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:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to |_| ss.240.14a-11(c)
or |_| ss.240.14a-12
DUNES HOTELS AND CASINOS, INC.
(Name of Registrant as Specified In Its Charter)
-------------------------------------
(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 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: ___________________
|_| Fee paid previously with preliminary materials.
|_| 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: ___________________________________________
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Preliminary Copy
DUNES HOTELS AND CASINOS, INC.
4600 Northgate Boulevard, Suite 130
Sacramento, CA 95834
(916) 929-2295
To the Shareholders of Dunes Hotels and Casinos, Inc.:
You are cordially invited to attend the Annual Meeting (the "Meeting")
of the Shareholders of Dunes Hotels and Casinos, Inc. ("Dunes"), which will be
held on Friday, April 14, 2000, at 10:00 a.m. (Pacific Time), at the Host
Airport Hotel, 6945 Airport Boulevard, Sacramento, CA 95837.
The accompanying Notice of the Annual Meeting of the Shareholders and
Proxy Statement contain the matters to be considered and acted upon, and you
should read such material carefully.
The Proxy Statement contains important information concerning the
election of the Board of Directors of Dunes. I urge you to give this matter your
close attention, as it is of great significance to Dunes and its shareholders.
The Board of Directors strongly recommends your approval of the nominees for the
Board of Directors. In addition, shareholders may transact such other business
as may properly come before the Meeting or any adjournment thereof.
We hope you will be able to attend the Meeting, but, if you cannot do
so, it is important that your shares be represented. Accordingly, we urge you to
mark, sign, date, and return the enclosed proxy promptly. You may, of course,
revoke your proxy if you attend the meeting and choose to vote in person.
Sincerely,
Edward Pasquale
President
March 27, 2000
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Preliminary Copy
DUNES HOTELS AND CASINOS, INC.
4600 Northgate Boulevard, Suite 130
Sacramento, CA 95834
(916) 929-2295
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On Friday, April 14, 2000
NOTICE IS HEREBY GIVEN that an Annual Meeting of the Shareholders of
Dunes Hotels and Casinos, a New York corporation ("Dunes" or the "Company"),
will be held on Friday, April 14, 2000, at 10:00 a.m. (Pacific Time), at the
Host Airport Hotel, 6945 Airport Boulevard, Sacramento, CA 95837 for the
following purposes, all of which are more completely discussed in the
accompanying Proxy Statement:
1. The election of five directors to hold office until the next
Annual Meeting of Shareholders or until their successors are
elected and qualified; and
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
All of the above-matters are more fully described in the accompanying
Proxy Statement. Only shareholders of record at the close of business on March
17, 2000, are entitled to notice of and to vote at the Annual Meeting of the
Shareholders.
BY ORDER OF THE BOARD OF DIRECTORS
Edward Pasquale, President
Sacramento, California
March 27, 2000
YOU ARE CORDIALLY INVITED TO ATTEND DUNES' ANNUAL MEETING OF SHAREHOLDERS. IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN
IF YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED TO COMPLETE,
SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF
YOU ATTEND THE MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY
GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE
EXERCISE THEREOF.
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PROXY STATEMENT OF
DUNES HOTELS AND CASINOS, INC.
4600 Northgate Boulevard, Suite 130
Sacramento, CA 95834
(916) 929-2295
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is furnished to the shareholders of Dunes Hotels
and Casinos, Inc. ("Dunes" or the "Company") in connection with the solicitation
of proxies on behalf of Dunes' Board of Directors for use at Dunes' Annual
Meeting of the Shareholders (the "Meeting") to be held on Friday, April 14,
2000, at 10:00 a.m. (Pacific Time), at the Host Airport Hotel, 6945 Airport
Boulevard, Sacramento, CA 95837, and at any and all adjournments thereof. Only
shareholders of record on March 17, 2000, will be entitled to notice of and to
vote at the Meeting.
The proxy solicited hereby, if properly signed and returned to Dunes and
not revoked prior to its use, will be voted at the Meeting in accordance with
the instructions contained therein. If no contrary instructions are given, each
proxy received will be voted "FOR" the five nominees for the Board of Directors,
and at the proxy holders' discretion, on such other matters, if any, which may
come before the Meeting (including any proposal to adjourn the Meeting). Any
shareholder giving a proxy has the power to revoke it at any time before it is
exercised by: (i) filing with Dunes written notice of its revocation addressed
to Edward Pasquale, President, Dunes Hotels and Casinos, Inc., 4600 Northgate
Boulevard, Suite 130, Sacramento, CA 95834; (ii) submitting a duly executed
proxy bearing a later date; or (iii) appearing at the Meeting and giving the
Corporate Secretary notice of his or her intention to vote in person.
