<PAGE> 1
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
[ ] Preliminary Information Statement [ ]Confidential,
for Use of the
Commission Only (as
permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
FAIR GROUNDS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant As Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g)
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:
[ ] 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> 2
FAIR GROUNDS CORPORATION
1751 Gentilly Boulevard
New Orleans, Louisiana 70119
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Fair Grounds Corporation:
Please take notice that the annual meeting of shareholders of Fair
Grounds Corporation (the "Company") will be held on Tuesday, March 17, 1998, at
2:00 p.m., Central Time, at the Fair Grounds Race Course, 1751 Gentilly
Boulevard, New Orleans, Louisiana, for the following purposes:
1. To elect seven directors;
2. To consider and vote upon a proposal to ratify the action of the
Board of Directors in selecting Rebowe & Company, CPAs (a professional
corporation) to serve as independent accountants to audit the financial
statements of the Company for the fiscal year ending October 31, 1998; and
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on February 20,
1998 as the record date for the determination of shareholders entitled to
notice of and to vote at the annual meeting and at any adjournment thereof. A
list of such shareholders will be available for inspection at the time and
place of the meeting.
All shareholders are cordially invited to attend the meeting at which
sandwiches and refreshments will be served.
By Order of the Board of Directors
JoAn B. Stewart
Secretary
February 25, 1998
<PAGE> 3
FAIR GROUNDS CORPORATION
1751 Gentilly Boulevard
New Orleans, Louisiana 70119
INFORMATION STATEMENT
This Information Statement is furnished to the shareholders of Fair
Grounds Corporation (the "Company") in connection with the annual meeting of
shareholders which is to be held on Tuesday, March 17, 1998, at 2:00 p.m.,
Central Time, at the Fair Grounds Race Course, 1751 Gentilly Boulevard, New
Orleans, Louisiana. This Information Statement and the Company's 1997 Annual
Report to Shareholders are being first sent or given to shareholders on or
about February 25, 1998.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the annual meeting, the Company's shareholders will consider and
vote upon (i) the election of seven directors to serve until the next annual
meeting of shareholders and until their respective successors are duly elected
and qualified and (ii) a proposal to ratify the action of the Board of
Directors in selecting Rebowe & Company, CPAs (a professional corporation) to
serve as independent accountants to audit the financial statements of the
Company for the fiscal year ending October 31, 1998.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY
VOTING SECURITIES AND VOTING RIGHTS; RECORD DATE
Common shares, without par value, are the only voting securities of
the Company. Holders of record of common shares outstanding at the close of
business on February 20, 1998 will be entitled to one vote for each common
share held of record on such date upon each matter presented to the
shareholders to be voted upon at the annual meeting. At the close of business
on February 20, 1998, the Company had outstanding 468,580 common shares. The
presence, in person or by proxy, of a majority of the common shares of the
Company outstanding on the record date will constitute a quorum for the
transaction of business at the annual meeting. Pursuant to the Company's
Bylaws the affirmative vote of the holders of a majority of the common shares
which are present in person or by proxy at the annual meeting is required to
elect directors and to ratify the selection of auditors. Any proxies sent to
the Company which are marked to "withhold authority" for the election of any
one or more nominees for election as directors and any proxies sent to the
Company which are marked "abstain" with respect to the ratification of the
Company's selection of independent accountants will be counted for the purpose
of determining the number of common shares represented at the meeting, but will
have the same effect as a negative vote for the purpose of determining whether
the requisite vote has been obtained with respect to the matter voted upon at
the meeting.
<PAGE> 4
ELECTION OF DIRECTORS
Directors of the Company are elected annually to serve until the next
annual meeting of shareholders and until their respective successors are
elected and qualified. The number of directors has been fixed at seven and the
Board of Directors has nominated the persons listed below for election as
directors at the annual meeting. Common shares of the Company represented at
the annual meeting may only be voted for seven nominees. Each of the nominees
for election as a director currently is serving as a member of the Board of
Directors of the Company and previously was elected by the shareholders. If
any of the nominees, each of whom has indicated his or her willingness to serve
as a director if elected, is unable or declines to serve, a replacement nominee
will be designated at the annual meeting or, in lieu thereof, the Board of
Directors may reduce the number of persons to be elected as directors at the
annual meeting. The Articles of Incorporation of the Company provide that
directors must have actual ownership or all legal or constructive control of at
least 400 common shares of the Company.
