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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
_______________________________________________________
2. Aggregate number of securities to which transaction applies:
_______________________________________________________
<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>
[LOGO OF PAUL-SON GAMING CORPORATION]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 13, 1997
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 Monday, October 13, 1997, at 10:00 a.m. local time, for
the following purposes:
(1) to elect Paul S. Endy, Jr. and Laurence A. Speiser as
directors of the Company; and
(2) to transact such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on
August 29, 1997 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 1997 Annual Report to Stockholders, including
financial statements for the twelve months ended May 31, 1997, is
enclosed.
By order of the Board of Directors,
/s/ Laurence A. Speiser
Laurence A. Speiser, Secretary
DATED: September 5, 1997
<PAGE>
PAUL-SON GAMING CORPORATION
PROXY STATEMENT
TABLE OF CONTENTS
PROXY STATEMENT 3
VOTING SECURITIES 3
ELECTION OF DIRECTORS 5
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS 6
DIRECTORS AND EXECUTIVE OFFICERS 6
COMMITTEES OF THE BOARD OF DIRECTORS 8
BOARD OF DIRECTORS' MEETINGS 9
COMPENSATION OF NON-EMPLOYEE DIRECTORS 9
COMPENSATION OF EXECUTIVE OFFICERS 9
COMPENSATION COMMITTEE AND INCENTIVE PLAN COMMITTEE
REPORT ON EXECUTIVE COMPENSATION 11
COMPENSATION COMMITTEE AND INCENTIVE PLAN COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION 12
STOCK PERFORMANCE CHART 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 13
INDEMNIFICATION OF DIRECTORS AND OFFICERS 14
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 15
INDEPENDENT PUBLIC ACCOUNTANTS 15
VOTING PROCEDURES 15
1998 ANNUAL MEETING OF STOCKHOLDERS 16
OTHER BUSINESS 16
2
<PAGE>
Paul-Son Gaming Corporation
1700 S. 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 Monday,
October 13, l997, 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 September
5, 1997. 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 29, 1997 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 29, 1997 was 3,421,500. 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
3
<PAGE>
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 August 15, 1997 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, 1997, which the Company solicited and received from
each executive officer and director:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
TITLE OF NAME AND ADDRESS OF OF BENEFICIAL PERCENT OF
CLASS BENEFICIAL OWNER OWNERSHIP<F1>,<F2> CLASS<F2>
<S> <C> <C> <C>
Common Paul S. Endy, Jr. 1,778,205<F3> 50.5
1700 S. Industrial Road
Las Vegas, Nevada 89102
Common Eric P. Endy 187,555<F4> 5.4
1700 S. Industrial Road
Las Vegas, Nevada 89102
Common Laurence A. Speiser - -
Common Jerry G. West 6,000<F5> *
Common Martin S. Winick 101,166<F6> 2.9
Common Richard W. Scott 2,000<F7> *
Common All executive officers 2,020,260<F8> 55.4
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> Includes options to purchase 100,000 shares issuable under
the Company's 1994 Long-Term Incentive Plan (the "Incentive
Plan"). Mr. Endy beneficially owns the following shares in the
manner described:
Paul S. Endy, Jr. Living Trust 1,660,205
Certain trusts established for the
benefit of Mr. Endy's family 18,000
Total shares 1,678,205
<F4> Includes options to purchase 50,000 shares issuable under
the Incentive Plan. Mr. Endy beneficially owns the following
shares in the manner described:
Direct 113,555
Certain trusts established for
the benefit of Mr. Endy's family 18,000
Mr. Endy's spouse 6,000
Total shares 137,555
4
<PAGE>
<F5> Includes options to purchase 6,000 shares issuable under
the Company's 1994 Directors' Stock Option Plan (the "Directors'
Plan").
<F6> Includes options to purchase 2,000 shares issuable under
the Directors' Plan, options to purchase 37,500 shares issuable
under the Incentive Plan and options to purchase 61,666 shares
granted to Mr. Winick from the Paul S. Endy, Jr. Living Trust
(the "Endy Trust").
