SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
FULL HOUSE RESORTS, INC.
(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 the table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
FULL HOUSE RESORTS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 30, 2001
To the Stockholders
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders of
Full House Resorts, Inc., ("Full House"), will be held at 2300 W. Sahara Avenue,
Suite 450, Las Vegas, Nevada 89102, on May 30, 2001, at 1:00 p.m., local time,
for the following purposes:
1. To elect four (4) directors to the Board of Directors of Full
House to hold office until the next Annual Meeting of
Stockholders of Full House following their election or until
their successors are duly elected and qualified;
2. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent accountants for 2001; and
3. To transact such other business as may properly come before
the Annual Meeting and any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on April 9, 2001
as the record date for determining those stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO BE PRESENT, ALL STOCKHOLDERS ARE URGED TO PROMPTLY EXECUTE
AND RETURN THE ENCLOSED PROXY CARD. STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY
NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN
PERSON. PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED POSTAGE PAID, PRE-ADDRESSED ENVELOPE.
By Order of the Board of Directors,
Megan G. McIntosh
Las Vegas, Nevada Secretary
April 18, 2001
2001 ANNUAL MEETING OF STOCKHOLDERS
OF
FULL HOUSE RESORTS, INC.
-----------------------
PROXY STATEMENT
-----------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Full House Resorts, Inc. ("Full House" or "the
Company"), of proxies from the holders of the Common Stock of Full House, par
value $.0001 per share (the "Common Stock"), for use at the 2001 Annual Meeting
of Stockholders of Full House to be held on May 30, 2001, or at any
adjournment(s) or postponement(s) thereof (the "Annual Meeting"), pursuant to
the enclosed Notice of Annual Meeting.
The approximate date that this Proxy Statement and the enclosed proxy
are first being sent to stockholders is April 30, 2001. Stockholders should
review the information provided herein in conjunction with the 2000 Annual
Report on Form 10-KSB of Full House, a copy of which report accompanies this
Proxy Statement.
The Company's principal executive offices are located at 2300 W. Sahara
Avenue, Suite 450, Las Vegas, Nevada 89102, and its telephone number is (702)
221-7800.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of
Full House. The giving of a proxy does not preclude the right to vote in person
should any stockholder giving the proxy so desire. Stockholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Secretary
of the Company a written revocation or duly executed proxy bearing a later date;
however, no such revocation will be effective until written notice of the
revocation is received by Full House at or prior to the Annual Meeting.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted in favor of the election of the four nominees for director named
below; in favor of the ratification of the appointment of Deloitte & Touche LLP;
and with discretion on any other matters as may properly come before the Annual
Meeting. In the event a stockholder specifies a different choice by means of the
enclosed proxy, his shares will be voted in accordance with the specification so
made.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Stockholders and the enclosed Proxy is to be borne
by the Company. In addition to soliciting proxies by mail, directors and
employees of the Company, without additional compensation, may solicit proxies
personally and/or by other appropriate means. It is anticipated that banks,
brokers and other custodians, nominees and fiduciaries will forward proxy
soliciting material to their principals and that the Company will reimburse such
persons for their expenses in so doing
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on April 9, 2001
as the record date (the "Record Date") for determining stockholders entitled to
notice of and to vote at the Annual Meeting. As of the Record Date, there were
10,340,380 shares of Common Stock issued and outstanding, each of which is
entitled to be voted at the Annual Meeting. Each share of Common Stock is
entitled to one vote on each matter submitted to stockholders for approval at
the Annual Meeting. In addition, there were 700,000 shares of the Series 1992-1
Preferred Stock outstanding (the "Preferred Stock"), each of which is entitled
to vote together as a group with the Common Stock, on all matters coming before
the Annual Meeting.
The attendance, in person or by proxy, of the holders of 40% of the
aggregate of the outstanding shares of Common Stock and Preferred Stock entitled
to vote at the Annual Meeting is necessary to constitute a quorum. Directors are
elected by a plurality vote of the aggregate of the shares of Common Stock and
Preferred Stock represented in person or by proxy at the Annual Meeting. The
affirmative vote of the majority of the aggregate of the shares of Common Stock
and Preferred Stock represented in person or by proxy at the Annual Meeting will
be required for the approval of any other matters that may be submitted to a
vote of the stockholders, unless the matter is one for which a greater vote is
required by law or by the Certificate of Incorporation or Bylaws of the Company.
