Item 1.01 Entry into a Material Definitive Agreement
American Place Development Agreement
On January 18, 2023, Full House Resorts, Inc.'s (the "Company's") wholly-owned
subsidiary, FHR-Illinois, LLC, a Delaware limited liability company ("FHR-IL"),
and the City of Waukegan, Illinois (the "City") entered into a Development and
Host Community Agreement (the "Development Agreement") related to FHR-IL's
development, construction and operation of a temporary casino facility ("The
Temporary") and a permanent casino facility ("American Place") in Waukegan,
Illinois.
The Development Agreement establishes terms and conditions related to the
project, including project milestones requiring (i) the completion of The
Temporary's construction by January 1, 2023, with operations commencing within
three months of such completion and (ii) the completion of American Place's
construction within 36 months of The Temporary's opening, with operations also
commencing within three months of such completion. The Development Agreement
provides a mechanism for the extension of the above deadlines in certain
circumstances, including if FHR-IL is diligently pursuing construction of the
facilities. The Development Agreement also establishes the procedures for
obtaining approvals for current and future phases of the project, penalties for
failure to complete the phases of the project on time, and standards and terms
for the use, operations and maintenance of the property. The Development
Agreement also requires FHR-IL to pay $150,000 for anticipated public works and
public safety costs related to the opening of The Temporary and to make annual
contributions to the City of at least $500,000 to support charitable programs
and causes following the commencement of operations at American Place.
Customary regulatory approvals are required to commence operations at The
Temporary and American Place. FHR-IL has the right to terminate the Development
Agreement and the Ground Lease (defined below) if it has complied with its
obligations related to the application and pursuit of applicable regulatory
approvals and either (i) such approvals are denied, materially delayed, or
otherwise not approved; or (ii) FHR-IL determines, in its reasonable judgment,
that any necessary regulatory approvals cannot be obtained using its best
efforts.
Ground Lease
On January 18, 2023, FHR-IL and the City entered into a 99-year Ground Lease
(the "Ground Lease") for approximately 31.7 acres of land (the "City-Owned
Parcel"). The City-Owned Parcel and an adjacent 10-acre parcel owned by FHR-IL
will comprise the location of American Place, including The Temporary. The
Ground Lease is a triple-net lease whereby FHR-IL is required to pay all taxes,
utilities, and expenses associated with the leased property. FHR-IL will pay
annual rent under the Ground Lease in an amount equal to the greater of
(i) $3,000,000 (the "Annual Guaranteed Minimum Rent"), or (ii) 2.5% of Adjusted
Gross Receipts (as defined in Section 4 of the Illinois Gambling Act) generated
by either the Temporary or American Place. The Ground Lease is only terminable
to the extent that the Development Agreement is terminated.
FHR-IL has the right to purchase the City-Owned Parcel at any time during the
term of the Ground Lease for $30 million, but if it does so prior to the opening
of American Place, it must continue to pay rent due to the City under the Ground
Lease until the permanent casino is open. The Ground Lease contains customary
terms with respect to taxes, leasehold mortgage, insurance, condemnation, and
other terms and conditions typically found in long-term ground leases of similar
nature.
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