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| UNITED STATES |
| SECURITIES AND EXCHANGE COMMISSION |
| Washington, D.C. 20549 |
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| SCHEDULE 14A |
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Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. ) |
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| Filed by the Registrant x |
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| Filed by a Party other than the Registrant o |
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| Check the appropriate box: |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
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| Canterbury Park Holding Corporation |
| (Name of Registrant as Specified In Its Charter) |
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| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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| Payment of Filing Fee (Check the appropriate box): |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Aggregate number of securities to which transaction applies: |
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Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials. |
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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. |
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Table of Contents
CANTERBURY
PARK HOLDING CORPORATION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS ON NOVEMBER [ ], 2015
Notice is hereby
given that a Special Meeting of Shareholders of Canterbury Park Holding Corporation (the “Company”) will be held in
the Triple Crown Room at Canterbury Park, 1100 Canterbury Road, Shakopee, MN 55379, on November [ ], 2015, beginning at 8:30 a.m.,
Central Standard Time, to consider and act on two proposals:
Proposal 1.
To approve a reorganization of the Company’s business into a holding company structure pursuant to an Agreement and Plan
of Reorganization dated as of October 2, 2015 (the “Reorganization Agreement”) between the Company, New Canterbury
Park Holding Corporation, a recently formed, wholly owned subsidiary of the Company (“New Canterbury”), and Canterbury
Park Entertainment LLC (“Canterbury Park Entertainment”), a recently formed, wholly owned subsidiary of New Canterbury.
If approved by the shareholders, upon consummation of the transactions contemplated by the Reorganization Agreement, the Company’s
business will be restructured (the “Business Restructuring”) as follows:
| · | New
Canterbury will be the public company owned by the Company’s shareholders with
each shareholder having the same percentage ownership in New Canterbury (and, indirectly,
in all property and other assets currently owned by the Company) immediately after the
Business Restructuring as that shareholder had immediately before the Business Restructuring. |
| · | New
Canterbury will be a holding company for and parent company of two subsidiaries, Canterbury
Park Entertainment and Canterbury Development LLC (“Canterbury Development”),
another recently formed subsidiary of New Canterbury. |
| · | Canterbury
Park Entertainment will be the surviving business entity in the merger with the Company
and will directly own all land, facilities, and substantially all other assets related
to the Company’s pari-mutuel wagering, card casino, concessions and other related
businesses (“Racetrack Operations”), will conduct these businesses consistent
with current practices, and will be subject to direct regulation by the Minnesota Racing
Commission (“MRC”). |
| · | Canterbury
Development will continue the Company’s efforts to commercially develop approximately
200 acres of land currently owned or controlled by the Company that is not needed for
the Racetrack Operations. Canterbury Development will not be subject to direct regulation
by the MRC. |
Proposal 2.
To approve recent acquisitions of shares of the Company’s common stock (“Company shares”) by investment
advisory firms affiliated with Mario J. Gabelli (the “Gabelli Group”) that increased its total beneficial ownership
in the Company from approximately 18.24% to 25.08% of all outstanding Company shares (the “Control Share Acquisition”).
Pursuant to the Minnesota Control Share Acquisition Act (“CSAA”), if shareholders do not approve the Gabelli Group’s
Control Share Acquisition, Company shares beneficially owned by the Gabelli Group in excess of 19.99% of all outstanding Company
shares will have limited voting rights. If shareholders approve the Control Share Acquisition pursuant to the CSAA, the Gabelli
Group will have full voting rights with respect to the Company shares already acquired pursuant to its Control Share Acquisition
and will be able to acquire beneficial ownership of additional shares that will have full voting rights up to a maximum of 33⅓%
of all outstanding Company shares.
The shareholders
will also transact such other business as may properly come before the meeting or any adjournment or postponement thereof.
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The Board of
Directors has fixed the close of business on October 2, 2015 as the record date for the determination of shareholders entitled
to notice of and to vote at the meeting.
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By Order of the Board of Directors, |
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| Shakopee, MN |
Randall D. Sampson |
| October [__], 2015 |
President and Chief Executive Officer |
All shareholders
are invited to attend the Special Meeting of Shareholders in person. Whether or not you expect to attend, please vote as
soon as possible. If your Company shares are registered in your name, information regarding how you can vote in person,
over the Internet, or by mail is provided in the “Important Notice Regarding Availability of Proxy Materials” sent
to you, and, if you have received a proxy card, it provides information on how to vote your shares. If you hold shares beneficially
through a financial institution, please follow the voting instructions it provides. Shareholders who attend the meeting may revoke
their proxies and vote in person if they so desire.
IMPORTANT
NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF SHAREHOLDERS
The Notice
of Internet Availability of Proxy Materials, Notice of Special Meeting of Shareholders, and Proxy Statement are available at voteproxy.com
TABLE
OF CONTENTS
Page
Exhibit A Reorganization Agreement
Exhibit B New Canterbury Articles
of Incorporation
Exhibit C Information Statement
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CANTERBURY
PARK HOLDING CORPORATION
PROXY STATEMENT
FOR NOVEMBER [ ], 2015
SPECIAL MEETING OF SHAREHOLDERS
GENERAL
INFORMATION
This Proxy Statement
is being provided on behalf of the Board of Directors of Canterbury Park Holding Corporation (the “Company” or “we”)
in connection with the Special Meeting of Shareholders to be held at Canterbury Park, 1100 Canterbury Road, Shakopee, Minnesota
55379 on [________], November [ ], 2015, beginning at 8:30 a.m., Central Standard Time (the “Special Meeting”). The Board
of Directors is soliciting proxies to be voted at the Special Meeting, and at any adjournment and reconvening of the meeting.
We first made this Proxy Statement available to our shareholders on or about October [___], 2015.
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING
What is the purpose of the special
meeting?
The purpose of
the special meeting is to request shareholder approval on the following two proposals:
Proposal
1 — Proposal to reorganize the Company’s business into a holding company structure (the “Business Restructuring”)
The Board is
seeking approval of the Reorganization Agreement described in the Notice of Special Meeting of Shareholders that accompanies this
Proxy Statement. If shareholders approve the Reorganization Agreement, at the time it becomes effective (the “Effective
Time”):
| · | The
business of Company will be restructured from what is essentially a single enterprise
that is subject to direct regulation by the Minnesota Racing Commission (“MRC”)
to a holding company structure in which New Canterbury, a new parent corporation that
is not subject to direct MRC regulation, will own and control two operating subsidiaries; |
| · | One
subsidiary, Canterbury Park Entertainment LLC (“Canterbury Park Entertainment”),
will own and operate the Company’s pari-mutuel horse racing, card casino, concessions
and hospitality businesses (“Racetrack Operations”) and will be subject to
direct regulation by the MRC; |
| · | The
other subsidiary, Canterbury Development LLC (“Canterbury Development”),
will not be subject to direct MRC regulation and, as a separate legal entity, will pursue
commercial development opportunities for approximately 200 acres of land the Company
owns or controls that is not needed for Racetrack Operations (the “Underutilized
Land”); and |
| · | The
shares of Company common stock (“Company shares”) currently owned of record
and beneficially by the Company’s shareholders will be automatically converted
into shares of New Canterbury on a one-for-basis, and each shareholder will have the
same percentage ownership in New Canterbury (and indirectly in all assets currently held
by the Company) immediately after the Reorganization as that shareholder had in the Company. |
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In considering
how to vote your shares on Proposal 1, please read the section of this Proxy Statement entitled “Proposal 1 – Proposal
to Restructure the Company’s Business” beginning at page 5, which provides more information regarding this proposal,
including why the Board believes the Business Restructuring is in the best interest of the Company and its shareholders and how
the Business Restructuring will affect the Company and its shareholders.
Proposal
2 – Proposal to Approve Control Share Acquisition by Gabelli Group
The Board is
seeking approval of recent acquisitions of the Company’s common stock by investment advisory firms affiliated with Mario
J. Gabelli (the “Gabelli Group”) that increased the Gabelli Group’s total beneficial ownership of the Company’s
common stock from approximately 18.24% to 25.08% of all outstanding shares (the “Control Share Acquisition”). Pursuant
to the Minnesota Control Share Acquisition Act (“CSAA”), if shareholders do not approve the Control Share Acquisition,
shares beneficially owned by the Gabelli Group in excess of 19.99% of all outstanding shares (currently 214,383 shares) have limited
voting rights. If shareholders approve the Control Share Acquisition pursuant to the CSAA, the Gabelli Group will have full voting
rights with respect to all Company shares already acquired pursuant to its Control Share Acquisition and will be able to acquire
beneficial ownership of additional shares that have full voting rights up to a maximum of 33⅓% of all outstanding Company
shares.
In considering
how to vote your shares on proposal 2, please read the section of this Proxy Statement entitled “Proposal 2 - Proposal to
Approve the Gabelli Group’s Control Share Acquisition” beginning at page 21, which provides more information
regarding why shareholders are being asked to approve the Gabelli Group’s Control Share Acquisition, how approval of this
proposal will affect the Company and its shareholders, and why the Board is recommending that shareholders vote in favor of this
proposal.
Will any other business to conducted?
While we do not
expect that other business will be conducted at the special meeting, we will consider other business, if any, that is properly
presented at the meeting.
How does the Board recommend
that I vote?
The Board of
Directors recommends a shareholders vote “FOR” each of the two proposals discussed in this Proxy Statement.
Who is entitled to vote at the
meeting?
If you were
a shareholder of record at the close of business on October 2, 2015 (“Record Date”), you are entitled to vote at
the meeting. As of the Record Date, 4,240,633 Company shares were outstanding. Of these shares, however, 214,383 Company
shares held by the Gabelli Group may not be voted on Proposal 1 and will have only limited voting rights on Proposal 2.
See “Proposal 2 – Proposal to Approve the Gabelli Group’s Control Share Acquisition
– Introduction” beginning at page 21.
What is the difference between
a shareholder of record and a street name holder?
If your Company
shares are registered directly in your name, you are considered the “shareholder of record” for those shares. If your
Company shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of
those Shares, and your shares are held by the financial institution or nominee in “street name.” If you are a “street
name holder” you will receive a voting instruction card, which is very similar to a proxy card. Please complete that card
as directed to ensure your Company shares are voted at the meeting.
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What are the voting rights of
the shareholders?
Except for
214,383 Company shares beneficially owned by the Gabelli Group (see “Proposal 2 – Proposal to Approve
Gabelli Group’s Control Share Acquisition – Introduction”), holders of common stock are entitled to one vote per
share.
How many shares must be present
to hold the meeting?
A quorum is
necessary to hold the meeting and conduct business. The presence of shareholders who can vote at least a majority of the
outstanding shares of common stock entitled to vote as of the record date is considered a quorum. A shareholder is counted
as present at the meeting if the shareholder is present and votes in person at the meeting or the shareholder has
properly submitted a proxy by mail, telephone or Internet.
How do I vote my Company shares?
If you are a
shareholder of record, you may give a proxy to be voted at the meeting either:
| · | Electronically,
by following the instructions provided in the Notice of Internet Availability of Proxy
Materials or proxy card; or |
| · | If
you received printed proxy materials, you may vote by mail or telephone as instructed
on the proxy card. |
If you hold shares
beneficially in street name, you may also vote by proxy over the Internet by following the instructions provided in the Notice
of Internet Availability of Proxy Materials or, if you received printed proxy materials, you may also vote by mail or telephone
by following the instructions provided in the voting instruction card provided to you by your broker, bank, trustee or nominee.
Telephone and Internet voting procedures have been set up for your convenience. These procedures have been designed to authenticate
your identity, to allow you to give voting instructions, and to confirm that those instructions have been recorded properly. You
may also vote in person at the meeting as described in “May I vote my shares in person at the meeting?” below.
What does it mean if I receive
more than one Notice of Internet Availability of Proxy Materials, proxy card or voting instruction card?
It means you
hold shares of the Company stock in more than one account. To ensure that all of your shares are voted, sign and return each proxy
card or voting instruction card or, if you vote by telephone or via the Internet, vote once for each proxy card, voting instruction
card or Notice of Internet Availability of Proxy Materials you receive.
May I vote my shares in person
at the meeting?
Yes. If you are
a shareholder of record, you may vote your shares at the meeting by completing a ballot at the meeting. Even if you currently
plan to attend the meeting, however, we recommend that you submit your proxy ahead of time so that your vote will be counted if,
for whatever reason, you later decide to not attend the meeting.
If you hold your
shares in street name, and then decide to attend the meeting, you may vote your shares in person at the meeting only if you obtain
a signed proxy from your broker, bank, trustee or other nominee giving you the right to vote these shares at the meeting.
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How are votes recorded and counted?
If you vote ABSTAIN, your shares will be counted as present at the meeting for the purposes of determining a quorum. If you ABSTAIN from
voting on a proposal, your abstention has the same effect as a vote against that proposal.
If you hold your
shares in street name and do not provide voting instructions to your broker or nominee, your shares will be considered to be “broker
non-votes” and will not be voted on any proposal on which your broker or nominee does not have discretionary authority to
vote under the rules of the New York Stock Exchange.
May I change my vote?
Yes. If you are
a shareholder of record, you may change your vote and revoke your proxy at any time before it is voted at the meeting in any of
the following ways:
| · | By
sending a written notice of revocation to our Corporate Secretary; |
| · | By
submitting another properly signed proxy card at a later date to our Corporate Secretary; |
| · | By
submitting another proxy by telephone or via the Internet at a later date; or |
| · | By
voting in person at the meeting. |
If you are a
street name holder, please consult your broker, bank, trustee or nominee for instructions on how to change your vote.
Who pays for the cost of proxy
preparation and solicitation?
We pay for the
cost of preparing this proxy statement and this solicitation, including the charges and expenses of brokerage firms or other nominees
for forwarding proxy materials to beneficial owners of shares held in street name.