A properly executed proxy marked "WITHHOLD AUTHORITY" with respect to
the election of one or more directors will not be voted with respect to the
director or directors indicated, although it will be counted for purposes of
determining whether there is a quorum. For each other item to be acted upon at
the meeting, a properly executed proxy marked "ABSTAIN" will not be voted on
such matters, although it will be counted for purposes of determining whether
there is a quorum. Accordingly, an abstention will have the effect of a vote
against the matter in question, whereas shares not voted due to the failure of a
broker to exercise his discretionary authority are not tabulated for purposes of
determining whether a proposal has been approved.
2
SECURITY OWNERSHIP
The following table sets forth, as of April 9, 2001, information with
respect to the beneficial ownership of the Common Stock by (i) each person known
by Full House to beneficially own more than 5% of the outstanding shares of
Common Stock, (ii) each director of Full House, (iii) the executive officers of
Full House named in the Summary Compensation Table, and (iv) all directors and
executive officers of Full House as a group.
Percentage of
Name and Address Shares of Common Common Stock
of Beneficial Owner Stock Owned(1) Outstanding
- ------------------- ---------------- ------------
William P. McComas (2) 1,446,537 (3)(4) 13.7%
Lee A. Iacocca (2) 1,381,471 (3)(5) 13.0%
LKL Family Limited Partnership 1,056,471 10.2%
10900 Wilshire Boulevard, Suite 310
Los Angeles, California 90024
Ronald K. Richey (2) 432,200 (3)(4) 4.1%
Michael P. Shaunnessy (2) 132,000 (3) 1.3%
Allen E. Paulson Living Trust 3,181,500 (6) 30.8%
6001 Clubhouse Drive
P. O. Box 9660
Rancho Santa Fe, California 92067
All Officers and Directors 3,352,208 (7) 29.5%
as a Group (5 Persons)
(1) Shares are considered beneficially owned, for purposes of this table
only, if held by the person indicated as beneficial owner, or if such
person, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise, has or shares the power to
vote, to direct the voting of and/or dispose of or to direct the
disposition of, such security, or if the person has a right to acquire
beneficial ownership within 60 days, unless otherwise indicated in
these footnotes. Any securities outstanding which are subject to
options or warrants exercisable within 60 days are deemed to be
outstanding for the purpose of computing the percentage of outstanding
securities of the class owned by such person, but are not deemed to be
outstanding for the purpose of computing the percentage of the class
owned by any other person.
3
(2) The address for Messrs. McComas, Iacocca, Richey and Shaunnessy is c/o
Full House Resorts, 2300 W. Sahara Avenue, Suite 450, Las Vegas, Nevada
89102
(3) Includes options to purchase 250,000, 325,000, 290,000 and 132,000
shares of Common Stock for Messrs. McComas, Iacocca, Richey and
Shaunnessy, respectively.
(4) Includes 50,000 shares held by Richmack, LLC of which Mr. McComas and
Mr. Richey are controlling persons.
(5) Includes 1,056,471 shares held by the LKL Family Limited Partnership of
which Lee A. Iacocca is the General Partner.
(6) Shares held by the Allen E. Paulson Living Trust of which Mr. Michael
Paulson and Mr. Edward White are trustees.
(7) Includes 1,007,000 shares of Common Stock which may be purchased upon
exercise of currently exercisable options.
4
PROPOSAL 1
ELECTION OF DIRECTORS; NOMINEES
Under the Bylaws of Full House, the number of directors constituting
the Board of Directors is fixed from time to time by the Board of Directors. The
Board of Directors has fixed at four the number of directors that will
constitute the Board for the ensuing year.
Each Director elected at the Annual Meeting will serve for a term
expiring at the 2002 Annual Meeting of Stockholders of Full House or when his
successor has been duly elected and qualified. Each of the current members of
the Board of Directors, consisting of William P. McComas, Lee A. Iacocca, Ronald
K. Richey, and Michael P. Shaunnessy has been nominated by the Company to be
re-elected as a Director at the Annual Meeting.
The Board of Directors has no reason to believe that any of the
nominees will refuse to act or be unable to accept election; however, in the
event that any of the nominees is unable to accept election or if any other
unforeseen contingencies should arise, each proxy that does not direct otherwise
will be voted for the remaining nominees, if any, and for such other person(s)
as may be designated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION
OF ALL THE DIRECTOR NOMINEES LISTED IN PROPOSAL 1 ABOVE.
