Law Offices of
Tolins & Lowenfels
12 East 49th Street
New York, NY 10017
(212) 421-1965
(212) 888-7706 - FAX
October 7, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: International Thoroughbred Breeders, Inc. - File No. 0-9624
Dear Sirs:
Enclosed please find five preliminary copies of the notice, proxy
statement and form of proxy to be furnished to securities holders of the
captioned company in connection with its annual meeting of stockholders to be
held on December 20, 1994. The filing fee of $125 has previously been
forwarded to you. The anticipated date of release of definitive copies of the
enclosed material is November 1, 1994.
In compliance with Instruction 5 of Item 10 of the Proxy Rules, please
be advised that the management options being voted on by the shareholders will
be issued (if approved) to five individuals who will be required to represent
they are acquiring the options (and upon exercise, the underlying shares) for
investment and not with a view to distribution. The options are non-
transferable except pursuant to the laws of descent and distribution and any
shares issued upon exercise thereof will be appropriately legended. In
addition, transfer stops will be placed against such shares. Exemption from
registration is claimed pursuant to Section 4(2) of the Securities Act of
1933.
Please call the undersigned collect with respect to any comments you may
have on or before October 18, 1994.
Please acknowledge receipt of the enclosed on the copy of this letter
enclosed for your convenience and return it in the envelope provided.
Very truly yours,
/s/ Roger A. Tolins
Roger A. Tolins
VIA EDGAR
RECEIPT of the above is hereby acknowledged
this 7th day of October, 1994
Securities and Exchange Commission
<PAGE>
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
P.O. BOX 1232
CHERRY HILL, NEW JERSEY 08034
(609) 488-3838
Notice of Annual Meeting of Stockholders
December 20, 1994
The Annual Meeting of Stockholders of International Thoroughbred
Breeders, Inc. (the "Company") will be held in The Phoenix Room at Garden
State Park, Route 70 and Haddonfield Road, Cherry Hill, New Jersey 08034 on
Tuesday, December 20, 1994 at 10:00 A.M. (EST) for the purpose of considering
and acting upon the following matters:
1. Election of directors for the ensuing year (Proposal One).
2. Ratification of Adoption of 1994 Employees' Stock Option Plan
(Proposal Two).
3. Ratification of Option Grants to President of International
Thoroughbred Gaming Development Corporation (Proposal Three).
4. Such other business as may properly come before the meeting or any
adjournment thereof.
Pursuant to the provisions of the By-Laws, the Board of Directors has
fixed the close of business on October 21, 1994 as the record date for
determining the stockholders of the Company entitled to notice of, and to vote
at the meeting or any adjournment thereof.
Stockholders who do not expect to be present in person at the meeting
are urged to date and sign the enclosed proxy and promptly mail it in the
accompanying postage-paid envelope.
By Order of the Board of Directors
/s/ Arthur Winkler
Arthur Winkler
President
Dated: Cherry Hill, New Jersey 08034
October 24, 1994
PLEASE COMPLETE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. THIS
WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE MEETING BUT WILL, HOWEVER,
HELP TO ASSURE A QUORUM AND AVOID ADDED PROXY SOLICITATION COSTS.
PROXY STATEMENT
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
P.O. BOX 1232
CHERRY HILL, NEW JERSEY 08034
(609) 499-3838
This Proxy Statement of International Thoroughbred Breeders, Inc. a
Delaware corporation (the "Company") is first being mailed to Stockholders on
or about November 1, 1994 in connection with the solicitation of proxies by
the Company and the Board of Directors to be used at the Annual Meeting of
Stockholders of the Company to be held on December 20, 1994 at The Phoenix
Room, Garden State Park, Route 70 and Haddonfield Road, Cherry Hill, New
Jersey 08034 at 10:00 A.M. (EST).
Accompanying this Proxy Statement is a Notice of Annual meeting of
Stockholders and a form of Proxy for such meeting. A copy of the Company's
Annual Report for the year ended June 30, 1994 including financial statements
with respect to such year has also been mailed to each stockholder of record
entitled to notice of and to vote at the meeting. All proxies which are
properly filled in, signed and returned to the Company in time will be voted
in accordance with the instructions thereon. Such proxies may be revoked by
any stockholder giving the same prior to the exercise thereof. Stockholders
not attending the meeting may revoke their proxies prior to the meeting, and
stockholders who are present at the meeting may withdraw their proxies and
vote in person if they so desire. The Board of Directors has fixed the close
of business on October 21, 1994 as the record date for the determination of
stockholders who are entitled to notice of, and to vote at the meeting or any
adjournment thereof.
The expenses of preparing, assembling, printing and mailing the form of
proxy and the material used in solicitation of proxies will be borne by the
Company. In addition to the solicitation of proxies by use of the mails, the
Company may utilize the services of some of its officers and regular employees
(who will receive no additional compensation therefor) to solicit proxies
personally, and by telephone and telegraph. The cost of such additional
solicitation incurred otherwise than by use of the mails is estimated not to
exceed $1,000. The Company has requested banks, brokers and other custodians,
nominees and fiduciaries to forward copies of the proxy material to their
principals and to request authority for the execution of proxies and will
reimburse such persons for their services in doing so.
