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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
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)
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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: (775) 825-3355
-------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Name of each exchange
Title of each class on which registered
------------------- -------------------
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $0.01 PAR VALUE
(Title of Class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by nonaffiliates of the
Registrant as of March 21, 2000, based on the closing price as reported on The
Nasdaq Stock Market(SM) of $5.438 per share, was approximately $12,669,860.
As of March 17, 2000, Registrant had outstanding 9,436,275 shares of
Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for Registrant's 2000 Annual Meeting of
Stockholders, which Proxy Statement shall be filed with the Commission not
later than 120 days after the end of the fiscal year covered by this report,
are incorporated by reference into Part III.
STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K WHICH EXPRESS THE "BELIEF",
"ANTICIPATION", "INTENTION", "EXPECTATION", OR "SCHEDULES" AS WELL AS OTHER
STATEMENTS WHICH ARE NOT HISTORICAL FACT, AND STATEMENTS AS TO BUSINESS
OPPORTUNITIES, MARKET CONDITIONS, COST ESTIMATIONS AND OPERATING PERFORMANCE
INSOFAR AS THEY MAY APPLY PROSPECTIVELY, ARE 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 AND INVOLVE RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED.
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PART I
ITEM 1. BUSINESS
Monarch Casino & Resort, Inc., through its wholly-owned subsidiary Golden
Road Motor Inn, Inc. ("Golden Road"), owns and operates the tropically-themed
Atlantis Casino Resort, a hotel/casino facility in Reno, Nevada (the
"Atlantis"). Unless otherwise indicated, "Monarch" or the "Company" refers to
Monarch Casino & Resort, Inc. and its Golden Road subsidiary. Monarch was
incorporated in 1993 under Nevada law for the purpose of acquiring all of the
stock of Golden Road. The principal asset of Monarch is the stock of Golden
Road, which holds substantially all of the assets of the Atlantis. The
Company's principal executive offices are located at 1175 West Moana Lane,
Suite 200, Reno, Nevada 89509, telephone (775) 825-3355.
Until December 1999, Monarch Casino & Resort, Inc. owned two other
subsidiaries, Dunes Marina Resort & Casino, Inc.("Dunes Marina"), and Sea World
Processors, Inc. ("Sea World"). Dunes Marina and Sea World had been inactive
for several years and had virtually no assets or liabilities. In December
1999, both corporations were dissolved.
THE ATLANTIS CASINO RESORT
Through Golden Road, the Company owns and operates the tropically-themed
Atlantis, which is located approximately three miles south of downtown Reno in
the generally more affluent southwest area of Reno. In the 1998 second
quarter, the Company began construction of a major expansion of the Atlantis
(the "Atlantis Expansion") that was substantially completed in the second
quarter of 1999.
The two primary components of the Atlantis Expansion were a new 27-story
hotel tower with approximately 391 new hotel rooms and suites with an adjoining
new low rise structure containing additional casino and public space (the
"Hotel Tower Project"), and an enclosed overhead sky walk ("Sky Terrace")
structure connecting the Atlantis with a 16 acre site across South Virginia
Street from the Atlantis, which contains approximately 8,000 square feet of
casino and public space. The Sky Terrace was officially opened to the public
on March 18, 1999.
The Atlantis now features approximately 51,000 square feet of casino space
interspersed with waterfalls and water features, giant artificial palm trees,
thatched-roof huts, and other tropical features; a hotel and a motor lodge;
nine food outlets; a nightclub; an enclosed pool with waterfall features in
addition to an outdoor pool; health club; retail outlets featuring traditional
"gift shop" merchandise as well as clothing and other merchandise and a gift
shop featuring items with the Atlantis logo; an 8,000 square-foot family
entertainment center; and approximately 25,000 square feet of banquet,
convention and meeting room space. The Atlantis is the closest hotel casino to
the 370,000 square-foot Reno Sparks Convention Center (the "Convention
Center"), and the only hotel casino located within easy walking distance of the
Convention Center.
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Casino. The Atlantis' casino features approximately 40 table games,
including blackjack, craps, roulette, mini-baccarat, "Let it Ride(TM)", "Three
Card Poker(TM)", "Fortune Pai Gow Poker(TM)", and "Royal Match(TM)";
approximately 1,500 slot and video poker machines; a race and sports book
(which is operated by an independent third party pursuant to a lease
arrangement with the Company); keno; and a poker room. During the year ended
December 31, 1999, 76.0% of the Atlantis' casino revenue was from slot and
video poker machines, 21.3% was from table games, and 2.7% was from keno and
the poker room.
The Atlantis offers what the Company believes to be higher-than-average
payout rates on slot machines and has adopted liberal rules for its blackjack
games which include using mostly single decks of cards at its tables and
allowing the player to "double down" on the first two cards. The Company's
present policy is to extend gaming credit only to a limited number of qualified
customers.
Lodging. The Atlantis features three contiguous high-rise hotel towers
offering a total of 834 rooms and suites, and a low-rise motor lodge offering
another 148 rooms, for a total guest room count of 976. The first of the three
hotel towers was completed in April 1991 and contains 160 rooms and suites in
13 stories. The second hotel tower was completed in September 1994 and
contains 283 rooms and suites in 19 stories. The third tower was completed in
June 1999 and contains 385 rooms and suites in 27 stories. The top seven
floors in the newest tower are larger than the standard guest rooms by nearly
20% and feature private elevator access, upscale accommodations, and a private
concierge service.
The Atlantis' hotel rooms feature fresh, colorful interior decorations and
furnishings consistent with the Atlantis' tropical theme, as well as nine-foot
ceilings (most standard hotel rooms feature eight-foot ceilings), which give
the rooms an open and spacious feel. The newest hotel tower features a four
story waterfall with an adjacent swimming pool in a climate controlled, five
story glass enclosure, which shares an outdoor third floor pool deck with an
outdoor swimming pool and whirlpool. The health club is located adjacent to
the swimming areas. The hotel also features glass elevators rising the full 19
and 27 stories of the two taller hotel towers, providing panoramic views of the
northern Reno valley, known as the Truckee Meadows and the Sierra Nevadas,
which is a majestic mountain range separating Nevada from California.
The two-story, 148-room motor lodge, which has been operated by the
Company since 1973, is located on the back half of the Atlantis' 13-acre site.
The motor lodge rooms, which are also decorated and furnished consistently with
the Atlantis' tropical theme, contain less average square footage than the
hotel rooms and have standard eight-foot ceilings. The Company believes the
motor lodge rooms appeal to value conscious travelers who still want to enjoy
the experience of and amenities associated with a stay at a first-class hotel
casino resort. The Company renovated all of the motor lodge units in 1996.
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The average occupancy rate at the Atlantis for fiscal years 1999, 1998,
and 1997 was 86.8%, 88.0%, and 85.9%, respectively.
Dining. The Atlantis features six restaurants, one snack bar, and two
gourmet coffee bars, including the 640-seat Toucan Charlie's Buffet & Grill,
which features a wide variety of standard hot food line selections, salads and
seafood, and specialty substations featuring made to order items such as
Mongolian Barbecue, fresh Southwest and Asian specialties, meats roasted in
wood-fired rotisserie ovens, and two salad stations; the aquatic-themed 135-
seat Atlantis Seafood Steakhouse gourmet restaurant; the new, upscale, intimate
230-seat MonteVigna Italian Ristorante, featuring a centrally located wine
"cellar" and seasonal outdoor terrace; the 74-seat Oyster Bar restaurant in the
new Sky Terrace, featuring seafood flown in daily and soups and bisques made to
order; a 178-seat twenty-four hour coffee shop; a 104-seat cafe restaurant
featuring pizzas from a wood-fired, brick oven; and a snack bar and soda
fountain. There are two gourmet coffee bars, one located in the Sky Terrace,
and the other located adjacent to the Xanadu Lounge next to the 27-story
elevator lobby, both featuring fine specialty coffee drinks and pastries and
desserts made fresh daily in the Atlantis bakery.
The Sky Terrace. The Sky Terrace is a one-of-a-kind structure, with a
diamond-shaped, blue glass body rising approximately 55 feet from street level
and spanning 160 feet across South Virginia Street with no intermediate support
pillars. The Sky Terrace connects the Atlantis with additional parking on a 16
acre site owned by the Company across South Virginia Street from the Atlantis.
The structure is supported at each end by two 100 foot tall Grecian columns
which erupt in flames at regular intervals. The tropically-themed interior of
the Sky Terrace contains an oyster bar and a gourmet coffee and pastry bar with
adjacent table seating, a video poker bar and numerous banks of slot machines,
and a lounge area featuring oversized leather sofas and chairs.
Capital expenditures at the Atlantis totaled approximately $46.1 million,
$27.2 million, and $2.3 million in fiscal years 1999, 1998, and 1997,
respectively. Capital expenditures during 1999 are a combination of
construction costs and the cost of furnishing the completed Atlantis Expansion
with fixtures and equipment. The capital expenditures for 1998 primarily
reflect construction costs associated with the Atlantis Expansion and upkeep of
existing facilities. The expenditures for 1997 were for ongoing refurbishment
and enhancement to the Atlantis, including equipment replacements.
Operations at the Atlantis are conducted 24 hours a day, every day of the
year. The Atlantis' business is moderately seasonal in nature, with its
highest revenues typically occurring in the summer months and lower amounts
generally in the winter months.
MARKETING
The Company's revenues and operating income are largely dependent on the
level of gaming activity at the Atlantis' casino; therefore, the Company's
predominant marketing goal is to attract gaming customers to its casino. The
Company's primary objective for its hotel, food and beverage outlets, and other
amenities is to utilize those facilities to generate additional casino play,
although as a secondary goal, the Company also seeks to maximize revenues from
those areas.
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The Company's marketing efforts are directed toward three broad consumer
groups: Reno area residents, non-conventioneer visitors to the Reno area, and
conventioneers. The Company believes that the Atlantis' location outside the
downtown area and across the street from the Convention Center makes the
property appealing to all three groups.
Reno area residents. The Atlantis' proximity to rapidly growing,
generally more affluent southwestern Reno residential areas provides a
significant source of middle to upper-middle income gaming customers. The
Company markets to Reno area residents ("Locals") on the basis of the Atlantis'
location and accessibility, the quality and ambiance of the Atlantis facility,
friendly efficient service, the quality and relative value of its food and
beverage offerings, entertainment offerings, promotions, and gaming values.
The Company believes that Locals as a group tend to prefer slot and video poker
machines over table games, and tend to prefer video poker machines over reel-
spinning (or electronically simulated reel-spinning) slot machines.
Accordingly, the Atlantis provides a large, diverse selection of video poker
machines. Moreover, the Company believes that Locals tend to seek out and
frequent those casinos with higher-than-average payout rates on slot and video
poker machines and liberal rules on table games. The Company believes that the
Atlantis offers higher-than-average payout rates on slot machines, and has
adopted liberal rules for its blackjack games which include using mostly single
decks of cards at its tables and allowing players to "double down" on the first
two cards.
Non-conventioneer Visitors. Reno is a popular gaming and vacation
destination which enjoys direct freeway access to nearly all major northern
California population centers, and non-stop air service from most large cities
in the western United States as well as many Midwest and southern population
centers such as Chicago, Dallas, Minneapolis and St. Louis. The principal
segments of Reno's non-conventioneer visitor market are leisure travelers,
package tour and travel customers, and higher-level wagerers. The Company
attempts to maximize its gaming revenues and hotel occupancy through a balanced
marketing approach addressing each market segment.
Leisure travelers are not affiliated with groups and make their
reservations directly with hotels of their choice or through independent travel
agents. The Company believes that this segment is largely comprised of
individuals driving, and to a lesser extent, flying to Reno from a regional
market, primarily California and to a lesser extent, the Pacific Northwest.
