SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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
MONARCH CASINO & RESORT, INC.
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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MONARCH CASINO & RESORT, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 26, 2004
To the Stockholders of Monarch Casino & Resort, Inc.:
The Annual Meeting of Stockholders of Monarch Casino & Resort, Inc. (the
"Company") will be held at the Atlantis Casino Resort, 3800 South Virginia
Street, Reno, Nevada 89502, on Wednesday, May 26, 2004, at 10:00 a.m. local
time, for the following purposes:
1. To elect John Farahi, Craig F. Sullivan and Charles W. Scharer as
directors of the Company;
2. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on April 8, 2004 are
entitled to notice of, and to vote, at the annual meeting. The stock transfer
books will not be closed.
Stockholders are cordially invited to attend the annual meeting in
person. STOCKHOLDERS DESIRING TO VOTE IN PERSON MUST REGISTER AT THE ANNUAL
MEETING WITH THE INSPECTORS OF ELECTION PRIOR TO COMMENCEMENT OF THE ANNUAL
MEETING. IF YOU WILL NOT BE ABLE TO ATTEND THE ANNUAL MEETING IN PERSON, YOU
ARE REQUESTED TO EXECUTE AND DATE THE ENCLOSED FORM OF PROXY AND TO FORWARD IT
TO THE SECRETARY OF THE COMPANY WITHOUT DELAY SO THAT YOUR SHARES MAY BE
REGULARLY VOTED AT THE ANNUAL MEETING.
A copy of the 2003 Annual Report to Stockholders, including financial
statements for the year ended December 31, 2003, is enclosed.
By order of the Board of Directors
/s/ Ben Farahi
--------------
BEN FARAHI
Secretary
MONARCH CASINO & RESORT, INC.
PROXY STATEMENT
TABLE OF CONTENTS
Page
VOTING SECURITIES .....................................................1
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN OTHER BENEFICIAL OWNERS ..3
ELECTION OF DIRECTORS .................................................4
Directors and Nominees .............................................5
Certain Officers of Subsidiary .....................................7
Committees of the Board ............................................7
Board Meetings ....................................................10
Annual Meetings ...................................................10
Communication with Directors ......................................10
Compensation of Non-Employee Directors ............................11
COMPENSATION OF EXECUTIVE OFFICERS ...................................12
Summary Compensation Table ........................................12
Option Grants in 2003 .............................................12
Aggregated Option Exercises in 2003 and Fiscal Year-End
Option Values ...................................................12
Compensation Committee Report on Executive Compensation ...........13
Audit Committee Report ............................................14
Stock Performance Chart ...........................................15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .......................16
INDEPENDENT PUBLIC ACCOUNTANTS .......................................17
AUDIT AND RELATED FEES ...............................................17
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 .19
CODE OF ETHICS .......................................................19
VOTING PROCEDURES ....................................................19
2005 ANNUAL MEETING OF STOCKHOLDERS ..................................19
OTHER BUSINESS .......................................................20
APPENDIX:
AUDIT COMMITTEE CHARTER, as Revised April 9, 2004 ....................21
MONARCH CASINO & RESORT, INC.
3800 South Virginia Street
Reno, Nevada 89502
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of Monarch Casino &
Resort, Inc. (the "Company") in connection with the annual meeting of
stockholders of the Company to be held at the Atlantis Casino Resort, 3800
South Virginia Street, Reno, Nevada 89502, on Wednesday, May 26, 2004, at
10:00 a.m. local time, and any adjournment thereof, for the purposes indicated
in the Notice of Annual Meeting of Stockholders.
The accompanying proxy is solicited by the Board of Directors of the
Company (the "Board"). This Proxy Statement and the accompanying form of
proxy are being mailed to stockholders on or about April 21, 2004. Any
stockholder giving a proxy has the power to revoke it prospectively by giving
written notice to the Company, addressed to Ben Farahi, Secretary, at the
Company?s principal address at 1175 W. Moana Lane, Suite 200, Reno, Nevada
89509 before the annual meeting, by delivering to the Company a duly executed
proxy bearing a later date, by notifying the Company at the annual meeting
prior to the commencement of the annual meeting, or by voting in person by
ballot at the annual meeting after notifying the inspectors of election of the
stockholder?s intention to do so prior to the commencement of the annual
meeting. The shares represented by the enclosed proxy will be voted if the
proxy is properly executed and received by the Company prior to the
commencement of the annual meeting, or any adjournment thereof.
None of the proposals to be voted on at the annual meeting creates a
right of appraisal under Nevada law. A vote "FOR" or "AGAINST" any of the
proposals set forth herein will only affect the outcome of the proposal.
The expenses of making the solicitation will consist of the costs of
preparing, printing, and mailing the proxies and proxy statements and the
charges and expenses of brokerage firms, custodians, nominees or fiduciaries
for forwarding such documents to security owners. These are the only
contemplated expenses of solicitation, and they will be paid by the Company.
VOTING SECURITIES
The close of business on April 8, 2004 has been fixed by the Board as the
record date for determination of stockholders entitled to vote at the annual
meeting. The securities entitled to vote at the annual meeting consist of
shares of common stock, par value $.01 ("Common Stock"), of the Company, with
each share entitling its owner to one vote. Common Stock is the only
outstanding class of voting securities authorized by the Company?s Articles of
Incorporation. The Company?s Articles of Incorporation authorize the Company
to issue 10,000,000 shares of preferred stock, par value $.01 ("Preferred
Stock"). None of the Preferred Stock is issued or outstanding, and the
Company has no present plans to issue shares of Preferred Stock.
The Board is empowered to issue one or more series of Preferred Stock
with such rights, preferences, restrictions, and privileges as may be fixed by
the Board, without further action by the Company?s stockholders. The issuance
of the Preferred Stock could adversely affect the rights, including voting
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rights, of the holders of the Common Stock and could impede an attempted
takeover of the Company. The Preferred Stock does not presently possess
general voting rights.
The number of outstanding shares of Common Stock at the close of business
on March 26, 2004, was 9,362,426. The number of shares outstanding may change
between such date and April 8, 2004, if any currently exercisable options to
purchase Common Stock are exercised, if the Company elects to repurchase and
cancel any shares in open market or privately negotiated transactions, or if
the Company otherwise authorizes the issuance of any shares. The stockholders
do not possess the right to cumulate their votes for the election of
directors.
