURITIES
NAME ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY COMPENSATION OPTIONS
------------------ ---- ------ ------------ -----------
William P. McComas, Chairman 1998 $181,193 -0- 250,000(1)
and Chief Executive Officer 1997 -0- -0- 250,000(1)
1996 -0- -0- -0-
Gregg R. Giuffria, President 1998 $153,458 -0- 800,000
and Chief Operating Officer 1997 -0- -0- -0-
1996 -0- -0- -0-
Michael P. Shaunnessy, Executive 1998 $100,000 -0- 176,000
V.P. Chief Financial Officer 1997 -0- -0- -0-
1996 -0- -0- -0-
Allen E. Paulson, Former Chairman 1998 $ -0- -0- -0-
and Chief Executive Officer 1997 -0- -0- 250,000
1996 -0- -0- -0-
William R. Jackson, Former 1998 $ -0- -0- -0-
Executive Vice President 1997 126,000 -0- -0-
and Chief Financial Officer 1996 110,079 -0- 50,000
(1) Represents a re-pricing in June 1998, of a grant originally issued
in March 1997
EMPLOYMENT ARRANGEMENTS
The Company and Gregg R. Giuffria have an employment arrangement
providing for Mr. Giuffria's employment as President and Chief Operating
Officer, at a base salary of $250,000 per year. Mr. Giuffria was also granted,
in connection with his service to the Company, options to purchase a total of
800,000 shares of the Company's Common Stock, 70,001 of which had vested as of
December 31, 1998.
10
The Company and Michael P. Shaunnessy have an employment arrangement
providing for Mr. Shaunnessy's employment as Chief Financial Officer of the
Company, at a base salary of $200,000 per year. In connection with his
employment, Mr. Shaunnessy was granted options to purchase a total of 176,000
shares of the Company's Common Stock, none of which were vested as of December
31, 1998.
STOCK OPTIONS
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of
options to purchase Common Stock made during 1998 to the Named Executive
Officers.
PERCENT OF
TOTAL OPTIONS
GRANTED TO
NUMBER OF EMPLOYEES IN EXERCISE EXPIRATION
NAME OPTIONS GRANTED 1998 PRICE DATE
- --------- ---------------------- ------------------ ------------- --------------
William P. McComas 250,000(1) 20% $2.25 3/03/07
Gregg R. Giuffria 350,000 28% $2.06 1/05/08
200,000 16% $2.12 9/00/03
250,000 20% $2.00 9/24/03
Michael P. Shaunnessy 176,000 14% $2.25 7/01/03
(1) Represents a re-pricing in June 1998, of a grant originally issued in
March 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth certain information concerning the
fiscal year-end value of the unexercised stock options held by the Named
Executive Officers. No options were exercised by such officers in 1998.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES ACQUIRED VALUE OPTIONS AT 1998 FISCAL IN-THE-MONEY OPTIONS AT
NAME ON EXERCISE REALIZED YEAR END 1998 FISCAL YEAR-END(1)
---- --------------- -------- -------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
William P. McComas -0- -0- 150,000 100,000 $ -0- $ -0-
Gregg R. Giuffria -0- -0- 70,001 729,999 13,300 141,700
Michael P. Shaunnessy -0- -0- 44,000 132,000 -0- -0-
(1) Based upon the market value of the underlying securities at December
31, 1998 of $2.25, minus the exercise price of "in-the-money" options.
11
REPORT ON EXECUTIVE COMPENSATION
During 1998, the Board of Directors of Full House administered the
compensation program for executive officers.
It is the philosophy of the Board of Directors that compensation of
executive officers should be closely aligned with the financial performance of
Full House. Therefore, benefits are provided to management through stock option
incentives and bonuses which are generally consistent with the goal of closely
coordinating the rewards to management with the maximization of stockholder
return. The compensation of William P. McComas, Chief Executive, Gregg R.
Giuffria, President, and Michael P. Shaunnessy, Executive Vice President -
Finance, reflects this policy
In reviewing the performance of Full House, consideration is given to
revenues and earnings and an evaluation is made of strategic planning and the
Company's progress in that regard. Also taken into consideration are external
economic factors that affect results of operations. An attempt is also made to
maintain compensation within the market range. Although review of individual
performance is primarily tied to the performance of the Company, it is also, to
a lesser extent, subjective.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to publicly held companies for compensation exceeding
$1 million paid to certain of the corporation's executive officers. The
compensation paid to the Company's executive officers in 1998 did not exceed the
$1 million limit per officer, nor is it expected that the compensation to be
paid to the Company's executive officers in 1999 will exceed that limit.
Although it is possible that the $1 million limit could be exceeded as a result
of awards under the Company's 1992 Incentive Plan, the Board intends to monitor
such grants in an attempt to ensure that this does not occur. Because it is very
unlikely that the cash compensation payable to any of the Company's executive
officers in the foreseeable future will approach the $1 million limit, the Board
has decided at this time not to take any other action to limit or restructure
the elements of cash compensation payable to the Company's executive officers.
The Compensation Committee will reconsider this decision should the individual
compensation of any executive officer ever approach the $1 million level.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. McComas became the Chief Executive Officer on March 5, 1998 after
serving as interim President of the Company since October 7, 1997. The Board
considered the necessary level of involvement in the day to day management of
the strategic affairs of the Company that it expected, and reviewed comparable
compensation levels in the gaming industry. Mr. McComas receives a base
compensation of $250,000 per year. In furtherance of its overall compensation
philosophy, the Board decided to adjust the exercise price for options held by
Mr. McComas. In March 1997, in his capacity as a director of the Company, Mr.
McComas was granted 250,000 options at the then current market price of $3.69
per share. In June 1998, the Board determined to adjust the exercise price to
the then current market price of $2.25 per share. See "Executive Compensation -
Employment Arrangements."
12
PERFORMANCE GRAPH
The following line-graph presentation compares cumulative stockholder
returns on Full House's Common Stock since December 17, 1993, with the NASDAQ
Stock Market index (U.S. companies) and a peer index consisting of companies
included in the NASDAQ system engaged in the gaming industry (sic 7010-7019).
The following companies were deleted from last year's peer index due to their
acquisition by other companies: Bally's Grand, Inc. and Boardwalk Casino, Inc.
The 1998 self-determined peer index companies are:
Butler National Corp. Hollywood Casino Corp
Dover Downs Entertainment Lady Luck Gaming
Europa Cruise Lines Presidents Casinos
Florida Gaming Corp.
[COPY FOR PERFORMANCE GRAPH TO COME]
13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 10, 1998, the Company and Allen E. Paulson formed a
limited liability company for the purpose of developing and owning a Hard Rock
Hotel & Casino in Biloxi, Mississippi. The Company contributed its rights to
various agreements with Hard Rock Cafe International ("Hard Rock"), and Mr.
Paulson contributed a gaming vessel and its related equipment (the former
Treasure Bay barge in Tunica, Mississippi). Each member received a 50% interest
for its contribution.
The agreements with Hard Rock provide for the exclusive right to
develop a Hard Rock themed gaming facility in the defined territory in exchange
for payment of a territory fee, and continuing fees based on the gaming and
hotel revenues generated by the project. The contributed gaming vessel will
provide the basis for the development of the complex.
. The Hard Rock - Biloxi, as currently envisioned, is expected to cost
between $250 and $300 million, and the Company is exploring various financing
alternatives. Substantial additional financing will be required for the Company
to effect its business strategy, and there can be no assurance that the Company
will be able to obtain such financing on acceptable terms.
The Company believes that the terms of the transaction with Mr. Paulson
were as favorable to Full House as would have been available from unrelated
parties.
14
PROPOSAL 2
APPROVAL OF AMENDMENT TO THE 1992 INCENTIVE PLAN
The Board of Directors recommends that the 1992 Incentive Plan ("Plan")
be amended to increase the aggregate number of shares of Common Stock subject to
issuance under the Plan by 2,000,000 shares from the current 1,000,000 to a
total of 3,000,000. The proposed increase is intended to serve the purposes of
the Plan, which are to enable the recruitment and retention of executive
personnel, key employees, consultants and advisors upon whose judgment,
initiative and effort the Company is largely dependent and to provide additional
incentive by permitting such individuals to participate in the ownership of the
Company. A copy of the Plan, as amended, is attached as Exhibit A.