The Company strives to attract the middle to upper-middle income strata of this
segment through advertising and direct marketing in select markets. This
segment represents a significant portion of the Atlantis' customers, especially
those customers visiting on weekends.
The package tour and travel segment consists of visitors who utilize
travel "packages" produced by wholesale operators. The Company markets to this
segment through relationships with select wholesalers, primarily to generate
customer visits and supplement occupancy mid-week.
The Company selectively markets to higher-level wagerers through direct
sales. The Company utilizes complimentary rooms, food and beverage, special
events and the extension of gaming credit to attract higher-level wagerers.
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Conventioneers. Convention business, like package tour and travel,
generates mid-week customer visits and supplements occupancy during low-demand
periods. Conventioneers typically also pay higher average room rates than non-
conventioneers. The Company seeks those convention and meeting groups which it
believes will materially enhance the Atlantis' average occupancy rate and
average daily room rates, as well as those the Company believes will be more
likely to gamble. As the only hotel casino within easy walking distance of the
Convention Center, the Company believes the Atlantis is uniquely positioned to
capitalize on this segment. The Company believes that this market segment is
presently underserved in the Reno area, and that the additional rooms and
amenities added with the completed Atlantis Expansion enhances the Company's
ability to realize the potential of this market segment.
The Company markets to all customer segments, including conventioneers, on
the basis of the quality and ambiance of the Atlantis facility, friendly
efficient service, the quality and relative value of its rooms and food and
beverage offerings, entertainment offerings, promotions, and gaming values.
The Company has instituted a frequent player club, "Club Paradise," which
allows the Atlantis' customers to earn rewards and special privileges based on
the amount of their play, while at the same time allowing the Company to track
the play of those customers utilizing a computerized player tracking system.
The Company uses this information to determine appropriate levels of
complimentary awards, and also in its direct marketing efforts. The Company
believes that Club Paradise significantly enhances the Company's ability to
build customer loyalty and generate repeat customer visits.
COMPETITION
Competition in the Reno area gaming market is intense. Based on
information obtained from the December 31, 1999 Gaming Revenue Report published
by the Nevada State Gaming Control Board and Company estimates, the Company
believes that there are approximately 12 casinos in the Reno area which
generate more than $12 million each in annual gaming revenues, approximately 7
of which are located in downtown Reno.
The Company believes that the Atlantis' competition for Locals comes
primarily from other large-scale casinos located outside of downtown Reno that
offer amenities that appeal to middle to upper-middle income customers, and
secondarily with those casinos located in downtown Reno which offer similar
amenities. The Company competes for Locals primarily on the basis of the
desirability of its location, the quality and ambiance of the Atlantis
facility, friendly efficient service, the quality and relative value of its
food and beverage offerings, entertainment offerings, promotions, and gaming
values. The Company believes its proximity to residential areas in southwest
and southeast Reno and its abundant surface parking afford it an advantage over
the casinos located in downtown Reno in attracting Locals.
The Company believes that the Atlantis' primary competition for non-
conventioneer visitors comes from other large-scale casinos, including those
located in downtown Reno and those located away from downtown Reno, that offer
amenities that appeal to middle to upper-middle income customers. The Company
competes for non-conventioneer visitors on the basis of the desirability of
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its location, the quality and ambiance of the Atlantis facility, friendly
efficient service, the quality and relative value of its rooms and food and
beverage offerings, entertainment offerings, promotions, and gaming values.
The Company believes that its location away from downtown Reno is appealing to
many customers who prefer to avoid the more congested downtown Reno area;
however, the Atlantis' location is a disadvantage in that it does not afford
the Company the ability to generate walk-in traffic, which is a significant
source of customers for some casinos located in downtown Reno.
The Company believes that the Atlantis' primary competition for
conventioneers comes from other large-scale hotel casinos in the Reno area that
actively target the convention market segment, and secondarily from other
cities on the U.S. west coast with large convention facilities and substantial
hotel capacity, including Las Vegas. The Company competes for conventioneers
based on the desirability of its location, the quality and ambiance of the
Atlantis facility, meeting and banquet rooms designed to appeal to conventions
and groups, friendly efficient service, and the quality and relative value of
its rooms and food and beverage offerings. The Company believes that the
Atlantis' proximity to the Convention Center affords it a distinct competitive
advantage in attracting conventioneers.
The Atlantis also competes for gaming customers with hotel casino
operations located in other parts of Nevada, especially Las Vegas and Lake
Tahoe, and with hotel casinos, Indian casinos, and riverboat casinos located
elsewhere throughout the United States and the world. The Company believes
that the Atlantis also competes to a lesser extent with state-sponsored
lotteries, off-track wagering, card parlors, and other forms of legalized
gaming, particularly in California and the Pacific Northwest.
The recent constitutional amendment approved by California voters allowing
the expansion of Indian casinos in California will have an impact on casino
revenues in Nevada in general, and many analysts have predicted the impact will
be more significant on the Reno-Lake Tahoe market. The extent of this impact
is difficult to predict, but the Company believes that the impact on the
Company will be mitigated to an extent due to the Atlantis' emphasis on Reno
area residents as a significant base of its business. However, if other Reno
area casinos suffer business losses due to increased pressure from California
Indian casinos, they may intensify their marketing efforts to Reno area
residents as well. However, the Company's numerous amenities such as a wide
array of restaurants and other venues are a key factor in the Company's ability
to attract Reno area residents which competitor facilities will not easily be
able to match.
Certain experienced Nevada gaming operators have annual agreements to
manage expanded Indian casino facilities near Sacramento, one of Reno's key
feeder markets. These facilities could provide an alternative to Reno area
casinos, especially during certain winter periods when auto travel through the
Sierra Nevada is hampered.
The Company believes that the legalization of unlimited land-based casino
gaming in or near any major metropolitan area in the Atlantis' key marketing
areas, such as San Francisco or Sacramento, could have a material adverse
effect on its business.
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REGULATION AND LICENSING
Nevada Gaming Regulation
The ownership and operation of casino gaming facilities in Nevada are
subject to: (i) the Nevada Gaming Control Act and the regulations promulgated
thereunder (collectively, the "Nevada Act"); and (ii) various local
regulations. The Company's gaming operations are subject to the licensing and
regulatory control of the Nevada Gaming Commission (the "Nevada Commission"),
the Nevada State Gaming Control Board (the "Nevada Board"), and the Reno City
Council (the "Reno Board"). (The Nevada Commission, the Nevada State Gaming
Control Board, and the Reno Board are collectively hereinafter referred to as
the "Nevada Gaming Authorities.")
The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of
periodic reports with the Nevada Gaming Authorities; (iv) the prevention of
cheating and fraudulent practices; and (v) providing a source of state and
local revenues through taxation and licensing fees. Changes in such laws,
regulations and procedures could have an adverse effect on the Company's gaming
operations.
Golden Road, which operates the Atlantis, is required to be licensed by
the Nevada Gaming Authorities. The gaming license requires the periodic
payment of fees and taxes and is not transferable. The Company is registered
by the Nevada Commission as a publicly traded corporation ("Registered
Corporation") and as such, it is required periodically to submit detailed
financial and operating reports to the Nevada Commission and furnish any other
information which the Nevada Commission may require. No person may become a
stockholder of, or receive any percentage of profits from, Golden Road without
first obtaining licenses and approvals from the Nevada Gaming Authorities. The
Company and Golden Road have obtained from the Nevada Gaming Authorities the
various registrations, approvals, permits and licenses required in order to
engage in gaming activities in Nevada.
The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company or Golden
Road in order to determine whether such individual is suitable or should be
licensed as a business associate of a gaming licensee. Officers, directors and
key employees of Golden Road must file applications with the Nevada Gaming
Authorities and may be required to be licensed or found suitable by the Nevada
Gaming Authorities. Officers, directors and key employees of the Company who
are actively and directly involved in gaming activities of Golden Road may be
required to be licensed or found suitable by the Nevada Gaming Authorities.
The Nevada Gaming Authorities may deny an application for licensing for any
cause which they deem reasonable. A finding of suitability is comparable to
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licensing, and both require submission of detailed personal and financial
information followed by a thorough investigation. The applicant for licensing
or a finding of suitability must pay all the costs of the investigation.
Changes in licensed positions must be reported to the Nevada Gaming Authorities
and in addition to their authority to deny an application for a finding of
suitability or licensure, the Nevada Gaming Authorities have jurisdiction to
disapprove a change in a corporate position.
If the Nevada Gaming Authorities were to find an officer, director or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company or Golden Road, the companies involved would have
to sever all relationships with such person. In addition, the Nevada
Commission may require the Company or Golden Road to terminate the employment
of any person who refuses to file appropriate applications. Determinations of
suitability or of questions pertaining to licensing are not subject to judicial
review in Nevada.
The Company and Golden Road are required to submit detailed financial and
operating reports to the Nevada Commission. Substantially all material loans,
leases, sales of securities and similar financing transactions by Golden Road
must be reported to, or approved by, the Nevada Commission.
If it were determined that the Nevada Act was violated by Golden Road, the
gaming licenses it holds could be limited, conditioned, suspended or revoked,
subject to compliance with certain statutory and regulatory procedures. In
addition, Golden Road, the Company, and the persons involved could be subject
to substantial fines for each separate violation of the Nevada Act at the
discretion of the Nevada Commission. Further, a supervisor could be appointed
by the Nevada Commission to operate the Company's gaming properties and, under
certain circumstances, earnings generated during the supervisor's appointment
(except for the reasonable rental value of the Company's gaming properties)
could be forfeited to the State of Nevada. Limitation, conditioning or
suspension of any gaming license or the appointment of a supervisor could (and
revocation of any gaming license would) materially adversely affect the
Company's gaming operations.
Any beneficial holder of the Company's voting securities, regardless of
the number of shares owned, may be required to file an application, be
investigated, and have his suitability as a beneficial holder of the Company's
voting securities determined if the Nevada Commission has reason to believe
that such ownership would otherwise be inconsistent with the declared policies
of the State of Nevada. The applicant must pay all costs of investigation
incurred by the Nevada Gaming Authorities in conducting any such investigation.
The Nevada Gaming Act requires any person who acquires more than 5% of the
Company's voting securities to report the acquisition to the Nevada Commission.
The Nevada Act requires that beneficial owners of more than 10% of the
Company's voting securities apply to the Nevada Commission for a finding of
suitability within 30 days after the Chairman of the Nevada Board mails the
written notice requiring such filing. Under certain circumstances, an
"institutional investor," as defined in the Nevada Act, which acquires more
than 10%, but not more than 15%, of the Company's voting securities may apply
to the Nevada Commission for a waiver of such finding of suitability if such
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institutional investor holds the voting securities for investment purposes
only. An institutional investor shall not be deemed to hold voting securities
for investment purposes unless the voting securities were acquired and are held
in the ordinary course of business as an institutional investor and not for the
purpose of causing, directly or indirectly, the election of a majority of the
members of the board of directors of the Company, any change in the Company's
corporate charter, bylaws, management, policies or operations of the Company,
or any of its gaming affiliates, or any other action which the Nevada
Commission finds to be inconsistent with holding the Company's voting
securities for investment purposes only. Activities which are not deemed to be
inconsistent with holding voting securities for investment purposes only
include: (i) voting on all matters voted on by stockholders; (ii) making
financial and other inquiries of management of the type normally made by
securities analysts for informational purposes and not to cause a change in its
management, policies or operations; and (iii) such other activities as the
Nevada Commission may determine to be consistent with such investment intent.
