<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:
<TABLE>
<S> <C>
[ ] Preliminary Information Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14c-5(d)(2))
[X] Definitive Information Statement
</TABLE>
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 2000 annual meeting of shareholders of
Fair Grounds Corporation (the "Company") will be held on Thursday, May 11,
2000, 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 eight 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, 2000; 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 April 3,
2000 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
April 10, 2000
<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 2000 annual meeting
of shareholders which is to be held on Thursday, May 11, 2000, 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 1999Annual
Report to Shareholders are being first sent or given to shareholders on or
about April 10, 2000.
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 eight 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, 2000.
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 April 3, 2000 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 April 3, 2000,
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 eight, 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 eight 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, except for William K. Caldwell, Jr. and Langdon
H. Stone, was previously 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>
WILLIAM K. CALDWELL, JR. 48 2000
Director of Golf, Chateau Golf & Country Club,
New Orleans, Louisiana.
RICHARD KATCHER 81 1994
Retired; attorney with Baker and Hostetler,
Cleveland, Ohio until 1995.
BRYAN G. KRANTZ 39 1990
President and General Manager of the Company;
President of Finish Line Management Corporation,
which operates certain off-track betting facilities in Louisiana.
MARIE G. KRANTZ 64 1990
Chairman of the Board of Directors and Treasurer of the
Company; Secretary-Treasurer of Finish Line Management
Corporation.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE AGE SINCE
- ------- --- -----
<S> <C> <C>
RONALD J. MAESTRI 59 1991
Director of Athletics, University of New Orleans.
CHARMAINE R. MOREL 65 1987
Administrative Assistant, MOTA L.L.C., Metairie Louisiana,
which operates Artiesia Restaurant, since 1998; prior to 2000,
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.
LANGDON H. STONE 54 2000
President, Stone Insurance, Inc.,
New Orleans, Louisiana
WAYNE E. THOMAS 52 1996
Self-employed insurance agent.
</TABLE>
INFORMATION REGARDING BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held five meetings during the
fiscal year ended October 31, 1999. 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, 1999. 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, 1999.
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, 1999.
BENEFICIAL OWNERSHIP OF COMMON SHARES
The following table sets forth certain information regarding the
beneficial ownership of common shares of the Company, as of March 1, 2000, 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>
William K. Caldwell, Jr. 400 *
Richard Katcher 400 *
Bryan G. Krantz 341,413 (b)(d) 72.9%
Marie G. Krantz 340,584 (c)(d) 72.7%
Ronald J. Maestri 480 *
Charmaine R. Morel 480 *
Langdon H. Stone 400 *
Wayne E. Thomas 400 *
All Directors and Executive
Officers as a Group 344,353 (e) 73.5%
</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, 2000.
(b) Bryan G. Krantz 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; 1,200 common
shares held jointly by him and his wife, constituting less than 1% of
the common shares outstanding; 9 shares held by him and 100 shares
held by Jefferson Downs Corporation ("Jefferson Downs"), each
constituting less than 1% of the common shares outstanding. Finish
Line Management Corporation ("Finish Line"), all the outstanding
capital stock of which
4
<PAGE> 7
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, shares with his wife
the power to vote or direct the vote and to dispose or direct the
disposition of the 1,200 common shares held jointly with her and has
the sole power to vote or direct the vote and to dispose or direct the
disposition of the 9 shares held by him. 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 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 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 341,793 common shares, constituting
approximately 72.9% 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, 1999, October 31, 1998 and October 31,
1997 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, 1999 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
Name and ------------------- All Other
Principal Position Year Salary Bonus Compensation
------------------ ---- ------ ----- ------------
<S> <C> <C> <C> <C>
BRYAN G. KRANTZ 1999 $ 400,000 $ 400,000 $ 3,600(1)
President and 1998 296,955 0 3,600
General Manager 1997 75,000 0 3,600
MARIE G. KRANTZ 1999 $ 241,666 $ 250,000 $ 992,389(2)
Chairman of the 1998 163,622 0 3,600
Board and Treasurer 1997 75,000 0 3,600
</TABLE>
(1) Annual retainer paid to each director of the Company.