DIRECTORS AND EXECUTIVE OFFICERS
The names, ages and positions of all directors and executive officers
of Full House as of April 9, 2001 are listed below, followed by a brief account
of their business experience during the past five years.
Name Age Positions
- ---- --- ---------
William P. McComas 74 Chairman and Chief Executive Officer
Lee A. Iacocca 76 Director
Ronald K. Richey 74 Director
Michael P. Shaunnessy 47 Director, Executive Vice President and Chief
Financial Officer
Megan G. McIntosh 45 Secretary
5
William P. McComas has been a Director of the Company since November
1992. He served as interim President of Full House Resorts between October 7,
1997 and April 9, 1998 and became Chairman of the Board and Chief Executive
Officer on March 5, 1998. He has been President of McComas Properties, Inc., a
California real estate development company, since January 1984. Mr. McComas and
companies controlled by him have owned or developed several hotels and resorts,
including Marina Bay Resort, Fort Lauderdale, Florida; Ocean Colony Hotel and
Resort, Half Moon Bay, California; Residence Inn by Marriott, Somers Point, New
Jersey; and five Holiday Inns located in Des Moines, Iowa; San Angelo, Texas;
Suffern, New York; Niagara Falls, New York; and Fort Myers, Florida.
Lee A. Iacocca has been a Director of the Company since April 1998. In
March 1998, he assumed the role of Acting Chairman of Koo Koo Roo, Inc., which
operates 52 restaurants, including Hamburger Hamlet restaurants and the Arrosto
Coffee Company. In 1997, he founded EV Global Motors, to design, market and
distribute the next generation of electric vehicles. Mr. Iacocca is former Chief
Executive Officer and Chairman of the Board of Directors of Chrysler
Corporation, retiring from those positions in 1992. He retired as a Chrysler
Director in September 1993 and continued to serve as a consultant to Chrysler
until 1994. He is Chairman of the Iacocca Foundation, a philanthropic
organization dedicated to educational projects and the advancement of diabetes
research, and is Chairman of the Committee for Corporate Support of Joslin
Diabetes Foundation. Mr. Iacocca is also Chairman Emeritus of the Statue of
Liberty - Ellis Island Foundation and serves on the Advisory Board of Reading Is
Fundamental, the nation's largest reading motivation program.
Ronald K. Richey has been a Director of the Company since April 1996.
He was Chairman of Torchmark Corporation, an insurance holding company from
August 1986 until his retirement from Torchmark in March 1998. He remains a
director of Torchmark. Mr. Richey was Chief Executive Officer of that company
from December 1984 until his retirement. From December 1984 through August 1986,
he was President of Torchmark Corporation. Mr. Richey is an attorney and a
member of the Oklahoma Bar Association.
Michael P. Shaunnessy was appointed a Director on March16, 2001. He
joined the Company in July 1998 as Executive Vice President and Chief Financial
Officer. Mr. Shaunnessy has over 15 years experience in the gaming industry.
From 1995 to 1998 he was Vice President - Finance and Chief Accounting Officer
of Primadonna Resorts, Inc. He was with Aztar Corporation from 1983 to 1995,
serving in senior financial positions at properties in New Jersey and Nevada.
Mr. Shaunnessy received his Master of Science in Business Administration in
Accountancy from Northern Illinois University in DeKalb, Illinois.
Megan G. McIntosh has been employed by Full House since December 1,
1994 and has been the Secretary of Full House since November 20, 1995.
The officers of Full House are elected annually and serve at the
discretion of the Board of Directors.
6
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company may receive a fee for
attendance at meetings of the Board of Directors, and are entitled to
reimbursement for reasonable expenses of such attendance. No fees for attendance
at meetings have been paid to date.
All non-employee directors are eligible to participate in the Company's
1992 Non-employee Director Stock Plan. However, no non-employee director is
eligible to receive options if at the time such option would otherwise be
granted, such non-employee director is directly or indirectly the beneficial
owner of more than ten percent of any class of equity security of the Company
which is registered pursuant to the Securities and Exchange Act of 1934, as
amended. Options to purchase 10,000 shares of Common Stock are granted pursuant
to the Plan immediately following each annual meeting of the Company's
stockholders at an exercise price equal to the Market Price at the date of
grant. The Market Price is the average of the "Fair Market Value" (as such term
is defined in the Plan) of the Common Stock for all trading days during the
thirty calendar days preceding the date on which the option is granted. Each
option is exercisable for a five-year period commencing six months after the
date of grant, and each such option expires five years and six months after the
date of grant.