If the beneficial holder of voting securities who must be found suitable is a
corporation, partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The applicant is
required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding of suitability or a
license within 30 days after being ordered to do so by the Nevada Commission or
the Chairman of the Nevada Board, may be found unsuitable. The same
restrictions apply to a record owner if the record owner, after request, fails
to identify the beneficial owner. Any stockholder found unsuitable and who
holds, directly or indirectly, any beneficial ownership of the common stock of
a Registered Corporation beyond such period of time as may be prescribed by the
Nevada Commission may be guilty of a criminal offense. The Company is subject
to disciplinary action if, after it receives notice that a person is unsuitable
to be a stockholder or to have any other relationship with such Company or
Golden Road, the Company (i) pays that person any dividend or interest upon
voting securities of the Company, (ii) allows that person to exercise, directly
or indirectly, any voting right conferred through securities held by that
person, (iii) pays remuneration in any form to that person for services
rendered or otherwise, or (iv) fails to pursue all lawful efforts to require
such unsuitable person to relinquish his voting securities for cash at fair
market value.
The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation to file applications, be investigated
and be found suitable to own the debt security of a Registered Corporation. If
the Nevada Commission determines that a person is unsuitable to own such
security, then pursuant to the Nevada Act, the Registered Corporation can be
sanctioned, including the loss of its approvals, if without the prior approval
of the Nevada Commission, it: (i) pays to the unsuitable person any dividend,
interest, or any distribution whatsoever; (ii) recognizes any voting right by
such unsuitable person in connection with such securities; (iii) pays the
unsuitable person remuneration in any form; or (iv) makes any payment to the
unsuitable person by way of principal, redemption, conversion, exchange,
liquidation or similar transaction.
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The Company is required to maintain a current stock ledger in Nevada which
may be examined by the Nevada Gaming Authorities at any time. If any
securities are held in trust by an agent or by a nominee, the record holder may
be required to disclose the identity of the beneficial owner to the Nevada
Gaming Authorities. A failure to make such disclosure may be grounds for
finding the record holder unsuitable. The Company is also required to render
maximum assistance in determining the identity of the beneficial owner. The
Nevada Commission has the power to require the Company's stock certificates to
bear a legend indicating that the securities are subject to the Nevada Act.
The Company may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or proceeds therefrom
are intended to be used to construct, acquire or finance gaming facilities in
Nevada, or to retire or extend obligations incurred for such purposes. Such
approval does not constitute a finding, recommendation or approval by the
Nevada Commission or the Nevada Board as to the accuracy or adequacy of the
prospectus or the investment merits of the securities. Any representation to
the contrary is unlawful.
Changes in control of the Company through merger, consolidation, stock or
asset acquisitions, management or consulting agreements, or any act or conduct
by a person whereby he obtains control, may not occur without the prior
approval of the Nevada Commission. Entities seeking to acquire control of a
Registered Corporation must satisfy the Nevada Board and Nevada Commission in a
variety of stringent standards prior to assuming control of such Registered
Corporation. The Nevada Commission may also require controlling stockholders,
officers, directors and other persons having a material relationship or
involvement with the entity proposing to acquire control, to be investigated
and licensed as part of the approval process relating to the transaction.
The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada gaming licensees, and Registered Corporations that are
affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming operators and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environment for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required from the Nevada
Commission before the Company can make exceptional repurchases of voting
securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Company's
Board of Directors in response to a tender offer made directly to the
Registered Corporation's stockholders for the purposes of acquiring control of
the Registered Corporation.
Licensee fees and taxes computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to the
counties and cities in which the Nevada licensee's respective operations are
conducted. Depending upon the particular fee or tax involved, these fees and
-12-
taxes are payable either monthly, quarterly or annually and are based upon
either: (i) a percentage of the gross revenues received; (ii) the number of
gaming devices operated; or (iii) the number of table games operated. A casino
entertainment tax is also paid by casino operations where entertainment is
furnished in connection with the selling of food or refreshments. Nevada
licensees that hold a license as an operator of a slot route, a manufacturer or
a distributor also pay certain fees and taxes to the State of Nevada.
Any person who is licensed, required to be licensed, registered, required
to be registered, or is under common control with such persons (collectively,
"Licensees"), and who proposes to become involved in a gaming venture outside
of Nevada is required to deposit with the Nevada Board, and thereafter
maintain, a revolving fund in the amount of $10,000 to pay the expenses of
investigation of the Nevada Board of their participation in such foreign
gaming. The revolving fund is subject to increase or decrease in the
discretion of the Nevada Commission. Thereafter, Licensees are required to
comply with certain reporting requirements imposed by the Nevada Act. A
licensee is also subject to disciplinary action by the Nevada Commission if it
knowingly violates any laws of the foreign jurisdiction pertaining to the
foreign gaming operation, fails to conduct the foreign gaming operation in
accordance with the standards of honesty and integrity required of Nevada
gaming operations, engages in activities that are harmful to the State of
Nevada or its ability to collect gaming taxes and fees, or employs a person in
the foreign operation who has been denied a license or finding of suitability
in Nevada on the ground of personal unsuitability.
EMPLOYEES
As of March 6, 2000, the Company had approximately 1,975 employees. None
of the Company's employees are covered by collective bargaining agreements.
The Company believes that its relationship with its employees is good.
ITEM 2. PROPERTIES
The Company's properties consist of:
(a) The approximately 13 acre site in Reno, Nevada on which the
Atlantis is situated, including the hotel towers, casino, restaurant facilities
and surrounding parking. These 13 acres are, in part or in whole, held subject
to trust deed encumbrances in favor of financial institutions totaling
approximately $81.7 million as of March 8, 2000.
(b) An approximately 16 acre site in Reno, Nevada adjacent to the
Atlantis and now connected to the Atlantis by the Sky Terrace, approximately
seven acres of which is paved and used for customer, employee and valet parking
and the remainder of which is undeveloped. This site is suitable and available
for future expansion of the Atlantis facilities, parking, or complimentary
resort and/or entertainment amenities. The Company has not determined what the
ultimate use of this site will be. These 16 acres are held subject to a trust
deed encumbrance in the approximate amount of $80.0 million as of March 8,
2000, which amount is also secured by the 13 acre site.
-13-
ITEM 3. LEGAL PROCEEDINGS
On April 26, 1994 and May 10, 1994, complaints in purported class action
lawsuits (William Poulos v. Caesars World, Inc. et al., Case No. 94-478-Civ-
Orl-22, and William H. Ahern v. Caesars World, Inc. et al., Case No. 94-532-
Civ-Orl-22, respectively) were filed in the United States District Court for
the Middle District of Florida (the "Florida Complaints") and were subsequently
transferred to the United States District Court for the District of Nevada,
Southern Division (the "Nevada District Court"). On September 26, 1995, a
complaint in a purported class action lawsuit (Larry Schrier v. Caesars World,
Inc. et al., Case No. 95-923-LDG (RJJ)) was filed in Nevada District Court
(along with the Florida Complaints, the "Complaints"). The Complaints allege
that manufacturers, distributors and casino operators of video poker and
electronic slot machines, including the Company, have engaged in a course of
conduct intended to induce persons to play such games based on a false belief
concerning how the gaming machines operate, as well as the extent to which
there is an opportunity to win on a given play. The Complaints charge
Defendants with violations of the Racketeer Influenced and Corrupt
Organizations Act, as well as claims of common law fraud, unjust enrichment and
negligent misrepresentation, and seek damages in excess of $1 billion without
any substantiation of that amount. The Nevada District Court consolidated the
actions (and one other action styled William Poulos v. American Family Cruise
Line, NV et al., Case No. CV -S-95-936-LDG (RLH), in which the Company is not a
named defendant). The parties are currently awaiting a decision from the
Nevada U.S. District Court on the issue of class certification. Management
believes that the substantive allegations in the Complaints are without merit
and intends vigorously to defend the allegations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's security
holders during the fourth quarter of fiscal 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) The Company's common stock trades on The Nasdaq Stock Market(SM)
under the symbol MCRI. The following table sets forth the high and low sales
prices of the Company's common stock, as reported by The Nasdaq Stock
Market(SM), during the periods indicated.
1999 1998
-------------- --------------
High Low High Low
------ ------ ------ ------
First quarter.......... 8 1/3 5 1/4 7 3/4 4 3/4
Second quarter.......... 7 5 1/3 7 5 3/8
Third quarter........... 7 3/4 5 1/2 6 1/2 5 3/8
Fourth quarter.......... 7 1/4 5 1/2 6 4 3/4
(b) As of March 15, 2000, there were approximately 136 holders of
record of the Company's common stock, and approximately 784 beneficial
stockholders.
-14-
(c) The Company paid no dividends in 1999 or 1998. The Company
presently intends to retain earnings to finance its operating activities and
does not anticipate declaring cash dividends in the foreseeable future. The
Company's bank loan agreement also contains provisions which limit Monarch's
ability to pay dividends to its stockholders. See Item 8, "FINANCIAL
STATEMENTS, Notes to Consolidated Financial Statements."
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------------------
(In thousands except per share amounts) 1999<F1> 1998<F2> 1997<F3> 1996<F4> 1995<F5>
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Casino revenues $48,345 $40,717 $37,254 $31,836 $30,072
Other revenues 43,227 31,802 30,365 29,476 30,099
--------------------------------------------
Gross revenues 91,572 72,519 67,619 61,312 60,171
Promotional allowances (12,707) (10,009) (8,504) (7,676) (6,772)
--------------------------------------------
Net revenues 78,866 62,511 59,115 53,636 53,399
Income from operations 3,982 9,039 9,159 6,049 6,351
Income (loss) before income
tax and extraordinary item (945) 5,681 5,722 1,298 2,323
Income (loss) before
extraordinary item (585) 3,760 3,710 830 1,564
Net income (loss) $ (585) $ 3,760 $ 3,526 $ 830 $ 1,564
======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------
INCOME PER SHARE OF COMMON STOCK
Income (loss) before extraordinary item
Basic $ (0.06) $ 0.40 $ 0.39 $ 0.09 $ 0.16
Diluted $ (0.06) $ 0.40 $ 0.39 $ 0.09 $ 0.16
Net income (loss)
Basic $ (0.06) $ 0.40 $ 0.37 $ 0.09 $ 0.16
Diluted $ (0.06) $ 0.40 $ 0.37 $ 0.09 $ 0.16
Weighted average number of common shares
and potential common shares outstanding
Basic 9,436 9,436 9,444 9,502 9,536
Diluted 9,436 9,502 9,479 9,502 9,536
- ----------------------------------------------------------------------------------------
OTHER DATA
EBITDA<F6> $ 11,720 $13,475 $13,284 $10,191 $10,370
Depreciation and amortization $ 7,738 $ 4,436 $ 4,125 $ 4,142 $ 4,020
Interest expense $ 4,742 $ 2,403 $ 3,437 $ 3,627 $ 4,087
Capital expenditures<F7> $ 46,132 $27,206 $ 2,270 $ 2,838 $ 2,148
- ----------------------------------------------------------------------------------------
BALANCE SHEET DATA
Total assets $132,310 $96,732 $67,828 $67,379 $69,269
Current maturities of long-term debt $ 7,334 $ 850 $ 2,244 $ 3,487 $ 3,993
Long-term debt, less current maturities $ 82,236 $52,310 $32,908 $37,602 $39,069
Stockholders' equity<F8> $ 25,869 $26,453 $22,694 $19,001 $18,435
-15-
<FN>
<F1> 1999 includes a $184 thousand loss on disposal of fixed assets.
<F2> 1998 includes a non-cash disposal of fixed assets charge of $956 thousand, primarily from
demolition relating to the start of the Atlantis Expansion.
<F3> 1997 includes a $185 thousand non-cash extraordinary loss on early retirement of
debt, net of applicable income tax benefit.