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SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN OTHER BENEFICIAL OWNERS
The following is a list of persons who beneficially owned more than 5% of
the outstanding Common Stock of the Company and the ownership of all executive
officers, directors, director nominees, and executive officers and directors
as a group at the close of business on March 31, 2004, according to record
ownership listings as of that date, according to the Securities and Exchange
Commission Forms 3, 4 and 5 and Schedules 13D and 13G of which the Company has
received copies, and according to verifications as of March 26, 2004, which
the Company solicited and received from each executive officer and director:
Title of Amount and Nature Percent of
Class Beneficial Owner of Beneficial Ownership Class
(1),(2)
-------- ---------------- ----------------------- ----------
Common John Farahi 1,484,279 15.9%
1175 W. Moana Lane,
Reno, NV 89509
Common Bob Farahi 1,484,278 15.9%
1175 W. Moana Lane,
Reno, NV 89509
Common Ben Farahi 1,477,827 15.8%
1175 W. Moana Lane,
Reno, NV 89509
Common Jila Farahi Trust 614,617 6.6%
1175 W. Moana Lane,
Reno, NV 89509
Common Craig F. Sullivan 3,050 (3) *
Common Ronald R. Zideck 9,150 (4) *
Common Charles W. Scharer 6,100 (5) *
Common Columbia Wanger Asset 912,700 (6) 9.7%
Management, L.P.
WAM Acquisition GP, Inc.
Columbia Acorn Trust
227 W. Monroe Street,
Ste 3000
Chicago, IL 60606
Common Akre Capital Management, LLC 782,955 (7) 8.4%
2 West Washington Street
PO Box 998
Middleburg, VA 20118
Common Friedman, Billings, Ramsey
Group, Inc. 500,500 (8) 5.3%
Eric F. Billings
Emanuel J. Friedman
1001 19th Street North
Arlington, VA 22209
Common All executive officers and
Directors as a group
(6 persons) 4,464,684 47.7%
* Less than 1%.
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(1) Unless otherwise noted, the persons identified in this table have sole
voting and sole investment power with regard to the shares beneficially
owned by them.
(2) Includes shares issuable upon exercise of options which are exercisable
within 60 days of April 8, 2004.
(3) Includes options to purchase 3,050 shares under the 1993 Directors?
Stock Option Plan (the "Directors? Plan").
(4) Includes options to purchase 9,150 shares under the Directors? Plan.
(5) Includes options to purchase 6,100 shares under the Directors? Plan.
(6) Columbia Wanger Asset Management, L.P. ("WAM"), WAM Acquisition GP,
Inc., the general partner of WAM ("WAM GP"), and Columbia Acorn Trust
("Acorn") reported on a Schedule 13G dated February 12, 2004, that they
have shared voting and dispositive power with respect to all such
shares. WAM and WAM GP reported on a Schedule 13G dated February 12,
2004, that they beneficially own 912,700 shares, of which Acorn
beneficially owns 635,000 shares.
(7) Akre Capital Management, LLC ("Akre") reported on a Schedule 13G dated
January 9, 2004, that it has sole voting and dispositive power with
respect to all such shares. Akre reported on a Schedule 13G dated
January 9, 2004, that it beneficially owns 782,955 shares.
(8) Friedman, Billings, Ramsey Group, Inc., Eric F. Billings and Emanuel J.
Friedman reported on a Schedule 13G dated February 17, 2004, that they
have shared voting and dispositive power with respect to all such
shares. All three parties reported on a Schedule 13G dated February
17, 2004, that they beneficially own 500,500 shares.
ELECTION OF DIRECTORS
The Board is comprised of six persons. The Bylaws of the Company provide
for a board of directors consisting of three to twelve persons who are elected
generally for a term of two years. Directors are to serve until their
successors are elected and have qualified.
If the enclosed proxy is duly executed and received in time for the
annual meeting and if no contrary specification is made as provided therein,
the proxy will be voted in favor of electing the nominees John Farahi, Craig
F. Sullivan and Charles W. Scharer for terms of office expiring in 2006. If
any such nominee shall decline or be unable to serve, the proxy will be voted
for such person as shall be designated by the Board to replace any such
nominee. The Board presently has no knowledge or reason to believe that any
of the nominees will refuse or be unable to serve.
Any vacancies on the Board which occur during the year will be filled, if
at all, by the Board through an appointment of an individual to serve only
until the next annual meeting of stockholders.
The Company, through a wholly owned subsidiary, Golden Road Motor Inn,
Inc. ("Golden Road"), owns and operates the Atlantis Casino Resort (the
"Atlantis") in Reno, Nevada. Accordingly, the Company, each director who has
been required by the Nevada Gaming Authorities (as defined below) to be found
suitable, each executive officer, and each controlling person have been "found
suitable" by the Nevada State Gaming Control Board and Nevada Gaming
Commission (collectively, the "Nevada Gaming Authorities"). Future new
members of the Board, if any, may be required to be found suitable in the
discretion of the Nevada Gaming Authorities. Should any such new director not
be found suitable or should any director later be found not to be suitable by
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the Nevada Gaming Authorities, that person will not be eligible to continue
serving on the Board and a majority of the remaining directors may appoint a
qualified replacement to serve as a director until the next annual meeting of
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ELECTION OF MESSRS.
JOHN FARAHI, CRAIG F. SULLIVAN AND CHARLES W. SCHARER TO THE BOARD OF
DIRECTORS.
The following information is furnished with respect to each member of the
Board or nominee thereto. Similar information is provided for the Company?s
executive officers and certain significant employees who are not directors.
John Farahi, Bob Farahi and Ben Farahi are brothers. There are no other
family relationships between or among any directors, nominees to the Board, or
executive officers of the Company. The statements as to beneficial ownership
of Common Stock as to each director or nominee to the Board are based upon
information furnished by him.
Directors and Nominees
Director
Name Age Since Position
-------------------- ---- -------- ----------------------------
John Farahi 56 1993 Co-Chairman of the Board,
(Nominee for term Chief Executive Officer
expiring in 2006) Chief Operating Officer, and
Director
Bob Farahi 53 1993 Co-Chairman of the Board,
(Term expires in President, and Director
2005)
Ben Farahi 51 1993 Co-Chairman of the Board,
(Term expires in Chief Financial Officer,
2005) Secretary, Treasurer and
Director
Craig F. Sullivan 57 1998 Director
(Nominee for term
expiring in 2006)
Ronald R. Zideck 66 2000 Director
(Term expires in
2005)
Charles W. Scharer 49 2001 Director
(Nominee for term
expiring in 2006)
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JOHN FARAHI has been Co-Chairman of the Board, Chief Executive Officer,
and Chief Operating Officer of the Company since its inception, and of Golden
Road since June 1993. From 1973 until June 1993, Mr. Farahi was President,
Director, and General Manager of Golden Road. Mr. Farahi is a partner in
Farahi Investment Company ("FIC") which is engaged in real estate investment
and development. Mr. Farahi has served on the Washoe County Airport Authority
as a Trustee since July of 1997. Mr. Farahi holds a political science degree
from the California State University, Hayward.
BOB FARAHI has been Co-Chairman of the Board and President of the Company
since its inception, and of Golden Road since 1993. From 1973 until June
1993, Mr. Farahi was Vice President and a Director of Golden Road. Mr. Farahi
divides his working time between the Company and the other companies with
which he is involved. Mr. Farahi is a partner in FIC. Mr. Farahi holds a
biochemistry degree from the University of California at Berkeley.