The following table shows each nominee for election as a director of
the Company, his or her age, present positions and offices with the Company,
principal occupation and the name and principal business of the corporation or
other organization in which such occupation has been carried on, the year he or
she first became a director of the Company and directorships in certain other
corporations, based upon information furnished to the Company by each nominee
or otherwise available to the Company. Unless otherwise indicated, each
nominee for election as a director of the Company has engaged in the
occupations stated below for at least the last five years. No family
relationships exist between or among any nominee, director or executive officer
of the Company, except that Bryan G. Krantz is the son of Marie G. Krantz.
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE AGE SINCE
- ------- --- --------
<S> <C> <C>
KATHERINE F. DUNCAN 70 1991
Private Investor.
RICHARD KATCHER 79 1994
Retired; attorney with Baker and Hostetler,
Cleveland, Ohio, from 1992 through 1995.
BRYAN G. KRANTZ 37 1990
President and General Manager of the Company;
President of Finish Line Management Corporation,
which operates certain off-track betting facilities
in Louisiana.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE AGE SINCE
- ------- --- --------
<S> <C> <C>
MARIE G. KRANTZ 62 1990
Chairman of the Board of Directors and Treasurer of the
Company; Secretary-Treasurer of Finish Line Management
Corporation.
RONALD J. MAESTRI 57 1991
Director of Athletics, University of New Orleans.
CHARMAINE R. MOREL 63 1987
Administrative Assistant, Fennelly & Bayley, Inc.,
d/b/a Mike's on the Avenue, a restaurant in New Orleans;
Secretary/Treasurer of Victory Management Group, a company
providing management services, from January 1993 to December
1995.
WAYNE E. THOMAS 50 1996
Self-employed insurance agent.
</TABLE>
INFORMATION REGARDING BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held four meetings during the
fiscal year ended October 31, 1997. Each director attended at least 75% of the
aggregate of the meetings of the Board of Directors and the meetings of all
committees on which he or she served held in such fiscal year during the time
he or she served as a director or as a member of such committee.
The Board of Directors has two standing committees, the Executive
Committee and the Compensation Committee. The Executive Committee, which is
currently comprised of Marie G. Krantz, Bryan G. Krantz and Ronald J. Maestri,
did not meet during the fiscal year ended October 31, 1997. The Compensation
Committee, which is currently comprised of Richard Katcher, Charmaine R. Morel
and Wayne E. Thomas, reviews executive compensation, makes recommendations to
the Board of Directors concerning the same, and administers the Fair Grounds
Corporation Stock Option Plan, including the selection of key employees to
participate therein and the determination of options to be granted thereunder.
The Compensation Committee met one time during the fiscal year ended October
31, 1997.
The Company pays each director (including directors who are employees
of the Company) a retainer of $3,600 annually, payable quarterly.
3
<PAGE> 6
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, executive officers and holders of more
than 10% of the common shares of the Company to file with the Securities and
Exchange Commission (the "Commission") initial reports of ownership and reports
of changes in ownership of common shares of the Company. Based upon a review
of these filings and written representations from the applicable reporting
persons, the Company believes that its directors and executive officers
complied with all applicable Section 16(a) filing requirements during the
fiscal year ended October 31, 1997.
BENEFICIAL OWNERSHIP OF COMMON SHARES
The following table sets forth certain information regarding the
beneficial ownership of common shares of the Company, as of February 1, 1998,
of (i) each person who, to the knowledge of the Company, owns beneficially more
than 5% of the outstanding common shares of the Company, (ii) each director and
nominee for election as a director, (iii) each of the current executive
officers of the Company listed in the Summary Compensation Table below and (iv)
all directors and executive officers of the Company as a group. The
information set forth in the following table is based upon statements filed by
such persons with the Commission and information otherwise available to the
Company. Unless otherwise indicated, each person has sole voting and
investment power of the common shares of the Company beneficially owned by him
or her.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP CLASS(A)
- ---------------- -------------------- ----------
<S> <C> <C>
Katherine F. Duncan 480 *
Richard Katcher 400 *
Bryan G. Krantz 342,204 (b)(d) 73.0%
Marie G. Krantz 340,584 (c)(d) 72.7%
Ronald J. Maestri 480 *
Charmaine R. Morel 480 *
Wayne E. Thomas 400 *
All Directors and Executive
Officers as a Group 344,824 (e) 73.6%
</TABLE>
___________________________
* Less than 1% of Class.
(a) The percentage of class beneficially owned has been computed on the
basis of 468,580 common shares outstanding on February 1, 1998.