The Plan is administered by a Committee of the Board of Directors.
Under the Plan, employees, officers and consultants are eligible to receive
incentive stock options (within the meaning of Section 422 of the Internal
Revenue Code), non-qualified stock options, stock appreciation rights ("SARs"),
restricted stock, phantom stock and stock bonuses. Options and SARs may be
granted for a term of up to ten years. The exercise price of the options is at
the discretion of the Committee, except that the exercise price of incentive
stock options shall be no less than 100% of the fair market value on the date of
the grant.
Since adoption of the Plan, a total of 1,684,395 options have been
granted (subject to approval of this proposal), of which 57,188 were exercised
and 391,207 were forfeited, leaving 1,236,000 currently outstanding. To date,
the Company has not granted any SARs, restricted stock, phantom stock or stock
bonuses. All option grants have included a fair market value exercise price,
with vesting periods ranging from three to five years, and terms ranging from
five to ten years.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL 2.
PROPOSAL 3
RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of Full House recommends that the stockholders
ratify the appointment of Deloitte & Touche LLP, as the independent accountants
for the Company for 1999.
Representatives of Deloitte & Touche LLP are expected to appear at the
Annual Meeting, to make a statement if they so desire, and to be available to
answer appropriate questions from stockholders. If the proposal is not approved,
the Board of Directors will reconsider the appointment.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL 3.
15
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as in
their discretion they may deem appropriate, unless they are directed by a proxy
to do otherwise.
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a stockholder intending to present a proposal to be included in the
proxy statement of Full House for the 2000 Annual Meeting of Stockholders must
deliver a proposal in writing to the principal executive offices of Full House
no later than January 8, 2000.
16
Exhibit A.
FUN HOUSE RESORTS, INC.
-------------------
1992 INCENTIVE PLAN
-------------------
1. PURPOSE OF THE PLAN
This Full House Resorts, Inc. ("FHR") 1992 Incentive Plan is intended
to promote the interests of the Company by providing the employees of the
Company and others, who are largely responsible for the management, growth and
protection of the business of the Company, with incentives and rewards to
encourage them to continue to provide their services to the Company.
2. DEFINITIONS
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Board of Directors" shall mean the Board of Directors of-FHR.
(b) "Cause," when used in connection with the termination of a
Participant's employment with the Company, shall mean the termination of the
Participant's employment by the Company on account of (i) the willful and
continued failure by the Participant substantially to perform his duties and
obligations (other than any such failure resulting from his incapacity due
to physical or mental illness) or (ii) the willful engaging by the
Participant in misconduct which could reasonably be expected to cause
substantial injury to the Company. For purposes of this Section 2(b), no
act, or failure to act, on a Participant's part shall be considered
"willful" unless done, or omitted to be done, by the Participant in bad
faith and without reasonable belief that his action or omission was in the
best interests of the Company. -
(c) "Cash Bonus" shall mean an award of a bonus payable in cash pursuant
to Section 13 hereof.
(d) "Change in Control" shall mean:
(i) a change in control of FHR of a nature that would be required to
be reported in response to Item 6(e) of
1
Schedule 14A of Regulation 14A promulgated under the Exchange Act; or
(ii) the occurrence of any of the following events:
(1) any Person is or becomes the "beneficial r owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of FHR representing 35% or more of the
combined voting power of FHR's then outstanding securities;
(2) a majority of individuals who are nominated by the Board of
Directors for election to the Board of Directors on any date, fail
to be elected to the Board of Directors as a direct or indirect
result of any proxy fight or contested election for positions on the
Board of Directors; or
(3) the Board of Directors determines in its sole and absolute
discretion that there has been a change in control of FHR.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" shall mean the Incentive Plan Committee of the Board of
Directors or such other committee as the Board of Directors shall appoint
from time to time to administer the Plan.
(g) "Common Stock" shall mean FHR's common stock, $.0001 par value per
share.
(h) "Company" shall mean Full House Resorts, Inc., a Delaware
corporation, and each of its Subsidiaries.
(i) "Disability" shall mean a Participant's inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than twelve (12) months.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) the "Fair Market Value" of a share of Common Stock with respect to
any day shall be (i) the closing sales price on the immediately preceding
business day of a share of Common Stock as reported on the principal
securities exchange on which shares of Common Stock are then listed or
admitted to trading or (ii) if not so reported, the average of the closing
bid and ask prices on the immediately preceding business day as reported on
the
2
National Association of Securities Dealers Automated Quotation System or
(iii) if not so reported, as furnished by any member of the National
Association of Securities Dealers, Inc. selected by the Committee. In the
event that the price of a share of Common Stock shall not be so reported,
the Fair Market Value of Common Stock shall be determined by the Committee
in its absolute discretion.
(l) "Incentive Award" shall mean an Option, LSAR, Tandem SAR,
Stand-Alone SAR, share of Phantom Stock, Stock Bonus or Cash Bonus granted
pursuant to the terms of the Plan.
(m) "Incentive Stock Option" shall mean an Option which is an "incentive
stock option" within the meaning of Section 422 of the Code and which is
identified as an Incentive Stock Option in the agreement by which it is
evidenced. .
(n) "Issue Date" shall mean the date established by the Committee on
which certificates representing shares of Restricted Stock shall be issued
by FHR pursuant to the terms of Section lO(d) hereof.
(o) "LSAR" shall mean a limited stock appreciation right which is
granted pursuant to the provisions of Section 8 hereof and which relates to
an Option. Each LSAR shall be exercisable only upon the occurrence of a
Change in Control and only in the alternative to the exercise of its related
Option.
(p) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option and which is identified as a Non-Qualified Stock
Option in the agreement by which it is evidenced.
(q) "Option" shall mean an option to purchase shares of Common Stock of
FHR granted pursuant to Section 6 hereof. Each 0~0~ sh=1 ~ he Eden' I AS of
- her =" T!lC=n.t'V" Stock Option c' a Non-Qualified Stock Option in the
agreement by which it is evidenced.
(r) "Participant" shall mean a person who is eligible to participate in
the Plan and to whom an Incentive Award is granted pursuant to the Plan,
and, upon his death, his successors, heirs, executors and administrators, as
the case may be.
(s) "Person" shall mean a "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act.
(t) "Phantom Stock" shall mean the right to receive in cash the Fair
Market Value of a share of Common Stock of the Company, which right is
granted pursuant to Section 11 hereof and subject to the terms and
conditions contained therein.
3
(u) "Plan" shall mean the Full House Resorts, Inc. 1992 Incentive Plan,
as it may be amended from time to time.
(v) "Restricted Stock" shall mean a share of Common Stock which is
granted pursuant to the terms of Section 10 hereof and which is subject to
the restrictions set forth in Section lO(c) hereof for so long as such
restrictions continue to apply to such share.
(w) "Securities Act" shall mean the Securities Act of 1933, as amended.
(x) "Stand-Alone SAR" shall mean a stock appreciation right granted
pursuant to Section 9 hereof which is not related to any Option.
(y) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Common Stock pursuant to Section 12 hereof.
(z) "Subsidiary" shall mean any corporation in which at the time of
reference FHR owns, directly or indirectly, stock comprising more than fifty
percent of the total combined voting power of all classes of stock of such
corporation.
(aa) "Tandem SAR" shall mean a stock appreciation right granted pursuant
to Section 8 hereof which is related to an Option. Each Tandem SAR shall be
exercisable only to the extent its related Option is exercisable and only in
the alternative to the exercise of its related Option.
(bb) "FHR" shall mean Full House Resorts, Inc., a Delaware corporation,
and its successors.
(cc) "Vesting Date" shall mean the date established by the Committee on
which a share of Restricted Stock or Phantom Stock may vest.
3. STOCK SUBJECT TO THE PLAN
Under the Plan, the Committee may grant to Participants (i) Options, (ii)
LSARs, (iii) Tandem SARs, (iv) Stand-Alone SARs, (v) shares of Restricted Stock,
(vi) shares of Phantom Stock, (vii) Stock Bonuses and (viii) Cash Bonuses.