VOTE REQUIRED, PRINCIPAL STOCKHOLDERS AND STOCKHOLDINGS OF MANAGEMENT
The presence, in person or by proxy, of the holders of at least one-
third of the outstanding voting shares of the Company is necessary to
constitute a quorum at the meeting. Election of directors (Proposal One),
ratification of the adoption of the 1994 Employees' Stock Option Plan
(Proposal Two) and ratification of the grant of options to the President of
the Company's International Thoroughbred Gaming Development Corporation
subsidiary (Proposal Three), each requires the affirmative vote of a majority
of the votes cast by the holders of Common Stock present in person or by proxy
at the meeting. As of the record date, the Company had
shares of its Common Stock outstanding, the holders of which are entitled to
one vote per share.
The following table sets forth, as of September 30, 1994, the number of
shares of the Company's Common Stock owned beneficially to the knowledge of
the Company, by each beneficial owner of more than 5% of such Common Stock, by
each director owning shares and by all Officers and Directors of the Company
as a group. The percentages have been calculated on the basis of treating as
outstanding for purposes of computing the percentage ownership of a particular
individual, all shares of the Company's Common Stock outstanding as of such
date.
<TABLE>
Series A Convertible
Common Stock Preferred Stock
<CAPTION>
Amountand Amountand
Nature of Nature of
Name and Address Beneficial Percent Beneficial Percent
Beneficial Owner Ownership of Class Ownership of Class
<S> <C> <C> <C> <C>
5% Owners
Robert J. Quigley 4,329,846 shs 45.3% 0 0
Retama Park (1)(2)
P.O. Box 600
San Antonio, Tx 78292
Robert E. Brennan 4,324,016 shs 45.3% 0 0
50 Broadway (2)
New York, NY 10004
Ronald Riccio 1,090,731 shs 11.4% 0 0
Seton Hall University (3)
Newark, NJ 07102
Other Directors
Joseph K. Fisher 800 shs -% 0 0
Kerry B. Fitzpatrick 1,274 shs -% 0 0
Arthur Winkler 121 shs -% 0 0
All Officers and
Directors as a Group 5,423,096 shs 56.8% 0 0
(1)(2)(3)(4)
</TABLE>
(1) Includes 5,830 shares of Common Stock which are owned of record and
beneficially by Mr. Quigley.
(2) Includes 4,324,016 shares of Common Stock owned of record by Robert E.
Brennan. Mr. Brennan has given Mr. Quigley an irrevocable proxy expiring on
December 31, 1994 to vote such shares, and has also agreed not to sell,
assign, hypothecate, pledge or transfer any of such shares during the period
the proxy is in effect without Mr. Quigley's consent.
(3) Includes 1,090,731 shares of Common Stock which are owned of record by Mr.
Riccio as the sole trustee of The Family Investment Trust. The grantor of the
Trust is Mr. Brennan and the sole beneficiaries are the three adult sons of
Mr. Brennan. Mr.Brennan disclaims beneficial ownership of the shares owned by
The Family Investment Trust.
(4) Includes 324 shares of Common Stock owned of record and beneficially
by two officers.
The Company's officers and directors owning and having the right to vote
shares of the Company's outstanding Common Stock have stated
their intention to vote their shares of Common Stock FOR the nominees for
election as directors (Proposal One), FOR the ratification of the adoption of
the 1994 Employees' Stock Option Plan (Prosposal Two) and FOR the ratification
of the grant of options to the President of the Company's International
Thoroughbred Gaming Development Corporation subsidiary (Proposal Three).
ACTION TO BE TAKEN AT THE MEETING
ELECTION OF DIRECTORS
(Proposal One)
Seven directors of the Company are to be elected at the meeting, each to
serve until the next Annual Meeting and until his successor is elected and
qualifies. The shares represented by proxies will be voted in favor of the
election as directors of the persons named below who are nominees for election
and authority to vote for the election of directors shall be deemed granted
unless specifically withheld. Management has no reason to believe that any of
the nominees for the office of director will not be available for election as
a director. However, should any of them become unwilling or unable to accept
nomination for election, it is intended that the individuals named in the
enclosed proxy may vote for the election of such other person as Management
may recommend. The Company does not have a nominating committee. During the
fiscal year ended June 30, 1994, the Company's board of directors held a total
of meetings.
<TABLE>
NOMINEES FOR ELECTION OF DIRECTORS
Name Age Position Position with
held since Company
<CAPTION>
<S> <C> <C> <C>
Robert E.Brennan(1)(2) 50 December, 1982 Chairman of the Board
April, 1988 Chief Executive Officer
Arthur Winkler (2)(5) 50 September, 1987 Director
April, 1988 Vice President
July, 1992 Chief Operating Officer
President
Charles Dees, Jr. 55 April, 1988 Director
(3)(4)(5)(6)
Joseph K. Fisher 47 March, 1985 Director
(1)(3)
Kerry B. Fitzpatrick 54 October, 1980 Director
(2)(4)
Ronald J. Riccio 48 March, 1985 Director
(1)(3)(4)(6)
Robert J. Quigley 65 October, 1980 Director
(4)
</TABLE>
(1) Member of Audit Committee
(2) Member of Executive Committee
(3) Member of Related Party Transactions Committee
(4) Member of Executive Compensation Committee
(5) Member of Litigation Committee
(6) Member of Stock Option Committee
The Audit Committee and the Executive Committee were established in
March, 1985 and the Related Party Transactions Committee in February, 1986.