BEN FARAHI has been Co-Chairman of the Board, Chief Financial Officer,
Secretary, and Treasurer of the Company since its inception, and of Golden
Road since June 1993. From 1973 until June 1993, Mr. Farahi was Secretary,
Treasurer, and a Director of Golden Road in charge of financial planning and
construction for the Company. Mr. Farahi is a partner in FIC. Mr. Farahi is
also the managing partner of Maxum LLC, a Nevada limited-liability company,
which, as of January 1, 2002, acquired all general partnership interests of
Biggest Little Investments L.P. (formerly Resources Accrued Mortgage Investors
2, L.P.), a Delaware limited partnership that invests in first and junior
mortgage loans. Mr. Farahi divides his working time between the Company and
the other companies with which he is involved. Mr. Farahi holds a mechanical
engineering degree from the University of California at Berkeley and a MBA
degree in accounting from the California State University, Hayward.
CRAIG F. SULLIVAN has been a member of the Board since September 1998.
Since March 1998, Mr. Sullivan has been President of Sullivan & Associates,
Las Vegas, Nevada, a strategic and financial consulting firm geared to
companies in the gaming industry. From April 1995 to March 1998, Mr. Sullivan
served as Chief Financial Officer and Treasurer of Primadonna Resorts, Inc.,
and from February 1990 to April 1995, Mr. Sullivan served as Treasurer of
Aztar Corporation. Mr. Sullivan also served on the Board of New York-New York
Hotel & Casino from March 1996 to June 1998, and served on the Board of
Windsor Woodmont Black Hawk Resort Corporation from March 2000 to January
2002. Mr. Sullivan holds a degree in economics from The George Washington
University, and holds a master?s degree in international management from the
American Graduate School of International Management.
RONALD R. ZIDECK has been a member of the Board since March 2000. From
August 1981 to August 1997, he was Managing Partner for the Reno office of the
national accounting firm of Grant Thornton, LLP and served on that firm?s
National Executive Committee. He also served as a director at Harveys Casino
Resorts from May 1997 to February 1999. He currently serves as Director of
Planned Giving for the University of Nevada, Reno, and as a trustee for Saint
Mary?s Health Network. Mr. Zideck is a certified public accountant with a
bachelor?s degree in business administration from the University of Nevada.
CHARLES W. SCHARER has been a member of the Board since July 2001. Mr.
Scharer ended an eighteen-year career with Harveys Casino Resorts in January
2001, serving as Harveys? Chairman, President and Chief Executive Officer from
1995 until his retirement in January 2001 and as Chief Financial Officer from
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1988 to 1995. Mr. Scharer is serving his second term as a commissioner of the
Nevada Commission on Tourism, having been appointed by Governor Kenny C. Guinn
in November 1999. Mr. Scharer also is a member of the Board of Advisors of
InfoTouch, LLC, a provider of High Speed Internet Access and related products
primarily to the lodging industry. Mr. Scharer, a certified public accountant,
graduated from San Jose State University in 1979.
The Company?s Bylaws, as amended, currently provide for a staggered board
of directors divided into two categories: Category A consisting of three
directors and Category B consisting of three directors. Each director serves
two-year terms. A staggered board of directors may have the effect of
delaying or preventing a change of control of the Company. Executive officers
serve at the pleasure of the Board.
CERTAIN OFFICERS OF SUBSIDIARY
DARLYNE SULLIVAN, age 49, has been Vice President of Sales and Marketing
and Assistant General Manager of Golden Road since June 1993. Mrs. Sullivan
has held positions including Assistant General Manager/Director of Sales and
Marketing, Reservations and Sales Manager, Front Desk Manager, Hotel Manager
and Assistant Hotel Manager for Golden Road from May 1977 through June 1993.
RICHARD COOLEY, age 56, has been Vice President of Finance of Golden Road
since May 2001. Mr. Cooley was Vice President of Administration of Golden
Road from March 2001 through May 2001, and served as Vice President of
Operations of Golden Road from July 1995 through March 2001. Mr. Cooley
served as Vice President of Finance of Golden Road from June 1993 through July
1995, and served as Controller of Golden Road from March 1993 through March
1994. Mr. Cooley was President and General Manager of the Reno Ramada Hotel
Casino from May 1988 to March 1993, and he was Chief Financial Officer and
Assistant General Manager from 1981 to 1988. From July 1977 to June 1981, Mr.
Cooley was Controller and Co-General Manager of the Shy Clown Casino in Reno.
Mr. Cooley is a certified public accountant licensed to practice in Nevada.
COMMITTEES OF THE BOARD
The Board has certain standing committees including the Audit Committee,
the Compensation Committee, the 1993 Executive Long-Term Incentive Plan
Committee (the "Incentive Plan Committee"), the 1993 Directors? Stock Option
Plan Committee (the "Directors? Plan Committee") and the Operations Committee.
Because the Company is considered a "Controlled Company" under Nasdaq
rules, the Company believes that it is exempt from Nasdaq requirements to have
a majority of independent directors and to have director nominees selected by
either a majority of independent directors or by a nominating committee
consisting solely of independent directors. The Company believes that it is a
"Controlled Company" because more than fifty percent (50%) of the Company?s
voting power is held by the Farahi family, including John Farahi, Bob Farahi,
Ben Farahi and the Jila Farahi Trust.
The Audit Committee, comprised of Craig F. Sullivan and Charles W.
Scharer, and chaired by Ronald R. Zideck, met 9 times during the fiscal year
ended December 31, 2003. The Audit Committee is comprised exclusively of
directors who are not salaried employees and a majority of whom are, in the
opinion of the Board, free from any relationship that would interfere with the
exercise of independent judgment as a committee member. The Audit Committee?s
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function is to review reports of certified public accountants to the Company;
to review Company financial practices, internal controls and policies with
officers and key employees; to review such matters with the Company?s auditors
to determine scope of compliance and any deficiencies; to consider selection
of independent public accountants; to review certain related party
transactions; and to make periodic reports on such matters to the Board. The
Audit Committee adopted an Audit Committee Charter on June 14, 2000, and
subsequently amended it effective June 7, 2001 and April 9, 2004. A copy of
the Charter as revised on April 9, 2004 is contained in the Appendix to this
Proxy Statement.
All members of the Audit Committee are "independent" directors, as such
term is defined in Rule 4200(a)(15) of the National Association of Securities
Dealers? Listings Standard.
The Company believes that each member of the Audit Committee is a
financial expert, as defined in Regulation S-K, Item 401(h)(2). The relevant
experience of such directors is summarized under "Election of Directions ?
Directors and Nominees" above.
The Compensation Committee, comprised of Ronald R. Zideck and Charles W.
Scharer, and chaired by Craig F. Sullivan, met 3 times during the fiscal year
ended December 31, 2003. The Compensation Committee?s function is to review
and make recommendations to the Board with respect to the salaries and bonuses
of the Company?s executive officers and to administer the 1993 Employee Stock
Option Plan (the "Employee Plan").