This solicitation of proxies is being made by Dunes' Board of Directors.
Dunes will bear the entire cost of preparing, assembling, printing, and mailing
proxy materials furnished by the Board of Directors to shareholders. In addition
to the solicitation of proxies by use of the mail, some of the officers,
directors, and employees of Dunes may, without additional compensation, solicit
proxies by telephone or personal interview, the cost of which Dunes will also
bear. Dunes will reimburse banks, brokerage houses, and other custodians,
nominees, and fiduciaries for their reasonable expenses in forwarding these
proxy materials to shareholders whose stock in Dunes is held of record by such
entities. Dunes estimates that the costs and expenditures related to this
solicitation will be approximately $_______, of which $______ has been spent to
date. Dunes believes that these costs and expenses are representative of those
costs normally expended for a solicitation for an election of directors.
This Proxy Statement and form of proxy were first mailed to shareholders
on or about March 27, 2000. A copy of the Company's Annual Report on Form 10-KSB
is accompanying this proxy statement.
RECORD DATE AND VOTING RIGHTS
Dunes is authorized to issue up to 25,000,000 shares of Common Stock,
par value of $.50 per share. As of March 27, 2000, 7,799,780 shares of Common
Stock were issued of which 5,094,340 shares were outstanding. Dunes is also
authorized to issue up to 10,750 shares of preferred stock, $.50 par value, of
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which 10,512 shares have been designated as Series B $7.50 Cumulative Preferred
Stock, $.50 par value ("Series B Preferred Stock") are issued, and 9,610 shares
of Series B Preferred Stock are outstanding. Each share of Common Stock and each
share of Series B Preferred Stock is entitled to one vote on all matters
submitted for shareholder approval. The Common Stock and Series B Preferred
Stock shall vote together as a class. The record date for determination of
shareholders entitled to notice of and to vote at the Meeting is March 17, 2000.
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted at the Meeting in accordance with the directions
given. A majority of the outstanding shares of Common Stock and Series B
Preferred Stock, together as a class, must be represented at the Meeting to
constitute a quorum for the transaction of business. Regarding the election of
directors, shareholders may vote in favor of all nominees, or withhold their
votes as to all nominees, or withhold their votes as to specific nominees, by
following the instructions on the enclosed proxy card. If no specific
instructions are given, the shares represented by a signed proxy will be voted
FOR the election of the Board's nominees. Directors will be elected from
nominees receiving the plurality of affirmative votes cast by the holders of the
Common Stock and Series B Preferred Stock voting in person or by proxy at the
Meeting. Dunes' certificate of incorporation does not provide for cumulative
voting. Abstentions and broker non-votes will be voted for purposes of quorum,
but will have no effect for the election of directors since directors will be
chosen from the five nominees receiving the plurality of affirmative votes.
A shareholder may choose to withhold from the proxyholders the authority
to vote for any of the nominees by marking the appropriate box on the proxy card
and striking out the names of the disfavored nominee as they appear on the proxy
card. In that event, the proxyholders will not cast any of the shareholder's
votes for nominees whose names have been crossed out, but they will retain the
authority to vote for the nominees whose names have not been struck out, and for
any other nominees who may be properly nominated at the Annual Meeting. Ballots
will be available at the Annual Meeting for persons desiring to vote in person.
Change in Control of Dunes
On June 3, 1999, GFS Acquisition Company, Inc., a subsidiary of General
Financial Services, Inc., a Kansas corporation ("GFS"), purchased from the
Federal Depository Insurance Corporation ("FDIC") for $1,126,496 any and all
rights and interests of the FDIC under an order issued on September 8, 1986 (the
"Judgment"), in the matter of Eureka Federal Savings and Loan Association v.
John B. Anderson, Edith Anderson, Maxim, Inc., Dunes Hotels and Casinos, Inc.
and Baby Grand Corp. in the District, Clark County, Nevada. Pursuant to the
terms of the Judgment, Mr. Anderson pledged 3,000,000 shares of Common Stock of
the Company to secure the Judgment. Mr. Anderson is in default under the
Judgment and related security agreements, and GFS Acquisition intends to
exercise its rights under the Judgment and related security agreements to
acquire direct ownership to the 3,000,000 shares, which represents approximately
58.89% of the outstanding shares of the Company's Common Stock.
On July 6, 1999, the Company filed a Complaint in Interpleader in the
Superior Court of California for the County of Yolo against J.B.A. Investments,
Inc., GFS, GFS Acquisition, John B. Anderson, Edith Anderson, Cedar Development
Company, and the FDIC to resolve conflict of claims concerning who has the
<PAGE>3
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power to transfer and otherwise dispose of the 3,000,000 shares and by whom
voting and other rights connected with the 3,000,000 shares may be exercised.
