DEF 14A 1 d14832ddef14a.txt DEFINITIVE PROXY STATEMENT SCHEDULE 14A PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the registrant [X] Filed by a party other than the registrant [ ] Check the appropriate box: [ ] Preliminary proxy statement. [ ] Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2)). [X] Definitive proxy statement. [ ] Definitive additional materials. [ ] Soliciting material pursuant to Section 240.14a-12 WINDSOR WOODMONT BLACK HAWK RESORT CORP. -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement if Other Than the Registrant) Payment of filing fee (check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: -------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: -------------------------------------------------------------------------------- (5) Total fee paid: -------------------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. -------------------------------------------------------------------------------- [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount Previously Paid: -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: -------------------------------------------------------------------------------- (3) Filing Party: -------------------------------------------------------------------------------- (4) Date Filed: -------------------------------------------------------------------------------- WINDSOR WOODMONT BLACK HAWK RESORT CORP. NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 26, 2004 Notice is hereby given that an Annual Meeting of the Shareholders of Windsor Woodmont Black Hawk Resort Corp., a Colorado corporation (the "Company"), will be held at 9:00 a.m., local time, on May 26, 2004, at the Mountain High Casino, in the Mountain High Grill, 111 Richman Street, Black Hawk, Colorado, 80422, and any adjournments or postponements thereof for the following purposes: 1. To elect the following four (4) persons to serve as directors of the Company until the next Annual Meeting of Shareholders and thereafter until their successors shall have been elected and qualified: Jerry Dauderman, Timothy G. Rose; Irving C. Deal; and Garry Saunders; and 2. To ratify the selection of Grant Thornton LLP as the independent public accountants of the Company for the fiscal year ending December 31, 2004; and 3. To consider and act upon such other business as may properly come before the meeting or any adjournments thereof. Only shareholders of record at the close of business on April 16, 2004 (the "record date") shall be entitled to notice of and to vote at the meeting or any adjournments thereof. All shareholders are cordially invited to attend the meeting in person. April 23, 2004 By Order of the Board of Directors Jerry L. Dauderman Chief Executive Officer IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WISH YOUR SHARES OF COMMON STOCK TO BE VOTED, YOU ARE REQUESTED TO SIGN AND PROMPTLY MAIL OR FAX THE ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. A RETURN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, IS ENCLOSED FOR THAT PURPOSE OR YOU MAY FAX YOUR VOTE TO SCHLUETER & ASSOCIATES, P.C. AT (303) 296-8880. WINDSOR WOODMONT BLACK HAWK RESORT CORP. 111 RICHMAN STREET BLACK HAWK, COLORADO 80422 PROXY STATEMENT DATED APRIL 23, 2004 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 26, 2004 GENERAL This Proxy Statement is being furnished to the shareholders of Windsor Woodmont Black Hawk Resort Corp., a Colorado corporation, in connection with the solicitation of proxies by our board of directors from holders of outstanding shares of our common stock, $0.01 par value, for use at the Annual Meeting of Shareholders to be held at 9:00 a.m. local time, on May 26, 2004, at the at the Mountain High Casino, in the Mountain High Grill, 111 Richman Street, Black Hawk, Colorado, 80422, and any adjournments or postponements of the annual meeting. This Proxy Statement, Notice of Annual Meeting of Shareholders and the accompanying Proxy Card are first being mailed to shareholders on or about April 23, 2004. VOTING SECURITIES AND VOTE REQUIRED Only shareholders of record at the close of business on April 16, 2004 (the "record date"), are entitled to notice of and to vote the shares of common stock of the Company held by them on such date at the meeting or any and all adjournments of the meeting. As of the record date, 1,000,000 shares of common stock were outstanding. There was no other class of voting securities outstanding at that date. Each share of common stock held by a shareholder entitles such shareholder to one vote on each matter that is voted upon at the annual meeting or any adjournments of the annual meeting. The presence, in person or by proxy, of the holders of a majority of the issued and outstanding shares of common stock is necessary to constitute a quorum at the meeting. Assuming that a quorum is present, the affirmative vote of the holders of a majority of the shares of common stock represented at the meeting in person or by proxy and entitled to vote will be required to approve each proposal to be considered at the meeting. Abstentions and broker "non-votes" will be counted toward determining the presence of a quorum for the transaction of business; however, abstentions will have the effect of a negative vote on the proposals being submitted. Abstentions may be specified on all proposals. A broker "non-vote" will have no effect on the outcome of any of the proposals. 