The Incentive Plan Committee, comprised of Craig F. Sullivan, Ronald R.
Zideck and Charles W. Scharer, did not meet during the fiscal year ended
December 31, 2003. The Incentive Plan Committee?s function is to administer
the 1993 Executive Long-Term Incentive Plan (the "Incentive Plan"), including
determining such matters as the persons to whom awards shall be granted, the
number of shares to be awarded, when the awards shall be granted, when the
awards shall vest, and the terms and provisions of the instruments evidencing
the awards, interpreting the Incentive Plan and notifying the Board of all
decisions concerning awards granted to Incentive Plan participants.
The Directors? Plan Committee, comprised of John Farahi and Bob Farahi,
did not meet during the fiscal year ended December 31, 2003. Neither John
Farahi nor Bob Farahi is eligible to participate in the Directors? Plan. The
Directors? Plan Committee consists of not less than 2 directors of the Company
selected by, and serving at the pleasure of, the Board and its function is to
administer the 1993 Directors? Stock Option Plan (the "Directors? Plan"). The
Directors? Plan Committee has the authority to interpret the Directors? Plan
and make all determinations necessary or advisable for its administration.
All decisions of the Directors? Plan Committee are subject to approval by the
Board.
The Operations Committee, comprised of John Farahi, Darlyne Sullivan and
Richard Cooley, and chaired by Charles W. Scharer, did not meet during the
fiscal year ended December 31, 2003. The purpose of the Operations Committee
is to provide a formal communication link between Golden Road management and
the Monarch Board and to facilitate examination of, and feedback regarding,
various operational issues.
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The Company does not have a standing Nominating Committee, nor has the
Board of Directors adopted a charter addressing the director nomination
process. The Board of Directors believes that it is appropriate for the
Company not to have a nominating committee because the entire Board of
Directors can adequately serve the function of considering potential director
nominees from time to time as needed.
The requirements for nomination by a security holder of a person to the
Company?s Board of Directors are set forth in Article II, Section 16 of the
Company?s Bylaws and the qualifications for a person to be a director of the
Company are set forth in Article II, Section 14 of the Bylaws. Both sections
of the Bylaws are set forth below.
...
14. ELIGIBILITY OF DIRECTORS. No Director is eligible to continue
to serve as a Director of the Corporation who is required under
Nevada gaming laws to be found suitable to serve as a director and
who is not found suitable or whose finding of suitability is
suspended or revoked by Nevada gaming authorities. Such
eligibility shall cease immediately following whatever act or event
terminates the director?s eligibility under the laws and gaming
regulations of the State of Nevada.
...
16. NOMINATION OF DIRECTORS. Only persons who are nominated in
accordance with the procedures set forth in this Section 16 of
Article II shall be eligible for election as Directors.
Nominations of persons for election to the Board of Directors of
the Corporation at the Annual Meeting may be made at a meeting of
stockholders by or at the direction of the Board of Directors by
any nominating committee or person appointed by the Board or by any
stockholder of the Corporation entitled to vote for the election of
Directors at the meeting who complies with the Notice procedures
set forth in this Section 16 of Article II. Such nominations,
other than those made by or at the direction of the Board, shall be
made pursuant to timely notice in writing to the secretary of the
Corporation. To be timely, unless waived by the Board of
Directors, no person not already a Director shall be eligible to be
elected or to serve as a Director unless such person?s notice of
nomination shall be received at the principal executive offices of
the Corporation at least seventy five (75) days before initiation
of solicitation to the stockholders for election in the event of an
election other than at an Annual Meeting and seventy five (75) days
before the corresponding date that had been the record date for the
previous year?s Annual Meeting or seventy five (75) days before the
date of the next Annual Meeting of shareholders announced in the
previous year?s proxy materials in the event of an election at an
Annual Meeting. To be timely, no stockholder?s notice shall be
received at the principal executive offices of the Corporation more
than ninety (90) days before the meeting; provided, however, that
in the event that less than ninety (90) days? notice or prior
public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be
received not later than the close of business on the 15th day
following the day on which such notice of the date of the meeting
was mailed or such public disclosure was made, whichever first
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occurs. The stockholder?s notice to the Secretary shall set forth
(a) as to each person whom the stockholder proposes to nominate for
election or reelection as a Director, (i) the name, age, business
address and residence address of the person, (ii) the principal
occupation or employment of the person, (iii) the class and number
of shares of stocks of the Corporation which are beneficially owned
by the person, (iv) a description of all arrangements or
understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the
stockholder, and (b) any other information relating to the person
that is required to be disclosed in solicitations for proxies for
election of Directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (vi) the consent of
such nominee to serve as Director of the Corporation, if he is so
elected; and (c) as to the stockholder giving the notice, (i) the
name and record address of stockholder, and (ii) the class and
number of shares of stock of the Corporation which are beneficially
owned by the stockholder. The Corporation may require any proposed
nominee to furnish such other information as may reasonably be
required by the Corporation to determine the eligibility of such
proposed nominee to serve as Director of the Corporation. No
person shall be eligible for election as a Director of the
Corporation unless nominated in accordance with the procedures set
forth in this Article II, Section 16. The Chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting
that a nomination was not made in accordance with the foregoing
procedure, and if he should so determine, he shall so declare to
the meeting and the defective nomination shall be disregarded.
The Company did not receive the names of any proposed director candidates
submitted by any stockholder by December 31, 2003 for inclusion in this Proxy
Statement.
BOARD MEETINGS
The Board held 11 meetings in the fiscal year ended December 31, 2003.
All directors attended at least 75% of the Board of Directors meetings and all
committee members attended at least 75% of the meetings for the committees on
which they serve during the fiscal year ended December 31, 2003.
ANNUAL MEETINGS
The Board of Directors has a policy that requires all directors to attend
each Annual Meeting of Stockholders absent exigent circumstances. All six
directors attended the 2003 Annual Meeting of Stockholders.
COMMUNICATION WITH DIRECTORS
The Company?s stockholders may contact directors by going to the
Company?s web site, www.monarchcasinos.com, selecting "Company Info" and then
selecting "Board of Directors/Executive Officers." Each director?s and
executive officer?s email address is set forth and provides a means to contact
such person directly.
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COMPENSATION OF NON-EMPLOYEE DIRECTORS
In 2003, annual fees of $30,000 were paid to directors who were not
employees of the Company. Each non-employee director serving as the chairman
of a committee of the Board received an additional annual fee of $10,000 for
each committee chaired in 2003. Each director may be reimbursed for certain
expenses incurred in connection with attendance at Board and committee
meetings. Certain non-employee directors have been granted options to
purchase Common Stock under the Directors? Plan.
