<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______TO______.
Commission File No. 0-22088
MONARCH CASINO & RESORT, INC.
(Exact name of registrant as specified in its charter)
-------------------------
NEVADA 88-0300760
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1175 W. MOANA LANE, SUITE 200
RENO, NEVADA 89509
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code: (702) 825-3355
-------------------------
NOT APPLICABLE
(Former name, former address and former fiscal
year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES _X_ NO ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES ___ NO ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. As of November 10, 1998,
there were 9,436,275 shares of Monarch Casino & Resort, Inc. $0.01 par value
common stock outstanding.
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MONARCH CASINO & RESORT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues
Casino............................... $ 10,666,836 $ 9,845,923 $ 30,846,935 $ 29,094,980
Food and beverage.................... 4,509,286 4,615,082 13,505,549 13,308,028
Hotel................................ 3,057,075 3,204,724 8,506,178 8,061,099
Other................................ 791,076 625,005 2,048,595 1,752,834
------------ ------------ ------------ ------------
Gross revenues.................... 19,024,273 18,290,734 54,907,257 52,216,941
Less promotional allowances.......... (2,626,320) (2,345,759) (7,394,250) (6,385,061)
------------ ------------ ------------ ------------
Net revenues...................... 16,397,953 15,944,975 47,513,007 45,831,880
------------ ------------ ------------ ------------
Operating expenses
Casino............................... 4,607,507 4,206,635 13,217,037 12,100,612
Food and beverage.................... 2,512,958 2,464,323 7,389,736 7,231,546
Hotel................................ 916,197 958,258 2,730,628 2,859,755
Other................................ 119,473 111,765 364,567 325,584
Selling, general and administrative.. 4,339,007 3,962,908 12,628,978 11,859,101
Depreciation and amortization........ 1,151,666 1,054,175 3,437,814 3,174,166
------------ ------------ ------------ ------------
Total............................. 13,646,808 12,758,064 39,768,760 37,550,764
------------ ------------ ------------ ------------
Income from operations............ 2,751,145 3,186,911 7,744,247 8,281,116
------------ ------------ ------------ ------------
Other expense
Interest expense..................... 548,872 794,279 1,746,606 2,494,788
------------ ------------ ------------ ------------
Total............................. 548,872 794,279 1,746,606 2,494,788
------------ ------------ ------------ ------------
Income before income taxes........ 2,202,273 2,392,632 5,997,641 5,786,328
Provision for income taxes............. 739,524 813,495 2,029,914 1,967,351
------------ ------------ ------------ ------------
Net Income........................ $ 1,462,749 $ 1,579,137 $ 3,967,727 $ 3,818,977
============ ============ ============ ============
Income per share of common stock
Net income
Basic.............................. $ 0.16 $ 0.17 $ 0.42 $ 0.40
Diluted............................ $ 0.15 $ 0.17 $ 0.42 $ 0.40
Weighted average number of common
shares and potential common
shares outstanding
Basic.............................. 9,436,275 9,436,275 9,436,275 9,447,048
Diluted............................ 9,504,389 9,494,656 9,505,855 9,461,864
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
-2- <PAGE>
MONARCH CASINO & RESORT, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash........................................ $ 4,656,467 $ 5,527,839
Receivables, net............................ 1,205,458 837,420
Inventories................................. 404,624 570,367
Prepaid expenses............................ 1,260,951 1,333,176
Deferred income taxes....................... 372,503 1,055,000
------------ ------------
Total current assets..................... 7,900,003 9,323,802
------------ ------------
Property and equipment
Land........................................ 10,339,530 10,339,530
Buildings................................... 36,273,298 36,273,298
Furniture and equipment..................... 23,660,971 22,304,919
Improvements................................ 5,068,749 5,040,033
------------ ------------
75,342,548 73,957,780
Less accumulated
depreciation and amortization.............. (21,131,277) (17,868,111)
------------ ------------
54,211,271 56,089,669
Construction in progress.................... 10,371,196 682,047
------------ ------------
Net property and equipment............... 64,582,467 56,771,716
------------ ------------
Other assets.................................. 1,738,446 1,732,569
------------ ------------
$ 74,220,916 $ 67,828,087
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt........ $ 510,708 $ 2,243,611
Accounts payable............................ 2,747,928 4,111,457
Accrued expenses............................ 3,494,462 3,383,855
Federal income taxes payable................ 398,574 240,970
------------ ------------
Total current liabilities................ 7,151,672 9,979,893
Long-term debt, less current maturities....... 38,208,519 32,907,530
Deferred income taxes......................... 2,199,334 2,247,000
Commitments and contingencies................. - -
Stockholders' equity
Preferred stock, $.01 par value, 10,000,000
shares authorized; none issued............. - -
Common stock, $.01 par value, 30,000,000
shares authorized; 9,536,275 issued;
9,436,275 and 9,436,275 outstanding........ 95,363 95,363
Additional paid-in capital.................. 17,241,788 17,241,788
Treasury stock.............................. (329,875) (329,875)
Retained earnings........................... 9,654,115 5,686,388
------------ ------------
Total stockholders' equity............... 26,661,391 22,693,664
------------ ------------
$ 74,220,916 $ 67,828,087
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
-3- <PAGE>
MONARCH CASINO & RESORT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1998 1997
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income.................................. $ 3,967,727 $ 3,818,977
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization............. 3,437,814 3,174,166
(Gain) loss on disposal of assets......... 17,495 (412)
Increase in receivables, net.............. (368,038) (567,265)
(Increase) decrease in inventories........ 165,743 (16,273)
(Increase) decrease in prepaid expenses... 72,225 (126,275)
Decrease in deferred income tax asset..... 682,497 -
(Increase) decrease in other assets....... (5,877) 17,803
Decrease in accounts payable.............. (1,363,529) (705,110)
Increase in accrued expenses.............. 268,211 642,271
Increase (decrease) in deferred
income tax liability..................... (47,666) 1,099,455
------------ ------------
Net cash provided by
operating activities.................... 6,826,602 7,337,337
------------ ------------
Cash flows from investing activities:
Proceeds from sale of assets................ 8,120 187,215
Acquisition of property and equipment....... (10,671,106) (1,226,369)
------------ ------------
Net cash used in investing activities.... (10,662,986) (1,039,154)
------------ ------------
Cash flows from financing activities:
Proceeds from long-term borrowings.......... 7,167,345 -
Principal payments on long-term debt........ (4,202,333) (6,449,735)
Acquisition of treasury stock............... - (65,875)
------------ ------------
Net cash provided by
(used in) financing activities.......... 2,965,012 (6,515,610)
------------ ------------
Net decrease in cash..................... (871,372) (217,427)
Cash at beginning of period................... 5,527,839 4,021,952
------------ ------------
Cash at end of period......................... $ 4,656,467 $ 3,804,525
============ ============
Supplemental disclosure of
cash flow information:
Cash paid for interest,
net of capitalized interest................ $ 2,443,045 $ 2,547,699
Capitalized interest........................ 141,531 -
Cash paid for income taxes.................. 1,237,479 610,000
Supplemental schedule of non-cash
investing and financing activities:
The Company financed the purchase of property
and equipment in the following amounts..... 603,075 316,162
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
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MONARCH CASINO & RESORT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Monarch Casino & Resort, Inc. ("Monarch") was incorporated in 1993.
Golden Road Motor Inn, Inc. ("Golden Road") operates the Atlantis Casino
Resort (the "Atlantis") in Reno, Nevada, and owns a 16-acre site adjacent to
the Atlantis which is suitable for future development. Unless stated
otherwise, the "Company" refers collectively to Monarch, its wholly owned
subsidiary, Golden Road, and majority owned subsidiaries, Dunes Marina Resort
and Casino, Inc. ("Dunes Marina"), formed in December 1993, and Sea World
Processors, Inc. ("Sea World"), purchased in February 1994.
The consolidated financial statements include the accounts of Monarch,
Golden Road, Dunes Marina and Sea World, and eliminate intercompany balances
and transactions.
Use of Estimates
In preparing these financial statements in conformity with generally
accepted accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the year. Actual results could
differ from those estimates.
Reclassifications
Certain amounts in the 1997 consolidated financial statements have been
reclassified to conform with the 1998 presentation. These reclassifications
had no effect on the Company's net income.
NOTE 2. INTERIM FINANCIAL STATEMENTS
The accompanying consolidated financial statements for the three month
and nine month periods ended September 30, 1998 and September 30, 1997 are
unaudited. In the opinion of management, all adjustments, consisting of normal
recurring adjustments necessary for a fair presentation of the Company's
financial position and results of operations for such periods, have been
included. The accompanying unaudited consolidated financial statements should
be read in conjunction with the Company's audited financial statements
included in its Annual Report on Form 10-K for the year ended December 31,
1997. The results for the three month and nine month periods ended September
30, 1998 are not necessarily indicative of the results that may be expected
for the year ending December 31, 1998, or for any other period.
NOTE 3. EARNINGS PER SHARE
In 1997, the Company adopted the provisions of SFAS No. 128, Earnings Per
Share. Earnings per share for all periods presented have been restated to
reflect the adoption of SFAS No. 128. SFAS No. 128 requires companies to
present basic earnings per share, and, if applicable, diluted earnings per
share. Basic earnings per share excludes dilution and is computed by dividing
net earnings available to common stockholders by the weighted
-5- <PAGE>
average number of common shares outstanding for the period. Diluted earnings
per share reflects the potential dilution that could occur if options to issue
common stock were exercised into common stock.
The following is a reconciliation of the number of shares (denominator)
used in the basic and diluted earnings per share computations (shares in
thousands):
<TABLE>
<CAPTION>
Three Months ended September 30,
-----------------------------------
1998 1997
---------------- ----------------
Per Share Per Share
Shares Amount Shares Amount
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Net Income
Basic..................... 9,436 $0.16 9,436 $0.17
Effect of dilutive
stock options............ 68 (.01) 59 -
------ --------- ------ ---------
Diluted................... 9,504 $0.15 9,495 $0.17
====== ========= ====== =========
</TABLE>
<TABLE>
<CAPTION>
Nine Months ended September 30,
-----------------------------------
1998 1997
---------------- ----------------
Per Share Per Share
Shares Amount Shares Amount
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Net Income
Basic..................... 9,436 $0.42 9,447 $0.40
Effect of dilutive
stock options............ 70 - 15 -
------ --------- ------ ---------
Diluted................... 9,506 $0.42 9,462 $0.40
====== ========= ====== =========
</TABLE>
The following options were not included in the computation of diluted
earnings per share because the options' exercise price was greater than the
average market price of the common shares:
-6- <PAGE>
<TABLE>
<CAPTION>
Three Months ended September 30,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
Options to purchase shares of
common stock (in thousands)..... 13 2
Exercise prices.................. $5.94-$8.06 $8.06
Expiration dates................. 6/99-5/08 6/99
</TABLE>
<TABLE>
<CAPTION>
Nine Months ended September 30,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
Options to purchase shares of
common stock (in thousands)..... 4 13
Exercise prices.................. $6.44-$8.06 $4.00-$8.06
Expiration dates................. 6/99-5/08 6/99-6/02
</TABLE>
-7- <PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included herein contains statements that may be
considered forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
such as statements relating to anticipated expenses, capital spending and
financing sources. Such forward-looking information involves important risks
and uncertainties that could significantly affect anticipated results in the
future and, accordingly, such results may differ from those expressed in any
forward-looking statements made herein. These risks and uncertainties
include, but are not limited to, those relating to competitive industry
conditions, Reno-area tourism conditions, dependence on existing management,
leverage and debt service (including sensitivity to fluctuations in interest
rates), the regulation of the gaming industry (including actions affecting
licensing), outcome of litigation, domestic or global economic conditions,
changes in federal or state tax laws or the administration of such laws, and
issues related to the year 2000.
RESULTS OF OPERATIONS
Comparison of Operating Results for the Three Month
Periods Ended September 30, 1998 and 1997
For the three month period ended September 30, 1998, the Company earned
$1.5 million, or $.15 per share, on net revenues of $16.4 million, compared to
earnings of $1.6 million, or $.17 per share, on net revenues of $15.9 million
for the three months ended September 30, 1997. The Company's income from
operations totaled $2.8 million in the 1998 third quarter, compared to $3.2
million in the 1997 third quarter. The Company's results were detrimentally
impacted in the 1998 third quarter by disruptions associated with the
expansion underway at the Atlantis, which includes major construction projects
on both sides of the property. In particular, the Company experienced a
decline in revenue and earnings in July 1998, the month in which both the
South Virginia Street skywalk and hotel tower construction projects at
Atlantis ramped up to full capacity. During July 1998, a sizable portion of
the Atlantis' primary customer parking area was torn up and reconfigured to
accommodate the tower construction yard. Other large sections of that same
parking area were cordoned off and taken temporarily out of service while the
primary construction crane was erected. With construction activity
continuing, the Company's results bounced back in August and September 1998
with both months experiencing gains in revenues and net income compared to the
same months in 1997.
Casino revenues totaled $10.7 million in the third quarter of 1998, up
from $9.8 million in the 1997 third quarter, with increases in both slot and
table game revenues contributing to the rise. Casino operating expenses
amounted to 43.2% of casino revenues in the 1998 third quarter, compared to
42.7% in the 1997 third quarter, primarily as a result of higher promotional
allowance costs in the 1998 period.
Food and beverage revenues for the 1998 third quarter totaled $4.5
million, compared to $4.6 million for the 1997 third quarter. Food and
beverage operating expenses during the 1998 third quarter amounted to 55.7% of
food and beverage revenues, up from 53.4% for the third quarter of 1997,
-8- <PAGE>
with the increase due primarily to higher food and personnel costs in the 1998
period. This increase was due in part to an increase in the minimum wage.
Many of the Atlantis' employees receive the minimum wage as their base pay,
and earn the majority of their income in the form of tips. Although federal
law and many states allow employers to count tip income toward part of the
minimum wage, reflecting the reality that tip income is to many employees in
service-related positions the dominant source of income, Nevada law does not
allow the practice.
Hotel revenues in the 1998 third quarter totaled $3.1 million, compared
to $3.2 million in the 1997 third quarter. The decrease reflects a slight
(1.5%) drop in the Atlantis' average daily room rate ("ADR")and a 2.7 point
decline in the average occupancy rate during the 1998 period. The occupancy
rate decline reflects a substantial decline during July 1998, when a
substantial amount of construction disruption occurred, compared to July 1997.
The combined occupancy rate for August and September 1998 was 1.5 points
higher than for the same period in 1997. Hotel operating expenses in the 1998
third quarter equaled 30.0% of hotel revenues, virtually unchanged from 29.9%
for the same quarter in 1997.
Other revenues in the 1998 third quarter totaled $791 thousand, up from
$625 thousand in the 1997 third quarter, with the increase due primarily to
increased retail sales at the Atlantis and an increase in miscellaneous
income. Other expenses decreased as a percentage of other revenues, falling
to 15.1% in the 1998 third quarter from 17.9% in the 1997 third quarter, due
to higher levels of miscellaneous income which had no offsetting expenses.
Selling, general and administrative expenses in the 1998 third quarter
amounted to 26.5% of net revenues, compared to 24.9% in the 1997 third
quarter, primarily due to higher personnel costs in the 1998 period. This
increase in part reflects additional marketing and administrative staff added
in preparation for the 1999 opening of the expansion currently under
construction at the Atlantis.
Interest expense for the 1998 third quarter totaled $549 thousand, down
from $794 thousand in the third quarter of 1997, reflecting lower average
interest rates on the Company's debt and the capitalization of certain
interest costs during the 1998 period. During the 1998 third quarter, the
Company capitalized approximately $94 thousand in interest costs related to
construction activities at the Atlantis. During the same period in 1997,
there was no capitalized interest.