The Interpleader Complaint, along with another case, was consolidated and
transferred to the United States District Court, District of Nevada. On January
6, 2000, the court ruled, among other things, that the Company is required to
hold an annual meeting on or before April 14, 2000, and that GFS Acquisition may
vote the 3,000,000 shares. As a result of the court's decision there has been a
change of control in the Company. Based on its Schedule 13D filed with the
Securities and Exchange Commission ("Commission"), GFS Acquisition beneficially
owns 3,853,422 shares of Common Stock which represent approximately 75.64% of
the outstanding shares of Common Stock of the Company. GFS Acquisition purchased
shares of Common Stock from its working capital and borrowed funds pursuant to
business loan agreements between GFS Acquisition and Commerce Bank N.A. and
Citizens Bank and Trust in the aggregate amount of up to $2,500,000.
PROPOSAL ONE
ELECTION OF DIRECTORS
Five directors are to be elected at the Meeting, each to serve until the
next meeting and until his successor shall be elected and qualified or until his
earlier death, resignation, or removal. Prior to the Meeting, there were seven
directors. Messrs. Wayne O. Pearson and John B. Anderson have decided not to
seek reelection. The Board of Director intends to set the number of directors to
five effective immediately after the election.
Pursuant to a Consent and Undertaking entered into with the Commission
on October 13, 1977, the Board of Directors must consist of at least three
directors satisfactory to the Commission (the "Independent Directors"). Messrs.
Pearson, Marincovich, and O'Leary represent these Independent Directors. As
previously disclosed, Mr. Pearson decided not to seek reelection at the April
2000 meeting of Shareholders. At this time, the Board has not yet selected a
third Independent Director. If all of the Board of Directors' nominees are
elected, after the Meeting, Dunes will immediately seek another Independent
Director to serve as the third Independent Director subject to no objection by
the Commission.
There are no family relationships between any of the directors and
executive officers of Dunes.
Based on its Schedule 13D, GFS Acquisition is the beneficial owner of
3,853,422 shares of Common Stock representing approximately 75.64% of the
outstanding shares. GFS Acquisition has indicated that it does not intend to
solicit any proxies in connection with the Annual Meeting but will propose its
own slate of Directors at the Meeting. As of the date of the proxy statement,
GFS Acquisition has not yet determined who it intends to elect to the Board.
Based upon GFS Acquisition's ownership, if GFS Acquisition elects a slate of its
directors, the election of their nominees is assured. See "Legal Proceedings."
Information About the Dunes Nominees for Director
The following table sets forth the name and business address of each of
the Dunes nominees for director of the Company. All of the Dunes nominees listed
and described below have expressed their willingness to serve. The information
contained herein has been furnished by the respective nominees. The present
principal occupation and business experience for at least the past five years
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for each of the Boards' nominees for director is set forth in the following
table. However, if GFS Acquisition elects its own slate of directors, it is
unlikely that any of the Board's nominees will be re-elected.
Name Principal Occupation and Background For the Past Five Years
- ---- -----------------------------------------------------------
Edward Pasquale Edward Pasquale is and has been a director of the Company
since December 1984. He was a director and officer of
certain of the Company's subsidiaries from December 1984
until September 1988. On January 27, 1998, he was elected
president and a director of certain of the Company's
subsidiaries. On December 11, 1997, Mr. Pasquale was elected
president of the Company. Mr. Pasquale has been a member of
the Company's audit committee since May 19, 1994. He is
presently, and has been since September 1983, self-employed
as a financial consultant, with emphasis in litigation
support services, bankruptcy proceedings, and corporate
reorganization. He is a Certified Public Accountant,
licensed to practice in the States of California and Nevada.
Mr. Pasquale is 56. His principal business address is 31
Sycamore Creek, Irvine, California 92612.
Brent L. Bowen Brent L. Bowen is and has been a director, officer and
member of the audit committee of the Company since December
1984. He has also been a director and officer of certain of
the Company's subsidiaries since December 1984. Mr. Bowen
was employed by Anderson Farms from 1981 to 1995 as a
business and financial analyst. Mr. Bowen was an employee of
M & R Investments from 1995 to 1998. Mr. Bowen has
experience in the hotel/casino, farming, real estate,
home-building, rice mill, commodities and banking
industries. Mr. Bowen retired from the Company as an
employee in 1998. He is 71. His principal business address
is 15361 Pear Valley Lane, Auburn, California 95603.