We are soliciting
proxies primarily by mail. In addition, proxies may be solicited by telephone or facsimile, or personally by our directors, officers
and regular employees. These individuals will receive no compensation (other than their regular salaries) for these services.
Why did I receive a notice in
the mail regarding the Internet availability of proxy materials instead of a full set of paper copies?
In accordance
with rules adopted by the Securities and Exchange Commission (the “SEC”), we may furnish proxy materials to our shareholders
by providing access to these documents on the Internet instead of mailing printed copies. In general, you will not receive printed
copies of the materials unless you request them. Instead, we mailed you the Notice of Internet Availability of Proxy Materials
(unless you have previously consented to electronic delivery or already requested to receive paper copies), which instructs you
as to how you may access and review all of the proxy materials on the Internet. The Notice of Internet Availability of Proxy Materials
explains how to submit your proxy over the Internet. If you would like to receive a paper copy or e-mail copy of the proxy materials,
please follow the instructions provided in the Notice of Internet Availability of Proxy Materials.
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What if I do not specify a choice
for a matter when returning a proxy?
Unless you indicate
otherwise, the persons named as proxies on the proxy card will vote your shares “FOR” Proposal 1 and Proposal
2.
While we do not
anticipate other matters will be considered at the Special Meeting, if any other matters come up for a vote at the meeting, the
proxy holders will vote in line with the recommendations of the Board of Directors or, if there is no recommendation, at their
own discretion.
PROPOSAL
1
PROPOSAL TO RESTRUCTURE THE COMPANY’S BUSINESS
INTRODUCTION
The Board of
Directors has approved and recommends that our shareholders approve a reorganization of the Company’s business into a holding
company structure (the “Business Restructuring”) pursuant to an Agreement and Plan of Reorganization dated as of October
2, 2015 (the “Reorganization Agreement”) between the Company, New Canterbury Park Holding Corporation (“New
Canterbury”), a recently formed, wholly owned subsidiary of the Company, and Canterbury Park Entertainment LLC (“Canterbury
Park Entertainment”), a recently formed, wholly owned subsidiary of New Canterbury. If the shareholders approve the Reorganization
Agreement and it becomes effective, the business of the Company will be restructured as follows:
| · | The
Company shares currently owned of record and beneficially by the Company’s shareholders
will be automatically converted into shares of New Canterbury on a one-for-one basis,
and each shareholder will have the same percentage ownership in New Canterbury (and indirectly
in the Company) immediately after the Reorganization as that shareholder had immediately
before the Reorganization. Also, each outstanding option, warrant or other right to acquire
Company shares will continue as a outstanding option, warrant or other right to acquire
shares of New Canterbury common stock. |
| · | The
Company will merge into Canterbury Park Entertainment, and Canterbury Park Entertainment
will be the surviving business entity in this merger. As a result, the Company’s
separate existence as a Minnesota corporation will cease, and Canterbury Park Entertainment
will continue as a wholly owned limited liability subsidiary of New Canterbury. |
| · | New
Canterbury will become the parent corporation that owns, directly or indirectly, all
assets of the Company subject to all Company liabilities. It will not, however, be subject
to direct supervision by the Minnesota Racing Commission (“MRC”). As a holding
company, it will directly own the following two subsidiaries that will engage in the
business activities respectively indicated; |
|
| · | Canterbury Park Entertainment. Canterbury
Park Entertainment will (a) have, in all material respects, all of the rights,
privileges, and powers of the Company related to Racetrack Operations; (b) continue
to possess all of the properties of and debts owed to the Company related to
Racetrack Operations; (c) continue to have all of the debts, liabilities, and
obligations of the Company related to Racetrack Operations; and (d) continue to hold
the Class A and Class B licenses pursuant to which it conducts its pari-mutual horse
racing, card casino, concessions, and hospitality businesses (“Racetrack Operations”)
and continue to be subject to direct MRC regulation. It will also retain title to all
Underutilized Land pending transfers of such land to Canterbury Development as discussed in the following paragraph;
and |
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|
| · | Canterbury
Development. Canterbury Development will not be subject to direct regulation
by the MRC. It will pursue development opportunities for the Company’s Underutilized
Land. Approximately 75 acres of Underutilized Land that is not covered by the Company’s
Class A License will be transferred promptly following shareholder approval of Proposal
1. The remaining 125 acres of Underutilized Land
are part of the Company’s Class A license, and MRC approval will be required to
transfer this land to Canterbury Development. |
| · | New
Canterbury will change its name to Canterbury Park Holding Corporation and its outstanding
shares of common stock will trade on the NASDAQ Global Market under the symbol “CPHC.” |
More detailed
information regarding the proposed Business Restructuring is provided under “Proposed Business Restructuring of the Company”
below.
QUESTIONS
AND ANSWERS ABOUT THE PROPOSED BUSINESS RESTRUCTURING
1. Why
is the Business Restructuring being proposed?
The Board is
proposing the Business Restructuring for two reasons related to its goal to develop the Company’s Underutilized Land.
First, it
is not feasible for the Company to pursue development of its Underutilized Land while the land is held by a business entity
regulated by the MRC because the MRC’s extensive regulation of the Company discourages participation by or
collaboration with developers, lenders, and potential tenants that are needed to successfully develop the Underutilized Land.
The Board believes it can not successfully develop the Underutilized Land unless the land is held by an entity that is not
subject to MRC regulation.
Second, real
estate development is risky. While the Company’s investigation to date suggests development of the Underutilized Land is
feasible and has the potential to build shareholder value, the Board believes it is prudent to conduct real estate development
in a separate entity and, to the maximum extent possible, minimize the risk to Racetrack Operations.
After considering
various alternatives, the Company determined the Business Restructuring was the most tax-efficient way to achieve those objectives.
2. How
will the Business Restructuring be accomplished?
The Business
Restructuring will be effected by the Reorganization Agreement. The Reorganization Agreement is attached to this Proxy Statement
as Exhibit A.
3. When
the Business Restructuring becomes effective, what will be the name of the entire business?
Pursuant
to the Reorganization Agreement, the name of the new parent corporation will be Canterbury Park Holding Corporation.
4. What
will be the effect of the Business Restructuring on my common stock?
You will not
experience any change in your ownership of Company shares. Upon effectiveness of the Business Restructuring, each outstanding
Company Share will automatically convert into one share of common stock of New Canterbury, which when the Business Restructuring
becomes effective, will be renamed Canterbury Park Holding Corporation.
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The number of
Company shares you own at the Effective Time and your proportional percentage ownership of the Company will remain unchanged and
will not be affected in any way by the Business Restructuring. In addition, upon effectiveness of the Business Restructuring,
all outstanding options to purchase Shares and other equity awards relating to our common stock will, without further action,
become options or other equity awards, as applicable, of New Canterbury, with no change in the exercise price or other terms or
provisions of the options or equity awards.
5. Will
the Business Restructuring have any practical effect on the Company’s Racetrack Operations?
No. Our business,
directors, officers, employees, assets and liabilities and the location of our headquarters will remain unchanged by the Business
Restructuring. Our name will continue to be “Canterbury Park Holding Corporation,” our headquarters will continue
to be located in Shakopee, Minnesota, and our shares of common stock will continue to be listed and traded on the NASDAQ Global
Market under the symbol “CPHC.”
6. What
approval is necessary to proceed with the Business Restructuring?
The
affirmative vote on Proposal 1 of the holders of a majority of our outstanding shares entitled to vote is required to approve
the Business Restructuring.
7. How
will the Business Restructuring affect my rights as a shareholder?
Your rights as
a shareholder currently are governed by Minnesota law and the Company’s Articles of Incorporation and Bylaws. Because New
Canterbury is a Minnesota corporation and because the Articles of Incorporation and Bylaws of New Canterbury are virtually identical to the Company’s, your rights will not change. New Canterbury’s Articles of Incorporation
are attached to this proxy statement as Exhibit B.
8. Is
shareholder approval all that is needed to fully implement the proposed Business Restructuring?
No. The
Business Restructuring we are proposing will establish the holding company structure we need in order to pursue development
of our Underutilized Land, but will not automatically transfer all of the Underutilized Land to Canterbury Development. We
own approximately 200 acres of Underutilized Land. Approximately 125 acres of our Unutilized Land is part of our Class A
license granted by the MRC that enables us to own and operate a pari-mutuel racetrack. Immediately after the Reorganization
becomes effective, this land will continue to be held by Canterbury Park Entertainment because the Class A license will be
transferred to Canterbury Park Entertainment pursuant to the Reorganization. If shareholders approve the Business
Restructuring, we will promptly transfer approximately 75 acres of Underutilized Land that it not part of our Class A License
to Canterbury Development. Later, as we determine the direction development of our Underutilized Land will take, we will
apply to the MRC for an amendment of our Class A license authorizing us to transfer all or part of the remaining 125 acres
of Underutilized Land to Canterbury Development.
9. On
what basis will the MRC approve transferring Underutilized Land from Canterbury Park Entertainment to Canterbury Development?
The MRC
wants to ensure that any transfer of assets from Canterbury Park Entertainment to an entity over which it does not have
jurisdiction will not undermine the financial stability of the Racetrack Operations that are conducted by Canterbury Park
Entertainment and that are regulated by the MRC. We believe the MRC will approve transfer of the Underutilized Land if it is
satisfied that the assets remaining with Canterbury Park Entertainment after the transfer of Underutilized Land and other
assets to Canterbury Development, will enable Canterbury Park Entertainment to remain a sustainable
business.
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10. Will
New Canterbury have any new “anti-takeover” protection?
No, but
it will continue to be subject to the Minnesota Control Share Acquisition Act and Business Combination Act that both
regulate takeovers. See “Business Combination Act” and “Control Share Acquisition Act” below. In
addition to these anti-take over provisions under Minnesota law, as an entity subject to regulation by MRC, the Company
articles contain provisions that enable it to re-purchase shares from a 5% shareholder if continued ownership by that 5%
shareholder would result in the MRC suspending or revoking the Company’s Class A or Class B license or putting material
limitations on the Company’s ability to conduct its Racetrack Operations. The Articles of Incorporation of New
Canterbury contain substantially similar provisions that reflect changes to accommodate New Canterbury’s indirect
ownership of the Racetrack Operations, as distinguished from the Company’s direct ownership, as well as other changes
to clarify the procedures that a person or group owning 5% or more of the Company’s stock or increasing its
ownership of the New Canterbury stock 5% or more must follow so that the Company can ensure it is able to comply with MRC
requirements. See “Provisions Affecting Holders of Five Percent or More of New Canterbury’s
Stock.”
11. Who
will manage New Canterbury?
The current directors
and principal officers of the Company will become the directors and officers of New Canterbury.
12. Should
I send in my stock certificates?
No. Please do
not send us your stock certificates. Following the Business Restructuring, existing stock certificates representing previously
issued shares of common stock will remain valid and may be delivered in effecting sales (through a broker or otherwise) of shares
of New Canterbury common stock. It will not be necessary for you to exchange your existing stock certificates for stock certificates
of New Canterbury, and if you do so, it will be at your own cost.
13. What
are the tax consequences of the Business Restructuring to me?
The Business
Restructuring is intended to be a tax-free reorganization under the U.S. Internal Revenue Code. Assuming the Business Restructuring
qualifies as a reorganization, holders of our capital stock will not recognize any gain or loss as a result of the Business Restructuring,
and the Company will not recognize a gain or loss. Generally, you will have the same basis in and holding period with respect
to the New Canterbury common stock received by you pursuant to the Business Restructuring as you had in the shares of our common
stock held by you as of immediately prior to Business Restructuring. See also, “Material U.S. Federal Income Tax Consequences”
at page 12 below.
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PROPOSED
BUSINESS RESTRUCTURING OF THE COMPANY
Business
Overview
The
Company’s primary businesses are pari-mutuel wagering and hosting “unbanked” card games at its Canterbury Park
Racetrack and Card Casino facility in Shakopee, Minnesota (the “Racetrack”). The Company also derives revenues from
concessions, catering, special events and other services and activities, such as parking, advertising signage, publication sales,
and from other entertainment events and activities held at the Racetrack. Collectively, these businesses constitute the Company’s
“Racetrack Operations.”
The
Company’s operations are regulated by the MRC pursuant to authority granted in Minnesota Statutes, Charter 240 and pursuant
to regulations issued thereunder. In particular, the Company conducts pari-mutuel wagering and hosts card games pursuant to Class
A and Class B licenses granted by the MRC. The Company’s Class A License enables it to own and operate a racetrack with
horse racing on which pari-mutuel betting is conducted and includes a specific designation of the land covered by the license.
The Company’s Class B License enables it to sponsor and manage horse racing on which pari-mutuel betting is conducted. Substantially
all other aspects of the Company’s operations that take place on the land covered by the Class A license are also significantly
regulated by the MRC pursuant to Minnesota law and rules adopted by the MRC.
The
Company owns or controls approximately 407 acres of land in Shakopee, Minnesota where the Racetrack is located. The
Racetrack facility, including public areas, areas for boarding horses, parking areas, and other amenities, requires
approximately 200 acres of land. As a result, approximately 200 acres are currently not being used by the Company (the
“Underutilized Land”) and this land is available for real estate development compatible with the
Racetrack’s operations. While the MRC’s focus is on regulating our Racetrack Operations, the MRC is obligated by
law to approve all contracts entered into by a Class A or Class B licensee. Therefore, because most of the Underutilized Land
is currently part of the Company’s Class A license, under the Company’s current business structure any future
development of the Underutilized Land would be under constant supervision by the MRC.
For
further information regarding the Company’s business, its properties and regulation of the Company’s Racetrack Operations
by the MRC, see Item 1 in the Company’s Report on Form 10-K for its fiscal year ended December 31, 2014, which can be found
at www.canterburypark.com.