Comparison of Operating Results for the Nine Month
Periods Ended September 30, 1998 and 1997
For the nine months ended September 30, 1998, the Company earned $4.0
million, or $.42 per share, on net revenues of $47.5 million, compared to
earnings of $3.8 million, or $.40 per share, on net revenues of $45.8 million
during the nine months ended September 30, 1997. Income from operations for
the 1998 nine month period totaled $7.7 million, compared to $8.3 million for
the same period in 1997.
Casino revenues for the nine months ended September 30, 1998 totaled
$30.8 million, up from $29.1 million for the nine months ended September 30,
1997, driven by growth in both slot and table game revenues. Casino operating
expenses amounted to 42.9% of casino revenues for the nine months ended
September 30, 1998, compared to 41.6% for the nine month period ending
-9- <PAGE>
September 30, 1997, with the increase due primarily to higher promotional
allowance costs during the 1998 period.
Food and beverage revenues totaled $13.5 million for the nine months
ended September 30, 1998, up from $13.3 million for the nine months ended
September 30, 1997. The Company's food and beverage operating expense margin
was 54.7% in the 1998 period, compared to 54.3% in the 1997 period.
Hotel revenues for the first nine months of 1998 totaled $8.5 million, up
from $8.1 million for the first nine months of 1997, with the improvement
primarily due to an increase in the Atlantis' ADR in the 1998 period. The
hotel operating expense margin for the nine month period ended September 30,
1998 was 32.1%, compared to 35.5% for the first nine months of 1997, with the
improvement reflecting increased operating efficiencies and a higher level of
revenue from which to offset the relatively high level of fixed costs of the
hotel operation.
Selling, general and administrative expenses for the first nine months of
1998 totaled 26.6% of net revenues, compared to 25.9% in the first nine months
of 1997, with the increase primarily reflecting higher personnel costs in the
1998 third quarter.
Interest expense for the nine months ended September 30, 1998 totaled
$1.7 million, down from $2.5 million for the nine months ended September 30,
1997, reflecting lower average outstanding debt, lower average interest rates
on the Company's debt, and the capitalization of certain interest costs during
the 1998 period. During the 1998 period, the Company capitalized
approximately $142 thousand in interest costs related to construction
activities at the Atlantis. During the same period in 1997, there was no
capitalized interest.
OTHER FACTORS AFFECTING CURRENT AND FUTURE RESULTS
The Company signed an agreement with Perini Building Company on June 12,
1998 to construct an expansion of the Atlantis that will add approximately 390
rooms, 16,000 square feet of additional casino space and other amenities to
the Atlantis (the "Hotel Tower Project"). Major construction activity on this
project began in July 1998 and will continue until the project is completed in
late spring/early summer 1999. The Company carefully planned the Hotel Tower
Project to mitigate the disruptive effects of construction by redirecting
traffic flows, creating alternative access points at the Atlantis, and
restricting construction crews, materials and vehicles to specified areas.
Following the very disruptive construction mobilization process in July 1998,
the Company believes these steps have been effective in reducing the
disruptive effect of the construction activities; however, the Company
believes that some disruption is occurring and will continue to occur until
the project is completed.
On April 20, 1998, the Company entered into a contract with Krump
Construction, Inc. ("Krump") of Reno, Nevada to construct a pedestrian
overhead walkway connecting the Atlantis with a 16-acre site with additional
parking owned by the Company adjacent to and across South Virginia Street from
the Atlantis (the "Walkway Project", and together with the Hotel Tower
Project, the "Expansion Project"). The Walkway Project is directly in front
of the Atlantis. Although the Walkway Project is much smaller in scale than
the Hotel Tower Project, the construction activity associated with the Walkway
Project has also impeded traffic flows and access to the property and
-10- <PAGE>
resulted in business disruptions. The Company has taken similar steps to
those described above to minimize the disruptive impact of this construction
activity, but believes that disruption has occurred and will continue to occur
until this project is completed in early 1999.
With the Expansion Project, the Company is subject to certain risks
typically associated with large-scale construction projects, including the
risks of delay, shortages of materials or skilled labor, unforeseen
engineering, environmental and/or geological problems, work stoppages, weather
interference and unanticipated cost increases.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended September 30, 1998, net cash provided by
operating activities totaled $6.8 million. Net cash used in investing
activities for the same period totaled $10.7 million, which consisted entirely
of acquisitions of property and equipment at the Atlantis, most of which were
related to the Expansion Project. Net cash provided by financing activities
totaled $3.0 million, as the Company borrowed funds under its bank credit
facility to fund the costs of the Expansion Project. At September 30, 1998 the
Company had cash of $4.7 million, compared to $5.5 million at December 31,
1997.
On December 30, 1997, the Company completed the refinancing of its long-
term debt with an $80 million construction and reducing revolving credit
facility with a group of banks (the "Credit Facility"). The Credit Facility
replaced approximately $33 million in existing long-term debt, with the
remainder of the $80 million Credit Facility available for use as a source of
funding for the Expansion Project. The principal terms of the Credit Facility
are summarized in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
The Company has signed contracts to construct the Expansion Project,
which the Company estimates will cost approximately $63 million to construct.
The Company believes it will have adequate resources available through cash on
hand, cash flow from operations, and borrowings allowed under the Credit
Facility to construct the Expansion Project.
In addition to the potential funding requirements associated with the
Expansion Project, the Company continues to monitor expansion and development
opportunities at its other Reno site and elsewhere in Nevada and in other
jurisdictions. The decision by the Company to proceed with any substantial
project will require the Company to secure adequate financing on acceptable
terms. No assurances can be made that if such projects are pursued that
adequate financing would be available on acceptable terms, if at all.
The Company believes that its existing cash balances, cash flow from
operations and borrowings permitted under the Credit Facility will provide the
Company with sufficient resources to fund its operations, meet its existing
debt obligations and fund its capital expenditure requirements; however, the
Company's operations are subject to financial, economic, competitive,
regulatory, and other factors, many of which are beyond its control. If the
Company is unable to generate sufficient cash flow, it could be required to
adopt one or more alternatives, such as reducing, delaying or eliminating
planned capital expenditures, selling assets, restructuring debt or obtaining
additional equity capital.
-11- <PAGE>
YEAR 2000
During 1997, the Company undertook an assessment of the information
systems and software used in its operations to determine whether or not those
systems were Year 2000 compliant, and implemented plans to upgrade or replace
systems and/or software that was determined not to be Year 2000 compliant.
Based on that assessment, and the plans made as a result thereof, the Company
believes that its critical internal information systems are Year 2000
compliant or will be made Year 2000 compliant before the end of 1999. The
Company has begun, and is continuing to assess, potential issues related to
the Year 2000 other than those relating to the Company's internal information
systems, such as critical supplier readiness and potential problems associated
with embedded technologies, and will develop and implement plans to correct
any deficiencies found. The costs of addressing the Company's year 2000
issues have not been fully determined, but are not currently expected to be
material to the Company's financial position; however, should the Company
and/or its critical suppliers fail to identify and/or correct material Year
2000 issues, such failure could impact the Company's ability to operate as it
did before the Year 2000, and subsequently have a material impact on the
Company's operating results or financial position. In such an event, the
Company will address issues as they arise and strive to minimize any impact on
the Company's operations.
For a more detailed discussion of the Company's liquidity and capital
resources, and issues related to the Year 2000, see the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, Item 7.
-12- <PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
10.01 Term Loan Agreement, entered into as of the
23rd day of July, 1998, by and among Golden
Road Motor Inn, Inc., as Borrower, Monarch
Casino & Resort, Inc., John Farahi, Bahram
Farahi and Behrouz Farahi as guarantors,
and U.S. Bank National Association as Term
Lender.
27.01 Financial Data Schedule
(b) Reports on Form 8-K
None
-13- <PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MONARCH CASINO & RESORT, INC.
(Registrant)
<TABLE>
<S> <C>
Date: November 12, 1998 By: /s/ BEN FARAHI
------------------------------------
Ben Farahi, Co-Chairman of the Board,
Secretary, Treasurer and Chief
Financial Officer(Principal Financial
Officer and Duly Authorized Officer)
</TABLE>
-14- <PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
Exhibit No. Description Page No.
- ----------- ----------- --------
10.01 Term Loan Agreement, entered into as of the 16
23rd day of July, 1998, by and among Golden
Road Motor Inn, Inc., as Borrower, Monarch
Casino & Resort, Inc., John Farahi, Bahram
Farahi and Behrouz Farahi as guarantors,
and U.S. Bank National Association as Term
Lender.
27.01 Financial Data Schedule 59
</TABLE>
-15- <PAGE>
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT ("Term Loan Agreement") is made and entered into
as of the 23rd day of July, 1998, by and among GOLDEN ROAD MOTOR INN, INC., a
Nevada corporation (the "Borrower"), MONARCH CASINO & RESORT, INC., a Nevada
corporation ("MCRI"), JOHN FARAHI, BAHRAM FARAHI and BEHROUZ FARAHI
(collectively "Farahi" and together with MCRI, collectively the "Guarantors")
and U.S. BANK NATIONAL ASSOCIATION (the "Term Lender").
R_E_C_I_T_A_L_S:
WHEREAS:
A. Borrower, Guarantors and Wells Fargo Bank, National Association,
The First National Bank of Chicago, U.S. Bank National Association, First
Security Bank, N.A. and Imperial Bank, as Lenders, and Wells Fargo Bank,
National Association, as Swingline Lender and L/C Issuer and as the
administrative and collateral agent for the Lenders, Swingline Lender and L/C
Issuer (herein in such capacity called the "Agent Bank" and, together with the
Lenders, Swingline Lender and L/C Issuer collectively referred to as the
"Banks") entered into a Construction and Reducing Revolving Credit Agreement
dated as of December 29, 1997, as amended by First Amendment to Credit
Agreement dated as of the 9th day of January, 1998 and as further amended by
Second Amendment to Credit Agreement dated as of June 12, 1998 (collectively
the "Credit Agreement") for the purpose of establishing a reducing revolving
line of credit in favor of Borrower, to be funded by Lenders up to the maximum
principal amount of Eighty Million Dollars ($80,000,000.00), including a
Swingline Facility to be funded by Swingline Lender up to the maximum amount of
Two Million Five Hundred Thousand Dollars ($2,500,000.00) at any time
outstanding and an additional subfacility for the issuance by L/C Issuer of
standby and commercial letters of credit up to the maximum aggregate amount of
Two Million Five Hundred Thousand Dollars ($2,500,000.00) at any time
outstanding.
B. For the purpose of this Term Loan Agreement, all capitalized words
and terms not otherwise defined in Section 1.01 herein shall have the
respective meanings and be construed herein as provided in Section 1.01 of the
Credit Agreement and any reference to a provision of the Credit Agreement shall
be deemed to incorporate that provision as a part hereof, in the same manner
and with the same effect as if the same were fully set forth herein, in each
case without regard to any amendment or modification of the Credit Agreement
made subsequent to the Term Closing Date and notwithstanding the occurrence of
Bank Facility Termination.
C. Under the terms of the Credit Agreement Borrower is permitted to
refinance the Caramella Obligations and Banks have agreed to subordinate the
WFB Deed of Trust to the deed of trust securing repayment of the loan
refinancing the Caramella Obligations on the terms more particularly described
therein. As of the date of this Term Loan Agreement, the outstanding principal
balance of the Caramella Obligations is One Million Eight Hundred Ninety-Seven
Thousand Five Hundred Ninety-Seven Dollars ($1,897,597.00).
D. Borrower has requested a term loan in the principal amount of One
Million Eight Hundred Ninety-Seven Thousand Five Hundred Ninety-Seven Dollars
($1,897,597.00) for the purpose of refinancing the Caramella Obligations. Term
Lender is willing to fund the Term Loan in the principal amount One Million
Eight Hundred Ninety-Seven Thousand Five Hundred Ninety-Seven Dollars
($1,897,597.00) for the purpose of refinancing the Caramella Obligations on the
terms and subject to the conditions, covenants and understandings hereinafter
set forth or incorporated herein by reference from the Credit Agreement.
NOW, THEREFORE, in consideration of the foregoing, and other valuable
considerations as hereinafter described, the parties hereto do promise,
covenant and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For the purposes of this Term Loan Agreement:
(i) all capitalized words and terms not otherwise defined in Section 1.01
herein shall have the respective meanings and be construed herein as provided
in Section 1.01 of the Credit Agreement and any reference to a provision of the
Credit Agreement shall be deemed to incorporate that provision as a part
hereof, in the same manner and with the same effect as if the same were fully
set forth herein, in each case without regard to any amendment or modification
of the Credit Agreement made subsequent to the Term Closing Date and
notwithstanding the occurrence of Bank Facility Termination, and (ii) each of
the following terms shall have the meaning specified with respect thereto,
unless a different meaning clearly appears from the context:
"Applicable Margin" shall mean the LIBO Rate Margin, as set forth in the
definition of "Applicable Margin" in the Credit Agreement as determined by and
in effect under the terms of the Credit Agreement on Term Closing Date and as
of the first day of each Fiscal Quarter.
"Banking Business Day" shall mean a day upon which the principal
administrative offices (or any successor offices) of Term Lender and banking
associations in Nevada, Idaho, New York and London, England, are open to
conduct regular banking business.
"Base Rate" shall mean the rate of interest per annum which Term Lender
from time to time identifies and publicly announces as its "prime rate" or
"reference rate" and is not necessarily, for example, the lowest rate of
interest which Term Lender collects from any borrower or group of borrowers.
"Borrower" shall have the meaning set forth in the Preamble of this Term
Loan Agreement.
"Breakage Charges" shall mean with respect to any prepayment of principal
made in connection wit the Term Loan, such additional amount or amounts as will
compensate Term Lender for any losses, costs or expenses which it may incur as
a result of such pre-payment, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by the
liquidation or reemployment of deposits or other funds acquired by such Term
Lender to fund or maintain the Term Loan at the applicable LIBO Rate.
"Caramella Deed of Trust" shall mean that certain Deed of Trust with
Assignment of Rents dated August 12, 1993, executed by Borrower as trustor to
Comstock Title Company as trustee for the benefit of the Beneficiaries therein
described, which Caramella Deed of Trust was recorded August 16, 1993, in the
Official Records of Washoe County, Nevada, in Book 3817, at Page 13, under
Document No. 1702393.
"Caramella Permitted Encumbrances" shall mean, at any particular time, (i)
liens for taxes, assessments or governmental charges not then due, payable and
delinquent, (ii) liens for taxes, assessments or governmental charges not then
required to be paid pursuant to Section 5.10 of the Credit Agreement, (iii)
Liens in favor of Term Lender and Banks, (iv) the liens, encumbrances and
restrictions and existing improvements which are allowed by Term Lender to
appear in Schedule B, Part I and II of the Term Title Insurance Policy relating
to the Caramella Property at the Term Closing Date, (v) liens in favor of Term
Lender or consented to in writing by Term Lender, (vi) easements, licenses or
rights-of-way, hereafter granted to any Governmental Authority or public
utility providing services to the Hotel/Casino Facilities which are first
approved in writing by the Term Lender, (vii) judgment liens on property other
than the Collateral which do not constitute an Event of Default, (viii)
statutory liens of landlords and liens of carriers, warehousemen, mechanics,
customs and revenue authorities and materialmen and other similar liens imposed
by law incurred in the ordinary course of business which could not reasonably
be expected to cause a Material Adverse Effect and which are discharged in
accordance with Section 5.04 of the Credit Agreement, (ix) liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations; and (x) minor defects,
encroachments or irregularities in title not interfering in any material
respect with the ordinary conduct of the business of Borrower.
"Caramella Property" shall mean the land encumbered by the Caramella Deed
of Trust.
"Closing Certificate" shall have the meaning ascribed to such term in
Section 3.05(a).