2 If the accompanying proxy is properly signed and returned to the Company and not revoked, it will be voted in accordance with the instructions contained therein. Unless contrary instructions are given, the persons designated as proxy holders in the accompanying proxy will vote "FOR" each of the proposals to be considered by the shareholders at the meeting or, if no such recommendation is given, in their own discretion. The Company's executive officers and directors have advised the Company that they intend to vote their shares (including those shares over which they hold voting power), representing approximately 15.33% of the outstanding shares of common stock, in favor of each of the proposals listed. Each proxy granted by a shareholder may be revoked by such shareholder at any time thereafter by writing to the Secretary of the Company prior to the meeting, or by execution and delivery of a subsequent proxy or by attendance and voting in person at the meeting, except as to any matters upon which, prior to such revocation, a vote shall have been cast pursuant to the authority conferred by such proxy. The cost of soliciting these proxies, consisting of the printing, handling and mailing of the proxy and related material, and the actual expense incurred by brokerage houses, custodians, nominees and fiduciaries in forwarding the proxy materials to the beneficial owners of the shares of common stock, will be paid by the Company. In order that there is a quorum, it may be necessary for certain officers, directors, regular employees and other representatives of the Company to solicit proxies by telephone or facsimile machine or in person. These persons will receive no extra compensation for their services. COMMUNICATION WITH THE BOARD The Company does not have any formal procedures for shareholder communication with the Board. Any matter intended for the members of the board of directors or any individual member of the board, should be directed to Michael L. Armstrong, the Company's secretary at 3811 Turtle Creek Blvd, Suite 170, Dallas, Texas 75219, with a request to forward the same to the intended recipient. In general, all shareholder communication delivered to the Company's secretary for forwarding to the members of the board of directors or any individual member of the board will be forwarded in accordance with the shareholder's instructions. However, Mr. Armstrong reserves the right to not forward to board members any abusive, threatening, or otherwise inappropriate materials. OWNERSHIP OF OUR COMMON STOCK The following table sets forth information regarding the beneficial ownership of our common stock as of April 16, 2004 by each person known by us to be the beneficial owner of more than 5% of our common stock, by each of our directors and executive officers and by all of our executive officers and directors as a group. Except as indicated in the footnotes to this table and under applicable community property laws, we believe that each shareholder named in this table has sole investment and voting power with respect to the shares indicated. 3
AMOUNT AND NATURE OF PERCENT OF COMMON BENEFICIAL OWNERSHIP STOCK -------------------- ----- NAME AND ADDRESS OF BENEFICIAL OWNER APR 21st Century Trust(1) 77,292.5 7.73% c/o Malouf Lynch Jackson and Swinson, P.C. 600 Preston Commons East 8115 Preston Road Dallas, TX 75225 AMR 21st Century Trust(1) 77,292.5 7.73% c/o Malouf Lynch Jackson and Swinson, P.C. 600 Preston Commons East 8115 Preston Road Dallas, TX 75225 Donald J. Malouf(1)(2) 164,585 16.20% c/o Malouf Lynch Jackson and Swinson, P.C. 600 Preston Commons East 8115 Preston Road Dallas, TX 75225 Patricia Deal(3) 83,602 8.36% c/o Normandy, Inc. 3811 Turtle Creek Blvd., Suite 170 Dallas, TX 75219 Jerry L. Dauderman(4) 78,792 7.88% 3 Hillsborough Newport Beach, CA 97660 Irving C. Deal(5) 19,375 1.94% c/o Normandy, Inc. 3811 Turtle Creek Blvd., Suite 170 Dallas, TX 75219 Michael L. Armstrong(6) 15,000 1.50% c/o Windsor Woodmont Black Hawk Resort Corp. 3811 Turtle Creek Blvd., Suite 170 Dallas, TX 75219 Timothy G. Rose(7) 30,171 3.02% 8117 Golfers Oasis Las Vegas, NV 89149 Garry Saunders(8) 14,213 1.42% 9004 Players Club Drive Las Vegas, NV 89134 John and Katherine Utley 60,000 6.00% 5601 Willow Bend Ct. Plano, TX 75093 Ableco Holding LLC(9) 152,521 13.23% c/o Cerberus Partners 450 Park Avenue, 28th Floor New York, NY 10022 U.S. Bancorp Investments, Inc.(10) 74,342 6.92% 11766 Wilshire Boulevard, #870 Los Angeles, CA 90025 Madeleine L.L.C.(11) 188,509 15.86% c/o Cerberus Partners 450 Park Avenue, 28th Floor New York, NY 10022
4 Jess Ravich(12) 83,579 7.71% c/o U.S. Bancorp Investments, Inc. 11766 Wilshire Boulevard, #870 Los Angeles, CA 90025 All our executive officers and directors 153,338 15.33% as a group
------------ (1) Donald J. Malouf is the trustee of the APR Trust and the AMR Trust. As the trustee, Mr. Malouf has the power and authority to vote and to dispose of the shares held by this trust and, accordingly, may be deemed to be the beneficial owner of such shares. Mr. Malouf, however, disclaims beneficial ownership with respect to such shares. (2) These shares include 10,000 shares underlying options granted by us to Mr. Malouf. (3) Patricia Deal is the spouse of Irving C. Deal. Ms. Deal disclaims beneficial ownership of any shares that may be deemed to be beneficially owned by her husband. (4) These shares represent (a) 78,792 shares held directly by Mr. Dauderman. Does not include 10,000 shares underlying options granted by us to Mr. Dauderman which were exchanged pursuant to the voluntary option exchange agreement dated January 29, 2003. See VOLUNTARY STOCK OPTION EXCHANGE. (5) These shares represent (a) 12,000 shares held directly by Mr. Deal, (b) 7,375 shares owned by Normandy, Inc., which Mr. Deal may be deemed to beneficially own by virtue of being the Chairman of the Board and Chief Executive Officer of Normandy, Inc. Does not include 10,000 shares underlying options granted by us to Mr. Deal which were exchanged pursuant to the voluntary option exchange agreement dated January 29, 2003. See VOLUNTARY STOCK OPTION EXCHANGE. (6) These shares include 15,000 shares held directly by Mr. Armstrong. Does not include 14,500 shares underlying options granted by us to Mr. Armstrong which were exchanged pursuant to the voluntary option exchange agreement dated January 29, 2003. See VOLUNTARY STOCK OPTION EXCHANGE. (7) These shares 30,171 shares held directly by Mr. Rose. Does not include 40,000 shares underlying options granted by us to Mr. Rose which were exchanged pursuant to the voluntary option exchange agreement dated January 29, 2003. See VOLUNTARY STOCK OPTION EXCHANGE. (8) These shares represent 10,000 shares held