Andrew Marincovich Andrew Marincovich is and has been since August 1978, a
director and member of the Audit Committee of the Company.
Since July 1983, he has been Chairman of the Audit
Committee. He is President and Executive Officer of
Marincovich & Company, a certified public accounting firm in
Rancho Palos Verdes, California. Mr. Marincovich is a
Certified Public Accountant, licensed to practice in
California. He is 78. Mr. Marincovich's principal business
address is 28924 S. Western Avenue, Suite 206, Rancho Palos
Verdes, California 90275.
Donald O'Leary Donald J. O'Leary was elected to the Company's Board of
Directors and appointed to the Company's Audit Committee on
May 19, 1994. Mr. O'Leary is an attorney and is a member of
the California, Virginia and District of Columbia Bars. He
is currently in private practice in California. Prior to
entering private practice, Mr. O'Leary was a trial attorney
for the U.S. Department of Justice and resident counsel for
several large real estate companies. Mr. O'Leary is 69. His
principal business address is Cove House, P. O. Box 9364,
Palm Springs, California 92263.
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Name Principal Occupation and Background For the Past Five Years
- ---- -----------------------------------------------------------
Erik J. Tallstrom Erik J. Tallstrom is and has been a director of the Company
since December 1984. Prior to 1985, he was self-employed as
a certified public accountant, and was a financial
consultant to Mr. Anderson. From November 1985 to December
1996, he was a business partner with Mr. Anderson in several
real estate developments, including Rancho Murieta in
California. Currently, Mr. Tallstrom acts as a consultant to
various real estate companies and is a part owner of a tile
manufacturing company. Mr. Tallstrom is 52. His principal
business address is 3 Juniper Court, Woodland, California
95695.
Information About Dunes' Directors Who Have Decided Not to Seek Reelection
The following table sets forth information regarding Messrs. Anderson and
Pearson who are current directors but will not seek re-election.
Name Principal Occupation and Background For the Past Five Years
- ---- -----------------------------------------------------------
John B. Anderson John B. Anderson is and has been a director of the Company
since May 1984 and until December 11, 1997, served as the
Company's chairman of the Board and president. On March 10,
1992, BGC (an Anderson entity) filed a voluntary petition
for relief under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the District of Nevada.
On November 10, 1992, the United States Bankruptcy Court
confirmed and approved BGC's plan of reorganization which
became effective December 1, 1992. On December 20, 1994, the
Chapter 11 case was closed. On April 6, 1992, Maxim
Development Co. (an Anderson entity) filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code
in the United States Bankruptcy Court for the Eastern
District of California, which bankruptcy was subsequently
dismissed on March 12, 1993. On June 4, 1998, BGC filed a
petition for relief under Chapter 7 of the Bankruptcy Code
in the United States Bankruptcy Court for the District of
Nevada. Mr. Anderson is 57.
Wayne O. Pearson Wayne O. Pearson is and has been a director and a member of
the Audit Committee of the Company since August 1978. From
March 1975 to May 1993, he was a marketing analyst for R&R
Advertising Agency, Las Vegas, Nevada. Mr. Pearson has been
sole proprietor of Wayne Pearson Consulting, Las Vegas,
Nevada, a business and public opinion research company,
since January 1970. Mr. Pearson is 69.
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Committees of the Board; Meetings and Attendance
The Board has an Audit Committee currently consists of Messrs. Bowen,
Marincovich, O'Leary, Pasquale, and Pearson. The primary functions of the Audit
Committee are to review the scope and results of audits by the Company's
independent auditors, the Company's internal accounting controls, the non-audit
services performed by the independent accountants, and the cost of accounting
services.
In addition, pursuant to the Consent and Undertaking entered into with
the Commission, the Board of Directors must establish the Audit Committee, the
majority of which shall consist of the Independent Directors. In addition to the
duties discussed above, the Audit Committee shall (a) review any and all
proposed transaction of any kind or nature to which Dunes and any of its
subsidiaries is to be a party provided that such transaction is (i) in excess of
$20,000 in the aggregate per year and (ii) one or more of the following is to
have a direct or indirect interest in such transaction: (1) any director or
officer of Dunes; (2) any director or officer of any subsidiary or affiliate of
Dunes; (3) any security holder who to Dunes' knowledge directly or indirectly
owns or controls more than five percent of the outstanding shares of any class
of stock of Dunes; (4) any employee of or consultant to Dunes or any of its
subsidiaries or affiliates whose annual compensation from Dunes and its
subsidiaries and affiliates exceeds $75,000 in the aggregate; or (5) any
relative or spouse of any of the foregoing person or any relative or spouse who
has the same home as such person; and (b) review the aforesaid proposed
transaction for fairness and business purpose and shall by majority vote of the
Audit Committee approve such transaction.