Background
Regarding the Proposed Business Restructuring
Over
the last several years, the Company’s Board and management, in collaboration with real estate development professionals,
have actively explored the possible commercial development of the Underutilized Land in a manner that is compatible and synergistic
with the Company’s Racetrack Operations. Although the Company is currently considering various possible development plans,
management has determined that before it can proceed further it must, for two reasons, implement the Business Restructuring.
| · | First,
because regulation of a business by a governmental agency adds delay and uncertainty, conducting real estate development inside
the same business entity that owns and operates government-regulated business activities will likely discourage the involvement
of developers, financial partners, and major potential tenants and substantially slow the pace of the development process. |
| · | Second, there are risks inherent in any real estate development and, in our current
structure, if real
estate
development were simply conducted as a separate line of business by the Company, it could present material financial risk
for the Racetrack Operations. |
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To
eliminate these concerns, the Company’s Board has approved and is seeking shareholder approval for the Business Restructuring.
While
the Business Restructuring that shareholders are being asked to approve is a necessary step to continuing the Company’s
real estate development efforts, the complete implementation of the Business Restructuring will require further action by the
MRC. Approximately 75 acres of Underutilized Land will be transferred promptly to Canterbury Development upon shareholder
approval of the Business Restructuring. MRC approval will be required, however, to transfer from Canterbury Park
Entertainment to Canterbury Development all or any part of the approximately 125 acres of the Underutilized Land that are
part of the Company’s Class A License. Following shareholder approval of the proposed Business Restructuring,
management will request MRC approval to transfer all or part of the Underutilized Land that is part of the Class A license
when the overall direction of our development plans is determined. We believe the MRC will grant this approval if we can demonstrate to
the MRC that our Racetrack Operations will remain a sustainable business after the Underutilized Land and other assets are
transferred to Canterbury Development.
Companies
Participating in the Business Restructuring
Canterbury
Park Holding Corporation (the “Company”)
The
Company is a Minnesota corporation that directly owns all land and substantially all other assets used in conducting Racetrack
Operations, and substantially all of the Underutilized Land. The Company is a public company with approximately 2,000 beneficial
owners of its common stock and its shares trade on the Nasdaq Global Market system under the symbol “CPHC.” Substantially
all of the Company’s land, including its Underutilized Land and all of Racetrack Operations, are currently
subject to the jurisdiction of and extensively regulated by MRC.
New
Canterbury Park Holding Corporation (“New Canterbury”)
New
Canterbury Park Holding Corporation is a Minnesota corporation and a wholly owned subsidiary of
the Company. It was incorporated on October 1, 2015. Other than its ownership and direct control of Canterbury Park Entertainment,
LLC and Canterbury Development, LLC, it currently has limited assets and has not engaged in any business activities.
Canterbury
Park Entertainment LLC (“Canterbury Park Entertainment”)
Canterbury
Park Entertainment LLC is a Minnesota limited liability company and a wholly owned subsidiary of the New Canterbury. It was organized
on October 1, 2015. Canterbury Park Entertainment currently holds no assets and has not engaged in any business activity. It will
not engage in any business activities prior to the Reorganization. If shareholders approve the Business Restructuring, Canterbury
Park Entertainment will own all assets, subject to all liabilities, of the Company and directly conduct all Racetrack Operations
subject to MRC regulation.
Canterbury
Development LLC (“Canterbury Development”)
Canterbury
Development LLC (Canterbury Development) is a Minnesota limited liability company and a wholly owned subsidiary of the New Canterbury.
It was organized on October 1, 2015. Assuming shareholder approval of the Business Restructuring is obtained, approximately 75
acres of Underutilized Land that is not covered by the Company’s Class A License will be transferred promptly following
shareholder approval. The remaining 125 acres of Underutilized Land are part of the Company’s Class A license, and MRC approval
will be required to transfer some or all of this land to Canterbury Development.
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The
Plan of Reorganization
The
Business Restructuring will be effected pursuant to an Agreement and Plan of Reorganization dated as of October 2, 2015 (the
“Reorganization Agreement”) between the Company, New Canterbury, and Canterbury Park Entertainment that is
attached as Exhibit A. The Reorganization Agreement provides that the Company will merge into Canterbury Park Entertainment.
Under the Reorganization, all of the rights, privileges and powers of the Company, all property owned by the Company, all
debts due to the Company and all causes of action belonging to the Company immediately prior to the Reorganization will be
vested in Canterbury Park Entertainment following the Reorganization. In addition, all debts, liabilities and duties of the
Company immediately prior to the Reorganization will be vested in Canterbury Park Entertainment following the Reorganization.
Each director and officer of the Company will continue to hold his or her respective office with New Canterbury.
If
approved by our shareholders, the Business Restructuring will become effective upon the filing and effectiveness of the Reorganization
Agreement with the Minnesota Secretary of State. If this proposal is approved, we anticipate that the Board of Directors will
cause the Business Restructuring to be effected as soon as practicable (the “Effective Time”). However, the Business
Restructuring may be delayed by the Board of Directors or the Reorganization Agreement may be terminated and abandoned by the
Board of Directors at any time prior to the Effective Time, including after approval of this proposal, if the Board of Directors
determines for any reason that doing so will be in the best interests of the Company and its shareholders.
At
the Effective Time, each outstanding share of common stock of the Company will automatically convert into one share of common
stock of New Canterbury and each outstanding option or other right to purchase shares of the Company common stock will constitute
an option or other right to purchase an equal number of shares of New Canterbury common stock. Company shareholders and holders
of Company stock options will not be required to exchange their stock certificates or stock options, respectively, and should
not destroy any stock certificate or stock option or submit any stock certificate or stock option to the Company unless they are
requested to do so. Any Company stock certificates submitted to the Company for transfer after the Effective Time, whether
pursuant to a sale or otherwise, will be exchanged automatically for New Canterbury stock certificates.
Dissenters’
or Appraisal Rights
The
shareholders of the Company are not entitled to dissenters’ rights or appraisal rights as a result of the Business Restructuring.
Regulatory
Approvals
The
Company is not required to obtain any regulatory approvals in advance of the Business Restructuring and the Business Restructuring
will not have any material accounting, financial or tax effects on the Company.
Effect
of Vote for the Business Restructuring Proposal
A
vote in favor of this Proposal 1 is a vote in favor of the Business Restructuring and the Plan of Reorganization and will authorize
the Company to file the Plan of Reorganization.
Effect
of Not Obtaining the Required Vote for Approval of the Proposal
If
we fail to obtain the requisite vote of shareholders to approve this proposal, the Business Restructuring will not occur and the
Company will continue to be incorporated in Minnesota and governed by Minnesota law and the Company’s Minnesota Articles
of Incorporation and Bylaws will remain as they are today.
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Effects
of Business Restructuring on Shareholders’ Rights
The
number of shares of common stock you own, and your proportional percentage ownership of the Company will remain unchanged and
will not be affected by the Business Restructuring. You do not need to exchange your stock certificates for new stock certificates.
The
Business Restructuring will not affect the governance rights of shareholders. The Articles of Incorporation and Bylaws of New
Canterbury are identical to the Articles of Incorporation and bylaws of the Company except as described below
under “Provisions Affecting Holders of Five Percent or More of New Canterbury’s Stock.” All rights of shareholders
relating to governance will be unchanged, including the following:
| Annual
Election of All Directors |
|
All
directors are elected on an annual basis; there is no classified board |
| Shareholder Ability
to Amend Articles of Incorporation |
|
Shareholders holding
3% or more of the Company’s stock can propose amendments to the Company’s articles of incorporation without obtaining
Board approval |
| Shareholder Ability
to Propose Binding Bylaw Amendments |
|
Shareholders holding
3% of the Company’s outstanding stock may propose bylaw amendments |
| Shareholder Ability
to Call Special Meeting |
|
Shareholders holding
10% of the Company’s outstanding stock may call a special meeting unless the purpose of the special meeting is the election
of directors or to cause a change in control of the Company, in which case shareholders must hold 25% of the Company’s
outstanding stock to call a special meeting |
| Supermajority Voting
Requirements |
|
None |
| Poison Pill |
|
None |
| Indemnification
of Officers and Directors |
|
Indemnification of officers
and directors is mandatory under Minnesota law |
Material
U.S. Federal Income Tax Consequences of the Business Restructuring
The
following discussion addresses certain U.S. federal income tax considerations that are generally applicable to U.S. holders (as
defined below) of our common stock who receive New Canterbury common stock in the Business Restructuring. This discussion addresses
only those stockholders who hold their common stock as a capital asset within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the “Code”).
This
discussion and does not address all the U.S. federal income tax consequences that may be relevant to particular stockholders in
light of their individual circumstances or to stockholders that are subject to special rules, including, without limitation: financial
institutions, insurance companies, regulated investment companies or real estate investment trusts; pass-through entities or investors
in such entities; tax-exempt organizations; dealers in securities or currencies, or traders in securities that elect to use a
mark-to-market method of accounting; persons that hold common stock as part of a straddle or as part of a hedging, integrated,
constructive sale or conversion transaction; persons who are not U.S. holders; persons that have a functional currency other than
the U.S. dollar; persons who acquired their shares of common stock through the exercise of an employee stock option or otherwise
as compensation; persons whose common stock is “qualified small business stock” for purposes of Section 1202 of the
Code; and persons who are subject to the alternative minimum tax.
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For
purposes of this discussion, the term “U.S. holder” means a beneficial owner of common stock that is:
| · | a citizen or resident of the United States; |
| · | corporation (or other entity treated as a corporation
for U.S. federal income tax purposes) created or organized under the laws of the U.S. or any of its political subdivisions; |
| · | a trust that (1) is subject to the supervision of a
court within the U.S. and the control of one or more U.S. persons or (2) has a valid election in effect under applicable U.S.
Treasury regulations to be treated as a U.S. person; or |
| · | an estate that is subject to U.S. federal income tax
on its income regardless of its source. |
If
a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds shares of common stock,
the U.S. federal income tax consequences to each partner generally will depend on the status of the partner and the activities
of the partnership and the partner. Partners holding common stock and partners in such partnerships should consult their own tax
advisors with respect to the U.S. federal income tax consequences of the Business Restructuring.
The following discussion
does not address the tax consequences of transactions effected prior to or after the Business Restructuring (whether or not such
transactions are in connection with the Business Restructuring).
The
following discussion is based on interpretations of the Code, applicable Treasury Regulations, judicial authority and administrative
rulings and practice, all as of the date hereof. The Internal Revenue Service (the “IRS”) is not precluded from adopting
a contrary position. In addition, there can be no assurance that future legislative, judicial or administrative changes or interpretations
will not adversely affect the accuracy of the statements and conclusions set forth herein. Any such changes or interpretations
could be applied retroactively and could affect the tax consequences of the Business Restructuring to the Company, New Canterbury
and/or our stockholders. A ruling from the IRS will not be requested in connection with the Business Restructuring.
EACH
SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISORS TO DETERMINE PARTICULAR FEDERAL TAX CONSEQUENCES TO SUCH STOCKHOLDERS
OF THE BUSINESS RESTRUCTURING, AS WELL AS THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER LAWS.
Subject
to the limitations, qualifications and exceptions described herein, and assuming the Business Restructuring qualifies as a reorganization
within the meaning of Section 368(a) of the Code, the U.S. federal income tax consequences of the Business Restructuring will
be as follows:
| · | No gain or loss will be recognized by holders of Canterbury
common stock upon receipt of New Canterbury common stock pursuant to the Business Restructuring; |
| · | The aggregate tax basis of the New Canterbury common
stock received by each stockholder of the Company pursuant to the Business Restructuring will be equal to the shareholder’s
aggregate tax basis in the common stock of the Company immediately prior to the Business Restructuring; |
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| · | The holding period of the New Canterbury common stock
received by each stockholder of the Company pursuant to the Business Restructuring will include the period for which such stockholder
held the common stock of the Company immediately prior to the Business Restructuring, provided that such common stock of the Company
was held by such stockholder as a capital asset at the time of the Business Restructuring; and |
| · | No gain or loss will be recognized by the Company or
New Canterbury as a result of the Business Restructuring. |
Certain
U.S. holders of Company common stock, which we refer to as significant holders, will have tax reporting obligations in connection
with the Business Restructuring. For these purposes, a significant holder is a person that, immediately before the Business Restructuring,
owns at least 5%, by vote or value, of the total outstanding common stock of the Company, or holds securities of the Company with
a tax basis of $1 million or more.
Each
significant holder will be required to file certain statements with such holder’s United States federal income tax return
as set forth in Treasury Regulations Section 1.368-3(b), including statements describing the basis and fair market value of the
shares of Company common stock immediately prior to the Business Restructuring. Each holder, whether or not a significant holder,
will be required to retain permanent records necessary to determine gain or loss from a subsequent disposition of shares of New
Canterbury common stock in accordance with the requirements of Treasury Regulations Section 1.368-3(d).
Effects
of Restructuring under Federal Securities Law and Stock Regulatory Agencies
The
Business Restructuring will not affect the respective positions of the Company or its shareholders under the federal securities
laws or stock exchange listing rules. The Business Restructuring will not affect the trading of the Company’s common stock,
which will continue to trade on the NASDAQ Global Market under the symbol “CPHC.” The Company will continue to file
periodic reports and other documents required by the rules and regulations of the SEC and stock exchange listing rules. Shareholders
who own shares of the Company’s common stock that are freely tradable prior to the Business Restructuring will continue
to hold freely tradable shares in New Canterbury after the Business Restructuring, and shareholders holding restricted shares
of the Company’s common stock prior to the Business Restructuring will continue to hold shares of New Canterbury common
stock that are subject to the same restrictions after the Business Restructuring. Existing shareholders will not be required to
exchange existing stock certificates for new stock certificates.
No
Changes to Employee Benefit Plans
Upon
effectiveness of the Business Restructuring, all of the Company’s employee benefit plans (including stock option and other
equity-based plans) will be continued by New Canterbury, and each stock option and other equity-based award issued and outstanding
pursuant to such plans will automatically convert into a stock option or other equity-based award with respect to the same number
of shares of New Canterbury, upon the same terms and subject to the same conditions as set forth in the applicable plan under
which the award was granted and in the agreement reflecting the award. Approval of the Business Restructuring will constitute
approval of the assumption of these plans by New Canterbury. Assuming the Business Restructuring is approved, New Canterbury will
continue the Company’s other employee benefit arrangements upon the terms and subject to the conditions currently in effect.
