Full House Resorts, Inc. (NASDAQ:FLL) entered into a Standby Purchase Agreement (the “Purchase Agreement”) with Daniel R. Lee, the Company’s chief executive officer, president and a director of the Company (the “Standby Purchaser”), pursuant to which the Standby Purchaser has agreed to purchase all shares of the Company’s common stock, par value $0.00001 per share (“Common Stock”) in the Rights Offering (described and defined in Item 8.01 below) which are not subscribed for by the rightsholders, to the extent necessary to generate $5,000,000 in gross proceeds.
Under the Purchase Agreement, the Standby Purchaser has committed to purchase, at the Subscription Price (defined in Item 8.01 below), (i) up to 1,000,000 additional shares to the extent that they are available after the rightsholders exercise their Basic Subscription Rights (defined below), and (ii) all unsubscribed shares available after the rightsholders exercise the Oversubscription Rights (defined below).
The Standby Purchaser and family trusts controlled by the Standby Purchaser collectively own 233,369 shares of our Common Stock, representing 1.2% of our outstanding Common Stock. Any shares of Common Stock issued to the Standby Purchaser in connection with the Purchase Agreement will be “restricted securities” as that term is defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”).
Consummation of the standby purchase is subject to usual and customary closing conditions. The Company has agreed to reimburse the Standby Purchaser for actual legal expenses in connection with the rights offering and the Purchase Agreement.
Registration Rights Agreement
On October 7, 2016, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Standby Purchaser, pursuant to which the Company agrees to register the shares of Common Stock purchased by the Standby Purchaser under the Purchase Agreement.
Pursuant to the Registration Rights Agreement, the Company is required to file a registration statement on Form S-3 (as amended or supplemented from time to time, the “Resale Registration Statement”) with the U.S. Securities and Exchange Commission (the “SEC”) to register for resale all shares of Common Stock purchased by the Standby Purchaser under the Purchase Agreement. The Company must cause the Resale Registration Statement to be declared effective (i) one year after the closing date of the rights offering if the number of unsubscribed shares (not including the first 1,000,000 shares) purchased under the Standby Purchase Agreement is less than 500,000, (ii) six months after the closing date of the rights offering if the number of unsubscribed shares (not including the first 1,000,000 shares) purchased under the Purchase Agreement is equal to at least 500,000 shares, or (iii) in the event of the death or disability of the Standby Purchaser, six months after the date of death or determination of disability. Under the terms of the Registration Rights Agreement, the Resale Registration Statement must be filed no later than 60 days before the applicable date of effectiveness.
The Company is required to maintain the effectiveness of the Resale Registration Statement until the earlier of (i) the tenth anniversary of the effective date of the Resale Registration Statement, (ii) the date on which the Standby Purchaser has sold all of the securities covered by such registration statement, or (iii) the date on which the Standby Purchaser may sell all of the securities covered by such registration statement without restriction or limitation under Rule 144 promulgated under the Securities Act.