<F4> 1996 includes non-cash fixed asset impairment charge of $1.3 million (before
minority interests), relating to the write down of the Company's investment in Sea World.
<F5> 1995 includes a $433 thousand provision for litigation expenses related to two
unfavorable judgments rendered in unrelated cases, and a $459 thousand charge
for asset impairment associated with changing the name of the Company's hotel
casino to the Atlantis Casino Resort.
<F6> "EBITDA" consists of income from operations plus depreciation and amortization.
EBITDA should not be construed as an alternative to operating income (as determined
in accordance with generally accepted accounting principles) as an indicator of the
Company's operating performance, or as an alternative to cash flows from operating
activities (as determined in accordance with generally accepted accounting
principles) as a measure of liquidity. This item enables comparison of the
Company's performance with the performance of other companies that report EBITDA,
although some companies do not calculate this measure in the same manner and therefore, the
measure as presented, may not be comparable to similarly titled measures presented by other
companies.
<F7> Includes amounts financed with debt or capitalized lease obligations.
<F8> The Company paid no dividends during the five year period ended December 31, 1999.
</FN>
</TABLE>
-16-
ITEM 7. 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,
expansion of Indian casinos in California, 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 and changes in federal or state tax laws
or the administration of such laws.
RESULTS OF OPERATIONS
1999 Compared with 1998
For the year ended December 31, 1999, the Company had a loss of $0.6
million, or $0.06 per share, on net revenues of $78.9 million, compared to
earnings of $3.8 million, or $0.40 per share, on net revenues of $62.5 million
for the year ended December 31, 1998. The Company's income from operations
totaled $4.0 million for 1999 compared to $9.0 million for 1998. The Company
believes the Atlantis continued to benefit in 1999 from the rapid growth
occurring in the residential and industrial communities south of the Atlantis
in Reno, and from the increasing popularity of the Atlantis with visitors to
the Reno area. The Company believes its results were detrimentally impacted in
1999 by disruptions and pre-opening costs associated with the Atlantis
Expansion, which involved major construction activity on both sides of the
Atlantis during the first and second quarters of the year and expansion related
disruptions into the third quarter of the year.
Casino revenues totaled $48.3 million in 1999, up 18.7% from $40.7 million
in 1998, driven by increases in both slot and table game win. Revenue from
slot and video poker machines ("slot machines") increased approximately 18.8%
in 1999 compared to 1998 due to an almost 30% increase in the number of slot
machines on average for the year. Table game win increased approximately 16.5%
in 1999 compared to 1998 due to an increase in table game drop and an almost 8%
increase in the number of table games on average for the year. Casino
operating expenses were 44.8% of casino revenues in 1999, compared to 43.7% in
1998, primarily as a result of higher promotional allowance costs in 1999.
Food and beverage revenues increased in 1999, up 38.6% to $25.2 million
from $18.2 million in 1998. Food and beverage operating expenses increased,
amounting to 64.1% of food and beverage revenues in 1999 compared to 54.2% in
1998. The increase is primarily due to a combination of increased food and
payroll costs.
-17-
Hotel revenues totaled $14.8 million in 1999, an increase of 35.3% from
$10.9 million in 1998, driven by a 36.3% increase in the Atlantis' average
number of rooms occupied and a 1.6% increase in the Atlantis' average daily
room rate ("ADR"). ADR was $55.16 in 1999, compared to $56.23 in 1998. The
average occupancy rate at Atlantis was 86.8% in 1999 compared to 88.0% in 1998.
Hotel operating expenses amounted to 33.0% of hotel revenues in 1999, compared
to 32.6% in 1998, with the slight increase reflecting increased operating
inefficiencies during the final period of construction in the first half of the
year and the opening of new rooms.
Other revenues increased approximately 20.3% in 1999 to $3.2 million from
$2.7 million in 1998, primarily reflecting increased revenues from the Atlantis
retail outlet. Other expenses were approximately 35.1% of other revenues in
1999, up from 17.9% in 1998, primarily due to opening a second gift shop.
Selling, general and administrative ("SG&A") expenses totaled 29.6% of net
revenues in 1999, compared to 27.7% in 1998, with the increase primarily
reflecting higher personnel costs and higher marketing costs in 1999. This
increase in part reflects additional marketing and administrative staff added
for the 1999 opening of the Atlantis Expansion, as well as additional operating
expenses associated with the Atlantis Expansion.
Interest expense for 1999 totaled $4.7 million, up from $2.4 million in
1998, reflecting an increase in the Company's debt from the Atlantis expansion
and the capitalization of certain interest costs in 1999. In 1999, the Company
capitalized approximately $1.6 million in interest costs related to
construction activities at the Atlantis compared to $0.4 million in 1998.
The Company incurred a non-cash expense of $0.2 million in the fourth
quarter of 1999 for the disposal of certain fixed assets and a non-cash expense
of $1.0 million in 1998 in conjunction with the Atlantis Expansion, including
certain exterior walls, door and windows that had to be removed to make way for
the expanded facilities.
1998 Compared with 1997
For the year ended December 31, 1998, the Company earned $3.8 million, or
$.40 per share, on net revenues of $62.5 million, compared to earnings of $3.5
million, or $.37 per share, on net revenues of $59.1 million for the year ended
December 31, 1997. The Company's income from operations totaled $9.0 million
for 1998 compared to $9.2 million for 1997. The Company believes the Atlantis
continued to benefit in 1998 from the rapid growth occurring in the residential
and industrial communities south of the Atlantis in Reno, and from the
increasing popularity of the Atlantis with visitors to the Reno area. The
Company also believes its results were positively impacted in 1998 by the
American Bowling Congress tournament, which ran from March through June 1998 at
the National Bowling Stadium in downtown Reno and which brought approximately
90,000 visitors to the Reno area. However, the Company also believes its
results were detrimentally impacted in 1998 by unusually severe winter weather
in the first quarter of the year and by disruptions associated with the
Atlantis Expansion, which involved major construction activity on both sides of
the Atlantis during the third and fourth quarters of the year.
-18-
Casino revenues totaled $40.7 million in 1998, up 9.3% from $37.3 million
in 1997, driven by increases in both slot and table game win. Revenue from
slot machines increased approximately 8% in 1998 compared to 1997 due to an
increase in the average daily win per slot machine. Table game win increased
approximately 16% in 1998 compared to 1997 due to an increase in table game
drop and an improvement in table game hold. Casino operating expenses amounted
to 43.7% of casino revenues in 1998, compared to 43.1% in 1997.
Food and beverage revenues were up slightly in 1998, rising approximately
2% to $18.2 million from $17.8 million in 1997. Food and beverage operating
expenses were basically unchanged, amounting to 54.2% of food and beverage
revenues in 1998 compared to 54.3% in 1997.
Hotel revenues totaled $10.9 million in 1998, up more than 7% from $10.2
million in 1997, driven by a 2.1 point improvement in the Atlantis' occupancy
rate and a 5% increase in the Atlantis' ADR. ADR was $56.23 in 1998, compared
to $53.50 in 1997. The average occupancy rate at Atlantis was 88.0% in 1998
compared to 85.9% in 1997. Hotel operating expenses amounted to 32.6 % of
hotel revenues in 1998, compared to 36.4% in 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.
Other revenues increased approximately 15.5% in 1998 to $2.7 million from
$2.3 million in 1997, primarily reflecting increased revenues from the
Atlantis' retail outlet. Other expenses equaled 17.9% of other revenues in
1998, down slightly from 18.5% in 1997.
SG&A expenses totaled 27.7% of net revenues in 1998, compared to 27.0% in
1997, with the increase primarily reflecting higher personnel costs and higher
marketing costs in 1998. This increase in part reflects additional marketing
and administrative staff added in preparation for the 1999 opening of the
Atlantis Expansion, as well as additional operating expenses associated with
the Atlantis Expansion.
Interest expense for 1998 totaled $2.4 million, down from $3.4 million in
1997, reflecting lower average interest rates on the Company's debt and the
capitalization of certain interest costs in 1998. In 1998, the Company
capitalized approximately $0.4 million in interest costs related to
construction activities at the Atlantis. During 1997, there was no capitalized
interest.
The Company incurred a non-cash expense of $1.0 million in the fourth
quarter of 1998 for the disposal of certain fixed assets in conjunction with
the Atlantis Expansion, including certain exterior walls, doors and windows
that had to be removed to accommodate the expanded facilities.
-19-
OTHER FACTORS AFFECTING CURRENT AND FUTURE RESULTS
The recent constitutional amendment approved by California voters allowing
the expansion of Indian casinos in California will have an impact on casino
revenues in Nevada in general, and many analysts have predicted the impact will
be more significant on the Reno-Lake Tahoe market. The extent of this impact
is difficult to predict, but the Company believes that the impact on the
Company will be mitigated to an extent due to the Atlantis' emphasis on Reno
area residents as a significant base of its business. However, if other Reno
area casinos suffer business losses due to increased pressure from California
Indian casinos, they may intensify their marketing efforts to Reno area
residents as well. However, the Company's numerous amenities such as a wide
array of restaurants and other venues are a key factor in the Company's ability
to attract Reno area residents which competitor facilities will not easily be
able to match.
The Company also believes that the legalization of unlimited land-based
casino gaming in or near any major metropolitan area in the Atlantis' key
marketing areas, such as San Francisco or Sacramento, could have a material
adverse effect on its business.
The gaming industry represents a significant source of tax revenues to the
State of Nevada. A recent proposal in Nevada would increase the tax on gaming
revenues from 6.25% to 11.25%. If enacted, this proposal would have a material
impact on the Company's results of operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its daily hotel and casino activities
with net cash provided by operating activities. For the years 1999, 1998, and
1997, net cash provided by operating activities totaled $11.1 million, $8.7
million, and $9.5 million, respectively. During each of the three years, net
cash provided by operating activities was sufficient to fund the day to day
operating expenses of the Company.
Net cash used in investing activities, which consisted of acquisitions of
property and equipment and the completion of the Atlantis Expansion, totaled
$38.3 million, $26.1 million, and $1.6 million in 1999, 1998,and 1997,
respectively. Total capital expenditures, including amounts financed, were
$46.1 million, $34.5 million, and $2.2 million in 1999, 1998, and 1997,
respectively. Capital expenditures during 1999 and 1998 primarily reflect
construction costs, fixtures, and equipment associated with the Atlantis
Expansion, and the expenditures for 1997 were primarily directed toward ongoing
refurbishment and enhancement of the Atlantis, including equipment replacement.
The Company funded the majority of these costs with borrowings available under
its $80 million construction credit facility and $4.5 million equipment credit
facility (the principal terms of which are summarized in Note 4 in the Notes to
Consolidated Financial Statements, see Item 8, "FINANCIAL STATEMENTS, Notes to
Consolidated Financial Statements"), together with cash flow from operations.
At December 31, 1999, the outstanding balance of the Credit Facilities was $80
million and $4 million, respectively.
Net cash provided by financing activities totaled $28.6 million in 1999
and $16.9 million in 1998, as a result of the Company borrowing funds under its
bank credit facilities to finance the construction of the Atlantis
-20-
expansion. Net cash used in financing activities in 1997 totaled $6.3 million,
with the funds being used primarily to reduce long-term debt. The Company also
used funds in 1997 to repurchase its common stock on the open market.
The Company believes that its existing cash balances and cash flow from
operations will provide the Company with sufficient resources to fund its
operations, meet its debt repayment obligations, and fund its other 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. The Company's credit facility restricts additional
debt incurrence. 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
ITEM 8. FINANCIAL STATEMENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
MONARCH CASINO & RESORT, INC.:
We have audited the accompanying consolidated balance sheet of Monarch
Casino & Resort, Inc., (a Nevada Corporation) and subsidiary as of December 31,
1999, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Monarch Casino & Resort,
Inc. and subsidiary as of December 31, 1999, and the results of their
operations and their cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States.