directly by Mr. Saunders. Does not include 10,000 shares underlying options granted by us to Mr. Saunders which were exchanged pursuant to the voluntary option exchange agreement dated January 29, 2003. See VOLUNTARY STOCK OPTION EXCHANGE. (9) These shares represent shares underlying 152,521 common stock purchase warrants contained in units purchased in the unit offering. (10) These shares represent shares underlying 32,013 warrants issued to U.S. Bancorp Libra, a division of U.S. Bancorp Investments, Inc., as placement agent for our unit offering, and 42,329 warrants purchased by U.S. Bancorp Investments, Inc. as part of the unit offering. (11) These shares represent shares underlying 188,509 common stock purchase warrants purchased in conjunction with shares of our series B preferred stock. (12) These shares represent: (a) 43,960 shares underlying the warrants held by Mr. Ravich; (b) 30,405 shares underlying warrants held by The Ravich Revocable Trust of 1989; (c) 1,714 shares underlying warrants held by the Ravich Family Foundation, which Mr. Ravich may be deemed to beneficially own by virtue of his having the power and authority to vote and to dispose of the shares; and (d) 7,500 shares underlying options granted by us to Mr. Ravich. CHANGE OF CONTROL ARRANGEMENTS There are no arrangements known to the Company that may at a subsequent date result in a change in control of the Company. SHAREHOLDERS' AGREEMENT The holders of the Company's common stock as of the date of issuance of its restricted 13% First Mortgage Notes due 2005 have entered into a shareholders' agreement which provides for: (1) the nomination, election and removal of our directors, including one director designated by Jess Ravich, as trustee of The Ravich Revocable Trust of 1989, so long as The Ravich Revocable Trust of 1989 owns shares of our series B preferred stock, (2) access to information by the shareholders, 5 (3) restrictions on the transfer of shares of common stock other than certain permitted transfers, including a right of first refusal by the other shareholders and by us, (4) tag-along rights of the holders of our warrants with respect to proposed transfers or series of transfers aggregating at least 15% of our shares of common stock, and (5) drag-along rights of the shareholders to require the holders of our warrants to transfer warrant shares to the proposed purchaser of shares aggregating at least 51% of our fully-diluted shares of common stock. 6 PROPOSAL 1 ELECTION OF DIRECTORS The Company's directors are elected annually to serve until the next Annual Meeting of Shareholders and thereafter until their successors shall have been elected and qualified. The number of directors presently authorized by the Articles of Incorporation of the Company is not less than two (2) nor more than fifteen (15). Unless otherwise directed by the shareholders, the proxy holder will vote all shares represented by proxies held by them for the election of the following nominees, all of whom are now members and constitute the Company's board of directors. The Company is advised that all nominees have indicated their availability and willingness to serve, if elected. In the event that any nominee becomes unavailable or unable to serve as a director of the Company prior to the voting, the proxy holder will vote for a substitute nominee in the exercise of his best judgment.
CURRENT NOMINEES AGE POSITIONS -------- --- --------- Jerry L. Dauderman 59 Chairman of the Board of Directors and Chief Executive Officer Timothy G. Rose 47 President and Director Irving C. Deal 76 Director Garry Saunders 52 Director
JERRY L. DAUDERMAN. Mr. Dauderman is the Chairman of the board of directors and the Chief Executive Officer of the Company. Mr. Dauderman has served as a director since March 2000. He is currently a director of CT Realty, The Stowell Co. and CDFC, Inc. Mr. Dauderman is currently self-employed. TIMOTHY G. ROSE. Mr. Rose, has been a director and our President since August 20, 2001. Mr. Rose was the Executive Vice President - Casino Operations and Development from July 1998 until becoming President. Mr. Rose has been President of R.O.I. Gaming, Inc., a gaming industry consulting firm, since June 1990. Between June 1996 and June 1998, Mr. Rose served as a Director of Coopers & Lybrand LLP's National Hospitality and Gaming Group in Las Vegas. Mr. Rose has 22 years of hospitality experience, including over 18 years of experience in the gaming industry. He worked for over ten years as a senior executive in several casinos in Atlantic City, New Jersey, including positions as Senior Vice President at Trump Castle Hotel and Casino and Senior Vice President of Marketing at Trump Plaza Casino Hotel from February 1986 through January 1989. Prior to joining the Trump organization, Mr. Rose was a marketing executive at Bally's Park Place Casino Hotel. 7 IRVING C. DEAL. Mr. Deal has served as a director since our inception and was formerly the Chairman of the board of directors of the Company. Since October 1975, Mr. Deal has been the Chief Executive Officer and Chairman of the Board of Normandy, Inc., a real estate development company, and is also the Chairman of the Board of each of Normandy Inc.'s subsidiaries. Mr. Deal received a Bachelor of Arts degree in Sociology, cum laude, from Stanford University, and served for a term of ten years from March 1985 through April 1995 on the Stanford Board of Trustees. He also served as Chairman of the Stanford Real Estate Commission for a term of two years. GARRY W. SAUNDERS. Mr. Saunders has served as a director since January 2002. Mr. Saunders is currently self employed. Mr. Saunders served as the President of Gaming of Playboy Enterprises from October 1997 through October 2001. From February 1994 through July 1997, Mr. Saunders worked for ITT Corporation as the Executive Vice President of Operations for Caesars World. At the present time no family relationship exists among any of the named directors and executive officers. No arrangement or understanding exists between any of these directors or