(2) Consists of a $988,789 guaranty fee and a $3,600 annual retainer paid
to each 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 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.
6
<PAGE> 9
Salaries for executive officers are generally reviewed on an annual
basis and may be adjusted based upon the determination that the individual's
performance and contribution to the Company merit such an adjustment. 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 1999 noted that shortly after the December 17, 1993 fire Mr.
Krantz had voluntarily reduced his annual salary to $75,000 and that his salary
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 has 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, 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. Mr. Krantz's annual salary
had been increased to $400,000 in fiscal 1998. Although the Compensation
Committee continued to believe that Mr. Krantz was doing an outstanding job, it
concluded that it would not recommend an increase in his base salary in light
of the increase that had been implemented in the prior year.
The Compensation Committee has recognized 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 1999. 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. Acknowledging Mr. Krantz's
superior job performance, the Compensation Committee recommended that Mr.
Krantz be paid a cash bonus of $400,000.
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 granted during the 1999 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.
Compensation Committee Members: Richard Katcher, Charmaine R. Morel and
Wayne E. Thomas
7
<PAGE> 10
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, 1994 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.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FOR THE FIVE YEAR PERIOD ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
CRSP Total Return Index
Fair Grounds Nasdaq Stock Market CRSP Total Return Index
Corporation (U.S. Companies) for Nasdaq Non-Financial Stocks
<S> <C> <C> <C>
1994 100.0 100.0 100.0
1995 187.5 134.6 133.0
1996 125.1 158.9 155.1
1997 166.8 209.2 199.2
1998 174.1 234.1 222.5
1999 281.5 391.0 389.6
</TABLE>
8
<PAGE> 11
CERTAIN TRANSACTIONS
In 1992, the Company entered into 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, 1999, Finish Line paid the
Company $87,530 under the Management Agreement, host track fees of $305,591 and
purse supplements of $4,986,874. As of October 31, 1999, the Company had
accounts receivable from Finish Line in the aggregate amount of $774,245.
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. The initial term of the Agreement, which was entered into in 1992,
was 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, 1999,
there were a total of 337 devices in operation at all of the Company's
facilities (excluding the tele-tracks operated for the Company by Finish Line)
and 345 devices in operation at facilities managed by Finish Line, including
the facilities formerly owned by Jefferson Downs. In fiscal 1999, the Company
received gross video poker revenue of $2,980,435, including amounts to be paid
as purse supplements totaling $1,265,192. 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, 1999 was paid in full to the
Company, with one-half of said amount set aside for purse supplements. 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, 1999 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 G. 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 and is
continuing to provide advertising services to the Company during the current
fiscal year. During the 1999 fiscal year, the Company made payments to
Continental of $628,365 to reimburse it for Company advertising expenses paid
by it. As of October 31, 1999, the Company was due $13,894 from Continental. No
commission or any other form of compensation is paid to the Krantzes for
advertising services rendered to the Company by Continental. The Board of
Directors believes that the terms of such arrangement are no less favorable to
the Company than terms that would be available from unrelated third parties for
comparable transactions.
During the years 1995-1997, Ms. Krantz guaranteed the Company's
indebtedness incurred in the reconstruction of its facilities destroyed by the
1993 fire and as security therefor granted the lender a security interest in
assets owned by her. In March 1999, after repayment of the indebtedness and
release of the security interest, the Company, as authorized by the Board of
Directors, paid to Ms. Krantz a guaranty fee of $988,799, computed as a
percentage of the outstanding balance of the indebtedness during the loan
period. The Board of Directors of the Company believes that the terms of such
arrangement were no less favorable to the Company than terms that would have
been available to the Company from unrelated third parties for comparable
transactions.
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, 2000, 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 a number of years.
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, 2000.
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 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
April 10, 2000
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