The Board and its Committees
The Board has an Audit Committee and an Incentive Plan Committee
The Audit Committee is comprised of Messrs. Iacocca and Richey, who
serves as its chairman. Mr. James Gilstrap served as the chairman until his
resignation from the board on December 31, 2000. This committee is responsible
for reviewing the audit scope, timing, and fee arrangements with the independent
public accountants; reviewing the audit findings and other information submitted
by such accountants; and presenting such information to the full Board.
The Incentive Plan Committee is comprised of Messrs. Iacocca and
Richey, who serves as its chairman. This committee is responsible for
recommending awards under the 1992 Employee Incentive Plan, and for
administering the compensation program for executive officers.
During 2000, the Board of Directors held four meetings. The Audit
Committee held three meetings, and there were no meetings of the Incentive Plan
Committee. Each Director attended all of the meetings of the Board and the
committees of which he was a member, except for Mr. Iacocca who was unable to
attend one Audit Committee meeting.
7
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews the Company's financial reporting process
on behalf of the Board of Directors. In fulfilling its responsibilities, the
Committee has reviewed and discussed the audited financial statements for the
year ended December 31, 2000 with management and the independent accountants. In
this process, the Committee met with the independent accountants to discuss the
results of their examinations and the overall quality of the Company's financial
reporting. The Committee has discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees. In addition, the Committee has discussed
with the independent accountants their independence from the Company and its
management, including the matters in the written disclosures received from the
accountants as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees. Based upon the Committee's
discussions with management, the representations of the independent accountants
and the review of the report of the independent accountants, the Committee
recommended to the Board of Directors that these financial statements be
included in the Company's Form 10-KSB filing with the Securities and Exchange
Commission.
Audit Committee
Ronald K. Richey, Chairman
Lee A. Iacocca
As part of its responsibilities, the Committee also reviewed the scope
and cost of services provided in fiscal year 2000 by Deloitte & Touche LLP, the
Company's independent public accountants. The Committee also considered whether
the provision of services other than audit services was consistent with
maintaining the accountants' independence.
The fees charged for the annual financial statement audit and the
reviews of the quarterly financial statements filed in the report on form 10-QSB
were approximately $55,500. No amounts were charged for financial information
systems design and implementation services. All other professional fees charged
by Deloitte & Touche, LLP in 2000 amounted to $1,600 and were for tax consulting
services.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
directors and executive officers of Full House, and persons who own more than
ten percent of the outstanding Common Stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock. Such persons are required by SEC
regulation to furnish Full House with copies of all such reports they file.
8
To the knowledge of Full House, based solely on a review of the copies
of such reports furnished to Full House and written representations that no
other reports were required, we believe that all required Section 16(a) reports
were timely filed in 2000 except for the following: Allen E. Paulson filed a
report in February which was one day late covering January transactions.
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid or accrued
by the Company for services rendered during each year presented, for the Chief
Executive, Operating, and Financial Officers of the Company (collectively,
"Named Executive Officers"), for services in all capacities to the Company and
its subsidiaries. No other executive officer received over $100,000 in annual
salary and bonus in 2000.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation ------------
------------------- Number of
Other Securities
Name Annual Underlying
Principal Position Year Salary Compensation Options
------------------ ---- ------ ------------ ----------
William P. McComas, Chairman 2000 $250,000 -0- -0-
and Chief Executive Officer 1999 250,000 -0- -0-
1998 181,193 -0- 250,000(1)
Gregg R. Giuffria, former President 2000 $185,424 -0- -0-
and Chief Operating Officer 1999 250,000 -0- -0-
1998 153,458 -0- 800,000
Michael P. Shaunnessy, Executive 2000 $200,000 $50,000 -0-
V.P. and Chief Financial Officer 1999 200,000 -0- -0-
1998 100,000 -0- 176,000
(1) Represents a re-pricing in June 1998, of a grant originally issued in
March 1997
Employment Arrangements
The Company and Gregg R. Giuffria had an employment arrangement
providing for Mr. Giuffria's employment as President and Chief Operating
Officer, at a base salary of $250,000 per year. Mr. Giuffria left the employ of
the Company at the expiration of his agreement in September 2000 and all
previous option grants were forfeited without exercise.