The Board does not have a nominating committee or compensation
committee.
The Board met eight times during 1999, the Board and Audit Committee
jointly met seven times during 1999, and the Audit Committee met one time during
1999. Each director attended at least seventy-five percent of the meetings of
the Board and of the committees upon which he served.
Vote Required for the Election of Directors
Directors will be elected from the nominees receiving the plurality of
the votes of the shares of Common Stock and Series B Preferred Stock present and
voting together as a class at the Meeting. Each share of Common Stock and Series
B Preferred Stock which is represented, in person or by proxy, at the Meeting
will be accorded one vote on each nominee for director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
ALL OF THE FIVE (5) ABOVE-LISTED NOMINEES.
Compliance With Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires Dunes'
directors, executive officers, and persons who own more than 10% of Dunes'
outstanding Common Stock to file reports of ownership and changes in ownership
with the SEC. Directors, executive officers, and shareholders of more the 10% of
Dunes' Common Stock are required by SEC regulations to furnish Dunes with copies
of the Section 16(a) forms they file.
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Based solely on a review of the copies of such forms furnished to Dunes,
or written representations that such filings were not required, Dunes believes
that, during the calendar year 1999, its directors and officers were in
compliance with all applicable all Section 16(a) filing requirements.
Executive Officers
The name, age and description of the executive officers of Dunes and its
subsidiaries are listed below.
<TABLE>
<CAPTION>
Name Age Office and Background
---- --- ---------------------
<S> <C> <C>
Edward Pasquale 56 See "Election of Directors"
Chairman of the Board and President
Brent L. Bowen, Secretary 71 See "Election of Directors"
Marvin P. Johnson, 60 Mr. Johnson has served as Chief Accounting
Principal Financial and Accounting Officer since September 1998. Prior to that
Officer time since July 1993, Mr. Johnson has served
as accountant/office manager of M&R
Investment Company, Inc., a subsidiary of
Dunes.
</TABLE>
Executive Compensation
Executive officers are appointed by, and serve at the discretion of, the
Board of Directors. The following table sets forth the compensation paid to
Edward Pasquale, President during the periods indicated. No executive officer of
the Company received compensation in excess of $100,000 for the year ended
December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
------------------------------- ------------------------------ ------------
Restricted Securities LTIP All Other
Name and Principal Other Annual Stock Underlying Payouts Compensa-
Position Year Salary Compensation ($) Award(s) ($) Options (#) ($) tion
- -------------------------------------------------------------- ------------------------------ --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward Pasquale 1999 $ 0 $ 0 $ 0 0 $ 0 $62,568 (1)
President and CEO 1998 $ 0 $ 0 $ 0 0 $ 0 $36,862 (2)
1997 $ 0 $ 0 $ 0 0 $ 0 $2,500 (3)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents director's fees of $15,000, audit committee fees of $12,000, and
consulting fees of $35,568.
(2) Represents director's fees of $15,000, audit committee fees of $12,000, and
consulting fees of $9,862.
(3) Mr. Pasquale was elected president in December 1997. The amount represents
one-twelfth of his total compensation consisting of director's fees of
$15,000, audit committee fees of $12,000, and consulting fees of $3,000.
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The Company pays each director an annual fee of $15,000 pro rated
monthly. Director's fees due Mr. Anderson are retained by the Company and
applied against amounts due the Company from entities owned or controlled by Mr.
Anderson. The assignment of Mr. Anderson's directors fees will remain in effect
until changed by the Board of Directors, although Mr. Anderson has decided not
to seek re-election. In addition to their regular directors fees and audit
committee fees, Board members and audit committee members are paid $150 per hour
for special projects considered to be outside the scope of their duties as Board
and audit committee members. In addition, they receive a travel fee of $300 for
each meeting attended.
Messrs. Marincovich, Pearson, Bowen, Pasquale and O'Leary are all
members of the Company's Audit Committee. Audit Committee members receive
compensation of $1,000 per month plus a travel fee of $300 for each meeting
attended. For services rendered as Audit Committee members and consultants
during the fiscal year 1999, Messrs. Marincovich, Pearson, Pasquale, O'Leary and
Bowen were paid $14,400, $12,900, $47,568, $14,100, and $12,000, respectively.
The Company does not have a plan, pursuant to which cash or non-cash
compensation is paid or distributed, or is proposed to be paid or distributed in
the future. The Company does not have any pension or other benefit plans.