Subject to adjustment as provided in Section 14 hereof, the Committee may
grant Options, Stand-Alone SARs, shares of Restricted Stock, shares of Phantom
Stock and Stock Bonuses under the Plan with respect to a number of shares of
Common Stock that in the aggregate does not exceed 3,000,000 shares. The grant
of an LSAR, Tandem SAR or Cash Bonus shall not reduce the number of shares of
Common Stock with respect to which Options, Stand-Alone SARs, shares of
Restricted
4
Stock, shares of Phantom Stock or Stock Bonuses may be granted pursuant to the
Plan.
In the event that any outstanding Option or Stand-Alone SAR expires,
terminates or is cancelled for any reason (other than pursuant to Paragraphs
7(b)(2) or 8(b)(3) hereof), the shares of Common Stock subject to the
unexercised portion of such Option or Stand-Alone SAR shall again be available
for grants under the Plan. In the event that an outstanding Option is cancelled
pursuant to Paragraphs 7(b)(2) or 8(b)(3) hereof by reason of the exercise of an
LSAR or a Tandem SAR, the shares of Common Stock subject to the cancelled
portion of such Option shall not again be available for grants under the Plan.
In the event that any shares of Restricted Stock or Phantom Stock, or any shares
of Common Stock granted in a Stock Bonus are forfeited or cancelled for any
reason, such shares shall again be available for grants under the Plan. -
Shares of Common Stock issued under the Plan may be either newly issued
shares or treasury shares, at the discretion of the Committee, and the Company
hereby reserves 3,000,000 shares of Common Stock for issuance pursuant to the
Plan.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a Committee of the Board of Directors
consisting of two or more persons, each of whom shall be a "disinterested
person" within the meaning of Rule 16b-3 promulgated under Section 16 of the
Exchange Act. The Committee shall from time to time-designate the persons who
shall be granted Incentive Awards and the amount and type of such Incentive
Awards.
The Committee shall have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan and the terms of
any Incentive Award issued under it and to adopt such rules and regulations for
administering the Plan as it may deem necessary. Decisions of the Committee
shall be final and binding on all parties.
The Committee may, in its absolute discretion (i) accelerate the date on
which any Option or Stand-Alone SAR granted under the Plan becomes exercisable,
(ii) accelerate the Vesting Date or Issue Date, or waive any condition imposed
pursuant to Section 10(b) hereof, with respect to any share of Restricted Stock
granted under the Plan and (iii) accelerate the Vesting Date or waive any
condition imposed pursuant to Section 11 hereof, with respect to any share of
Phantom Stock granted under the Plan.
In addition, the Committee may, in its absolute discretion, grant Incentive
Awards to Participants on the condition that such Participants surrender to the
Committee for cancellation such other Incentive Awards (including, without
limitation, Incentive Awards with higher exercise prices) as the Committee
specifies. Notwithstanding
5
Section 3 herein, prior to the surrender of such other Incentive Awards,
Incentive Awards granted pursuant to the preceding sentence of this Section 4
shall not count against the limits set forth in such Section 3.
Whether an authorized leave of absence, or absence in military or government
service, shall constitute termination of employment shall be determined by the
Committee.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and FOR shall indemnify and hold harmless
each member of the Committee and each other director or employee of the Company
to whom any duty or power relating to the administration or interpretation of
the Plan has been delegated against any cost or expense (including counsel
fees)-or liability (including any sum paid in settlement of a claim with the
approval of the Committee) arising out of any action, omission or determination
relating to the Plan, unless, in either case, such action, omission or
determination was taken or made by such member, director or employee in bad
faith and without reasonable belief that it was in the best interests of the
Company.
5. ELIGIBILITY
The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be such persons, including employees and officers of the Company
(whether or not such officers are also directors of the Company), consultants
and advisors to the Company, who are largely responsible for the management,
growth and protection of the business of the Company, as the Committee shall
select from time to time. Directors who are not employees of the Company may not
participate in the Plan.
6. OPTIONS
The Committee may grant Options pursuant to the Plan, which Options shall be
evidenced by agreements in such form as the Committee shall from time to time
approve. Options shall comply with and be subject to the following terms and
conditions:
(a) IDENTIFICATION OF OPTIONS
All Options granted under the Plan shall be clearly identified in the
agreement evidencing such Options as either Incentive Stock Options or as
Non-Qualified Stock Options.
(b) EXERCISE PRICE
The exercise price of any Non-Qualified Stock Option granted under the
Plan shall be such price as the Committee shall determine on the date on
which such Non-Qualified Stock Option is granted;-provided, that such price
may not be less than the
6
minimum price required by applicable law. The exercise price of any
Incentive Stock option granted under the Plan shall be not less than 100% of
the Fair Market Value of a share of Common Stock on the date on which such
Incentive Stock Option is granted.
(c) TERM AND EXERCISE OF OPTION
(1) Each Option shall be exercisable on such date or dates, during
such period and for such number of shares of Common Stock as shall be
determined by the Committee on the day on which such Option is granted
and set forth in the option agreement with respect to such Option;
provided, however, that no Option shall be exercisable after the
expiration of ten years from the date such Option was granted; and,
provided, further, that each Option shall be subject to earlier
termination, expiration or cancellation as provided in the Plan.
(2) Each Option shall be exercisable in whole or in part; provided,
that no partial exercise of an Option shall be for an aggregate exercise
price of less than $1,000. The partial exercise of an Option shall not
cause the expiration, termination or cancellation of the remaining
portion thereof. Upon the partial exercise of an Option, the agreements
evidencing such Option and any related LSARs and Tandem SARs shall be
returned to the Participant exercising such Option together with the
delivery of the certificates described in Section 6(c)(4) hereof.
(4) An Option shall be exercised by delivering notice to FHR's
principal office, to the attention of its Secretary, no less than three
business days in advance of the effective date of the proposed exercise.
Such notice shall be accompanied by the agreements evidencing the Option
and any related LSARs and Tandem SARs, shall specify the number of
shares of Common Stock with respect to which the Option is being
exercised and the effective date of the proposed exercise and shall be
signed by the Participant. The Participant may withdraw such notice at
any time prior to the close of business on the business day immediately
preceding the effective date of the proposed exercise, in which case
such agreements shall be returned to him. Payment for shares of Common
Stock purchased upon the exercise of an Option shall be made on the
effective date of such exercise either (i) in cash, by certified check,
bank cashier's check or wire transfer or (ii) subject to the approval of
the Committee, in shares of Common Stock owned by the Participant and
valued at their Fair Market Value on the effective date of such
exercise, or partly in shares of Common Stock with the balance in cash,
by certified check, bank cashier's check or wire transfer. Any payment
in
7
shares of Common Stock shall be effected by the delivery of such shares
to the Secretary of FHR, duly endorsed in blank or accompanied by stock
powers duly executed in blank, together with any other documents and
evidences as the Secretary of FHR shall require from time to time.
(4) Any Option granted under the Plan may be exercised by a
broker-dealer acting on behalf of a Participant if (i) the broker-dealer
has received from the Participant or the Company a
fully-and-duly-endorsed agreement evidencing such Option and
instructions signed by the Participant requesting FHR to deliver the
shares of Common Stock subject to such Option to the broker-dealer on
behalf of the Participant and specifying the account into which such
shares should be deposited, (ii) adequate provision has been made with
respect to the payment of any withholding taxes due upon such exercise
and (iii) the broker-dealer and the Participant have otherwise complied
with Section 220.3(e)(4) of Regulation T. 12 CFR Part 220.
(5) Certificates for shares of Common Stock purchased upon the
exercise of an Option shall be issued in the name of the Participant and
delivered to the Participant as soon as practicable following the
effective date on which the Option is exercised.
(6) During the lifetime of a Participant, each Option granted to him
shall be exercisable only by him. No Option shall be assignable or
transferable otherwise than by will, the laws of descent and
distribution, or pursuant to a qualified domestic relations order.