Effects
of Business Restructuring on the Company’s Operations
The
Business Restructuring will not result in any change in the business, physical location, management, assets, liabilities or net
worth of the Company, nor will it result in any change in location of our headquarters or current employees, including management.
The Business Restructuring will not affect our daily business operations, or our consolidated financial condition and results
of operations. In addition, the Business Restructuring will not alter the composition of management or the Board of Directors.
After the Business Restructuring, the Company’s principal executive offices will remain located at Canterbury Park, 1100
Canterbury Road, Shakopee, Minnesota, 55379.
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Provisions
Affecting Holders of Five Percent or More of New Canterbury’s Stock
The
MRC is charged with responsibility to ensure that pari-mutuel horse racing is conducted “in the public interest”
and to ensure the “integrity” of racing in Minnesota. Under Minnesota law, the MRC has broad powers to require
disclosure whether any natural person or business entity associated with a Class A or Class B licensee, including officers,
directors or holders of a material amount of the licensee’s stock or other form of ownership interest (“Control
Persons”), have engaged in certain conduct or committed certain acts that reflect adversely on their character as it
would pertain to affiliation with a Class A or Class B licensee (herein called “Character Information”).
Character Information includes having been convicted of a felony, being the subject of a pending criminal prosecution, having
engaged in any illegal business or having been found guilty of fraud or misrepresentation in connection with horse racing or
breeding). If adverse Character Information about a Control Person of a Class A or Class B licensee becomes known to the MRC
or if Character Information required by Minnesota law about a Control Person cannot be verified, the MRC has the power to
revoke or suspend the licensee’s Class A or Class B license. A Class A or Class B licensee is required to provide
Character Information about Control Persons when applying for its license and when its license is renewed. In addition, if a
change occurs in the officers, directors or persons with a direct or indirect financial interest in the Class A or Class B
license or if a 5% or more change in a licensee’s ownership occurs after the license is issued, the licensee must
report to the MRC the identity of and Character Information about such Control Person within five days after such
change
To
enable it to fulfill its responsibilities under Minnesota law that are intended to protect the integrity of racing, as well as
to protect its interests as a Class A and Class B license holder, the Company’s Restated Articles of Incorporation, that
have been in effect since August 1994, provide that in the event any person or group of persons acquires a five percent or greater
beneficial interest in the Company’s equity securities, the shareholder must provide the Company with the information that
the Company is required to provide to the MRC under Minnesota law. The Company’s Articles further provide that if any five
percent beneficial holder of the equity securities of the Company, or any other beneficial holder of the Company’s securities,
is determined by the MRC to be detrimental to the integrity of horse racing in Minnesota or in the reasonable judgment of the
Company such a conclusion is likely or if the person refuses to provide the information required to make the determination under
Minnesota law, the Company has the right to repurchase all shares acquired by such person or persons at the lowest of (i) the
price at which shares were acquired, (ii) the book value per share of the Company as of its most recent audited balance sheet
prior to the purchase, or (iii) the fair market value of the Company’s common stock on the date the Company learned of the
purchase.
Because
the provisions in Minnesota law regarding disclosure about Control Persons and related Character Information apply to
those with an indirect as well as direct ownership of a Class A or Class B licensee and because New Canterbury, as the parent
of Canterbury Park Entertainment, will be the “indirect” holder of Class A and Class B licenses,
New Canterbury’s Articles of Incorporation include substantially the same provisions that are currently in
the Company’s Restated Articles of Incorporation. These provisions have, however, been updated to reflect that New
Canterbury is the indirect owner of the Racetrack Operations including the Class A and Class B licenses, to provide greater
clarity regarding procedures applicable to holders of 5% or more of New Canterbury’s stock and to better conform
to Minnesota laws that are applicable to Class A and Class B licenses. The exact text of these provisions can be found
in Section IX of New Canterbury’s Articles of Incorporation which is Exhibit B to this Proxy Statement.
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Description
of New Canterbury Capital Stock at the Effective Time
If
this proposal is approved by our shareholders and the Business Restructuring becomes effective, at the Effective Time, the
outstanding shares of the Company’s common stock will convert automatically into shares of New Canterbury stock and the
rights of shareholders of New Canterbury will continue to be governed by Minnesota law, the New Canterbury’s Articles
of Incorporation and the New Canterbury’s Bylaws. The following is a description of New Canterbury’s capital
stock at the Effective Time. This description is not intended to be complete and is
qualified in its entirety by reference to the full text of New Canterbury’s Articles of Incorporation, which is
attached as Exhibit B to this proxy statement.
General
At
the Effective Time, the authorized capital of New Canterbury will be 10,000,000 shares of common stock, par value $0.01 per share,
which is the same number of shares authorized under the Company’s Articles of Incorporation.
Description
of New Canterbury Common Stock
At
the Effective Time, New Canterbury will be authorized to issue up to 10,000,000 shares of common stock. All of
the Company’s issued and outstanding shares of common stock at that time, as converted into shares of New Canterbury
common stock, will remain issued and outstanding.
At
the Effective Time, the holders of shares of New Canterbury common stock will continue to be entitled to one vote per share on
all matters to be voted on by shareholders. Except with respect to the election of directors, all questions submitted to a vote
of New Canterbury shareholders will be decided by the affirmative vote of the holders of a majority of the voting power of the
shares present and entitled to vote on that item of business. New Canterbury shareholders will not be entitled to cumulate their
votes for the election of directors.
New
Canterbury common stock will not be redeemable, will not have subscription or conversion rights and will not entitle common stock
holders to any preemptive rights to subscribe for any shares of any class or series of New Canterbury capital stock, or for any
obligations convertible into shares of any class or series of New Canterbury capital stock, whether now or hereafter authorized.
At
the Effective Time, the holders of New Canterbury common stock will continue to be entitled to receive such dividends, if any,
as may be declared by the Board in its discretion out of legally available funds. Subject to the rights of any preferred stock
outstanding, upon liquidation or dissolution of New Canterbury, the holders of common stock will be entitled to receive on a pro
rata basis all assets remaining for distribution to shareholders.
New
Canterbury’s Articles of Incorporation and Bylaws contain the same provisions that are in the Company’s Restated
Articles of Incorporation that, together with provisions in the Minnesota Business Corporation Act, could have the effect of
delaying or deferring a change in control of our Company, including provisions that:
| · | Grant our Board broad discretion to create and issue
preferred stock from time to time without shareholder approval; |
| · | Provide that any vacancy on our Board may be filled
by the affirmative vote of a majority of the remaining directors then in office, and not by the shareholders; and |
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| · | Establish advance notice requirements for shareholders
to nominate candidates for election as directors at any meeting of shareholders or to present any other business for consideration
at any meeting of shareholders. |
Business
Combination Act
At
the Effective Time, Section 302A.673 of the Minnesota Business Corporation Act will apply to New Canterbury and its shareholders.
This provision provides that a corporation such as the Company that is listed on a national securities exchange or that has more
than 2,000 shareholders is not permitted to engage in a business combination with any interested shareholder, generally a person
who owns 15% or more of the outstanding shares of a corporation’s voting stock, for four years after the person became an
interested shareholder, unless
(a)
before the person became an interested shareholder, the board of directors of the corporation approved either the transaction
resulting in a person becoming an interested shareholder or the business combination,
(b)
upon consummating the transaction which resulted in the person becoming an interested shareholder, the interested shareholder
owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding shares
owned by persons who are both officers and directors of the corporation, and shares held by certain employee stock ownership plans),
or
(c)
on or after the date the person becomes an interested shareholder, the business combination is approved by the board of directors
and at an annual or special meeting of shareholders by the affirmative vote of at least 66-2/3% of the corporation’s outstanding
voting stock which is not owned by the interested shareholder.
Control
Share Acquisition Act
At
the Effective Time, ownership of our Company shares will be subject to Section 302A.671 of Minnesota’s Business Corporation
Act, which is known as the Control Share Acquisition Act (“CSAA”). Under the CSAA, the purchase of Company common
stock by a natural person, entity, or a group consisting of natural persons and entities (an “Acquiring Person”) that
causes the Acquiring Person’s ownership to increase the Acquiring Person’s range of voting power
(i)
from less than 20% to 20% or more,
(ii) from
less than 33 1/3% to 33 1/3% or more, or
(iii)
from less than a majority to a majority of the corporation’s outstanding shares
represents
a “Control Share Acquisition” that triggers the application of the CSAA and, in general, limits the number of shares
that may be voted by the Acquiring Person in excess of the relevant threshold unless the Company’s shareholders approve
the Control Share Acquisition pursuant to special voting procedures specified in the CSAA. See “Summary of The Minnesota
Control Share Acquisition Act,” at page 24.
Transfer
Agent
Wells
Fargo Shareowner Services is the Company’s transfer agent and registrar and will continue to be the transfer agent and
registrar for New Canterbury common stock.
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Vote
Required
The
affirmative vote by holders of a majority of all outstanding Company shares is required to approve the Reorganization
Agreement attached as Exhibit A and the proposed Business Restructuring contemplated thereby. As discussed under
“Proposal 2 – Proposal to Approve the Gabelli Group’s Control Share Acquisition
– Introduction,” the Gabelli Group may not vote 214,383 Company shares on Proposal 1 because such shares
constitute a Control Share Acquisition that has not received shareholder approval under the CSAA.
Board
Voting Recommendation
THE
BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” APPROVAL OF THE BUSINESS RESTRUCTURING.
Table of Contents
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, based upon
information available as of October 2, 2015, the beneficial ownership of shares of our common stock (i) by each person known
by us to own of record or beneficially five percent or more of our common stock, (ii) by our Named Executive Officers, (iii) by each of our directors; and, (iv) by all of our current
executive officers and directors as a group.
[Share totals and footnotes
will be updated in the definitive Proxy Statement]
| |
|
|
|
|
|
|
|
| |
|
Amount and Nature of |
|
|
|
|
Name and Address
of Beneficial Owner
| |
Beneficial
Ownership (1)(2) |
|
Percent of
Class (1)(2) |
|
| |
|
|
|
|
|
|
|
| Curtis A. Sampson |
|
|
868,612 |
(3) |
|
|
20.5 |
% |
|
| |
|
|
|
|
|
|
|
|
|
| Randall D. Sampson † |
|
|
628,540 |
(4) |
|
|
14.8 |
% |
|
| |
|
|
|
|
|
|
|
|
|
|
Gabelli Asset Management, Inc.
One Corporate Center
Rye, New York 10580-1435 |
|
|
1,058,960 |
(5) |
|
|
25.08 |
% |
|
| |
|
|
|
|
|
|
|
|
|
| Dale H. Schenian |
|
|
505,360 |
(6) |
|
|
11.9 |
% |
|
| |
|
|
|
|
|
|
|
|
|
| Carin J. Offerman |
|
|
94,562 |
|
|
|
2.2 |
% |
|
| |
|
|
|
|
|
|
|
|
|
| David C. Hansen† |
|
|
36,209 |
|
|
|
0.9 |
% |
|
| |
|
|
|
|
|
|
|
|
|
| Burton F. Dahlberg |
|
|
26,783 |
|
|
|
0.8 |
% |
|
| |
|
|
|
|
|
|
|
|
|
| Patrick R. Cruzen |
|
|
29,312 |
|
|
|
0.7 |
% |
|
| |
|
|
|
|
|
|
|
|
|
| Eric A. Halstrom† |
|
|
4,791 |
|
|
|
0.1 |
% |
|
| |
|
|
|
|
|
|
|
|
|
| All current directors and executive officers as a group (12 persons) |
|
|
1,851,895 |
|
|
|
43.7 |
% |
|
| † | Named Executive Officer. |
| (1) | Shares not outstanding but deemed beneficially owned by virtue of the right of a person or group to acquire them within 60 days
of October 2, 2015 are treated as outstanding only when determining the amount and percent owned by that person or group |
| (2) | Includes the following number of shares that could be purchased upon exercise of stock options exercisable within sixty days
of October 2, 2015: Mr. C. Sampson, 18,000 shares; Mr. Schenian, 18,000 shares; Mr. R. Sampson, 40,000 shares; Ms. Offerman,
18,000 shares; Mr. Hansen, 25,000 shares; Mr. Cruzen, 18,000 shares; Mr. Dahlberg, 12,000 shares; and all director and officers
as a group, 184,000 shares. |
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| (3) | Includes 11,300 shares held by Mr. C. Sampson’s spouse as to which beneficial ownership is disclaimed. Also
includes 342,200 shares owned by the Marian Arlis Sampson 2012 Family Irrevocable Trust. Marian Arlis Sampson is Mr.
C. Sampson’s spouse. |
| (4) | Includes 342,200 shares owned by the Marian Arlis Sampson 2012 Family Irrevocable Trust. Mr. R. Sampson is trustee
of this trust, but disclaims beneficial ownership of any shares held by the trust. |
| (5) | Based upon Amendment 18 to Schedule 13D filed by GAMCO Investors, Inc. dated September 30, 2015 and Amendment 1 to the
Information Statement supplied to the Company by the Gabelli Group pursuant to the CSAA on September 30, 2015 which contain disclosures
regarding shares beneficially owned by Gabelli Funds, GAMCO Asset Management, Gabelli Securities, Inc., MJG Associates, Inc., and
Teton Advisors, Inc. Of the shares listed above, 214,576 shares have limited voting rights under the Minnesota Control Share Acquisition
Act as discussed in the following section of this Proxy Statement. |
| (6) | Includes 33,000 shares held by Mr. Schenian’s spouse as to which beneficial ownership is disclaimed. |
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PROPOSAL
2
PROPOSAL TO APPROVE THE GABELLI GROUP’S CONTROL SHARE ACQUISITION
INTRODUCTION
The Company is a Minnesota corporation and
ownership of its Shares of common stock is subject to Section 302A.671 of Minnesota’s Business Corporation Act, which is
known as the Control Share Acquisition Act (“CSAA”). Under the CSAA, the purchase of Company shares by a natural person,
entity, or a group consisting of natural persons and entities (an “Acquiring Person”) that causes the Acquiring Person’s
ownership to equal or exceed 20% of all outstanding Shares (a “Control Share Acquisition”) triggers the application
of the CSAA and, in general, limits the number of Shares that may be voted by the Acquiring Person to 19.99 % of all outstanding
Shares unless the Company’s shareholders approve the Control Share Acquisition pursuant to special voting procedures specified
in the CSAA.