Further, the Company has no stock option plans and has not granted any stock
options to its officers or directors.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 17, 2000, the number and
percentage of shares of the Company's Common Stock which are beneficially owned,
directly or indirectly, by (a) each shareholder who owns more than 5% of the
outstanding shares; (b) each of the Company's directors; (c) the Company's named
executive officer; and (d) all of the Company's directors and executive officers
as a group. The shares "beneficially owned" are determined under the Commission
rules, and do not necessarily indicate ownership for any other purpose. In
general, beneficial ownership includes shares over which the indicated person
has sole or shared voting or investment power and shares which he/she has the
right to acquire within 60 days of March 17, 2000. Unless otherwise indicated,
the persons listed have sole voting and investment power over the shares
beneficially owned.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of Common
Beneficial Owner Beneficial Ownership (1) Stock Outstanding
- -------------------- ------------------------ -----------------
<S> <C> <C>
John B. Anderson(2) 3,000,000 58.89%
P.O. Box 1410
Davis, CA 95617
GFS Acquisition Company, Inc.(3) 3,853,422 75.64%
8441 E. 32nd Street N.
Wichita, KS 67226
Edward Pasquale 0 0
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Name and Address of Amount and Nature of Percent of Common
Beneficial Owner Beneficial Ownership (1) Stock Outstanding
- -------------------- ------------------------ -----------------
Donald J. O'Leary 0 0
Erik J. Tallstrom 0 0
Wayne Pearson 0 0
Brent L. Bowen 2,000 *
Andrew P. Marincovich 200 *
All Directors and Officers
as a Group (7 Persons) 3,002,200 58.93%
</TABLE>
* less than one percent.
(1) In furnishing this information, the Company is relying upon the contents of
statements filed with the Commission pursuant to Section 13(d) and Section 13(g)
of the Exchange Act.
(2) Mr. Anderson, through various entities owned or controlled by him, claims
beneficial ownership of, and shared voting and shared investment power with
respect to the reported shares. On June 3, 1999, GFS Acquisition purchased from
the FDIC all rights and interests of the FDIC under the Judgment in the matter
of Eureka Federal Savings and Loan Association v. John B. Anderson, Edith
Anderson, Maxim, Inc., Dunes Hotels and Casinos Inc., and Baby Grand Corp. in
the District Court, Clark County, Nevada, Case No. A245662. Pursuant to the
terms of the Judgment, Mr. Anderson pledged 3,000,000 shares of Common Stock to
secure the Judgment. As disclosed in note (3), GFS Acquisition claims ownership
to these 3,000,000 shares. Pursuant to a court order entered into on January 6,
2000, GFS Acquisition has the right to vote the 3,000,000 shares. These
3,000,000 shares are subject to litigation.
Previously, 1,280,756 shares of Common Stock were held by Baby Grand
Corporation, a corporation controlled by Mr. Anderson. These 1,280,756 shares
were pledged to M & R Investment Corporation, a wholly-indirect subsidiary of
the Company, to secure a loan to Baby Grand Corporation from M & R Investment.
In 1998, Baby Grand Corporation filed for bankruptcy. In March 2000, M & R
Investment foreclosed upon the 1,280,756 shares and now has title to the shares.
The 3,000,000 shares of Common Stock do not include the 1,280,756 shares now
held by M & R Investment Corporation.
(3) Of the 3,853,422 shares of Common Stock, 3,000,000 shares relate to shares
held in the name of J.B.A. Investment, Inc. In June 1999, GFS Acquisition
acquired an interest in the Judgment from the FDIC together with the underlying
security and part of a judgment against Mr. Anderson and his affiliates.
Included in part of that sale was the 3,000,000 shares discussed in note (2)
above. As previously disclosed, the ownership of the 3,000,000 shares is under
dispute. Pursuant to a court order entered into on January 6, 2000, GFS has the
right to vote these 3,000,000 shares at the Meeting, although ownership of such
shares is still under dispute. GFS Acquisition has indicated that at the Meeting
it intends to nominate and vote for its slate of directors. See Legal
Proceedings.
The following table sets forth, as of March 17, 2000, the number and
percentage of shares of the Company's Series B preferred stock which are
beneficially owned, directly or indirectly, by each shareholder who owns more
than 5% of the outstanding shares. No director or officer has any beneficial
ownership in the Series B preferred stock. Unless otherwise indicated, the
person listed has sole voting and investment power over the preferred stock
beneficially owned.
<PAGE>10
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Name and Address of Amount and Nature of Percent of Series B
Beneficial Owner Beneficial Ownership Stock Outstanding
- ------------------- -------------------- -------------------
USI Corp. 1,811 18.84%
1040 Lawrence Court
Wichita, KS 67206
Legal Proceedings
The Company filed on July 6, 1999, a Complaint in Interpleader in the
Superior Court of California for the County of Yolo (the Interpleader Action).