EXISTING 1993 DIRECTORS? STOCK OPTION PLAN. The Directors? Plan is
designed to encourage non-employee directors to take a long-term view of the
affairs of the Company, to attract and retain superior non-employee directors
and to aid in compensating non-employee directors for their services to the
Company. The Company?s non-employee directors for the year ended December 31,
2003 were Craig F. Sullivan, Ronald R. Zideck and Charles W. Scharer.
An eligible director, upon becoming a member of the Board of Directors,
will receive an initial grant to purchase 2,400 shares of Common Stock
("Initial Director Grant"), plus an additional grant to purchase 650 shares of
Common Stock for each committee chaired. Thereafter, immediately following
the close of the annual stockholders? meeting, each eligible director will
receive an annual option grant to purchase 2,400 shares of Common Stock
("Annual Director Grant") plus an additional grant to purchase 650 shares of
Common Stock for each committee chaired for the first five years following
election to the Board. The Directors? Plan Committee may also recommend
discretionary grants of options on terms deemed appropriate by the Directors?
Plan Committee, subject to the approval of the Board.
The exercise price of all director option grants is 100% of the fair
market value of the Common Stock on the date of grant. Initial Director
Grants and Annual Director Grants may not be exercised until six months and
one day after the date of the grant. All options granted under the Directors?
Plan are non-qualified options, the tax treatment of which is determined under
Section 422 of the Internal Revenue Code of 1986, as amended. In 2003, the
Company?s stockholders approved the extension of grants previously granted
under the Directors? Plan from five years to ten years.
In 2003, Craig F. Sullivan, Ronald R. Zideck and Charles W. Scharer each
received an Annual Director Grant of options to purchase 3,050 shares of
Common Stock, in accordance with the Directors? Plan.
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COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
Annual Compensation
--------------------------------------
Name and All other
Principal Positions Year Salary($) Bonus($) Compensation($)(1)
------------------- ---- ---------- ----------- ------------------
John Farahi, Co-Chairman 2003 337,232 150,000 52,357
of the Board and 2002 280,000 75,000 -
Chief Executive Officer 2001 269,230 100,000 995
Bob Farahi, Co-Chairman 2003 182,770 75,000 17,588
of the Board and 2002 240,000 75,000 2,852
President 2001 230,770 100,000 10,028
Ben Farahi, Co-Chairman 2003 182,770 75,000 10,930
of the Board, Chief Financial 2002 240,000 12,884
Officer, Secretary and 2001 230,770 14,459
Treasurer
Darlyne Sullivan, Vice- 2003 176,793 35,000 529
President - Sales & Marketing 2002 145,385 30,000 439
and Assistant General 2001 130,000 30,000 363
Manager of Golden Road
Richard Cooley 2003 142,220 35,000 936
Vice-President - Finance 2002 145,770 30,000 877
of Golden Road 2001 145,770 30,000 1,413
(1) Amount for John Farahi, Bob Farahi and Ben Farahi represent the lease
value of automobiles paid for by the Company, except the 2003 amount for John
Farahi which represents a purchased automobile. Amounts for Richard Cooley
and Darlyne Sullivan represent the Company?s contribution to 401(k) plans.
OPTION GRANTS IN 2003
No options were granted to the Company?s executive officers in the fiscal
year ended December 31, 2003.
AGGREGATED OPTION EXERCISES IN 2003 AND FISCAL YEAR-END OPTION VALUES
Number of Securities
underlying unexercised Value of unexercised
Shares options at fiscal in-the-money options
acquired on Value year end(#) at fiscal year-end($)
Name exercise(#) realized($) Exercisable / Unexercisable Exercisable / Unexercisable
------------- ----------- ----------- --------------------------- ---------------------------
John Farahi - $ - - / - $ - / $ -
Bob Farahi - - - / - - / -
Ben Farahi - - - / - - / -
Darlyne Sullivan 35,000 320,480 - / - - / -
Richard Cooley - - 17,200 / 10,000 142,244 / 82,700
-12-
(1) Represents the difference between the last reported sale price of the
Common Stock reported on The Nasdaq Stock MarketSM on December 31, 2003, and
the exercise price of the options.
COMMITTEE REPORTS
Notwithstanding any statement to the contrary set forth in any of the
Company?s previous filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
Compensation Committee Report on Executive Compensation and the Stock
Performance Chart presented shall not be incorporated by reference into any
such filings.
Compensation Committee Report on Executive Compensation
April 9, 2004
The Compensation Committee (the "Committee"), which is composed entirely
of directors who have never served as executive officers of the Company,
determines and administers the compensation of the Company?s executive
officers.
COMPENSATION PHILOSOPHY. The Committee seeks to compensate the Company?s
executive officers in such a fashion that will attract and retain individuals
who are responsible for the management, growth, and success of the Company.
The Committee believes that executive compensation should be designed to
reward those individuals for their services to the Company and encourage them
to continue in its employ. The Committee?s actions related to compensation of
the Company?s executive officers are submitted to the full Board of Directors
for ratification and approval.
The Committee believes that the Company?s overall financial performance
is an important factor in the compensation of the Company?s executive officers
and, therefore, applies a quantitative formula in making compensation
decisions related to some bonus plans. The Committee also recognizes
qualitative factors such as successful supervision of the Company?s
operations, development of corporate projects, promotion of the Company?s
corporate image, and participation in industry and community activities.
The Committee also evaluates the total compensation of the Company?s
executive officers in light of the compensation practices and relative
corporate financial performance of other companies in the gaming industry
similar to the Company in terms of asset size and target market. The
Committee?s goal is that the base salaries for the Chief Executive Officer and
other executive officers should be established at levels considered
appropriate in light of the duties and scope of responsibilities of each
officer?s position. Salaries are reviewed annually and are warranted to
reflect sustained individual officer performance. The Chief Executive Officer
and other executive officers are also eligible to receive incentive
compensation in the form of stock options under the Incentive Plan; however,
no options were granted to executive officers during 2003.
-13-
CHIEF EXECUTIVE OFFICER COMPENSATION. Following the recommendation of
the Compensation Committee, the Board established the Chief Executive
Officer?s salary at $340,000 for 2003. In determining the Chief Executive
Officer?s salary, the Compensation Committee considered (a) the Chief
Executive Officer?s record of leadership and service to the Company over the
past three years, (b) the growth of the Company during the same period, (c)
the Chief Executive Officer?s pivotal role in overseeing the day-to-day
operations of the Company, (d) the Company?s performance over the same period
in relation to its competitors in a very competitive environment, and (e) the
Chief Executive Officer?s civic leadership in the Reno area.
COMPENSATION COMMITTEE
By: Craig F. Sullivan, Chairman
Ronald R. Zideck, Member
Charles W. Scharer, Member
Audit Committee Report
The following Report of the Audit Committee does not constitute
soliciting material and should not be deemed filed or incorporated by
reference into any other Company filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this Report by reference
therein.