Beginning in April 2015 and continuing through
September 2015, investment advisory firms affiliated with Mario J. Gabelli (the “Gabelli Group”) purchased a total
of 290,432 Company shares on behalf of their respective customers. As a result of these purchases, the Gabelli Group’s beneficial
ownership of the Company’s shares increased from approximately 18.62% to approximately 25.08% of all outstanding Company
shares. Pursuant to the CSAA, the acquisition of the 214,383 Company shares, which exceeded 19.99% of the Company’s outstanding shares, is deemed a “Control Share Acquisition”
and, unless the Company’s shareholders approve this Control Share Acquisition pursuant to the voting procedures specified
in the CSAA, the 214,383 shares do not have voting rights, except as described below in procedures
used to conduct the shareholder vote on approving the Gabelli Group’s Control Share Acquisition.
After carefully considering a number of
factors, the Board of Directors is recommending that the Company’s shareholders approve the Gabelli Group’s Control
Share Acquisition pursuant to voting procedures specified in the CSAA. If shareholders approve the Gabelli Group’s Control
Share Acquisition, the Gabelli Group will be able to exercise full voting rights with respect to the 214,383 shares,
and could acquire beneficial ownership of additional shares with full voting rights so long as its total beneficial ownership is
less than 33.33% of all outstanding shares.
More detailed information regarding the
proposed approval of the Gabelli Group’s Control Share Acquisition is supplied below under “Information Regarding Proposed
Approval of Gabelli Group’s Control Share Acquisition.”
QUESTIONS
AND ANSWERS ABOUT PROPOSAL TO APPROVE THE
GABELLI GROUP’S CONTROL SHARE ACQUISITION
1.
Why are shareholders being asked to approve the Gabelli Group’s acquisition of Company shares?
As a Minnesota corporation with shares trading
on the Nasdaq Global Market, the Company is subject to the CSAA. Under the CSAA, the purchase of Company shares by a natural person,
entity, or a group (an “Acquiring Person”) that causes the Acquiring Person’s percentage ownership to increase
from less than 20% to 20% or more represents a “Control Share Acquisition” that triggers the application of the CSAA
and, in general, limits to 19.99% the number of Shares that may be voted by the Acquiring Person unless the Company’s shareholders
approve the Control Share Acquisition pursuant to special voting procedures specified in the CSAA.
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From April through September 2015 the Gabelli
Group increased its beneficial ownership of the Company’s Shares from 18.24% to 25.08% of all outstanding Company shares.
Pursuant to the CSAA, the Gabelli Group delivered to the Company an Information Statement and Amendment 1 to the Information Statement
reporting these share acquisitions. Because these Gabelli Group purchases triggered the application of the CSAA and because the
Gabelli Group delivered to the Company an Information Statement in May 2015 and an Amendment 1 to Information Statement on September
30, 2015 that reported on these purchases, the Company must conduct a shareholder vote on whether to approve the Gabelli Group’s
Control Share Acquisition.
2.
How does the Board recommend that shareholders vote on the proposed Control Share Acquisition?
After careful consideration of a
number of factors, the Board has determined to recommend that shareholders APPROVE the Gabelli Group’s Control Share
Acquisition. The factors considered by the Board in reaching this determination are described below under the section titled
“Factors Considered by the Board in Recommending the Shareholders Approve the Gabelli Group Control Share Acquisition.”
3.
What procedures will be followed in conducting the shareholder vote on approving the Control Share Acquisition?
Under Minnesota law, authorization for the
Control Share Acquisition requires:
· The affirmative vote of the holders all shares entitled to vote, including all Company shares beneficially owned by the
Gabelli Group (the “First Majority Approval”); and
·
The affirmative vote of the holders of a majority of the voting power entitled to vote, excluding “Interested
Shares” as defined in the CSAA (the “Second Majority Approval”).
For purposes of this vote,
“Interested Shares” are shares beneficially owned by the Gabelli Group and shares owned by any officer of
the Company that reports beneficial ownership of Company shares under Section 16 of the Securities Exchange Act.
4.
Why are “Interested Shares” included in the First Majority Approval vote and not in the Second Majority Approval
vote?
The requirement for a second
majority approval reflects a Minnesota law policy that shareholders, other than those who may be parties to a control
share acquisition or who, as executive officers of the Company, might have a conflict of interest related to an unsolicited
takeover, should have the opportunity to separately approve control share acquisitions.
5.
If shareholders approve the Control Share Acquisition, will I be asked to tender my Shares to Gabelli Group?
No. The Control Share Acquisition you are
voting on is not a tender offer, and you are not being asked to tender any common stock. However, if shareholders approve the Control
Share Acquisition, Gabelli Group will be permitted to acquire additional shares in the open market, in one or more block trades,
through an intermediary, by any other legally permitted method. However, only a maximum of 33% of all outstanding Shares owned
by the Gabelli Group will have full voting rights.
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6.
What if the Control Share Acquisition is not approved?
If the Control Share Acquisition is not
approved, Gabelli Group Shares in excess of 19.99% of the Company’s outstanding Shares will have no meaningful voting rights.
7.
How can I determine the results of the voting at the Special Meeting?
Preliminary voting results will be announced
at the Special Meeting, if available. Preliminary results, if necessary, and final results will be reported on a Form 8-K
filed with the Securities and Exchange Commission (“SEC”).
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INFORMATION
REGARDING PROPOSED APPROVAL OF
GABELLI GROUP’S CONTROL SHARE ACQUISITION
Summary of the Minnesota Control Share Acquisition Act
(“CSAA”)
The CSAA, adopted in 1984 and
subsequently amended several times, applies to shares and shareholders of Minnesota corporations that are
“public” companies. The Company believes the general purpose of the CSAA is to provide a mechanism that
reduces the pace at which a hostile takeover might be conducted, to deter underfinanced or unfinanced takeovers, and to
provide more time to a Board of Directors to consider the merits of unsolicited takeover offers and possible alternatives and
communicate its perspective to shareholders. The CSAA also restricts the ability of any Acquiring Person that acquires 20% or
more of the stock of a Minnesota public company from voting the shares that exceed 19.99% of all outstanding shares, whether
or not the Acquiring Person intends to make a takeover offer.
The CSAA applies to any “control
share acquisition” of shares of an “issuing public corporation” incorporated in Minnesota. Because the
Company’s Shares are traded on a national securities exchange, the Company is an issuing public corporation.
A “control share acquisition”
generally occurs upon an acquisition of beneficial ownership of shares that, together with all other shares beneficially owned
by the Acquiring Person, increases the Acquiring Person’s range of voting power from (i) less than 20% to 20% or more, (ii)
from less than 33 1/3% to 33 1/3% or more, or (iii) from less than a majority to a majority of the corporation’s outstanding
shares.
In general, if a Acquiring Person becomes
the beneficial owner of 20% or more of the voting power of the shares of an “issuing public corporation,” the Acquiring
Person may only vote 19.99% of the corporation’s shares in the absence of special shareholder approval. That approval can
be obtained only by resolution adopted by (1) the affirmative vote of the holders of a majority of the voting power of all shares
entitled to vote, including all shares held by the Acquiring Person, and (2) the affirmative vote of the holders of a majority
of the voting power of all shares entitled to vote, excluding all “interested shares.” Interested Shares are shares
held by the Acquiring Person, any officer of the issuing public corporation, or any director who is also an employee of the corporation.
Even if the shareholders approve a share
acquisition that increases the Acquiring Person’s beneficial ownership to 20% or more, but less than 33 1/3%, of the voting
power of the corporation’s shares, the CSAA requires a second similar shareholder vote to permit the Acquiring Person to
exercise voting power with respect to 33 1/3% or more of the outstanding shares upon becoming the beneficial owner of shares otherwise
entitled to 33 1/3% or more of the voting power of the corporation’s shares. A third similar shareholder vote generally is
necessary to permit the Acquiring Person to exercise a majority of the voting power following the acquisition of shares otherwise
entitled to a majority of such voting power. A shareholder vote on whether to grant voting power to the Acquiring Person in excess
of the 20%, 33 1/3%, or 50% threshold must be conducted at a special or annual shareholders’ meeting if an information statement complying with the CSAA is delivered to the corporation by the Acquiring Person.
The CSAA provides that when an Acquiring
Person makes a Control Share Acquisition it must promptly file an Information Statement with the issuing public corporation. The
Information Statement must contain several items of information concerning the Acquiring Person and the Acquiring Person’s
plans for the issuing public corporation. Material changes to the Information Statement must be disclosed promptly to the issuing
public corporation by amending the Information Statement and delivering the amendment to the corporation’s principal executive
office. Increases or decreases in share ownership aggregating one percent or more by all persons required to have their share ownership
disclosed in the information statement are conclusively deemed material while lesser increases or decreases may be material depending
upon facts and circumstances.
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Gabelli Group’s Recent Acquisition of Company Common
Stock
The information in this section
of the Proxy Statement and the information in the immediately following section titled “Further Information Regarding the
Gabelli Group” has been derived from Schedule 13D filings with the SEC by or on behalf of Mario J. Gabelli and his affiliates
and from Information Statements delivered to the Company by the Gabelli Group.
Mario J. Gabelli is the CEO and controlling
shareholder of several large investment advisory firms (collectively, the “Gabelli Group”) that manage portfolios of
publicly traded securities for mutual funds, hedge funds and private accounts. The Gabelli Group has been the “beneficial
owner” of more than 5% of the Company’s publicly traded shares since 2004.
In April 2015, the Gabelli Group increased
its beneficial ownership of Company common stock by 245,724 shares, which represented an increase in its percentage ownership of
all outstanding shares from approximately 18.62% to 24.03%. Due to these transactions, the Gabelli Group became subject to the
CSAA, and, on May 7, 2015 the Gabelli Group delivered an Information Statement to the Company, as required by the CSAA, that supplied
information required by the CSAA.
On September 30 2015 the Company was notified
through a Schedule 13D Amendment filed with the SEC and an Amendment No. 1 to its Information Statement that the Gabelli Group
had acquired an additional 44,708 shares of the Company’s common stock. After this acquisition, the following entities, controlled
by Mario J. Gabelli, beneficially owned a total of 1,058,960 Shares of common stock, which represents 25.08% of all outstanding
shares of common stock:
| |
GAMCO Asset Management, Inc. (“GBL”) |
503,780 shares |
11.93% |
| |
Gabelli Funds, Inc. (“Gabelli Funds”) |
186,580 shares |
4.42% |
| |
Teton Advisors, Inc. (“Teton Advisors”) |
353,100 shares |
8.36% |
| |
Gabelli Securities, Inc. (“GSI”) |
10,000 shares |
0.24% |
| |
MJG Associates, Inc. (“MJG Associates”) |
5,500 shares |
0.13% |
| |
Total |
1,058,960 shares |
25.08% |
The Gabelli Group has advised the Company
that each of the five entities named above are SEC-registered investment advisors and hold substantially all of the Company’s
shares for their respective clients in mutual funds, hedge funds and separate accounts. Gabelli Group also advised us that the
clients of these advisors, not the Gabelli Group entities, have the sole economic interest in the Company shares. These five entities
are considered “beneficial owners” of the Company shares because they hold or share with their respective clients the
power to vote or to dispose of the Company shares. Mario Gabelli is be deemed to beneficially own all of the 1,058,960 shares of
Company common stock beneficially owned by the five entities named above because he is a majority owner of each entity directly
or through majority-owned subsidiaries.
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The relationship of Mr. Gabelli to the five
entities named above and other, intermediary, majority-owned subsidiaries is presented in the following diagram:
| (1) | Mario Gabelli is the controlling share holder and Chief Executive Officer of GGCP, Inc. (GGCBY) |
| (2) | GGCP is the manager of GGCP Holdings, LLC (Holdings), and, together, GGCP and Mario Gabelli own 100% of Holdings membership
interests. |
| (3) | Holdings holds 94% of the voting power of all shareholders of GAMCO Investors, Inc. (GBL), an NYSE listed company. Mario Gabelli
is the CEO and Chief Investment Officer of GBL. |
| (4) | GAMCO Asset Management and Gabelli Funds, Inc. are wholly owned subsidiaries of GBL. |
| (5) | Gabelli Securities Inc. is a majority owned subsidiary of GBL. |
| (6) | Mario Gabelli is the controlling shareholder of Teton Advisors, Inc. |
| (7) | Mario Gabelli is the sole shareholder, director and employee of MJG Associates, Inc. |
Further Background Regarding the Gabelli Group
Mario J. Gabelli
Mario Gabelli has served as Chairman, Chief
Executive Officer, Chief Investment Officer — Value Portfolios and a director of GAMCO Investors, Inc. (“GBL”)
since founding GBL in November 1976. As Chief Investment Officer of Value Portfolios for GBL, the scope of his responsibility represented
approximately 86% of the GBL’s assets under management as of December 31, 2014. In connection with those responsibilities,
he serves as director or trustee of registered investment companies managed by GBL and its affiliates (“Gabelli Funds”).
