SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PAUL-SON GAMING CORPORATION
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-
6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1. Title of each class of securities to which
transaction applies:
__________________________________________________
2. Aggregate number of securities to which
transaction applies:
__________________________________________________
<PAGE>
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>
PAUL-SON GAMING CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 17, 1996
To the Stockholders of Paul-Son Gaming Corporation:
The annual meeting of the stockholders of Paul-Son Gaming
Corporation (the "Company") will be held at Treasure Island at
the Mirage, 3300 South Las Vegas Boulevard, Las Vegas, Nevada
89109, on Thursday, October 17, 1996, at 10:00 a.m. local time,
for the following purposes:
(1) to elect Eric P. Endy and Richard W. Scott as directors
of the Company;
(2) to approve and ratify an amendment to the Paul-Son
Gaming Corporation 1994 Long-Term Incentive Plan; and
(3) to transact such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on August
28, 1996 are entitled to notice of and to vote at the annual
meeting. The stock transfer books will not be closed.
Stockholders are cordially invited to attend the annual
meeting in person. STOCKHOLDERS DESIRING TO VOTE IN PERSON MUST
REGISTER AT THE ANNUAL MEETING WITH THE INSPECTORS OF ELECTION
PRIOR TO COMMENCEMENT OF THE ANNUAL MEETING. IF YOU WILL NOT BE
ABLE TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE REQUESTED TO
EXECUTE AND DATE THE ENCLOSED FORM OF PROXY AND TO FORWARD IT TO
THE SECRETARY OF THE COMPANY WITHOUT DELAY SO THAT YOUR SHARES
MAY BE REGULARLY VOTED AT THE ANNUAL MEETING.
A copy of the 1996 Annual Report to Stockholders, including
financial statements for the twelve months ended May 31, 1996, is
enclosed.
By order of the Board of Directors,
/s/ Laurence A. Speiser
Laurence A. Speiser, Secretary
DATED: August 29, 1996
<PAGE>
Paul-Son Gaming Corporation
PROXY STATEMENT
TABLE OF CONTENTS
PROXY STATEMENT 1
VOTING SECURITIES 1
ELECTION OF DIRECTORS 2
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS 3
Directors and Executive Officers 3
Committees of the Board of Directors 4
Board of Directors' Meetings 5
Compensation of Non-Employee Directors 5
COMPENSATION OF EXECUTIVE OFFICERS 6
Employment Agreement 6
Compensation Committee and Incentive Plan
Committee Report on Executive Compensation 7
Compensation Committee and Incentive Plan
Committee Interlocks and Insider Participation 7
Stock Performance Chart 8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 9
Services and Products Provided by Related Parties 9
Indemnification of Directors and Officers 9
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 10
RATIFICATION OF AN AMENDMENT TO THE PAUL-SON
GAMING CORPORATION 1994 LONG-TERM INCENTIVE PLAN 10
Incentive Plan Description 11
Federal Tax Consequences of Options 12
INTEREST IN CERTAIN MATTERS TO BE ACTED UPON 13
INDEPENDENT PUBLIC ACCOUNTANTS 13
VOTING PROCEDURES 13
1997 ANNUAL MEETING OF STOCKHOLDERS 14
OTHER BUSINESS 14
2
<PAGE>
PAUL-SON GAMING CORPORATION
2121 Industrial Road
Las Vegas, Nevada 89102
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of Paul-
Son Gaming Corporation (the "Company") in connection with the
annual meeting (the "Annual Meeting") of stockholders of the
Company to be held at Treasure Island at the Mirage, 3300 South
Las Vegas Boulevard, Las Vegas, Nevada 89109, on Thursday,
October 17, l996, at 10:00 a.m. local time, and any adjournment
thereof, for the purposes indicated in the Notice of Annual
Meeting of Stockholders ("Notice").
THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY. This Proxy Statement and the accompanying form
of proxy are being mailed to stockholders on or about August 29,
1996. Any stockholder giving a proxy has the power to revoke it
prospectively by giving written notice to the Company, addressed
to Laurence A. Speiser, Secretary, at the Company's principal
address before the Annual Meeting, by delivering to the Company a
duly executed proxy bearing a later date, or by notifying the
Company at the Annual Meeting prior to the commencement of the
Annual Meeting. The shares represented by the enclosed proxy
will be voted if the proxy is properly executed and received by
the Company prior to the commencement of the Annual Meeting, or
any adjournment thereof.
None of the proposals to be voted on at the Annual Meeting
creates a right of appraisal under Nevada law. A vote "FOR" or
"AGAINST" any of the proposals set forth herein will only affect
the outcome of the proposal.
The expenses of making the solicitation will consist of the
costs of preparing, printing, and mailing the proxies and proxy
statements and the charges and expenses of brokerage houses,
custodians, nominees or fiduciaries for forwarding such documents
to security owners. These are the only contemplated expenses of
solicitation, and they will be paid by the Company.
VOTING SECURITIES
The close of business on August 28, 1996 has been fixed by the
Board of Directors as the record date for determination of
stockholders entitled to vote at the Annual Meeting. The
securities entitled to vote at the Annual Meeting consist of
shares of common stock, par value $.01 ("Common Stock"), of the
Company, with each share entitling its owner to one vote. Common
Stock is the only outstanding class of voting securities
authorized by the Company's Articles of Incorporation. The
number of outstanding shares of Common Stock at the close of
business on August 28, 1996 was 3,324,000. Stockholders do not
possess the right to cumulate their votes for the election of
directors.
The Company's Articles of Incorporation authorize the Company
to issue 10,000,000 shares of preferred stock, par value $.01
("Preferred Stock"), in one or more series, with such rights,
preferences, restrictions, and privileges as may be fixed by the
Company's Board of Directors, without further action by the
Company's stockholders. The issuance of the Preferred Stock
could adversely affect the rights, including voting rights, of
the holders of the Common Stock and could impede an attempted
takeover of the Company. None of the Preferred Stock is issued
or outstanding, and the Company has no present plans to issue
shares of Preferred Stock.
The following is a list of the beneficial stock ownership at
the close of business on July 31, 1996 of (1) all persons who
beneficially owned more than 5% of the outstanding Common Stock,
(2) all directors, and (3) all executive officers and directors
as a group. These share amounts are based upon record-ownership
listings as of that date, according to the Securities and
Exchange Commission Forms 3 and 4 and Schedules 13D of which the
Company has received copies, and according to verifications as of
August 15, 1996, which the Company solicited and received from
each executive officer and director:
1
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Title of Name and Address of Beneficial Percent of
Class Beneficial Owner Ownership<F1>, <F2> Class<F2>
<S> <C> <C> <C>
Common Paul S. Endy<F3> 1,756,445<F3> 52.8
2121 S. Industrial Road
Las Vegas, Nevada 89102
Common Eric P. Endy 107,555 3.2
Common Laurence A. Speiser -- *
Common Jerry G. West 2,000<F4> *
Common Martin S. Winick 1,000<F5> *
Common Richard W. Scott 1,000<F5> *
Common All executive officers 1,868,700<F7> 56.1
and directors as a group
(8 persons)
<FN>
*Beneficial ownership does not exceed 1% of the outstanding
Common Stock.
<F1> Unless otherwise noted, the persons identified in this table
have sole voting and investment power with regard to the
shares beneficially owned.
<F2> Includes shares issuable upon exercise of options which are
exercisable within 60 days of the stated date.
<F3> Paul S. Endy's shares are held of record by the Paul S.
Endy, Jr. Living Trust.
<F4> Includes options to purchase 2,000 shares issuable under the
1994 Directors' Stock Option Plan (the "Directors' Plan").
<F5> Includes options to purchase 1,000 shares issuable under the
Directors' Plan.
<F6> Includes options to purchase 1,000 shares issuable under the
Directors' Plan.
<F7> Includes options to purchase 4,000 shares issuable under the
Directors' Plan.
</FN>
</TABLE>
ELECTION OF DIRECTORS
The Company's Board of Directors consists of six persons in
three categories who are elected for staggered terms of three
years each. Two directors' terms expire at the Annual Meeting;
two in 1997; and two in 1998. Directors are to serve until their
successors are elected and have been qualified.