(d) LIMITATIONS ON GRANT OF INCENTIVE STOCK OPTIONS
(1) The aggregate Fair Market Value of shares of Common Stock with
respect to which "incentive stock options" (within the meaning of
Section 422 of the Code) are exercisable for the first time by a
Participant during any calendar year under the Plan and any other stock
option plan of the Company (or any "subsidiary" of FHR as such term is
defined in Section 425 of the Code) shall not exceed $100,000. Such Fair
Market Value shall be determined as of the date on which each such
incentive stock option is granted. In the event that the aggregate Fair
Market Value of shares of Common Stock with respect to such incentive
stock options exceeds $100,000, then Incentive Stock Options granted
hereunder to such Participant shall, to the extent and in the order
required by Regulations promulgated under the Code (or any other
authority having the force of Regulations), automatically be deemed to
be Non-Qualified Stock Options, but all other terms and provisions of
such Incentive Stock Options shall remain unchanged. In the
8
absence of such Regulations (and authority), or in the event such
Regulations (or authority) require or permit a designation of the
options which shall cease to constitute incentive stock options,
Incentive Stock Options shall, to the extent of such excess and in the
order in which they were granted, automatically be deemed to be
Non-Qualified Stock Options, but all other terms and provisions of such
Incentive Stock Options shall remain unchanged.
(2) No Incentive Stock Option may be granted to an individual if, at
the time of the proposed grant, such individual owns stock possessing
more than ten percent of the total combined voting power of all classes
of stock of FHR or any of its "subsidiaries" (within the meaning of
Section 425 of the Code), unless (i) the exercise price of such
Incentive Stock Option is at least one hundred and tent percent of the
Fair Market Value of a share of Common Stock at the time such Incentive
Stock Option is granted and (ii) such Incentive Stock Option is not
exercisable after the expiration of five years from the date such
Incentive Stock option is granted.
(e) EFFECT OF TERMINATION OF EMPLOYMENT
(1) In the event that the employment of a Participant with the
Company shall terminate for any reason other than Cause, Disability or
death ti) Options granted to such Participant, to the extent that they
were exercisable at the time of such termination, shall remain
exercisable until the expiration of one month after such termination, on
which date they shall expire, and (ii) Options granted to such
Participant, to the extent that they were not exercisable at the time of
such termination, shall expire at the close of business on the date of
such termination; provided, however, that no Option shall be exercisable
after the expiration of its term.
(2) In the event that the employment of a Participant with the
Company shall terminate on account of the Disability or death of the
Participant (i) Options granted to such Participant, to the extent that
they were exercisable at the time of such termination, shall remain
exercisable until the expiration of one year after such termination, on
which date they shall expire, and (ii) Options granted to such
Participant, to the extent that they were not exercisable at the time of
such termination, shall expire at the close of business on the date of
such termination; provided, however, that no Option shall be exercisable
after the expiration of its term.
(3) In the event of the termination of a Participant's employment
for Cause, all outstanding Options granted to
9
such Participant shall expire at the commencement of business on the
date of such termination.
(f) ACCELERATION OF EXERCISE DATE UPON CHANCE IN CONTROL
Upon the occurrence of a Change in Control, each Option r granted under
the Plan and outstanding at such time shall become fully and immediately
exercisable and shall remain exercisable until its expiration, termination
or cancellation pursuant to the terms of the Plan.
7. LIMITED STOCK ANURECIATION RIGHTS
The Committee may grant in connection with any Option granted hereunder one
or more LSARs relating to a number of shares of Common Stock equal to or less
than the number of shares of Common Stock subject to the related Option. An LSAR
may be granted at the same time as, or subsequent to the time that, its related
Option is granted. Each LSAR shall be evidenced by an agreement in such form as
the Committee shall from time to time approve. Each LSAR granted hereunder shall
be subject to the following terms and conditions:
(a) BENEFIT UPON EXERCISE
(1) The exercise of an LSAR relating to a Non-Qualified Stock Option
with respect to any number of shares of Common Stock shall entitle the
Participant to a cash payment, for each such share, equal to the excess
of (i) the greater of (A) the highest price per share of Common Stock
paid in the Change in Control in connection with which such LSAR became
exercisable and (B) the Fair Market Value of a share of Common Stock on
the date of such Change in Control over (ii) the exercise price of the
related Option. Such payment shall be paid as soon as practical, but in
no event later than the expiration of five business days, after the
effective date of such exercise.
(2) The exercise of an LSAR relating to an Incentive Stock Option
with respect to any number of shares of Common Stock shall entitle the
Participant to a cash payment, for each such share, equal to the excess
of (i) the Fair Market Value of a share of Common Stock on the effective
date of such exercise over (ii) the exercise price of the related
Option. Such payment shall be paid as soon as practical, but in no event
later than the expiration of five business days, after the effective
date of such exercise.
(b) TERM AND EXERCISE OF LSARS
(1) An LSAR shall be exercisable only during the period commencing
on the first day following the occurrence of a Change in Control and
terminating on the expiration of
10
sixty days after such date. Notwithstanding the preceding sentence of
this Section 7(b), in the event that an LSAR held by any Participant who
is or may be subject to the provisions of Section 16(b) of the Exchange
Act becomes exercisable prior to the expiration of six months following
the date on which it is granted, then the LSAR shall also be exercisable
during the period commencing on the first day immediately following the
expiration of such six month period and terminating on the expiration of
sixty days following such date. Notwithstanding anything else herein, an
LSAR relating to an Incentive Stock Option may be exercised with respect
to a share of Common Stock only if the Fair Market Value of such share
on the effective date of such exercise exceeds the exercise price
relating to such share. Notwithstanding anything else herein, an LSAR
may be exercised only if and to the extent that the Option to which it
relates is exercisable.
(2) The exercise of an LSAR with respect to a number of shares of
Common Stock shall cause the immediate and automatic cancellation of the
Option to which it relates with respect to an equal number of shares.
The exercise of an Option, or the cancellation, termination or
expiration of an Option (other than pursuant to this Paragraph (2)),
with respect to a number of shares of Common Stock, shall cause the
cancellation of the LSAR related to it with respect to an equal number
of shares.
(3) Each LSAR shall be exercisable in whole or in part; provided,
that no partial exercise of an LSAR shall be for an aggregate exercise
price of less than $1,000. The partial exercise of an LSAR shall not
cause the expiration, termination or cancellation of the remaining
portion thereof. Upon the partial exercise of an LSAR, the agreements
evidencing the LSAR, the related Option and any Tandem SARs related to
such Option shall be returned to the Participant exercising such LSAR
together with the payment described in Paragraph 7(a)(1) or (2) hereof,
as applicable.
(4) During the lifetime of a Participant, each LSAR granted to him
shall be exercisable only by him. No LSAR shall be assignable or
transferable otherwise than by will, the laws of descent and
distribution, or pursuant to a qualified domestic relations order, and
otherwise than together with its related Option.
(5) An LSAR shall be exercised by delivering notice to FHR's
principal office, to the attention of its Secretary, no less than three
business days in advance of the effective date of the proposed exercise.
Such notice shall be accompanied by the applicable agreements evidencing
the LSAR, the related Option and any Tandem SARs relating to
11
such Option, shall specify the number of shares of Common Stock with respect
to which the LSAR is being exercised and the effective date of the proposed
exercise and shall be signed by the Participant. The Participant may
withdraw such notice at any time prior to the close of business on the
business day immediately preceding the effective date of the proposed
exercise, in which case such agreements shall be returned to him.
8. TANDEM STOCK APPRECIATION RIGHTS
The Committee may grant in connection with any Option granted hereunder one
or more Tandem SARs relating to a number of shares of Common Stock equal to or
less than the number of shares of Common Stock subject to the related Option. A
Tandem SAR may be granted at the same time as, or subsequent to the time that,
its related Option is granted. Each Tandem SAR shall be evidenced by an
agreement in such form as the Committee shall from time to time approve. Tandem
SARs shall comply with and be subject to the following terms and conditions:
(a) BENEFIT UPON EXERCISE
The exercise of a Tandem SAR with respect to any number of shares of
Common Stock shall entitle a Participant to a cash payment, for each such
share, equal to the excess of (i) the Fair Market Value of a share of Common
Stock on the effective date of such exercise over (ii) the exercise price of
the related Option. Such payment shall be paid as soon as practical, but in
no event later than the expiration of five business days, after the
effective date of such exercise.
(b) TERM AND EXERCISE OF TANDEM SAR
(1) A Tandem SAR shall be exercisable at the same time and to the
same extent (on a proportional basis, with any fractional amount being
rounded down to the immediately preceding whole number) as its related
Option. Notwithstanding the first sentence of this Paragraph 8(b)(1),
(i) a Tandem SAR shall not be exercisable at any time-that an LSAR
related to the Option to which the Tandem SAR is related is exercisable
and (ii) a Tandem SAR relating to an Incentive Stock Option may be
exercised with respect to a share of Common Stock only if the Fair
Market Value of such share on the effective date of such exercise
exceeds the exercise price relating to such share.