The Litigation Committee was established in October, 1992, the Executive
Compensation Committee was established in May, 1993 and the Stock Option
Committee was established in June 1994.
The Audit Committee periodically confers with the Company's independent
auditors concerning the Company's accounting systems and the maintenance of
its books and records, reviews the scope of the audit of the Company's
financial statements and the results thereof and performs other services.
The Litigation Committee reviews litigation matters of the Company on a
periodic basis.
The Executive Committee, subject to the limitations of the Delaware
Corporation Law (which without an enabling resolution from the Board of
Directors, prohibits the Committee from authorizing a dividend, issuing stock
or merging the Company), possesses all other powers of the Board of Directors
in the management and direction of the business and affairs of the Company.
The Related Parties Transactions Committee meets periodically to review
and approve any related party transactions considered and/or accepted by the
Company's management.
The Executive Compensation Committee reviews and recommends actions
regarding executive compensation.
The Stock Option Committee is responsible for the administration of the
employee stock option plan.
The following executive officers of the Company are not directors of the
Company nor Nominees for election as a director.
Position
Name Age Officer Since With Company
William H. Warner 49 December, 1983 Treasurer
Christopher C. Castens 43 April, 1987 Secretary
PRINCIPAL OCCUPATIONS OF NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS DURING
PAST FIVE YEARS
The following is a brief account of the business experience of each of
the Company's executive officers and directors during the past five year.
NOMINEES FOR DIRECTORS
Robert E. Brennan has been principally engaged for the past five years
as the sole stockholder (and until September, 1986, as Chief Executive Officer
and Chairman of the Board) of the investment banking firm of First Jersey
Securities, Inc. ("First Jersey"). He is presently also a director of First
Jersey. Mr. Brennan is also the controlling stockholder and a director of FJS
Properties, Inc., the Managing General Partner of FJS Properties Fund I, LP, a
publicly owned limited partnership formed to acquire, own and operate real
estate investments. Mr. Brennan was elected a director and Chairman of the
Board of the Company in December, 1982 and Chief Executive Officer in April of
1988. Mr. Brennan is Chairman of the Board of Regents of Seton Hall
University.
Arthur Winkler is an attorney who served as an Assistant Commissioner of
the New Jersey Department of Education from March, 1979, until August, 1980
and as House Counsel at the New Jersey Sports and Exposition Authority (The
Meadowlands) from August, 1980, until July, 1983. He joined the Company in
July, 1983 and served as Director of Administration for the Garden State Park
subsidiary until his resignation in October, 1986. In October, 1986 Mr.
Winkler became President and Chief Executive Officer of Winkler Capital
Management, Inc., Lawrenceville, New Jersey. He currently retains this
position although that company is no longer actively conducting business. In
May 1987, Mr. Winkler became an associate of the Flemington, N. J. law firm of
Schaff, Motiuk, Gladstone, Moeller and Ligorano. In March, 1988, when Mr.
Winkler rejoined the Company, he resigned as an associate of the law firm and
became "of counsel" to said law firm. That relationship terminated on November
1, 1990. He was elected Director of the Company in September, 1987 and Vice
President and Chief Operating Officer of the Company in April, 1988. Effective
July 1992, Mr. Winkler succeeded Robert J. Quigley as President of the Company
as well as its Garden State Park subsidiary.
Dr. Charles R. Dees, Jr. is currently Vice President of Institutional
Advancement at Fairleigh Dickinson University. Dr. Dees had been principally
engaged during the preceding five years as Vice Chancellor for University
Affairs at Seton Hall University in South Orange, New Jersey. He is not
actively engaged in the business of the Company.
Joseph K. Fisher has been principally engaged for the past five years as
President and Chief Executive Officer of Fisher and Company, a New York City
advertising agency. He is not actively engaged in the business of the
Company.
Kerry B. Fitzpatrick was principally engaged as chief executive of
Southlake (NJ) Thoroughbred Services, a thoroughbred management and consulting
firm and as managing general partner of the Southlake (NJ) Stable, a
thoroughbred racing stable, in 1980 prior to his election as President and
Chief Executive Officer of the Company. Mr. Fitzpatrick was elected to the
Board of Trustees of the Pennsylvania Horse Breeders Association for a three
year term commencing May of 1986. Mr. Fitzpatrick devoted all of his working
time to the business of the Company until his resignation as President and
Chief Executive Officer in the third quarter of fiscal 1988 for medical
reasons. He continues to serve as a Director of the Company and is on a paid
disability leave of absence but remains available to the Company for
consultation.