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Mr. Gabelli has been a portfolio manager
for Teton Advisors, Inc. (“Teton Advisors”) since 1998 through the present. In addition, Mr. Gabelli is the Chief Executive
Officer, a director and the controlling shareholder of GGCP, Inc. (“GGCP”), a private company that owns 98.18% of GBL’s
Class B Stock through an intermediate subsidiary, GGCP Holdings, LLC (“Holdings”), and the Chairman and sole shareholder
of MJG Associates, Inc. (“MJG Associates”), which acts as an investment manager of various investment funds and other
accounts.
GAMCO Investors, Inc. (NYSE: GBL)
GAMCO Investors, Inc. or “GBL”
is a New York Stock Exchange-listed financial services firm with $47.5 billion in assets under management as of December 31, 2014.
GBL manages hedge funds, mutual funds and separate accounts through its three SEC registered-investment advisers identified below.
The majority of GBL’s revenue is generated through its three registered investment advisors. GGCP Inc., a private company
majority owned by Mario Gabelli, is the controlling shareholder of GBL, holding 96% of the voting power of all GBL shareholders
through an intermediate subsidiary GGCP Holdings, LLC.
GAMCO Asset Management, Inc.
GAMCO Asset Management, Inc. is a wholly
owned subsidiary of GAMCO Investors, Inc. and is the registered investment adviser for the separate account business. This business
manages money for high net worth individuals, pensions, endowments, institutions, etc. The assets in each of these separate accounts
belong to the client. GAMCO Asset Management, Inc. (and Mario Gabelli through his ultimate ownership in its parent company, GBL)
is deemed to have beneficial ownership of the securities in these accounts because of its ability to buy and sell the securities
and in most cases vote the proxies for these companies. In limited circumstances the clients may opt to vote the proxies for the
securities in their account. The 11.93% ownership of the Company shares attributed to GAMCO Asset Management, Inc. is spread among
various individual client accounts. The economic ownership of the securities in these accounts belongs to the client.
Gabelli Funds, LLC
Gabelli Funds, LLC is a wholly owned subsidiary
of GAMCO Investors, Inc. and is the registered investment adviser for GBL’s mutual fund business. A mutual fund is organized
either as trust or corporation and is required under the Investment Company Act to have an independent Board of Directors/Trustees.
The Board of each individual fund hires an investment adviser, in this case Gabelli Funds, LLC, to manage the assets in the individual
fund. Gabelli Funds, LLC is deemed to have beneficial ownership due to the investment adviser’s ability to buy and sell securities
as well as vote the proxies for the securities in each fund. The 4.42% ownership of Company shares attributed to Gabelli Funds,
LLC is spread amongst several funds with the economic owner of the Company shares being the mutual fund (i.e. the Corporate entity)
itself.
Teton Advisors, Inc.
Teton Advisor, Inc. is a separate company
spun out of GAMCO Investors, Inc. Teton Advisors, Inc. is a pink sheet traded registered investment adviser with approximately
$2 billion in assets under management in mutual funds and separate accounts. Teton Advisors holds a 8.36% ownership of Company
shares in a micro-cap mutual fund for which Mario Gabelli serves as one of the portfolio managers. Mario Gabelli is deemed to have
beneficial ownership of these shares due to his controlling interest in Teton Advisors, but neither Teton Advisors or Mr. Gabelli
have an economic ownership interest in the Company shares.
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GAMCO
Securities Inc.
GAMCO
Securities Inc. is a majority-owned subsidiary of GBL and is an investment adviser registered under the Advisers Act and serves
as a general partner or investment manager to limited partnerships and offshore investment companies and other accounts. This
entity owns .24% of the Company shares.
MJG
Associates, Inc.
Mario
J. Gabelli is the sole shareholder of MJG Associates, which provides advisory services to private investment partnerships. This
entity owns .13% of the Company shares.
Factors
Considered by the Board in Connection with Recommending Shareholders Approve the Gabelli Group’s Control Share Acquisition
The
Company’s Board of Directors considered the following factors in reaching its decision to recommend that shareholder’s
vote in favor of the Gabelli Group’s Control Share Acquisition:
Representations
Regarding “Investment Intent” by the Gabelli Group.
The
Gabelli Group has been the beneficial owner of 5% or more of the Company’s common stock since 2004. As a 5% or more beneficial
owner, the Gabelli Group is required by rules of the Securities and Exchange Commission to report on Schedule 13D when its ownership
of Company shares exceeds 5% of all outstanding shares and to report by amendments to Schedule 13D any material changes that would
further increase their ownership above 5%. They are also required to disclose the purpose of their investment in Company shares
and any changes in their purpose on amendments to their Schedule 13D. Throughout the past eleven years the Gabelli Group has represented
in their Schedule 13D filings they have acquired and hold Company shares for “investment.” They have also represented
that as part of their investment philosophy, they “may suggest or take a position with respect to potential changes in the
operations, management or capital structure of such companies as a means of enhancing shareholder values,” but have also
represented that none of the members of the Gabelli Group “intends to seek control” of the Company or “participate
in the management” of the Company.
The
Gabelli Group delivered an Information Statement pursuant to the CSAA on May 7, 2015 and Amendment 1 to the Information Statement
on September 30, 2015. In its Information Statements, the Gabelli Group has represented it holds the shares for “investment
purposes” and that it does not have any plans or intent to make any proposals to:
(1)
liquidate or dissolve the Company,
(2)
sell all or a substantial part of the Company’s assets, or merge it or exchange its shares with any other person,
(3)
change the location of the Company’s principal place of business or its principal executive officer or of a material
portion of its business activities,
(4)
change materially the Company’s management or policies of employment,
(5)
change materially the Company’s charitable or community contribution or its policies, programs, or practices relating
thereto,
(6)
change materially the Company’s relationship with suppliers or customers or the communities in which it operates, or
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(7)
make any other material change in the Company’s business, corporate structure, management or personnel.
The
Board believes it is reasonable to rely on these representations in considering whether to recommend approval of the Gabelli
Group’s Control Share Acquisition.
Purposes
of the CSAA.
The
Company believes the primary purposes of the CSAA are to provide a mechanism that reduces the pace at which a hostile takeover
might be conducted, to deter underfinanced or unfinanced takeovers and to provide more time for a board of directors to consider
the merits of an unsolicited takeover offer, and to consider alternatives to the unsolicited takeover offer. To achieve these
purposes the CSAA establishes the hurdle that, unless approved by the company’s shareholders in accordance with CSAA specified
procedures, shares acquired in excess of 20% or more of a public company’s stock will have very limited voting rights. The
representations of the Gabelli Group in SEC filings and in the CSAA Information Statement indicate it does not intend to make
an unsolicited takeover offer, whether alone or in conjunction with others, and the Board is not aware of any information that
is inconsistent with these representations. Therefore, while the CSAA gives the Board the opportunity to recommend that the Company’s
shareholders vote against granting full voting rights to the Control Acquisition Shares, the Board believes a recommendation to
vote against approval is unnecessary given the Gabelli Group’s longstanding demonstration of its “investment”
intent, and that a positive recommendation is not inconsistent with the purposes of the CSAA.
Potential
influence over corporate policy and the Company’s business plans.
The
Board recognizes that if shareholders approve the Gabelli Group’s Control Share Acquisition, the Gabelli Group’s
ownership of, and ability to vote at least 24.93% of the Company’s outstanding shares and, potentially, up to 33.3% of
all outstanding shares, provides a level of stock ownership from which the Gabelli Group could actively seek to exercise
influence over the Company’s policies and strategic plans. As discussed above, the Gabelli Group has been a 5% or more
shareholder of the Company’s outstanding common stock since 2004. To date, the Gabelli Group has been supportive of the
Company and its management. Given the positive, constructive relationship between the Gabelli Group and the Company’s
Board of Directors and management over the past 11 years, the Board believes that the Gabelli Group will continue to
responsibly exercise its substantial ownership position and that there is no threat to the Company’s ability to fulfill
its fiduciary duties if shareholders approve Proposal 2.
Continued
applicability of the CSAA to any increase in the Gabelli Group’s beneficial ownership at or above over 33-1/3% of all outstanding
shares or the sale of its shares to another person.
While
shareholder approval would confer full voting rights with respect to the 214,383 Company shares already beneficially owned
that currently have very limited voting rights and up to 33 1/3% of all outstanding shares (if it acquires additional
Company shares), any acquisition of shares that causes the Gabelli Group to increase its ownership position to 33-1/3% or
more of all outstanding shares would, until and unless shareholder approval is given, result in these additional shares
having limited voting rights under the CSAA . At that time, based on then relevant facts and circumstances, the Board may
recommend against and the Company’s shareholders may vote against granting full voting rights for any shares that equal
or exceed 33-1/3% of all outstanding Company shares.
Even
if the Company’s shareholders give their approval to the Gabelli Group’s Control Share Acquisition, this approval
is only applicable to the Gabelli Group’s beneficial ownership of Company shares. Therefore, while it is not subject to
any material limitation on its ability to sell all or part of the Company shares it beneficially owns or may acquire in the future,
if the Gabelli Group sold 20% or more of its shares to a person or a group acting in concert, this transfer would be subject to
the CSAA and any shares in excess of 19.99% of all outstanding shares would have only limited voting rights unless and until the
Company’s shareholders approved the acquisition in accordance with CSAA specified procedures.
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Substantial
Stock Ownership of Company’s Board of Directors.
The
Company’s Board of Directors beneficially owns, collectively over 40% of the Company’s outstanding common stock. This
collective ownership position is a material counterweight to any holder or holders of another block of stock that undertakes to
pursue objectives that the Board would view as contrary to the best interests of the shareholders as a whole.
Possible
effect on future strategic transactions.
Approval
of the Control Share Acquisition will give the Gabelli Group at least approximately 25% beneficial ownership and potentially
up to approximately 33 1/3% beneficial ownership of the Company’s outstanding common stock. This will not enable it to
block transactions requiring shareholder approval because any transaction requiring shareholder approval pursuant to the
Company’s Articles of Incorporation and the Articles of Incorporation of New Canterbury Park Holding Corporation only
requires approval by holders of a majority of the outstanding shares of the Company’s common stock. The Board
nevertheless recognizes the Gabelli Group’s potential beneficial ownership of up to 1/3 of all outstanding shares in
combination with shares beneficially owned by other shareholders would make it easier to block a transaction otherwise
supported by the Company’s Board of Directors.
Shareholder
democracy.
The
Board of Directors believes that, in general, every share of common stock beneficially owned should carry with it the right to
vote that share in accordance with the wishes of the beneficial owner. While there are circumstances where it may be appropriate
for the Board of Directors to claim the protection provided under the CSAA, given the long-term, positive relationship the Company
has enjoyed with the Gabelli Group, the Board believes that each share acquired by the Gabelli Group up to 33 1/3% of all outstanding
shares should carry with it the right to vote.
Voting
on the Control Share Acquisition
At
the Special Meeting, Canterbury shareholders will be asked to approve a resolution approving the Gabelli Group’s Control
Share Acquisition.
Authorization
for the Control Share Acquisition requires:
| · | The
affirmative vote of the holders of a majority of the voting power entitled to vote, including
for purposes of this vote all Company shares beneficially owned by the Gabelli Group
(the “First Majority Approval”); and |
| · | The
affirmative vote of the holders of a majority of the voting power entitled to vote, excluding
the voting power of “Interested Shares,” as defined in the CSAA (the “Second
Majority Approval”). |
As
of the Record Date, there were 4,240,633 shares issued and outstanding, all of which are eligible to be voted in determining whether
the Control Share Acquisition will be approved by the First Majority Approval required under the Minnesota Control Share Acquisition
Statute.
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Shares
eligible to be voted in determining whether the Control Share Acquisition has been approved by the Second Majority Approval under
the CSAA is the voting power of all the outstanding Shares excluding the voting power of Interested Shares. The categories of
Interested Shares that not be eligible to vote in determining the Second Majority Approval are as follows:
i. Shares
beneficially owned by Gabelli Group and its affiliates. Based on Gabelli Group’s Schedule 13D filed with the SEC,
as amended through September 30, 2015, the Gabelli Group beneficially owns 1,058,960 shares, which as of the Record Date
represented approximately 25.08% of the outstanding shares.
ii. Shares
beneficially owned by officers of Canterbury or any employee of Canterbury who is also a director of Canterbury. As of the Record
Date, these individuals own, in the aggregate, [672,466] shares.
The
Board has authorized, and Canterbury, together with its third party vote tabulators, will conduct the Special Meeting to exclude
the voting power of Interested Shares from the determination of the Second Majority Approval.
The
affirmative vote of a majority of the outstanding Company shares, or 2,120,317 Shares, in favor of the Control Share Acquisition
would be required for the First Majority Approval.
As
of the Record Date, 1,724,739 of the 4,240,633 outstanding shares were known to Canterbury to be Interested Shares and
therefore ineligible to vote in determining the Second Majority Approval. If no additional shares are determined to be
Interested Shares, the affirmative vote of a majority of the remaining outstanding shares, or 1,254,604 shares, in favor of
the Control Share Acquisition will be required for the Second Majority Approval. Canterbury is not currently aware that any
of the outstanding shares are Interested Shares other than those held by Canterbury officers and the Gabelli Group and its
affiliates.
The
Board has appointed Broadridge as the Inspector of Election. The Inspector of Election will, among other things,
determine whether a quorum is present, tabulate votes at the Special Meeting, including a separate tally of Interested
Shares, and resolve disputes, including disputes as to whether shares are Interested Shares. Canterbury
will submit, and Gabelli Group may also submit, to the Inspector of Election information that may assist in identifying
which Shares are Interested Shares.
Board
Recommendation on Approving the Control Share Acquisition.
THE
BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” APPROVAL OF THE GABELLI GROUP’S CONTROL SHARE ACQUISITION
OTHER
MATTERS AT MEETING
We
know of no other matters that may come before the Special Meeting. However, if any matters calling for a vote of the shareholders,
other than those referred to in this proxy statement, should properly come before the meeting, the persons named as proxies will
vote on such matters according to their individual judgment.