/s/Arthur Andersen LLP
Las Vegas, Nevada
February 11, 2000
-21-
ITEM 8A. FINANCIAL STATEMENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF
MONARCH CASINO & RESORT, INC.
We have audited the accompanying consolidated balance sheet of Monarch
Casino & Resort, Inc. as of December 31, 1998, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the two
years in the period ended December 31, 1998. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Monarch Casino
& Resort, Inc. as of December 31, 1998, and the consolidated results of its
operations and its consolidated cash flows for each of the two years in the
period ended December 31, 1998, in conformity with generally accepted
accounting principles.
/s/Grant Thornton LLP
Reno, Nevada
January 29, 1999
-22-
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Revenues
Casino................................ $ 48,344,843 $ 40,716,535 $ 37,254,033
Food and beverage..................... 25,189,207 18,169,375 17,841,009
Hotel................................. 14,807,903 10,948,283 10,199,911
Other................................. 3,230,489 2,685,012 2,323,885
------------ ------------ ------------
Gross revenues..................... 91,572,442 72,519,205 67,618,838
Less promotional allowances........... (12,706,786) (10,008,673) (8,504,072)
------------ ------------ ------------
Net revenues....................... 78,865,656 62,510,532 59,114,766
------------ ------------ ------------
Operating expenses
Casino................................ 21,659,138 17,800,326 16,043,256
Food and beverage..................... 16,135,529 9,850,599 9,682,253
Hotel................................. 4,889,968 3,567,021 3,710,462
Other................................. 1,132,640 479,560 430,471
Selling, general and administrative... 23,328,208 17,337,640 15,964,188
Depreciation and amortization......... 7,738,029 4,436,249 4,125,408
------------ ------------ ------------
Total operating expenses........... 74,883,512 53,471,395 49,956,038
------------ ------------ ------------
Income from operations............. 3,982,144 9,039,137 9,158,728
------------ ------------ ------------
Other income (expense)
Interest expense, net................. (4,742,475) (2,402,562) (3,436,650)
Disposal of fixed assets.............. (184,206) (955,836) -
------------ ------------ ------------
Total other........................ (4,926,681) (3,358,398) (3,436,650)
------------ ------------ ------------
Income (loss) before income
taxes and extraordinary item...... (944,537) 5,680,739 5,722,078
Provision (benefit) for income taxes.... (359,672) 1,920,957 2,011,930
------------ ------------ ------------
Income (loss) before extraordinary
item.............................. (584,865) 3,759,782 3,710,148
Extraordinary item - loss on
early retirement of debt, net
of applicable income tax
benefit of $95,057..................... - - (184,524)
------------ ------------ ------------
Net income (loss).................. $ (584,865) $ 3,759,782 $ 3,525,624
============ ============ ============
INCOME PER SHARE OF COMMON STOCK
Income (loss) before extraordinary item
Basic.............................. $ (0.06) $ 0.40 $ 0.39
Diluted............................ $ (0.06) $ 0.40 $ 0.39
Net income (loss)
Basic.............................. $ (0.06) $ 0.40 $ 0.37
Diluted............................ $ (0.06) $ 0.40 $ 0.37
Weighted average number of
common shares and potential
common shares outstanding
Basic.............................. 9,436,275 9,436,275 9,444,333
Diluted............................ 9,436,275 9,502,327 9,479,359
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
-23-
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Current assets
Cash........................................ $ 6,367,507 $ 4,919,143
Receivables, net............................ 1,954,447 1,283,129
Related party receivables................... 83,205 22,315
Inventories................................. 1,456,602 747,364
Prepaid expenses............................ 1,600,249 1,917,429
Prepaid federal income tax.................. 443,870 449,226
Deferred income taxes....................... 1,174,626 432,874
------------ ------------
Total current assets..................... 13,080,506 9,771,480
------------ ------------
Property and equipment
Land........................................ 10,339,530 10,339,530
Land improvements........................... 3,034,095 -
Buildings................................... 78,432,078 35,335,973
Furniture and equipment..................... 49,392,494 24,667,318
Improvements................................ 4,462,520 4,969,881
------------ ------------
145,660,717 75,312,702
Less accumulated
depreciation and amortization.............. (27,964,180) (22,125,039)
------------ ------------
117,696,537 53,187,663
Construction in progress.................... - 32,669,282
------------ ------------
Net property and equipment............... 117,696,537 85,856,945
Other assets, net............................. 877,382 1,103,535
------------ ------------
$ 131,654,425 $ 96,731,960
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
-24-
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt........ $ 7,333,921 $ 850,498
Accounts payable............................ 7,238,084 3,441,829
Accounts payable construction............... 942,264 7,275,617
Accrued expenses............................ 5,156,363 4,152,237
Federal income taxes payable................ 213,686 -
------------ ------------
Total current liabilities................ 20,884,318 15,720,181
Long-term debt, less current maturities....... 82,235,509 52,309,785
Deferred income taxes......................... 2,666,017 2,248,548
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 outstanding...................... 95,363 95,363
Additional paid-in capital.................. 17,241,788 17,241,788
Treasury stock.............................. (329,875) (329,875)
Retained earnings........................... 8,861,305 9,446,170
------------ ------------
Total stockholders' equity............... 25,868,581 26,453,446
------------ ------------
$131,654,425 $ 96,731,960
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
-25-
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
-------------------- Additional Retained
Shares Paid-in Earnings Treasury
Outstanding Amount Capital (Deficit) Stock Total
----------- -------- ------------ ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997 9,453,275 $ 95,363 $ 17,008,779 $ 2,160,764 $(264,000) $ 19,000,906
Net income - - - 3,525,624 - 3,525,624
Treasury stock acquired,
at cost (17,000) - - - (65,875) (65,875)
Other - - 233,009 - - 233,009
----------- -------- ------------ ----------- --------- ------------
Balance, December 31, 1997 9,436,275 95,363 17,241,788 5,686,388 (329,875) 22,693,664
Net income - - - 3,759,782 - 3,759,782
----------- -------- ------------ ----------- --------- ------------
Balance, December 31, 1998 9,436,275 95,363 17,241,788 9,446,170 (329,875) 26,453,446
Net loss - - - (584,865) - (584,865)
----------- -------- ------------ ----------- --------- ------------
Balance, December 31, 1999 9,436,275 $ 95,363 $ 17,241,788 $ 8,861,305 $(329,875) $ 25,868,581
=========== ======== ============ =========== ========= ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
-26-
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................ $ (584,865) $ 3,759,782 $ 3,525,624
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization.............. 7,919,120 4,616,722 4,308,991
(Gain) loss on disposal of assets.......... 184,206 955,836 (4,589)
Deferred income taxes...................... (324,283) 623,674 949,009
Increase in receivables, net............... (732,208) (393,205) (343,124)
(Increase) decrease in inventories......... (709,238) 93,419 (210,664)
(Increase) decrease in prepaid expenses.... 322,536 (856,913) (164,794)
(Increase) decrease in other assets........ 41,599 (1,884) 304,854
Increase (decrease) in accounts payable.... 3,796,255 (669,628) 108,691
Increase in accrued expenses
and federal income taxes payable........... 1,217,812 527,412 980,769
------------ ------------ ------------
Net cash provided by
operating activities..................... 11,130,934 8,655,215 9,454,767
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sale of assets................. 39,993 8,170 188,040
Acquisition of property and equipment........ (31,964,910) (26,145,674) (1,820,935)
Payment on accounts payable construction..... (6,333,353) - -
------------ ------------ ------------
Net cash used in investing activities..... (38,258,270) (26,137,504) (1,632,895)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from long-term borrowings........... 30,671,549 21,385,842 32,810,000
Principal payments on long-term debt......... (2,095,849) (4,437,430) (39,085,029)
Acquisition of treasury stock................ - - (65,875)
------------ ------------ ------------
Net cash provided by
(used in) financing activities............ 28,575,700 16,948,412 (6,340,904)
------------ ------------ ------------
Net increase (decrease) in cash........... 1,448,364 (533,877) 1,480,968
Cash at beginning of period.................... 4,919,143 5,453,020 3,972,052
------------ ------------ ------------
Cash at end of period.......................... $ 6,367,507 $ 4,919,143 $ 5,453,020
============ ============ ============
Supplemental disclosure of
cash flow information:
Cash paid for interest, net of
capitalized interest....................... $ 4,880,664 $ 1,850,321 $ 3,590,323
Capitalized interest......................... $ 1,550,916 $ 432,835 $ -
Cash paid for income taxes................... $ - $ 1,987,479 $ 610,000
Supplemental schedule of non-cash
investing and financing activities:
The Company financed the purchase of property
and equipment in the following amounts...... $ 7,833,446 $ 8,336,347 $ 336,926
Capitalized loan costs included
in accounts payable......................... - - $ 1,185,000
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
-27-
MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Monarch Casino & Resort, Inc. ("Monarch") was incorporated in 1993.
Monarch's wholly-owned subsidiary, Golden Road Motor Inn, Inc. ("Golden Road"),
operates the Atlantis Casino Resort (the "Atlantis"), a hotel/casino facility
in Reno, Nevada. Unless stated otherwise, the "Company" refers to Monarch and
its wholly-owned subsidiary Golden Road.
Until December 1999, Monarch Casino & Resort, Inc. owned two other
subsidiaries, Dunes Marina Resort & Casino, Inc.("Dunes Marina"), and Sea World
Processors, Inc. ("Sea World"). Dunes Marina and Sea World had been inactive
for several years and had virtually no assets or liabilities. In December
1999, both corporations were dissolved.
The consolidated financial statements include the accounts of Monarch and
Golden Road. Intercompany balances and transactions are eliminated.
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 1998 and 1997 consolidated financial statements
have been reclassified to conform with the 1999 presentation. These
reclassifications had no effect on the previously reported net income.
Capitalized Interest
The Company capitalizes interest costs associated with debt incurred in
connection with major construction projects. When no debt is specifically
identified as being incurred in connection with a construction project, the
Company capitalizes interest on amounts expended on the project at the
Company's average cost of borrowed money. Interest capitalization is ceased
when the project is substantially complete. The amounts capitalized during the
years ended December 31, 1999, 1998, and 1997 were $1,550,916, $432,835, and
$0, respectively.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with an original
maturity of three months or less to be cash equivalents.
-28-
Related Party Receivables
Receivables from officers, employees, or affiliated companies are
primarily for banquet related services, and are priced at the retail value of
the goods or services provided.
Inventories
Inventories, consisting primarily of food, beverages, and retail
merchandise, are stated at the lower of cost or market. Cost is determined on
a first-in, first-out basis.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation
and amortization. Since inception, property and equipment have been
depreciated principally on a straight line basis over the estimated service
lives as follows:
Buildings..........30-40 years
Furniture.......... 5-10 years
Equipment.......... 5-20 years
Improvements.......15-40 years
Casino Revenues
Casino revenues represent the net win from gaming activity, which is the
difference between wins and losses. Additionally, net win is reduced by a
provision for anticipated payouts on progressive jackpots.
Promotional Allowances
The retail value of hotel, food and beverage services provided to
customers without charge is included in gross revenue and deducted as
promotional allowances. The estimated departmental costs of providing such
promotional allowances are included in casino costs and expenses as follows:
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Food and beverage....... $ 6,769,700 $ 5,644,800 $ 5,393,000
Hotel................... 1,424,700 930,600 360,900
Other................... 105,400 198,700 40,100
----------- ----------- -----------
$ 8,299,800 $ 6,774,100 $ 5,794,000
=========== =========== ===========
</TABLE>
Advertising Costs
All advertising costs are expensed as incurred. Advertising expense was
$3,314,101, $1,897,036, and $1,940,628 for 1999, 1998, and 1997, respectively.