"Closing Instructions" shall mean the Depository Closing Instructions to
be given by Term Lender to the Title Company on or before the Term Closing Date
setting forth the requirements of Term Lender for issuance of the Term Title
Policy and other conditions for the occurrence of the Term Closing Date.
"Credit Agreement" shall have the meaning ascribed to such term in Recital
Paragraph A of this Term Loan Agreement.
"Default Rate" shall have the meaning ascribed to such term in Section
2.08(c).
"Environmental Certificate" shall mean the Certificate and Indemnification
Regarding Hazardous Substances to be executed by Borrower on or before the Term
Closing Date as a further inducement to the Term Lender to make the Term Loan,
as it may be amended, modified, extended, renewed or restated from time to
time.
"Environmental Disclosure Statement" shall have the meaning ascribed to
such term in Section 3.03(c).
"Event of Default" shall mean any event of default as defined in Section
7.01 hereof.
"Guarantors" shall have the meaning set forth in the Preamble to this Term
Loan Agreement.
"LIBO Rate" shall mean the per annum rate of interest equal to the asking
price per annum for U.S. Dollar denominated deposits in the London, England
interbank market for three (3) months for the amount of the then unpaid
principal balance of the Term Loan, as such price is presented to Term Lender
by Dow, Jones & Company through its Dow, Jones Telerate, Inc. subsidiary or a
similar quote reporting service, on each Reduction Date, to which LIBO Rate
shall be added the Applicable Margin.
"Loan Fee" shall have the meaning ascribed to such term in Section 2.07.
"Loan Reduction Schedule" shall mean the Loan Reduction Schedule marked
Schedule 2.04 affixed hereto and by this reference incorporated herein and made
a part hereof, setting forth the Scheduled Reductions of the Term Loan as of
each Reduction Date.
"Loan Termination" shall mean indefeasible payment in full of all sums
owing under the Term Note and each of the other Term Loan Documents.
"Material Adverse Change" shall mean any change which is material and
adverse to the Caramella Property or the condition (financial or otherwise),
business operations or prospects of: (a) Borrower, or (b) the ability of
Borrower to perform its obligations under the Term Loan Documents or the
ability of the Term Lender to enforce any of its rights or remedies under any
of the Term Loan Documents.
"Material Adverse Effect" means (i) a material adverse effect upon (a) the
business, operations, properties, assets, condition (financial or otherwise) of
Borrower, (b) the value of the Caramella Property, (c) the validity, priority
or enforceability of any of the Term Loan Documents, or (d) the impairment of
the ability of Borrower to perform, or of Term Lender to enforce, the Term Loan
Documents in any material respect caused in any manner by an act of the
Borrower or any Guarantor.
"Pricing Certificate" shall mean a Pricing Certificate in the form affixed
to the Credit Agreement as Exhibit F, without regard to any amendment or
modification of the Credit Agreement or the form of Pricing Certificate made by
the Banks subsequent to the Term Closing Date, which form is by this reference
incorporated herein and made a part hereof as though fully set forth verbatim.
"Reduction Date(s)" shall mean the applicable day of each Fiscal Quarter
following the Term Closing Date as set forth on the Loan Reduction Schedule
upon which Borrower shall pay accrued interest and the required Scheduled
Reduction and upon which the LIBO Rate shall be determined for that period
continuing until the next occurring Reduction Date.
"Scheduled Balance" shall mean the maximum amount of scheduled principal
which may be outstanding on the Term Loan from time to time in the amount of
the Term Loan as of the Term Closing Date, as reduced from time to time on each
Reduction Date as set forth on the Loan Reduction Schedule.
"Scheduled Reduction(s)" shall mean the amount by which the Term Loan is
reduced on each Reduction Date as set forth on the Loan Reduction Schedule.
"Subordination Agreement" shall mean the agreement to be executed by and
among Borrower, Agent Bank and Term Lender under the terms of which the WFB
Security Documents are fully subordinated to the encumbrance lien of the Term
Deed of Trust, a copy of the form of which is marked "Exhibit D", affixed
hereto and by this reference incorporated herein and made a part hereof.
"Taxes" shall have the meaning set forth in Section 2.11 of this Term Loan
Agreement.
"Term Closing Date" shall mean the date upon which: (i) each condition
precedent required under Article IIIA of this Term Loan Agreement has been
satisfied or waived and (ii) the Term Deed of Trust and the Subordination
Agreement have been filed and/or recorded in accordance with and in the manner
required by the Closing Instructions.
"Term Deed of Trust" shall mean the Deed of Trust with Assignment of Rents
to be executed by Borrower on or before the Term Closing Date in favor of Term
Lender, encumbering the Caramella Property, as such deed of trust may be
amended, modified, extended, renewed or restated from time to time.
"Term Guaranty" shall mean the General Continuing Guaranty to be executed
by Guarantors in favor of Term Lender, a copy of the form of which is marked
"Exhibit B", affixed hereto and by this reference incorporated herein and made
a part hereof, as the same may be amended, modified, supplemented, replaced,
renewed or restated from time to time.
"Term Lender" shall mean U.S. Bank National Association.
"Term Loan" shall mean reference to the aggregate amount committed by Term
Lender for advance to or on behalf of Borrower on the Term Closing Date in the
principal amount of One Million Eight Hundred Ninety-Seven Thousand Five
Hundred Ninety-Seven Dollars ($1,897,597.00).
"Term Loan Agreement" shall mean this Term Loan Agreement executed by and
among Borrower, Guarantors and Term Lender setting forth the terms and
conditions of the Term Loan as it may be amended, modified, extended, renewed
or restated from time to time.
"Term Loan Documents" shall mean the collective reference to this Term
Loan Agreement, the Term Note, the Term Guaranty, the Term Deed of Trust, the
Environmental Certificate and all other instruments and agreements required to
be executed by or on behalf of Borrower, Guarantors, or any of them, or any
other Person in connection with and/or securing repayment of the Term Loan for
the benefit of Term Lender, as the same may be amended, modified, supplemented,
replaced, renewed or restated from time to time.
"Term Maturity Date" shall mean the earlier to occur of: (i) the full
payment or refinance of the Bank Facilities established under the terms of the
Credit Agreement and the occurrence of the Bank Facility Termination, or (ii)
June 30, 2004.
"Term Note" shall mean the Term Promissory Note, a copy of which is marked
"Exhibit A", affixed hereto and by this reference incorporated herein and made
a part hereof, to be executed by Borrower on the Term Closing Date, payable to
the order of Term Lender, evidencing the Term Loan, as the same may be amended,
modified, supplemented, replaced, renewed or restated from time to time.
"Term Title Policy" shall mean the ALTA Extended Coverage Lenders Policy
of Title Insurance, and the endorsements thereto, which are to be issued by the
Title Company, as of the Term Closing Date, in the amount of the Term Note in
favor of Term Lender, insuring the Term Deed of Trust as a first priority
mortgage lien encumbering the Caramella Property therein described subject only
to the exceptions shown therein in Schedule B, Part One, together with all such
endorsements thereto as are required by Term Lender; all in accordance with the
Closing Instructions.
"Title Company" shall mean Ticor Title Insurance Company, and its issuing
agent, Western Title Company, Inc., with offices located at 225 South
Arlington, Reno, Nevada.
"WFB Deed of Trust" shall mean that certain Deed of Trust, Fixture Filing
and Security Agreement with Assignment of Rents executed by Borrower securing
repayment of the Bank Facilities for the benefit of Agent Bank on behalf of the
Lenders, recorded in the Official Records of Washoe County, Nevada, on December
31, 1997, under Document No. 2167154.
"WFB Security Documents" shall mean collective reference to: (i) the WFB
Deed of Trust, (ii) the Assignment of Spaceleases, Contracts, Rents and
Revenues recorded December 29, 1997, in the Official Records of Washoe County,
Nevada, in Book 5086, at Page 655, as Document No. 2166000, (iii) the
Assignment of Permits, Licenses and Contracts recorded December 29, 1997, in
the Official Records of Washoe County, Nevada, in Book 5086, at Page 672, as
Document No. 2166001, and (iv) the UCC Financing Statement recorded December
29, 1997, in the Official Records of Washoe County, Nevada, in Book 5086, at
Page 687, as Document No. 2166002.
Section 1.02. Interpretation and Construction. In this Term Loan
Agreement, unless the context otherwise requires:
(i) Articles and Sections mentioned by number only are the
respective Articles and Sections of this Term Loan Agreement as so numbered;
(ii) Words importing a particular gender mean and include every other
gender, and words importing the singular number mean and include the plural
number and vice versa;
(iii) All times specified herein, unless otherwise specifically
referred, shall be the time in Reno, Nevada;
(iv) Any headings preceding the texts of the several Articles and
Sections of this Term Loan Agreement, and any table of contents or marginal
notes appended to copies hereof, shall be solely for convenience of reference
and shall not constitute a part of this Term Loan Agreement, nor shall they
affect its meaning, construction or effect;
(v) If any clause, definition, provision or Section of this Term Loan
Agreement shall be determined to be apparently contrary to or conflicting with
any other clause, definition, provision or Section of this Term Loan Agreement
then the clause, definition, provision or Section containing the more specific
provisions shall control and govern with respect to such apparent conflict.
The parties hereto do agree that each has contributed to the drafting of this
Term Loan Agreement and all Term Loan Documents and that the provisions herein
contained shall not be construed against either Borrower, Guarantors or Term
Lender as having been the person or persons responsible for the preparation
thereof;
(vi) The terms "herein", "hereunder", "hereby", "hereto", "hereof"
and any similar terms as used in the Term Loan Agreement refer to this Term
Loan Agreement; the term "heretofore" means before the date of execution of
this Term Loan Agreement; and the term "hereafter" means after the date of the
execution of this Term Loan Agreement;
(vii) All accounting terms used herein which are not otherwise
specifically defined shall be used in accordance with GAAP consistently
applied;
(viii) If any clause, provision or Section of this Term Loan
Agreement shall be ruled invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any of
the remaining provisions hereof; and
(ix) Each reference to this Loan Agreement or any other Term Loan
Document or any of them, as used in this Term Loan Agreement or in any other
Term Loan Document, shall be deemed a reference to this Term Loan Agreement or
such Term Loan Document, as applicable, as the same may be amended, modified,
supplemented, replaced, renewed or restated from time to time.
Section 1.03. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this Term
Loan Agreement shall have such meanings when used in the Term Note and in each
Term Loan Document and other communication delivered from time to time in
connection with this Term Loan Agreement or any other Term Loan Document.
Section 1.04. Cross-References. Unless otherwise specified,
references in this Term Loan Agreement and in each other Term Loan Document to
any Article or Section are references to such Article or Section of this Term
Loan Agreement or such other Term Loan Document, as the case may be, and,
unless otherwise specified, references in any Article, Section or definition to
any clause are references to such clause of such Article, Section or
definition.
Section 1.05. Exhibits and Schedules. All Exhibits and Schedules to
this Term Loan Agreement, either as originally existing or as the same may from
time to time be supplemented, modified, amended or restated are incorporated
herein by this reference.
Section 1.06. Incorporation of Credit Agreement Financial Covenants
and Reporting Requirements. In the event of Bank Facility Termination, all
financial reporting requirements and delivery of the Compliance Certificate
shall be made directly to Term Lender at the times and in the manner set forth
in the Credit Agreement.
ARTICLE II
AMOUNT, TERMS AND SECURITY OF THE TERM LOAN
Section 2.01. The Term Loan. Subject to the conditions and upon the
terms hereinafter set forth and in accordance with the terms and provisions of
the Term Note, Term Lender to lend and advance the proceeds of the Term Loan to
Borrower on the Term Closing Date. Borrower may not reborrow any amounts
repaid or prepaid on the Term Note.
Section 2.02. Use of Proceeds of the Term Loan. The proceeds of the
Term Loan shall be used for the purpose of paying in full the Caramella
Obligations.
Section 2.03. Term of Loan. The Term Loan shall be for a term
commencing on the Term Closing Date and terminating on the Term Maturity Date.
Section 2.04. The Term Note, Interest Rate and Repayment.
a. The Term Loan shall be further evidenced by the Term Note
payable to the order of Term Lender. Accrued interest shall be paid quarterly
on the applicable Reduction Date of each and every Fiscal Quarter as set forth
on the Loan Reduction Schedule. Principal shall be reduced quarterly on each
applicable Reduction Date in the amounts set forth on the Loan Reduction
Schedule, Schedule 2.04, affixed hereto and attached to the Term Note. Term
Lender shall record manually or electronically the amount of each repayment of
interest and/or principal made thereunder by Borrower and the entry of such
records shall be conclusive absent manifest or demonstrable error; provided,
however, the failure to make such a record or notation with respect to any
repayment thereof, or an error in making such a record or notation, shall not
limit or otherwise affect the obligations of Borrower hereunder or under the
Term Note.
b. Interest shall accrue on the entire outstanding principal
balance at a rate per annum equal to the LIBO Rate plus the Applicable Margin.
c. The applicable LIBO Rate shall be determined by Term Lender on
the Term Closing Date and on the applicable Reduction Date of each Fiscal
Quarter, and notice thereof shall be given promptly to Borrower. Each
determination of the applicable LIBO Rate shall be conclusive and binding upon
the Borrower, in the absence of manifest or demonstrable error. The Term
Lender shall, upon written request of Borrower deliver to Borrower a statement
showing the computations used by the Term Lender in determining the LIBO Rate
hereunder.
d. Concurrently with the delivery of each Pricing Certificate to
Agent Bank as provided in Section 5.08(c) of the Credit Agreement, and in any
event within forty-five (45) days after the end of each Fiscal Quarter
(including the fourth (4th) Fiscal Quarter in each Fiscal Year), Borrower shall
deliver a properly completed and duly executed Pricing Certificate to Term
Lender setting forth the calculations for the determination of the Applicable
Margin as of such Fiscal Quarter end. The Applicable Margin so determined
shall be the Applicable Margin to be added to the applicable LIBO Rate
hereunder as of the next occurring Reduction Date and shall continue until the
next determination of the applicable LIBO Rate hereunder.
e. Computation of interest with reference to the LIBO Rate shall
be calculated on the basis of a year of three hundred sixty (360) days and the
actual number of days elapsed.
Section 2.05. Place and Manner of Payment.
a. All amounts payable by Borrower to the Term Lender pursuant to
this Term Loan Agreement and the Term Note shall be made on a Banking Business
Day in lawful money of the United States of America and in immediately
available funds.
b. All such amounts payable by Borrower shall be made by wire
transfer to Term Lender at the payment office set forth on the signature page
of this Term Loan Agreement, or at such other place as may be directed in
writing by Term Lender from time to time. If such payment is received by Term
Lender prior to 2:00 o'clock p.m., Term Lender shall credit Borrower with such
payment on the day so received. If such payment is received by Term Lender
after 2:00 o'clock p.m., Term Lender shall credit Borrower with such payment as
of the next Banking Business Day. If the Term Note or any payment required to
be made thereon or hereunder, is or becomes due and payable on a day other than
a Banking Business Day, the due date thereof shall be extended to the next
succeeding Banking Business Day and interest thereon shall be payable at the
then applicable rate during such extension.
Section 2.06. Voluntary Prepayment. Borrower shall have the right, at
any time, and from time to time, to prepay the Term Note in whole or in part in
the amount of Fifty Thousand Dollars ($50,000.00) or an integral multiple
thereof, provided that (i) each prepayment shall be applied in each instance to
the next required Scheduled Reductions under the Term Note, (ii) no such
prepayment may be reborrowed, and (iii) Borrower pays any applicable Breakage
Charges incident to such prepayment. If the Borrower prepays the entire
principal amount then outstanding under the Term Note, such payment shall be
accompanied by a payment equal to the interest accrued thereon to the date of
such prepayment and any other amount then owing under the terms of any Term
Loan Documents.
Section 2.07. Loan Fee. On the Term Closing Date, Borrower shall pay
the Term Lender a non-refundable fee (the "Loan Fee") in the amount of Five
Thousand Dollars ($5,000.00).