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By Order of the Board of Directors, |
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David C. Hansen |
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Vice President and Secretary |
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| Dated: October ___, 2015 |
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Exhibit A
AGREEMENT
AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF
REORGANIZATION, dated as of October 2, 2015 (this “Agreement”), is by and between CANTERBURY PARK HOLDING
CORPORATION, a Minnesota corporation (the “Company”), NEW CANTERBURY PARK HOLDING CORPORATION, a Minnesota
corporation and a wholly-owned subsidiary of the Company (the “New
Parent”), and CANTERBURY PARK ENTERTAINMENT, LLC, a Minnesota limited
liability company and a wholly-owned subsidiary of the New Parent (the “Surviving Entity”).
RECITALS
WHEREAS, the Board of Directors of
the Company has upon the terms and conditions of this Agreement determined that the Merger (as defined below) is in the best interest
of the shareholders of the Company and approved this Agreement and the transactions contemplated hereby;
WHEREAS, the Merger has received
necessary approvals by the Board of Directors, shareholders, governors and members, as applicable, of the New Parent and the Surviving
Entity; the New Parent, the Surviving Entity and the Company are each sometimes referred to hereinafter as a “Constituent
Entity” and collectively as the “Constituent Entities.”.
NOW, THEREFORE, the parties
hereto agree as follows:
ARTICLE I
THE
MERGER
SECTION 1.01 The Merger. Subject
to the terms and conditions of this Agreement, at the Effective Time (defined below), the Company and the Surviving Entity shall
consummate a merger (the “Merger”) in which (a) the Company shall be merged with and into the Surviving
Entity and the separate corporate existence of the Company shall thereupon cease; (b) the Surviving Entity shall be the surviving
entity in the Merger, shall continue to be governed by the laws of the State of Minnesota and, pursuant to the Merger, have all
of the rights, privileges, immunities, powers and franchises of the Company; and (c) the outstanding shares of the Company’s
common stock will automatically be converted one-for-one into outstanding shares of the common stock of New Parent.
SECTION 1.02 Effective Time of Merger;
Articles of Merger. As soon as practicable after approval by the Company’s shareholders of this Agreement, the appropriate
parties hereto shall execute in the manner required by Minnesota law and file with the Minnesota Secretary of State appropriate
articles of merger relating to the Merger setting forth the information required by the Minnesota Revised Uniform Limited Liability
Company Act (Chapter 322C of the Minnesota Statutes) (the “Act”) and the Minnesota Business Corporation Act,
and the parties shall take such other and further actions as may be required by law to make the Merger effective. The time the
Merger becomes effective in accordance with applicable law is hereinafter referred to as the “Effective Time.”
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SECTION 1.03 Effect of Merger. As
of the Effective Date:
(a) Company. The Company will
be merged into the Surviving Entity and the separate existence of the Company will cease.
(b) Surviving Entity. The limited
liability company existence of the Surviving Entity, with all its purposes, powers and objects, will continue unaffected and unimpaired
by the Merger. The identity and existence, together with all the rights, privileges, immunities, powers, licenses, and franchises
of the Company, both of a public and private nature, and all property, real, personal and mixed, all debts due on whatever account,
and all other things or any chose in action belonging to the Company, and all and every other interest, will be taken and deemed
to be transferred to and to vest, and will be vested, in the Surviving Entity as of the Effective Date, without further act or
deed and as effectively as they were formerly vested in the Company.
(c) Articles of Incorporation and
Bylaws. The Articles of Incorporation of the New Parent as they exist on the Effective Date will continue as of the Effective
Date to be the Articles of Incorporation of the New Parent except that the name of the New Parent will be amended to be “Canterbury
Park Holding Corporation.” The Bylaws of the New Parent, as they exist on the effective date, will be the Bylaws of the New
Parent following the Effective Date except that such Bylaws will be amended to indicate they are the Bylaws of “Canterbury
Park Holding Corporation.”
(d) Articles of Organization, Operating
Agreement. The Articles of Organization of the Surviving Entity, as they exist on the Effective Date, will continue, as of
the Effective Date, to be the Articles of Organization of the Surviving Entity. The Operating Agreement of the Surviving Entity,
as of the Effective Date, will be the Operating Agreement of the Surviving Entity.
(e) Tax Treatment. For federal
income tax purposes, it is intended that the Merger constitute a reorganization described in Section 368(a)(1)(F) of the Internal
Revenue Code of 1986, as amended and that this Agreement constitutes a “plan of reorganization” within the meaning
of Treasury Regulation Section 1.368-2(g).
ARTICLE II
CONVERSION OF SHARES
SECTION 2.01 Treatment of Shares.
As of the Effective Date, by virtue of the Merger and without any action on the part of the holder thereof:
(a) Each of the issued and outstanding
shares of common stock of the Company will, by virtue of the merger and without further action on the part of the Constituent Entities,
be converted into one share of the common stock of the New Parent. Each share so converted will be fully paid and non-assessable.
(b) Each unit of the Surviving Entity’s
membership interests that was outstanding prior to the Effective Date will be unaffected by the Merger; and
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(c) Each share of the New Parent’s
capital stock that was outstanding prior to the Effective Date will be canceled.
ARTICLE III
MISCELLANEOUS
SECTION 3.01 Successors and Assigns.
The provisions of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
SECTION 3.02 Governing Law. This
Agreement, and all claims arising hereunder or relating hereto, will be governed and construed and enforced in accordance with
the laws of the State of Minnesota.
SECTION 3.03 Counterparts; Third Party
Beneficiaries. This Agreement may be executed in any number of counterparts and by facsimile or other means of electronically
imaging a signature, each of which will be an original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. No provision of this Agreement will confer upon any person other than the parties hereto any rights or remedies
hereunder.
SECTION 3.04 Entire Agreement. This
Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both oral and written, among the parties with respect to the subject matter hereof.
SECTION 3.05 Severability. If one
or more provisions of this Agreement are finally held to be unenforceable under applicable law, such provision will be deemed to
be excluded from this Agreement and the balance of this Agreement will be interpreted as if such provision were so excluded and
will be enforced in accordance with its terms to the maximum extent permitted by law.
SECTION 3.06 Interpretation. The
headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation
of this Agreement. As used in this Agreement, the words “hereof’, “herein”, “herewith” and
words of similar import will, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and the words “Article” and “Section” are references to the articles and sections
of this Agreement unless otherwise specified. Whenever the words “include”, “includes” or “including”
are used in this Agreement they will be deemed to be followed by the words “without limitation”. The definitions contained
in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms. The parties hereto have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
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IN WITNESS WHEREOF, this Agreement and
Plan of Reorganization has been duly executed and delivered by the parties hereto as of the day and year first above written.
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CANTERBURY PARK HOLDING CORPORATION |
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NEW PARENT: |
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NEW CANTERBURY PARK HOLDING CORPORATION |
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SURVIVING ENTITY: |
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CANTERBURY PARK ENTERTAINMENT, LLC |
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Table of Contents
Exhibit B
ARTICLES OF INCORPORATION
OF
NEW CANTERBURY PARK HOLDING CORPORATION
ARTICLE I
The name of this corporation shall be New
Canterbury Park Holding Corporation.
ARTICLE II
The
registered office of this corporation shall be located at 1100 Canterbury Road South, Shakopee, MN 55379.
ARTICLE III
The corporation is authorized to issue an
aggregate total of Ten Million (10,000,000) shares of common stock with a stated par value of $.01 per share. All shares shall
be of one class and one series, except that the Board of Directors, by its action, may establish more than one class or series.
ARTICLE IV
No shareholder of this corporation
shall be entitled to any cumulative voting rights.
ARTICLE V
No shareholder of this corporation shall
have any preferential, preemptive or other rights to subscribe for, purchase or acquire any shares of the corporation of any class,
whether unissued or now or hereafter authorized, or any obligations or other securities convertible into or exchangeable for any
such shares.
ARTICLE VI
Any action required or permitted to be taken
at a meeting of the Board of Directors of this corporation not needing approval by the shareholders under Minnesota Statutes, Chapter
302A, may be taken by written action signed by the number of directors that would be required to take such action at a meeting
of the Board of Directors at which all directors were present. Any action required or permitted to be taken at a meeting of the
shareholders of this Corporation may be taken by written action signed, or consented to by authenticated electronic communication,
by shareholders having voting power equal to the voting power that would be required to take the same action at a meeting of the
shareholder at which all the shareholder were present.
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ARTICLE VII
The number of directors
of this corporation shall be fixed in the manner provided in the Bylaws.
ARTICLE VIII
No
director of this corporation shall be personally liable to the corporation or its shareholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the
corporation or its shareholders; (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing
violation of law; (iii) under Sections 302A.559 or 80A.76 of the Minnesota Statutes; (iv) for any transaction from which the director
derives any improper personal benefit; or (v) for any act or omission occurring prior to the date when this provision becomes effective.
The provisions of this Article VIII shall
not be deemed to limit or preclude indemnification of a director by the corporation for any liability of a director that has not
been eliminated by the provisions of this article.
If the Minnesota Statutes hereafter are
amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the
corporation shall be eliminated or limited to the fullest extent permitted by the amended Minnesota Statutes.
ARTICLE IX
So long as this corporation owns or has
a financial interest in a Regulated Business Entity, the following provisions shall apply to this corporation’s Equity Securities,
with all capitalized terms used in this Article IX having the meanings respectively indicated below.
A. Any Person or Group that becomes the Beneficial Owner
of 5% or more of any class of this corporation’s Equity Securities or increases its beneficial ownership of any class of
this corporation’s Equity Securities by 5% or more, within three days after the date such Person or Group becomes a 5% or
more Beneficial Owner of such Equity Securities or increases its beneficial ownership of such Equity Securities 5% or more, shall
provide this corporation with the identity of such Person or Group and such additional information as this corporation or a Regulated
Business Entity is required to provide to the Commission under the Act.
B. If any Person or Group becomes the Beneficial Owner
of 5% or more of any class of this corporation’s Equity Securities or increases its beneficial ownership of any class of
this corporation’s Equity Securities by 5% or more, and:
| (1) | The ownership interest of such Person or Group is determined by the Commission to be detrimental to the public interest or
integrity of horse racing in Minnesota or the Commission advises this corporation or the Regulated Business Entity that if |
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Person or Group continues to hold all or any portion of the Equity Securities it acquired, the Commission will suspend the Regulated
Business Entity’s Class A or Class B License or take other action materially adverse to the Regulated Business Entity’s
business, or |
| (2) | The Person or Group does not supply to the Commission within the time period specified by the Commission a certification with
respect to the matters specified in Minnesota Statutes § 240.06, Subd.1(d) or rules or regulations issued thereunder
(or any successor provision of Minnesota law and any related regulations), or |
| (3) | The Person or Group fails to provide to the Commission within the time period specified by the Commission any information which
the Commission requests, or |
| (4) | The Board of Directors of this corporation shall in the exercise of its reasonable judgment determine that the Commission will
suspend the Class A or Class B license issued to the Regulated Business Entity or take other action that could have a material
adverse effect on the Regulated Business Entity’s business if such Person or Group continues to hold all or any portion of
the Equity Securities it acquired, |
then, notwithstanding any other provision in these Articles, the corporation shall have the right, by action of
its Board of Directors, to redeem all or any portion of the Equity Securities acquired by such Person or Group at any time at the lowest of (i) the price at which the Equity Securities were acquired, (ii)
the book value per share of such Equity Securities based on this corporation’s most recent audited balance sheet prior to
the date such Equity Securities were purchased, or (iii) the fair market value of such Equity Securities on the date this corporation
receives notification that such Person or Group became the Beneficial Owner of 5% or more of this corporation’s Equity Securities
or increased its beneficial ownership of such Equity Securities 5% or more.
C. The terms and conditions of a redemption of Equity
Securities pursuant to this Article IX shall be as follows:
| (1) | The redemption price of such shares may be paid in cash, Redemption Securities or any combination thereof; |
| (2) | If this corporation elects to redeem less than all of the Equity Securities, the shares to be redeemed shall be selected in
such manner as the Board of Directors determines, which may include selection first of the most recently purchased shares thereof,
selection by lot, or selection in any other manner. |
| (3) | At least 30 days’ written notice of the Redemption Date must be given to the record holders of the shares selected to
be redeemed (unless waived in writing by |
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| | any such holder); but the Redemption Date may be the date on which written notice is given
to record holders if the cash or Redemption Securities necessary to effect the redemption has been deposited in trust for benefit
of the record holders and subject to immediate withdrawal by them upon surrender of the stock certificates for their shares to
be redeemed; and |
| (4) | From and after the Redemption Date or such earlier date as mandated by pertinent state or federal law, any and all rights of
whatever nature, that may be held by the Beneficial Owner(s) of shares of Equity Securities selected for redemption (including
without limitation any rights to vote or participate in dividends declared on shares of the same class or series as such shares),
will cease and terminate and they will thenceforth be entitled only to receive the cash and Redemption Securities payable upon
redemption. |
D. Capitalized terms used in this Article IX will have
the meanings provided below.
“Act” means Minnesota
Statutes Chapter 240 and rules and regulations promulgated thereunder, as the same exists as of the filing of these Articles of
Incorporation, or as will from time to time be amended hereafter, or any successor statute and regulations applicable to pari-mutuel
horse racing and other wagering currently regulated by the Commission.
“Affiliate” and “Associate”
shall have the respective meanings ascribed to such terms in Rule 12b-2 under the General Rules and Regulations under the Securities
and Exchange Act of 1934, as amended (the “Exchange Act”). The term “registrant” as used in said Rule 12b-2
shall mean this corporation.
“Beneficial Owner”
shall mean any person who, singly or together with any such person’s Affiliates or Associates, directly or indirectly, has
“beneficial ownership” of Equity Securities (as determined pursuant to Rule 13d-3 or any successor rule of the Exchange
Act).