(2) Notwithstanding the first sentence of Paragraph 8(b)(1) hereof,
the Committee may, in its absolute discretion, grant one or more Tandem
SARs which shall not become exercisable unless and until the Participant
to whom such Tandem sAR is granted is, in the determination of the
12
Committee, subject to Section 16(b) of the Exchange Act and which shall
cease to be exercisable if and at the time that the Participant ceases,
in the determination of the Committee, to be subject to such
Section 16(b).
(3) The exercise of a Tandem SAR with respect to a number of shares
of Common Stock shall cause the immediate and automatic cancellation of
its related Option with respect to an equal number of shares. The
exercise of an Option, or the cancellation, termination or expiration of
an option (other than pursuant to this Paragraph (3)), with respect to a
number of shares of Common Stock shall cause the automatic and immediate
cancellation of its related Tandem SARs to the extent that the number of
shares of Common Stock subject to such Option after such exercise,
cancellation, termination or expiration is less than the number of
shares subject to such Tandem SARs. Such Tandem SARs shall be cancelled
in the order in which they became exercisable.
(4) Each Tandem SAR shall be exercisable in whole or in part;
provided, that no partial exercise of a Tandem SAR shall be for an
aggregate exercise price of less than $1,000. The partial exercise of a
Tandem SAR shall not cause the expiration, termination or cancellation
of the remaining portion thereof. Upon the partial exercise of a Tandem
SAR, the agreements evidencing such Tandem SAR, its related Option and
LSARs relating to such Option shall be returned to the Participant
exercising such Tandem SAR together with the payment described in
Section 8(a) hereof.
(5) During the lifetime of a Participant, each Tandem SAR granted to
him shall be exercisable only by him. No Tandem SAR shall be assignable
or transferable otherwise than by will, the laws of descent and
distribution, or pursuant to a qualified domestic relations order, and
otherwise than together with its related Option.
(6) A Tandem SAR shall be exercised by delivering notice to FHR's
principal office, to the attention of its Secretary, no less than three
business days in advance of the effective date of the proposed exercise.
Such notice shall be accompanied by the applicable agreements evidencing
the Tandem SAR, its related Option and any LSARs related to such Option,
shall specify the number of shares of Common Stock with respect to which
the Tandem SAR is being exercised and the effective date of the proposed
exercise and shall be signed by the Participant. The Participant may
withdraw such notice at any time prior to the close of business on the
business day immediately preceding the effective date of the proposed
exercise, in which case such agreements shall be returned to him.
13
9. STAND-ALONE STOCK APPRECIATION RIGHTS
The Committee may grant Stand-Alone SARs pursuant to the Plan, which
Stand-Alone SARs shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Stand-Alone SARs shall comply with and be
subject to the following terms and conditions:
(a) EXERCISE PRICE
The exercise price of any Stand-Alone SAR granted under the Plan shall
be determined by the Committee at the time of the grant of such Stand-Alone
SAR.
(b) BENEFIT UPON EXERCISE
The exercise of a Stand-Alone SAR with respect to any number of shares
of Common Stock prior to the occurrence of a Change in Control shall entitle
a Participant to a cash payment, for each such share, equal to the excess of
(i) the Fair Market Value of a share of Common Stock on the exercise date
over (ii) the exercise price of the Stand-Alone SAR. The exercise of a
Stand-Alone SAR with respect to any number of shares of Common Stock upon or
after the occurrence of a Change in Control shall entitle a Participant to a
cash payment, for each such share, equal to the excess of (i) the greater of
(A) the highest price per share of Common Stock paid in connection with such
Change in Control and (B) the Fair Market Value of a share of Common Stock
on the date of such Change in Control over (ii) the exercise price of the
Stand-Alone SAR. Such payments shall be paid as soon as practical, but in no
event later than five business days, after the effective date of the
exercise.
(c) TERM AND EXERCISE OF STAND-ALONE SARS
(1) Each Stand-Alone SAR shall be exercisable on such date or dates,
during such period and for such number of shares of Common Stock as
shall be determined by the Committee and set forth in the Stand-Alone
SAR agreement with respect to such Stand-Alone SAR; provided, however,
that no Stand-Alone SAR shall be exercisable after the expiration of ten
years from the date such Stand-Alone SAR was granted; and, provided,
further, that each Stand-Alone SAR shall be subject to earlier
termination, expiration or cancellation as provided in the Plan.
(2) Each Stand-Alone SAR may be exercised in whole or in part;
provided, that no partial exercise of a Stand-Alone SAR shall be for an
aggregate exercise price of less than $l,000. The partial exercise of a
Stand-Alone SAR shall not cause the expiration, termination or
cancellation of the
14
remaining portion thereof. Upon the partial exercise of a Stand-Alone
SAR, the agreement evidencing such Stand-Alone SAR shall be returned to
the Participant exercising such Stand-Alone SAR together with the
payment described in Section 9(b) hereof.
(3) A Stand-Alone SAR shall be exercised by delivering notice to
FHR's principal office, to the attention of its Secretary, no less than
three business days in advance of the effective date of the proposed
exercise. Such notice shall be accompanied by the applicable agreement
evidencing the Stand-Alone SAR, shall specify the number of shares of
Common Stock with respect to which the Stand-Alone SAR is being
exercised and the effective date of the proposed exercise and shall be
signed by the Participant. The Participant may withdraw such notice at
any time prior to the close of business on the business day immediately
preceding the effective date of the proposed exercise, in which case the
agreement evidencing the Stand-Alone SAR shall be returned to him.
(4) During the lifetime of a Participant, each Stand-Alone SAR
granted to him shall be exercisable only by him. No Stand-Alone SAR
shall be assignable or transferable otherwise than by will, the laws of
descent and distribution, or pursuant to a qualified domestic relations
order.
(d) EFFECT OF TERMINATION OF EMPLOVMENT
(1) In the event that the employment of a Participant with the
Company shall terminate for any reason other than Cause, Disability or
death (i) Stand-Alone SARs granted to such Participant, to the extent
that they were exercisable at the time of such termination, shall remain
exercisable until the expiration of one month after such termination, on
which date they shall expire, and (ii) Stand-Alone SARs granted to such
Participant, to the extent that they were not exercisable at the time of
such termination, shall expire at the close of business on the date of
such termination; provided, however, that no Stand-Alone SAR shall be
exercisable after the expiration of its term.
(2) In the event that the employment of a Participant with the
Company shall terminate on account of the Disability or death of the
Participant (i) Stand-Alone SARs granted to such Participant, to the
extent that they were exercisable at the time of such termination, shall
remain exercisable until the expiration of one year after such
termination, on which date they shall expire, and (ii) Stand-Alone SARs
granted to such Participant, to the extent that they were not
exercisable at the time of such
15
termination, shall expire at the close of business on the date of
such termination; provided, however, that no Stand-Alone SAR shall be
exercisable after the expiration of its term.
(3) In the event of the termination of a Participant's employment
for Cause, all outstanding Stand-Alone SARs granted to such Participant
shall expire at the commencement of business on the date of such
termination.
(e) ACCELERATION OF EXERCISE DATE UPON CHANCE IN CONTROL
Upon the occurrence of a Change in Control, each Stand-Alone SAR granted
under the Plan and outstanding at such time shall become fully and
immediately exercisable and shall remain exercisable until its expiration,
termination or cancellation pursuant to the terms of the Plan.
10. RESTRICTED STOCK
The Committee may grant shares of Restricted Stock pursuant to the Plan.
Each grant of shares of Restricted Stock shall be evidenced by an agreement in
such form as the Committee shall from time to time approve. Each grant of shares
of Restricted Stock shall comply with and be subject to the following terms and
conditions:
(a) ISSUE DATE AND VESTING DATE
At the time of the grant of shares of Restricted Stock, the Committee
shall establish an Issue Date or Issue Dates and a Vesting Date or Vesting
Dates with respect to such shares. The Committee may divide such shares into
classes and assign a different Issue Date and/or Vesting Date for each
class. Except as provided in Sections lO(c) and lO(f) hereof, upon the
occurrence of the Issue Date with respect to a share of Restricted Stock, a
share of Restricted Stock shall be issued in accordance with the provisions
of Section lO(d) hereof. Provided that all conditions to the vesting of a
share of Restricted Stock imposed pursuant to Section lO(b) hereof are
satisfied, and except as provided in Sections lO(c) and lO(f) hereof, upon
the occurrence of the Vesting Date with respect to a share of Restricted
Stock, such share shall vest and the restrictions of Section lO(c) hereof
shall cease to apply to such share.