Each Company director may be required to be found suitable or
qualified, as applicable, by the Nevada Gaming Commission or the
New Jersey Casino Control Commission, as well as relevant
regulatory agencies in any of the other jurisdictions in which
the Company is licensed or conducts business (collectively, the
"Gaming Authorities"), to serve as a director of the Company. No
directors of the Company have been found unsuitable or
unqualified, as applicable, by the Gaming Authorities. Should
any director not be found suitable or qualified, as applicable,
by one or more of the Gaming Authorities, that person will not be
eligible to continue on the Board of Directors and a majority of
the remaining directors may appoint a qualified replacement to
serve as a director until the next annual meeting of
stockholders.
If the enclosed proxy is duly executed and received in time
for the meeting, and if no contrary specification is made as
provided therein, the proxy will be voted in favor of the
nominees, Eric P. Endy and Richard W. Scott, for terms expiring
in 1999. Both of the nominees have consented to serve if elected
and the Board of Directors presently has no knowledge or reason
to believe that either of the nominees will be unable to serve.
If either such nominee shall decline or be unable to serve, the
proxy will be voted for such person as shall be designated by the
Board of Directors to replace either such nominee. Any
additional vacancies on the Board of Directors which occur during
the year will be filled, if at all, by the Board of Directors
through an appointment of an individual to serve until the next
annual meeting of stockholders. There will be no cumulative
voting for the election of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF
THE ELECTION OF MESSRS. ENDY AND SCOTT TO THE BOARD OF DIRECTORS
2
<PAGE>
INFORMATION CONCERNING THE BOARD
OF DIRECTORS AND EXECUTIVE OFFICERS
The following information is furnished with respect to each
member or nominee to the Board of Directors, each of whom, unless
otherwise indicated, has served as a director continuously since
the year shown opposite his name. Similar information is
provided for the Company's executive officers. There are no
family relationships between or among any directors, nominees to
the Board of Directors or executive officers of the Company,
except Eric P. Endy is the son of Paul S. Endy.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as
follows:
<TABLE>
<CAPTION>
Position
Director Term with the
Name Age Since Expires Company
<S> <C> <C> <C> <C>
Paul S. Endy 68 1993 1997 Chairman of the Board
and Chief Executive
Officer
Eric P. Endy 41 1993 1996 President and Director
(Nominee to the Board
for term expiring in
1999)
Laurence A. Speiser 44 1993 1997 Secretary and Director
Jerry G. West 53 1994 1998 Director
Martin S. Winick 46 1995 1998 Director
Richard W. Scott 58 1995 1996 Director (Nominee to the
Board for term expiring
in 1999)
Louis W. DeGregorio 41 -- -- Senior Vice President of
Sales
Kirk Scherer 38 -- -- Treasurer and Chief
Financial Officer
</TABLE>
PAUL S. ENDY has been Chairman of the Company's Board of
Directors since the Company's inception in 1993 and Chief
Executive Officer since January 1994. Mr. Endy has been Chairman
of the Board and President of Paul-Son Gaming Supplies, Inc.
("Paul-Son Supplies"), formerly Paul-Son Dice and Card, Inc.,
since 1969 and Paul-Son Mexicana S.A. de C.V. since 1987. Until
their mergers with Paul-Son Supplies in March 1994, Mr. Endy had
been Chairman of the Board and President of Paul-Son Casino
Supplies of New Jersey, Inc. since 1979, and of Paul-Son Playing
Cards, Inc. ("PSPC") since 1969. From 1969 until its purchase by
the Company in March 1994, Mr. Endy was the sole proprietor of
C.J. Sisk ("Sisk"). Mr. Endy is the father of Eric P. Endy.
ERIC P. ENDY has been a Director of the Company since its
inception in 1993 and President since January 1994. From January
1994 to July 1995, Mr. Endy was Chief Operating Officer of the
Company. Since July 1990, Mr. Endy has been Executive Vice
President and General Manager of Paul-Son Supplies. From 1988 to
March 1994, Mr. Endy served as a Director of PSPC. Mr. Endy has
been a board member of the National Indian Gaming Association
since 1991. Since 1989, Mr. Endy has been an advisor to the
International Gaming Business Exposition. Mr. Endy is the son of
Paul S. Endy.
3
<PAGE>
LAURENCE A. SPEISER has been a Director of the Company since
its inception in 1993, and Secretary since January 1994. From
1978 to the present, Mr. Speiser has provided legal services to
the Company and its affiliates. Mr. Speiser is the President,
Director and sole stockholder of the law firm of Laurence A.
Speiser, Ltd., Las Vegas, Nevada. See "Certain Relationships and
Related Transactions - Services and Products Provided by Related
Parties." Mr. Speiser is licensed to practice law in Nevada,
California and Colorado.
JERRY G. WEST has been a Director of the Company since April
1994. Mr. West is currently self employed as a private
investigator licensed in the state of Nevada. From 1969 to April
1993, Mr. West was a special agent with the United States Federal
Bureau of Investigation, serving the majority of that time with
the Organized Crime Squad and the last five years with the
Reactive Crime Squad.
MARTIN S. WINICK has been a Director since July 1995. Since
August 1995, Mr. Winick has been a retail securities broker and
Senior Vice President at the securities firm of Mesirow
Financial, Cleveland, Ohio. Mr. Winick was Senior Vice
President, Marketing Director of Corporate Finance and a retail
securities broker for the securities firm of Rodman & Renshaw,
Cleveland, Ohio, from February 1993 to August 1995. Mr. Winick
was also a retail securities broker for the securities firms of
Dean Witter Reynolds, Cleveland, Ohio, from February 1991 to
January 1993; and Cowen & Co., Cleveland, Ohio, from September
1982 to January 1991.
RICHARD W. SCOTT has been a Director since July 1995. From
1986 to 1994, Mr. Scott was Vice President and, since 1994, Mr.
Scott has been President of Sports Media Network, Las Vegas,
Nevada, a licensed disseminator of live horse and dog race
information to Nevada sports books. From 1962 to 1986, Mr. Scott
was a Nevada licensed veterinarian.
LOUIS W. DEGREGORIO has been Senior Vice President of Sales of
the Company since January 1994 and Sales Manager of Paul-Son
Supplies since 1983. From 1973 to 1983, Mr. DeGregorio worked as
a Production Manager and in other positions of the casino chip
department of Paul-Son Supplies.
KIRK SCHERER has been Treasurer and Chief Financial Officer of
the Company since July 1995. From May 1993 to July 1995, Mr.
Scherer was Chief Financial Officer of American Nutrition
Corporation, Las Vegas, Nevada, a private label food contract
manufacturer. From February 1993 to May 1993, Mr. Scherer, a
certified public accountant, was an accounting supervisor with
the accounting firm of McGladrey & Pullen, Las Vegas, Nevada.
From May 1988 to February 1993, Mr. Scherer owned and operated an
accounting firm in Las Vegas, Nevada.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has five standing committees: the
Audit Committee; the Compensation Committee; the 1994 Long-Term
Incentive Plan Committee (the "Incentive Plan Committee"); the
1994 Directors' Stock Option Plan Committee (the "Directors' Plan
Committee"); and the Compliance Committee.
The Audit Committee is comprised of Jerry G. West and Richard
W. Scott. The Audit Committee's function is to review reports of
independent public accountants to the Company; to review Company
financial practices, internal controls and policies with officers
and key employees; to review such matters with the Company's
auditors to determine the scope of compliance and any
deficiencies; to consider selection of independent public
accountants; to review certain related party transactions; and to
make periodic reports on such matters to the Board of Directors.
The Audit Committee met four times during the twelve months ended
May 31, 1996.
4
<PAGE>
The Compensation Committee consists of Jerry G. West, Richard
W. Scott and Martin S. Winick. The Compensation Committee's
function is to review and make recommendations to the Board of
Directors with respect to the salaries and bonuses for the
Company's executive officers and the fees for the Company's
directors. The Compensation Committee took certain action by
consent but did not meet during the twelve months ended May 31,
1996.
The Incentive Plan Committee consists of Jerry G. West and
Richard W. Scott. From October 16, 1996 until July 29, 1996,
Martin S. Winick also served on the Incentive Plan Committee.
The Incentive Plan Committee's function is to administer the 1994
Long-Term
Incentive Plan (the "Incentive Plan"), including: determining
such matters as the persons to whom awards will be granted, the
number of shares to be awarded, when the awards will be granted,
when the awards will vest, and the terms and provisions of the
instruments evidencing the awards; interpreting the Incentive
Plan; and notifying the Company's Board of Directors of all
decisions concerning awards granted to Incentive Plan
participants. The Incentive Plan Committee took certain action
by consent but did not meet during the twelve months ended May
31, 1996.
