<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>
[PAUL-SON GAMING CORPORATION LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 11, 1999
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, November 11, 1999, at 10:00 a.m. local time,
for the following purposes:
(1) to elect Richard W. Scott and Eric P. Endy 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
September 24, 1999 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 1999 Annual Report to Stockholders, including
financial statements for the twelve months ended May 31, 1999, is
enclosed.
By order of the Board of Directors,
/s/ Eric P. Endy
Eric P. Endy, Secretary
DATED: October 5, 1999
<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...........................5
Committees of the Board of Directors.......................6
Board of Directors' Meetings...............................7
Compensation of Non-Employee Directors.....................7
COMPENSATION OF EXECUTIVE OFFICERS..............................8
Compensation Committee and Incentive Plan Committee
Report on Executive Compensation........................8
Compensation Committee and Incentive Plan Committee
Interlocks and Insider Participation....................9
Stock Performance Chart...................................10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................11
Services and Products Provided by Related Parties.........11
Indemnification of Directors and Officers.................11
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE........11
INDEPENDENT PUBLIC ACCOUNTANTS.................................12
VOTING PROCEDURES..............................................12
2000 ANNUAL MEETING OF STOCKHOLDERS............................12
OTHER BUSINESS.................................................12
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 Thursday,
November 11, l999, 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 October 7,
1999. 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 September 24, 1999 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 September 20, 1999 was 3,455,818. 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 September 20, 1999 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
3
<PAGE>
and 4 and Schedules 13D of which the Company has received copies,
and according to verifications as of September 20, 1999, 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> PERCENT OF CLASS
- --------- ------------------------- ------------------------ -----------------
<S> <C> <C> <C>
Common Eric P. Endy 1,945,467<F2> 53.3
1700 S. Industrial Road
Las Vegas, Nevada 89102
Common Jerry G. West 18,000<F3> *
Common Richard W. Scott 6,000<F4> *
Common All executive officers 1,970,467<F5> 53.6
and directors as a group
(4 persons)
*Beneficial ownership does not exceed 1% of the outstanding
Common Stock.
<FN>
<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 options granted to Mr. Endy to purchase 97,000
shares issuable under the Company's 1994 Long-Term Incentive Plan
(the "Incentive Plan"). Also includes exercisable options to
purchase 100,000 shares under the Incentive Plan which are
included in the estate of Paul S. Endy, Jr. for which Mr. Eric
Endy serves as executor. Mr. Endy beneficially owns the
following shares in the manner described:
Paul S. Endy, Jr. Living Trust 1,610,912
Direct 113,555
Certain trusts established for the 18,000
benefit of Mr. Endy's family
Mr. Endy's spouse 6,000
-----------
Total shares 1,748,467
<F3>Includes options to purchase 18,000 shares issuable under
the Company's 1994 Directors' Stock Option Plan (the "Directors'
Plan").
<F4>Includes options to purchase 6,000 shares issuable under
the Directors' Plan.
<F5>Includes options to purchase 197,000 shares issuable under
the Incentive Plan and options to purchase 24,000 shares issuable
under the Directors' Plan.
</FN>
</TABLE>
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of three
persons in two categories who are elected for staggered terms of
three years each. Two directors' terms expire at the Annual
Meeting and one director's term expires in 2001. 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
4
<PAGE>
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,
Richard W. Scott, for a term expiring in 2000, and Eric P. Endy,
for a term expiring in 2002. 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. SCOTT AND ENDY 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 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.
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>
Eric P. Endy 44 1993 1999 Chairman of the Board, Chief
Executive Officer, President
and Secretary (Nominee to the
Board for term expiring in
2002)
Jerry G. West 56 1994 2001 Director
Richard W. Scott 61 1995 1999 Director (Nominee to the
Board for term expiring in
2000)
John M. Garner 40 - - Treasurer and Chief
Financial Officer
</TABLE>
ERIC P. ENDY has been Chairman of the Board and Chief Executive
Officers of the Company since November 1998, a Director of the
Company since the Company's inception in 1993, President since
January 1994, and Secretary since May 1998. From May 1998 to
July 1998 Mr. Endy was Treasurer of the Company, and from January
1994 to July 1995, Mr. Endy was Chief Operating Officer of the
Company. Mr. Endy has been Chairman of the Board, President and
Chief Executive Officer of Paul-Son Gaming Supplies, Inc.
("Paul-Son Supplies") since November 1998, and Executive Vice
President and General Manager of Paul-Son Supplies since July
1990. From 1988 to March 1994, Mr. Endy served as a Director of
Paul-Son Playing Cards. 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.
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 and in November 1998
formed a partnership with an individual to operate Phonechip.COM
TM, LLC. From 1969 until his retirement in 1993, Mr. West was
a special agent with the United States Federal Bureau of
Investigation.