(b) CONDITIONS TO VESTING
At the time of the grant of shares of Restricted Stock, the Committee
may impose such restrictions or conditions, not inconsistent with the
provisions hereof, to the vesting of such shares as it, in its absolute
discretion deems appropriate. By way of example and not by way of
limitation, the Committee may require-, as a condition to the vesting of any
class or classes of
16
shares of Restricted Stock, that the Participant or the Company achieve
certain performance criteria, such criteria to be specified by the Committee
at the time of the grant of such shares.
(c) RESTRICTIONS ON TRANSFER PRIOR TO VESTING
Prior to the vesting of a share of Restricted Stock, no transfer of a
Participant's rights with respect to such shares, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee
with any interest or right in or with respect to such share, but immediately
upon any attempt to transfer such rights, such share, and all of the rights
related thereto, shall be forfeited by the Participant and the transfer
shall be of no force or effect.
(d) ISSUANCE OF CERTIFICATES
(1) Except as provided in Sections lO(c) or lO(f) hereof, reasonably
promptly after the Issue Date with respect to shares of Restricted Stock,
FHR shall cause to be issued a stock certificate, registered in the name of
the Participant to whom such shares were granted, evidencing such shares;
provided, that FHR shall not cause to be issued such a stock certificate
unless it has received a stock power duly endorsed in blank with respect to
such shares. Each such stock certificate shall bear the following legend:
The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and conditions
(including forfeiture and restrictions against transfer) contained in
the Full House Resorts, Inc. 1992 Incentive Plan and an Agreement
entered into between the registered owner of such shares and Full House
Resorts, Inc. A copy of the Plan and Agreement is on file in the office
of the Secretary of Full House Resorts, Inc.
Such legend shall not be removed from the certificate evidencing such shares
until such shares vest pursuant to the terms hereof.
(2) Each certificate issued pursuant to Paragraph (lO(d)(1) hereof,
together with the stock powers relating to the shares of Restricted Stock
evidenced by such certificate, shall be deposited by the Company with a
custodian designated by the Company. The Company shall cause such custodian
to issue to the Participant a receipt evidencing the certificates held by it
which are registered in the name of the Participant.
17
(e) CONSEQUENCES UPON VESTING
Upon the vesting of a share of Restricted Stock pursuant to the terms
hereof, the restrictions of Section lO(c) hereof shall cease to apply to
such share. Reasonably promptly after a share of Restricted Stock vests
pursuant to the terms hereof, FHR shall cause to be issued and delivered to
the Participant to whom such shares were granted, a certificate evidencing
such share, free of the legend set forth in Paragraph lO(d)(1) hereof,
together with any other property of the Participant held by the custodian
pursuant to Section 14(b) hereof.
(f) EFFECT OF TERMINATION OF EMPLOVMENT
(l) In the event that the employment of a Participant with the
Company shall terminate for any reason other than Cause prior to the
vesting of shares of Restricted Stock granted to such Participant, a
proportion of such shares, to the extent not forfeited or cancelled on
or prior to such termination pursuant to any provision hereof, shall
vest on the date of such termination. The proportion referred to in the
preceding sentence shall be determined by the Committee at the time of
the grant of such shares of Restricted Stock and may be based on the
achievement of any conditions imposed by the Committee with respect to
such shares pursuant to Section lO(b). Such proportion may be equal to
zero.
(2) In the event of the termination of a Participant's employment
for Cause, all shares of Restricted Stock granted to such Participant
which have not vested as of the date of such termination shall
immediately be forfeited.
(g) EFFECT OF CHANCE IN CONTROL
Upon the occurrence of a Change in Control, all shares of Restricted
Stock which have not theretofore vested (including those with respect to
which the Issue Date has not yet occurred), or been cancelled or forfeited
pursuant to any provision hereof, shall immediately vest.
11. PHANTOM STOCK
The Committee may grant shares of Phantom Stock pursuant to the Plan. Each
grant of shares of Phantom Stock shall be evidenced by an agreement in such form
as the Committee shall from time to time approve. Each grant of shares of
Phantom Stock shall comply with and be subject to the following terms and
conditions:
18
(a) VESTING DATE
At the time of the grant of shares of Phantom Stock, the Committee shall
establish a Vesting Date or Vesting Dates with respect to such shares. The
Committee may divide such shares into classes and assign a different Vesting
Date for each class. Provided that all conditions to the vesting of a share
of Phantom Stock imposed pursuant to Section ll(c) hereof are satisfied, and
except as provided in Section ll(d) hereof, upon the occurrence of the
Vesting Date with respect to a share of Phantom Stock, such share shall
vest.
(b) BENEFIT UPON VESTING
Upon the vesting of a share of Phantom Stock, a Participant shall be
entitled to receive in cash, within 30 days of the date on which such share
vests, an amount in cash in a lump sum equal to the sum of (i) the Fair
Market Value of a share of Common Stock of the Company on the date on which
such share of Phantom Stock vests and (ii) the aggregate amount of cash
dividends paid with respect to a share of Common Stock of the Company during
the period commencing on the date on which the share of Phantom Stock was
granted and terminating on the date on which such share vests.
(c) CONDITIONS TO VESTING
At the time of the grant of shares of Phantom Stock, the Committee may
impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it, in its absolute discretion
deems appropriate. By way of example and not by way of limitation, the
Committee may require, as a condition to the vesting of any class or classes
of shares of Phantom Stock, that the Participant or the Company achieve
certain performance criteria, such criteria to be specified by the Committee
at the time of the grant of such shares.
(d) EFFECT OF TERMINATION OF EMPLOVMENT
(1) In the event that the employment of a Participant with the
Company shall terminate for any reason other than Cause prior to the
vesting of shares of Phantom Stock granted to such Participant, a
proportion of such shares, to the extent not forfeited or cancelled on
or prior to such termination pursuant to any provision hereof, shall
vest on the date of such termination. The proportion referred to in the
preceding sentence shall be determined by the Committee at the time of
the grant of such shares of Phantom Stock and may be based on the
achievement of any conditions imposed by the Committee with respect to
such shares pursuant to Section ll(c). Such proportion may be equal to
zero.
19
(2) In the event of the termination of a Participant's employment
for Cause, all shares of Phantom Stock granted to such Participant which
have not vested as of the date of such termination shall immediately be
forfeited.
(e) EFFECT OF CHANGE IN CONTROL
Upon the occurrence of a Change in Control, all shares of Phantom Stock
which have not theretofore vested, or been cancelled or forfeited pursuant
to any provision hereof, shall immediately vest.
12. STOCK BONUSES
The Committee shall grant Stock Bonuses in such amounts as it shall
determine from time to time. A Stock Bonus shall be paid at.- such time and
subject to such conditions as the Committee shall determine at the time of the
grant of such Stock Bonus. Certificates for shares of Common Stock granted as a
Stock Bonus shall be issued in the name of the Participant to whom such grant
was made and delivered to such Participant as soon as practicable after the date
on which such Stock Bonus is required to be paid.
13. CASH BONUSES
The Committee may, in its absolute discretion, grant, in connection with any
grant of Restricted Stock or Stock Bonus or at any time thereafter, a cash
bonus, payable promptly after the date on which the Participant is required to
recognize income for federal income tax purposes in connection with such
Restricted Stock or Stock Bonus, in such amounts as the Committee shall
determine from time to time; provided however, that in no event shall the amount
of a Cash Bonus exceed the Fair Market Value of the related shares of Restricted
Stock or Stock Bonus on such date. A Cash Bonus shall be subject to such
conditions as the Committee shall determine at the time of the grant of such
Cash Bonus.