officers and any other persons pursuant to which any director or executive officer was elected as a director or executive officer of the Company. The directors of the Company are elected annually and serve until their successors take office or until their death, resignation or removal. The executive officers serve at the pleasure of the board of directors of the Company. BOARD RECOMMENDATION The Board recommends a vote FOR the election of each of the four nominees for directors of the Company. BOARD OF DIRECTORS Our bylaws provide that the number of our directors may be established by the board of directors but may not be fewer than two nor more than fifteen. Any vacancy may be filled, at any regular meeting or at any special meeting called for that purpose, by a majority of the directors then in office. Once elected, directors serve a one-year term or until their successors are duly elected and qualified. Holders of shares have no right to cumulative voting for the election of directors. At each Annual Meeting of Shareholders, the holders of a majority of the issued and outstanding shares will be able to elect all of the directors. Directors may be removed by the affirmative vote of the holders of a majority of the issued and outstanding shares entitled to vote on such matters. Jess Ravich, the Chairman and Chief Executive Officer of Libra Securities, LLC, in his capacity as trustee for The Ravich Revocable Trust of 1989, which is a holder of our series B preferred stock, has the right to designate one member of our board of directors. On August 16, 2002, Mr. Ravich resigned as a member of the board of directors. To date, Mr. Ravich has not designated a replacement to serve on the board of directors. Mr. Ravich declined to nominate a director to serve as his replacement. The Ravich Revocable Trust of 1989 is a trust established by Jess Ravich and his wife to hold their assets. 8 Mr. and Mrs. Ravich are the grantors and co-trustees. The director designated by The Ravich Revocable Trust is subject to removal by The Ravich Revocable Trust. LIMITED LIABILITY AND INDEMNIFICATION Colorado law permits a Colorado corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its shareholders for monetary damages except for liability resulting from: - a breach of a director's duty of loyalty to us or our shareholders; - acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; - violations of Section 7-108-403 of the Colorado Business Corporation Act; or - transactions from which a director directly or indirectly derived an improper benefit. Our articles of incorporation contain a provision which limits the liability of our directors and officers to the maximum extent permitted by Colorado law. In addition, our bylaws provide that we will, to the fullest extent permitted by Colorado law in effect from time to time, indemnify and hold harmless our officers and directors from and against all expense, liability and loss, including attorneys' fees, actually and reasonably incurred by them in connection with civil, criminal, administrative or investigative actions, suits or proceedings. The bylaws further provide that we may, by action of the board of directors, provide indemnification to our employees and agents with the same scope and effect as the indemnification of our officers and directors. We are permitted under the bylaws to purchase and maintain insurance and to advance expenses to directors and officers and others to cover the costs of defending a proceeding. MEETINGS AND COMMITTEES OF THE BOARD The board of directors has a standing Audit Committee. The board of directors does not have a Compensation Committee or a Nominating Committee or any committee performing similar functions and the board of directors participates in the consideration of new nominees as members of the board of directors. During the fiscal year ended December 31, 2003, the board of directors met 4 times and the Audit Committee met 4 times. During the fiscal year ended December 31, 2003, all directors attended the meetings of the board of directors and the committees thereof on which they served or participated by telephone. Messrs. Garry Saunders and Irving C. Deal are members of the Audit Committee. Mr. Saunders acts as chairman of the Audit Committee. The Audit Committee's responsibilities include recommending to the board the selection of our independent auditors, reviewing the arrangements and the scope of the independent audit and reviewing all financial statements. Messrs. Deal and Saunders are "independent" as defined in the NASDAQ listing standards. In 9 February 2002, the board of directors adopted an Audit Committee Charter. The Audit Committee Charter was filed with the Securities and Exchange Commission in a proxy statement dated March 28, 2002. 10 PROPOSAL 2 SELECTION OF ACCOUNTANTS On May 20, 2002, we dismissed Arthur Andersen, LLP ("Andersen"), as our independent public accountants. Our Audit Committee participated in and approved the decision to dismiss Andersen. The reports by Andersen on our financial statements during the preceding two years contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principles. During the preceding two fiscal years and through May 20, 2002, there were no disagreements between the Company and Andersen on any matter of accounting principles or practices, financial statement disclosure, or audit scope or procedure, which, if not resolved to Andersen's satisfaction, would have caused Andersen to make reference to the subject matter of the disagreements in connection with Andersen's report on the Company's financial statements. During the preceding two fiscal years and through May 20, 2002, there were no reportable events required to be disclosed pursuant to Item 304(a)(1)(v). On May 13, 2002, we announced that the Company's Board of Directors voted to approve the engagement of Deloitte & Touche LLP as the Company's independent auditor for the year ending December 31, 2002, subject to customary client acceptance procedures. On August 13, 2002, Deloitte & Touche LLP notified the