<PAGE>
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, 1998
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 Tuesday, October 13, 1998, at 10:00 a.m. local time,
for the following purposes:
(1) to elect Jerry G. West and Martin S. Winick 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 27, 1998 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 1998 Annual Report to Stockholders, including
financial statements for the twelve months ended May 31, 1998, is
enclosed.
By order of the Board of Directors,
/s/
Eric P. Endy, Secretary
DATED: September 9, 1998
<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 ......................................... 5
Directors and Executive Officers ...................... 6
Committees of the Board of Directors .................. 7
Board of Directors' Meetings .......................... 8
Compensation of Non-Employee Directors ................ 8
COMPENSATION OF EXECUTIVE OFFICERS ............................ 9
Compensation Committee and Incentive Plan
Committee Report on Executive Compensation......... 10
Compensation Committee and Incentive Plan
Committee Interlocks and Insider Participation .... 11
Stock Performance Chart .............................. 11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ............... 12
Services and Products Provided by Related
Parties ........................................... 12
Indemnification of Directors and Officers ............ 13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE ...... 13
INDEPENDENT PUBLIC ACCOUNTANTS ............................... 14
VOTING PROCEDURES ............................................ 14
1999 ANNUAL MEETING OF STOCKHOLDERS .......................... 14
OTHER BUSINESS ............................................... 15
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 Tuesday,
October 13, l998, 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 9, 1998. Any stockholder giving a proxy has the
power to revoke it prospectively by giving written notice to the
Company, addressed to Eric P. Endy, 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 27, 1998 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 24, 1998 was 3,474,850. 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 24, 1998 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 24, 1998, which the Company solicited and received from
each executive officer and director:
<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS OF AMOUNT AND NATURE OF
CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP<F1>,<F2> PERCENT OF CLASS<F2>
- - ---------- --------------------- ------------------------------- ----------------------
<S> <C> <C> <C>
Common Paul S. Endy, Jr. 1,778,205 <F3> 49.7
1700 S. Industrial Road
Las Vegas, Nevada 89102
Common Eric P. Endy 209,555 <F4> 5.9
1700 S. Industrial Road
Las Vegas, Nevada 89102
Common Jerry G. West 14,000 <F5> *
Common Martin S. Winick 190,833 <F6> 5.4
Common Richard W. Scott 3,000 <F7> *
Common All executive officers 2,072,260 <F8> 55.5
and directors as a group
(6 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 72,000 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 14,000 shares issuable
under the Company's 1994 Directors' Stock Option Plan (the
"Directors' Plan").
<F6> Includes options to purchase 3,000 shares issuable
under the Directors' Plan, options to purchase 64,500 shares
issuable under the Incentive Plan and options to purchase 123,333
shares granted to Mr. Winick from the Paul S. Endy, Jr. Living
Trust (the "Endy Trust").
<F7> Includes options to purchase 3,000 shares issuable
under the Directors' Plan.
<F8> Includes options to purchase 236,500 shares issuable
under the Incentive Plan and options to purchase 20,000 shares
issuable under the Directors' Plan. Does not include options to
purchase shares granted to Martin S. Winick by the Endy Trust.
</FN>
</TABLE>
ELECTION OF DIRECTORS
The Company's Board of Directors consists of five persons in
three categories who are elected for staggered terms of three
years each. Two directors' terms expire at the Annual Meeting;
two in 1999; and one in 2000. 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, Jerry G. West and Martin S. Winick, for terms expiring
in 2001. 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. WEST AND WINICK TO THE BOARD OF DIRECTORS
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
5
<PAGE>
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. 70 1993 2000 Chairman of the Board and Chief
Executive Officer
Eric P. Endy 43 1993 1999 President, Secretary and
Director
Jerry G. West 55 1994 1998 Director (Nominee to the Board
for term expiring in 2001)
Martin S. Winick 48 1995 1998 Director (Nominee to the Board
for term expiring in 2001)
Richard W. Scott 60 1995 1999 Director
John M. Garner 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, President since January 1994, Secretary since
May 1998, and Treasurer from May 1998 to July 1998. 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, Jr.
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 until his
retirement in 1993, Mr. West was a special agent with the United
States Federal Bureau of Investigation.
6
<PAGE>
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. Mr. Winick is 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.
JOHN M. GARNER has been Treasurer and Chief Financial
Officer of the Company since July 1998. From September 1996 to
April 1998, Mr. Garner was Corporate Controller of Alliance
Gaming Corp., a gaming equipment manufacturer, distributor and
route operator. From December 1994 to September 1996, Mr. Garner
was Vice President Finance, and from July 1989 to December 1994
Controller, of Bally Gaming, Inc., a gaming equipment
manufacturer and distributor. Prior to joining Bally Gaming,
Inc., Mr. Garner was an audit manager in the Reno, Nevada office
of the accounting firm of Ernst & Young.
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 seven times during the twelve months
ended May 31, 1998.
The Compensation Committee consists of Jerry G. West
and Richard W. Scott. 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, 1998.
7
<PAGE>
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, 1998.
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, 1998.
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
the administrative approval of the Chairman of the Nevada State
Gaming Control Board. The Compliance Committee met 13 times
during the twelve months ended May 31, 1998.