Section 2.08. Late Charges and Default Rate.
a. If any Scheduled Reduction, interest payment or fee due under
the Term Note or under the Term Loan Agreement is not paid within five (5) days
of the date upon which such payment is due, Borrower promises to pay a late
charge in the amount of two percent (2%) of the amount of such delinquent
payment and Term Lender need not accept any late payment made unless it is
accompanied by such two percent (2%) late payment charge.
b. In the event of the existence of an Event of Default,
commencing on the third (3rd) Banking Business Day following the receipt by
Borrower of written notice of the occurrence of such Event of Default from Term
Lender, the total of the unpaid balance of the principal and the then accrued
and unpaid interest owing under the Term Loan shall collectively commence
accruing interest at a rate equal to the Base Rate plus four percent (4%) (the
"Default Rate") until such time as all payments and additional interest are
paid, together with the curing of any Events of Default which may exist, at
which time the interest rate shall revert to that rate of interest otherwise
accruing pursuant to the terms of the Term Note.
c. In the event of the occurrence of an Event of Default,
Borrower and Guarantors agree to pay all reasonable costs of collection,
including a reasonable attorneys' fee, in addition to and at the time of the
payment of such sum of money and/or the performance of such acts as may be
required to cure such default. In the event legal action is commenced for the
collection of any sums owing hereunder or under the terms of the Term Note, the
Borrower and Guarantors agree that any judgment issued as a consequence of such
action against Borrower and/or Guarantors shall bear interest at a rate equal
to the Default Rate until fully paid.
Section 2.09. Security for the Term Loan. As security for the due and
punctual payment and performance of the terms and provisions of this Term Loan
Agreement and the Term Note, the Term Deed of Trust shall be executed and
delivered to Term Lender as of the Term Closing Date, by the Borrower.
Section 2.10. Guaranty Agreement. As additional security for the due
and punctual payment and performance of the Term Loan and each of the terms,
covenants, representations, warranties and provisions herein contained and
contained in each of the Term Loan Documents, on or before the Term Closing
Date, Guarantors shall execute the Term Guaranty, a copy of which is marked
"Exhibit B", affixed hereto and by this reference incorporated herein and made
a part hereof.
Section 2.11. Net Payments. All payments under this Term Loan
Agreement, the Term Note and/or any other Term Loan Document shall be made
without set-off or counterclaim and in such amounts as may be necessary in
order that all such payments, after deduction or withholding for or on account
of any future taxes, levies, imposts, duties or other charges of whatsoever
nature imposed by the United States or any Governmental Authority, other than
franchise taxes or any tax on or measured by the gross receipts or overall net
income of any Term Lender pursuant to the income tax laws of the United States
or any State, or the jurisdiction where Term Lender's principal office is
located (collectively "Taxes"), shall not be less than the amounts otherwise
specified to be paid under this Term Loan Agreement and the Term Note. A
certificate as to any additional amounts payable to the Term Lender under this
Section 2.11 submitted to the Borrower by the Term Lender shall show in
reasonable detail an accounting of the amount payable and the calculations used
to determine in good faith such amount and shall be conclusive absent manifest
or demonstrable error. Any amounts payable by the Borrower under this Section
2.11 with respect to past payments shall be due within ten (10) days following
receipt by the Borrower of such certificate from the Term Lender; any such
amounts payable with respect to future payments shall be due within ten (10)
days after demand with such future payments. With respect to each deduction or
withholding for or on account of any Taxes, the Borrower shall promptly furnish
to the Term Lender such certificates, receipts and other documents as may be
required (in the reasonable judgment of the Term Lender) to establish any tax
credit to which the Term Lender may be entitled.
Section 2.12. Increased Costs. If after the date hereof the adoption
of, or any change in, any applicable law, rule or regulation (including without
limitation Regulation D of the Board of Governors of the Federal Reserve System
and any successor thereto), or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by Term Lender with any future request or future directive (whether
or not having the force of law) of any such Governmental Authority, central
bank or comparable agency:
a. Shall subject Term Lender to any tax, duty or other charge
payable to the United States or any Governmental Authority with respect to the
Term Loan or the Term Note, or shall change the basis of taxation of payments
to Term Lender of the principal of, or interest on, the Term Loan or any other
amounts due under the Term Note in respect of the Term Loan or (except for
changes in the rate of tax on the overall net income of Term Lender imposed by
the United States or any Governmental Authority pursuant to the income tax laws
of the United States or any State, or the jurisdiction where Term Lender's
principal office is located); or
b. Shall impose, modify or deem applicable any reserve imposed by
the Board of Governors of the Federal Reserve System, special deposit,
capitalization, capital adequacy or similar requirement against assets of,
deposits with or for the account of, or credit extended by, Term Lender; or
c. Shall impose on Term Lender any other condition affecting the
Term Loan or the Term Note;
and the result of any of the foregoing, as set forth in subsections (a), (b) or
(c) is to increase the cost to (or in the case of Regulation D or reserve
requirements referred to above or a successor thereto, to impose a cost on)
Term Lender of making or maintaining the Term Loan, or to reduce the amount of
any sum or rate of return received or receivable by Term Lender under the Term
Note, then within ten (10) days after demand by such Term Lender (which demand
shall be accompanied by a certificate setting forth the basis of such demand),
the Borrower shall pay directly to Lender such additional amount or amounts as
will compensate Term Lender for such increased cost (or in the case of
Regulation D or reserve requirements referred to above or a successor thereto,
such costs which may be imposed upon Term Lender) or such reduction of any sum
or rate of return received or receivable under the Term Note. A certificate as
to any additional amounts payable to Term Lender under this Section 2.12
submitted to the Borrower by Term Lender shall show in reasonable detail an
accounting of the amount payable and the calculations used to determine in good
faith such amount and shall be conclusive absent manifest or demonstrable
error. Term Lender agrees to use its reasonable efforts not materially
disadvantageous to it (in its reasonable determination) to minimize such
increased or imposed costs or such reduction.
ARTICLE III
CONDITIONS PRECEDENT TO THE TERM CLOSING DATE
Closing Conditions. The obligation of Term Lender hereunder is subject to
the following conditions precedent, each of which shall be satisfied prior to
July 31, 1998 (unless Term Lender, in its sole and absolute discretion, shall
agree otherwise). The occurrence of the Term Closing Date is subject to and
contingent upon Term Lender having received, in each case in form and substance
reasonably satisfactory to Term Lender, or in the case of an occurrence, action
or event, the occurrence of each of the following:
Section 3.01. Term Loan Agreement. Three executed counterparts of
this Term Loan Agreement duly executed by Borrower and each of the Guarantors.
Section 3.02. The Term Note and Term Guaranty.
a. The Term Note duly executed by the Borrower, payable to the
order of Term Lender.
b. The Term Guaranty duly executed by the Guarantors in favor of
Term Lender.
Section 3.03. Term Deed of Trust and Environmental Documentation.
a. The Term Deed of Trust, duly executed by Borrower encumbering
the Caramella Property as a first priority Lien.
b. The Environmental Certificate duly executed by the Borrower.
c. The original Environmental Questionnaire and Disclosure
Statement ("Environmental Disclosure Statement") on Term Lender's form duly
executed by Borrower, which Environmental Disclosure Statement shall be fully
completed to the satisfaction of Term Lender. In the event the Environmental
Disclosure Statement discloses or indicates any material environmental risk to
Term Lender, as determined by Lender in its sole and absolute discretion, the
Closing Conditions shall not be deemed satisfied and Term Lender shall have no
further duty or obligation to fund the Term Loan.
Section 3.04. Subordination Agreement. The Subordination Agreement
duly executed by Agent Bank on behalf of each of the Banks, Borrower and Term
Lender.
Section 3.05. Organizational Documents, Existence and Authority and
Closing.
a. Term Lender shall have received from Borrower an original
closing certificate ("Closing Certificate"), substantially in the form of the
Closing Certificate marked "Exhibit C", affixed hereto and by this reference
incorporated herein and made a part hereof, duly executed by Borrower.
b. Agent Bank shall have received from each of Borrower and MCRI:
(i) a Certificate of Good Standing issued by the Secretary of State of the
State of Nevada and dated within thirty (30) calendar days of the Closing Date,
(ii) a copy of the Articles of Incorporation and Bylaws certified as of the
Term Closing Date to be true, correct and complete by a duly Authorized Officer
of MCRI, and (iii) an original corporate resolution executed by the President
and Secretary of each of Borrower and MCRI authorizing Borrower to enter into
the Term Loan Documents and MCRI to enter into the Term Guaranty and all other
documents and agreements to be executed by them pursuant to this Term Loan
Agreement and further authorizing and empowering the officers who will execute
such documents and agreements with the authority and power to execute such
documents and agreements on behalf of Borrower and MCRI, respectively.
Section 3.06. Payment of Loan Fee. Payment by Borrower of the Loan
Fee as provided in Section 2.07 hereinabove.
Section 3.07. Reimbursement for Expenses and Fees. Reimbursement by
Borrower for all reasonable fees and out-of-pocket expenses incurred by Term
Lender in connection with the Term Loan, including, but not limited to, escrow
charges, title insurance endorsement premiums, recording fees, reasonable
attorney's fees of Henderson & Morgan, LLC and all other like fees and expenses
remaining unpaid as of the Term Closing Date to the extent then due and payable
on the Term Closing Date, provided that the amount then invoiced shall not
thereafter preclude Borrower's obligation to pay such costs and expenses
relating to the closing of the Term Loan following the Term Closing Date or to
reimburse Term Lender for the payment thereof.
Section 3.08. Term Title Policy. The Term Title Policy (or proforma
commitment for the issuance thereof) together with such endorsements as set
forth in the Closing Instructions.
Section 3.09. Payment of Caramella Obligations. Payment in full by
Borrower of the Caramella Obligations. As of the Term Closing Date, the
Caramella Deed of Trust shall be fully released, terminated and reconveyed.
Section 3.10. Certain Statements. On the Term Closing Date the
following statements shall be true and correct:
a. The representations and warranties with respect to the
Borrower contained in Article IV hereof (other than representations and
warranties which expressly speak only as of a different date which shall be
true and correct as of such date) are true and correct on and as of the Term
Closing Date in all material respects as though made on and as of that date,
except to the extent that such representations and warranties are not true and
correct as a result of a change which is permitted by this Term Loan Agreement
or by any other Term Loan Document, or which is otherwise consented to by Term
Lender;
b. The representations and certifications contained in the
Environmental Certificate and in the Environmental Disclosure Statement are
true and correct in all material respects;
c. Since the date of the financial statements referred to in
Section 4.04, no Material Adverse Change shall have occurred; and
d. No event has occurred or is continuing which constitutes a
Default or Event of Default hereunder.
Section 3.11. Additional Documents and Statements. Such additional
documents, affidavits, certificates and opinions as Term Lender may reasonably
require to insure compliance with this Term Loan Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce Term Lender to enter into this Term Loan Agreement, Borrower and
MCRI make the following representations and warranties:
Section 4.01. Organization; Power and Authorization. Borrower and
MCRI are each a corporation duly organized and validly existing under the laws
of the State of Nevada. Each of Borrower and MCRI (i) has all requisite
corporate power, authority and legal right to execute and deliver each
document, agreement or certificate to which it is a party or by which it is
bound in connection with the Term Loan, to consummate the transactions and
perform its obligations hereunder and thereunder, and to own its properties and
assets and to carry on and conduct its business as presently conducted or
proposed to be conducted, and (ii) has taken all necessary corporate action to
authorize the execution, delivery and performance of this Term Loan Agreement
and the other Term Loan Documents to which it is a party or by which it is
bound and to consummate the transactions contemplated hereunder and thereunder.
Section 4.02. No Conflict With, Violation of or Default Under Laws or
Other Agreements. Neither the execution and delivery of this Term Loan
Agreement, the Term Note or any other Term Loan Document, or any other
agreement, certificate or instrument to which either Borrower or MCRI is a
party or by which it is bound in connection with the Term Loan, nor the
consummation of the transactions contemplated hereunder or thereunder, nor the
compliance with or performance of the terms and conditions herein or therein,
is prevented by, limited by, conflicts in any material respect with, or will
result in a material breach or violation of, or a material default (with due
notice or lapse of time or both) under, or the creation or imposition of any
lien, charge, or encumbrance of any nature whatsoever upon any of their
respective property or assets by virtue of, the terms, conditions or provisions
of (a) any indenture, evidence of indebtedness, loan or financing agreement,
or other agreement or instrument of whatever nature to which Borrower or MCRI
is bound, or (b) any provision of any existing law, rule, regulation, order,
writ, injunction or decree of any court or Governmental Authority to which
Borrower or MCRI are subject.
Section 4.03. Agreements Legal, Binding, Valid and Enforceable. This
Term Loan Agreement, the Term Note, the Term Guaranty and all other Term Loan
Documents, when executed and delivered by Borrower and/or Guarantors, as
applicable, in connection with the Term Loan will constitute legal, valid and
binding obligations of Borrower, enforceable against Borrower and/or
Guarantors, as applicable, in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
laws of general application relating to or affecting the enforcement of
creditors' rights and the exercise of judicial discretion in accordance with
general principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law).
Section 4.04. Information and Financial Data Accurate; Financial
Statements; No Adverse Event. All information and financial and other data
previously furnished in writing by Borrower and MCRI in connection with the
Term Loan was true, correct and complete in all material respects as of the
date furnished (unless subsequently corrected prior to the date hereof), and
there has been no Material Adverse Event with respect thereto to the date of
this Term Loan Agreement since the dates thereof. No information has been
omitted which would make the information previously furnished in such financial
statements to Term Lender misleading or incorrect in any material respect to
the date of this Term Loan Agreement. Any and all financial statements
heretofore furnished to Term Lender by Borrower and/or MCRI: (a) present fairly
the financial position of Borrower and MCRI as of their respective dates and
the results of operations and changes in financial position for the periods to
which they apply, and (b) have been prepared in conformity with GAAP applied on
a consistent basis throughout the periods involved. Since the date of the
financial statements referred to in this Section 4.04, there has been no
Material Adverse Event in the financial condition, assets, liabilities,
business or operations of Borrower or MCRI.
Section 4.05. Governmental Approvals. All timely consents, approvals,
orders or authorizations of, or registrations, declarations, notices or filings
with any Governmental Authority which are required in connection with the valid
execution and delivery of this Term Loan Agreement and the other Term Loan
Documents by Borrower and the carry-out or performance of any of the
transactions required or contemplated hereunder, or thereunder, by Borrower,
have been obtained or accomplished and are in full force and effect, or can be
obtained or accomplished by Borrower. All timely consents, approvals, orders
or authorizations of, or registrations, declarations, notices or filings with
any Governmental Authority which are required by Borrower in connection with
the use and operation of the Hotel/Casino Facility have been obtained or
accomplished and are in full force and effect.
Section 4.06. Payment of Taxes. Borrower and MCRI have duly filed or
caused to be filed all federal, state and local tax reports and returns which
are required to be filed by them and have paid or made provisions for the
payment of, all material taxes, assessments, fees and other governmental
charges which have or may have become due pursuant to said returns or otherwise
pursuant to any assessment received by Borrower except such taxes, assessments,
fees or other governmental charges, if any, as are being contested in good
faith by Borrower by appropriate proceedings and for which Borrower or MCRI
have maintained adequate reserves for the payment thereof in accordance with
GAAP.