Company that Deloitte & Touche LLP declined to accept this engagement. Deloitte & Touche LLP has not reviewed, audited or rendered any report on any financial statements of the Company as of any date or for any period. On January 14, 2003 we employed Grant Thornton LLP as our new independent accountants, which employment was approved by the Bankruptcy Court on February 6, 2003. During the preceding two fiscal years and through December 31, 2002, the Company had not consulted with Grant Thornton LLP regarding the matters described in, and required to be disclosed pursuant to Item 304(a)(2)(i) or Item 304(a)(2)(ii) of Regulation S-K. The board of directors has selected Grant Thornton LLP as the independent public accountants of the Company for the fiscal year ending December 31, 2004, and has further directed that the Company submit the selection of the independent public accountants for ratification by the shareholders at the Annual Meeting of Shareholders. A representative of Grant Thornton LLP is expected to be present at the annual meeting with the opportunity to make a statement and be available to respond to appropriate questions. Unless otherwise directed by shareholders, the proxy holders will vote all shares represented by proxies held by them to ratify the selection of Grant Thornton LLP as the independent public accountants of the Company for the fiscal year ending December 31, 2004. 11 BOARD RECOMMENDATION The Board recommends a vote FOR the ratification of the selection of Grant Thornton LLP as the independent public accountants of the Company for the fiscal year ending December 31, 2004. Shareholder ratification of the selection of Grant Thornton LLP as the Company's independent public accountants is not required by the Company's bylaws or otherwise. However, the board of directors is submitting the selection of Grant Thornton LLP to the shareholders for ratification as a matter of corporate practice. If the shareholders fail to ratify the section, the board of directors will reconsider the retention of that firm. Even if the selection is ratified, the board of directors, at its discretion, may direct the appointment of a different independent public accounting firm at any time during the year if the board of directors determines that such a change is in the best interests of the Company and its stockholders. AUDIT COMMITTEE REPORT(1) The Audit Committee has reviewed and discussed with management the Company's audited consolidated financial statements as of and for the year ended December 31, 2003. The Audit Committee has also discussed with Grant Thornton LLP the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended, by the Auditing Standards Board of the American Institute of Certified Public Accountants. The Audit Committee has received and reviewed the written disclosures and the letter from Grant Thornton LLP required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, as amended, and has discussed with Grant Thornton LLP their independence. Based on the reviews and discussions referred to above, the Audit Committee has recommended to the board of directors that the audited consolidated financial statements referred to above be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003 filed with the Securities and Exchange Commission on April 14, 2004. AUDIT COMMITTEE OF THE BOARD OF DIRECTORS Garry Saunders, Chairman Irving C. Deal ----------- (1) The material in this report is not soliciting material, is not deemed filed with the SEC, and is not incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date of this proxy statement and irrespective of any general incorporation language in such filing. 12 AUDIT COMMITTEE FINANCIAL EXPERT The Audit Committee does not have any members who qualify as an "audit committee financial expert" under Item 401(h) of Regulation S-K. The Company does not intend to add any new members to the board of directors until the completion of its bankruptcy proceedings. FEES PAID TO THE INDEPENDENT AUDITORS AUDIT FEES The aggregate fees billed by Grant Thornton LLP ("Grant Thornton") for professional services rendered for the audit of the Company's annual consolidated financial statements for the year ended December 31, 2003 and the reviews of the unaudited interim financial statements for the periods ending March 31, 2003, June 30, 2003 and September 30, 2003, included in the Company's Form 10-Q's ("Audit Services") were approximately $52,206.61. The aggregate fees billed by Grant Thornton for Audit Services for the Company's annual consolidated financial statements for the year ended December 31, 2002 and the reviews of the unaudited interim financial statements for the periods ending June 30, 2002 and September 30, 2002, included in the company's Form 10-Q's were approximately $70,000. TAX FEES. The aggregate fees billed by Grant Thornton for professional services rendered for the tax compliance, tax advice and tax planning for the fiscal year ended December 31, 2003 ("Tax Fees") were $12,438.75. Grant Thornton did not provide any Tax Fees for the fiscal year ended December 31, 2002. ALL OTHER FEES Grant Thornton did not perform any professional services other than those set forth above for the fiscal years ended December 31, 2003 and 2002. CODE OF ETHICS The Company has a code of ethics that applies to the Company's Chief Executive Officer and Chief Financial Officer. A copy of this code is attached to this proxy statement as Exhibit A. The Company intends to disclose any changes in or waivers from its code of ethics by filing a Form 8-K. 13 MANAGEMENT EXECUTIVE OFFICER Mr. Armstrong and Mr. Sullivan are officers of the Company. The other executive officers and information concerning their background and experience are identified and included in the section captioned "Election of Directors."
NAME AGE POSITION ---- --- -------- Michael L. Armstrong 54 Executive Vice President, Chief Financial Officer, Treasurer and Secretary Sean A. Sullivan 46 Vice President, Casino Operations and General Manager