The Directors' Plan Committee consists of Eric P. Endy and
Martin S. Winick. Neither Eric P. Endy nor Martin S. Winick is
eligible to participate in the Directors' Plan. The Directors'
Plan Committee administers the Directors' Plan; however, it has
no discretion to determine or vary any matters which are fixed
under the terms of the Directors' Plan. Fixed matters include,
but are not limited to, which non-employee directors will receive
awards, the number of shares of Common Stock subject to each
option award, the exercise of any option, and the means of
acceptable payment for the exercise of the option. The
Directors' Plan Committee has the authority to otherwise
interpret the Directors' Plan and make all determinations
necessary or advisable for its administration. All decisions of
the Directors' Plan Committee are subject to approval by the
Board of Directors. The Director's Plan Committee took certain
action by consent but did not meet during the twelve months ended
May 31, 1996.
A Compliance Committee was organized in July 1996. Jerry G.
West is the independent director member of the Compliance
Committee. The remainder of the Compliance Committee consists of
Company employees, including Eric P. Endy. The Compliance
Committee's function is to oversee implementation of and
compliance with internal operating systems which will ensure
compliance with all gaming laws applicable to the Company's
operations. Membership on the Compliance Committee is subject to
the administrative approval of the Chairman of the Nevada State
Gaming Control Board.
BOARD OF DIRECTORS' MEETINGS
The Board of Directors of the Company meets at least quarterly
and in the fiscal year ended May 31, 1996, the Board of Directors
held eight meetings. All of the incumbent directors attended at
least 75% of (i) the meetings of the Board of Directors held
during the period for which they have been a director and (ii)
the meetings held by all committees of the Board of Directors on
which they served.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
Annual directors' fees of $10,000 are paid to directors who
are not employees or consultants of the Company. Each director
may be reimbursed for certain expenses incurred in connection
with attendance at Board of Directors and committee meetings.
5
<PAGE>
Additionally, certain non-employee directors who are not
consultants to the Company are granted options to purchase Common
Stock under the Directors' Plan. Under the Directors' Plan, such
directors initially receive a one-time option to purchase 3,000
shares of Common Stock following such Director's election to the
Board of Directors. Thereafter, each such director receives a
grant to purchase 1,000 shares of Common Stock each year,
beginning on the third anniversary of such Director's election to
the Board of Directors. In addition, each year such directors
also receive options to purchase 1,000 shares of Common Stock for
serving on the following committees for at least six months
during the twelve months prior to the date of grant: (i) the
Audit Committee; (ii) the Compliance Committee; and (iii) the
Compensation Committee.
Under the terms of the Directors' Plan, the initial option
grant is exercisable to the extent of vesting. The initial
option vests over a three-year period, with one-third of the
initial option vesting upon each anniversary of such non-employee
director's election to the Board of Directors. Annual option
grants are fully vested upon grant, but are only exercisable six
months and one day from the date of grant. Unless special
circumstances exist, each option expires on the later of the
tenth anniversary of the date of its grant or nine months after
the non-employee director retires. The option exercise price is
the fair market value, as defined under the Directors' Plan, of
the Common Stock on the date such option is granted.
There were options to purchase 6,000 shares of Common Stock
granted during the year ended May 31,1996 under the Directors'
Plan; options to purchase 3,000 shares of Common Stock were
granted each to Richard W. Scott and Martin S. Winick upon their
appointment to the Board of Directors of the Company in July
1995. The Company's non-employee directors who are currently
eligible to participate in the Directors' Plan are Jerry G. West
and Richard W. Scott.
COMPENSATION OF EXECUTIVE OFFICERS
The following tables set forth compensation received by Paul
S. Endy, the Company's Chief Executive Officer, and Eric P. Endy,
the only other executive officer of the Company whose total
compensation for the fiscal year ended May 31,1996 exceeded
$100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Awards Payouts
Other Annual Restricted Stock Options/ LTIP All Other
Name and Principal Fiscal Salary Bonus Compensation Awards SARs Payouts Compensation
Position<F1> Year ($) ($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul S. Endy, 1996 195,875 -0- -0- -0- -0- -0- -0-
Chairman of the 1995 197,693 27,000 -0- -0- -0- -0- -0-
Board and Chief 1994 311,441 1,585 -0- -0- -0- -0- -0-
Executive Officer
Eric P. Endy, 1996 150,231 -0- -0- -0- -0- -0- -0-
President and 1995 150,160 -0- -0- -0- -0- -0- -0-
Director 1994 113,997 29,130 -0- -0- -0- -0- -0-
<FN>
<F1> Paul S. Endy and Eric P. Endy were appointed to their
respective offices on January 31, 1994
</FN>
</TABLE>
EMPLOYMENT AGREEMENT
Pursuant to a two-year employment agreement entered into
February 28, 1994, Mr. Eric P. Endy agreed to devote his full
working time to the performance of his duties with the Company
for an annual base salary of $150,000, plus an annual incentive
bonus determined by the Compensation Committee of the Board of
Directors. The employment agreement expired February 28, 1996
and has not been renewed.
6
<PAGE>
COMPENSATION COMMITTEE AND INCENTIVE PLAN COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF
THE COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY
STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING COMPENSATION
COMMITTEE AND INCENTIVE PLAN COMMITTEE REPORT ON EXECUTIVE
COMPENSATION AND THE STOCK PERFORMANCE CHART ON PAGE 8 SHALL NOT
BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
The Compensation Committee and Incentive Plan Committee
(collectively, the "Committees"), composed entirely of directors
who have never served as executive officers of the Company,
determine and administer the compensation of the Company's
executive officers.
Although no compensation policy has been formalized, the
Committees generally recommend that the Company compensate its
executive officers at a level that will attract and retain
individuals who are responsible for the management, development
and success of the Company. The Committees believe that
executive compensation should be designed to reward individuals
for their services to the Company and encourage them to stay with
the Company. The Committees' compensation decisions are
submitted to the full Board of Directors for approval.
Although the Committees believe that the Company's overall
financial performance is an important factor in the total
compensation of the Company's executive officers, no specific
quantitative factors are applied in making compensation
recommendations. The Committees also recognize qualitative
factors such as successful supervision of the Company's
operations, established relationships with key customers and the
development of corporate projects and new products.
The Committees also evaluate the total compensation of the
Company's executive officers in light of the compensation
practices and relative corporate financial performance of other
companies in the gaming industry. The Committees' goal is for
the Company to set base salaries for the Chief Executive Officer
and other executive officers at appropriate levels which reflect
the duties and scope of responsibilities of each officer's
position. The Chief Executive Officer and other executive
officers are also eligible to receive incentive compensation in
the form of stock options under the Incentive Plan. During the
last fiscal year an option to purchase 10,500 shares was granted
to one executive officer.
In evaluating the compensation of Paul S. Endy, Jr., Chairman
of the Board and Chief Executive Officer of the Company, for the
year ended May 31, 1996, the Committees considered the financial
performance of the Company but recognized Mr. Endy's efforts in
implementing cost reduction policies, Mr. Endy's experience in
the industry and Mr. Endy's established customer relationships.
August 12, 1996 COMPENSATION COMMITTEE INCENTIVE PLAN COMMITTEE
Richard W. Scott Jerry G. West
Martin S. Winick Richard W. Scott
Jerry G. West
COMPENSATION COMMITTEE AND INCENTIVE PLAN COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The Company's executive compensation is determined by the
Compensation Committee and the Incentive Plan Committee, no
member of which is or was an officer of the Company. For the
1996 fiscal year, the Compensation Committee and the Incentive
Plan Committee consisted of Messrs. Richard W. Scott, Jerry G.
West and Martin S. Winick. Mr. Winick ceased to be a member of
the Incentive Plan Committee as of July 29, 1996.
7
<PAGE>
STOCK PERFORMANCE CHART
Prior to the Company's 1994 public offering (the "1994
Offering"), the Company and its predecessors were privately held.
In order to provide a representative comparison of the Company's
stock performance, the following chart compares the cumulative
stockholder return on the Company's Common Stock, since March 29,
1994, the date of the 1994 Offering, until May 31, 1996, with the
cumulative return on the Standard & Poor's 500 Composite Stock
Index and a self-determined industry peer group index.1
The following chart assumes $100 invested March 29, 1994. The
total return assumes the reinvestment of dividends, if any.