<F7> Includes options to purchase 2,000 shares issuable under
the Directors' Plan.
<F8> Includes options to purchase 212,500 shares issuable under
the Incentive Plan and options to purchase 10,000 shares issuable
under the Directors' Plan. Does not include options to purchase
shares granted to an officer or director by the Endy Trust.
</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 1998; and two in 1999. 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,
Paul S. Endy, Jr. and Laurence A. Speiser, for terms expiring in
2000. 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 SPEISER TO THE BOARD OF
DIRECTORS
5
<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 Paul S. Endy, Jr. is the father of Eric P. Endy.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as
follows:
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE SINCE EXPIRES POSITION WITH THE COMPANY
<S> <C> <C> <C> <C>
Paul S. Endy, Jr. 69 1993 1997 Chairman of the Board and Chief
Executive Officer (Nominee to
the Board for term expiring in
2000)
Eric P. Endy 42 1993 1999 President and Director
Laurence A. Speiser 45 1993 1997 Secretary and Director (Nominee
to the Board for term expiring
in 2000)
Jerry G. West 54 1994 1998 Director
Martin S. Winick 47 1995 1998 Director
Richard W. Scott 59 1995 1999 Director
Louis W. DeGregorio 42 - - Senior Vice President of Sales
Kirk Scherer 39 - - Treasurer and Chief Financial
Officer
</TABLE>
PAUL S. ENDY, JR. 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") 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
6
<PAGE>
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, Jr.
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." 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
February 1997, Mr. Winick has been a retail securities broker and
Senior Vice President of Private Client Services with the
securities firm of Ladenburg Thalmann & Co., Cleveland, Ohio.
From August 1995 to February 1997, Mr. Winick was 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. Since January 1997, Mr.
Winick has been a director of Blackhawk Gaming & Development Co.,
Boulder, Colorado, the co-owner and manager of the Gilpin Hotel
and Casino in Blackhawk, Colorado.
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.
7
<PAGE>
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, 1997.
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 met ten times during the
twelve months ended May 31, 1997.
The Incentive Plan Committee consists of Jerry G. West and
Richard W. Scott. 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, 1997.
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, 1997.
The Compliance Committee consists of Jerry G. West, Eric P.
Endy and certain other Company employees. 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
8
<PAGE>
the administrative approval of the Chairman of the Nevada State
Gaming Control Board. The Compliance Committee met ten times
during the twelve months ended May 31, 1997.
BOARD OF DIRECTORS' MEETINGS
The Board of Directors of the Company meets at least quarterly
and in the fiscal year ended May 31, 1997, the Board of Directors
held four 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.
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 or
appointment to the Board of Directors. In addition, on the
anniversary of each such Director's election or appointment to
the Board of Directors such director also receives options to
purchase 1,000 shares of Common Stock for serving on the Audit
Committee, the Compliance Committee or the Compensation Committee
for at least six months during the twelve months prior to the
date of grant.
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 3,000 shares of Common Stock
granted to Jerry G. West during the year ended May 31,1997 under
the Directors' Plan. 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, Jr., the Company's Chief Executive Officer, and certain
other executive officers of the Company whose total compensation
for the fiscal year ended May 31,1997 exceeded $100,000.