Robert J. Quigley was General Manager-Racing for the New Jersey Sports
and Exposition Authority (The Meadowlands) for more than the preceding five
years until May, 1983 when he commenced to serve on a full-time salaried basis
as Vice President of the Company and President and Chief Executive Officer of
its Garden State Park subsidiary. He was also the President and Chief
Executive Officer of the Company's subsidiaries which owned and operated
Philadelphia Park. In April, 1988, Mr. Quigley was elected President of the
Company. Effective July 1992, Mr. Quigley resigned his positions to become
president and chief operating officer of Retama Park Association, Inc.,
engaged in constructing a new racetrack facility in San Antonio, Texas. Mr.
Quigley continues to serve as a member of the Company's board of directors.
Ronald J. Riccio is currently Dean of the School of Law at Seton Hall
University, a position he assumed effective July 1, 1988. He was principally
engaged for the preceding five years as a practicing attorney and a member of
the New Jersey law firm of Robinson, Wayne, Levin, Riccio and LaSala. He is
not actively engaged in the business of the Company.
LEGAL PROCEEDINGS INVOLVING DIRECTORS
The Company, certain of its present and former directors, and certain
other parties including the Underwriter of the Company's four public offerings
from 1983 through 1986 (a broker-dealer firm owned by the Company's Chairman
of the Board and principal stockholder), were the defendants in two putative
class actions filed in August, 1986 and July, 1987 in the United States
District Court for the Southern District of New York. The complaint filed in
August, 1986 was also asserted derivatively against all defendants except the
Company. The essential allegations of the complaints in the two actions were
that the Company's prospectuses utilized in connection with the Company's said
four public offerings violated the federal securities laws by containing false
and misleading information and omitting to disclose other material
information, and that the defendants were liable therefor. The actions sought
judgements in amounts equal to approximately $200,000,000 representing the
gross proceeds of the Company's said four public offerings, as well as
punitive damages against all defendants and treble damages and attorneys' fees
against all defendants other than the Company. In fiscal 1988, the U.S.
District Court transferred both cases from the Southern District of New York
to the District of New Jersey. On June 7, 1988, a consolidated amended
complaint was filed by the plaintiffs in the two putative "class action" suits
described above, in the United States District Court in Trenton. This
complaint was substantially similar to the original suits filed separately
except to expand the number of current and former directors as defendants. On
July 27, 1989, based upon motions filed by the Company, the United States
District Court, District of New Jersey, dismissed some, but not all of the
claims asserted in the consolidated amended complaint.
The factual allegations underlying the remaining claims are that the
prospectuses issued in the Company's 1984, 1985 and 1986 public offerings
failed to disclose that (a) the profitability of Garden State, and by
extension, ITB, was directly dependent upon Garden State's betting handle and
attendance; (b) that Garden State's ability to attract customers and betting
dollars was limited by the demographics of the population of the Delaware
Valley area in which it was based; (c) that the reasonable market potential
for Garden State's attendance and betting handle were delimited by the
attendance and betting handle of the previous Garden State Park racetrack
("Old Garden State"); (d) that there is a direct ratio between the number of
days in a racing meet and the daily attendance and betting handle, i.e., the
longer the meet, the smaller the average daily attendance and betting handle;
(e) that based upon its costs of acquisition and construction, in order for
Garden State to "break even" on an operating basis, it needed an average on
track daily betting handle of at least $1.7 million based on a racing meet of
approximately 100 days; (f) that the Old Garden State had not achieved a $1.7
million average daily betting handle since 1971 when the racing meet was only
60 days; that the $1.7 million level was attained prior to the competition
from the casinos in nearby Atlantic City; that the Old Garden State's average
daily betting handle in 1977, its last year of operation, was less than $1.2
million; and that the average daily betting handle for the Old Garden State's
last five years of operation was $1.347 million; (g) that Garden State's
revenues would in large part be derived from harness racing meets which had
never been held at the Old Garden State; and (h) that both thoroughbred and
harness racing were experiencing steep declines in attendance and betting
handle both nationally and regionally over the years.
On October 20, 1993, the United States District Court for the District
of New Jersey signed an order granting preliminary approval to a proposed
partial settlement of the consolidated class action pending since 1986 against
the Company, its officers and directors and various other defendants alleging
various violations of federal securities laws and other statutes. Although
the Company believes this lawsuit is totally without merit, it has incurred
approximately $1,150,000 in legal expense in defending against the lawsuit and
would have been required to expend significant additional amounts to continue
the defense through trial. Therefore in order to avoid further expense,
inconvenience and delay and to dispose of this expensive, burdensome and
protracted litigation, the Company executed the proposed partial Settlement
Agreement. The proposed partial settlement required the Company to make a
$250,000 settlement payment and an additional payment of up to $150,000
contingent upon receipt of future amounts by the Company from its sale of the
Philadelphia Park mortgage note. If effectuated, the settlement would dispose
of all class claims made against the Company, its officers and directors and
all derivative claims made on behalf of the Company against all parties in the
litigation. As part of the proposed settlement, the Company's directors and
officers' liability insurance carrier will pay $3,125,000 plus an additional
$4,125,000 which latter amount is subject to reduction on a dollar for dollar
basis in the event of collections from certain non-settling defendants or in
the event of collection of any of the above described $150,000 contingency
payment. The non-settling defendants include the three underwriters of the
above desribed public offerings and the Company's Chairman of the Board and
principal stockholder to the extent of any liability imposed on him other than
as an officer or director of the Company. On April 12, 1994, an order was
entered approving the settlement agreement and entering a final judgement of
dismissal of the plaintiffs' claims against the Company and the Director
defendants in their capacity as officers and directors of the Company.