MICHAEL L. ARMSTRONG. Mr. Armstrong is our Executive Vice President, Chief Financial Officer, Treasurer and Secretary. From December 1980 to March 2000, Mr. Armstrong was the Chief Financial Officer of Normandy, Inc. Mr. Armstrong was also the President and a director of Normandy, Inc. and the Vice President of each of Normandy, Inc.'s subsidiaries. Prior to joining Normandy, Inc., Mr. Armstrong worked at Deloitte & Touche for nine years. He is a Certified Public Accountant. SEAN A. SULLIVAN. Mr. Sullivan is our Vice President, Casino Operations and General Manage. From November 2000 to March 2003, Mr. Sullivan was the General Manager of the Riviera Casino in Black Hawk, Colorado. From 1997 to November 2000, Mr. Sullivan was General Manager of the Canyon Casino in Black Hawk, Colorado. Prior to 1997, Mr. Sullivan held executive positions with other casinos in Las Vegas, Nevada. SECTION 16(a) COMPLIANCE Section 16(a) of the Exchange Act, generally requires the Company's directors and executive officers and persons who own more than 10% of a registered class of the Company's equity securities ("10% owners") to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Directors and executive officers and 10% owners are required by Securities and Exchange Commission regulation to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on review of copies of such reports furnished to us and verbal representations that no other reports were required to be filed during the fiscal year ended December 31, 2003, all Section 16(a) filing requirements applicable to its directors, executive officers and 10% owners were met. 14 COMPENSATION OF OFFICERS AND DIRECTORS The following table sets forth information as to the compensation paid to our Chief Executive Officer and other executive officers who received compensation in excess of $100,000 for services rendered during the last three fiscal years. These three persons are referred to collectively as the "Named Executive Officers." ANNUAL COMPENSATION
SECURITIES OTHER ANNUAL UNDERLYING NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS -------------------------------------------------------------------------------------------------------------- Jerry L. Dauderman, Chief 2003 $210,000(1) 0 0 0 Executive Officer 2002 $ 96,000(2)(3) 0 0 0 Timothy G. Rose, President 2003 $230,842(1) 0 0 0 2002 $196,847(2)(3) 0 0 0 2001 $200,200 0 0 25,000 Michael L. Armstrong, Exec. Vice 2003 $153,480(1) 0 0 0 President Chief Financial Officer, 2002 $129,800(2)(3) 0 0 7,000 Treasurer and Secretary 2001 $132,000 0 0 0 Sean A. Sullivan, Vice President Casino Operations and General Manager 2003 $250,503.67 $83,333.33(4) 0 0
------------ (1) The above amount excludes post-bankruptcy petition (November 7, 2002) compensation which was accrued and paid on January 15, 2003. (2) The above amount includes post-bankruptcy petition (November 7, 2002) compensation which was accrued and paid on January 15, 2003. (3) The above amount do not include amounts accrued and unpaid from November 1, 2003 until November 6, 2003 (4) Paid pursuant to Mr. Sullivan's employment agreement. See "Employment Agreement" below. EMPLOYMENT AGREEMENT. On September 16, 2003, we entered into an employment agreement with Sean Sullivan, Vice President of Casino Operations and General Manager. The employment agreement is not intended to create anything other than "at will" employment agreement between Mr. Sullivan and the Company. The principal terms of the employment agreement are summarized below. Pursuant to the employment agreement, Mr. Sullivan's regular base salary is $330,000 per year until the date of confirmation of the Company's Chapter 11 reorganization plan by the United States Bankruptcy Court in the District of Colorado. After the date of confirmation of the reorganization plan, Mr. Sullivan's base salary shall be reduced to $258,000 per year. Because of the risk associated with accepting employment with the Company involved in a Chapter 11 bankruptcy reorganization, Mr. Sullivan was granted a $100,000 bonus. Mr. Sullivan is entitled to certain performance bonuses tied to the Company's earnings before interest, taxes, depreciation, and amortization ("EBITDA"). If the Company's EBITDA is equal to or exceeds $16,000,000 for the calendar year 2004, Mr. Sullivan shall be entitled to a bonus of $132,000. If the Company's EBITDA is equal to or exceeds $18,000,000 for the calendar year 2005, Mr. Sullivan shall be entitled to a bonus of $198,000. If Mr. Sullivan voluntarily terminates his employment or if the Company terminates Mr. Sullivan for cause 15 prior to the end of a calendar year, Mr. Sullivan will not be entitled to any performance bonus for that year. If Mr. Sullivan is terminated without cause prior to the end of calendar 2004, Mr. Sullivan shall be entitled to the entire performance bonus for 2004 and 2005. If Mr. Sullivan is terminated without cause prior to the end of calendar 2005, Mr. Sullivan shall be entitled to the entire performance bonus for 2005. In addition, Mr. Sullivan is entitled to 15,000 options to purchase shares of the Company's common stock at an exercise price of the greater of $1.00 per share of the fair market value on the date of issuance. The options are subject to the following vesting schedule: 5,000 options vest on May 15, 2004, 5,0000 options vest on May 15, 2005 and 5,000 options vest on May 15, 2006, provided that Mr. Sullivan is employed as the general manager of the Casino. As of the date of this proxy statement, Mr. Sullivan had not been granted these options. We have also verbally agreed to pay Timothy G. Rose an annual salary of $230,230, and Michael L. Armstrong an annual salary of $151,800. OPTION GRANTS IN LAST FISCAL YEAR There were no options granted to the Named Executive Officers during the fiscal year ended December 31, 2003. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following table sets forth information concerning the number and value of shares acquired on the exercise of options and exercisable and unexercisable stock options as of December 31, 2003 for the Named Executive Officers.