Section 4.07. Title to Caramella Property. Borrower shall have good
and marketable title to the Caramella Property as of the Term Closing Date and
at all times during the term of the Term Loan. Each of Borrower and MCRI has
good and marketable title to: (a) all of its properties and assets reflected
in the most recent financial statements referred to in Section 4.04 hereof as
owned by them (except those properties and assets disposed of since the date of
said financial statements in the ordinary course of business or those
properties and assets which are no longer used or useful in the conduct of its
businesses), including, but not limited to, Borrower's and MCRI's interest in
patents, trademarks, tradenames, servicemarks, and licenses relating to or
pertaining to the Caramella Property or the Hotel/Casino Facility, and (b) all
properties and assets acquired by them subsequent to the date of the most
recent financial statements referred to in Section 4.04 hereof. All such
properties and assets are not subject to any liens, encumbrances or
restrictions except Caramella Permitted Encumbrances.
Section 4.08. No Untrue Statements. All statements, representations
and warranties made by Borrower and MCRI in this Term Loan Agreement, any other
Term Loan Document and any other agreement, document, certificate or instrument
previously furnished or to be furnished by Borrower and/or MCRI to Term Lender
pursuant to the provisions of this Term Loan Agreement, at the time they were
made and on and as of the Term Closing Date: (a) are and shall be true, correct
and complete in all material respects, (b) do not and shall not contain any
untrue statement of a material fact, and (c) do not and shall not omit to state
a material fact, the absence of which makes the information contained herein or
therein materially misleading or incomplete. Borrower and MCRI understand that
all such statements, representations and warranties shall be deemed to have
been relied upon by Term Lender as a material inducement to establish the Term
Loan.
Section 4.09. Brokerage Commissions. No person is entitled to receive
any brokerage commission, finder's fee or similar fee or payment in connection
with the extensions of credit contemplated by this Term Loan Agreement. No
brokerage or other fee, commission or compensation is to be paid by Banks with
respect to the extensions of credit contemplated hereby and Borrower agrees to
indemnify Term Lender against any such claims for brokerage fees or commissions
and to pay all expenses including, without limitation, reasonable attorney's
fees incurred by Term Lender in connection with the defense of any action or
proceeding brought to collect any such brokerage fees or commissions.
Section 4.10. No Defaults. Borrower is not in violation of any
applicable law and/or regulations, the violation of which materially and
adversely affects the business, financial condition or operations of the
Caramella Property or the Hotel/Casino Facility. Borrower is not in violation
or default (nor is there any waiver in effect which, if not in effect, would
result in a violation or default) in any material and adverse respect under any
indenture, evidence of indebtedness, loan or financing agreement or other
agreement or instrument of whatever nature to which it is a party or by which
it is bound (except for any defaults previously brought to Term Lender's
attention in writing, for which Borrower has received a waiver from Term
Lender), a default under which would reasonably be expected to have a Material
Adverse Effect.
Section 4.11. Environmental Certificate. The representations and
certifications contained in the Environmental Certificate and in the
Environmental Disclosure Statement are true and correct in all material
respects as to Term Lender and with respect to the Term Loan.
Section 4.12. No Defaults. Neither Borrower nor any Guarantor is in
Default under the terms of the Credit Agreement and/or any of the Loan
Documents.
ARTICLE V
GENERAL COVENANTS OF BORROWER AND MCRI
To induce Term Lender to make the Term Loan, each of the "General
Covenants of Borrower and MCRI" which are set forth in Article V of the Credit
Agreement shall be deemed incorporated herein and made a part hereof as of the
Term Closing Date to the same extent as if fully restated verbatim, in each
case without regard to any amendment or modification of the Credit Agreement
made subsequent to the Term Closing Date.
ARTICLE VI
FINANCIAL COVENANTS
To induce Term Lender to make the Term Loan, each of the "Financial
Covenants" which are set forth in Article VI of the Credit Agreement shall be
deemed incorporated herein and made a part hereof as of the Term Closing Date
to the same extent as if fully restated verbatim, in each case without regard
to any amendment or modification of the Credit Agreement made subsequent to the
Term Closing Date.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default. Any of the following events and the
passage of any applicable notice and cure periods shall constitute an Event of
Default hereunder:
a. Any representation or warranty made by Borrower or any
Guarantor pursuant to or in connection with this Term Loan Agreement, the Term
Note, the Term Guaranty or any other Term Loan Document or in any report,
certificate, financial statement or other writing furnished by Borrower or
Guarantor in connection herewith, shall prove to be false, incorrect or
misleading in any materially adverse aspect as of the date when made (unless
cured within thirty (30) days of the date when made if such representation or
warranty is capable of being cured);
b. Borrower shall have defaulted in the payment of any principal
or interest on the Term Note when due;
c. The Term Deed of Trust or any provision thereof shall cease to
be in full force and effect in any material respect or shall cease to give the
Term Lender in any material respect the liens, rights, powers and privileges
purported to be created thereby or the Borrower shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Term Deed of Trust for a period of thirty
(30) days after written notice thereof is delivered to Borrower by Term Lender
of such failure (or such shorter period following such notice as may be
specifically required in any Term Loan Document);
d. Borrower shall have defaulted in the payment of any late
charge, expenses, indemnities or any other amount owing under any Term Loan
Document (other than interest and Scheduled Reductions) for a period of five
(5) days after notice thereof to Borrower from Term Lender;
e. Borrower or any Guarantor shall fail duly and punctually to
perform or comply in all material respects with any other term, covenant,
condition or promise contained in this Term Loan Agreement, the Term Note or
any other Term Loan Document and such failure shall continue for thirty (30)
days after written notice thereof is delivered to Borrower and Guarantors by
Term Lender of such failure (or such shorter period following such notice as
may be required in any Term Loan Document);
f. The occurrence of any "Event of Default", beyond any
applicable grace period, under the terms of the Credit Agreement;
g. The occurrence of any default under the Term Guaranty or the
revocation, termination or repudiation of any Guarantor's promises, obligations
or covenants under the Term Guaranty.
Section 7.02. Default Remedies. Upon the occurrence of any Event of
Default, Term Lender may declare the unpaid balance of the Term Loan, together
with the interest thereon, to be fully due and payable and exercise any or all
of the following remedies:
a. Declare all outstanding unpaid Indebtedness hereunder and
under the Term Note and other Term Loan Documents together with all accrued
interest thereon immediately due and payable without presentation, demand,
protest or notice of any kind. This remedy will be deemed to have been
automatically exercised on the occurrence of any event set out in Sections
7.01(g), (h) or (i) of the Credit Agreement.
b. The Term Lender may exercise any and all remedies available to
Term Lender under the Term Loan Documents.
c. The Term Lender may exercise any other remedies available to
Term Lender at law or in equity, including requesting the appointment of a
receiver to perform any acts required of Borrower under this Term Loan
Agreement, and Borrower hereby specifically consents to any such request by
Term Lender.
For the purpose of carrying out this section and exercising these rights,
powers and privileges, Borrower hereby irrevocably constitutes and appoints
Term Lender as its true and lawful attorney-in-fact to execute, acknowledge and
deliver any instruments and do and perform any acts such as are referred to in
this paragraph in the name and on behalf of Borrower. Term Lender may exercise
one or more of Term Lender's remedies simultaneously and all its remedies are
nonexclusive and cumulative. Term Lender shall not be required to pursue or
exhaust any Collateral or remedy before pursuing any other Collateral or
remedy. Term Lender's failure to exercise any remedy for a particular default
shall not be deemed a waiver of (i) such remedy, nor its rights to exercise any
other remedy for that default, nor (ii) its right to exercise that remedy for
any subsequent default.
Section 7.03. Application of Proceeds. All payments and proceeds
received and all amounts held or realized from the sale or other disposition of
the Collateral, which are to be applied hereunder towards satisfaction of
Borrower's and/or Guarantors' Obligations under this Term Loan Agreement, shall
be applied in the manner set forth in Nevada Revised Statutes or otherwise in
the following order of priority:
a. First, to the payment of all reasonable fees, costs and
expenses (including reasonable attorney's fees and expenses) incurred by Term
Lender, its agents or representatives in connection with the realization upon
any of the Collateral;
b. Next, to the payment in full of any other amounts due under
this Term Loan Agreement and any other Term Loan Documents (other than the Term
Note);
c. Next, to the balance of interest remaining unpaid on the Term
Note;
d. Next, to the balance of principal remaining unpaid on the Term
Note;
e. Next, the balance, if any, of such payments or proceeds to
whomever may be legally entitled thereto.
Section 7.04. Notices. In order to entitle Term Lender to exercise
any remedy available hereunder, it shall not be necessary for Term Lender to
give any notice, other than such notice as may be required expressly herein.
Section 7.05. Agreement to Pay Attorney's Fees and Expenses. Upon the
occurrence of an Event of Default, as a result of which Term Lender shall
require and employ attorneys or incur other expenses for the collection of
payments due or to become due or the enforcement or performance or observance
of any obligation or agreement on the part of Borrower contained herein,
Borrower and Guarantors shall, on demand, pay to Term Lender the actual and
reasonable fees of such attorneys (including actual and reasonable allocated
costs of in-house legal counsel) and such other reasonable expenses so incurred
by Term Lender.
Section 7.06. No Additional Waiver Implied by One Waiver. In the
event any agreement contained in this Term Loan Agreement should be breached by
either party and thereafter waived by the other party, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder.
Section 7.07. Exercise of Rights Subject to Applicable Law. All
rights, remedies and powers provided by this Article VII may be exercised only
to the extent that the exercise thereof does not violate any applicable
provision of the laws of any Governmental Authority and all of the provisions
of this Article VII are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they will not render this Term Loan Agreement invalid,
unenforceable or not entitled to be recorded or filed under the provisions of
any applicable law.
Section 7.08. Discontinuance of Proceedings. In case Term Lender
shall have proceeded to enforce any right, power or remedy under this Term Loan
Agreement, the Term Note, the Term Guaranty or any other Loan Document by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to Term Lender, then and in every such case Borrower, Guarantors
and/or Term Lender shall be restored to their former positions and rights
hereunder with respect to the Collateral, and all rights, remedies and powers
of Term Lender shall continue as if such proceedings had not been taken,
subject to any binding rule by the applicable court or other tribunal in any
such proceeding.
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
The following terms and conditions shall be applicable throughout the term
of this Term Loan Agreement:
Section 8.01. Failure to Exercise Rights. Nothing herein contained
shall impose upon Term Lender, Borrower or any Guarantor any obligation to
enforce any terms, covenants or conditions contained herein. Failure of Term
Lender, Borrower or Guarantors, in any one or more instances, to insist upon
strict performance by Borrower, Guarantors or Term Lender of any terms,
covenants or conditions of this Term Loan Agreement or the other Term Loan
Documents, shall not be considered or taken as a waiver or relinquishment by
Term Lender, Borrower or Guarantors of their right to insist upon and to
enforce in the future, by injunction or other appropriate legal or equitable
remedy, strict compliance by Borrower, Guarantors or Term Lender with all the
terms, covenants and conditions of this Term Loan Agreement and the other Term
Loan Documents. The consent of Term Lender, Borrower or Guarantors to any act
or omission by Borrower, Guarantor or Term Lender shall not be construed to be
a consent to any other or subsequent act or omission or to waive the
requirement for Term Lender's, Borrower's or Guarantors' consent to be obtained
in any future or other instance.
Section 8.02. Notices and Delivery. Unless otherwise specifically
provided herein, any consent, notice or other communication herein required or
permitted to be given shall be in writing and may be personally served,
telecopied or sent by courier service or United States mail and shall be deemed
to have been given when delivered in person or by courier service, upon receipt
of a telecopy (or on the next Banking Business Day if such telecopy is received
on a non-Banking Business Day or after 5:00 p.m. on a Banking Business Day) or
four (4) Banking Business Days after deposit in the United States mail
(registered or certified, with postage prepaid and properly addressed). For
the purposes hereof, the addresses of the parties hereto (until notice of a
change thereof is delivered as provided in this Section 8.02) shall be as set
forth below each party's name on the signature pages hereof, or, as to each
party, at such other address as may be designated by such party in a written
notice to all of the other parties.
Section 8.03. Modification in Writing. This Term Loan Agreement, the
other Term Loan Documents and the provisions incorporated herein by reference
from the Credit Agreement constitute the entire agreement between the parties
and supersede all prior agreements, whether written or oral with respect to the
subject matter hereof, including, but not limited to, any term sheets furnished
by Term Lender to Borrower and/or Guarantors. Neither this Term Loan
Agreement, nor any other Term Loan Documents, nor any provision herein, or
therein, may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
Section 8.04. Counterparts. This Term Loan Agreement may be executed
by the parties hereto in any number of separate counterparts with the same
effect as if the signatures hereto and hereby were upon the same instrument.
All such counterparts shall together constitute but one and the same document.
Section 8.05. Rights, Powers and Remedies are Cumulative. None of the
rights, powers and remedies conferred upon or reserved to Term Lender, Borrower
or Guarantors in this Term Loan Agreement are intended to be exclusive of any
other available right, power or remedy, but each and every such right, power
and remedy shall be cumulative and not alternative, and shall be in addition to
every right, power and remedy herein specifically given or now or hereafter
existing at law, in equity or by statute. Any forbearance, delay or omission
by Term Lender, Borrower or Guarantors in the exercise of any right, power or
remedy shall not impair any such right, power or remedy or be considered or
taken as a waiver or relinquishment of the right to insist upon and to enforce
in the future, by injunction or other appropriate legal or equitable remedy,
any of said rights, powers and remedies given to Term Lender, Borrower or
Guarantors herein. The exercise of any right or partial exercise thereof by
Term Lender, Borrower or Guarantors shall not preclude the further exercise
thereof and the same shall continue in full force and effect until specifically
waived by an instrument in writing executed by Term Lender.
Section 8.06. Continuing Representations. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Term Loan Agreement, the making of the Term Loan hereunder and
the execution and delivery of each other Term Loan Document until and final
payment of all sums owing under the Term Loan has occurred.
Section 8.07. Successors and Assigns. All of the terms, covenants,
warranties and conditions contained in this Term Loan Agreement shall be
binding upon and inure to the sole and exclusive benefit of the parties hereto
and their respective successors and assigns.
Section 8.08. Time of Essence. Time shall be of the essence of this
Term Loan Agreement.
Section 8.09. Choice of Law and Forum. This Term Loan Agreement and
each of the Term Loan Documents shall be governed by and construed in
accordance with the internal laws of the State of Nevada without regard to
principles of conflicts of law. Borrower and Guarantors further agree that the
full and exclusive forum for the determination of any action relating to this
Term Loan Agreement, the Term Loan Documents, or any other document or
instrument delivered in favor of Term Lender pursuant to the terms hereof,
shall be either an appropriate Court of the State of Nevada or the United
States District Court or United States Bankruptcy Court for the District of
Nevada.
Section 8.10. Arbitration.
a. Other than an action or legal proceeding instituted by Term
Lender for the purpose of exercising any remedy under the Term Loan Documents,
the request of any party, whether made before or after the institution of any
legal proceeding, any action, dispute, claim or controversy of any kind (e.g.,
whether in contract or in tort, statutory or common law, legal or equitable)
("Dispute") now existing or hereafter arising between the parties in any way
arising out of, pertaining to or in connection with the Term Loan Agreement,
Term Loan Documents or any related agreements, documents, or instruments
(collectively the "Documents"), may, by summary proceedings (e.g., a plea in
abatement or motion to stay further proceedings), bring an action in court to
compel arbitration of any Dispute.
b. All Disputes between the parties shall be resolved by binding
arbitration governed by the Commercial Arbitration Rules of the American
Arbitration Association. Judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction.
c. No provision of, nor the exercise of any rights under this
arbitration clause shall limit the rights of any party, and the parties shall
have the right during any Dispute, to seek, use and employ ancillary or
preliminary remedies, judicial or otherwise, for the purposes of realizing
upon, preserving, protecting or foreclosing upon any property, real or
personal, which is involved in a Dispute, or which is subject to, or described
in, the Documents, including, without limitation, rights and remedies relating
to: (i) foreclosing against any real or personal property collateral or other
security by the exercise of a power of sale under the Security Documentation or
other security agreement or instrument, or applicable law, (ii) exercising
self-help remedies (including setoff rights) or (iii) obtaining provisional or
ancillary remedies such as injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver from a court having jurisdiction
before, during or after the pendency of any arbitration. The institution and
maintenance of an action for judicial relief or pursuit of provisional or
ancillary remedies or exercise of self-help remedies shall not constitute a
waiver of the right of any party, including the plaintiff, to submit the
Dispute to arbitration nor render inapplicable the compulsory arbitration
provision hereof.