9
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
AWARDS PAYOUTS
NAME AND PRINCIPAL FISCAL OTHER ANNUAL RESTRICTED STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARD(S) ($) SARS (#) PAYOUTS ($) COMPENSATION ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul S. Endy, Jr., 1997 204,000 -0- -0- -0- 100,000 -0- -0-
Chairman of the Board 1996 195,875 -0- -0- -0- -0- -0- -0-
and Chief Executive 1995 197,693 27,000 -0- -0- -0- -0- -0-
Officer<F1>
Eric P. Endy, 1997 158,171 -0- -0- -0- 100,000 -0- -0-
President and 1996 150,231 -0- -0- -0- -0- -0- -0-
Director<F1> 1995 150,160 -0- -0- -0- -0- -0- -0-
Louis W. DeGregorio, 1997 141,611 -0- -0- -0- -0- -0- -0-
Senior Vice President 1996 99,806 -0- -0- -0- -0- -0- -0-
of Sales<F1> 1995 109,759 -0- -0- -0- -0- -0- -0-
Kirk Scherer, 1997 101,591 -0- -0- -0- 100,000 -0- -0-
Treasurer and Chief 1996 90,045 -0- -0- -0- 10,500 -0- -0-
Financial Officer<F2>, 1995 - - - - - - -
<F3>
<FN>
<F1> Paul S. Endy, Jr., Eric P. Endy and Louis W. DeGregorio
were appointed to their respective offices on January 31, 1994.
<F2> Kirk Scherer was appointed to his office on July 30, 1996.
<F3> An option to purchase 10,500 shares of Common Stock issued
to Mr. Scherer in December 1995 was subsequently cancelled in
October 1996 and replaced with an option to purchase 100,000
shares of Common Stock.
</FN>
</TABLE>
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE APPRECIATION FOR
OPTION TERM<F1>
PERCENT OF TOTAL
OPTIONS/ OPTIONS/SARS
SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#)<F2> FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Paul S. Endy, Jr. 100,000 14.0 8.0625 07/29/06 507,046 1,284,955
Eric P. Endy 100,000 14.0 8.0625 07/29/06 507,046 1,284,955
Kirk Scherer 100,000 14.0 7.5000 10/18/06 471,671 1,195,307
<FN>
<F1> The amounts shown represent assumed rates of appreciation
in the Company's Common Stock. The actual value, if any, on
stock option exercises will depend on the future performance of
the Company's Common Stock, as well as the option holders'
continued employment through the applicable vesting period.
There can be no assurance that the value, if any, ultimately
realized by the executive will be at or near the values shown
above.
<F2> These numbers represent only options granted pursuant to
the Incentive Plan; there are no stock appreciation rights.
</FN>
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS AT FISCAL IN-THE MONEY OPTIONS/SARS
YEAR-END (#)<F1> AT FISCAL YEAR-END ($)<F1>, <F2>
SHARES VALUE
ACQUIRED ON REALIZED
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Paul S. Endy, Jr. -0- -0- 100,000 -0- 568,750 -0-
Eric P. Endy -0- -0- 25,000 75,000 142,188 770,313
Louis W. DeGregorio 7,500 27,500 -0- 22,500 -0- 112,500
Kirk Scherer 15,000 85,325 5,000 80,000 31,250 500,00
<FN>
<F1> These numbers represent only options granted pursuant to
the Incentive Plan; there are no stock appreciation rights.
<F2> Based on a closing bid price of $13.75 on May 30, 1997,
the last trading day in May 1997, minus the option exercise
price.
</FN>
</TABLE>
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 COMMENCING ON PAGE
12 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
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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 options to purchase 300,000
shares were granted to 3 executive officers.
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, 1997, the Committees considered the financial
performance of the Company and Mr. Endy's efforts in expanding
the Company's operations and implementing cost reduction
policies. The Committees also considered Mr. Endy's experience
in the industry and his established customer relationships.
<TABLE>
<CAPTION>
<S> <C> <C>
August 22, 1997 COMPENSATION COMMITTEE INCENTIVE PLAN COMMITTEE
Richard W. Scott Jerry G. West
Martin S. Winick Richard W. Scott
Jerry G. West
</TABLE>
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
1997 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.
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, 1997, 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.
