<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 1999 annual meeting of shareholders of
Fair Grounds Corporation (the "Company") will be held on Tuesday, March 23,
1999, 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, 1999; 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
24, 1999 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
March 2, 1999
<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 1999 annual meeting
of shareholders which is to be held on Tuesday, March 23, 1999, 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 1998 Annual
Report to Shareholders are being first sent or given to shareholders on or
about March 2, 1999.
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, 1999.
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 24, 1999 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 24, 1999, 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 71 1991
Private Investor.
RICHARD KATCHER 80 1994
Retired; attorney with Baker and Hostetler,
Cleveland, Ohio until 1995.
BRYAN G. KRANTZ 38 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 63 1990
Chairman of the Board of Directors and Treasurer of the
Company; Secretary-Treasurer of Finish Line Management
Corporation.
RONALD J. MAESTRI 58 1991
Director of Athletics, University of New Orleans.
CHARMAINE R. MOREL 64 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 51 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, 1998. 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, 1998. 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,
1998.
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, 1998.
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, 1999,
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, 1999.
4
<PAGE> 7
(b) Bryan G. Krantz has reported to the Commission that he is the
beneficial owner of the following common shares of the Company: 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. Finish Line
Management Corporation ("Finish Line"), all the outstanding capital
stock of which is beneficially owned by Mr. Krantz, holds the Voting
Trust certificate respecting 339,604 common shares in the Voting Trust,
and Mr. Krantz holds the Voting Trust certificate respecting 500 common
shares in the Voting Trust. Mr. Krantz, as a director, executive
officer and the beneficial owner of all of the outstanding capital
stock of Finish Line, may be deemed to share with Ms. Krantz the power
to dispose or direct the disposition of 339,604 common shares held by
Ms. Krantz as Voting Trustee, the Voting Trust certificate with respect
to which is held by Finish Line. In addition, Mr. Krantz has the sole
power to dispose or direct the disposition of 500 common shares held by
Ms. Krantz as Voting Trustee, the Voting Trust certificate with respect
to which is held by him, 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 Ms.
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 (i) that she is the
beneficial owner of 380 common shares of the Company held directly
by her, constituting less than 1% of the common shares outstanding; and
100 common shares held by Jefferson Downs, constituting less than 1% of
the common shares outstanding, and (ii) 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 her 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, and, as a
director and executive officer of Finish Line, she may be deemed to
share with Bryan G. Krantz the power to dispose or direct the
disposition of 339,604 common shares held by her as Voting Trustee, the
Voting Trust certificate with respect to which is held by Finish Line.
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 Mr. 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 Mr. Krantz and Richard
Katcher, as Trustee of the Masoni Trust, are grantors and Ms. Krantz is
Voting Trustee, provides that title to the 340,104 common shares is
vested in Ms. Krantz as Voting Trustee during the term of the Voting
Trust 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 Ms. Krantz during the term of the Voting
Trust, 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. The Voting Trust Agreement, which was entered
into in 1993, 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. The 339,604 common shares as to which Mr. Krantz and Ms.
Krantz may be deemed to share the power to dispose or direct the
disposition and which are held by the Voting Trust are pledged, along
with the Voting Trust certificate issued by the Voting Trust with
respect to said 339,604 common shares, to Richard Katcher, as Trustee
of the Masoni Trust, as security for the payment of a promissory note
made and delivered by Mr. Krantz in April 1996, when the Masoni Trust
sold such shares to Mr. Krantz, and later assumed by Finish Line. A
default in the payment of said note could result in the Masoni Trust
acquiring control of the Company. 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, Ms.
Krantz and Mr. 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, 1998, October 31, 1997 and October 31,
1996 of the chief executive officer of the Company and of each other executive
officer of the Company whose salary and bonus for the fiscal year ended October
31, 1998 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
---------------------------------
Other
Annual All Other
Name and Compen- Compen-
Principal Position Year Salary Bonus sation(1) sation(2)
- - ------------------ ---- -------- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
BRYAN G. KRANTZ 1998 $296,955 $ 0 -- $3,600
President and 1997 75,000 0 -- 3,600
General Manager 1996 75,000 0 -- 3,600
MARIE G. KRANTZ 1998 $163,622 $ 0 -- $3,600
Chairman of the 1997 75,000 0 -- 3,600
Board and Treasurer 1996 75,000 0 -- 3,600
</TABLE>
- - --------------------------
(1) For each of the fiscal years listed, the executive officers 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 directors 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
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<PAGE> 9
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 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.