<TABLE>
<CAPTION>
COMPARISON OF CUMMULATIVE TOTAL RETURNS
Stock Performance Graph
[GRAPH BASED ON THE FOLLOWING INFORMATION APPEARS
ON PRINTED ORIGINAL PROXY STATEMENT.]
INDEX DESCRIPTION 3/29/94 5/31/94 5/31/95 5/31/96
<S> <C> <C> <C> <C>
Paul-Son Gaming Corporation 100.0 116.3 61.2 69.4
Total Return Index for S&P 100.0 101.4 121.9 156.6
500 Stocks
Self Determined Peer Group 100.0 78.1 45.4 51.3
<FN>
<F1> The companies in the peer group include: Autotote Corp.,
Bally Gaming, Inc., Casino Data Systems, Conquest
Industries, Inc., American Gaming and Entertainment
(formerly Gamma International, Ltd.), Gtech Holdings
Corporation, Innovative Gaming, Inc., International Game
Technology, Mikohn Gaming Corporation, Shuffle Master, Inc.,
Sodak Gaming, Inc., Alliance Gaming, Inc. and Video Lottery
Technologies, Inc.
</FN>
</TABLE>
8
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was incorporated in 1993 for the purpose of
acquiring all of the gaming supply businesses owned or controlled
by Paul S. Endy, Chairman of the Board and Chief Executive
Officer of the Company. In conjunction with the 1994 Offering, a
reorganization of the Company and a related asset acquisition
were effected (collectively, the "Reorganization/Acquisition").
As a part of the Reorganization/Acquisition, the Company
purchased from Paul S. Endy the assets of Sisk, a distributor of
playing cards and table game equipment to California card clubs.
For the purchase of Sisk, the Company paid Mr. Endy, in part, a
promissory note for the sum of $500,000 requiring four annual
principal payments of $125,000 commencing on March 28, 1995 plus
accumulated interest at the rate of 6% per annum. During the
fiscal year ended May 31, 1996, the Company paid principal of
$235,000 and accrued interest of $7,281 on the promissory note to
Mr. Endy, leaving a principal balance due of $15,000 at May 31,
1996. The entire balance due under the promissory note was paid
off following the end of the fiscal year.
SERVICES AND PRODUCTS PROVIDED BY RELATED PARTIES
Laurence A. Speiser, Ltd., of which Secretary and Director
Laurence A. Speiser is the principal, provides legal services to
the Company. During the fiscal year ended May 31, 1996, the
Company paid Laurence A. Speiser, Ltd. $128,591 for legal
services rendered and related costs and expenses.
The Company purchased plastic playing cards directly from Kem
Plastic Playing Cards, Inc. ("Kem Cards") in an amount totaling
$331,355 during the fiscal year ended May 31, 1996. Mr. Henry A.
Suraci, a Director of the Company until his resignation in May
1996, is a director and executive officer and principal
stockholder of Kem Cards and of the corporation which is the
majority owner of Kem Cards.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of Chapter 78 of the Nevada Revised Statutes
("NRS"), Article X of the Company's Articles of Incorporation,
and Article VII of the Company's Bylaws contain provisions for
indemnification of officers and directors of the Company. The
indemnification provisions in the Articles of Incorporation
require the Company to indemnify the Company's officers and
directors to the full extent permitted by Nevada law. Each such
person will be indemnified in any proceeding provided that such
person's acts or omissions did not involve intentional
misconduct, fraud or knowing violation of law or the payment of
dividends in violation of NRS 78.300. Indemnification would
cover expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement.
The Company's Articles of Incorporation also provide that the
Company's Board of Directors may cause the Company to purchase
and maintain insurance on behalf of any present or past director
or officer insuring against any liability asserted against such
person incurred in the capacity of director or officer or arising
out of such status, whether or not the Company would have the
power to indemnify such person. The Company has obtained and
maintains such insurance.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of
the Securities and Exchange Commission ("SEC") such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable.
The Company believes that the transactions described above are
on terms at least as favorable as would have been obtainable from
non-related parties. The Company requires that the Audit
Committee of the Board of Directors review certain related party
transactions.
9
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act") requires the Company's directors and executive
officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with
the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the
Company. Officers, directors, and stockholders holding more than
ten percent of the class of stock are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended May 31, 1996, all Section 16(a) filing
requirements applicable to its officers, directors, and greater
than ten percent beneficial owners were satisfied.
RATIFICATION OF AN AMENDMENT TO THE PAUL-SON GAMING
CORPORATION 1994 LONG-TERM INCENTIVE PLAN
The Incentive Plan was adopted by the Board of Directors on
January 31, 1994 and ratified by the Company's stockholders on
October 5, 1994. On July 29, 1996, the Board of Directors
amended the Incentive Plan to increase the amount of the
Company's Common Stock reserved for issuance under the Incentive
Plan to an aggregate of 1,000,000 shares, an increase of 500,000
shares. The Company's Board of Directors believes the amendment
is necessary in order to have sufficient shares of Common Stock
available under the Incentive Plan to be able to reward executive
officers, key employees and outside consultants for their service
to the Company and to encourage them to continue in the employ of
or to provide services to the Company.
In connection with the adoption of the amendment to the
Incentive Plan, and subject to stockholder approval of the
amendment, the Board of Directors granted non-statutory stock
options as follows: (i) Paul S. Endy, 100,000 shares, fully
vested, at an exercise price of $8.0625; (ii) Eric P. Endy,
100,000 shares, 25,000 fully vested and the balance vesting over
three years with the first installment vesting July 29, 1997, at
an exercise price of $8.0625; and (iii) Martin S. Winick,
150,000, 37,500 fully vested and the balance vesting over three
years with the first installment vesting July 29, 1997, at an
exercise price of $8.0625.
The following chart illustrates the number of shares of Common
Stock underlying options, and the dollar value of such options,
granted in connection with the July 29, 1996 amendment to the
Incentive Plan and subject to stockholder approval of such
amendment, to (i) Paul S. Endy, the Company's Chief Executive
Officer; (ii) Eric P. Endy, the Company's President; (iii) Martin
S. Winick, a Director; (iv) all current executive officers as a
group; (v) all current directors who are not executive officers
as a group; and (vi) all employees, including all current
officers who are not executive officers, as a group. No other
options have been granted under the Incentive Plan subsequent to
the Board of Directors' approval of the Incentive Plan amendment.
Future grants under the Incentive Plan will be made in accordance
with the grant procedures described below.
10
<PAGE>
<TABLE>
<CAPTION>
1994 LONG-TERM INCENTIVE PLAN
Number of Shares
Dollar Value of Common Stock
Name and Position <F1>, <F2> Underlying Options<F1>
<S> <C> <C>
Paul S. Endy<F3> $43,750 100,000
Chief Executive Officer
Eric P. Endy<F3> $43,750 100,000
President
Martin S. Winick<F3> $65,625 150,000
Director
Executive Officer Group $87,500 200,000
Non-Executive Officer $65,625 150,000
Director Group
Non-Executive Officer -0- -0-
Employee Group
<FN>
<F1> Does not include grants issued prior to the July 29, 1996
amendment to the Incentive Plan.
<F2> Dollar value is calculated as of August 19, 1996 based on
the Nasdaq National Market closing bid price of $8.50.
<F3> On July 29, 1996, in connection with the adoption of the
amendment to the Incentive Plan which will be submitted
for stockholder approval at the Annual Meeting, the Board
of Directors granted non-statutory stock options to Paul
S. Endy (100,000 shares), Eric P. Endy (100,000 shares),
and Martin S. Winick (150,000 shares). The option grants
are subject to stockholder approval of the Incentive Plan
amendment.
</FN>
</TABLE>
INCENTIVE PLAN DESCRIPTION
Options and restricted stock are intended to be granted under
the Incentive Plan primarily to those persons who possess the
capacity to contribute significantly to the successful
performance of the Company. Because persons to whom grants of
options and restricted stock awards are to be made are to be
determined from time to time by the Incentive Plan Committee, it
is impossible at this time to indicate the precise number, names,
or positions of persons who will receive options or restricted
stock awards or the number of shares for which options or
restricted stock awards will be granted to any such employee or
consultant. The Company anticipates that approximately thirty
employees and five consultants will participate in the Incentive
Plan over the next three fiscal years; however, no assurance can
be given as to the exact number of participants. Pursuant to the
recent amendment, and subject to adjustment by reason of stock
splits or other capital adjustments, an aggregate of 1,000,000
shares of Common Stock is reserved for issuance in connection
with the Incentive Plan.