14. ADJUSTMENT UPON CHANGES IN COMMON STOCK
(a) SHARES AVAILABLE FOR GRANTS
In the event of any change in the number of shares of Common Stock
outstanding by reason of any stock dividend or split, recapitalization,
merger, consolidation, combination or exchange of shares or similar
corporate change, the maximum aggregate number of shares of Common Stock
with respect to which the Committee may grant Options, Stand-Alone SARs,
shares of Restricted Stock, shares of Phantom Stock and Stock Bonuses shall
be appropriately adjusted by the Committee. In the event of any change in
the number of shares of Common Stock outstanding by reason of any other
event or transaction, the Committee may, but need not, make such adjustments
in the number and class of shares
20
of Common Stock with respect to which Options, Stand-Alone SARs, shares of
Restricted Stock, shares of Phantom Stock and Stock Bonuses may be granted
as the Committee may deem appropriate.
(b) OUTSTANDING RESTRICTED STOCK AND PHANTOM STOCK
Unless the Committee in its absolute discretion otherwise determines,
any securities or other property (including dividends paid in cash) received
by a Participant with respect to a share of Restricted Stock, the Issue Date
with respect to which occurs prior to such event, but which has not vested
as of the date of such event, as result of any dividend, stock split,
recapitalization, merger, consolidation, combination, exchange of shares or
otherwise will not vest until such share of Restricted Stock vests, and
shall be promptly deposited with the custodian designated pursuant to
Paragraph 10(d)(2) hereof.
The Committee may, in its absolute discretion, adjust any grant of
shares of Restricted Stock, the Issue Date with respect to which has not
occurred as of the date of the occurrence of any of the following events, or
any grant of shares of Phantom Stock, to reflect any dividend, stock split,
recapitalization, merger, consolidation, combination, exchange of shares or
similar corporate change as the Committee may deem appropriate to prevent
the enlargement or dilution of rights of Participants under the grant.
(c) OUTSTANDING ONTIONS. LSARS, TANDEM SARS AND STAND-ALONE
SARS--INCREASE OR DECREASE IN ISSUED SHARES WITHOUT CONSIDERATION
Subject to any required action by the shareholders of FHR, in the event
of any increase or decrease in the number of issued shares of Common Stock
resulting from a subdivision or consolidation of shares of Common Stock or
the payment of a stock dividend (but only on the shares of Common Stock), or
any other increase or decrease in the number of such shares effected without
receipt of consideration by FHR, the Committee shall proportionally adjust
the number of shares of Common Stock subject to each outstanding Option,
LSAR, Tandem SAR and Stand-Alone SAR, and the exercise price per share of
Common Stock of each such Option, LSAR, Tandem SAR and Stand-Alone SAR.
(d) OUTSTANDING OPTIONS, LSARS, TANDEM SARS AND STAND-ALONE
SARS--CERTAIN MERAERS
Subject to any required action by the shareholders of FHR, in the event
that FHR shall be the surviving corporation in any merger or consolidation
(except a merger or consolidation as a result of which the holders of shares
of Common Stock receive securities of another corporation), each Option,
LSAR, Tandem SAR and Stand-Alone SAR outstanding on the date of such merger
or
21
consolidation shall pertain to and apply to the securities which a holder of
the number of shares of Common Stock subject to such Option, LSAR, Tandem
SAR or Stand-Alone SAR would have received in such merger or consolidation.
(e) OUTSTANDING OPTIONS. LSARS, TANDEM SARS AND STAND-ALONE
SARS--CERTAIN OTHER TRANSACTIONS
In the event of (i) a dissolution or liquidation of FHR, (ii) a sale of
all or substantially all of FHR's assets, (iii) a merger or consolidation
involving FHR in which FHR is not the surviving corporation or (iv) a merger
or consolidation involving FHR in which FHR is the surviving corporation but
the holders of shares of Common Stock receive securities of another
corporation and/or other property, including cash, the Committee shall, in
its absolute discretion, have the power to:
(i) cancel, effective immediately prior to the occurrence of such
event, each option (including each LSAR and Tandem SAR related thereto)
and Stand-Alone SAR outstanding immediately prior to such event (whether
or not then exercisable), and, in full consideration of such
cancellation, pay to the Participant to whom such Option or Stand-Alone
SAR was granted an amount in cash, for each share of Common Stock
subject to such Option or Stand-Alone SAR, respectively, equal to the
excess of (A) the value, as determined by the Committee in its absolute
discretion, of the property (including cash) received by the holder of a
share of Common Stock as a result of such event over (B) the exercise
price of such Option or Stand-Alone SAR; or
(ii) provide for the exchange of each Option (including any related
LSAR or Tandem SAR) and Stand-Alone SAR outstanding immediately prior to
such event (whether or not then exercisable) for an option on or stock
appreciation right with respect to, as appropriate, some or all of the
property for which such Option or Stand-Alone SAR is exchanged and,
incident thereto, make an equitable adjustment as determined by the
Committee in its absolute discretion in the exercise price of the option
or stock appreciation right, or the number of shares or amount of
property subject to the option or stock appreciation right or, if
appropriate, provide for a cash payment to the Participant to whom such
Option or Stand-Alone SAR was granted in partial consideration for the
exchange of the Option or Stand-Alone SAR.
(f) OUTSTANDING OPTIONS. LSARS. TANDEM SARS AND STAND-ALONE
SARS--OTHER CHANGES
In the event of any change in the capitalization of FHR or corporate
change other than those specifically referred to in
22
Section 14(c), (d) or (e) hereof, the Committee may, in its absolute
discretion, make such adjustments in the number and class of shares subject
to Options, LSARs, Tandem SARs or Stand-Alone SARs outstanding on the date
on which such change occurs and in the per share exercise price of each such
Option, LSAR, Tandem SAR and Stand-Alone SAR as the Committee may consider
appropriate to prevent dilution or enlargement of rights.
(g) NO OTHER RIGHTS
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of
any class, the payment of any dividend, any increase or decrease in the
number of shares of stock of any class or any dissolution, liquidation,
merger or consolidation of FOR or any other corporation. Except as expressly
provided in the Plan, no issuance by FHR of shares of stock of any class, or
securities convertible, into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to the number of
shares of Common Stock subject to an Incentive Award or the exercise price
of any Option, LSAR, Tandem SAR or Stand-Alone SAR.
15. RIGHTS AS A STOCKHOLDER
No person shall have any rights as a stockholder with respect to any shares
of Common Stock covered by or relating to any Incentive Award granted pursuant
to this Plan until the date of the issuance of a stock certificate with respect
to such shares. Except as otherwise expressly provided in Section 14 hereof, no
adjustment to any Incentive Award shall be made for dividends or other rights
for which the record date occurs prior to the date such stock certificate is
issued.
16. NO SPECIAL EMPLOVMENT RIGHTS: NO RIGHT TO INCENTIVE AWARD
Nothing contained in the Plan or any Incentive Award shall confer upon any
Participant any right with respect to the continuation of his employment by the
Company or interfere in any way with the right of the Company, subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.
23
17. SECURITIES MATTERS
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be issued
hereunder or to effect similar compliance under any state laws. Notwithstanding
anything herein to the contrary, the Company shall not be obligated to cause to
be issued or delivered any certificates evidencing shares of Common Stock
pursuant to the Plan unless and until the Company is advised by its counsel that
the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authority and the requirements of
any securities exchange on which shares of Common Stock are traded. The
Committee may require, as a condition of the issuance and delivery of
certificates evidencing shares of Common Stock pursuant to the terms hereof,
that the recipient of such shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the Committee,
in its sole discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall only be effective at
such time as counsel to the Company shall have determined that the issuance and
delivery of shares of Common Stock pursuant to such exercise is in compliance
with all applicable laws, regulations of governmental authority and the
requirements of any securities exchange on which shares of Common Stock are
traded. The Company may, in its sole discretion, defer the effectiveness of any
exercise of an Option granted hereunder in order to allow the issuance of shares
of Common stock pursuant thereto to be made pursuant to registration or an
exemption from the registration or other methods for compliance available under
federal or state securities laws. The Company shall inform the Participant in
writing of its decision to defer the effectiveness of the exercise of an Option
granted hereunder. During the period that the effectiveness of the exercise of
an Option has been deferred, the Participant may, by written notice, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.