The three underwriter non-settling defendants have appealed the order
approving the settlement. In the event the settlement is upset on appeal, the
Company intends to continue to vigorously contest this lawsuit.
EXECUTIVE OFFICERS WHO ARE NOT NOMINEES FOR DIRECTOR
William H. Warner is a certified public accountant and was employed as
an audit manager by Mortenson and Associates, P.C., the Company's auditors,
for the five years preceding his joining the Company in September, 1983.
Christopher C. Castens is an attorney who was admitted to practice law
in 1978. He had served as house counsel and assistant to the executive vice
president of Harness Tracks of America for five years prior to joining the
Company in December, 1986 as house counsel.
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
Based solely on a review of Forms 3 and 4 and any amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) under the Securities
Exchange Act of 1934, or representations that no Form 5 were required, the
Company believes that with respect to fiscal 1993, all Section 16 (a) filing
requirements applicable to its officers, directors and beneficial owners of
more than 10% of its equity securities were timely compiled with.
<PAGE>
EXECUTIVE COMPENSATION COMMITTEE REPORT
The Executive Compensation Committee is composed of four Directors of
the Company, none of whom are officers of the Company or its Garden State Race
Track, Inc. (GSR) subsidiary.
The Committee is responsible for annually reviewing the compensation
paid to all of the officers of the Company and GSR. The Committee develops
recommendations with respect to the compensation of these officers and reports
these recommendations to the Board of Directors.
In determining the compensation to be paid to executive officers, the
Committee reviews the experience and the performance of the individual
executives as well as the Company's overall performance and conditions
prevailing in the pari-mutuel industry. The Committee annually examines
compensation packages at similar companies in the industry and seeks to
provide its executive officers with compensation that will attract, retain and
motivate experienced individuals as executive officers. In comparing the
Company's compensation to that of other companies, the Committee takes into
account the small number of officers of the Company, the responsibilities
resulting from the Company being publicly held, the limited forms of
compensation it uses, and prevailing industry and geographic factors.
The Company's executive officers are primarily compensated through their
salaries. The Company does not have a formal bonus plan. The 1994 stock
option plan directly relates a portion of executive compensation to an
increase in the price of the Company's Common Stock.
Mr. Winkler was appointed as President and Chief Operating Officer of
the Company and GSR in June, 1992. His compensation is less than that paid to
his predecessor as President of the Company and GSR.
Analysis of comparable companies indicates that the Company's officers
are being compensated at appropriate levels compared to other companies in the
industry. The entire management team combined to return the Company to
profitability in the fiscal year ended June 30, 1994. The Committee believes
that compensation levels are at appropriate levels during the 1995 fiscal
year.
Executive Compensation Committee
Charles R. Dees, Jr.
Kerry B. Fitzpatrick
Robert J. Quigley
Ronald J. Riccio
<PAGE>
REMUNERATION OF OFFICERS AND DIRECTORS
The following tables disclose compensation received for the three fiscal
years ended June 30, 1994 by the Company's President at the end of the 1994
fiscal year and each executive officer of the Company at the end of the 1994
fiscal year whose aggregate cash compensation in fiscal 1994 exceeded $100,000
(all such executive officers, including the President, are collectively
referred to herein as the "Named Executive Officers").
<TABLE>
Summary Compensation Table
<CAPTION>
Name and Annual Compensation Long-Term All Other
Principal Position Year Salary Bonus Compensation Compensation
($) ($) Awards ($)(a)
Options/SARs
(#)
<S> <C> <C> <C> <C> <C>
Arthur Winkler 1994 141,827 0 0 9,627
President 1993 125,000 0 0 9,408
1992 100,449 0 0 7,882
</TABLE>
(a) In June 1994, Mr. Winkler was awarded options to purchase 275,000 shares
of common stock. These options are subject to shareholder approval. (See
Proposal Two)
(b) Consists of life insurance premiums paid by the Company with respect to
certain term life insurance payable on the officer's death to beneficiaries
designated by him and further, includes amounts contributed by the Company to
the officer's account under the Company's 401(k) plan. Amounts attributable to
such term life insurance are as follows:
1994 $ 1,764
1993 1,764
1992 1,764
Amounts contributed by the Company to the Company's 401(k) plan on
behalf of the named executive officer are as follows:
1994 $ 7,863
1993 7,644
1992 6,118
COMPENSATION OF DIRECTORS
For the fiscal year ended June 30, 1994, the Company paid $25,000 in
directors fees to each of four directors, namely Mr. Quigley, Dr. Dees
and Messrs. Fisher, and Riccio.
EMPLOYEES RETIREMENT PLAN
During fiscal 1985, the Company adopted an employee retirement and
savings profit sharing plan for its non-union employees (as of June 30, 1993
approximately 70) pursuant to Section 401(k) of the Internal Revenue Code. The
Company made a contribution with respect to fiscal 1993 and 1994 of $148,897
and $126,159, respectively.