4
<PAGE> 7
(b) Bryan G. Krantz has reported to the Commission that he is the
beneficial owner of 340,104 common shares held by Marie G. Krantz as
Voting Trustee under the Voting Trust Agreement described below,
constituting 72.6% of the common shares outstanding; 2,000 common
shares held jointly by him and his wife, constituting less than 1% of
the common shares outstanding; and 100 shares held by Jefferson Downs
Corporation ("Jefferson Downs"), constituting less than 1% of the
common shares outstanding. Bryan G. Krantz has the sole power to
dispose or direct the disposition of the 340,104 common shares held by
Marie G. Krantz as Voting Trustee, and shares with his wife the power
to vote or direct the vote and to dispose or direct the disposition of
the 2,000 common shares held jointly with her. He may be deemed to
share with Marie G. Krantz the power to vote or direct the vote and
the power to dispose or direct the disposition of the 100 common
shares held by Jefferson Downs. Mr. Krantz's address is 1751
Gentilly Boulevard, New Orleans, Louisiana 70119.
(c) Marie G. Krantz has reported to the Commission that she is the
beneficial owner of 380 common shares held directly by her,
constituting less than 1% of the common shares outstanding; and of 100
common shares held by Jefferson Downs, constituting less than 1% of
the common shares outstanding; and that she may be deemed to be the
beneficial owner of the 340,104 common shares held by her as Voting
Trustee under the Voting Trust Agreement described below, constituting
72.6% of the common shares outstanding. In such capacity as Voting
Trustee, Ms. Krantz has the sole power to vote or direct the vote of
the 340,104 common shares held by her as Voting Trustee. She also
has the sole power to vote or direct the vote and the sole power to
dispose or direct the disposition of the 380 common shares held by her
directly. She may be deemed to share with Bryan G. Krantz the power
to vote or direct the vote and the power to dispose or direct the
disposition of the 100 common shares held by Jefferson Downs. The
Voting Trust Agreement, pursuant to which Bryan G. Krantz and Richard
Katcher as trustee are grantors and Marie G. Krantz is Voting Trustee,
provides that title to the 340,104 common shares is vested in Marie G.
Krantz as Voting Trustee during the term of the Voting Trust
Agreement, and that in such capacity she may exercise all rights of a
holder of common shares of the Company, including the right to vote
such common shares; however, the common shares which are subject to
the Voting Trust Agreement may not be transferred, sold, assigned or
otherwise disposed of by Marie G. Krantz during the term of the Voting
Trust Agreement, other than in connection with any corporate event or
action which affects common shares other than the common shares
subject to the Voting Trust Agreement. Bryan G. Krantz is not
entitled during the term of the Voting Trust Agreement to vote the
common shares subject to the Voting Trust Agreement; however, he does
have the right to receive any and all dividends and distributions made
by the Company to the holders of common shares. The Voting Trust
Agreement is for an initial term of 15 years, is irrevocable during
its term, and is to survive the death of the grantors thereunder. It
may be extended for an additional ten years at the written request of
such grantors. Ms. Krantz's address is 1751 Gentilly Boulevard, New
Orleans, Louisiana 70119.
(d) Bryan G. Krantz and Marie G. Krantz, who together are the beneficial
owners of an aggregate of 342,584 common shares, constituting
approximately 73.2% of the common shares outstanding, have reported to
the Commission that they constitute a "group" within the meaning of
section 13(d)(3) of the Exchange Act. By virtue of their beneficial
ownership of common shares of the Company and the matters set forth in
filings made by them under Section 13(d) of the Exchange Act, Marie G.
Krantz and Bryan G. Krantz may be deemed to be controlling persons of
the Company.
(e) See notes (b) - (d) above. The number of common shares shown as
beneficially owned includes any directors qualifying shares held by
each director and nominee for election as a director.
5
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
annual and long-term compensation for services in all capacities to the Company
for the fiscal years ended October 31, 1997, October 31, 1996 and October 31,
1995 of the chief executive officer of the Company. No executive officer of
the Company received salary and bonus totalling more than $100,000 for the
fiscal year ended October 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------------------------------
Other
Annual All Other
Name and Compen- Compen-
Principal Position Year Salary Bonus sation(1) sation
- ------------------ ---- ------ ----- --------- ----------
<S> <C> <C> <C> <C> <C>
BRYAN G. KRANTZ 1997 $ 75,000 $ 0 -- $3,600(2)
President and 1996 75,000 0 -- 3,600
General Manager 1995 75,000 0 -- 3,600
</TABLE>
____________________________________
(1) For each of the fiscal years listed, Mr. Krantz did not receive
perquisites or other personal benefits in excess of the amounts
required to be disclosed under the rules on executive compensation
disclosure adopted by the Commission; accordingly, such amounts are
omitted from this column.