9
Stock Options
Option Grants In Last Fiscal Year
The Company did not grant any options to purchase Common Stock to the
Named Executive Officers during 2000.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
The following table sets forth certain information concerning the
fiscal year-end value of the unexercised stock options held by the Named
Executive Officers. No options were exercised by such officers in 2000.
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Acquired Value Options at 2000 Fiscal In-the-Money Options at
Name on Exercise Realized Year End 2000 Fiscal Year-End(1)
---- --------------- -------- --------------------------- ---------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
William P. McComas -0- -0- 250,000 -0- $-0- $-0-
Michael P. Shaunnessy -0- -0- 132,000 44,000 -0- -0-
(1) Based upon the market value of the underlying securities at December
31, 2000 of $0.47, minus the exercise price of "in-the-money" options.
REPORT ON EXECUTIVE COMPENSATION
During 2000, the Incentive Plan Committee administered the compensation
program for executive officers.
It is the philosophy of the Committee that compensation of executive
officers should be closely aligned with the financial performance of Full House.
Therefore, benefits are provided to management through stock option incentives
and bonuses which are generally consistent with the goal of closely coordinating
the rewards to management with the maximization of stockholder return. The
compensation of William P. McComas, Chief Executive Officer and Michael P.
Shaunnessy, Executive Vice President and Chief Financial Officer, reflects this
policy. During 2000, Mr. Shaunnesssy was granted a $50,000 bonus. There were no
options granted, or raises given to any of the Named Executive Officers during
2000.
In reviewing the performance of Full House, consideration is given to
revenues and earnings and an evaluation is made of strategic planning and the
Company's progress in that regard. Also taken into consideration are external
economic factors that affect results of operations. An attempt is
10
also made to maintain compensation within the market range. Although review of
individual performance is primarily tied to the performance of the Company, it
is also, to a lesser extent, subjective.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to publicly held companies for compensation exceeding
$1 million paid to certain of Full House's executive officers. The compensation
paid to the Company's executive officers in 2000 did not exceed the $1 million
limit per officer, nor is it expected that the compensation to be paid to the
Company's executive officers in 2001 will exceed that limit. Although it is
possible that the $1 million limit could be exceeded as a result of awards under
the Company's 1992 Incentive Plan, the Board intends to monitor such grants in
an attempt to ensure that this does not occur. Because it is very unlikely that
the cash compensation payable to any of the Company's executive officers in the
foreseeable future will approach the $1 million limit, the Committee has decided
at this time not to take any other action to limit or restructure the elements
of cash compensation payable to the Company's executive officers. The Committee
will reconsider this decision should the individual compensation of any
executive officer ever approach the $1 million level.
Compensation of the Chief Executive Officer
Mr. McComas became the Chief Executive Officer on March 5, 1998 after
serving as interim President of the Company since October 7, 1997. The Board
considered the necessary level of involvement in the day to day management of
the strategic affairs of the Company that it expected, and reviewed comparable
compensation levels in the gaming industry. Mr. McComas receives a base
compensation of $250,000 per year. In furtherance of its overall compensation
philosophy, in June 1998, the Board adjusted the exercise price for previously
issued options held by Mr. McComas to the then current market price of $2.25 per
share.
11
PERFORMANCE GRAPH
The following line-graph presentation compares cumulative stockholder
returns on Full House's Common Stock since December 31, 1995, with the NASDAQ
Stock Market index (U.S. companies) and a peer index consisting of companies
included in the NASDAQ system engaged in the gaming industry (sic 7010-7019).
The 2000 self-determined peer index companies are:
Butler National Corp. Florida Gaming Corp.
Dover Downs Entertainment Hollywood Casino Corp
Europa Cruise Lines Presidents Casinos
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
Full House Resorts, Inc.