The Incentive Plan is administered by the Incentive Plan
Committee, consisting of not less than two non-employee directors
of the Company selected by, and serving at, the pleasure of the
Company's Board of Directors. Based upon the recommendations
from the Company and its operating subsidiaries, the Incentive
Plan Committee determines the persons to whom awards shall be
granted, the number of shares to be awarded, when the awards
shall be granted, when the awards shall vest, and the terms and
provisions of the instruments evidencing the awards. Only
employees who serve as executives and other key employees of the
Company or its operating subsidiaries, the Company's employee-
directors, and certain outside consultants are eligible for
selection as participants in the Incentive Plan. An incentive
stock option may not be issued to a person who, at the time of
grant, is not an employee of the Company or to a person who owns
stock of the Company possessing more than 10% of the total
combined voting power of all the classes of stock of the Company
or a subsidiary.
11
<PAGE>
Stock options granted under the Incentive Plan have an option
exercise price equal to the last reported sale price of the
Common Stock on the date of grant on the Nasdaq National Market,
or such other stock exchange on which the Common Stock may be
listed from time to time. Options may be exercised by payment of
the option price in full (i) in cash, (ii) in Common Stock,
including Common Stock underlying the option being exercised,
having a fair market value equal to such option price, or (iii) a
combination of cash and Common Stock, including the Common Stock
underlying the option being exercised. An option may be
exercised no earlier than six months and one day from the date of
grant. An option may not be transferred or assigned other than
by will or the laws of descent and distribution.
If an option holder ceases to be employed by the Company or a
subsidiary, except by reason of death or retirement, the option
holder must exercise an option within the earlier of either the
tenth anniversary after the date of grant, or three months after
the date such option holder's employment ends. In the event of
termination of employment due to retirement, all options granted
to such option holder and exercisable on the date of the option
holder's retirement shall expire on the earlier of the tenth
anniversary after the date of grant or the date of the second
anniversary of such option holder's retirement. Any installment
not exercisable on the date of such termination or retirement
shall expire. In the event of termination of employment due to
the death of the option holder, the option may be exercised, to
the extent of the number of shares that the option holder could
have exercised on the date of option holder's death, by the
option holder's estate, personal representative, or beneficiary
who acquires the option by will or by the laws of descent and
distribution.
As of August 19, 1996, outstanding options representing
585,000 shares of Common Stock had been granted under the
Incentive Plan. The Common Stock underlying options granted
pursuant to the Incentive Plan traded at a closing bid price of
$8.50 per share on August 19, 1996, as reported by the Nasdaq
National Market.
FEDERAL TAX CONSEQUENCES OF OPTIONS
Holders of incentive stock options will not recognize taxable
income as a result of the grant or exercise of such options. If
the option holder does not dispose of the stock transferred to
the option holder within two years from the date of the grant and
within one year after the stock is transferred to the option
holder, then any gain or loss recognized on the disposition of
the stock will be a long-term capital gain or loss equal to the
difference between the amount realized by the option holder and
the option price. However, the difference between the option
exercise price and the fair market value of the shares on the
option exercise date will be treated as a tax preference item
subject to alternative minimum tax. The Company will not be
entitled to any tax deduction in connection with the grant or
exercise of any incentive stock option. However, if stock
acquired pursuant to an incentive stock option is disposed of
before the holding periods described above expire, then the
excess of fair market value (but not in excess of the sales
proceeds) of such stock on the option exercise date over the
option price will be treated as compensation income to the option
holder in the year in which such disposition occurs and the
Company will be entitled to a commensurate income tax deduction.
Any difference between the sales proceeds and the fair market
value of the stock on the option exercise date will be treated as
a long-term capital gain or loss if the shares were held more
than one year after the option exercise date.
Except as provided in the next paragraph below, the holder of
a non-statutory stock option, upon exercise, must include in
ordinary income subject to federal taxation an amount equal to
the excess of the fair market value of the stock acquired at date
of exercise over the aggregate price paid pursuant to the option
for such stock. Accordingly, the Company may, as a condition to
the exercise of a non-statutory stock option, deduct from
payments otherwise due to the option holder the amount of taxes
to be withheld by virtue of such exercise or require that the
option holder pay such withholding to the Company or make other
arrangements satisfactory to the Company regarding the payment of
such taxes.
12
<PAGE>
When an officer or director who is subject to Section 16(b) of
the Exchange Act exercises a non-statutory stock option, no
income is recognized for federal income tax purposes at the time
of exercise unless the option holder makes an appropriate
election within thirty days after the date of exercise, in which
case the rules described in the preceding paragraph would apply.
If such an election is not made, the option holder will recognize
ordinary income on the date that is six months after the date of
the exercise (generally, the first day that the sale of such
shares would not create liability under Section 16(b) of the
Exchange Act). The ordinary income recognized will be the
excess, if any, of the fair market value of the shares on such
later date over the option exercise price, and the Company's tax
deduction will also be deferred until such later date. The
effect of the alternative minimum tax may not be delayed for six
months after exercise of incentive stock options by an officer or
director subject to Section 16 of the Exchange Act.
Option holders should consult their own tax counsel as to the
consequences under federal, state and local tax laws upon the
grant and exercise of the options on the subsequent sale of the
stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
RATIFICATION OF THE AMENDMENT TO THE PAUL-SON GAMING CORPORATION
1994 LONG-TERM INCENTIVE PLAN
INTEREST IN CERTAIN MATTERS TO BE ACTED UPON
The Company's executive officers, key employees and
consultants, including, but not limited to, Paul S. Endy, Eric P.
Endy, Lawrence A. Speiser, Martin S. Winick, Louis W. DeGregorio
and Kirk Scherer will benefit from the ratification of the
amendment to the Incentive Plan, increasing the shares of the
Company's Common Stock available for issuance under the Incentive
Plan. Additionally, because the option grants on July 29, 1996
to Messrs. Paul Endy, Eric Endy and Winick were made subject to
stockholder ratification of the amendment to the Incentive Plan,
Messrs. Paul Endy, Eric Endy and Winick will benefit from such
ratification.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants, Deloitte &
Touche LLP, have audited the Company's books for the fiscal year
ended May 31, 1996, and are expected to have a representative
present at the Annual Meeting who will have the opportunity to
make a statement if such representative desires to do so and is
expected to be available to respond to appropriate questions. The
Company has not yet formally engaged an independent public
accountant to audit the Company's financial statements for the
year ended May 31, 1997.
On October 18, 1995, the Company dismissed McGladrey & Pullen,
LLP ("McGladrey") as its independent accountants. Neither of
McGladrey's reports on the financial statement for the Company's
fiscal years ended May 31, 1994 or 1995 contained an adverse
opinion or a disclaimer of opinion, nor was either qualified or
modified as to uncertainty, audit scope or accounting principals.
During the Company's fiscal years ended May 31, 1994 and 1995,
the Company had no disagreement with McGladrey on any matter of
of accounting principals or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement,
if not resolved to the satisfaction of McGladrey, would have
caused McGladrey to make a reference to the subject matter of the
disagreement in connection with its reports. The decision to
change accountants was recommended by the Audit Committee and was
approved by the Board of Directors. On October 24, 1995, the
Company engaged Deloitte & Touche LLP, Las Vegas, Nevada, to
audit the Company's financial statements for the fiscal year
ended May 31, 1996.
VOTING PROCEDURES
A majority of a quorum of stockholders present in person or
represented by proxy voting "FOR" each of the matters being
submitted to the stockholders is required to approve the matters
being voted on at the meeting. A quorum of stockholders exists
when a majority of the stock issued and outstanding and entitled
to vote at a meeting is present, in person or represented by
proxy, at the meeting. Abstentions are effectively treated as
votes "AGAINST" a matter submitted to stockholders. Neither the
Company's Articles of Incorporation, Bylaws, nor Nevada corporate
statutes address the treatment and effect of abstentions and
broker non-votes.