Section 8.11. Waiver of Jury Trial. TO THE MAXIMUM EXTENT PERMITTED
BY LAW, BORROWER, GUARANTORS AND TERM LENDER EACH MUTUALLY HEREBY EXPRESSLY
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND,
OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS TERM LOAN AGREEMENT, THE
TERM NOTE, THE TERM GUARANTY OR ANY OF THE TERM LOAN DOCUMENTS, OR IN ANY WAY
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE DEALINGS OF BORROWER,
GUARANTORS AND TERM LENDER WITH RESPECT TO THIS TERM LOAN AGREEMENT, THE TERM
NOTE, THE TERM GUARANTY OR ANY OF THE TERM LOAN DOCUMENTS, OR THE TRANSACTIONS
RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE
MAXIMUM EXTENT PERMITTED BY LAW, BORROWER, GUARANTORS AND TERM LENDER EACH
MUTUALLY AGREE THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR
PROCEEDINGS SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT THE
DEFENDING PARTY MAY FILE AN ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT
OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF THE COMPLAINING PARTY
TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
Section 8.12. Scope of Approval and Review. Any inspection of the
Caramella Property shall be deemed to be made solely for Term Lender's internal
purposes and shall not be relied upon by the Borrower, Guarantor or any third
party. In no event shall Term Lender be deemed or construed to be joint
venturers or partners of Borrower or Guarantors.
Section 8.13. Severability of Provisions. In the event any one or
more of the provisions contained in this Term Loan Agreement shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby.
Section 8.14. Cumulative Nature of Covenants. All covenants contained
herein are cumulative and not exclusive of each other covenant. Any action
allowed by any covenant shall be allowed only if such action is not prohibited
by any other covenant.
Section 8.15. Costs to Prevailing Party. If any action or arbitration
proceeding is brought by any party against any other party under this Term Loan
Agreement or any of the Term Loan Documents, the prevailing party shall be
entitled to recover such costs and attorney's fees as the court in such action
or proceeding may adjudge reasonable.
Section 8.16. Setoff. In addition to any rights and remedies of the
Term Lender provided by law, if any Event of Default exists, Term Lender is
authorized at any time and from time to time, without prior notice to the
Borrower or Guarantors, any such notice being waived by the Borrower and
Guarantors to the fullest extent permitted by law, to set-off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by Term Lender to or for the credit or the account of Borrower or
Guarantors against any and all obligations of Borrower or Guarantors under the
Term Loan, now or hereafter existing, irrespective of whether or not the Term
Lender shall have made demand under this Term Loan Agreement or any Term Loan
Document and although such amounts owed may be contingent or unmatured. Term
Lender agrees promptly to notify the Borrower and Guarantors after any such
setoff and application made by Term Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of Term Lender under this Section 8.16 are in addition
to the other rights and remedies which Term Lender may have.
Section 8.17. Schedule Attached. Schedules are attached hereto and
incorporated herein and made a part hereof as follows:
Schedule 2.04 - Loan Reduction Schedule
Section 8.18. Exhibits Attached. Exhibits are attached hereto and
incorporated herein and made a part hereof as follows:
Exhibit A - Note - Form
Exhibit B - Guaranty - Form
Exhibit C - Closing Certificate - Form
Exhibit D - Subordination Agreement - Form
IN WITNESS WHEREOF, the parties hereto have caused this Term Loan
Agreement to be executed as of the day and year first above written.
BORROWER:
GOLDEN ROAD MOTOR INN, INC.,
a Nevada corporation
By /s/ Ben Farahi
----------------------
Ben Farahi,
Secretary
Address:
1175 West Moana Lane
Suite 200
Reno, NV 89509
Telephone: (702) 825-3355
Facsimile: (702) 825-7705
<PAGE>
GUARANTORS:
MCRI:
MONARCH CASINO & RESORT,
INC., a Nevada corporation
By /s/ Ben Farahi
----------------------
Ben Farahi,
Secretary
Address:
1175 West Moana Lane
Suite 200
Reno, NV 89509
Telephone: (702) 825-3355
Facsimile: (702) 825-7705
/s/ John Farahi
------------------------
John Farahi
/s/ Bahram Farahi
------------------------
Bahram Farahi
/s/ Behrouz Farahi
------------------------
Behrouz Farahi
TERM LENDER:
U.S. BANK NATIONAL
ASSOCIATION
By /s/ Anthony W. Olbrich
-----------------------
Name Anthony W. Olbrich
---------------------
Title Sr. VP
--------------------
Administrative Address:
U.S. Bank
101 S. Capitol Blvd.
P.O. Box 8247
Boise, ID 83733
Attn: Stephen G. Buntin
Telephone: (208) 383-7373
Facsimile: (208) 383-7563
Payment Office:
U.S. Bank National Association
Commercial Loan Servicing Center
555 S.W. Oak
P.O. Box 5308
Portland, OR 97228-5308
Attn: Kathy O'Grady
ABA No. 123000220
Account No. 00340012160600
Reference: Golden Road
Motor Inn, Inc.,
Obligor #
3316778012,
Loan # 109 <PAGE>
TERM LOAN REDUCTION SCHEDULE
REDUCTION SCHEDULED MAXIMUM
DATE REDUCTION PRINCIPAL BALANCE
===========================================================
Term Closing Date -0- $ 1,897,597.00
October 1, 1998 $ 42,500.00 1,855,097.00
January 4, 1999 $ 42,500.00 1,812,597.00
April 1, 1999 $ 42,500.00 1,770,097.00
July 1, 1999 $ 42,500.00 1,727,597.00
October 1, 1999 $ 42,500.00 1,685,097.00
January 3, 2000 $ 42,500.00 1,642,597.00
April 3, 2000 $ 42,500.00 1,600,097.00
July 3, 2000 $ 42,500.00 1,557,597.00
October 2, 2000 $ 42,500.00 1,515,097.00
January 2, 2001 $ 101,006.47 1,414,090.53
April 2, 2001 $ 101,006.47 1,313,084.06
July 2, 2001 $ 101,006.47 1,212,077.59
October 1, 2001 $ 101,006.47 1,111,071.12
January 2, 2002 $ 101,006.47 1,010,064.65
April 1, 2002 $ 101,006.47 909,058.18
July 1, 2002 $ 101,006.47 808,051.71
October 1, 2002 $ 101,006.47 707,045.24
January 2, 2003 $ 101,006.47 606,038.77
April 1, 2003 $ 101,006.47 505,032.30
July 1, 2003 $ 101,006.47 404,025.83
October 1, 2003 $ 101,006.47 303,019.36
January 2, 2004 $ 101,006.47 202,012.89
April 1, 2004 $ 101,006.47 101,006.42
June 30, 2004 $ 101,006.42 0.00
(Remaining Remaining unpaid
unpaid principal principal balance
balance) fully due and
payable
SCHEDULE 2.04 <PAGE>
TERM PROMISSORY NOTE
$1,897,597.00 July 23, 1998
FOR VALUE RECEIVED, the undersigned, GOLDEN ROAD MOTOR INN, INC., a Nevada
corporation (the "Borrower"), promises to pay to the order of U.S. BANK
NATIONAL ASSOCIATION ("Term Lender") the principal sum of One Million Eight
Hundred Ninety Seven Thousand Five Hundred Ninety Seven Dollars
($1,897,597.00), together with interest accrued on the declining balance of the
principal sum at the rate or rates set forth below from the Term Closing Date
and continuing until fully paid, as follows:
A. Interest Rate. Interest shall accrue on the entire
outstanding principal balance at the LIBO Rate plus the Applicable Margin.
Interest accrued on the outstanding unpaid balance of the principal sum shall
be paid quarterly on each Reduction Date commencing on the first day of
October, 1998 and on the Reduction Date in each calendar quarter thereafter
occurring and on the Term Maturity Date.
B. Principal Repayment. Scheduled Reductions of principal
commencing on October 1, 1998, in the amounts set forth on the Loan Reduction
Schedule shall be made quarterly on each Reduction Date as set forth on the
Loan Reduction Schedule, Schedule 2.04 attached hereto and by this reference
incorporated herein and made a part hereof, until the Term Maturity Date, on
which date the remaining balance of the principal sum, together with all unpaid
interest accrued thereon shall be fully paid.
C. General Conditions.
(1) Definitions. When used herein the following terms shall
have the following meanings:
Applicable Margin shall have the meaning as defined in Section
1.01 of the Term Loan Agreement.
Banking Business Day shall have the meaning as defined in
Section 1.01 of the Term Loan Agreement.
Borrower shall have the meaning set forth in the preamble to
this Term Note.
Default Rate shall have the meaning as defined in Section 1.01
of the Term Loan Agreement.
Dollar(s) and the sign ($) shall mean lawful money of the United
States of America.
LIBO Rate shall have the meaning as defined in Section 1.01 of
the Term Loan Agreement.
Loan Reduction Schedule shall mean the Loan Reduction Schedule
marked "Schedule 2.04", affixed to this Term Note and by this reference
incorporated herein and made a part hereof, setting forth the Scheduled
Reductions and Maximum Principal Balance as of each Reduction Date under the
Term Loan.
EXHIBIT A <PAGE>
Maximum Principal Balance shall mean the maximum unpaid
principal amount which may be outstanding on the Term Loan as of any Reduction
Date, as set forth on the Loan Reduction Schedule.
Reduction Date(s) shall mean reference to each Reduction Date as
set forth on the Loan Reduction Schedule.
Scheduled Reductions shall mean the amount by which the Term
Loan is reduced on each Reduction Date as set forth on the Loan Reduction
Schedule.
Term Closing Date shall have the meaning as defined in Section
1.01 of the Term Loan Agreement.
Term Lender shall have the meaning set forth in the preamble to
this Term Note.
Term Loan Agreement shall mean that certain Term Loan Agreement
of even date herewith executed by and among Borrower, Guarantors, as therein
described, and Term Lender, as such Term Loan Agreement may be amended,
modified, supplemented or restated from time to time.
Term Loan Documents shall have the meaning as defined in Section
1.01 of the Term Loan Agreement.
Term Maturity Date shall have the meaning as defined in Section
1.01 of the Term Loan Agreement.
Term Note shall mean this Term Promissory Note.
(2) Records. The Term Lender shall record in its records the
date and amount of each repayment. The aggregate unpaid principal amount,
rate, and interest amount so recorded shall be calculated by the Term Lender
and shall be binding upon Borrower subject to Borrower's right to require
corrections of errors in calculation. The failure to so record any such amount
or any error in so recording any such amount shall not, however, limit or
otherwise affect the obligation of Borrower hereunder to repay the principal
amount outstanding together with all interest accruing thereon.
(3) Setting and Notice of Rates. The LIBO Rate shall be determined
by the Term Lender as provided in the Term Loan Agreement, and notice of each
change thereof shall be given promptly to Borrower. Each determination of the
applicable LIBO Rate shall be conclusive and binding upon the Borrower, in the
absence of demonstrable error. The Term Lender shall, upon written request of
Borrower, deliver to Borrower a statement showing the computations used by the
Term Lender in determining any rate hereunder.
(4) Computation of Interest. Computation of interest with
reference to the LIBO Rate shall be calculated on the basis of a year of three
hundred sixty (360) days and the actual number of days elapsed.
(5) Prepayments. This Term Note may be prepaid at any time in whole
or in part as provided in Section 2.06 of the Term Loan Agreement.
D. Default. The "Late Charges and Default Rate" provisions contained in
Section 2.08 and the "Events of Default" provisions contained in Article VII of
the Term Loan Agreement are hereby incorporated by this reference as though
fully set forth herein.
E. Waivers. Borrower waives diligence, demand, presentment for payment,
protest and notice of protest.
F. Collection Costs. In the event of the occurrence of an Event of
Default, the Borrower agrees to pay all reasonable costs of collection,
including a reasonable attorney's fee, in addition to and at the time of the
payment of such sum of money and/or the performance of such acts as may be
required to cure such default. In the event legal action is commenced for the
collection of any sums owing hereunder the undersigned agrees that any judgment
issued as a consequence of such action against Borrower shall bear interest at
a rate equal to the Default Rate until fully paid.
G. Interest Rate Limitation. Notwithstanding any provision herein or
in any document or instrument now or hereafter securing this Term Note, the
total liability for payments in the nature of interest shall not exceed the
limits now imposed by the applicable laws of the State of Nevada or the United
States of America.
H. Security. This Term Note is secured by the Term Deed of Trust
described in the Term Loan Agreement.
I. Governing Law. This Term Note has been delivered in Reno, Nevada, and
shall be governed by and construed in accordance with the laws of the State of
Nevada.
J. Partial Invalidity. If any provision of this Term Note shall be
prohibited by or invalid under any applicable law, such provision shall be in-
effective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision of any other provision of this
Term Note.
K. Incorporation of Term Loan Agreement. This Term Note is issued
under, and subject to, the terms, covenants and conditions of the Term Loan
Agreement, which Term Loan Agreement is by this reference incorporated herein
and made a part hereof.
IN WITNESS WHEREOF, this Term Note has been executed as of the date first
hereinabove written.
BORROWER:
GOLDEN ROAD MOTOR INN,
INC., a Nevada corporation
By________________________
Name______________________
Title_____________________<PAGE>
GENERAL CONTINUING GUARANTY
THIS GENERAL CONTINUING GUARANTY ("Guaranty"), dated as of July 23, 1998,
is executed and delivered by MONARCH CASINO & RESORT, INC., a Nevada
corporation ("MCRI"), JOHN FARAHI, a married man, BAHRAM FARAHI, a married man
and BEHROUZ FARAHI, a married man (hereinafter collectively referred to as
"Farahi" and together with MCRI each individually referred to as a "Guarantor"
and collectively referred to as "Guarantors"), in favor of the Beneficiary,
referred to below, and in light of the following:
R_E_C_I_T_A_L_S:
WHEREAS:
A. Reference is made to that certain Term Loan Agreement, dated of
even date herewith (as amended, supplemented or otherwise modified from time to
time, the "Term Loan Agreement"), by and among GOLDEN ROAD MOTOR INN, INC., a
Nevada corporation (the "Borrower"), Guarantors, U.S. Bank National
Association, as the Term Lender (herein the "Beneficiary").
B. For the purpose of this Guaranty, all capitalized terms not
otherwise specifically defined herein shall have the same meaning given them in
Section 1.01 of the Term Loan Agreement or incorporated therein by reference as
though fully restated verbatim.
C. In order to induce Beneficiary to make the Term Loan and extend
financial accommodations to Borrower pursuant to the Term Loan Agreement, and
in consideration thereof, Guarantors have agreed to guaranty the Guarantied
Obligations.
NOW, THEREFORE, in consideration of the foregoing, Guarantors hereby
jointly and severally agree, in favor of Beneficiary, as follows:
1. Definitions and Construction.
(a) Definitions. The following terms, as used in this Guaranty,
shall have the following meanings:
"Beneficiary" shall mean U.S. Bank National Association, in its
capacity as the Term Lender under the Term Loan Agreement.
"Borrower" shall mean Golden Road Motor Inn, Inc., a Nevada
corporation.
"Guarantied Obligations" shall mean: (a) the due and punctual
payment of the principal of, and interest (including post petition interest and
including any and all interest which, but for the application of the provisions
of the Bankruptcy Code, would have accrued on such amounts) on, and premium, if
any, on the Term Note; and (b) the due and punctual payment of all present or
future Indebtedness owing by Borrower.