(2) Consists of the annual retainer paid to Mr. Krantz as a director of
the Company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Board of Directors of the Company has designated a Compensation
Committee (the "Compensation Committee") to review and make recommendations
regarding the compensation for executive officers of the Company and to
administer the Company's Stock Option Plan. The Compensation Committee is
currently composed of three directors who have never served as officers of the
Company.
The policies of the Compensation Committee are intended to motivate,
retain and attract management and to enhance the profitability of the Company
and, thus, shareholder value. The
6
<PAGE> 9
Compensation Committee believes that the components of compensation for the
Company's executive officers should be annual salaries and, where appropriate,
bonuses and stock options.
Salaries for executive officers are generally reviewed on an annual
basis and may be increased based upon the determination that the individual's
performance and contribution to the Company merit such an increase. No
objective, performance-based criteria have been established for use in
determining executive compensation. The Compensation Committee has noted,
however, that, since the Company is in a highly competitive industry and
continues to operate in a difficult competitive environment in Louisiana, any
review of, and decisions with respect to, executive compensation must be made
in light of other Company policies which are designed to control costs and
improve operating performance.
In light of the uncertainties resulting from the December 17, 1993
fire and the difficult competitive environment in Louisiana, the Compensation
Committee concluded in 1997 that the annual salaries of Marie G. Krantz, the
Chairman of the Board, and Bryan G. Krantz, the Company's President and General
Manager, should remain at $75,000 each for fiscal 1997, which was the level to
which these executive officers voluntarily reduced their annual salaries in
fiscal 1994, shortly after the fire, and Ms. Krantz and Mr. Krantz agreed that
their annual salaries should continue at that reduced level.
The Compensation Committee recognizes that bonuses can be an important
component of executive compensation and can be granted based on corporate and
individual performance. While the Compensation Committee may propose the
implementation of a formal bonus program at some time in the future, it
concluded that no such proposal would be made in fiscal 1997 in view of the
above-stated uncertainties and difficulties. The Compensation Committee has
also confirmed that in the future it may recommend the payment of bonuses to
officers on the basis of corporate or individual performance, in the absence of
a formal bonus program and without necessarily having established
performance-based criteria.
Long-term incentive compensation has been available through the
Company's Stock Option Plan, the purpose of which is to provide an incentive
and inducement to key employees of the Company to remain in the Company's
employment and to participate in the ownership and successful operation of the
Company's business. No specific performance criteria have been followed in
making option grants; rather, eligibility for grants has been determined on a
case-by-case basis in light of overall performance and contribution to the
Company. No options were granted during the 1997 fiscal year. The
Compensation Committee continues to believe, however, that in the future grants
of stock options can be used to (i) encourage and facilitate personal stock
ownership by key executives; (ii) strengthen the personal commitment of such
officers to the Company; and (iii) provide a direct link between the interests
of the officers and those of the Company's other shareholders.
In view of the uncertainties caused by the fire and because of the
continued difficult competitive environment in the Louisiana gaming industry,
the Compensation Committee
7
<PAGE> 10
concluded in 1997 that the adoption of more specific compensation policies or
criteria, or any attempt to relate them to corporate performance, would be
further deferred.