13
<PAGE>
The Company has appointed three inspectors of election to:
determine the number of shares outstanding and the voting power
of each, the shares represented at the meeting, the existence of
a quorum, and the authenticity, validity, and effect of a proxy;
receive votes, ballots, or consents; hear and determine all
challenges and questions in any way arising in connection with
the right to vote; count and tabulate all votes or consents;
determine when the polls shall close; determine the results; and
do any other acts which may be proper to conduct the election or
vote with fairness to all stockholders.
1997 ANNUAL MEETING OF STOCKHOLDERS
The next annual meeting of stockholders will be held on or
about October 9, 1997. Stockholders desiring to present proper
proposals at that meeting and to have their proposals included in
the Company's Proxy Statement and form of proxy for that meeting
must meet the eligibility and other criteria under Rule 14a-8 of
the Exchange Act and must submit the proposal to the Company and
such proposal must be received no later than April 30, 1997.
OTHER BUSINESS
The Board of Directors does not know of any other business
which will be presented for action by the stockholders at the
Annual Meeting. However, if any business other than that set
forth in the Notice should be presented at the Annual Meeting,
the proxy committee named in the enclosed proxy intends to take
such action as will be in harmony with the policies of the Board
of Directors of the Company, and in that connection will use
their discretion and vote all proxies in accordance with
their judgment.
The Company's 1996 Annual Report to Stockholders, including
financial statements for the twelve months ended May 31, 1996,
accompanies these proxy materials, which are being mailed to all
stockholders of the Company who were stockholders at the close of
business on August 28, 1996.
By order of the Board of Directors,
/s/ Laurence A. Speiser
Laurence A. Speiser, Secretary
DATED: August 29, 1996
THE COMPANY'S ANNUAL REPORT ON SECURITIES AND EXCHANGE COMMISSION
FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULE
THERETO, FOR THE TWELVE MONTHS ENDED MAY 31, 1996, WILL BE
FURNISHED WITHOUT CHARGE TO ANY BENEFICIAL OWNER OF SECURITIES
ENTITLED TO VOTE AT THE ANNUAL MEETING. TO OBTAIN A COPY OF THE
FORM 10-K, WRITTEN REQUEST MUST BE MADE TO THE COMPANY AND THE
REQUESTING PERSON MUST REPRESENT IN WRITING THAT HE WAS A
BENEFICIAL OWNER OF THE COMPANY'S SECURITIES AS OF AUGUST 28,
1996.
REQUESTS SHOULD BE ADDRESSED TO:
Paul-Son Gaming Corporation
Attention: Eric P. Endy
2121 S. Industrial Road
Las Vegas, Nevada 89102
14
<PAGE>
PAUL-SON GAMING CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, OCTOBER 17, 1996
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Paul-Son Gaming Corporation (the
"Company") hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders, Proxy Statement, and Annual Report to
Stockholders in connection with the annual meeting of
stockholders of the Company to be held at Treasure Island at the
Mirage, Las Vegas, Nevada, on Thursday, October 17, 1996, at
10:00 o'clock in the morning, local time, and hereby appoints
Eric P. Endy and Martin S. Winick and each or any of them,
proxies, with power of substitution, to attend and to vote all
shares the undersigned would be entitled to vote if personally
present at said annual meeting and at any adjournment thereof.
The proxies are instructed to vote as follows:
(TO BE SIGNED ON REVERSE SIDE)
<PAGE>
[X] Please mark your votes
as in this example
NOMINEES: Eric P. Endy
FOR WITHHELD Richard W. Scott
1. Election of [ ] [ ]
Directors
(INSTRUCTION: to withhold authority to vote for any
individual nominee, write that nominee's name on the
space provided below.)
FOR AGAINST ABSTAIN
2. Approve and ratify amendment [ ] [ ] [ ]
to the Paul-Son Gaming
Corporation 1994 Long-Term
Incentive Plan.
3. In their discretion, upon
such other matters as may
properly come before the
annual meeting.
The shares represented by this proxy will be voted as specified.
If no specification is made, the shares represented by this
proxy will be voted in favor of all nominees listed, in favor
of approval and ratification of the amendment to the Paul-Son
Gaming Corporation 1994 Long-Term Incentive Plan, and in the
discretion of the proxies, on other matters that may properly
come before the annual meeting.
SIGNATURE(s)_________________________ DATE_______________
NOTE: PLEASE SIGN PROXY EXACTLY AS YOUR NAME APPEARS. Date the
Proxy in the space provided. If shares are held in the name of
two or more persons, all must sign. When signing as attorney,
executor, administrator, trustee, or guardian, give full title as
such. If signer is a corporation, sign full corporate name by
duly authorized officer.
<PAGE>
APPENDIX
PAUL-SON GAMING CORPORATION
1994 LONG-TERM INCENTIVE PLAN
ADOPTED BY THE BOARD OF DIRECTORS JANUARY 31, 1994
AMENDED BY THE BOARD OF DIRECTORS AUGUST 24, 1994
APPROVED BY THE STOCKHOLDERS OCTOBER 5, 1994
FURTHER REVISED BY THE BOARD OF DIRECTORS ON JULY 29, 1996
1. PURPOSE
The 1994 Long-Term Incentive Plan (the "Plan") is intended
to promote the interests of Paul-Son Gaming Corporation and its
subsidiaries (collectively the "Corporation") by offering those
executive officers, key employees and outside consultants of the
Corporation who are primarily responsible for the management,
growth and success of the business of the Corporation, the
opportunity to participate in a long-term incentive plan designed
to reward them for their services and to encourage them to
continue in the employ of or to provide services to the
Corporation.
2. DEFINITIONS
For all purposes of this Plan, the following terms shall
have the following meanings:
"Common Stock" means Paul-Son Gaming Corporation common
stock, $.01 par value.
"ISO" means incentive stock options qualified under
Section 422 of the Internal Revenue Code of 1986, as amended.
"Non-statutory Options" means stock options not qualified
under Section 422 of the Internal Revenue Code of 1986, as
amended.
"Paul-Son" means Paul-Son Gaming Corporation.
"Restricted Shares" means shares of Common Stock which have
not been registered under federal securities law.
"Subsidiary" means any company of which Paul-Son Gaming
Corporation owns, directly or indirectly, the majority of the
combined voting power of all classes of stock.
3. ADMINISTRATION
The Plan shall be administered by a Committee (the
"Committee") of not less than two non-employee directors of Paul-
Son selected by, and serving at the pleasure of, Paul-Son's Board
of Directors ("Paul-Son Board"). Directors who are also
employees of Paul-Son or any
<PAGE>
Subsidiary, or who have been such employees within one year, may
not serve on the Committee. Such non-employee directors shall be
"disinterested" directors as provided under Rule 16b-3(c)(2)(i)
of the Securities Exchange Act of 1934 ("Exchange Act").
Initially, the Company or Subsidiary will recommend to the
Committee persons to whom awards may be granted. The Committee
then shall have the authority, subject to the terms of the Plan,
to determine, based upon recommendations, the persons to whom
awards shall be granted ("Participants") the number of shares
covered by each award, the time or times at which awards shall be
granted, the timing of when awards shall vest, and the terms and
provisions of the instruments by which awards shall be evidenced,
and to interpret the Plan and make all determinations necessary
or to a person advisable for its administration. The Committee
shall notify the Paul-Son Board of all decisions concerning
awards granted to Participants under the Plan, the interpretation
thereof, and determinations concerning its administration.
Notwithstanding the foregoing, the initial grants of Non-
statutory Options under this Plan and the terms of such grants,
shall be as set forth in "Schedule A" attached hereto and
incorporated herein by this reference; and such grants shall not
be modified or amended except in accordance with Section 9 or
with the consent of the respective Participants.
4. ELIGIBILITY
Only persons who are employees, outside consultants,
officers or employee-directors of the Corporation or of any
Subsidiary shall be granted awards. An ISO may not be issued to
a person who, at the time of grant is a non-employee of the
Corporation or to a person who owns stock of the Corporation
possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation or a subsidiary.
5. STOCK SUBJECT TO THE PLAN
The stock from which awards may be granted shall be shares
of Common Stock. When Restricted Shares are vested or when
options are exercised, Paul-Son may either issue authorized but
unissued Common Stock or Paul-Son may transfer issued Common
Stock held in its treasury. Each of the respective boards of
Paul-Son and Subsidiaries will fund the Plan to the extent so
required to provide Common Stock for the benefit of Participants.