BOARD OF DIRECTORS' MEETINGS
The Board of Directors of the Company meets at least
quarterly and in the fiscal year ended May 31, 1998, 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, at the
beginning of such director's fourth year of service. In
addition, on the anniversary of each such Director's election
8
<PAGE>
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 4,000 shares of Common Stock
granted to Jerry G. West during the year ended May 31, 1998. 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
Eric P. Endy, the Company's President and the only other
executive officer of the Company whose total compensation for the
fiscal year ended May 31,1998 exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
==============================================================================================================================
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------- -----------------------------------------
AWARDS PAYOUTS
--------------------------- -------------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL RESTRICTED STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARD(S) ($) SARS (#) PAYOUTS ($) COMPENSATION ($)
- - --------------------- ------ ---------- --------- ---------------- ---------------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul S. Endy, Jr. 1998 191,948 4,000 -0- -0- -0- -0- -0-
Chairman of the Board 1997 204,000 -0- -0- -0- -0- -0- -0-
and Chief Executive 1996 195,875 -0- -0- -0- -0- -0- -0-
Officer
- - --------------------- ------ ---------- --------- ---------------- ---------------- ---------- --------------- --------------
Eric P. Endy, 1998 149,106 3,129 -0- -0- -0- -0- -0-
President, Secretary 1997 158,171 -0- -0- -0- -0- -0- -0-
and Director <F1> 1996 150,231 -0- -0- -0- -0- -0- -0-
==============================================================================================================================
____________
<FN>
<F1> Eric P. Endy was appointed Secretary on May 4, 1998.
</FN>
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
===================================================================================================================================
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE MONEY OPTIONS/SARS
OPTIONS/SARS AT FISCAL YEAR-END (#)<F1> AT FISCAL YEAR-END ($)<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- 93,750 -0-
- - ------------------ ----------------- ------------ ---------------- ------------------------- ---------------- -----------------
Eric P. Endy -0- -0- 47,000 50,000 44,063 46,875
===================================================================================================================================
____________
<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 $9.00 on May 29, 1998,
the last trading day in May 1998, 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 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 other executive
officers are also eligible to receive incentive compensation in
the form of stock
10
<PAGE>
options under the Incentive Plan. During the last fiscal year no
options were granted to 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, 1998, 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.
August 27, 1998 INCENTIVE PLAN COMMITTEE
COMPENSATION COMMITTEE
Jerry G. West
Richard W. Scott
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
1998 fiscal year, the Compensation Committee and the Incentive
Plan Committee consisted of Messrs. Richard W. Scott and Jerry G.
West.
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, 1998, 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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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 31-MAY-98
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Paul-Son Gaming Corporation $ 100.00 $ 116.33 $ 61.23 $ 69.39 $ 112.25 $ 73.47
Total Return Index for S&P 500 $ 100.00 $ 101.42 $ 121.90 $ 156.56 $ 202.61 $ 264.78
Self Determined Peer Group $ 100.00 $ 78.15 $ 45.37 $ 51.32 $ 50.86 $ 60.07
</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.), Conquest Industries, Inc., 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
SERVICES AND PRODUCTS PROVIDED BY RELATED PARTIES
Laurence A. Speiser, Ltd., of which Laurence A. Speiser,
Secretary and a Director of the Company until May 1998, is the
principal, provides legal services to the Company. During the
fiscal year ended May 31, 1998, the Company paid Laurence A.
Speiser, Ltd. $108,000 for legal services rendered, plus related
costs and expenses.
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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. As of August 31, 1998, the amount outstanding under
the Winick Loan was $150,000.
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.
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.
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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, 1998, 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 issuance of an option for the sale of 5,000 shares was
inadvertently filed late by Paul S. Endy, Jr.; two reports of a
change in ownership for a series of ten transactions, covering
the purchase and sale of 42,500 shares in connection with the
cashless exercise of an option granted under the Incentive Plan
were 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 2,000 shares in connection with
the cashless exercise of an option granted under the Incentive
Plan was inadvertently filed late by Kirk Scherer.
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, 1998, 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, 1999.
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 results; and
do any other acts which may be proper to conduct the election or
vote with fairness to all stockholders.
1999 ANNUAL MEETING OF STOCKHOLDERS
The next annual meeting of stockholders will be held on or
about October 12, 1999. 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, 1999. Unless a
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stockholder proposal for the Company's 1999 Annual Meeting of
Stockholders is submitted to the Company prior to July 26, 1999,
management may use its discretionary voting authority to vote
management proxies on the stockholder proposal without any
discussion of the matter in the proxy statement.
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 1998 Annual Report to Stockholders,
including financial statements for the twelve months ended
May 31, 1998, accompanies these proxy materials, which are being
mailed to all stockholders of the Company who were stockholders
at the close of business on August 27, 1998.
By order of the Board of Directors,
/s/
Eric P. Endy, Secretary
DATED: September 8, 1998
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, 1998, 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 27,
1998.
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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PAUL-SON GAMING CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, OCTOBER 13, 1998
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 Tuesday, October 13, 1998, 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>
<TABLE>
<CAPTION>
[X] Please mark your votes
as in this example
FOR WITHHELD NOMINEES:
<S> <C> <C> <C> <C>
1. ELECTION OF [ ] [ ] Jerry G. West 2. In their discretion, upon such other
DIRECTORS Martin S. Winick matters as may properly come before
the annual meeting.
</TABLE>
(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.