-29-
Disposal of Fixed Assets
In 1999, there was a loss on disposal of fixed assets of $184 thousand,
primarily related to the disposal of obsolete assets. In 1998, there was a
loss on disposal of fixed assets of $956 thousand, primarily from the
demolition of assets relating to the start of the Atlantis Expansion.
Income Taxes
Income taxes are recorded in accordance with the liability method
specified by Statement of Financial Accounting Standards ("SFAS") No. 109
"Accounting for Income Taxes." Under the asset and liability approach for
financial accounting and reporting for income taxes, the following basic
principles are applied in accounting for income taxes at the date of the
financial statements: (a) a current liability or asset is recognized for the
estimated taxes payable or refundable on taxes for the current year; (b) a
deferred tax liability or asset is recognized for the estimated future tax
effects attributable to temporary differences and carryforwards; (c) the
measurement of current and deferred tax liabilities and assets is based on the
provisions of the enacted tax law; the effects of future changes in tax laws or
rates are not anticipated; and (d) the measurement of deferred taxes is
reduced, if necessary, by the amount of any tax benefits that, based upon
available evidence, are not expected to be realized.
Pre-Opening Costs
During April 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-5 "Reporting of the Costs of Start-up
Activities" effective for fiscal years beginning after December 15, 1998. The
new standard requires that all companies expense costs of "start-up" activities
as the costs are incurred. The term "start-up" includes pre-opening, pre-
operating, and organization activities. Accordingly, the Company has no
capitalized "start-up" costs as of December 31, 1999 and all "start-up" costs
related to projects were expensed as incurred in 1999. The impact of the
adoption of SOP 98-5 on the 1999 consolidated financial statements was not
material.
Earnings Per Share
In 1997, the Company adopted the provisions of SFAS No. 128 "Earnings Per
Share." SFAS No. 128 replaces previously reported earnings per share with
"basic" earnings per share and "diluted" earnings per share. Basic earnings
per share is computed by dividing reported net earnings by the weighted-average
number of common shares outstanding during the period. Diluted earnings per
share reflects the additional dilution for all potentially dilutive securities
such as stock options. In accordance with SFAS No. 128, when an entity has a
loss from continuing operations, no potential common shares shall be included
in the computation of any diluted per share amount. As such, potential
dilution has not been considered in the calculations for 1999.
-30-
The weighted-average number of common and common equivalent shares used in
the calculation of basic and diluted earnings per share is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Basic........................... 9,436,275 9,436,275 9,444,333
Diluted......................... 9,436,275 9,502,327 9,479,359
</TABLE>
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>
Years ended December 31,
------------------------------------------------------
1999 1998 1997
---------------- ---------------- ----------------
Per Share Per Share Per Share
Shares Amount Shares Amount Shares Amount
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before
extraordinary item
Basic..................... 9,436 $(0.06) 9,436 $0.40 9,444 $0.39
Effect of dilutive
stock options............ - - 66 - 35 -
------ --------- ------ --------- ------ ---------
Diluted................... 9,436 $(0.06) 9,502 $0.40 9,479 $0.39
====== ========= ====== ========= ====== =========
Net income (loss)
Basic..................... 9,436 $(0.06) 9,436 $0.40 9,444 $0.37
Effect of dilutive
stock options........... - - 66 - 35 -
------ --------- ------ --------- ------ ---------
Diluted................... 9,436 $(0.06) 9,502 $0.40 9,479 $0.37
====== ========= ====== ========= ====== =========
</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:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Options to purchase shares of
common stock (in thousands).... - 16 26
Exercise prices.................. - $5.88-$8.06 $4.88-$8.06
Expiration dates................. - 6/99-5/08 9/98-6/00
</TABLE>
In accordance with SFAS No. 128, no options were included in the
computation of diluted earnings per share in 1999 because the Company reported
a loss and the effect of the options would be anti-dilutive.
-31-
Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107
"Disclosures About Fair Value of Financial Instruments." The estimated fair
value of the Company's financial instruments have been determined by the
Company, using available market information and valuation methodologies.
However, considerable judgment is required to develop the estimates of fair
value; thus, the estimates provided herein are not necessarily indicative of
the amounts that the Company could realize in a current market exchange.
The carrying amounts of cash, receivables, accounts payable and accrued
expenses, and current installments of long-term debt approximate fair value
because of the short-term nature of these instruments.
The fair value of long-term debt is estimated based on the current
borrowing rates offered to the Company for debt of the same remaining
maturities.
It is estimated that the carrying amounts of all of the Company's
financial instruments approximate fair value at December 31, 1999.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of bank deposits and trade
receivables. The Company maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Company has not experienced
any losses in such accounts. Concentrations of credit risk with respect to
trade receivables are limited due to the large number of customers comprising
the Company's customer base. The Company believes it is not exposed to any
significant credit risk on cash and accounts receivable.
NOTE 2. ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
Casino....................... $ 1,663,128 $ 975,131
Hotel........................ 891,290 411,473
Other........................ 49,043 62,103
----------- -----------
2,603,461 1,448,707
Less allowance for
doubtful accounts.......... (649,014) (165,578)
----------- -----------
$ 1,954,447 $ 1,283,129
=========== ===========
</TABLE>
-32-
NOTE 3. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1999 1998
----------- -----------
<S> <C> <C
Accrued salaries, wages
and related benefits............ $ 2,352,310 $ 1,506,699
Progressive slot machine
and other gaming accruals....... 942,475 1,175,361
Accrued gaming taxes.............. 199,780 174,508
Accrued interest.................. 420,895 559,084
Other accrued liabilities......... 1,240,903 736,585
----------- -----------
$ 5,156,363 $ 4,152,237
=========== ===========
</TABLE>
NOTE 4. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------
1999 1998
------------- -------------
<S> <C> <C>
Amounts outstanding under bank reducing revolving
credit facility, collateralized by substantially
all property and equipment of Golden Road and guaranteed
by Monarch and its three largest stockholders, with
floating interest rates tied to a base rate approximately
equal to the prime rate or LIBOR (at the Company's option)
plus a margin which fluctuates according to the Company's
ratio of funded debt to EBITDA. At December 31, 1999,
the weighted average interest rate was approximately 9.16%.
The loan matures in June 2004, with all unpaid interest
and principal due and payable at that time.................... $ 80,000,000 $ 50,328,451
Note payable to bank, collateralized by real property and
guaranteed by Monarch and its three largest stockholders,
with floating interest rates equal to the three month
LIBO rate plus a margin which fluctuates according to
the Company's ratio of funded debt to EBITDA. At
December 31, 1999, the interest rate was approximately 9.585%.
Interest and scheduled principal payments are payable quarterly
until June, 2004, with all unpaid interest and principal due
and payable at that time........................................ 1,685,097 1,855,097
Amount outstanding under bank promissory note, unsecured
and guaranteed by Monarch's three largest stockholders,
with a variable initial interest rate of 9% and adjusted
based on an independent index plus 0.5 percentage points
over the index. Interest is paid monthly and the note
matures on April 5, 2001...................................... 1,000,000 -
-33-
Amounts outstanding under bank credit facility,
collateralized by furniture, fixtures and equipment and
guaranteed in full by Monarch and in part by Monarch's
three largest stockholders, with interest rates on
advances fixed at a margin over five year U.S. Treasury
notes. At December 31, 1999, the Company's weighted
average interest rate was 7.44%. Each advance under the
credit facility is repaid in 60 monthly installments of
principal and interest....................................... 4,012,523 339,795
Slot purchase contracts, collateralized by equipment,
maturing in 2001. Contracts are non-interest
bearing...................................................... 2,852,956 515,736
Notes payable, collateralized by equipment, with
principal and interest due monthly through 2001.............. 18,854 121,204
------------ ------------
$ 89,569,430 $ 53,160,283
Less current maturities....................................... (7,333,921) (850,498)
------------ ------------
$ 82,235,509 $ 52,309,785
============ ============
</TABLE>
THE CREDIT FACILITY. The Company has an $80 million reducing revolving
term loan credit facility (the "Credit Facility") with a consortium of banks.
The Credit Facility is a direct obligation of Golden Road, and is guaranteed by
Monarch. The Credit Facility is also guaranteed individually by John Farahi,
Co-Chairman of the Board, Chief Executive Officer and Chief Operating Officer
of Monarch and Golden Road and General Manager of the Atlantis; Bahram (Bob)
Farahi, Co-Chairman of the Board and President of Monarch and Golden Road; and
Behrouz (Ben) Farahi, Co-Chairman of the Board, Chief Financial Officer,
Secretary and Treasurer of Monarch and Golden Road.
The Company will be able to utilize proceeds from the Credit Facility for
working capital needs and general corporate purposes relating to the Atlantis
and for ongoing capital expenditure requirements at the Atlantis.
At the Company's option, borrowings under the Credit Facility can accrue
interest at a rate designated by the agent bank as its base rate (the "Base
Rate") or at the London Interbank Offered Rate ("LIBOR") for one, two, three or
six month periods. The rate of interest paid by the Company will include a
margin added to either the Base Rate or to LIBOR that is tied to the Company's
ratio of funded debt to EBITDA (the "Leverage Ratio"). Depending on the
Company's Leverage Ratio, this margin can vary between 0.00 percent and 2.00
percent above the Base Rate, and between 1.50 percent and 3.50 percent above
LIBOR. At December 31, 1999, the applicable margin was the Base Rate plus
2.0%, and the applicable LIBOR margin was LIBOR plus 3.5%. The Base Rate at
December 31, 1999 was 10.5%, and the LIBOR rates were for various time periods
and ranged in interest rates from 9.14% to 9.21%. At December 31, 1999, the
Company had no Base Rate loans outstanding and had three LIBOR loans
outstanding totaling $80 million.
The maturity date of the Credit Facility is June 30, 2004. Beginning July
1, 2000, the maximum principal available under the Credit Facility will reduce
quarterly from $80 million by an aggregate of $40 million in increasing
increments ranging from $1.5 million to $6 million per quarter. The Company
may prepay borrowings under the Credit Facility without penalty (subject to
certain charges applicable to the prepayment of LIBOR borrowings prior to the
-34-
end of the applicable interest period) so long as the amount repaid is at least
$200 thousand and a multiple of $10 thousand. Amounts prepaid under the Credit
Facility may be reborrowed so long as the total borrowings outstanding do not
exceed the maximum principal available. The Company may also permanently
reduce the maximum principal available under the Credit Facility at any time so
long as the amount of such reduction is at least $500 thousand and a multiple
of $50 thousand.
The Credit Facility is secured by liens on substantially all of the real
and personal property of Golden Road, as well as by the aforementioned parent
and personal guarantees. The Credit Facility contains covenants customary and
typical for a facility of this nature, including, but not limited to, covenants
requiring the preservation and maintenance of the Company's assets (including
provisions requiring that a minimum amount equal to two percent of the
Company's gaming revenues each year must be expended on capital expenditures at
the Atlantis), and covenants restricting the Company's ability to merge,
transfer ownership of Golden Road, incur additional indebtedness, encumber
assets, and make certain investments. The Credit Facility also contains
covenants requiring the Company to maintain certain financial ratios, and
provisions restricting transfers between Golden Road and Monarch and between
Golden Road and other specified persons. The Credit Facility also contains
provisions requiring the achievement of certain financial ratios before the
Company can repurchase its common stock or pay or declare dividends.