“Commission” means
the Minnesota Racing Commission or any successor governmental body authorized to regulate pari-mutuel horse racing and other wagering
currently regulated by the Commission.
“Equity Securities”
shall mean any common stock, preferred stock, special stock, or any other class or series of stock of this corporation.
“Group” shall have
the meaning specified in Section 13(d)(3) of the Exchange Act or Rule 13d-5 or any successor rule under the Exchange Act.
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“Person” shall mean
any natural person, corporation, firm, partnership, limited liability company, association, government, governmental agency, or
any other business entity, whether acting in an individual, fiduciary, or any other capacity.
“Redemption Date”
shall mean the date fixed by the Board of Directors for the redemption of any Equity Securities of this corporation pursuant to
this Article IX.
“Redemption Securities”
shall mean any debt or equity securities of this corporation, any Subsidiary or any other corporation, or any combination thereof,
having such terms and conditions as shall be approved by the Board of Directors and which, together with any cash to be paid as
part of the redemption price, in the opinion of any nationally recognized investment banking firm selected by the Board of Directors
(which may be a firm which provides other investment banking, brokerage or other services to this corporation), has a value, at
the time notice of redemption is given pursuant to Paragraph C of this Article IX, at least equal to the price to be paid for the
shares to be redeemed pursuant to section B of this Article IX (assuming, in the case of Redemption Securities to be publicly traded,
such Redemption Securities were fully distributed and subject only to normal trading activity).
“Regulated Business Entity”
means any business entity that this corporation owns or in which it has a financial interest that is subject to the provisions
of the Act.
“Subsidiary” shall
mean any business entity of which a majority of any class of equity security is beneficially owned by this corporation.
ARTICLE X
The name and address of the Incorporator
is Richard A. Primuth, 4200 IDS Center, 80 South Eighth Street, Minneapolis, Minnesota 55402.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st
day of October, 2015.
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/s/ Richard A. Primuth |
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Richard A. Primuth, Incorporator |
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Exhibit C
Canterbury Park Holding Corporation
Information Statement
AMENDMENT 1
Supplied Pursuant to Minnesota Statutes Section 302A.671, Subd. 2
(a) This
statement is being filed by the following persons: GGCP, Inc. (“GGCP”), GGCP Holdings LLC (“GGCP Holdings”),
GAMCO Investors, Inc. (“GBL”), Gabelli Funds, LLC (“Gabelli Funds”), GAMCO Asset Management Inc. (“GAMCO”),
Teton Advisors, Inc. (“Teton Advisors”), Gabelli Securities, Inc. (“GSI”), MJG Associates, Inc. (“MJG
Associates”), and Mario Gabelli (together, “Gamco and its affiliates”).
GGCP makes investments for its own account
and is the manager and a member of GGCP Holdings which is the controlling shareholder of GBL. GBL, a public company listed on the
New York Stock Exchange, is the parent company for a variety of companies engaged in the securities business, including those named
below.
GAMCO, a wholly-owned subsidiary of GBL, is
an investment adviser registered under the Investment Advisers Act of 1940, as amended (“Advisers Act”). GAMCO is an
investment manager providing discretionary managed account services for employee benefit plans, private investors, endowments,
foundations and others.
GSI, a majority-owned subsidiary of GBL, is
an investment adviser registered under the Advisers Act and serves as a general partner or investment manager to limited partnerships
and offshore investment companies and other accounts. As a part of its business, GSI may purchase or sell securities for its own
account. GSI is a general partner or investment manager of a number of funds or partnerships, including Gabelli Associates Fund,
L.P., Gabelli Associates Fund II, L.P., Gabelli Associates Limited, Gabelli Associates Limited II E, ALCE Partners, L.P., Gabelli
Capital Structure Arbitrage Fund LP, Gabelli Capital Structure Arbitrage Fund Limited, Gabelli Intermediate Credit Fund L.P., Gabelli
Japanese Value Partners L.P., GAMA Select Energy + L.P., GAMCO Medical Opportunities L.P., GAMCO Long/Short Equity Fund, L.P.,
Gabelli Multimedia Partners, L.P, Gabelli International Gold Fund Limited and Gabelli Green Long/Short Fund, L.P.
Gabelli Funds, a wholly owned subsidiary of
GBL, is a limited liability company. Gabelli Funds is an investment adviser registered under the Advisers Act which provides advisory
services for The Gabelli Equity Trust Inc., The Gabelli Asset Fund, The GAMCO Growth Fund, The Gabelli Convertible and Income Securities
Fund Inc., The Gabelli Value 25 Fund Inc., The Gabelli Small Cap Growth Fund, The Gabelli Equity Income Fund, The Gabelli ABC Fund,
The GAMCO Global Telecommunications Fund, The Gabelli Gold Fund, Inc., The Gabelli Multimedia Trust Inc., The Gabelli Global Rising
Income & Dividend Fund, The Gabelli Capital Asset Fund, The GAMCO International Growth Fund, Inc., The GAMCO Global Growth
Fund, The Gabelli Utility Trust, The GAMCO Global Opportunity Fund, The Gabelli Utilities Fund, The Gabelli Dividend Growth Fund,
The GAMCO Mathers Fund, The Gabelli Focus Five Fund, The Comstock Capital Value Fund, The Gabelli Dividend and Income Trust, The
Gabelli Global Utility & Income Trust, The GAMCO Global Gold, Natural Resources, & Income Trust, The GAMCO Natural Resources
Gold & Income Trust, The GDL Fund, Gabelli Enterprise Mergers & Acquisitions Fund, The Gabelli SRI Fund, Inc., The Gabelli
Healthcare & Wellness Rx Trust, The Gabelli Global Small and Mid
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Cap Value Trust and Gabelli Value Plus+ Trust (collectively,
the “Funds”), which are registered investment companies. Gabelli Funds is also the investment adviser to The GAMCO
International SICAV (sub-fund GAMCO Merger Arbitrage), a UCITS III vehicle.
Teton Advisors, an investment adviser registered
under the Advisers Act, provides discretionary advisory services to The TETON Westwood Mighty Mitessm Fund, The TETON
Westwood Income Fund, The TETON Westwood Small Cap Equity Fund, and The TETON Westwood Mid-Cap Equity Fund.
Both Teton Advisors and Gabelli Funds, LLC
act as investment advisors to registered investment companies (i.e. mutual funds). The mutual funds advised by Teton Advisors and
Gabelli Funds that hold shares of Canterbury Park Holdings Corporation have fundamental investment policies which generally prohibit
investing in the securities of a company for the purpose of exercising management or control, but each Fund will vote the securities
it owns in its portfolio as a shareholder in accordance with its views.
MJG Associates provides advisory services
to private investment partnerships and offshore funds. Mario Gabelli is the sole shareholder, director and employee of MJG Associates.
MJG Associates is the Investment Manager of Gabelli International Limited and Gabelli Fund, LDC. Mario J. Gabelli is the general
partner of Gabelli Performance Partnership, LP.
Mario Gabelli is the controlling stockholder,
Chief Executive Officer and a director of GGCP and Chairman and Chief Executive Officer of GBL. Mario Gabelli is also a member
of GGCP Holdings. Mario Gabelli is the controlling shareholder of Teton.
GAMCO is a New York corporation and GBL, GSI,
and Teton Advisors are Delaware corporations, each having its principal business office at One Corporate Center, Rye, New York
10580. GGCP is a Wyoming corporation having its principal business office at 140 Greenwich Avenue, Greenwich, CT 06830. GGCP Holdings
is a Delaware limited liability corporation having its principal business office at 140 Greenwich Avenue, Greenwich, CT 06830.
Gabelli Funds is a New York limited liability company having its principal business office at One Corporate Center, Rye, New York
10580. MJG Associates is a Connecticut corporation having its principal business office at 140 Greenwich Avenue, Greenwich, CT
06830.
(b) This Amendment 1 is supplied pursuant to Minnesota Statutes,
Section 302A.671 with respect to Canterbury Park Holding Corporation (“Issuer”).
(c) Prior to this Amendment, GAMCO and its affiliates disclosed
ownership in its Initial Information Statement of 1,014,252 shares or 24.03% of the Issuer’s shares outstanding.
(d) GAMCO and its affiliates currently own 1,058,960 or 25.08%
of the Issuer’s shares outstanding, in a range of at least 20 percent but less than 33-1/3 percent.
The Issuer’s shares are held as follows:
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| Gabelli Funds |
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186,550 |
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4.42% |
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503,780 |
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11.93% |
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5,500 |
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.13% |
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353,100 |
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10,000 |
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.24% |
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(e) GAMCO and its affiliates used approximately $460,000 of
funds of investment advisory clients in the control share acquisition purchase reported in this Amendment No. 1. These purchases
were made for investment purposes into the investment vehicles disclosed above. It is anticipated these securities would continue
to be held similar to the Canterbury Park securities already held. GAMCO and its affiliates do not have any plans and do not presently
intend to make any proposals to (1) liquidate or dissolve the Issuer, (2) sell all or a substantial part of Issuer’s assets, or
merge it or exchange its shares with any other person, (3) change the location of Issuer’s principal place of business or its principal
executive office or of a material portion of its business activities, (4) change materially Issuer’s management or policies of
employment, (5) change materially Issuer’s charitable or community contributions or its policies, programs, or practices relating
thereto, (6) change materially Issuer’s relationship with suppliers or customers or the communities in which it operates, or (7)
make any other material change in Issuer’s business, corporate structure, management or personnel.
After reasonable inquiry, the information herein provided herein
is true, complete and correct.
GGCP, Inc.
GGCP Holdings LLC
GAMCO Investors, Inc.
Gabelli Funds, LLC
GAMCO Asset Management Inc.
Teton Advisors, Inc.
Gabelli Securities, Inc.
MJG Associates, Inc.
Mario J. Gabelli
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VOTE BY INTERNET
- www.proxyvote.com
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Use the Internet to transmit your
voting instructions and for electronic delivery of information up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in
hand when you access the web site and follow the instructions to obtain your
records and to create an electronic voting instruction form.
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ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
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If you would like to reduce the
costs incurred by our company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet
and, when prompted, indicate that you agree to receive or access proxy
materials electronically in future years.
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VOTE BY PHONE -
1-800-690-6903
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Use any touch-tone telephone to
transmit your voting instructions up until 11:59 P.M. Eastern Time the day
before the cut-off date or meeting date. Have your proxy card in hand when you call and then
follow the instructions.
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VOTE BY MAIL
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Mark, sign and date your proxy
card and return it in the postage-paid envelope we have provided or return it
to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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THE COMPANY NAME INC. - COMMON
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SHARES
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123,456,789,012.12345
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THE COMPANY NAME INC. - CLASS A
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123,456,789,012.12345
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THE COMPANY NAME INC. - CLASS B
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123,456,789,012.12345
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THE COMPANY NAME INC. - CLASS C
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123,456,789,012.12345
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THE COMPANY NAME INC. - CLASS D
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123,456,789,012.12345
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THE COMPANY NAME INC. - CLASS E
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123,456,789,012.12345
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THE COMPANY NAME INC. - CLASS F
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123,456,789,012.12345
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THE COMPANY NAME INC. - 401 K
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123,456,789,012.12345
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☒
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PAGE 1 OF 2
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TO VOTE, MARK BLOCKS BELOW IN
BLUE OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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The Board of Directors recommends you |
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vote FOR proposals 1. and 2. |
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Abstain |
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1. |
To approve the Agreement and
Plan of Reorganization dated as of October 2, 2015 between Canterbury Park Holding Corporation, New Canterbury Park
Holding Corporation and Canterbury Park Entertainment LLC that would reorganize the Company’s
business into a holding company structure. |
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2. |
Pursuant to the Minnesota Control Share Acquisition Act, to approve the purchase of Company’s stock by investment advisory firms affiliated with Mario J. Gabelli (the “Gabelli Group”) that increased the Gabelli Group’s aggregate total beneficial ownership of the Company’s stock from approximately 18.24% to 25.08% of all outstanding shares. |
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NOTE: THE PROXIES ARE AUTHORIZED
TO VOTE IN THEIR DISCRETION UPON ANY OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. |
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For address change/comments, mark here. |
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(see reverse for instructions) |
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Yes |
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No |
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Please indicate if you plan to attend this meeting |
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. |
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SHARES |
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CUSIP # |
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JOB
# |
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SEQUENCE # |
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint Owners) |
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| 0000257151_1 R1.0.0.51160 |
02 0000000000 |
Table of Contents
| Important
Notice Regarding the Availability of Proxy Materials for the Special Meeting: The Notice & Proxy Statement is/are
available at www.proxyvote.com. |
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CANTERBURY PARK HOLDING
CORPORATION |
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1100 CANTERBURYROAD
SHAKOPEE, MINNESOTA 55379 |
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SPECIAL MEETING OF SHAREHOLDERS |
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NOVEMBER __, 2015 |
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10:00 A.M. CT |
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The
undersigned hereby appoints Curtis A. Sampson, Randall A. Sampson and David C. Hansen, or either of them, with power of
substitution to each, as attorneys and proxies, and hereby authorizes them to
represent the undersigned at the Special Meeting of Shareholders of Canterbury Park
Holding Corporation to be held at the Company’s offices located at 1100
Canterbury Park Road, Shakopee, Minnesota 55379 on ________, November __ 2015 at
8:30 A.M. CT, and at any adjournment(s) or postponement(s) thereof, and to vote,
as designated below, all shares of common stock of Canterbury Park Holding
Corporation held of record by the undersigned on October 2, 2015, and that the
undersigned would be entitled to vote at the Special Meeting, hereby revoking all former
proxies. |
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THIS
PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2. PLEASE SIGN,
DATE AND RETURN THIS PROXY FORM.
Please
mark, sign and date your proxy card and return it in the postage-paid envelope provided.
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Address
change/comments: |
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(If
you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.)
Continued
and to be signed on reverse side |
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0000257151_2
R1.0.0.51160
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