The total number of shares of Common Stock which may be granted
as Restricted Shares or stock options shall not exceed, in the
aggregate, 1,000,000 shares in total. Any Restricted Shares
awarded and later forfeited are again subject to award under the
Plan. If an option expires, or is otherwise terminated prior to
its exercise, the shares of Common Stock covered by such an
option immediately prior to such expiration or other termination
shall continue to be available for grant under the Plan.
6. GRANTING OF OPTIONS
The date of grant of options to Participants under the Plan
will be the date on which the options are awarded by the
Committee. The grant of any option to any Participant shall
neither entitle nor disqualify such Participant from
participating in any subsequent grant of options.
2
<PAGE>
7. TERMS AND CONDITIONS OF OPTIONS
Options shall be designated Non-statutory Options or ISOs
and shall be evidenced by written instruments approved by the
Committee. Such instruments shall conform to the following terms
and conditions:
7.1 Option Price
The option price per share for an option shall be the fair
market value of the Common Stock underlying the option on the day
the option is granted. Fair market value shall be an amount
equal to the initial public offering price of the Common Stock or
the last reported sale price of the Common Stock on such date on
the Nasdaq National Market, or such other stock exchange on which
the Common Stock may be listed from time to time. The option
price shall be paid (i) in cash or (ii) in Common Stock,
including Common Stock underlying the option being exercised,
having a fair market value equal to such option price or (iii) in
a combination of cash and Common Stock, including Common Stock
underlying the option being exercised. The fair market value of
Common Stock delivered to the Corporation pursuant to the
immediately preceding sentence shall be determined on the basis
of the last reported sale price of the Common Stock on the
Nasdaq National Market on the day of exercise or, if there was no
such sale price on the day of exercise, on the day next preceding
the day of exercise on which there was such a sale.
7.2 Term and Exercise of Options
No option shall be exercisable sooner than six months and
one day from the date of grant.
Except in special circumstances, each option shall expire on
the tenth anniversary of the date of its grant and shall be
exercisable according to a vesting schedule to be determined by
the Committee. However the Committee may include in any option
instrument, initially or by amendment at any time, a provision
making any installment or installments exercisable at such
earlier date, if the Committee deems such provision to be in the
interests of the Corporation or necessary to realize the
reasonable expectation of the optionee.
After becoming exercisable, each installment shall remain
exercisable until expiration or termination of the option. After
becoming exercisable an option may be exercised by the optionee
from time to time, in whole or part, up to the total number of
shares with respect to which it is then exercisable. The
Committee may provide that payment of the option exercise price
may be made following delivery of the certificate for the
exercised shares.
Upon the exercise of a stock option, the purchase price will
be payable in full in cash or Common Stock, or a combination
thereof, as provided in Paragraph 7.1. Any shares of Common
Stock so assigned and delivered to Paul-Son or the Subsidiary, as
applicable, in payment or partial payment of the purchase price
will be valued at Fair Market Value on the exercise date. Upon
the exercise of an option, Paul-Son or a Subsidiary, as
applicable, shall withhold from the shares of Common Stock to be
issued to the Participant the number of shares necessary to
satisfy Paul-Son's or the Subsidiary's, as applicable, obligation
to withhold federal taxes, such determination to be based on the
shares' Fair Market Value on the date of exercise.
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7.3 Termination of Employment or Association
If an optionee ceases, other than by reason of death or
retirement as determined under any of the Corporation's pension
plans, if any, to be employed or associated with the Corporation,
all options granted to such optionee and exercisable on the date
of termination of employment or association shall expire on the
earlier of (i) the tenth anniversary after the date of grant or
(ii) three months after the day such optionee's employment or
association ends.
If an optionee retires, all options granted to such
optionee, and exercisable on the date of such optionee's
retirement shall expire on the earlier of (i) the tenth
anniversary after the date of grant or (ii) the second anni
versary of the day of such optionee's retirement.
Any installment not exercisable on the date of such
termination or retirement shall expire and be thenceforth
unexercisable. Whether authorized leave of absence or absence in
military or governmental service may constitute employment for
the purposes of the Plan shall be conclusively determined by the
Committee.
7.4 Exercise Upon Death of Optionee
If an optionee dies, the option may be exercised, to the
extent of the number of shares that the optionee could have
exercised on the date of such death, by the optionee's estate,
personal representative or beneficiary who acquires the option by
will or by the laws of descent and distribution. Such exercise
may be made at any time prior to the earlier of (i) the tenth
anniversary after the date of grant or (ii) the first anniversary
of such optionee's death. On the earlier of such dates, the
option shall terminate.
7.5 Assignability
No option shall be assignable or transferable by the
optionee except by will or by the laws of descent and distri
bution and during the lifetime of the optionee the option shall
be exercisable only by such optionee.
7.6 Limitation on Incentive Stock Options
During a calendar year, the aggregate fair market value of
the option stock (determined at the time of the ISO grant) for
which ISOs are exercisable by a person for the first time under
the Plan, cannot exceed $100,000.
8. RESTRICTED SHARE AWARDS
8.1 Grant of Restricted Share Awards
The Committee will determine for each Participant the time
or times when Restricted Shares shall be awarded and the number
of shares of Common Stock to be covered by each Restricted Share
award.
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8.2 Restrictions
Shares of Common Stock issued to a Participant as a
Restricted Share award will be subject to the following
restrictions ("Share Restrictions"):
(a) Except as set forth in Paragraphs 8.4 and 8.5, all
of the Restricted Shares subject to a Restricted Award will
be forfeited and returned to Paul-Son or, in the event such
Restricted Shares were provided to the Participant from
shares of Common Stock purchased by the Subsidiary, then the
Restricted Shares will be returned to the Subsidiary. In
either case, all rights of the Participant to such
Restricted Shares will terminate without any payment of
consideration by Paul-Son or the Subsidiary with which the
Participant is employed or associated, unless the
Participant maintains his or her employment or association
(including consulting arrangements) with Paul-Son or a
Subsidiary for a period of time determined by the Committee.
(b) During the longer of the restriction period
("Restriction Period") relating to a Restricted Share award
or a period of six months and one day from the date of the
award, none of the Restricted Shares subject to such award
may be sold, assigned, bequeathed, transferred, pledged,
hypothecated or otherwise disposed of in any way by the
Participant.
(c) The Committee may require the Participant to enter
into an escrow agreement providing that the certificates
representing Restricted Shares sold or granted pursuant to
the Plan will remain in the physical custody of Paul-Son or
the employing Subsidiary or an escrow holder during the
Restriction Period.
(d) Each certificate representing a Restricted Share
sold or granted pursuant to the Plan will bear a legend
making appropriate reference to the restrictions imposed on
the Restricted Share.
(e) The Committee may impose other restrictions on any
Restricted Shares sold pursuant to the Plan as it may deem
advisable, including without limitation, restrictions under
the Securities Act of 1933, as amended, under the
requirements of any stock exchange upon which such share or
shares of the same class are then listed and under any state
securities laws or other securities laws applicable to such
shares.
8.3 Rights as a Stockholder
Except as set forth in Paragraph 8.2(b), the recipient of a
Restricted Share award will have all of the rights of a
stockholder of Paul-Son with respect to the Restricted Shares,
including the right to vote the Restricted Shares and to receive
all dividends or other distributions made with respect to the
Restricted Shares.
8.4 Lapse of Restrictions at Termination of Employment
In the event of the termination of employment, or
association of a Participant during the Restriction Period by
reason of death, total and permanent disability, retirement as
determined
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under any of the Corporation's pension plans, if any, or
discharge from employment other than a discharge for cause, the
Committee may, at its discretion, remove Share Restrictions on
Restricted Shares subject to a Restricted Share award.
Restricted Shares to which the Share Restrictions have not
so lapsed will be forfeited and returned to the Corporation as
provided in Paragraph 8.2(a).
8.5 Lapse of Restrictions at Discretion of the Committee
The Committee may shorten the Restriction Period or remove
any or all Share Restrictions if, in the exercise of its absolute
discretion, it determines that such action is in the best
interests of the Corporation and equitable to the Participant.
8.6 Listing and Registration of Shares
The Corporation may, in its reasonable discretion, postpone
the issuance and/or delivery of Restricted Shares until
completion of stock exchange listing, or registration, or other
qualification of such Restricted Shares under any law, rule or
regulation.