The Company's basic contribution under the Plan is 4% of each covered
employee's compensation for such calendar year. In addition, commencing in
fiscal 1986, the Company contributed up to an additional 50% of the first 4%
of compensation contributed by any covered employee to the Plan (or up to an
additional 2% of compensation). Funds in the Plan become fully vested in six
years or in the event of the employee's death and can be withdrawn upon early
retirement (attainment of age 59 1/2 and completion of 10 years of service),
normal retirement (attainment of age 65) or separation from the Company.
PERFORMANCE GRAPH
The following information sets forth the cumulative total shareholder
return to the Company's shareholders against the cumulative total return of
Standard & Poor's 500 Stock Index and a peer group index for the five (5)
years ending June 30, 1994. The companies used in the peer group index
consist of Bay Meadows Operating Co., Hollywood Park Operating Co., Santa
Anita Realty Enterprises and Turf Paradise, Inc. All are publicly traded
comapnies known to the Company to be engaged primarily in Thoroughbred racing
activities in the continental United States. The information assumes that
$100 was invested at the market close on June 30, 1989 and that dividends were
reinvested. The data was furnished by Standard & Poor's Compustat Services,
Inc.
<TABLE>
FISCAL YEAR BASIS: JUNE
<CAPTION>
Return Return Return Return Return
Company/Index Name 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
Intl Thoroughbred Breeders -50.00 0.00 -42.50 69.57 12.82
S&P 500 Index 16.49 7.40 13.41 13.63 1.41
Peer Group - 6.45 4.15 -21.67 78.25 -4.20
</TABLE>
<TABLE>
INDEXED/CUMULATIVE RETURNS
<CAPTION>
Base
Period Return Return Return
Company/Index Name 1989 1990 1991 1992
<S> <C> <C> <C> <C>
Intl Thoroughbred Breeders 100 50.00 50.00 28.75
S&P 500 Index 100 116.49 125.10 141.88
Peer Group 100 93.55 97.43 76.32
</TABLE>
<TABLE>
<CAPTION>
Base
Period Return Return
Company/Index Name 1989 1993 1994
<S> <C> <C> <C>
Intl Thoroughbred Breeders 100 48.75 55.00
S&P 500 Index 100 161.22 163.49
Peer Group 100 136.04 130.33
</TABLE>
PEER GROUP COMPANIES
Bay Meadows Oper Co
Hollywood Park Inc
Santa Anita Realty Enter
Turf Paradise Inc
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A company operated by the family of Kevin Quigley, son of Robert J.
Quigley, former President and Director of the Company, maintains the stable
area cafeteria and stable area refreshment stand in the recreation hall at
Garden State Park making food and beverage service available for purchase by
stable employees. Although Kevin Quigley's company has made investments in the
smallwares and some equipment and pays all direct costs in connection with
such operations, it uses kitchen equipment permanently installed and owned by
Service America at a cost of approximately $445,000, without charge. (Title to
this equipment will automatically pass to Garden State Park in the year 2000).
These facilities provide three meals per day at prices that are below the
outside market prices for the benefit of licensed stable area employees in a
restrictive area not opened to the public. These facilities are required to
promote good relationships with the horsemen. These operations are customary
for racetracks in the industry. The Company believes these arrangements are in
its best interest as it believes it is the most economical method to service
the stable employees at the track without significant expense or risk to the
Company. Effective August 18, 1992, Kevin Quigley became an employee of Garden
State Park and devotes 100% of his time to this position.
In management's opinion, the Company's transactions with related parties
as described in this section were in the Company's best interests and were
made on terms no less favorable to the Company than could have been obtained
from unaffiliated third parties.
RATIFICATION OF ADOPTION OF 1994 EMPLOYEES' STOCK OPTION PLAN
(Proposal Two)
On June 2, 1994, the Board of Directors adopted the 1994 Employees'
Stock Option Plan ("1994 Plan") reserving an aggregate 475,000 shares of
Common Stock for options to be issued under the Plan. On the same date, the
Stock Option Committee appointed by the Board to administer the 1994 Plan,
granted stock options thereunder to four key employee members of management to
purchase the aggregate 475,000 shares of Common Stock reserved for issuance
under the 1994 Plan at an exercise price of $5.875 per share (the per share
closing price for the Common Stock on the American Stock Exchange on June 2,
1994). The adoption of the 1994 Plan is subject to stockholder approval,
which approval is being sought at the December 20, 1994 Annual Meeting of
Stockholders. It such approval is not obtained, the options will be
cancelled.
DESCRIPTION OF THE 1994 PLAN
The 1994 Plan which is being submitted for approval by stockholders
provides for the grant of options to purchase up to an aggregate 475,000
shares of the Company's Common Stock to employees of the Company and its
subsidiaries including officers and directors who are also employees. Under
the terms of the 1994 Plan, options granted thereunder may be designated as
options which qualify for incentive stock option treatment ("ISOs") under
Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"), or
options which do not so qualify ("Non-ISOs").
