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 [ ] Confidential, For Use Of the
Commission Only (as permitted by
Rule 14a-6(e)(2)0
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
Full House Resorts, Inc
(Name of Registrant as Specified in Its Charter)
N/A
(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:
- --------------------------------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
<PAGE>
FULL HOUSE RESORTS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 1998
To the Stockholders
of Full House Resorts, Inc.:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of
Stockholders of Full House Resorts, Inc., ("Full House"), will be held at 1:00
p.m., local time, on June 15, 1998, at the DoubleTree Hotel Del Mar, 11915 El
Camino Real, San Diego, California 92130, 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 consider and vote upon a proposal to ratify the appointment
of Deloitte & Touche LLP as independent accountants of Full
House for the current year; and
3. 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 May
7, 1998 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.
Whether or not you expect to be present, please promptly mark,
sign and date the enclosed proxy and return it in the enclosed pre-addressed
envelope. No postage is required if mailed in the United States.
By Order of the Board of Directors
Megan G. McIntosh
Deadwood, South Dakota Secretary
May 15, 1998
THIS IS AN IMPORTANT MEETING AND ALL STOCKHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. THOSE STOCKHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE>
1998 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 1998
Annual Meeting of Stockholders of Full House to be held on June 15, 1998, 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 15, 1998.
Stockholders should review the information provided herein in conjunction with
the 1997 Annual Report on Form 10-KSB of Full House, a copy of which report
accompanies this Proxy Statement. The principal executive offices of Full House
are located at Deadwood Gulch Resort, Highway 85 South, P.O. Box 643, Deadwood,
South Dakota 57732, and its telephone number is (605) 578-1294.
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 Full House at the headquarters of Full House 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.
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 Full House. In addition to the use of mail, employees of Full
House may solicit proxies personally and by telephone. The employees of Full
House will receive no compensation for soliciting proxies other than their
regular salaries. Full House may request banks, brokers and other custodians,
nominees and fiduciaries to forward copies of the proxy material to their
principals and to request authority for the execution of proxies. Full House may
reimburse such persons for their expenses in so doing.
<PAGE>
PURPOSES OF THE MEETING
At the Annual Meeting, the stockholders of Full House will
consider and vote upon the following matters:
(1) The election of five (5) directors to the Board of Directors
of Full House to serve until the next Annual Meeting of
Stockholders of Full House following their election or until
their successors are duly elected and qualified;
(2) To consider and vote upon a proposal to ratify the appointment
of Deloitte & Touche LLP as independent accountants of Full
House for the current year; and
(3) Such other business as may properly come before the Annual
Meeting, including any adjournments or postponements thereof.
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, and in favor of the ratification of the appointment of
Deloitte & Touche LLP. 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.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on May 7,
1998 as the record date (the "Record Date") for determining stockholders of Full
House 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 of Full House outstanding (the "Preferred Stock"),
each of which is entitled to vote on all matters coming before the Annual
Meeting.
The attendance, in person or by proxy, of the holders of 40%
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 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 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 Full House.
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
2
<PAGE>
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.
SECURITY OWNERSHIP
The following table sets forth, as of May 7, 1998, 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
named in the Summary Compensation Table, and (iv) all directors and executive
officers of Full House as a group.
3
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES OF COMMON PERCENTAGE OF COMMON
OF BENEFICIAL OWNER STOCK OWNED(1) STOCK OUTSTANDING(2)
- --------------------------------------------- ----------------- -------------------------
<S> <C> <C>
William P. McComas(3) 1,440,037(4)(5)(6) 13.3%
Robert L. Brock(3) -0- *
James C. Gilstrap(3) 500 *
Lee A. Iacocca(3) 1,306,471(4)(6)(8) 12.3%
LKL Family Limited Partnership 1,306,471(6) 12.3%
10900 Wilshire Boulevard., Suite 520
Los Angeles, California 90024
Ronald K. Richey(3) 202,200(6) 1.9%
Gregg R. Giuffria(3) 70,001(7) *
William R. Jackson(3) 102,000(7) 1.0%
Allen E. Paulson 2,560,000(4)(9) 24.5%
6001 Clubhouse Drive
P. O. Box 9660
Rancho Santa Fe, California 92067
All Officers and Directors 3,121,163(10) 27.5%
as a Group (8 Persons)
</TABLE>
- ------------
* 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, Brock, Gilstrap, Iacocca, Richey,
Giuffria and Jackson is c/o Deadwood Gulch Resort, Highway 85 South,
Deadwood, South Dakota 57732.
(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.
(5) Includes 350,000 shares of Common Stock into which 350,000 shares of
Series 1992-1 Preferred Stock (50% of such class) presently may be
converted.