Shares Number of Securities Acquired Value Underlying Unexercised Value of Unexercised In-the- Name on Exercise Realized Options at Year End Money Options at Year End ---------------------------------------------------------------------------------------------------------- Exercisable Unexercisable Exercisable Unexercisable ---------------------------------------------------------------------------------------------------------- Jerry L. 0 0 10,000 (1) 0 (2) (2) Dauderman Timothy G. 0 0 40,000 (1) 0 (2) (2) Rose Michael L. 0 0 14,500 (1) 0 (2) (2) Armstrong
------------ (1) Includes shares underlying options granted by Windsor Woodmont which were to be exchanged pursuant to the voluntary option exchange agreements dated January 29, 2003. As of the date of this Proxy Statement, the new stock options have not been granted. See VOLUNTARY STOCK OPTION EXCHANGE. (2) We are unable to determine the value of the options because there is no trading market for our common stock. SECURITIES AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS The table set forth below presents the securities authorized for issuance with respect to compensation plans under which equity securities are authorized for issuance as of December 31, 2003: 16 EQUITY COMPENSATION PLAN INFORMATION
---------------------------------------------------------------------------------------------------------------------------- Number of securities to Weighted-average Number of securities remaining Plan Category be issued upon exercise exercise price of available for future issuance under of outstanding options, outstanding options, equity compensation plans (excluding warrants and rights warrants and rights securities reflected in the 1st column) ---------------------------------------------------------------------------------------------------------------------------- Equity Compensation Plans approved by security holders 150,000 $ 18.31(1) 45,000 Equity Compensation Plans not approved by security holders 0 0 0 Total 150,000 $ 18.31 45,000
1. Includes 95,000 shares exchanged pursuant to the Option Exchange Agreements entered into on January 29, 2003. The 95,000 new options were to be granted exactly six months and one day after the date of the Option Exchange Agreements with an exercise price to be the fair market value of the Common Stock on the new grant date. As of the date of this Proxy Statement, the new stock options have not been granted. See "Voluntary Stock Option Exchange." COMPENSATION OF DIRECTORS We have agreed to pay Jerry L. Dauderman, Chairman of the board of directors a directors fee of $10,000 per month during the course of our reorganization. The remaining directors receive no cash compensation for serving as directors. All directors are reimbursed for travel and other expenses incurred in connection with attending board meetings. VOLUNTARY STOCK OPTION EXCHANGE On January 29, 2003, the Company entered into voluntary stock option exchange agreements (the "Option Exchange Agreements") to exchange outstanding options to purchase shares of our the Common Stock granted under the 2000 Stock Incentive Plan held by eligible employees or eligible directors for new options under the same option plans. The Option Exchange Agreements required an optionee to cancel and terminate their old stock options previously granted to the optionee with the result that the same number of new options with a exercise price to be the fair market value of the Common Stock on a new grant date exactly six months and one day after the date of the Option Exchange Agreements. Stock options to acquire a total of 95,000 shares of the Company's Common Stock with exercise prices ranging from $16.50 to $20.00 were exchanged under the Option Exchange Agreements. The Exchange Program was designed to comply with FASB Interpretation No. 44, "Accounting for Certain Transactions involving Stock Compensation," for fixed plan accounting. On the new grant date and as of the date of this Proxy Statement, the Company had not determined the fair market value of the Company's common stock. Because the Company had not determined the fair market value of the common stock, the new stock options had not been granted under the Option Exchange Agreements. 2000 STOCK INCENTIVE PLAN On April 14, 2000, our board of directors approved the 2000 Stock Incentive Plan of Windsor Woodmont Black Hawk Resort Corp. which provides for the grant of options to purchase an aggregate of not more than 150,000 shares of our common stock. The purpose of the plan is to promote our long-term growth and profitability by providing key people with 17 incentives to improve stockholder value and contribute to our growth and financial success and by enabling us to attract, retain and reward the best-available persons. The plan provides for the granting of both incentive stock options qualifying under Section 422 of the Internal Revenue Code of 1986 and nonqualified stock options, stock appreciation rights, restricted or unrestricted stock awards, phantom stock and performance awards. Awards of incentive stock options under the plan are limited to employees and must have an exercise price at least equal to the fair market value of our common stock at the date of grant, but nonqualified stock options may have an exercise price less than fair market value. The plan will be administered by the board of directors or by a committee appointed by the board of directors which determines the persons to be granted options under the plan, the number of shares subject to each option, the exercise price of each option and the option period. The plan was approved by the shareholders in August 2000. 2002 STOCK INCENTIVE PLAN On March 25, 2002, the Company's board of directors adopted and approved by a majority vote, the Company's 2002 Stock Incentive Plan (the "Plan"). The following summary of the principal features of the Plan is qualified in its entirety by reference to the terms and provisions of the Plan. The Plan authorizes the issuance of options to purchase the Company's common stock and other types of awards to eligible persons, as further described below. Subject to certain adjustments, the Plan authorizes the granting of up to forty-five thousand (45,000) shares of the Company's common stock in the form of stock options, stock appreciation rights, stock awards, phantom stock, and performance awards, that may be granted under the Plan. The Company has not yet granted any option or award under the Plan. The purpose of the Plan is to promote long-term growth and profitability of the Company by (i) providing key people with incentives to improve stockholder value and to contribute to the growth and financial success of the Company and (ii) enabling the Company to attract, retain and reward the best-available persons. The Plan provides for the board or by such committee as may be appointed by the board (the "Administrator"), in its sole discretion to grant awards under the Plan, prescribe grant agreements evidencing such awards and establish programs for granting awards. The Administrator has the authority to determine the eligible persons and the time at which awards shall be granted, the number of shares to be issued or underlying stock options, to designate the exercise price of options granted under the Plan, the term during which an option may be exercised and the rate at which the options may be exercised and the shares may vest. The Administrator has the authority to establish objectives and conditions for earning awards and determining whether awards will be paid after the end of a performance period. The Administrator also will have full authority and discretion to interpret the Plan and apply its provisions, procedures and forms relating to the Plan. The Plan provides that no member of the Administrator responsible for administering the Plan will be liable for any action taken or decision made in good faith relating to the Plan or any award thereunder and for the indemnification of the members of the Administrator. 