The 1994 Plan is administered by the Board of Directors or by a Stock
Option Committee designated by the Board of Directors. On June 2, 1994, the
Board of Directors elected Charles R. Dees, Jr. and Ronald J. Riccio as the
members of the Committee. The Board or the Stock Option Committee, as the
case may be, has the discretion to determine the eligible employees to whom,
and the prices at which, options will be granted; whether such options shall
be ISOs or Non-ISOs; the periods during which each option is exercisable; and
the number of shares subject to each option. The Board or the Stock Option
Committee has the authority to interpret the 1994 Plan and to establish and
amend rules and regulations relating thereto.
Under the 1994 Plan, the exercise price of an option granted thereunder
whether designated an ISO or a Non-ISO shall not be less than the fair market
value of the Common Stock on the date the option is granted. However, in the
event an option designated as an ISO is granted to a holder of 10% or more of
the Company's outstanding Common Stock, the exercise price shall be at least
110% of such fair market value. Under the 1994 Plan, options must be granted
before the June 2, 2004 Termination Date. No option may have a term longer
than 10 years (limited to five years in the case of an option granted to a 10%
or greater stockholder of the Company). The aggregate fair market value of
the Company's Common Stock with respect to which options designated as ISOs
are exercisable for the first time by a grantee under the 1994 Plan during any
calendar year shall not exceed $100,000. Options under the Plan are non-
transferable and must be exercised by an optionee, if at all, while employed
by the Company or a subsidiary or within three months after termination of
such optionee's employment due to retirement, or within one year of such
termination if due to disability or death. Options under the 1994 Plan are
non-transferable except in the event of death. The Board or the Stock Option
Committee, as the case may be, may, in its sole discretion, cause the Company
to lend money to or guaranty an obligation of an employee for the purpose of
enabling such employee to exercise an option granted under the 1994 Plan
provided that such loan or obligation shall not exceed fifty percent (50%) of
the exercise price of such option.
<PAGE>
OPTIONS GRANTED UNDER THE 1994 PLAN
Each of the options granted under the 1994 Plan is exercisable over a
term of five years from the date of stockholder approval of the Plan at an
exercise price of $5.875 per share and is exercisable by the optionee only
while serving as an employee of the Company or one of its subsidiaries. Both
ISOs and Non-ISOs were granted under the 1994 Plan. The optionees who were
granted these options and the number of shares of Common Stock issuable upon
exercise of such options are as follows:
<TABLE>
Shares Purchasable Upon Exercise
of
<CAPTION>
Optionee ISOs Non-ISOs Total Shares
Purchasable
<S> <C> <C> <C>
Arthur Winkler
(President and
Chief Executive Officer) 17,020 257,980 275,000
William H. Warner
(Treasurer and
Chief Financial Officer) 17,020 57,980 75,000
Richard E. Orbann
(Chief Operating Officer,
Garden State Park) -- 75,000 75,000
Christopher C. Castens
(Secretary) 17,020 32,980 50,000
TOTAL 475,000
</TABLE>
With the exception of the grant of options under the 1994 Plan and the
grant of options to purchase 1,000,000 shares of Common Stock to the president
of the Company's International Thoroughbred Gaming Development Corporation
subsidiary, which options are subject to stockholder approval (see Proposal
Three herein), the Company has not granted any other employee stock options in
the past five years.
TAX INFORMATION
Assuming stockholder approval of the 1994 Plan, Non-ISOs granted
thereunder will constitute nonstatutory stock options and will not qualify for
any special tax benefits for the optionee. Although the optionee does not
recognize any taxable income at the time of grant, upon exercise of the
option, the optionee will recognize ordinary income for federal income tax
purposes in an amount generally measured as the excess of the then fair market
value of each share over its exercise price. With respect to ISOs granted
under the 1994 Plan, the optionee does not recognize any taxable income at the
time of grant nor at the time of exercise of the option. Upon an optionee's
resale of shares purchased upon exercise of an option, any difference between
the sale price and the fair market value of such shares on the date of
exercise in the case of a Non-ISO or between the sale price and the exercise
price in the case of an ISO not subject to a disqualifying disposition, will
be treated as capital gain or loss and will generally qualify for long-term
capital gain or loss treatment if the shares have been held for more than one
year.
Subject to certain limits on the deductibility of employee remuneration
under Section 162(m) of the Code, the Company will generally be entitled to a
tax deduction in the amount that an optionee recognizes as ordinary income
with respect to a Non-ISO but will not be entitled to a tax deduction with
respect to an ISO.
The foregoing does not purport to be a complete summary of the federal
income tax considerations that may be relevant to holders of options or upon
the Company. It also does not reflect provisions of the income tax laws of
any municipality, state or foreign country in which an optionee may reside,
nor does it reflect the tax consequences of an optionee's death.
RECOMMENDATION
The Board of Directors recommends that shareholders vote FOR
ratification of the adoption of the 1994 Employee's Stock Option Plan.