8.7 Designation of Beneficiary
A Participant may, with the consent of the Committee,
designate a person or persons to receive, in the event of death,
any Restricted Shares to which such Participant would then be
entitled. Such designation will be made upon forms supplied by
and delivered to the Committee and may be revoked in writing by
the Participant. If a Participant fails effectively to designate
a beneficiary, then such Participant's estate will be deemed to
be the beneficiary.
8.8 Withholding of Taxes for Restricted Shares
When the Participant, as holder of the Restricted Shares,
recognizes income, either on the Date of Grant or the date the
restrictions lapse, Paul-Son or a Subsidiary, as applicable,
shall withhold from the shares of Common Stock, the number of
shares necessary to satisfy Paul-Son's or the Subsidiary's, as
applicable, obligation to withhold federal taxes, such
determination to be based on the shares' Fair Market Value as of
the date income is recognized.
9. CAPITAL ADJUSTMENTS
The number and price of Common Stock covered by each award
of options and/or Restricted Shares and the total number of
shares that may be granted or sold under the Plan shall be
proportionally adjusted to reflect, subject to any required
action by stockholders, any stock dividend or split,
recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares or other
similar corporate change.
10. CHANGE OF CONTROL
Notwithstanding the provisions of Section 9, in the event of
a change of control, all share restrictions on all Restricted
Shares will lapse and vesting on all unexercised stock options
will
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accelerate to the change of control date. For purposes of this
plan, a "Change of Control" of Paul-Son shall be deemed to have
occurred at such time as (a) any "person" (as that term is used
in Section 13(d) and 14(d) of the Exchange Act), not including
Paul S. Endy, or his heirs or assigns, or the Paul S. Endy, Jr.
Living Trust, or its beneficiaries, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of Paul-Son representing
25.0% or more of the combined voting power of Paul-Son's
outstanding securities ordinarily having the right to vote at the
election of directors; or (b) individuals who constitute the
Board of Directors of Paul-Son on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent
to the date hereof whose election was approved by at least a
majority of the directors comprising the Incumbent Board, or
whose nomination or election was approved by a majority of the
Board of Directors of Paul-Son serving under an Incumbent Board,
shall be, for purposes of this clause (b), considered as if he or
she were a member of the Incumbent Board; or (c) merger,
consolidation or sale of all or substantially all the assets of
Paul-Son occurs, unless such merger or consolidation shall have
been affirmatively recommended to Paul-Son's stockholders by a
majority of the Incumbent Board; or (d) a proxy statement
soliciting proxies from stockholders of Paul-Son, by someone
other than the current management of Paul-Son seeking stockholder
approval of a plan of reorganization, merger or consolidation of
Paul-Son with one or more corporations as a result of which the
outstanding shares of Paul-Son's securities are actually
exchanged for or converted into cash or property or securities
not issued by Paul-Son unless the reorganization, merger or
consolidation shall have been affirmatively recommended to Paul-
Son's stockholders by a majority of the Incumbent Board.
11. APPROVALS
The issuance of shares pursuant to this Plan is expressly
conditioned upon obtaining all necessary approvals from all
regulatory agencies from which approval is required, including
gaming regulatory agencies, and upon obtaining stockholder
ratification of the Plan.
12. EFFECTIVE DATE OF PLAN
The effective date of the Plan is January 31, 1994.
13. TERM AND AMENDMENT OF PLAN
This Plan shall expire on January 30, 2004 (except to
options and Restricted Shares outstanding on that date). Paul-
Son's Board may terminate or amend the Plan in any respect at any
time, except that, without the approval of the holders of a
majority of the outstanding Common Stock: the total number of
shares that may be sold, issued or transferred under the Plan may
not be increased (except by adjustment pursuant to Section 9);
the provisions of Section 4 regarding eligibility may not be
modified; the purchase price at which shares may be offered
pursuant to options may not be reduced (except by adjustment
pursuant to Section 9); and the expiration date of the Plan may
not be extended and no change may be made which would cause the
Plan not to comply with Rule 16b-3 of the Exchange Act. No
action of the Paul-Son Board or Paul-Son's stockholders, however,
may, without the consent of an optionee or Restricted
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Shares grantee, alter or impair such Participant's rights under
any option or Restricted Shares previously granted.
14. NO RIGHT OF EMPLOYMENT
Neither the action of Paul-Son in establishing this Plan,
nor any action taken by any Board of Paul-Son or any Subsidiary
or the Committee, nor any provision of the Plan itself, shall be
construed to limit in any way the right of Paul-Son to terminate
a Participant's employment or association at any time; nor shall
it be evidence of any agreement or understanding, expressed or
implied, that the Corporation will employ an employee in any
particular position nor ensure participation in any future
compensation or stock purchase program.
15. WITHHOLDING TAXES
Paul-Son or the Subsidiary, as applicable, shall have the
right to deduct withholding taxes from any payments made pursuant
to the Plan or to make such other provisions as it deems
necessary or appropriate to satisfy its obligations to withhold
federal, state or local income or other taxes incurred by reason
of payments or the issuance of Common Stock under the Plan.
Whenever under the Plan, Common Stock is to be delivered upon
vesting of Restricted Shares or exercise of an option, the
Committee shall be entitled to require as a condition of delivery
that the Participant remit or provide for the withholding of an
amount sufficient to satisfy all federal, state and other
government withholding tax requirements related thereto.
16. PLAN NOT A TRUST
Nothing contained in the Plan and no action taken pursuant
to the Plan shall create or be construed to create a trust of any
kind, or a fiduciary relationship, between the Corporation and
any Participant, the executor, administrator or other personal
representative, or designated beneficiary of such Participant, or
any other persons. If and to the extent that any Participant or
such Participant's executor, administrator or other personal
representative, as the case may be, acquires a right to receive
any payment from the Corporation pursuant to the Plan, such right
shall be no greater than the right of an unsecured general
creditor of the Corporation.
17. NOTICES
Each Participant shall be responsible for furnishing the
Committee with the current and proper address for the mailing of
notices and delivery of agreements, Common Stock and cash
pursuant to the Plan. Any notices required or permitted to be
given shall be deemed given if directed to the person to whom
addressed at such address and mailed by regular United States
mail, first-class and prepaid. If any item mailed to such
address is returned as undeliverable to the addressee, mailing
will be suspended until the Participant furnishes the proper
address. This provision shall not be construed as requiring the
mailing of any notice or notification if such notice is not
required under the terms of the Plan or any applicable law.
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18. SEVERABILITY OF PROVISIONS
If any provision of this Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be con
strued and enforced as if such provisions had not been included.
19. PAYMENT TO MINORS, ETC.
Any benefit payable to or for the benefit of a minor, an
incompetent person or other person incapable of receipting there
for shall be deemed paid when paid to such person's guardian or
to the party providing or reasonably appearing to provide for the
care of such person, and such payment shall fully discharge the
Committee, the Corporation and other parties with respect
thereto.
20. HEADINGS AND CAPTIONS
The headings and captions herein are provided for reference
and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.
21. CONTROLLING LAW
This Plan shall be construed and enforced according to the
laws of the State of Nevada to the extent not preempted by
federal law, which shall otherwise control.
22. ENFORCEMENT OF RIGHTS
In the event the Corporation or a Participant is required to
bring any action to enforce the terms of this Plan, the
prevailing party shall be reimbursed by the non-prevailing party
for all costs and fees, including actual attorney fees, for
bringing and pursuing such action.
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SCHEDULE A
PAUL-SON GAMING CORPORATION
1994 LONG-TERM INCENTIVE PLAN
INITIAL OPTION GRANTS
Type of Options: Non-Statutory
Exercise Price
of Options: Public Offering Price
Vesting Schedule
of Options 25% at February 1, 1995
25% at February 1, 1996
25% at February 1, 1997
25% at February 1, 1998
GRANTEE NO. OF
SHARES
Larry Speiser 100,000
Lou DeGregorio 30,000
Charlie Endy 30,000
Jim Farnham 30,000
Mike Cox 15,000
Frank Moreno 15,000
Ron Coiro 30,000
Chris Costello 12,500
Hank Van Son 4,000
Jay Peiper 4,000
Dennis Endy 5,000
David Endy 4,000
Don Williams 4,000
Elaine Hutchison 3,000
Cheryl Tobin 3,000
Al Treise 4,000
Willie Santiago 4,000
Henry Pingtella 3,000
Wayne White 3,000
Jewell Hall 3,000
Total Shares 306,500
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