(6) Includes options to purchase 150,000, 250,000 and 110,000 shares of
Common Stock for Messrs. McComas, Iacocca and Richey, respectively.
(7) Includes options to purchase 70,001 and 100,000 shares of Common Stock
for Messrs. Giuffria and Jackson, respectively.
(8) Includes 1,056,471 shares held by the LKL Family Limited Partnership of
which Lee A. Iacocca is the General Partner.
(9) Includes options to purchase 100,000 shares of Common Stock and
2,000,636 shares held by the Allen E. Paulson Living Trust of which Mr.
Paulson is the trustee.
(10) Includes (i) 350,000 shares of Common Stock into which 350,000 shares
of Series 1992-1 Preferred Stock (50% of such class) presently may be
converted and (ii) 680,001 shares of Common Stock which may be
purchased upon exercise of currently exercisable options.
4
<PAGE>
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 complied with all applicable
Section 16(a) filing requirements.
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 1999 Annual Meeting of Stockholders of Full House or when
their successor has been duly elected and qualified. Each of the current members
of the Board of Directors, consisting of William P. McComas, Robert L. Brock,
James C. Gilstrap, Lee A. Iacocca and Ronald K. Richey has been nominated by
Full House 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.
5
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The names, ages and positions of all directors and executive
officers of Full House as of May 7, 1998 are listed below, followed by a brief
account of their business experience during the past five years.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
------ ----- -----------
<S> <C> <C>
William P. McComas 71 Chairman and Chief Executive
Officer
Robert L. Brock 73 Director
James C. Gilstrap 62 Director
Lee A. Iacocca 73 Director
Ronald K. Richey 71 Director
Gregg R. Giuffria 46 President and Chief Operating Officer
William R. Jackson 48 Executive Vice President-Corporate
Finance
Megan G. McIntosh 42 Secretary
</TABLE>
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.
ROBERT L. BROCK has been a Director of the Company since March
11, 1998. He has been Chairman and Chief Executive Officer of Brock Hospitality,
Inc. and President and Chief Operating Officer of 2nd Home Hotel Company, LLC
since 1994. Mr. Brock was Chairman/Founder of Park Inns International, Inc., a
hotel company which franchised and managed Park Plaza and Park Inn International
hotels in the U.S., from 1986 to 1994. He is an attorney and has served as
President of the International Association of Holiday Inns, and as chief counsel
for the Securities Commission of Kansas as well as a member of the Federal Small
Business Administration Advisory Counsel. Mr. Brock was the developer of the
Holidome and of the Brock Residence Inn system (now Residence
6
<PAGE>
Inns by Marriott), and has been called "the guru of the hotel industry" by the
Wall Street Journal. He also serves as a Trustee of the University of Kansas
Endowment Association and of the Menninger Foundation.
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 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 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.
7
<PAGE>
WILLIAM R. JACKSON has been Executive Vice President--
Corporate Finance of Full House since June, 1994. Mr. Jackson was the Chief
Financial Officer of Westinghouse Communities, Inc. for over 6 years. Mr.
Jackson received a Bachelor of Business Administration Degree in Accounting from
Stetson University in Deland, Florida. He is a member of the American Institute
of Certified Public Accountants and the Florida Institute of Certified Public
Accountants.
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.
Allen E. Paulson served as Chairman of the Board of Directors
and Chief Executive Officer of the Company from August 20, 1994 until his
resignation on March 5, 1998. Mr. Paulson resigned from his position as a
Director of Full House Resorts on April 7, 1998.
Directors of Full House who are not employees may receive a
fee for attendance at meetings of the Board of Directors of Full House, 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
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 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
Director Stock 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
shall be exercisable for a five-year period commencing six months after the date
of grant. Each such option shall expire five years and six months after the date
of grant.
Messrs. Richey and Brock are members of a committee
administering the 1992 Incentive Plan of Full House. Mr. McComas served on this
committee until he assumed the role of President and COO in October 1997. Full
House has a separate audit committee, on which directors Richey, Brock and
Gilstrap serve. A Chairman of the Audit Committee will be selected at its next
meeting.
The officers of Full House are elected annually and serve at
the discretion of the Board of Directors.
8
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
During the year ended December 31, 1997, the Board of
Directors held six meetings. During 1997, no director attended less than 75
percent of the aggregate of (i) the number of meetings of the Board of Directors
held during the period he served on the Board, and (ii) the number of meetings
of committees of the Board of Directors held during the period he served on such
committees.