RATIFICATION OF OPTION GRANTS TO PRESIDENT OF INTERNATIONAL THOROUGHBRED
GAMING DEVELOPMENT CORPORATION (Proposal Three)
On March 21, 1994 in consideration for the services he had previously
performed in connection with attempting to promote and develop casino gaming
at Garden State Park on behalf of the Company's International Thoroughbred
Gaming Development Corporation ("ITG") subsidiary and his agreement to serve
as president of ITG, the Board of Directors authorized the grant to Francis W.
Murray of non-transferable options exercisable to purchase an aggregate
1,000,000 shares of the Company's Common Stock. The options are subject to
stockholder approval which is being sought at the December 20, 1994 Annual
Meeting of Stockholders. The options are exercisable over a term of two years
from the date of stockholder approval and only at a time when Mr. Murray is
employed by the Company or a subsidiary. Mr. Murray is not compensated for
his services by the Company or ITG but does receive expense reimbursement.
The number of shares purchasable by Mr. Murray pursuant to the options and the
exercise prices are as follows:
Number of Shares Per Share Exercise Price
200,000 $12.00
200,000 $15.00
200,000 $18.00
200,000 $21.00
200,000 $24.00
On March 21, 1994, the closing price for the Common Stock on the
American Stock Exchange was $7.00 per share.
RECOMMENDATION
The Board of Directors recommends that shareholders vote FOR
ratification of the above option grants to Francis W. Murray.
AUDITORS
The firm of Mortenson & Associates, P.C., certified public accountants,
has been selected by the Board of Directors to audit the accounts of the
Company and its subsidiaries for the current fiscal year ending June 30, 1995.
Said firm has served as the Company's auditors since the Company's inception
in October, 1980. Representatives of such firm are not expected to be present
at the December 20, 1994 Annual Meeting of Stockholders.
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Under current rules of the Securities and Exchange Commission,
stockholders wishing to submit proposals for inclusion in the Proxy Statement
of the Board of Directors for the 1995 Annual Meeting of Stockholders must
submit such proposals so as to be received by the Company at P.O. Box 1232,
Cherry Hill, New Jersey 08034 on or before October 1, 1995.
<PAGE>
OTHER MATTERS
Management does not know of any other matters which are likely to be
brought before the Meeting. However, in the event that any other matters
properly come before the Meeting, the persons named in the enclosed proxy will
vote said proxy in accordance with their judgment in said matters.
By Order of the Board of Directors
/s/ Arthur Winkler
Arthur Winkler
President
Cherry Hill, New Jersey
October 21, 1994
PROXY PROXY
This Proxy Is Solicited On Behalf Of The Board Of Directors
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
Annual Meeting of Stockholders - December 20, 1994
The undersigned, a stockholder of INTERNATIONAL THOROUGHBRED BREEDERS,
INC. (the "Company") hereby appoints ROBERT E. BRENNAN and ARTHUR WINKLER and
each of them, as proxy or proxies, of the undersigned, with full power of
substitution, to vote, in the name, place and stead of the undersigned, with
all the powers which the undersigned would possess if personally present, on
behalf of the undersigned, all the shares to which the undersigned is entitled
to vote at the Annual Meeting of the Stockholders of INTERNATIONAL
THOROUGHBRED BREEDERS, INC. to be held at 10:00 A.M. (EST) on Tuesday,
December 20, 1994 at The Phoenix, Garden State Park, Route 70 and Haddonfield
Road, Cherry Hill, New Jersey 08034 and at any and all adjournments thereof.
The undersigned directs that the Proxy be voted as follows:
(1) To elect directors for the ensuing year (Proposal One)
All nominees:
FOR [ ] all nominees listed below WITHHOLD AUTHORITY [ ]
(except as marked to the to vote all nominees
contrary below) listed below
Nominees: Robert E. Brennan, Charles R. Dees, Jr., Joseph K.Fisher,
Kerry B. Fitzpatrick, Robert J. Quigley,Ronald J. Riccio, Arthur Winkler
If it is desired to withhold authority to vote for any individual
nominee, check the FOR box above and strike out the name of the nominee for
whom you desire to withhold voting authority.
(2) To ratify the adoption of the 1994 Employees' Stock Option Plan
(Proposal Two).
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) To ratify the grant of options to the President of International
Thoroughbred Gaming Development Corporation
(Proposal Three).
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(4) In their discretion, on all other business that may properly come
before the meeting.
AUTHORITY GRANTED [ ] AUTHORITY WITHHELD [ ]
This proxy will be voted as directed, but if no instructions are given for any
item, this proxy will be voted for that item. Authority to vote for the
election of directors shall be deemed granted unless specifically withheld.
Discretionary authority is hereby conferred as to all other matters that may
come before the meeting. Stockholders who are present at the meeting may
withdraw their proxy and vote in person if they so desire.
Dated: , 1994
(Signature of Stockholder)
Please sign exactly as name appears on this Proxy. If shares are registered
in more than one name, the signatures of all such persons are required. A
corporation should sign in its full corporate name by a duly authorized
officer, stating his title. Trustees, guardians, executors and administrators
should sign in their official capacity, giving their full title as such. If a
partnership, please sign in partnership name by authorized person.
PLEASE SIGN AND RETURN THIS PROXY PROMPTLY.
No postage is required if returned in the enclosed envelope and
mailed in the United States
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