The Company paid various fees and other loan costs upon the closing of the
Credit Facility that are being amortized over the term of the Credit Facility
using the effective interest rate method. As of January 2000, the Company will
be required to pay a fee equal to three eighths of one percent per annum on the
average unused portion of the Credit Facility.
Annual maturities of long-term debt as of December 31, 1999, are as
follows:
<TABLE>
<CAPTION>
Years ending
December 31,
------------
<S> <C>
2000.......... $ 7,333,921
2001.......... 8,786,336
2002.......... 9,341,912
2003.......... 11,407,259
2004.......... 52,700,002
Thereafter -
------------
$ 89,569,430
============
</TABLE>
-35-
NOTE 5. INCOME TAX
Income tax provision (benefit) consists of the following:
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Current provision.(benefit)........... $ (655,843) $ 1,297,283 $ 1,062,921
Deferred provision.................... 296,171 623,674 949,009
----------- ----------- -----------
$ (359,672) $ 1,920,957 $ 2,011,930
=========== =========== ===========
</TABLE>
The difference between the Company's provision (benefit) for federal
income taxes as presented in the accompanying Consolidated Statements of
Operations, and the provision (benefit) for income taxes computed at the
statutory rate is comprised of the items shown in the following table as a
percentage of pre-tax earnings.
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Income tax at the statutory rate...... (34.0)% 34.0% 34.0%
Non-deductible expenses............... 3.5% 1.7% 1.2%
Tax credits........................... (7.6)% (1.2)% -
Other, net............................ - (0.7)% -
----------- ----------- -----------
(38.1)% 33.8% 35.2%
=========== =========== ===========
</TABLE>
The components of the deferred income tax assets and liabilities at
December 31, 1999 and 1998, as presented in the Consolidated Balance Sheets,
are as follows:
-36-
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Compensation and benefits............ $ 188,804 $ 88,319
Bad debt reserves.................... 220,665 56,297
Accrued gaming liabilities........... 253,508 71,406
Accrued other liabilities............ 47,594 -
Alternative minimum tax credit....... 392,055 216,852
Other tax credit..................... 72,000 -
----------- -----------
1,174,626 432,874
NONCURRENT ASSETS
Net operating loss carryforward...... 655,843 -
----------- -----------
Deferred income tax asset $ 1,830,469 $ 432,874
=========== ===========
NONCURRENT LIABILITIES
Impairment of assets................. $ (170,196) $ (70,195)
Depreciation......................... (2,874,121) (1,900,810)
Land basis........................... (277,543) (277,543)
----------- -----------
Deferred income tax liability $(3,321,860) $(2,248,548)
=========== ===========
</TABLE>
SFAS No. 109 requires recognition of the future tax benefit of deferred
tax assets to the extent realization of such benefits is "more likely than
not," otherwise a valuation allowance is applied. Based on the operating
history of the Company, management determined that the assets meet the "more
likely than not" criteria and therefore no valuation allowance has been
recognized as of December 31, 1999.
As of December 31, 1999, the Company had a net operating loss carryforward
available for Federal income tax purposes of approximately $1,929,000, which
expires in 2019.
NOTE 6. BENEFIT PLANS
Self Insurance - The Company is self-insured for health care claims for
eligible active employees. Benefit plan administrators assist the Company in
determining its liability for self-insured claims, and such claims are not
discounted. The Company is also self-insured for workman's compensation. Both
plans limit the Company's maximum liability under stop-loss agreements with
insurance companies. The maximum liability for health care claims under the
stop-loss agreement is $50,000 as of November 1, 1999, and was $40,000 prior to
that date. The maximum liability for workman's compensation under the stop-
loss agreement is $300,000.
-37-
Savings Plan - Effective November 1, 1995, the Company adopted a savings
plan, which qualifies under Section 401(k) of the Internal Revenue Code. Under
the plan, participating employees may defer up to 15% of their pre-tax
compensation, but not more than statutory limits. The Company contributes
twenty five cents for each dollar contributed by a participant, with a maximum
contribution of 4% of a participant's compensation. The Company's matching
contribution was approximately $21,770 in 1999, $19,300 in 1998, and $17,000 in
1997.
Stock Option Plans - The Company maintains three stock option plans,
consisting of the Directors' Stock Option Plan, the Executive Long-term
Incentive Plan, and the Employee Stock Option Plan, which collectively provide
for the granting of options to purchase up to 425,000 common shares. The
exercise price of stock options granted under the plans is established by the
respective plan committees, but the exercise price may not be less than the
market price of the Company's common stock on the date the option is granted.
Options expire five to ten years from the grant date.
The Company has adopted the disclosure-only provisions of SFAS No. 123,
Accounting for Stock-Based Compensation, but applies Accounting Principles
Board Opinion No. 25 and related interpretations in accounting for its plans.
If the Company had elected to recognize compensation cost on the fair market
value at the grant dates for awards under the stock option plans, consistent
with the method prescribed by SFAS No. 123, net income and income per share
would have been changed to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Income (loss) before
extraordinary item As reported $ (584,865) $ 3,759,782 $ 3,710,148
Pro forma $ (803,022) $ 3,728,019 $ 3,515,191
Net income (loss) As reported $ (584,865) $ 3,759,782 $ 3,525,624
Pro forma $ (803,022) $ 3,728,019 $ 3,330,668
Basic earnings (loss)
per share before
extraordinary item As reported $ (0.06) $ 0.40 $ 0.39
Pro forma $ (0.09) $ 0.40 $ 0.37
Basic earnings (loss)
per share As reported $ (0.06) $ 0.40 $ 0.37
Pro forma $ (0.09) $ 0.40 $ 0.35
Diluted earnings (loss)
per share before
extraordinary item As reported $ (0.06) $ 0.40 $ 0.39
Pro forma $ (0.09) $ 0.39 $ 0.37
Diluted earnings (loss)
per share As reported $ (0.06) $ 0.40 $ 0.37
Pro forma $ (0.09) $ 0.39 $ 0.35
</TABLE>
-38-
The fair value of the Company's stock options was estimated as of the
grant date using the Black-Scholes option pricing model with the following
weighted average assumptions for 1999, 1998, and 1997: dividend yield of 0.0%
for all periods; expected volatility of 128.0%, 60.0%, and 35.0%, respectively;
a weighted average risk free interest rate of 5.0%, 4.9%, and 6.6%,
respectively; and an expected holding period of three to seven years.
Presented below is a summary of the status of the Company's stock options
and the related transactions.
<TABLE>
<CAPTION>
Weighted Average
Shares Exercise Price
-------- ----------------
<S> <C> <C>
Outstanding at December 31, 1996.... 31,700 $ 6.44
Granted............................ 233,700 3.21
Exercised.......................... - -
Forfeited/expired.................. (2,500) (2.88)
------- -----
Outstanding at December 31, 1997.... 262,900 3.60
Granted............................ 14,600 5.98
Exercised.......................... - -
Forfeited/expired.................. (25,300) (6.27)
------- -----
Outstanding at December 31, 1998.... 252,200 3.47
Granted............................ 4,800 5.50
Exercised.......................... - -
Forfeited/expired.................. (60,100) (5.93)
------- -----
Outstanding at December 31, 1999.... 196,900 $ 3.04
======= =====
Weighted average fair value of
options granted during 1999......... $ 5.50
=======
1998......... $ 2.18
=======
1997......... $ 1.28
=======
</TABLE>
<TABLE>
<CAPTION>
Stock Options Stock Options
Outstanding Exercisable
------------------------- -------------------------
Weighted Weighted Weighted
Average Average Average
Range of Contractual Exercise Exercise
Exercise Prices Shares Life Price Shares Price
---------------- ------- -------- --------- ------- --------
<S> <C> <C> <C> <C> <C>
$2.25 to $3.50 132,400 4.00 $ 2.82 52,400 $ 2.31
$4.00 to $5.00 58,700 4.00 $ 5.13 52,400 $ 4.44
$5.75 to $8.13 5,800 4.00 $ 5.97 7,300 $ 5.90
------- -------
Total 196,900 112,100
======= =======
</TABLE>
-39-
NOTE 7. COMMITMENTS AND CONTINGENCIES
The Company is a defendant in various pending legal proceedings. In the
opinion of management, all pending claims in such litigation will not, in the
aggregate, have a material adverse effect on the Company's financial position
or results of operations.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This information is incorporated by reference to the Company's Proxy
Statement to be filed with the Commission in connection with the Annual Meeting
of Stockholders on June 21, 2000.
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference to the Company's Proxy
Statement to be filed with the Commission in connection with the Annual Meeting
of Stockholders on June 21, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference to the Company's Proxy
Statement to be filed with the Commission in connection with the Annual Meeting
of Stockholders on June 21, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference to the Company's Proxy
Statement to be filed with the Commission in connection with the Annual Meeting
of Stockholders on June 21, 2000.
-40-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
Included in Part II of this report:
Consolidated Statements of Income for the years ended
December 31, 1999, 1998, and 1997.
Consolidated Balance Sheets at December 31, 1999 and 1998.
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1999, 1998 and 1997.
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997.
Notes to Consolidated Financial Statements.
2. Schedules are omitted because of the absence of conditions under
which they are required or because the required information is
provided in the financial statements or notes thereto.
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated October 28, 1999
reporting a change in the Company's auditors.
(c) Exhibits
Number Exhibit Description
------ -------------------
3.01 Articles of Incorporation of Monarch Casino & Resort, Inc., filed
June 11, 1993 are incorporated herein by reference from the
Company's Form S-1 registration statement (SEC File 33-64556),
Part II, Item 16, Exhibit 3.01.
3.02 Bylaws of Monarch Casino & Resort, Inc., adopted June 14, 1993
are incorporated herein by reference from the Company's Form S-1
registration statement (SEC File 33-64556), Part II, Item 16,
Exhibit 3.02.
3.03 Articles of Incorporation of Golden Road Motor Inn, Inc. filed
March 6, 1973; Certificate Amending Articles of Incorporation of
Golden Road Motor Inn, Inc. filed August 29, 1973; and
Certificate of Amendment of Articles of Incorporation filed April
5, 1984 are incorporated herein by reference from the Company's
Form S-1 registration statement (SEC File 33-64556), Part II,
Item 16, Exhibit 3.03.
-41-
3.04 Bylaws of Golden Road Motor Inn, Inc., adopted March 9, 1973
are incorporated herein by reference from the Company's Form S-1
registration statement (SEC File 33-64556), Part II, Item 16,
Exhibit 3.04.
4.01 Specimen Common Stock Certificate for the Common Stock of Monarch
Casino & Resort, Inc. is incorporated herein by reference from
the Company's Form S-1 registration statement (SEC File 33-
64556), Part II, Item 16, Exhibit 4.01.
4.02 Amended and Restated Monarch Casino & Resort, Inc. 1993 Directors'
Stock Option Plan is incorporated herein by reference to the
Company's Form 10-K report (SEC File 0-022088) for the fiscal year
ended December 31,1998, Item 14(c), Exhibit 4.02.
4.03 Amended and Restated Monarch Casino & Resort, Inc. 1993 Executive
Long Term Incentive Plan is incorporated herein by reference to
the Company's Form 10-K report (SEC File 0-22088) for the fiscal
year ended December 31, 1997, Item 14(c), Exhibit 4.03.
4.04 Amended and Restated Monarch Casino & Resort, Inc. 1993 Employee
Stock Option Plan is incorporated herein by reference to the
Company's Form 10-K report (SEC File 0-22088) for the fiscal year
ended December 31, 1997, Item 14(c), Exhibit 4.04.