18 The Administrator may grant: (i) incentive stock options, which are intended to qualify for preferential tax treatment under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and non-statutory stock options (each an "NSO") to purchase shares of Common Stock (which do not qualify for such preferential tax treatment under the Code); (ii) Stock Appreciation Rights ("SAR"), which entitles the grantee to receive as payment having an aggregate value equal to the appreciation of the stock price over the base price, multiplied by the number of shares specified; (iii) stock awards, which provides for the grant of restricted stock awards on such terms and conditions as the Administrator may provide; (iv) phantom stock, which entitles the grantee awards in stock-equivalent units; and (v) performance awards, which become payable on account of attainment of one or more performance goals. All employees, directors, officers and consultants of the Company or any affiliate of the Company are eligible to participate in the Plan, subject to the discretion of the Administrator. The Company may make or guarantee loans to grantees to assist grantees in exercising awards and satisfying obligations. The Administrator may require, as a condition precedent, that grantees become a party to a stock restriction agreement. CERTAIN RELATIONSHIP AND RELATED PARTY TRANSACTIONS We have a financial consulting arrangement with one of our former directors. During the year ended December 31, 2001 this director earned $208,000 for services related to the FF&E loan from Wells Fargo Bank and provided $40,000 in additional services. Trade accounts payable and accrued expenses include $208,000 payable to this director at December 31, 2003 and 2002. Our former Secretary and director provided legal and professional services to the Company. During the year ended December 31, 2002, he provided $26,794 in legal services. During the year ended December 31, 2001, he provided $63,496 in legal services. Trade accounts payable and accrued expenses include $3,912 payable to this director at December 31, 2003 and 2002, respectively. 19 GENERAL OTHER MATTERS The board of directors does not know of any matters that are to be presented at the Annual Meeting of Shareholders other than those stated in the Notice of Annual Meeting and referred to in this Proxy Statement. If any other matters should properly come before the meeting, it is intended that the proxies in the accompanying form will be voted as the persons named therein may determine in their discretion. April 23, 2004 By Order of the Board of Directors Jerry L. Dauderman Chief Executive Officer 20 EXHIBIT A WINDSOR WOODMONT BLACK HAWK RESORT CORP. CODE OF ETHICS FOR CEO AND CFO Windsor Woodmont Black Hawk Resort Corp.'s (the "Corporation") Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") are subject to the following policies: 1. The CEO and CFO are responsible for full, fair, accurate, timely and understandable disclosure in the periodic reports filed by the Corporation with the Securities and Exchange Commission and in other public communications. Accordingly, it is the responsibility of the CEO and CFO to promptly to bring to the attention of the Audit Committee any material information that affects the disclosures made by the Corporation in its public filings. 2. The CEO and CFO shall promptly bring to the attention of the Audit Committee and the Corporation's auditors any information concerning (a) significant deficiencies in the design or operation of internal controls which could adversely affect the Corporation's ability to record, process, summarize and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation's financial reporting, disclosures or internal controls. 3. The CEO and CFO shall promptly bring to the attention of the Audit Committee any information concerning (a) any violation of this Code, including any actual or apparent conflicts of interest between personal and professional relationships, involving any management or other employees who have a significant role in the Corporation's financial reporting, disclosures or internal controls and (b) evidence of a material violation of the securities or other laws, rules or regulations applicable to the Corporation and the operation of its business, by the Corporation or any agent thereof. 4. The Board of Directors shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of this Code by the CEO and CFO. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code. In determining what action is appropriate in a particular case, the Board of Directors or such designee shall take into account all relevant information, including the nature and severity of the violation, whether the violation was a single occurrence or a repeated occurrence, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action and whether or not the individual in question had committed other violations in the past. Any waiver of this Code for the CEO and CFO may be made only by the Board of Directors or a committee of such and will be promptly disclosed as required by law or stock exchange regulation. Management shall periodically review and reassess the adequacy of this Code and recommend changes to the Board of Directors for approval. The Board of Directors reserves the right to amend this Code from time to time as it determines to be desirable or appropriate. Any amendment of this Code will be promptly disclosed as required by law or stock exchange regulation. 2 WINDSOR WOODMONT BLACK HAWK RESORT CORP. 111 RICHMAN STREET BLACK HAWK, COLORADO 80422 ANNUAL MEETING OF SHAREHOLDERS MAY 26, 2004 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned shareholder of Windsor Woodmont Black Hawk Resort Corp., a Colorado corporation, acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement, dated April 23, 2004, and hereby appoints Jerry L. Dauderman and Michael L. Armstrong, or either of them, each with the power of substitution, as Attorneys and Proxies to represent and vote all shares of common stock of the Company which the undersigned would be entitled to vote at the Annual Meeting of Shareholders and at any adjournment or adjournments thereof, hereby revoking any proxy or proxies heretofore given and ratifying and confirming all that said Attorneys and Proxies may do or cause to be done by virtue thereof with respect to the following matters: 1. Election of the following four (4) persons to serve as directors of the Company until the next Annual Meeting of Shareholders and thereafter until their successors shall have been elected and qualified: JERRY L. DAUDERMAN FOR [ ] AGAINST [ ] ABSTAIN [ ] TIMOTHY G. ROSE FOR [ ] AGAINST [ ] ABSTAIN [ ] IRVING C. DEAL FOR [ ] AGAINST [ ] ABSTAIN [ ] GARRY W. SAUNDERS FOR [ ] AGAINST [ ] ABSTAIN [ ] 2. Ratification of the selection of Grant Thornton LLP as the independent public accountants for the Company for the fiscal year ending December 31, 2004. FOR [ ] AGAINST [ ] ABSTAIN [ ] 3. To act upon such other matters as may properly come before the meeting or any adjournments thereof. This proxy, when properly executed, will be voted as directed. If no direction is indicated, the proxy will be voted FOR the election of each of the nominees listed above to the Board of Directors and FOR the proposal to select Grant Thornton LLP as the independent public accountants for the Company for the fiscal year ending December 31, 2004. Dated: ____________________, 2004 __________________________________ Signature __________________________________ Please Print Name __________________________________ Signature if held jointly __________________________________ Please Print Name [LABEL] Please sign your name exactly as it appears hereon. When joint tenants hold shares, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD IMMEDIATELY USING THE ENCLOSED ENVELOPE OR PLEASE FAX THIS TO THE OFFICES OF SCHLUETER & ASSOCIATES, P.C. AT (303) 296-8880. 2