The Interpleader Action was filed against GFS, and its subsidiary, GFS
Acquisition, Inc., John B. Anderson (a director hereinafter "Anderson"), and the
FDIC to resolve conflicting claims concerning who has the power to transfer and
otherwise dispose of 3,000,000 shares (hereinafter the "3,000,000 Shares") of
the Company in the name of J.B.A. Investments and by whom voting and other
rights connected with the 3,000,000 Shares may be exercised. On July 26, 1999
the Interpleader Action was removed to the United States District Court for the
Eastern District of California and, on September 20, 1999, it was transferred to
the United States District Court for the District of Nevada (Case No.
CV-S-99-1470-PMP (RJJ)).
The 3,000,000 Shares at issue were first pledged pursuant to a
creditor-debtor agreement to Eureka Federal Savings and Loan Association
(Eureka) in consideration of Eureka's forbearance from executing a judgment in
the original principal amount of approximately $33,700,000 obtained against
Anderson and affiliates. The 3,000,000 Shares were then pledged to the FDIC as
successor and assignee of EurekaBank, formerly known as Eureka. On July 14,
1995, the FDIC filed an action in the United States District Court for the
District of Nevada against Anderson and affiliates. The Company is not a party
to that action.
In May 1999, the FDIC solicited bids for the sale of a portion of its
loan, together with the underlying security, and a part of the judgment against
Anderson. Included in the package was the 3,000,000 Shares.
The successful bidder was GFS Acquisition.
On June 3, 1999, GFS Acquisition filed a Schedule 13D with the
Commission which stated that GFS Acquisition intends to exercise its rights
under the judgment and security documents. Subsequently, GFS Acquisition
attempted to transfer the 3,000,000 Shares to itself but Mr. Anderson objected,
claiming, among other things, that there was no change in ownership of the
3,000,000 Shares.
On January 6, 2000, the United States District Court for the District of
Nevada issued a preliminary injunction in the Interpleader Action requiring the
Company to hold a meeting of the shareholders on or before April 14, 2000, at
which the Company is directed to permit GFS Acquisition to vote the 3,000,000
Shares and enjoining the Company from wasting corporate assets during the
pendency of the Interpleader Action.
In its amended answer and counterclaim in the Interpleader Action, GFS
Acquisition has asserted counterclaims against the Company for conversion of the
3,000,000 Shares and for injunctive relief. In connection with its
counterclaims, GFS Acquisition is seeking damages of an unspecified amount,
<PAGE>11
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attorneys' fees, costs, and expenses, and other unspecified relief. Pursuant to
GFS Acquisition's Schedule 13D, GFS Acquisition does not intend to solicit
proxies but intends to nominate its slate of directors at the Meeting.
On March 23, 2000, GFS and GFS Acquisition served the Company with an
emergency motion for temporary restraining order and amendment of preliminary
injunction in the United States District Court for the District of Nevada (Case
No. CV-S-99-1470-PMP-(RJJ)) seeking the Company from (1) issuing new shares of
common or preferred stock; (2) continuing or completing a purported transaction
with USI; (3) doing anything that will hinder or effect GFS' majority voting
control of the Company; and (4) changing the status quo concerning ownership of
the Company as of January 6, 2000, except as to transactions previously approved
by GFS. The litigation relates to a purported transaction with USI Corp. On
January 28, 2000, the Company entered into a non-binding letter of intent with
USI whereby the Company would acquire not less than 3,000 shares of Series B
Preferred Stock of the Company valued at $275 per share, based upon the
liquidation value and accrued but unpaid dividends on such share, in exchange
for shares of the Company's Common Stock valued at $.70 per share. The entering
into the transaction was subject to a number of conditions, including entering
into a definitive stock purchase agreement, an independent third party appraiser
confirming the value of the Series B Preferred Stock and Common Stock and the
overall transaction, and determination by the United States District Court,
District of Nevada (No. CV-5-99-1470- PMP (RJJ)), that the proposed stock
purchase agreement was not subject to the Court's order of January 6, 2000.