(c) With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
24
18. WITHHOLDING TAXES
(a) CASH REMITTANCE
Whenever shares of Common Stock are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or Vesting Date with respect to a
share of Restricted Stock or the payment of a Stock Bonus, the Company shall
have the right to require the Participant to remit to the Company in cash an
amount sufficient to satisfy federal, state and local withholding tax
requirements, if any, attributable to such exercise, occurrence or payment
prior to the delivery of any certificate or certificates for such shares. In
addition, upon the exercise of an LSAR, Tandem SAR or Stand-Alone Sar, the
grant of a Cash Bonus or the making of a payment with respect to a share of
Phantom Stock, the Company shall have the right to withhold from any cash.
payment required to be made pursuant thereto an amount sufficient to satisfy
the federal, state and local withholding tax requirements.
(b) STOCK REMITTANCE
At the election of the Participant, subject to the approval of the
Committee, when shares of Common Stock are to be issued upon the exercise of
an Option, the occurrence of the Issue Date or the Vesting Date with respect
to a share of Restricted Stock or the grant of a Stock Bonus, in lieu of the
remittance required by Section 18(a) hereof, the Participant may tender to
the Company a number of shares of Common Stock determined by such
Participant, the Fair Market Value of which at the tender date the Committee
determines to be sufficient to satisfy the federal, state and local
withholding tax requirements, if any, attributable to such exercise,
occurrence or grant and not greater than the Participant's estimated total
federal, state and local tax obligations associated with such exercise,
occurrence or grant.
(c) STOCK WITHHOLDING
At the election of the Participant, subject to the approval of the
Committee, when shares of Common Stock are to be issued upon the exercise of
an Option, the occurrence of the Issue Date or the Vesting Date with respect
to a share~of Restricted Stock or the grant of a Stock Bonus, in lieu of the
remittance required by Section 18(a) hereof, the Company shall withhold a
number of such shares determined by such Participant, the Fal- Market Value
of which at the exercise date the Committee determines to be sufficient to
satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise, occurrence or grant and is not greater than
the Participant's estimated total federal, state and local tax obligations
associated with such exercise, occurrence or grant.
25
(d) TIMING AND METHOD OF ELECTIONS
Notwithstanding any other provisions of the Plan, a Participant who is
subject to Section 16(b) of the Exchange Act may not make either of the
elections described in Sections 18(b) and (c) hereof prior to the expiration
of six months after the date on which the applicable Option, share of
Restricted Stock or Stock Bonus was granted, except in the event of the
death or Disability of the Participant, unless the Company is advised by its
counsel that such election(s) may be permitted pursuant to Section 16 of the
Exchange Act or any rule or interpretation of the U.S. Securities and
Exchange Commission thereunder. A Participant who is subject to Section
16(b) of the Exchange Act may not make such elections other than (i) during
the 10-day window period beginning on the third business day following the
date of release for publication of FHR's quarterly and annual summary
statements of sales and earnings and ending on the twelfth business day
following such date or (ii) at least six months prior to the date as of
which the income attributable to the exercise of such Option is recognized
under the Code. Such election shall be irrevocable and shall be made by the
delivery to FHR's principal office, to the attention of its Secretary, of a
written notice signed by the Participant.
19. AMENDMENT OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan or
revise or amend it in any respect whatsoever; provided, however, that the Plan
may not be amended more than once every six monti-,s other than to comport with
changes in the Code, the Employee Retirement Income Security Act, or the rules
thereunder, or any other laws or regulations; and provided, further, that
without approval of the shareholders no revision or amendment shall (i) except
as provided in Section 14 hereof, increase the number of shares of Common Stock
that may be issued under the Plan, (ii) materially increase the benefits
accruing to individuals holding Incentive Awards granted pursuant to the Plan or
(iii) materially modify the requirements as to eligibility for participation in
the Plan.
20. NO OBLIGATION TO EXERCISE
The grant to a Participant of an Option, LSAR, Tandem SAR or Stand-Alone SAR
shall impose no obligation upon such Participant to exercise such Option, LSAR,
Tandem SAR or Stand-Alone SAR.
21. TRANSFERS UNON DEATH OR PURSUANT TO A QUALIFIED DOMESTIC RELATIONS ORDER
Upon the death of a Participant or pursuant to a qualified domestic
relations order, outstanding Incentive Awards granted to such Participant may be
exercised only by the executors or administrators of the Participant's estate or
by any person or persons who shall have
26
acquired such right to exercise by will, the laws of descent and
distribution, or pursuant to a qualified domestic relations order. No
transfer by will, the laws of descent and distribution, or pursuant to a
qualified domestic relations order, of any Incentive Award, or the right to
exercise any Incentive Award, shall be effective to bind the Company unless
the Committee shall have been furnished with (a) written notice thereof and
with a copy of the will, order, and/or such evidence as the Committee may
deem necessary to establish the validity of the transfer and (b) an
agreement by the transferee to comply with all the terms and conditions of
the Incentive Award that are or would have been applicable to the
Participant and to be bound by the acknowledgements made by the Participant
in connection with the grant of the Incentive Award.
22. EXPENSES AND RECEIPTS
The expenses of the Plan shall be paid by the Company. Any proceeds received
by the Company in connection with any Incentive Award will be used for general
corporate purposes.
23. PARTICINANT'S FAILURE TO COMPLV
In addition to the remedies of the Company elsewhere provided for herein,
failure by a Participant to comply with any of the terms and conditions of the
Plan or the agreement executed by such Participant evidencing-an Incentive
Award, unless such failure is remedied by such Participant within ten days after
having been notified of such failure by the Committee, shall be grounds for the
cancellation and forfeiture of such Incentive Award, in whole or in part, as the
Committee, in its absolute discretion, may determine.
24. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall be effective as of June 30, 1992, subject to approval by the
Company's Stockholders at their next Annual or Special Meeting. The Plan shall
terminate on June 30, 2002, unless earlier terminated pursuant to Section 19. No
grants may be made under the Plan after June 30, 2002.
27
FULL HOUSE RESORTS, INC.
2300 W. SAHARA AVE.
SUITE 450, BOX 23
LAS VEGAS, NV 89102
THIS PROXY IS SOLICITED ON BEHALF OF THE
COMPANY'S BOARD OF DIRECTORS
The undersigned holder of Common Stock of Full House Resorts, Inc., a
Delaware corporation ("Full House"), hereby appoints William P. McComas and
Ronald K. Richey, and each of them, as proxies for the undersigned, each with
full power of substitution, for and in the name of the undersigned to act for
the undersigned and to vote, as designated on the reverse, all of the shares of
stock of Full House that the undersigned is entitled to vote at the 1999 Annual
Meeting of Stockholders of Full House to be held on June 8, 1999 at 1:00 p.m.,
local time, at the Four Seasons Hotel, 3950 Las Vegas Blvd. S., Las Vegas, NV
89109, and at any adjournment(s) or postponement(s) thereof.
(SEE REVERSE SIDE)
PLEASE SIGN, DATE AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
FULL HOUSE RESORTS, INC.
JUNE 8, 1999
/down arrow/ Please Detach and Mail in the Envelope Provided /down arrow/
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE ELECTION OF ALL THE NOMINEES FOR DIRECTOR LISTED BELOW.
(1) To elect five (5) directors to the Board of Directors of Full House to hold
office until the next Annual Meeting of Stockholders of Full House following
their election or until their successors are duly elected and qualified.
Nominees: William P. McComas, Gregg R. Giuffria, James C. Gilstrap, Lee A.
Iacocca and Ronald K. Richey
INSTRUCTION: To withhold authority to vote for any individual nominee, write the
nominee's name in the space provided below.
________________________________________________________________________________
(2) Approval of Amendment to the Company's 1992 FOR AGAINST ABSTAIN
Incentive Plan. [ ] [ ] [ ]
(3) Ratification of the appointment of Deloitte &
Touche LLP to serve as Full House's independent
accounts for the current year. [ ] [ ] [ ]
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting and any adjournments
or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES LISTED ABOVE, AND THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN IT IN THE
ENVELOPE PROVIDED. NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
Signature _____________ Signature if held jointly ___________ Dated: _____, 1999
(SIGNATURE IF HELD JOINTLY)
IMPORTANT: Please sign exactly as your name appears hereon and mail it promptly
even though you now plan to attend the meeting. When shares held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership please sign in partnership
name by authorized person.