Members of the Compensation Committee: Richard Katcher
Charmaine R. Morel
Wayne E. Thomas
PERFORMANCE OF COMMON SHARES
The following compares the cumulative total shareholder return on
investment (the change in year-end stock price plus reinvestment of dividends)
for each of the last five fiscal years, assuming that $100 was invested on
October 31, 1992 in each of (i) Fair Grounds Corporation, (ii) a group of
stocks consisting of all domestic companies whose stocks are listed on The
Nasdaq Stock Market and (iii) a group of stocks consisting of non-financial
industry stocks listed on The Nasdaq Stock Market. The Total Return Index for
The Nasdaq Stock Market and the Total Return Index for Nasdaq Non-Financial
Stocks were prepared by the Center for Research in Securities Prices at the
University of Chicago.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Fair Grounds Corporation 100 66.3 66.3 138.2 110.3 146.5
CRSP Total Return Index for NASDAQ (U.S. Companies) 100 128.9 129.5 174.5 205.9 271.1
CRSP Total Return Index for NASDAQ Non-Financial Stocks 100 129.0 128.0 171.6 198.8 255.6
</TABLE>
8
<PAGE> 11
CERTAIN TRANSACTIONS
The Company is a party to a Management Agreement (the "Management
Agreement") with Finish Line Management Corporation ("Finish Line"). The
Management Agreement provides that Finish Line is to operate the Company's
tele-track facilities in Terrebonne, St. Tammany and Jefferson Parishes,
Louisiana, which were formerly owned by Jefferson Downs, for a period of ten
years, commencing November 1, 1992, with the option granted to Finish Line to
extend the term of the Management Agreement for two additional five-year
periods. The Management Agreement provides that Finish Line is to have the
exclusive responsibility for the direction, supervision, management and
operation of such facilities, is to collect all monies from such operation and
is to pay all expenses in connection therewith. The Company is to receive 0.1%
of the gross pari-mutuel handle at such facilities, and Finish Line is to
receive monthly compensation equal to the difference between the gross receipts
collected at such facilities less all expenses (including the payment to the
Company described above) paid by Finish Line. In addition, Finish Line is to
indemnify the Company for, among other things, all obligations under the leases
assigned by Jefferson Downs to the Company. During the fiscal year ended
October 31, 1997, Finish Line paid the Company $82,655 under the Management
Agreement, host track fees of $325,680 and purse supplements of $4,822,405. As
of October 31, 1997, the Company had accounts receivable from Finish Line in
the aggregate amount of $124,324.
The Company, Jefferson Downs and Finish Line are parties to an
agreement with Video Services, Inc. ("VSI"), whereby VSI has the exclusive
right and license to install, maintain and operate video draw poker devices at
the Fair Grounds Race Course and at the tele-tracks operated by the Company and
Finish Line. Such agreement was entered into in November 1992 for an initial
term of five years, with an option by VSI to extend the term for an additional
five years, which option has been exercised. The agreement provides that the
Company is to receive a percentage of the revenues from the operation of the
devices installed at the Company's facilities. Such percentage is calculated
on the basis of the average amount collected daily from each device during each
month, after the payment of prizes, taxes and fees. The devices installed by
VSI pursuant to such agreement remain the property of VSI. As of October 31,
1997, there were a total of 297 devices in operation at all of the Company's
facilities (excluding the tele-tracks operated for the Company by Finish Line)
and 428 devices in operation at facilities managed by Finish Line, including
the facilities formerly owned by Jefferson Downs. In fiscal 1997, the Company
received gross video poker revenue of $2,346,677, including amounts to be paid
as purse supplements of $981,097. In addition, such agreement provides that
the Company, Jefferson Downs and Finish Line are entitled to receive an annual
promotional allowance from VSI in the aggregate amount of $270,000, which for
the fiscal year ended October 31, 1997 was paid in full to the Company. The
agreement also provides for advances annually from VSI against future revenues
of up to $1 million in the aggregate to the Company, Jefferson Downs and Finish
Line. The Company received all of such advance during the year ended October
31, 1997 and has also received such an advance during the current fiscal year.
The Company anticipates that it will continue to receive revenues pursuant to
the agreement with VSI.
9
<PAGE> 12
Marie Krantz is a director, the President and the owner of 66 2/3% of
the outstanding common stock, and Bryan Krantz is a director, Vice President
and the owner of 33 1/3% of the outstanding common stock, of Jefferson Downs.
Marie Krantz is a director, executive officer and the owner of 66 2/3% of the
outstanding common stock, and Bryan Krantz is a director, executive officer and
the owner of 33 1/3% of the outstanding common stock, of Finish Line. By
virtue of such positions and ownership and their positions with and
relationship with such entities, the Company, Finish Line and Jefferson Downs
may be deemed to be affiliates.
Marie Krantz and Bryan Krantz each own 50% of the outstanding common
stock of Continental Advertising, Inc. ("Continental"), an advertising agency
which provided advertising services to the Company during the last fiscal year.
During the 1997 fiscal year, the Company made payments to Continental of
$333,000. As of October 31, 1997, the Company was due $41,869 from
Continental. The Company is continuing to utilize Continental's services
during the current fiscal year. No commissions or any other form of
compensation are paid to the Krantzes for advertising services rendered to the
Company by Continental.
During 1997, the Company was a party to certain loan agreements with
First National Bank of Commerce of Louisiana ("FNBC"), and the Company's
indebtedness thereunder was guaranteed by Finish Line. In addition, Marie G.