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<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURNS
STOCK PERFORMANCE GRAPH
[THE ORIGINAL PROXY STATEMENT CONTAINS BAR GRAPH BASED ON THE
FOLLOWING INFORMATION]
<TABLE>
<CAPTION>
29-MAR-94 31-MAY-94 31-MAY-95 31-MAY-96 31-MAY-97
<S> <C> <C> <C> <C> <C>
Paul-Son Gaming Corporation $ 100.00 $ 116.33 $ 61.23 $ 69.39 $ 112.25
Total Return Index for S&P 500 $ 100.00 $ 101.42 $ 121.90 $ 156.56 $ 202.61
Self Determined Peer Group $ 100.00 $ 78.15 $ 45.37 $ 51.32 $ 50.86
</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 fiscal year-end is not a trading day, the preceding
trading day is used.
D. The index level for all series was set to 100.0 on 3/29/94.
(1) The companies in the peer group include: Autotote Corp.,
Bally Gaming, Inc. (until its acquisition in July 1996), Casino
Data Systems, 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.
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, Jr., 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, Jr. the assets of Sisk, a
distributor of playing cards and table game equipment to
California card clubs.
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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, 1997, the Company paid off the entire
promissory note, including principal of $15,000 and accrued
interest of $32.
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, 1997, the
Company paid Laurence A. Speiser, Ltd. $134,317 for legal
services rendered and related costs and expenses.
In November 1996, the Company advanced to Martin S. Winick, a
member of the Company's board of directors, the sum of $150,000
under a line of credit loan ("Winick Loan"). Outstanding amounts
under the Winick Loan are to be repaid in full on or before
December 1, 1998; until which time only interest is payable
quarterly to the Company at an interest rate equal to prime plus
2%. The Winick Loan is secured by a general pledge agreement
covering all of Mr. Winick's assets, rights to purchase certain
shares of the Company's common stock, and a pledge of certain
shares of the Company's common stock by the Company's principal
stockholder.
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.
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<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, 1997, all reports required under
Section 16(a) filing requirements were filed as required, except:
one report of a change in ownership for one transaction, covering
the sale of 3,740 shares was inadvertently filed late by Paul S.
Endy, Jr.; one report of a change in ownership for a series of
eight transactions, covering the purchase and sale of 37,500
shares in connection with the cashless exercise of an option
granted under the Incentive Plan was inadvertently filed late by
Martin S. Winick; and one report of a change in ownership for a
series of two transactions covering the purchase and sale of
5,500 shares in connection with the cashless exercise of an
option granted under the Incentive Plan was inadvertently filed
late by Louis W. DeGregorio.
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, 1997, 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, 1998.
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.
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
15
<PAGE>
results; and do any other acts which may be proper to conduct the
election or vote with fairness to all stockholders.
1998 ANNUAL MEETING OF STOCKHOLDERS
The next annual meeting of stockholders will be held on or
about October 12, 1998. 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 May 8, 1998.
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 1997 Annual Report to Stockholders, including
financial statements for the twelve months ended May 31, 1997,
accompanies these proxy materials, which are being mailed to all
stockholders of the Company who were stockholders at the close of
business on August 29, 1997.
By order of the Board of Directors,
/s/ Laurence A. Speiser
Laurence A. Speiser, Secretary
DATED: September 5, 1997
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, 1997, 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 29,
1997.
REQUESTS SHOULD BE ADDRESSED TO:
Paul-Son Gaming Corporation
Attention: Eric P. Endy
1700 S. Industrial Road
Las Vegas, Nevada 89102
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<PAGE>
PAUL-SON GAMING CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, OCTOBER 13, 1997
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 Monday, October 13, 1997, 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)
17
<PAGE>
[X] Please mark your votes
as in this example
<TABLE>
<S> <C> <C> <C> <C> <C>
FOR WITHHELD NOMINEES: Paul S. Endy, Jr.
1. Election of [ ] [ ] Laurence A. Speiser 2. In their discretion,
Directors upon such other matters
as may properly come before
the annual meeting.
(INSTRUCTION: to withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below.)
___________________________________________________________
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, 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.
18
</TABLE>