"Guarantor(s)" shall have the meaning set forth in the preamble to
this Guaranty.
"Guaranty" shall have the meaning set forth in the preamble to this
document.
EXHIBIT B <PAGE>
"Indebtedness" shall mean any and all obligations, indebtedness, or
liabilities of any kind or character owed to Beneficiary arising directly or
indirectly out of or in connection with the Term Loan Agreement, the Term Note,
the Environmental Certificate, or any of the other Term Loan Documents,
including all such obligations, indebtedness, or liabilities, whether for
principal, interest (including post petition interest and including any and all
interest which, but for the application of the provisions of the Bankruptcy
Code, would have accrued on such amounts), premium, reimbursement obligations,
fees, costs, expenses (including attorneys' fees), or indemnity obligations,
whether heretofore, now, or hereafter made, incurred, or created, whether
voluntarily or involuntarily made, incurred, or created, whether secured or
unsecured (and if secured, regardless of the nature or extent of the security),
whether absolute or contingent, liquidated or unliquidated, or determined or
indeterminate, whether Borrower is liable individually or jointly with others,
and whether recovery is or hereafter becomes barred by any statute of
limitations or otherwise becomes unenforceable for any reason whatsoever,
including any act or failure to act by Beneficiary.
"Term Loan Agreement" shall have the meaning set forth by Recital A
of this Guaranty.
(b) Construction. Unless the context of this Guaranty clearly
requires otherwise, references to the plural include the singular, references
to the singular include the plural, the part includes the whole, the term
"including" is not limiting, and the term "or" has the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and other similar terms refer to this Guaranty as a whole and not
to any particular provision of this Guaranty. Any reference in this Guaranty
to any of the following documents includes any and all alterations, amendments,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable: the Term Loan Documents; the Term Loan Agreement; this Guaranty;
the Environmental Certificate; and the Term Note.
2. Guarantied Obligations. Guarantors hereby jointly and severally,
irrevocably and unconditionally guaranty to Beneficiary, as and for their own
debt, until final and indefeasible payment thereof has been made, (a) the due
and punctual payment of the Guarantied Obligations, in each case when the same
shall become due and payable, whether at maturity, pursuant to a mandatory
payment requirement, by acceleration, or otherwise; it being the intent of
Guarantors that the guaranty set forth herein shall be a guaranty of payment
and not a guaranty of collection; and (b) the punctual and faithful
performance, keeping, observance, and fulfillment by Borrower of all of the
agreements, conditions, covenants, and obligations of Borrower contained in the
Term Loan Agreement, the Term Note, the Environmental Certificate and under
each of the other Term Loan Documents.
3. Continuing Guaranty. This Guaranty includes Guarantied Obligations
arising under successive transactions continuing, compromising, extending,
increasing, modifying, releasing, or renewing the Guarantied Obligations,
changing the interest rate, payment terms, or other terms and conditions
thereof, or creating new or additional Guarantied Obligations after prior
Guarantied Obligations have been satisfied in whole or in part. To the maximum
extent permitted by law, Guarantors hereby waive any right to revoke this
Guaranty as to future Indebtedness. If such a revocation is effective
notwithstanding the foregoing waiver, Guarantors acknowledge and agree that (a)
no such revocation shall be effective until written notice thereof has been
received and acknowledged by Beneficiary, (b) no such revocation shall apply to
any Guarantied Obligations in existence on such date (including any subsequent
continuation, extension, or renewal thereof, or change in the interest rate,
payment terms, or other terms and conditions thereof to the extent permitted by
law), (c) no such revocation shall apply to any Guarantied Obligations made or
created after such date to the extent made or created pursuant to a legally
binding commitment of Beneficiary in existence on the date of such revocation,
(d) no payment by Guarantors, Borrower, or from any other source, prior to the
date of such revocation shall reduce the maximum obligation of Guarantors
hereunder, and (e) any payment by Borrower or from any source other than
Guarantors subsequent to the date of such revocation shall first be applied to
that portion of the Guarantied Obligations as to which the revocation is
effective and which is not, therefore, guarantied hereunder.
4. Performance under this Guaranty. In the event that Borrower fails
to make any payment of any Guarantied Obligations on or before the due date
thereof, or if Borrower shall fail to perform, keep, observe, or fulfill any
other obligations referred to in clause (b) of Section 2 hereof in the manner
provided in the Term Loan Agreement, the Term Note, or the other Term Loan
Documents, as applicable, Guarantors immediately shall cause such payment to be
made or each of such obligations to be performed, kept, observed, or fulfilled.
5. Primary Obligations. This Guaranty is a primary and original
obligation of Guarantors, is not merely the creation of a surety relationship,
and is an absolute, unconditional, and continuing guaranty of payment and
performance which shall remain in full force and effect without respect to
future changes in conditions, including any change of law or any invalidity or
irregularity with respect to the issuance of the Term Note. Guarantors agree
that they are directly, jointly and severally with any other guarantor of the
Guarantied Obligations, liable to Beneficiary, that the obligations of
Guarantors hereunder are independent of the obligations of Borrower or any
other guarantor, and that a separate action may be brought against Guarantors,
whether such action is brought against Borrower or any other guarantor whether
Borrower or any such other guarantor is joined in such action. Guarantors
agree that their liability hereunder shall be immediate and shall not be
contingent upon the exercise or enforcement by Beneficiary of whatever remedies
they may have against Borrower or any other guarantor, or the enforcement of
any lien or realization upon any security Beneficiary may at any time possess.
Guarantors agree that any release which may be given by Beneficiary to Borrower
or any other guarantor shall not release Guarantors. Guarantors consent and
agree that Beneficiary shall be under no obligation to marshal any property or
assets of Borrower or any other guarantor in favor of Guarantors, or against or
in payment of any or all of the Guarantied Obligations.
6. Waivers.
(a) Guarantors hereby waive: (i) notice of acceptance hereof;
(ii) notice of any advances, loans or other financial accommodations made or
extended under the Term Loan Agreement, or the creation or existence of any
Guarantied Obligations; (iii) notice of the amount of the Guarantied
Obligations, subject, however, to Guarantors' right to make inquiry of
Beneficiary to ascertain the amount of the Guarantied Obligations at any
reasonable time; (iv) notice of any adverse change in the financial condition
of Borrower or of any other fact that might increase Guarantors' risk
hereunder; (v) notice of presentment for payment, demand, protest, and notice
thereof as to the Term Note or any other instrument; (vi) notice of any Default
or Event of Default under the Term Loan Agreement; and (vii) all other notices
(except if such notice is specifically required to be given to Guarantors under
this Guaranty or any other Term Loan Document to which Guarantors are party)
and demands to which Guarantors might otherwise be entitled.
(b) To the fullest extent permitted by applicable law, Guarantors
waive the right by statute or otherwise to require Beneficiary to institute
suit against Borrower or to exhaust any rights and remedies which Beneficiary
has or may have against Borrower. In this regard, Guarantors agree that they
are bound to the payment of each and all Guarantied Obligations, whether now
existing or hereafter accruing, as fully as if such Guarantied Obligations were
directly owing to Beneficiary by Guarantors. Guarantors further waive any
defense arising by reason of any disability or other defense (other than the
defense that the Guarantied Obligations shall have been fully and finally
performed and indefeasibly paid) of Borrower or by reason of the cessation from
any cause whatsoever of the liability of Borrower in respect thereof.
(c) To the maximum extent permitted by law, each Guarantor hereby
waives: (i) any rights to assert against Beneficiary any defense (legal or
equitable), set-off, counterclaim, or claim which Guarantors may now or at any
time hereafter have against Borrower or any other party liable to Beneficiary;
(ii) any defense, set-off, counterclaim, or claim, of any kind or nature,
arising directly or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of the Guarantied Obligations or any
security therefor; (iii) any defense arising by reason of any claim or defense
based upon an election of remedies by Beneficiary; (iv) the benefit of any
statute of limitations affecting Guarantors' liability hereunder or the
enforcement thereof, and any act which shall defer or delay the operation of
any statute of limitations applicable to the Guarantied Obligations shall
similarly operate to defer or delay the operation of such statute of
limitations applicable to Guarantors' liability hereunder; and (v) any defense
or benefit that may be derived from or afforded by law which limits the
liability of or exonerates guaranties or sureties including, without
limitation, the benefits of Nevada Revised Statutes [sections] 40.430 - 40.459,
40.475 and 40.485 as permitted by Nevada Revised Statutes [section] 40.495.
(d) Guarantors agree that if all or a portion of the Indebtedness
or this Guaranty is at any time secured by a deed of trust or mortgage covering
interests in real property, Beneficiary, in its sole discretion, without notice
or demand and without affecting the liability of Guarantors under this
Guaranty, may foreclose (pursuant to the terms of the Term Loan Agreement or
otherwise) the deed of trust or mortgage and the interests in real property
secured thereby by non-judicial sale. Guarantors understand that the exercise
of Beneficiary of certain rights and remedies contained in the Term Loan
Agreement and any such deed of trust or mortgage may affect or eliminate
Guarantors' right of subrogation against Borrower and that Guarantors may
therefore incur a partially or totally non-reimbursable liability hereunder.
Nevertheless, Guarantors hereby authorize and empower Beneficiary to exercise,
in its sole discretion, any rights and remedies, or any combination thereof,
which may then be available, since it is the intent and purpose of Guarantors
that the obligations hereunder shall be absolute, independent and unconditional
under any and all circumstances. Notwithstanding any foreclosure of the lien
of any deed of trust or security agreement with respect to any or all of any
real or personal property secured thereby, whether by the exercise of the power
of sale contained therein, by an action for judicial foreclosure or by an
acceptance of a deed in lieu of foreclosure, Guarantors shall remain bound
under this Guaranty including its obligation to pay any deficiency following a
non-judicial foreclosure.
(e) Guarantors also hereby waive any claim, right or remedy which
such Guarantors may now have or hereafter acquire against the Borrower that
arises hereunder and/or from the performance by Guarantors hereunder including,
without limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, contribution, indemnification, or participation in any claim,
right or remedy of Beneficiary against the Borrower or any security which
Beneficiary now have or hereafter acquire, whether or not such claim, right or
remedy arises in equity, under contract, by statute, under common law or
otherwise.
7. Releases. Guarantors consent and agree that, without notice to or
by Guarantors and without affecting or impairing the obligations of Guarantors
hereunder, Beneficiary may, by action or inaction, compromise or settle, extend
the period of duration or the time for the payment, or discharge the
performance of, or may refuse to, or otherwise not enforce, or may, by action
or inaction, release all or any one or more parties to, any one or more of the
Term Loan Agreement, the Term Note, or any of the other Term Loan Documents or
may grant other indulgences to Borrower in respect thereof, or may amend or
modify in any manner and at any time (or from time to time) any one or more of
the Term Loan Agreement, the Term Note, or any of the other Term Loan
Documents, or may, by action or inaction, release or substitute any other
guarantor, if any, of the Guarantied Obligations, or may enforce, exchange,
release, or waive, by action or inaction, any security for the Guarantied
Obligations (including the Collateral) or any other guaranty of the Guarantied
Obligations, or any portion thereof.
8. No Election. Beneficiary shall have the right to seek recourse
against Guarantors to the fullest extent provided for herein and no election by
Beneficiary to proceed in one form of action or proceeding, or against any
party, or on any obligation, shall constitute a waiver of Beneficiary's right
to proceed in any other form of action or proceeding or against other parties
unless Beneficiary has expressly waived such right in writing. Specifically,
but without limiting the generality of the foregoing, no action or proceeding
by Beneficiary under any document or instrument evidencing the Guarantied
Obligations shall serve to diminish the liability of Guarantors under this
Guaranty except to the extent that Beneficiary finally and unconditionally
shall have realized indefeasible payment by such action or proceeding.
9. Indefeasible Payment. The Guarantied Obligations shall not be
considered indefeasibly paid for purposes of this Guaranty unless and until all
payments to Beneficiary are no longer subject to any right on the part of any
person whomsoever, including Borrower, Borrower as a debtor in possession, or
any trustee (whether appointed under the Bankruptcy Code or otherwise) of
Borrower's assets to invalidate or set aside such payments or to seek to recoup
the amount of such payments or any portion thereof, or to declare same to be
fraudulent or preferential. In the event that, for any reason, all or any
portion of such payments to Beneficiary is set aside or restored, whether
voluntarily or involuntarily, after the making thereof, the obligation or part
thereof intended to be satisfied thereby shall be revived and continued in full
force and effect as if said payment or payments had not been made and
Guarantors shall be liable for the full amount Beneficiary is required to repay
plus any and all costs and expenses (including attorneys' fees) paid by
Beneficiary in connection therewith.
10. Financial Condition of Borrower and Guarantors.
a. Guarantors represent and warrant to Beneficiary that they are
currently informed of the financial condition of Borrower and of all other
circumstances which a diligent inquiry would reveal and which bear upon the
risk of nonpayment of the Guarantied Obligations. Guarantors further represent
and warrant to Beneficiary that they have each read and understand the terms
and conditions of the Term Loan Agreement, the Term Note and the other Term
Loan Documents. Guarantors hereby covenant that they will continue to keep
themselves informed of Borrower's financial condition, the financial condition
of other guarantors, if any, and of all other circumstances which bear upon the
risk of nonpayment or nonperformance of the Guarantied Obligations.
11. Subordination. Any indebtedness of Borrower now or hereafter held
by Guarantors is hereby subordinated to the indebtedness of Borrower to
Beneficiary.
12. Payments; Application. All payments to be made hereunder by
Guarantors shall be made in lawful money of the United States of America at the
time of payment, shall be made in immediately available funds, and shall be
made without deduction (whether for taxes or otherwise) or offset. All
payments made by Guarantors hereunder shall be applied as follows: first, to
all reasonable costs and expenses (including attorneys' fees) incurred by
Beneficiary in enforcing this Guaranty or in collecting the Guarantied
Obligations; second, to all accrued and unpaid interest, premium, if any, and
fees owing to Beneficiary constituting Guarantied Obligations; and third, to
the balance of the Guarantied Obligations.
13. Costs and Expenses. Guarantors agree to pay Beneficiary's
reasonable out-of-pocket costs and expenses, including, but not limited to,
legal fees and disbursements, incurred in any effort (which shall include those
incurred in investigations of and advising on matters relating to the
Beneficiary's rights and remedies) to collect or enforce any of sums owing
under this Guaranty whether or not any lawsuit is filed. Until paid to the
Beneficiary such sums will bear interest at the Default Rate set forth in the
Term Loan Agreement.
14. Costs to Prevailing Party. If any action or proceeding is brought
by any party against any other party under this Guaranty, the prevailing party
shall be entitled to recover such costs and attorney's fees as the court in
such action or proceeding may adjudge reasonable.
15. Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, sent by telefacsimile, telexed, or
sent by courier service or United States mail and shall be deemed to have been
given when delivered in person or by courier service, upon receipt of a
telefacsimile or telex or five (5) Banking Business Days after deposit in the
United States mail (registered or certified, with postage prepaid and properly
addressed). For the purposes hereof, the addresses of the parties hereto
(until notice of a change thereof is delivered as provided in this Section 15)
shall be as set forth below, or, as to each party, at such other address as may
be designated by such party in a written notice to all of the other parties:
If to Guarantors: Monarch Casino & Resort, Inc.
1175 West Moana Lane
Suite 200
Reno, Nevada 89509
John Farahi
[Address Omitted]
Bahram Farahi
[Address Omitted]
Behrouz Farahi
[Address Omitted]
If to Beneficiary: U.S. Bank National Association
101 S. Capitol Blvd.
P.O. Box 8247
Boise, ID 83733
Attn: Stephen G. Buntin
With a copy to: Timothy J. Henderson, Esq.