April 9, 2004
To the Board of Directors of Monarch Casino & Resort, Inc.:
Our role is to assist the Board of Directors in its oversight of the
Company?s financial reporting process. As set forth in our charter, the
Company?s management is responsible for the preparation, presentation and
integrity of our financial statements, and for maintaining appropriate
accounting and financial reporting principles and policies and internal
controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. The independent auditors are
responsible for auditing our financial statements and expressing an opinion as
to their conformity with generally accepted accounting principles.
We have reviewed and discussed with management the Company?s audited
financial statements as of and for the year ended December 31, 2003.
We have discussed with the independent auditors 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.
We have received and reviewed the written disclosures and the letter from
the independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the auditors the auditors? independence.
-14-
Based on the reviews and discussions referred to above, we recommend to
the Board of Directors that the financial statements referred to above be
included in the Company?s Annual Report on Form 10-K for the year ended
December 31, 2003.
By: Ronald R. Zideck, Chairman
Craig F. Sullivan, Member
Charles W. Scharer, Member
Stock Performance Chart
The following chart reflects the cumulative total return (change in stock
price plus reinvested dividends) of a $100 investment in the Company?s Common
Stock for the five year period from January 1, 1999, through December 31,
2003, in comparison to the Standard & Poor?s 500 Composite Stock Index and an
industry peer group index. The comparisons are not intended to forecast or be
indicative of possible future performance of the Company?s Common Stock.
MONARCH CASINO & RESORT, INC.
TOTAL RETURN
JANUARY 1, 1999 - DECEMBER 31, 2003
Base
Period
12/31/98 12/31/99 12/31/00
-------- -------- --------
Monarch Casino & Resort, Inc. 100 100.00 90.48
S&P 500 Index 100 121.04 110.02
Self Determined Peer Group (1) 100 150.92 162.55
12/31/01 12/31/02 12/31/03
-------- -------- --------
Monarch Casino & Resort, Inc. 152.38 261.52 212.38
S&P 500 Index 96.95 75.52 97.18
Self Determined Peer Group (1) 210.69 232.12 327.33
(1) The companies included in the peer group are as follows: Alliance Gaming
Corp.; Archon Corp.; Argosy Gaming Corp.; Aztar Corp.; Black Hawk Gaming &
Development Company, Inc.; Casino Magic Corp. (Acquired by Hollywood Park
Corporation 11/16/98); Grand Casinos, Inc. (Merged with Park Place
Entertainment, Inc. 2/19/99); Harrah?s Entertainment, Inc.; Hollywood
Casino Corporation-Cl. A; Lady Luck Gaming Corporation (Acquired by Isle
of Capris Casinos, Inc. 4/17/00); Mandalay Resort Group (Formerly Circus
Circus Enterprise, Inc.); Mirage Resorts, Inc. (Acquired by MGM Grand,
Inc. 7/17/00, now MGM Mirage); President Casinos, Inc.; Sands Regent;
Showboat, Inc. (Acquired by Harrah?s Entertainment, Inc. 7/20/98); Station
Casinos, Inc.; and Winwin Gaming, Inc.
Note: For the companies that have been acquired, the peer line on the graph
includes the acquired company?s performance up to the acquisition date,
and the acquiring company?s performance since the acquisition date.
-15-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Guarantee Fees
The Company?s Compensation Committee approved the payment of a guarantee
fee of two percent of the average outstanding guaranteed debt as compensation
for bank debt personal guarantees granted for the benefit of the Company by
John Farahi, Bob Farahi and Ben Farahi. For the year ended December 31, 2003,
the Company paid approximately $1.0 million in guarantee fees to these
persons.
Other Relationships
The three principal stockholders of the Company, through their
affiliates, directly or indirectly control the ownership and management of a
shopping center directly adjacent to the Atlantis (the "Shopping Center").
The shopping center occupies 18.7 acres and consists of 213,000 square feet of
retail space. The Company currently rents approximately 8,100 square feet in
the shopping center and pays rent of approximately $6,100 per month.
In 2004, the Shopping Center is planning construction of a new driveway
that will be shared between the Atlantis and the Shopping Center. As part of
this project, the Company has leased a 37,368 square-foot corner section of
the Shopping Center for a minimum lease term of 15 years at a monthly rent of
$25,000, subject to increase every 60 months based on the Consumer Price
Index. The Company is also to use part of the common area of the Shopping
Center and will pay its proportional share of the common area expense of the
Shopping Center. The Company has the option to renew the lease for 3 five-year
terms, and at the end of the extension period, the Company has the option to
purchase the leased section of the Shopping Center at a price to be determined
based on a MAI Appraisal. The leased space will be used by the Company for
pedestrian and vehicle access to the Atlantis, and the Company will have use
of a portion of the parking spaces at the Shopping Center. The Company is
responsible for two thirds of the construction costs of the project, up to a
maximum of $1.2 million. The Company anticipates that this project will be
completed in summer 2004.
In 2003, the Company entered into an option agreement with an affiliate
of its controlling stockholders to purchase property in South Reno for
development of a new hotel casino. Commencement of any development of the
property will require completion of property due diligence and receipt of
numerous approvals, including master plan changes and zone changes, neither of
which can be assured. Through the current property owner, the Company has
filed an application with the City of Reno for master plan change and zone
change for 13 acres of the property.
Indemnification of Directors and Officers
Section 78.751 of Chapter 78 of the Nevada Revised Statutes ("NRS"),
Article IX of the Company?s Articles of Incorporation, and Article VII of the
Company?s Bylaws contain provisions for indemnification of officers and
directors of the Company. The Articles of Incorporation require the Company
to indemnify such persons to the full extent permitted by Nevada law. Each
person will be indemnified in any proceeding provided that such person?s acts
-16-
or omissions did not involve intentional misconduct, fraud or knowing
violation of law, or the payment of dividends in violation of NRS 78.300.
Indemnification would cover expenses, including attorneys? fees, judgments,
fines, and amounts paid in settlement
The Company?s Articles of Incorporation also provide that the Board may
cause the Company to purchase and maintain insurance on behalf of any present
or past director or officer insuring against any liability asserted against
such person incurred in the capacity of director or officer or arising out of
such status, whether or not the corporation would have the power to indemnify
such person.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, or persons controlling
the Company pursuant to the foregoing provisions, the Company has been
informed that in the opinion of the Securities and Exchange Commission (the
"SEC") such indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable.
Audit Committee Review
The Company requires that the Audit Committee of the Board review and
approve related party transactions.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company?s independent accountants, Ernst & Young LLP, have audited
the Company?s financial statements for the fiscal year ended December 31,
2003. Ernst & Young LLP is expected to have a representative present at the
annual meeting who will have the opportunity to make a statement if such
representative desires to do so and is expected to be available to respond to
appropriate questions.
The Audit Committee has not yet formally engaged an independent public
accountant to audit the Company?s financial statements for the fiscal year
ending December 31, 2004. In the event the Audit Committee selects a firm
other than Ernst & Young LLP prior to the 2004 Annual Meeting, a
representative of that firm will be invited to the stockholders? meeting.