In reviewing Mr. Krantz's compensation, together with the
compensation of Ms. Krantz and the Company's other executive officers, the
Compensation Committee in 1998 noted that shortly after the December 17, 1993
fire Mr. Krantz and Ms. Krantz had each voluntarily reduced his or her annual
salary to $75,000 and that their salaries had been maintained at that reduced
level for fiscal years 1994-1997 in light of the uncertainties facing the
Company in those years. The Compensation Committee acknowledged that such
period was one of the most challenging periods that the Company had ever faced
and that during such period the Company, under the leadership of Mr. Krantz,
together with Ms. Krantz and the other executive officers of the Company, had
conducted its usual operations as well as rebuilding its facilities and
prosecuting significant litigation against insurance companies and others. The
Compensation Committee also noted that with the completion of the Company's new
facilities and the success of the first live racing season utilizing those
facilities, it would be appropriate to increase substantially Mr. Krantz's, as
well as Ms. Krantz's, annual salary. As a result, the Compensation Committee
recommended that Mr. Krantz's annual salary be increased to $400,000 and Ms.
Krantz's annual salary be increased to $200,000.
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 1998. 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 can be provided 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
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<PAGE> 10
granted during the 1998 fiscal year. The Compensation Committee continues to
believe, however, that in the future grants of stock options could 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.
<TABLE>
<S> <C>
Compensation Committee Members: Richard Katcher, Charmaine R. Morel and
Wayne E. Thomas
</TABLE>
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, 1993 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 Security Prices at the
University of Chicago.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FOR THE FIVE YEAR PERIOD ENDED OCTOBER 31, 1998
<TABLE>
<CAPTION>
CRSP TOTAL CRSP TOTAL
RETURN INDEX RETURN INDEX
NASDAQ FOR NASDAQ
STOCK NON-
MEASUREMENT PERIOD FAIR GROUNDS MARKET (U.S. FINANCIAL
(FISCAL YEAR COVERED) CORPORATION COMPANIES) STOCKS
<S> <C> <C> <C>
1993 100 100 100
1994 100 100.5 99.2
1995 187.5 135.4 133.0
1996 125.1 159.8 154.0
1997 166.8 210.3 197.9
1998 174.1 235.9 221.9
</TABLE>
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<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. Pursuant to the Management
Agreement, the Company receives 0.1% of the gross pari-mutuel handle at such
facilities, and Finish Line receives 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, 1998, Finish Line paid the
Company $90,668 under the Management Agreement, host track fees of $297,035 and
purse supplements of $4,788,281. As of October 31, 1998, the Company had
accounts receivable from Finish Line in the aggregate amount of $753,984.
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. Pursuant to such agreement, the
Company receives 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, 1998,
there were a total of 315 devices in operation at all of the Company's
facilities (excluding the tele-tracks operated for the Company by Finish Line)
and 414 devices in operation at facilities managed by Finish Line, including
the facilities formerly owned by Jefferson Downs. In fiscal 1998, the Company
received gross video poker revenue of $2,899,761, including amounts to be paid
as purse supplements totaling $1,197,433. 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, 1998 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, 1998 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.
Ms. Krantz is a director and executive officer, and Mr. Krantz is a director,
executive officer and the beneficial owner of all 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.
Ms. Krantz and Mr. 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 1998 fiscal year, the Company made payments to Continental of
$502,000 to reimburse it for Company advertising expenses paid by it. As of
October 31, 1998, the Company was due $6,614 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.
In early fiscal 1998, the Company repaid in full its indebtedness
to First National Bank of Commerce of Louisiana ("FNBC") which had been
guaranteed by Finish Line. In connection with FNBC's loan to the Company, Ms.
Krantz had granted FNBC a security interest in certain investment securities
held by her, and Finish Line and Jefferson Downs had 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 loan,
Ms. Krantz, Mr. Krantz, Vickie Krantz, Richard Katcher, as Trustee, and
Jefferson Downs had pledged to FNBC all of the common shares of the Company
owned by such shareholder. Since the repayment of such loan, FNBC's security
interest in the collateral described above has been released.
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.
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, 1999, 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.
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<PAGE> 13
A representative of Rebowe & Company is expected to be present at
the annual meeting, will have an opportunity to make a statement if he so
desires and is expected to 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, 1999.
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.
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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 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
March 2, 1999
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