9
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid
to the Chief Executive and Chief Financial Officers of Full House for services
in all capacities to Full House and its subsidiaries during the fiscal year
ended December 31, 1997 (no other executive officer received over $100,000 in
annual salary and bonus in 1997):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
---------------------------- NUMBER OF
OTHER SECURITIES
NAME ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY COMPENSATION OPTIONS
-------------------- ------ ------ ------------- ------------
<S> <C> <C> <C> <C>
Allen E. Paulson, Chairman 1997 -0- -0- 250,000
and Chief Executive Officer 1996 -0- -0- -0-
1995 -0- -0- -0-
William R. Jackson, 1997 $126,000 -0- -0-
Executive Vice President 1996 110,079 -0- 50,000
and Chief Financial Officer 1995 81,000 -0- -0-
</TABLE>
EMPLOYMENT AGREEMENTS
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 $180,000 per year commencing April 10,
1998. Mr. Giuffria was also granted, in connection with his service to the
Company, options to purchase a total of 350,000 shares of the Company's Common
Stock, of which 70,001 shares were vested as of January 6, 1998.
The Company and William R. Jackson have an employment
arrangement providing for Mr. Jackson's employment as Chief Financial Officer of
the Company. In connection with his employment, Mr. Jackson was granted a total
of 60,000 shares in 1994 and 50,000 shares in 1996 of the Company's Common
Stock, of which 80,000 were vested as of December 31, 1997.
10
<PAGE>
STOCK OPTIONS
OPTION GRANTS IN LAST FISCAL YEAR
On March 31, 1997 (the "Grant Date"), the Board of Directors
approved a grant of an option ("Option") to each of the Company's Directors,
Messrs. Paulson, McComas and Richey, to purchase 250,000 shares of Common Stock,
in consideration of the fact that services to the Company by such directors have
exceeded and are expected to continue to exceed the duties of a typical
corporate director. The stockholders ratified the Options on May 12, 1997 at the
Company's 1997 Annual Meeting.
The following table sets forth certain information concerning
grants of options to purchase Common Stock made during 1997 to the Named
Executive Officers.
<TABLE>
<CAPTION>
PERCENT OF
TOTAL OPTIONS
GRANTED TO
NUMBER OF EMPLOYEES IN EXERCISE EXPIRATION
NAME OPTIONS GRANTED 1997 PRICE DATE
- ------------------------ ----------------- ------------------ ------------- ---------
<S> <C> <C> <C> <C>
Allen E. Paulson 250,000 50% $3.375 3/02/07
William R. Jackson 0 N/A N/A N/A
</TABLE>
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 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT 1997 FISCAL IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED VALUE YEAR END 1997 FISCAL YEAR-END(2)
NAME ON EXERCISE REALIZED(1) ------------------------- -------------------------
------ ---------------- ----------- EXERCISABLE UNEXERSIABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Allen E. Paulson -0- -0- 100,000 150,000 -0- -0-
William R. Jackson -0- -0- 80,000 30,000 -0- -0-
- ------------
</TABLE>
(1) In accordance with the rules of the Securities and Exchange Commission,
values are calculated by subtracting the exercise price from the fair
market value of the underlying Common Stock. For purposes of this
table, fair market value is deemed to be $2.06, the closing price for
the Common Stock on December 31, 1997.
(2) The market value of the shares of Common Stock underlying the options
held by Messrs. Paulson and Jackson was less than the exercise price of
the options at December 31, 1997.
11
<PAGE>
PERFORMANCE GRAPH
The following line-graph presentation compares cumulative
stockholder returns on Full House's Common Stock since August 17, 1993, the date
the Common Stock was listed on the Nasdaq SmallCap Market, 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 added to the self-determined peer index: Lady Luck
Gaming, Presidents Casinos, Dover Downs Entertainment, Europa Cruise Lines,
Butler National Corp. and Florida Gaming Corp. The following companies were
deleted from last year's peer index: Amerihost Properties, Inc., Buckhead
America Corp., Doubletree Corp., Jameson Inns, Inc., Kahler Corp., Kahler Realty
Corp., Microtel Franchise & Development Corp., Monarch Casino & Resort, Inc.,
SKI Ltd., Santa Fe Financial Corp., Sholodge, Inc., Sonesta International
Hotels., Station Casinos, Inc., Suppertel Hospitality, Inc. and Transworld
Gaming Corp. The 1997 self-determined peer index companies are:
Bally's Grand Inc. Florida Gaming Corp.
Boardwalk Casino Inc. Hollywood Casino Corp.
Butler National Corp. Lady Luck Gaming
Dover Downs Entertainment Presidents Casinos
Europa Cruise Lines
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SYMBOL CRSP TOTAL RETURNS INDEX FOR: 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ------ ---------------------------- 56.3 175.0 91.7 106.3 70.8
FULL HOUSE RESORTS, INC.