Henderson & Morgan, LLC
164 Hubbard Way, Suite B
Reno, NV 89502
16. Cumulative Remedies. No remedy under this Guaranty, under the
Term Loan Agreement, the Term Note, or any Term Loan Document is intended to be
exclusive of any other remedy, but each and every remedy shall be cumulative
and in addition to any and every other remedy given under this Guaranty, under
the Term Loan Agreement, the Term Note, or any other Term Loan Document, and
those provided by law. No delay or omission by Beneficiary to exercise any
right under this Guaranty shall impair any such right nor be construed to be a
waiver thereof. No failure on the part of Beneficiary to exercise, and no
delay in exercising, any right under this Guaranty shall operate as a waiver
thereof; nor shall any single or partial exercise of any right under this
Guaranty preclude any other or further exercise thereof or the exercise of any
other right.
17. Severability of Provisions. Any provision of this Guaranty which
is prohibited or unenforceable under applicable law, shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
18. Entire Agreement; Amendments. This Guaranty, together with the
Term Loan Agreement and other Term Loan Documents and documents incorporated
therein by reference constitutes the entire agreement between Guarantors and
Beneficiary pertaining to the subject matter contained herein. This Guaranty
may not be altered, amended, or modified, nor may any provisions hereof be
waived or noncompliance therewith consented to, except by means of a writing
executed by Guarantors and Beneficiary. Any such alteration, amendment,
modification, waiver, or consent shall be effective only to the extent
specified therein and for the specific purpose for which given. No course of
dealing and no delay or waiver of any right or default under this Guaranty
shall be deemed a waiver of any other, similar or dissimilar, right or default
or otherwise prejudice the rights and remedies hereunder.
19. Successors and Assigns. This Guaranty shall be binding upon
Guarantors and their respective successors and assigns and shall inure to the
benefit of the successors and assigns of Beneficiary; provided, however,
Guarantors shall not assign this Guaranty or delegate any of its duties
hereunder without Beneficiary's prior written consent and any unconsented to
assignment shall be absolutely void. In the event of any assignment or other
transfer of rights by Beneficiary, the rights and benefits herein conferred
upon Beneficiary shall automatically extend to and be vested in such assignee
or other transferee.
20. Choice of Law and Venue; Service of Process. THE VALIDITY OF THIS
GUARANTY, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF
GUARANTORS AND BENEFICIARY, SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST GUARANTORS WITH RESPECT TO THIS GUARANTY MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEVADA, AND BY
EXECUTION AND DELIVERY OF THIS GUARANTY, GUARANTORS ACCEPT, FOR THEMSELVES AND
IN CONNECTION WITH THEIR RESPECTIVE ASSETS, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREE TO BE
BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY
FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE.
21. Arbitration.
a. Upon the request of any party, whether made before or after
the institution of any legal proceeding, any action, dispute, claim or
controversy of any kind (e.g., whether in contract or in tort, statutory or
common law, legal or equitable) ("Dispute") now existing or hereafter arising
between the parties in any way arising out of, pertaining to or in connection
with the Term Loan Agreement, Term Loan Documents or any related agreements,
documents, or instruments (collectively the "Documents"), may, by summary
proceedings (e.g., a plea in abatement or motion to stay further proceedings),
bring an action in court to compel arbitration of any Dispute.
b. All Disputes between the parties shall be resolved by binding
arbitration governed by the Commercial Arbitration Rules of the American
Arbitration Association. Judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction.
c. No provision of, nor the exercise of any rights under this
arbitration clause shall limit the rights of any party, and the parties shall
have the right during any Dispute, to seek, use and employ ancillary or
preliminary remedies, judicial or otherwise, for the purposes of realizing
upon, preserving, protecting or foreclosing upon any property, real or
personal, which is involved in a Dispute, or which is subject to, or described
in, the Documents, including, without limitation, rights and remedies relating
to: (i) foreclosing against any real or personal property collateral or other
security by the exercise of a power of sale under the Security Documentation or
other security agreement or instrument, or applicable law, (ii) exercising
self-help remedies (including setoff rights) or (iii) obtaining provisional or
ancillary remedies such as injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver from a court having jurisdiction
before, during or after the pendency of any arbitration. The institution and
maintenance of an action for judicial relief or pursuit of provisional or
ancillary remedies or exercise of self-help remedies shall not constitute a
waiver of the right of any party, including the plaintiff, to submit the
Dispute to arbitration nor render inapplicable the compulsory arbitration
provision hereof.
22. Waiver of Jury Trial. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
GUARANTORS AND BENEFICIARY EACH MUTUALLY HEREBY EXPRESSLY WAIVE ANY RIGHT TO
TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING
ARISING UNDER OR WITH RESPECT TO THIS GUARANTY, OR IN ANY WAY CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE DEALINGS OF GUARANTORS AND BENEFICIARY WITH
RESPECT TO THIS GUARANTY, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
GUARANTORS AND BENEFICIARY EACH MUTUALLY HEREBY AGREE THAT ANY SUCH ACTION,
CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDINGS SHALL BE DECIDED BY A COURT
TRIAL WITHOUT A JURY AND THAT THE DEFENDING PARTY MAY FILE AN ORIGINAL
COUNTERPART OF THIS SECTION WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN
EVIDENCE OF THE CONSENT OF THE COMPLAINING PARTY TO THE WAIVER OF ITS RIGHT TO
TRIAL BY JURY.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Guaranty as of the day and year first written above.
MONARCH CASINO & RESORT,
INC., a Nevada corporation
By_________________________
Ben Farahi,
Secretary
____________________________
John Farahi
____________________________
Bahram Farahi
____________________________
Behrouz Farahi
<PAGE>
CLOSING CERTIFICATE
TO: U.S. BANK NATIONAL ASSOCIATION, in its capacity as the Term Lender
under that certain Term Loan Agreement, dated as of July 23, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Term Loan
Agreement"), by and among GOLDEN ROAD MOTOR INN, INC., a Nevada corporation
(the "Borrower"), the Guarantors therein named and the Term Lender.
Capitalized terms used herein without definition shall have the meanings
incorporated or attributed to them in Section 1.01 of the Term Loan Agreement.
THE UNDERSIGNED, Borrower and MCRI, do hereby make the following
certifications effective as of the date of this Closing Certificate pursuant to
Article III of the Term Loan Agreement:
(a) the representations and warranties contained in Article IV of
the Term Loan Agreement and contained in each of the other Term Loan Documents
are true and correct on and as of the Term Closing Date in all material
respects as though such representations and warranties had been made on and as
of the Term Closing Date;
(b) Since the date of the most recent financial statements
referred to in Section 4.04 of the Term Loan Agreement, no Material Adverse
Change has occurred and no event or circumstance which could reasonably be
expected to result in a Material Adverse Change or Material Adverse Effect has
occurred;
(c) no event (i) has occurred and is continuing or (ii) would
occur as a result of the funding of Term Loan, or (iii) would result from the
making thereof, which (in the case of (i), (ii) or (iii) above) constitutes a
Default or Event of Default under the terms of the Term Loan Agreement or the
Credit Agreement;
(d) Borrower and Guarantors have, as of the Term Closing Date,
performed and complied with all agreements and conditions that are contained in
the Term Loan Agreement and that the Term Loan Agreement requires Borrower and
Guarantors to perform and comply with prior to or as of the Term Closing Date;
(e) The Term Agreement, the Term Note and the other Term Loan
Documents have been duly authorized by all necessary action of each of
Borrower's and MCRI's respective Board of Directors and have been executed and
delivered on behalf of Borrower or MCRI, where applicable, by a duly authorized
representative thereof; and
(f) Concurrently herewith, each of Borrower and MCRI have
delivered to Term Lender a true and correct copy of the articles of
incorporation and bylaws, together with all amendments thereto adopted through
the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand as of the ____ day of
July, 1998.
EXHIBIT C<PAGE>
BORROWER:
GOLDEN ROAD MOTOR INN,
INC., a Nevada corporation
By_________________________
Ben Farahi,
Secretary
MCRI:
MONARCH CASINO & RESORT,
INC., a Nevada corporation
By_________________________
Ben Farahi,
Secretary
<PAGE>
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT is made and entered into this 23rd day of
July, 1998, by and between GOLDEN ROAD MOTOR INN, INC., a Nevada corporation,
owner of the land hereinafter described and hereinafter referred to as "Owner",
and WELLS FARGO BANK, National Association, as Agent Bank, hereinafter referred
to as "Agent Bank", present owner and holder of the WFB Deed of Trust and WFB
Indebtedness first hereinafter described and U.S. BANK NATIONAL ASSOCIATION, as
the Term Lender described below.
W_I_T_N_E_S_S_E_T_H
THAT WHEREAS, Owner executed to secure indebtedness in the original
principal sum of Eighty Million Dollars ($80,000,000.00) (the "WFB
Indebtedness"), in favor of Agent Bank, as the administrative and collateral
agent for the Lenders and Swingline Lender described in the WFB Deed of Trust
hereinafter described, the following security instruments (collectively the
"WFB Security Documents"), (i) a Deed of Trust, Fixture Filing and Security
Agreement with Assignment of Rents, dated December 29, 1997, to Western Title
Company, Inc., a Nevada corporation, as trustee, encumbering, together with
certain other real property and collateral more particularly therein described,
that certain real property situate in the County of Washoe, State of Nevada,
more particularly described on that certain exhibit marked "Exhibit A", affixed
hereto and by this reference incorporated herein and made a part hereof (the
"Caramella Real Property"), which Deed of Trust, Fixture Filing and Security
Agreement with Assignment of Rents was recorded December 31, 1997, in the
office of the County Recorder of Washoe County, Nevada, in Book 5091, at Page
451, as Document No. 2167154, of Official Records (the "WFB Deed of Trust"),
(ii) an Assignment of Spaceleases, Contracts, Rents and Revenues recorded
December 29, 1997, in the Official Records of Washoe County, Nevada, in Book
5086, at Page 655, as Document No. 2166000, (iii) an Assignment of Permits,
Licenses and Contracts recorded December 29, 1997, in the Official Records of
Washoe County, Nevada, in Book 5086, at Page 672, as Document No. 2166001, and
(iv) UCC Financing Statement recorded December 29, 1997, in the Official
Records of Washoe County, Nevada, in Book 5086, at Page 687, as Document No.
2166002; and
WHEREAS, Owner has executed or is about to execute a Term Promissory Note
("Term Note") in the principal amount of One Million Eight Hundred Ninety-Seven
Thousand Five Hundred Ninety-Seven Dollars ($1,897,597.00), payable to the
order of U.S. Bank National Association (the "Term Lender"), pursuant to the
terms of a Term Loan Agreement of even date therewith (the "Term Loan
Agreement"), executed by Owner, as borrower, the Guarantors therein named, and
Term Lender, under the terms of which Term Lender agrees to lend the principal
amount of the Term Note (the "Term Loan") in accordance with the terms and
provisions therein contained. The Term Note and Term Loan Agreement are to be
secured by a Deed of Trust with Assignment of Rents encumbering the Caramella
Real Property (the "Term Deed of Trust"), executed by Owner, as trustor, to
Western Title Company, as trustee, for the benefit of Term Lender; and
WHEREAS, it is a condition precedent to Owner obtaining the Term Loan
evidenced by the Term Note and Term Loan Agreement described immediately
hereinabove that the Term Deed of Trust shall unconditionally be and remain at
all times a lien and charge upon the Caramella Real Property prior and superior
to the liens and charges of the WFB Security Documents; and
EXHIBIT D <PAGE>
WHEREAS, Term Lender is willing to establish the Term Loan evidenced by
the Term Note and Term Loan Agreement provided that the Term Deed of Trust is a
lien and charge on the Caramella Real Property and other collateral therein
described, prior and superior to the liens and charges of the WFB Security
Documents and provided that Agent Bank specifically and unconditionally
subordinates the liens and charges of the WFB Security Documents to the lien
and charge of the Term Deed of Trust in favor of Term Lender and all advances
made by Term Lender to Owner under the Term Note and Term Loan Agreement; and
WHEREAS, it is to the mutual benefit of the parties hereto that Term
Lender establish the Term Loan in favor of Owner and Agent Bank is willing that
the Term Deed of Trust securing the same shall, when recorded, constitute a
lien and charge upon the Caramella Real Property which is unconditionally prior
and superior to the liens and charges of the WFB Security Documents.
NOW, THEREFORE, in consideration of the mutual benefits accruing to the
parties hereto and other good and valuable considerations, the receipt and
sufficiency of which consideration is hereby acknowledged, it is hereby
declared, understood and agreed as follows:
(1) That the Term Deed of Trust securing the Term Loan, Term Note and
Term Loan Agreement and all advances thereunder and any amendments, renewals
and extensions made thereunder shall unconditionally and irrevocably be and
remain at all times a lien or charge upon the Caramella Real Property described
on Exhibit A hereto, prior and superior to the liens and charges of the WFB
Security Documents.
(2) That Term Lender would not establish the Term Loan above described
without this Subordination Agreement.
(3) Agent Bank declares, agrees and acknowledges that:
(a) It has received a copy of the Term Note, Term Loan Agreement
and Term Deed of Trust above referred to; and
(b) It intentionally, unconditionally and irrevocably
subordinates the liens and charges of the WFB Security Documents in favor of
the lien and charge upon the Caramella Real Property described on Exhibit A
hereto of the Term Deed of Trust above referred to and understands that in
reliance upon, and in consideration of, this subordination, the Term Loan will
be created and, as part and parcel thereof, specific monetary advances are
being made and will be entered into which would not be made or entered into but
for said reliance upon this subordination.
(4) This Subordination Agreement may be executed by the parties hereto
in any number of separate counterparts with the same effect as if the
signatures hereto and hereby were upon the same document. All such
counterparts shall together constitute but one and the same document.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
day and year first above written.
OWNER:
GOLDEN ROAD MOTOR INN, INC.,
a Nevada corporation
By________________________
Name______________________
Title_____________________
TERM LENDER:
U.S. BANK NATIONAL
ASSOCIATION
By________________________
Name______________________
Title_____________________
AGENT BANK:
WELLS FARGO BANK,
National Association,
Agent Bank
By________________________
Name______________________
Title_____________________
STATE OF NEVADA )
) ss
COUNTY OF WASHOE )
This instrument was acknowledged before me on _____________, 1998, by
______________________ as _______________________ of/for GOLDEN ROAD MOTOR INN,
INC.
____________________________
Notary Public
STATE OF NEVADA )
) ss
COUNTY OF WASHOE )
This instrument was acknowledged before me on _____________, 1998, by
______________________ as _______________________ of/for WELLS FARGO BANK,
National Association.
____________________________
Notary Public
STATE OF IDAHO )
) ss
COUNTY OF _________ )
This instrument was acknowledged before me on _____________, 1998, by
______________________ as _______________________ of/for U.S. BANK NATIONAL
ASSOCIATION.
____________________________
Notary Public
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANT'S
CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1998 AND THE ACCOMPANYING
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 4,656,467
<SECURITIES> 0
<RECEIVABLES> 1,205,458
<ALLOWANCES> 0
<INVENTORY> 404,624
<CURRENT-ASSETS> 7,900,003
<PP&E> 85,713,744
<DEPRECIATION> 21,131,277
<TOTAL-ASSETS> 74,220,916
<CURRENT-LIABILITIES> 7,151,672
<BONDS> 38,208,519
0
0
<COMMON> 95,363
<OTHER-SE> 26,566,028
<TOTAL-LIABILITY-AND-EQUITY> 74,220,916
<SALES> 0
<TOTAL-REVENUES> 47,513,007
<CGS> 0
<TOTAL-COSTS> 23,701,968
<OTHER-EXPENSES> 3,437,814
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,746,606
<INCOME-PRETAX> 5,997,641
<INCOME-TAX> 2,029,914
<INCOME-CONTINUING> 3,967,727
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,967,727
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