AUDIT AND RELATED FEES
In connection with the decision not to engage Deloitte & Touche, LLP and
to engage Ernst & Young LLP on October 1, 2003, we filed an SEC Form 8-K dated
October 1, 2003 and filed October 8, 2003 ("Form 8-K"). In the Form 8-K, we
reported that:
-On October 1, 2003, the Audit Committee of the Company elected not to
engage Deloitte & Touche LLP, or Deloitte, as the Company?s
independent public accountants for the current year?s audit.
-The reports of Deloitte on the financial statements of The Company
for the past two fiscal years contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principle.
-17-
-The action not to engage Deloitte was taken by the Audit Committee.
-During the two most recent fiscal years and through October 1, 2003,
there had been no disagreements between the Company and Deloitte on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Deloitte, would have caused
Deloitte to make reference to the subject matter thereof in its
report on the Company?s financial statements for such periods.
-During the two most recent fiscal years and through October 1, 2003,
there have been no reportable events (as defined in Item 304(a)(1)(v)
of Regulation S-K).
-At the request of the Company, Deloitte furnished a letter addressed
to the SEC stating that it agreed with the above statements. A copy
of such letter, dated October 7, 2003, was filed as Exhibit 16 to the
Form 8-K.
-The Company?s Audit Committee engaged Ernst & Young LLP as The
Company?s new independent accountants as of October 1, 2003. During
the two most recent fiscal years and through October 1, 2003, the
Company had not consulted with Ernst & Young 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.
AUDIT FEES. The aggregate fees billed by the Company?s principal
accountant for the audit of the Company?s annual financial statement and
review of financial statements included in the Company?s Form 10-Q or services
that are normally provided by the accountant in connection with statutory and
regulatory filings or engagements were $76,000 for the year ended December 31,
2003 and $62,400 for the year ended December 31, 2002.
AUDIT RELATED FEES. The aggregate fees billed for assurance and related
services by the Company?s principal accountant that are reasonably related to
the performance of the audit or review of the Company?s financial statements
not included under "Audit Fees" above were $0 for the year ended December 31,
2003 and $63,921 for the year ended December 31, 2002. Such services in 2002
included fees billed by Deloitte for professional services for S-3
Registration Statement related to a secondary stock offering by certain
principal stockholders of the Company during 2002, including the re-audits of
each of the three years in the period ended December 31, 2001.
TAX FEES. The aggregate fees billed for professional services rendered
by the Company?s principal accountant for the compilation, tax advice and tax
planning were $12,000 for the year ended December 31, 2003 and $13,000 for the
year ended December 31, 2002. For 2003 and 2002, these services consisted of
the preparation of the Company?s federal corporate tax return.
ALL OTHER FEES. There were no other fees billed by the Company?s
principal accountants for the years ended December 31, 2003 and 2002.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
As required by the Audit Committee Charter, as revised on April 9, 2004,
all services proposed to be provided by outside independent auditors must be
approved in advance by the Audit Committee.
None of the non-audit services provided by our independent auditors in
2003 or 2002 were approved in advance by the Audit Committee.
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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company?s directors and executive officers, and persons who own more than ten
percent of a registered class of the Company?s equity securities, to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors,
and stockholders holding more than 10% of the class of stock are required by
SEC 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 the copies of such
reports furnished to the Company and written representations that no other
reports were required, during 2003 all reports as required under Section 16(a)
filing requirements were filed as required.
CODE OF ETHICS
The Company adopted a Business Ethics Policy and Code of Conduct (Code of
Ethics), a copy of which may be reviewed on the Company?s website,
www.monarchcasino.com.
VOTING PROCEDURES
A majority of a quorum of stockholders present in person or represented
by proxy voting "FOR" the election of the nominees to the Board is sufficient
to approve the election of the nominees to the Board. A quorum of
stockholders exists when a majority of the stock issued and outstanding and
entitled to vote at a meeting is present, in person, or represented by proxy,
at the meeting. Abstentions are effectively treated as votes "AGAINST" a
matter presented. Neither the Company?s Articles of Incorporation, Bylaws, or
Nevada corporate statutes address the treatment and effect of abstentions and
broker non-votes.
The Company will appoint three inspectors of election to: determine the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, and the authenticity,
validity, and effect of a proxy; receive votes, ballots, or consents; hear and
determine all challenges and questions in any way arising in connection with
the right to vote; count and tabulate all votes or consents; determine when
the polls shall close; determine the results; and do any other acts which may
be proper to conduct the election or vote with fairness to all stockholders.
2005 ANNUAL MEETING OF STOCKHOLDERS
The next annual meeting of stockholders will be held on or about June 8,
2005. Stockholders desiring to present proper proposals at that meeting and
to have their proposals included in the Company?s proxy statement and form of
proxy for that meeting must meet the eligibility and other criteria under Rule
14a-8 of the Securities Exchange Act of 1934 and must submit the proposal to
the Company. Such proposal must be received no later than December 21, 2004.
Unless a stockholder proposal for the Company?s 2005 Annual Meeting of
Stockholders is submitted to the Company prior to March 10, 2005, management
may use its discretionary voting authority to vote management proxies on the
stockholder proposal without any discussion of the matter in the proxy
statement.
-19-
OTHER BUSINESS
The Board does not know of any other business which will be presented for
action by the stockholders at this annual meeting. However, if any business
other than that set forth in the Notice of Annual Meeting of Stockholders
should be presented at the annual meeting, the proxy committee named in the
enclosed proxy intends to take such action as will be in harmony with the
policies of the Board and will use their discretion and vote all proxies in
accordance with their judgment.
The Company?s 2003 Annual Report to Stockholders, including financial
statements for the year ended December 31, 2003, accompanies these proxy
materials, which are being mailed on or about April 21, 2004, to all
stockholders of record of the Company as of April 8, 2004.
By order of the Board
/s/ Ben Farahi
--------------
BEN FARAHI
Secretary
OUR ANNUAL REPORT ON SEC FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS
AND THE SCHEDULES THERETO, FOR THE
12 MONTHS ENDED DECEMBER 31, 2003,
WILL BE FURNISHED WITHOUT CHARGE TO
ANY BENEFICIAL OWNER OF SECURITIES
ENTITLED TO VOTE AT THIS ANNUAL
MEETING. TO OBTAIN A COPY OF THE
FORM 10-K, WRITTEN REQUEST MUST BE
MADE TO MONARCH CASINO & RESORT,
INC. AND THE REQUESTING PERSON MUST
REPRESENT IN WRITING THAT SUCH
PERSON WAS A BENEFICIAL OWNER OF
OUR SECURITIES AS OF APRIL 8, 2004.
REQUESTS SHOULD BE ADDRESSED TO:
Monarch Casino & Resort, Inc.