Although the Company and USI had entered into subsequent discussions regarding
the acquisition, no definitive agreement has been entered into. The hearing for
the emergency motion has been scheduled for March 28, 2000, and the Company has
not yet responded to the motion.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In addition to fees for serving as directors to Dunes' Board of
Directors or as members of the Audit Committee, certain directors also have
provided consulting services to Dunes. During the past fiscal year Dunes has
entered into certain transactions with its directors or companies in which they
may have an interest. During the year ended December 31, 1999, no transaction
exceeded $60,000 except that Mr. Pasquale received fees of $62,568 consisting of
audit and director fees of $27,000 and consulting fees of $35,568. The
consulting fees primarily related to Mr. Pasquale's increased activity with the
Dunes as a result of its increased litigation activity.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors retained the firm of Piercy, Bowler, Taylor &
Kern as independent auditor for Dunes and its subsidiaries for the year 1999. It
is the intent of the current Board to retain Piercy, Bowler, Taylor & Kern as
independent auditors for the year 2000. A representative of Piercy, Bowler,
Taylor & Kern [will] [will not] be at the Meeting to respond to appropriate
questions.
OTHER MATTERS AND ADDITIONAL INFORMATION
The Board of Directors of Dunes knows of no other matters that may or
are likely to be presented at the Meeting. However, in such event, the persons
<PAGE>12
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named in the enclosed form of proxy will vote such proxy in accordance with
their best judgement in such matters pursuant to discretionary authority granted
in the proxy.
Shareholders should direct any requests for additional information to
Dunes Hotels and Casinos, Inc., 4600 Northgate Boulevard, Suite 130, Sacramento,
CA 95834.
SHAREHOLDER PROPOSALS
Shareholder proposals to be included in Dunes' Proxy Statement and Proxy
for its 2000 Annual Meeting must meet the requirements of Rule 14a-8 promulgated
by the SEC and must be received by Dunes no later than November 17, 2000.
ALL SHAREHOLDERS ARE URGED TO EXECUTE THE ACCOMPANYING PROXY AND TO RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE. SHAREHOLDERS MAY REVOKE THE PROXY IF THEY
DESIRE AT ANY TIME BEFORE IT IS VOTED.
BY ORDER OF THE BOARD OF DIRECTORS
Edward Pasquale,
President
March 27, 2000
<PAGE>
Preliminary Copy
DUNES HOTELS AND CASINOS, INC.
4600 Northgate Boulevard, Suite 130, Sacramento, CA 95834
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Edward Pasquale and Brent Bowen, and
each of them, as proxies with the power to appoint his or their successor, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Common Stock of DUNES HOTELS AND CASINOS, INC. ("Dunes"), held of
record by the undersigned on March 17, 2000, at the Annual Meeting of
Shareholders to be held on April 14, 2000, at 10:00 a.m. (Pacific Time), at the
Host Airport Hotel, 6945 Airport Boulevard, Sacramento, CA 95837, and at any and
all adjournments thereof.
1. Election of Directors.
FOR all nominees listed below _____ WITHOUT AUTHORITY ____
(except as marked to the contrary below) (to vote for all Nominees below)
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.)
Edward Pasquale Brent L. Bowen Andrew P. Marincovich
Donald J. O'Leary Erik J. Tallstrom
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR the five above-listed director nominees.
Please sign exactly as name appears on the share certificates. When
shares are 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.
_____________________________ ______________________________
Name (Print) Name (Print) (if held jointly)
Dated: ____________ _____________________________ ______________________________
Signature Signature (if held jointly)
_____________________________ ______________________________
_____________________________ ______________________________
(Address) (Address)
I will ___ will not ___ attend the Meeting. Number of persons to attend: _____.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
Preliminary Copy
DUNES HOTELS AND CASINOS, INC.
4600 Northgate Boulevard, Suite 130, Sacramento, CA 95834
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Edward Pasquale and Brent Bowen, and each
of them, as proxies with the power to appoint his or their successor, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
Series B $7.50 Preferred Stock of DUNES HOTELS AND CASINOS, INC. ("Dunes"), held
of record by the undersigned on March 17, 2000, at the Annual Meeting of
Shareholders to be held on April 14, 2000, at 10:00 a.m. (Pacific Time), at the
Host Airport Hotel, 6945 Airport Boulevard, Sacramento, CA 95837, and at any and
all adjournments thereof.
1. Election of Directors.
FOR all nominees listed below _____ WITHOUT AUTHORITY ____
(except as marked to the contrary below) (to vote for all Nominees below)
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.)
Edward Pasquale Brent L. Bowen Andrew P. Marincovich
Donald J. O'Leary Erik J. Tallstrom
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR the five above-listed director nominees.
Please sign exactly as name appears on the share certificates. When shares
are 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.
_____________________________ ______________________________
Name (Print) Name (Print) (if held jointly)
Dated: ____________ _____________________________ ______________________________
Signature Signature (if held jointly)
_____________________________ ______________________________
_____________________________ ______________________________
(Address) (Address)
I will ___ will not ___ attend the Meeting. Number of persons to attend: _____.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