[GRAPHIC OMITTED]
Legend
CRSP Total Returns Index for: 12/1995 12/1996 12/1997 12/1998 12/1999 12/2000
- ----------------------------- ------- ------- ------- ------- ------- -------
Full House Resorts, Inc. 100.0 115.9 77.3 81.8 45.5 17.0
Nasdaq Stock Market (US Companies) 100.0 123.0 150.7 212.5 394.8 237.4
Self-Determined Peer Group 100.0 75.3 56.2 39.9 80.7 87.6
Companies in the Self-Determined Peer Group
BUTLER NATIONAL CORP DOVER DOWNS ENTERTAINMENT INC
EUROPA CRUISES CORP FLORIDA GAMING CORP
HOLLYWOOD CASINO CORP PRESIDENT CASINOS INC
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly internval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/29/1995.
12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 10, 1998, the Company and Allen E. Paulson formed a
limited liability company for the purpose of developing and owning a Hard Rock
Hotel & Casino in Biloxi, Mississippi. The Company agreed to contribute its
rights to various agreements with Hard Rock Cafe International ("Hard Rock"),
and Mr. Paulson agreed to contribute a gaming vessel and its related equipment
(the former Treasure Bay barge in Tunica, Mississippi). Each member received a
50% interest for its contribution.
The agreements with Hard Rock provide for the exclusive right to
develop a Hard Rock themed gaming facility in the defined territory in exchange
for payment of a $2,000,000 territory fee, and annual continuing fees based on
5% of gaming and hotel revenues generated by the project. The contributed gaming
vessel will provide the basis for the development of the complex. The Hard Rock
agreements were amended in November 1999 to change the continuing fees to a flat
$2,500,000 per year plus 3% of hotel revenue.
The Company owns a one-acre parcel in Biloxi that was acquired in 1998
for $4,622,000. The Company is discussing its development plans with the
adjacent landowners. The Hard Rock - Biloxi, as currently envisioned, is
expected to cost between $250 and $300 million, and the Company is pursuing an
equity partner to assist in the development of the project. Substantial
additional financing will be required for the Company to effect its business
strategy, and there can be no assurance that the Company will be able to obtain
such financing on acceptable terms, or at all.
In July 2000, Mr. Paulson passed away. His stock holdings in Full
House, as well as the agreements to develop the Hard Rock - Biloxi project, are
held by the Allen E. Paulson Living Trust and Estate.
The Company believes that the terms of the transaction with Mr. Paulson
were as favorable to Full House as would have been available from unrelated
parties.
13
PROPOSAL 2
RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation by the Audit Committee,
recommends that the stockholders ratify the appointment of Deloitte & Touche
LLP, as the independent accountants for the Company for 2001. The members of the
Board and the Audit Committee considered the performance of Deloitte & Touche,
LLP since their original retention in 1994, their independence with respect to
the services to be performed, and their reputation for adherence to professional
auditing standards.
Representatives of Deloitte & Touche LLP are expected to appear at the
Annual Meeting to be available to answer appropriate questions from
stockholders. If the proposal is not approved, the Board of Directors will
reconsider the appointment.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL 2.
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will, consistent with
applicable laws, vote proxies as in their discretion they may deem appropriate,
unless they are directed by a proxy to do otherwise.
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a stockholder intending to present a proposal to be included in the
proxy statement of Full House for the 2002 Annual Meeting of Stockholders must
deliver a proposal in writing to the principal executive offices of Full House
no later than January 8, 2002. Pursuant to Rule 141-4(c)(1) of the federal proxy
rules, the holders of proxies shall have discretionary authority to vote with
respect to any matter that a stockholder desires to bring before the annual
meeting that is not the subject of a proposal timely submitted for inclusion in
the Proxy Statement, unless written notice of said business is received no later
than March 16, 2002.
14
EXHIBIT A
AUDIT COMMITTEE CHARTER
The Audit Committee of the Board of Directors assists the Board in
fulfilling its oversight responsibilities with respect to the quality and
integrity of the accounting policies and financial reporting and disclosure
practices of the Company. The committee shall consist of three or more
directors, as determined by the Board, each of whom shall be independent of the
management of the Company and free of any relationship that, in the opinion of
the Board, would interfere with their exercise of independent judgment. Each
member shall be generally knowledgeable in financial and auditing matters.
The Audit Committee will maintain free and open communication with the
independent accountants, financial and senior management, and the Board of
Directors. The committee may meet in separate executive sessions with any of
these groups to discuss any matters that the committee or the group believes
should be discussed privately.