Attention: Ben Farahi, Secretary
1175 W. Moana Lane, Suite 200
Reno, Nevada 89509
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APPENDIX 1
AUDIT COMMITTEE CHARTER
MONARCH CASINO & RESORT, INC.
(Effective June 14, 2000)
(Revised April 9, 2004)
Purpose
There shall be an Audit Committee ("Committee") of the Board of Directors
of Monarch Casino & Resort, Inc., a Nevada corporation (the "Company") which
is designated by and reports to the Board of Directors (the "Board".)
The Committee shall have responsibility to oversee the Company?s
management, internal audit and independent public accountants in regard to
corporate accounting, financial reporting and system of internal control
established by management. The Committee has the authority to conduct any
investigations it deems appropriate, with full access to all books and
records, facilities, personnel and outside advisors of the Company.
Organization
The Committee shall consist of at least three Directors. Each Director
appointed to the Committee shall:
a) Not be disqualified from being an "independent director" within the
meaning of Rule 4200(a)(15) of the NASD Manual, or Rule 10A-3 of the
Securities Exchange Act of 1934 and shall have no relationship with the
Company which, in the opinion of the Board, would interfere with the exercise
of independent judgment; and
b) Be able to read and understand fundamental financial statements,
including the Company?s balance sheet, income statement and cash flow
statement.
At least one member of the Committee shall have past employment
experience in finance or accounting, requisite professional certification in
accounting or any other comparable experience or background which results in
the director?s financial sophistication. The Board will determine if any
member of the Committee is a "financial expert" as defined by the Securities
and Exchange Commission.
Authority
The Committee has the authority necessary to carry out the
Responsibilities of the Committee as set forth herein and as required by law.
The Committee has authority to engage independent counsel and/or other
professional advisers as the Committee deems necessary for the competent
performance of its responsibilities, and receive appropriate funding from the
Company, as the Committee deems necessary, to carry out the responsibilities
of the Committee.
-21-
Responsibilities
The Committee recognizes that the preparation of the Company?s financial
statements and other financial information is the responsibility of the
Company?s management and that the auditing, or conducting of limited reviews,
of those financial statements and other financial information is the
responsibility of the Company?s independent public accountants. The
Committee?s responsibility is to oversee the financial reporting process.
The Company?s management, and its independent public accountants, in the
exercise of their responsibilities, acquire greater knowledge and more
detailed information about the Company and its financial affairs than the
members of the Committee. Consequently, the Committee is not responsible for
providing any expert or other special assurance as to the Company?s financial
statements and other financial information or any professional certification
as to the outside auditors? work, including, without limitation, their reports
on and limited reviews of, the Company?s financial statements and other
financial information.
The Committee is responsible for the appointment, compensation, retention
and oversight of the work performed by any registered public accounting firm
engaged to prepare or issue an audit report or to perform other audit, review
or attest services for the Company. The independent public accountants shall
report directly to the Committee. The Committee shall have a clear
understanding with the independent public accountants that the firm ultimately
is accountable to the Committee, as the stockholders? representative.
Oversight
In carrying out its responsibilities, the Committee shall:
1. Charter
Review and reassess the adequacy of the Audit Committee Charter annually;
2. Independent Public Accountants
a) Approve the Company?s engagement of independent public accountants in
advance; or establish pre-approval policies for engagement of independent
auditors detailed as to the particular service to be performed and which do
not delegate to management the responsibilities required by law to be
undertaken by the Committee with regard to the engagement of independent
public accountants;
b) Require that the independent public accountants provide the Committee
with a formal written statement delineating all relationships between the
independent public accountants and the Company, consistent with Independence
Standards Board Standard No. 1, and discuss with the independent public
accountants their independence;
c) Actively engage in a dialogue with the independent public accountants
regarding any disclosed relationships or services that may impact their
objectivity and independence;
d) Take appropriate action to oversee the independence of the independent
public accountants;
-22-
e) Review and consider the matters identified in the American Institute
of Certified Public Accountants? Statement on Auditing Standards No. 61, and
related Statements on Auditing Standards, with the independent public
accountants and management;
f) Beginning with the audited financial statements of the Company for the
fiscal year ending December 31, 2000, review and discuss the Company?s audited
financial statements that are to be included in the Company?s Annual Report on
Form 10-K with the independent public accountants and management and determine
whether to recommend to the Board of Directors that the financial statements
be included in the Company?s Annual Report on Form 10-K for filing with the
Securities and Exchange Commission; and
g) Review, or the Committee?s Chairperson shall review, any matters
identified by the independent public accountants pursuant to American
Institute of Certified Public Accountants? Statement on Auditing Standards No.
71, and related Statements on Auditing Standards regarding the Company?s
interim financial statements filed by the Company in the Quarterly Report on
Form 10-Q.
Related Party Transactions
The Committee shall review and approve all related party transactions
(those transactions required to be disclosed pursuant to Item 404 of
Regulation S-K) before the Company enters into such transaction.
Complaints Regarding Accounting and Internal Controls
Administer and carry out all duties assigned to the Committee as set forth in
the Policy for Resolution of Complaints Concerning Accounting Internal
Auditing Controls and/or Auditing Matters ("Attachment 1") which is
incorporated into this Audit Committee Charter by reference.
Firm and Partner Rotation
The Committee shall consider, at least annually, whether the Company
should have a policy requiring a regular rotation of the independent public
accountants and report its findings to the Board. The Committee shall also
establish a policy regarding the rotation of the lead partner and concurring
and reviewing partners in accordance with applicable SEC regulations.
Further, the Committee may establish a policy regarding the rotation of the
partners of the independent public accountants who are responsible for each of
the Company?s major business units.
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ATTACHMENT 1
TO AUDIT COMMITTEE CHARTER
POLICY FOR RESOLUTION OF COMPLAINTS CONCERNING ACCOUNTING,
INTERNAL AUDITING CONTROLS AND/OR AUDITING MATTERS
It is the Policy of Monarch Casino & Resorts Inc. ("MCRI" or "Company")
that all complaints concerning accounting, internal auditing controls and/or
auditing matters related to MCRI and/or its subsidiary companies be promptly
investigated under the direction of the Company?s Audit Committee of the
Board of Directors ("Audit Committee"). The Audit Committee is responsible
for the administration of procedures for the receipt, retention and treatment
of such complaints. As part of these responsibilities, the Audit Committee
shall designate and enforce procedures which accommodate submission of such
complaints to the Chairman of the Audit Committee.
Additionally, the Audit Committee shall designate and enforce procedures
which accommodate submission of anonymous complaints concerning accounting,
internal auditing controls and/or auditing matters related to MCRI and/or its
subsidiary companies by employees of MCRI and its subsidiaries. Any employee
of MCRI or its subsidiaries who, in good faith, reports a complaint
concerning accounting, internal auditing controls and/or auditing matters
related to MCRI and/or its subsidiary companies will not be subjected to
retaliation, discharge or any adverse employment consequence as a result of
making such a complaint.
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