Nasdaq Stock Market (US Companies) 92.8 106.5 104.1 147.2 181.1 222.2
Self-Determined Peer Group 52.5 89.0 35.7 23.9 29.6 32.6
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 8/17/93.
12
<PAGE>
CERTAIN TRANSACTIONS
On March 24, 1994, Allen E. Paulson purchased 1,000,000 shares
of Common Stock for $800,000. Full House also issued 500,000 shares of Common
Stock to Mr. Paulson in exchange for his agreement to individually provide or to
take such actions as were required for a financial institution to provide a
commercial line of credit to Full House in the minimum amount of $8 million.
Full House valued the shares of stock at $.80 per share based upon the size of
the transaction, the fact that the shares were not registered and are not
subject to registration rights. In addition, a large block of shares was
repurchased by the Company from an unaffiliated then principal stockholder at a
price per share and time sequence reasonably close to the transaction with Mr.
Paulson. On June 7, 1994, Bank of America, as a result of the joint and several
guarantees of the full amount of the loan by Mr. Paulson and the other directors
of Full House, provided Full House with a line of credit in the amount of $8
million at the "reference rate" of Bank of America, N.A. All amounts outstanding
under this line of credit were repaid in 1996 and the line was canceled. Full
House believes that it would have been unable to obtain this line of credit
without the actions of Mr. Paulson, as its financial condition would not have
supported such an extension of credit.
As part of the November 1995 merger of a subsidiary of Full
House into Omega Properties Inc., the stockholders of Omega received an
aggregate of 500,000 shares of Common Stock and a promissory note of Full House
in the principal amount of $375,000. William P. McComas received the note and
the other stockholder of Omega received the shares in exchange for their
interests as stockholders of Omega. The principal amount of this promissory note
accrues interest at a rate equal to the "prime" rate and such principal amount,
together with all accrued interest, is due and payable in full upon demand by
the holder(s) of this note. Total interest and debt issue costs charged to
operations in 1997 and 1996 related to the note payable to Mr. McComas were
$31,567 and $34,872, respectively.
With respect to the foregoing transactions, Full House
believes that such transactions were on terms as favorable to Full House as
would have been available from unrelated parties.
13
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
During 1997, 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 Gregg R. Giuffria, President, and
William R. Jackson, the Executive Vice President-Corporate Finance of Full
House, reflects this policy. See "Executive Compensation - Employment
Agreements."
In reviewing the performance of Full House, consideration is
given to revenues and earnings and an evaluation is made of strategic planning
and Full House'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 Full House, it is
also, to a lesser extent, subjective.
No compensation was paid in 1997 to either William P. McComas,
who served as President of Full House between October 7, 1997 and April 9, 1998,
or Allen E. Paulson, who served as Chief Executive Officer until March 5, 1998.
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 1997 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 1998 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.
14
<PAGE>
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, independent
certified public accountants, as the auditors for Full House for 1998.
Representatives of Deloitte & Touche LLP are expected to
appear at the 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.
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 1999 Annual Meeting of
Stockholders must deliver a proposal in writing to the principal executive
offices of Full House no later than January 8, 1999.
15
<PAGE>
FULL HOUSE RESORTS, INC.
DEADWOOD GULCH RESORT
HIGHWAY 85 SOUTH
DEADWOOD, SOUTH DAKOTA 57732
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 1998 Annual
Meeting of Stockholders of Full House to be held on June 15, 1998 at 1:00 p.m.,
local time, at the DoubleTree Hotel Del Mar, 11915 El Camino Real, San Diego,
California 92130, and at any adjournment(s) or postponement(s) thereof.
(SEE REVERSE SIDE)
<PAGE>
PLEASE SIGN, DATE AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
FULL HOUSE RESORTS, INC.
JUNE 15, 1998
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<CAPTION>
THE BOARD OF DIRECORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE ELECTION OF ALL THE NOMINEES FOR DIRECTOR LISTED BELOW.
<S> <C>
VOTE FOR all nominees
listed below, except vote VOTE WITHHELD
withheld from the following FROM
nominees (if any): ALL NOMINEES FOR AGAINST ABSTAIN
(1) To elect five (5) [ ] [ ] (2) Ratification of the appointment [ ] [ ] [ ]
directors to the of Deloitte & Touche LLP to serve
Board of Directors as Full House's independent
of Full House to accountants for the current year.
hold office until the next Annual Meeting of Stockholders
of Full House following their election or until their (3) In their discretion, the proxies are authorized to vote
successors are duly elected and qualified. upon such other business as may properly come before the
Annual Meeting and any adjournments or postponements
thereof.
NOMINEES: WILLIAM P. MCCOMAS, ROBERT L. BROCK, 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.
_________________________________________________________________
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: _______, 1998
(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.
</TABLE>