5
<PAGE>
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, and Treasurer of Paul-Son
Supplies since October 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 five times during the twelve months ended
May 31, 1999.
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, 1999.
The Incentive Plan Committee consists of Jerry G. West and
Richard W. Scott. The Incentive Plan Committee's function is to
administer 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, 1999.
The Directors' Plan Committee currently consists of Eric P.
Endy. Mr. Endy is not 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, 1999.
6
<PAGE>
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 12 times during the twelve
months ended May 31, 1999.
BOARD OF DIRECTORS' MEETINGS
The Board of Directors of the Company meets at least quarterly
and in the fiscal year ended May 31, 1999, the Board of Directors
held 14 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. Effective January
1, 2000, directors who are not employees or consultants of the
Company will also receive $500 for attendance at each meeting of
the Board of Directors and each meeting of the Audit Compliance
or Compensation Committees. 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. The Directors' Plan was amended
(the "Amendment") by the Board of Directors in September 1999 to
increase the amount of the grants provided under the Directors
Plan. Under the Directors' Plan, as amended, eligible non-
employee directors initially receive a one-time option to
purchase 6,000 shares of Common Stock (up from 3,000 shares prior
to the Amendment) following such director's election to the Board
of Directors. Thereafter, each such director receives a grant to
purchase 2,000 shares of Common Stock (up from 1,000 shares prior
to the Amendment) each year, at the beginning of such director's
fourth year of service. 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 1,500 shares of
Common Stock (up from 1,000 shares prior to the Amendment) 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 and 3,000 shares of Common
Stock granted to Jerry G. West and Richard W. Scott,
respectively, for the year ended May 31,1999. The option grants
were made prior to the adoption of the Amendment. The Company's
non-employee directors who are currently eligible to participate
in the Directors' Plan are Jerry G. West and Richard W. Scott.
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following tables set forth compensation for the fiscal year
ended May 31,1999 received by Eric P. Endy, the Company's
Chairman of the Board, Chief Executive Officer, President and
Secretary, and Paul S. Endy, Jr., the Company's Chairman of the
Board and Chief Executive Officer until November 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- ------------------------------------------------------
AWARDS PAYOUTS
-------------------------- ---------------------------
NAME AND PRINCIPAL FISCAL SALARY($) BONUS($) OTHER ANNUAL RESTRICTED STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR COMPENSATION($) AWARD(S)($) SARS(#) PAYOUTS($) COMPENSATION($)
- ------------------------------ ------ --------- -------- --------------- ---------------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Eric P. Endy, 1999 155,070 3,101 -0- -0- -0- -0- -0-
Chairman of the Board, Chief 1998 149,106 3,129 -0- -0- -0- -0- -0-
Executive Officer, 1997 158,171 -0- -0- -0- -0- -0- -0-
President, and Secretary<F1>
- ---------------------------------------------------------------------------------------------------------------------------------
Paul S. Endy, Jr., 1999 146,154 4,000 -0- -0- -0- -0- -0-
Chairman of the Board, Chief 1998 191,948 4,000 -0- -0- -0- -0- -0-
Executive Officer (until 1997 204,000 -0- -0- -0- -0- -0- -0-
November 1998)<F2>
_____________
<FN>
<F1> Eric P. Endy was appointed Chairman of the Board and Chief
Executive Officer in November 1998.
<F2> Due to illness, Paul S. Endy, Jr. was replaced as Chairman of
the Board and Chief Executive Officer in November 1998. Paul S.
Endy, Jr. died in April 1999.
</FN>
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE MONEY OPTIONS/SARS
OPTIONS/SARS AT FISCAL YEAR- AT FISCAL YEAR-END
END (#)<F1> ($)<F1>,<F2>
---------------------------- ---------------------------
SHARES VALUE
ACQUIRED ON REALIZED
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eric P. Endy -0- -0- 72,000 25,000 -0- -0-
Paul S. Endy, Jr.<F3> -0- -0- 100,000 -0- -0- -0-
_______________
<FN>
<F1> These numbers represent only options granted pursuant to the
Incentive Plan; there are no stock appreciation rights.
<F2> Based on a closing price of $5.813 on May 28, 1999, the last
trading day in May 1998, less the option exercise price.
<F3> Paul S. Endy, Jr. died in April 1999. Unexercised options
are held in the estate of Paul S. Endy, Jr.
</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 11 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
8
<PAGE>
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, 100,000 stock options under the Incentive Plan
were granted to the Company's Chief Financial Officer.