Krantz granted FNBC a security interest in certain investment securities held
by her, and Finish Line and Jefferson Downs granted to FNBC a security interest
in substantially all of the property, furniture, fixtures and equipment owned
by each such corporation. Also in connection with such agreements, each of
Marie Krantz, Bryan Krantz, Vickie Krantz, Richard Katcher as trustee and
Jefferson Downs pledged to FNBC all of the common shares of the Company owned
by such shareholder. The Company's indebtedness under such agreements was
repaid during 1997 and FNBC's security interest in the collateral described
above has been released.
In connection with payment by the Company during 1996 of the remaining
principal balance of a mortgage loan due to Louie J. Roussel, III, Marie G.
Krantz made a short-term loan of $1 million to the Company in October 1996.
The loan bore interest at the rate of 8.25%, and was repaid in full together
with all accrued interest, in January 1997. Total interest paid to Marie G.
Krantz under such short-term loan was approximately $15,000.
From time to time, persons who are officers, directors or principal
shareholders of the Company own or have interests in horses racing at the
Company's race track. Such races are conducted under the rules and regulations
of the Louisiana Racing Commission, and no officer, director or principal
shareholder receives any extra or special benefits not shared by all others so
racing.
10
<PAGE> 13
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Rebowe & Company, CPAs
(a professional corporation) to audit the financial statements of the Company
for the fiscal year ending October 31, 1998, and, in accordance with the Board
of Directors' policy of seeking annual shareholder ratification of the
selection of auditors, requests that such selection be ratified. Rebowe &
Company has audited the Company's financial statements for the past several
fiscal years.
A representative of Rebowe & Company will be present at the annual
meeting, will have an opportunity to make a statement if he so desires and will
be available to answer appropriate questions from shareholders.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL TO
RATIFY THE SELECTION OF REBOWE & COMPANY TO AUDIT THE FINANCIAL STATEMENTS OF
THE COMPANY FOR THE FISCAL YEAR ENDING OCTOBER 31, 1998.
SHAREHOLDER PROPOSALS
SHAREHOLDER PROPOSALS TO BE PRESENTED AT ANNUAL MEETINGS
The Company's Bylaws provide that a shareholder who desires to propose
any business at an annual meeting of shareholders must give the Company written
notice, which must be received by the Company not later than ten days following
the date on which the Company first gives written or printed notice to
shareholders of such meeting, or, if the meeting is adjourned and the Company
is required by Louisiana law to give notice of the adjourned meeting date,
within five days after the date on which the Company first gives written or
printed notice to shareholders of such adjourned meeting, setting forth (a) a
brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting; (b) the name and
address of the shareholder who intends to propose such business; (c) a
representation that the shareholder is a holder of record of shares of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at such meeting to propose such business; and (d) any material interest
of the shareholder in such business. The Chairman of the meeting may refuse to
transact any business presented at any meeting without compliance with the
foregoing procedure. The ten-day period referred to above will expire ten days
after the date on which the accompanying notice of annual meeting of
shareholders is first mailed to shareholders of the Company.
11
<PAGE> 14
SHAREHOLDER NOMINATIONS FOR DIRECTORS
The Company's Bylaws provide that a shareholder who desires to
nominate directors at a meeting of shareholders must give the Company written
notice, which must be received by the Company not later than ten days following
the date on which the Company first gives written or printed notice to
shareholders of such meeting, or, if the meeting is adjourned and the Company
is required by Louisiana law to give notice of the adjourned meeting date,
within five days after the date on which the Company first gives written or
printed notice to shareholders of such adjourned meeting, setting forth (a) the
name and address of the shareholder who intends to make the nomination and of
the person or persons to be nominated; (b) a representation that the
shareholder is a holder of record of shares of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the shareholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the shareholder; (d) such other
information regarding each nominee proposed by such shareholder as would have
been required to be included in an information statement filed pursuant to the
rules of the Securities and Exchange Commission had each nominee been
nominated, or intended to be nominated, by the Board of Directors; and (e) the
consent of each nominee to serve as a director of the Company if so elected.
The Chairman of the meeting may refuse to acknowledge the nomination of any
person if a shareholder has failed to comply with the foregoing procedure. The
ten-day period referred to above will expire ten days after the date on which
the accompanying notice of annual meeting of shareholders is first mailed to
shareholders of the Company.
OTHER MATTERS
The Board of Directors does not intend to bring any business before
the annual meeting other than that stated herein and is not aware of any other
matters that may be presented for action at the meeting.
By Order of the Board of Directors
JoAn B. Stewart
Secretary
February 25, 1998
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