In discharging its oversight responsibilities, the committee is
empowered to investigate any matter brought to its attention, with full power to
retain outside counsel or others experts that it deems advisable for this
purpose. While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and in accordance with generally accepted accounting principles. This
is the responsibility of management and the independent accountants. It is not
the duty of the Audit Committee to conduct investigations or to resolve
disagreements, if any, between management and the independent accountants.
However, the committee will use its best efforts to oversee that the parties
resolve such disagreements in accordance with the laws and regulations to which
the Company is subject. Should this effort fail to achieve satisfactory
resolution, the committee shall refer the matter to the full Board.
All requirements of this Charter are qualified by the understanding
that the role of the Audit Committee is to act in an oversight capacity. This
charter is not intended to require a detailed review of the work performed by
the independent accountants or financial management unless specific
circumstances are brought to its attention warranting such a review.
The duties and responsibilities of an Audit Committee member are in
addition to those as a member of the Board of Directors.
A - 1
Responsibilities of the Audit Committee:
Recommend to the Board the selection, retention and discharge of the
independent accountants, after having considered their independence,
the scope of the audit work required, and the proposed fee structure.
Review with management and the independent accountants the scope of the
proposed audit for the current year and the audit procedures to be
utilized.
Review with management and the independent accountants the financial
statements, and notes thereto, of the Company, including appropriate
discussions concerning accounting policies, management estimates, audit
adjustments and the quality of earnings.
Review with the independent accountants, at the conclusion of the
annual audit, any difficulties encountered, including any restrictions
on the scope or access to required information, and any significant
disagreement with management concerning the preparation of the
financial statements.
Review with management and the independent accountants the quality and
adequacy of the Company's internal controls, including computerized
information system controls and security.
Review with management and the independent accountants significant
risks or exposures and assess steps taken by management to minimize
such risks to the Company.
Review with management and the independent accountants filings with the
Securities Exchange Commission and other published documents containing
Company financial information. The Chair of the committee may represent
the entire committee for purposes of this review.
Review with management any legal or regulatory matters that may have a
material impact on the financial statements.
Review and update this Charter periodically as conditions dictate, but
at least annually.
Report on the Audit Committee activities to the full Board.
A - 2
FULL HOUSE RESORTS, INC.
2300 W. Sahara Ave.
Suite 450, Box 23
Las Vegas, NV 89102
THIS PROXY IS SOLICITED ON BEHALF OF THE
COMPANY'S BOARD OF DIRECTORS
The undersigned holder of Common Stock of Full House Resorts, Inc., a
Delaware corporation ("Full House"), hereby appoints William P. McComas and
Ronald K. Richey, and each of them, as proxies for the undersigned, each with
full power of substitution, for and in the name of the undersigned to act for
the undersigned and to vote, as designated on the reverse, all of the shares of
stock of Full House that the undersigned is entitled to vote at the 2001 Annual
Meeting of Stockholders of Full House to be held on May 30, 2001 at 2300 W.
Sahara Avenue, Suite 450, Las Vegas, 89102, at 1:00 p.m., local time, and at any
adjournment(s) or postponement(s) thereof.
(see reverse side)
Please sign, date and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
FULL HOUSE RESORTS, INC.
May 30, 2001
-- Please Detach and Mail in the Enclosed Envelope --
A [X] Please mark your
votes as in this
example.
VOTE FOR all nominees
listed below, except vote VOTE WITHHELD The Board of Directors unanimously recommends a vote FOR
withheld from the following FROM the election of all the nominees for director listed below.
nominees (if any): ALL NOMINES
(1) To elect four (4) [ ] [ ]
directors to the
Board of Directors
of Full House to
hold office until the next Annual Meeting of Stockholders of Full House
following their election or until their successors are duly elected and
qualified.
Nominees: William P. McComas, Michael P. Shaunnessey, Lee A. Iacocca and
Ronald K. Richey
INSTRUCTION: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below.
- -------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
(2) Ratification of the appointment of Deloitte & [ ] [ ] [ ]
Touche LLP to serve as Full House's independent
accountants for the current year.
(3) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting and any adjournments
or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES LISTED ABOVE, AND THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN IT IN THE
ENVELOPE PROVIDED. NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
Signature Signature if held jointly
-------------------------- ------------------
Dated: , 2001
----------
IMPORTANT: Please sign exactly as your name appears hereon and mail it promptly
even though you now plan to attend the meeting. When shares held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership please sign in partnership
name by authorized person.