During the fiscal year ended May 31, 1999, in evaluating the
compensation of Paul S. Endy, Jr., who served as Chairman of the
Board and Chief Executive Officer of the Company until November
1998, and Eric P. Endy, who was appointed Chairman of the Board
and Chief Executive Officer of the Company in November 1998, the
Committees considered the financial performance of the Company
and efforts exerted by Mr. Paul Endy and Mr. Eric Endy in
expanding the Company's operations and implementing cost
reduction policies. The Committees also considered industry
experience of Mr. Paul Endy and Mr. Eric Endy, and their
established customer relationships.
September 24, 1999 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
1999 fiscal year, the Compensation Committee and the Incentive
Plan Committee consisted of Messrs. Richard W. Scott and Jerry G.
West.
9
<PAGE>
STOCK PERFORMANCE CHART
The following chart compares the cumulative stockholder return
on the Company's Common Stock, for the five year period from
May 31, 1994 through May 31, 1999, in comparison 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 on May 31, 1994. The
total return assumes the reinvestment of dividends, if any. The
comparisons are not intended to forecast or be indicative of
possible future performance of the Company's Common Stock.
COMPARISON OF CUMULATIVE TOTAL RETURNS
Stock Performance Graph
[GRAPH BASED UPON THE FOLLOWING INFORMATION IS CONTAINED IN
PRINTED PROXY STATEMENT]
<TABLE>
<CAPTION>
31-MAY-94 31-MAY-95 31-MAY-96 31-MAY-97 31-MAY-98 31-MAY-99
<S> <C> <C> <C> <C> <C> <C>
Paul-Son Gaming Corporation $ 100.00 $ 52.63 $ 59.65 $ 96.49 $ 63.16 $ 40.79
Total Return Index for S&P 500 $ 100.00 $ 120.19 $ 154.37 $ 199.77 $ 261.08 $ 315.97
Self Determined Peer Group<F1> $ 100.00 $ 58.06 $ 65.68 $ 65.08 $ 76.86 $ 59.20
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 5/31/94.
- --------------------
<FN>
<F1> 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 Powerhouse
Technologies, Inc. (formerly Video Lottery Technologies, Inc.).
</FN>
</TABLE>
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SERVICES AND PRODUCTS PROVIDED BY RELATED PARTIES
In November 1996, the Company advanced to Martin S. Winick, a
member of the Company's Board of Directors until February 1999,
the sum of $150,000 under a line of credit loan (the "Winick
Loan"). Outstanding amounts under the Winick Loan were to be
repaid in full on or before December 1, 1998; until which time
only interest was payable quarterly to the Company at an interest
rate equal to prime plus 2%. The Winick Loan was secured by a
general pledge agreement covering all of Mr. Winick's assets,
rights to purchase certain shares of Common Stock, and a pledge
by the Company's former principal stockholder of certain shares
of Common Stock. As a result of nonpayment of the loan, the
Company enforced its rights under the aforementioned agreements.
As a result of this enforcement, the Company received 19,293
shares of Common Stock from the Company's former principal
stockholder to satisfy the unpaid obligation of Mr. Winick.
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.
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, 1999, all reports required under
Section 16(a) filing requirements were filed as required, except
11
<PAGE>
one report of a change in ownership for one transaction covering
the transfer of 19,293 shares to the Company in payment of a loan
guarantee and one report of a change in ownership for a series of
three transactions covering the sale of 22,380 shares, were
inadvertently filed late by the estate of Paul S. Endy, Jr.
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, 1999, 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, 2000.
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.
2000 ANNUAL MEETING OF STOCKHOLDERS
The next annual meeting of stockholders will be held on or
about November 10, 2000. 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 31, 2000.
Unless a stockholder proposal for the Company's 2000 Annual
Meeting of Stockholders is submitted to the Company prior to
August 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 1999 Annual Report to Stockholders,
including financial statements for the twelve months
12
<PAGE>
ended May 31, 1999, accompanies these proxy materials, which are
being mailed to all stockholders of the Company who were
stockholders at the close of business on September 24, 1999.
By order of the Board of Directors,
/s/ Eric P. Endy
Eric P. Endy, Secretary
DATED: October 7, 1999
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, 1999, 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 SEPTEMBER 24,
1999.
REQUESTS SHOULD BE ADDRESSED TO:
Paul-Son Gaming Corporation
Attention: John M. Garner
1700 S. Industrial Road
Las Vegas, Nevada 89102
13
<PAGE>
PAUL-SON GAMING CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, NOVEMBER 11, 1999
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, November 11, 1999, at
10:00 o'clock in the morning, local time, and hereby appoints
Eric P. Endy and Jerry G. West, 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 using
dark ink only.
FOR WITHHELD NOMINEES:
<S> <C> <C> <C> <C>
1. ELECTION OF [ ] [ ] Richard W. Scott 2. In their discretion, upon such other
DIRECTORS Eric P. Endy matters as may properly come before
the annual meeting.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
(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.
</TABLE>
__________________________________________________ DATE _______________
SIGNATURE (s)
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.