10.01 Construction and Reducing Revolving Credit Agreement, dated as of
December 29, 1997, among Golden Road Motor Inn, Inc. as Borrower,
Monarch Casino & Resort, Inc., John Farahi, Bahram Farahi, and
Behrouz Farahi as guarantors, the Lenders as defined therein, and
Wells Fargo Bank as administrative and collateral Agent for the
Lenders and Swingline Lender is incorporated herein by reference
to the Company's Form 8-K report (SEC File 0-22088) dated January
14, 1998, Exhibit 10.01.
10.02 First Amendment to Construction and Reducing Revolving Credit
Agreement, dated as of January 9, 1998, among Golden Road Motor
Inn, Inc. as Borrower, Monarch Casino & Resort, Inc., John Farahi,
Bahram Farahi, and Behrouz Farahi as guarantors, the Lenders as
defined therein, and Wells Fargo Bank as administrative and
collateral Agent for the Lenders, Swingline Lender and L/C Issuer
is incorporated herein by reference to the Company's Form 10-K
report (SEC File 0-22088) for the fiscal year ended December 31,
1997, Item 14(c), Exhibit 10.02.
10.03 Second Amendment to Construction and Reducing Revolving Credit
Agreement, dated as of June 12, 1998, among Golden Road Motor Inn,
Inc. as Borrower, Monarch Casino & Resort, Inc., John Farahi,
Bahram Farahi, and Behrouz Farahi as guarantors, the Lenders as
defined therein, and Wells Fargo Bank as administrative and
collateral Agent for the Lenders, Swingline Lender and L/C Issuer
is incorporated herein by reference to the Company's Form 10-Q
report (SEC File 0-22088) for the fiscal quarter ended June 30,
1998, Item 6(a), Exhibit 10.01.
-42-
10.04 Term Loan Agreement, entered 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 is
incorporated herein by reference to the Company's Form 10-Q report
(SEC File 0-22088) for fiscal quarter ended September 30, 1998,
Item 6(a), Exhibit 10.01.
10.05 Schedule to Master Loan Agreement, dated as of December 16, 1998;
Master Loan Agreement, dated as of October 3, 1998; and
Guaranties, dated as of September 9, 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 Leasing and Financial as Lender is incorporated herein
by reference to the Company's Form 10-K report (SEC File 0-22088)
for the fiscal year ended December 31, 1998, Item 14(c), Exhibit
10.05.
10.06 Agreement dated April 20, 1998, between Golden Road Motor Inn,
Inc. and Krump Construction, Inc. is incorporated herein by
reference to the Company's Form 10-Q report (SEC File 0-22088) for
the fiscal quarter ended March 31, 1998, Item 6(a), Exhibit 10.01.
10.07 Agreement dated June 12, 1998, between Golden Road Motor Inn, Inc.
and Perini Building Company, Inc. is incorporated herein by
reference to the Company's Form 10-Q report (SEC File 0-22088) for
the fiscal quarter ended June 30, 1998, Item 6(a), Exhibit 10.02.
10.08 Lease, by and between Sierra Development Company, dba Club Cal-
Neva, Tenant, and Golden Road Motor Inn, Inc., dba Clarion Hotel
and Casino, Landlord, dated June 10, 1991 is incorporated herein
by reference from the Company's Form S-1 registration statement
(SEC File 33-64556), Part II, Item 16, Exhibit 10.03.
10.09 Agreement for Purchase of Real Property between Marcelle M.
Caramella, a widow, individually and Marcelle Margaret Caramella,
as trustee of the Trust created under the Last Will and Testament
of Ernest John Caramella, deceased, Ben A. Caramella and Cecile
D. Caramella, as trustees of the Caramella Family Trust Agreement
dated December 1, 1989, Marcelle Margaret Caramella, Erma V.
Pezzi, Trustee of the Erma V. Pezzi Trust Agreement dated
November 21, 1991, Golden Road Motor Inn, Inc. and Farahi
Investment Company, dated June 1, 1993 is incorporated herein by
reference from the Company's Form S-1 registration statement (SEC
File 33-64556), Part II, Item 16, Exhibit 10.04.
10.10 Agreement between Monarch Casino & Resort, Inc. and Peter Wilday
dated May 13, 1994; First Amendment to Agreement between Monarch
Casino & Resort, Inc. and Peter Wilday dated June 8, 1994; and
Second Amendment to Agreement between Monarch Casino & Resort,
Inc. and Peter Wilday dated March 23, 1995 are incorporated
herein by reference from the Company's Form 10-K report (SEC File
0-22088) for the fiscal year ended December 31, 1994, Item
14(a)(3), Exhibit 10.20.
-43-
10.11 Nonstandardized 401(k) Plan Adoption Agreement between Monarch
Casino & Resort, Inc. and Smith Barney Shearson dated November 7,
1995 is incorporated herein by reference to the Company's Form
10-K report (SEC File 0-22088) for the fiscal year ended December
31, 1995, Item 14(a)(3), Exhibit 10.21.
10.12 Recordkeeping Service Agreement between Monarch Casino & Resort,
Inc. and Travelers Recordkeeping dated June 29, 1995 is
incorporated herein by reference to the Company's Form 10-K
report (SEC File 0-22088) for the fiscal year ended December 31,
1995, Item 14(a)(3), Exhibit 10.22.
10.13 Trademark Agreement between Golden Road Motor Inn, Inc. and
Atlantis Lodge, Inc., dated February 3, 1996 is incorporated
herein by reference to the Company's Form 10-K report (SEC File
0-22088) for the fiscal year ended December 31, 1995, Item
14(a)(3), Exhibit 10.23.
10.14 Business Loan Agreement between Golden Road Motor Inn, Inc. and
Colonial Bank, dated November 17, 1999; Promissory Note by Golden
Road Motor Inn, Inc. in favor of Colonial Bank, dated November 17,
1999; Commercial Guaranty issued by John Farahi in favor of
Colonial Bank, dated November 17, 1999; Commercial Guaranty issued
by Bahram Farahi in favor of Colonial Bank, dated November 17,
1999; and Commercial Guaranty issued by Ben Farahi, dated
November 17, 1999.
10.15 Schedule to Master Loan Agreement, dated as of April 1, 1999;
Master Loan Agreement, dated as of October 3, 1998; and
Guaranties, dated as of September 9, 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 Leasing and Financial as Lender.
10.16 Schedule to Master Loan Agreement, dated as of April 19, 1999;
Master Loan Agreement, dated as of October 3, 1998; and
Guaranties, dated as of September 9, 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 Leasing and Financial as Lender.
10.17 Schedule to Master Loan Agreement, dated as of May 5, 1999;
Master Loan Agreement, dated as of October 3, 1998; and
Guaranties, dated as of September 9, 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 Leasing and Financial as Lender.
10.18 Schedule to Master Loan Agreement, dated as of May 24, 1999;
Master Loan Agreement, dated as of October 3, 1998; and
Guaranties, dated as of September 9, 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 Leasing and Financial as Lender.
-44-
10.19 Schedule to Master Loan Agreement, dated as of June 23, 1999;
Master Loan Agreement, dated as of October 3, 1998; and
Guaranties, dated as of September 9, 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 Leasing and Financial as Lender.
21.01 Amended and Restated List of Subsidiaries of Monarch Casino &
Resort, Inc.
27.01 Financial Data Schedule
-45-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 20, 2000 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>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
------------------ ----------------------------------- ----
<S> <C> <C>
/S/ JOHN FARAHI Co-Chairman of the Board of Directors, March 20, 2000
------------------ Chief Executive Officer (Principal
John Farahi Executive Officer) and Director
/S/ BOB FARAHI Co-Chairman of the Board of Directors, March 20, 2000
------------------ President, and Director
Bob Farahi
/S/ BEN FARAHI Co-Chairman of the Board of Directors, March 20, 2000
------------------ Secretary, Treasurer, Chief Financial
Ben Farahi Officer (Principal Financial Officer
and Principal Accounting Officer) and
Director
/S/ CRAIG. F.
SULLIVAN Director March 20, 2000
------------------
Craig F. Sullivan
/S/ RONALD R.
ZIDECK Director March 20, 2000
------------------
Ronald R. Zideck
</TABLE>
-46-
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ----------- ------------------------------------------------------------------ --------
<S> <C> <C>
3.01 Articles of Incorporation of Monarch Casino & Resort, Inc., filed
June 11, 1993 are incorporated herein by reference from the
Company's Form S-1 registration statement (SEC File 33-64556),
Part II, Item 16, Exhibit 3.01.
3.02 Bylaws of Monarch Casino & Resort, Inc., adopted June 14, 1993
are incorporated herein by reference from the Company's Form S-1
registration statement (SEC File 33-64556), Part II, Item 16,
Exhibit 3.02.
3.03 Articles of Incorporation of Golden Road Motor Inn, Inc. filed
March 6, 1973; Certificate Amending Articles of Incorporation of
Golden Road Motor Inn, Inc. filed August 29, 1973; and
Certificate of Amendment of Articles of Incorporation filed April
5, 1984 are incorporated herein by reference from the Company's
Form S-1 registration statement (SEC File 33-64556), Part II,
Item 16, Exhibit 3.03.
3.04 Bylaws of Golden Road Motor Inn, Inc., adopted March 9, 1973 are
incorporated herein by reference from the Company's Form S-1
registration statement (SEC File 33-64556), Part II, Item 16,
Exhibit 3.04.
4.01 Specimen Common Stock Certificate for the Common Stock of Monarch
Casino & Resort, Inc. is incorporated herein by reference from
the Company's Form S-1 registration statement (SEC File 33-
64556), Part II, Item 16, Exhibit 4.01.
4.02 Amended and Restated Monarch Casino & Resort, Inc. 1993 Directors'
Stock Option Plan is incorporated herein by reference to the
Company's Form 10-K report (SEC File 0-022088) for the fiscal year
ended December 31,1998, Item 14(c), Exhibit 4.02.
4.03 Amended and Restated Monarch Casino & Resort, Inc. 1993 Executive
Long Term Incentive Plan is incorporated herein by reference to
the Company's Form 10-K report (SEC File 0-22088) for the fiscal
year ended December 31, 1997, Item 14(c), Exhibit 4.03.
4.04 Amended and Restated Monarch Casino & Resort, Inc. 1993 Employee
Stock Option Plan is incorporated herein by reference to the
Company's Form 10-K report (SEC File 0-22088) for the fiscal year
ended December 31, 1997, Item 14(c), Exhibit 4.04.
10.01 Construction and Reducing Revolving Credit Agreement, dated as of
December 29, 1997, among Golden Road Motor Inn, Inc. as Borrower,
Monarch Casino & Resort, Inc., John Farahi, Bahram Farahi, and
Behrouz Farahi as guarantors, the Lenders as defined therein, and
Wells Fargo Bank as administrative and collateral Agent for the
Lenders and Swingline Lender is incorporated herein by reference
to the Company's Form 8-K report (SEC File 0-22088) dated January
14, 1998, Exhibit 10.01.
10.02 First Amendment to Construction and Reducing Revolving Credit
Agreement, dated as of January 9, 1998, among Golden Road Motor
Inn, Inc. as Borrower, Monarch Casino & Resort, Inc., John Farahi,
Bahram Farahi, and Behrouz Farahi as guarantors, the Lenders as
defined therein, and Wells Fargo Bank as administrative and
collateral Agent for the Lenders, Swingline Lender and L/C Issuer
is incorporated herein by reference to the Company's Form 10-K
report (SEC File 0-22088) for the fiscal year ended December 31,
1997, Item 14(c), Exhibit 10.02.
-47-
10.03 Second Amendment to Construction and Reducing Revolving Credit
Agreement, dated as of June 12, 1998, among Golden Road Motor Inn,
Inc. as Borrower, Monarch Casino & Resort, Inc., John Farahi,
Bahram Farahi, and Behrouz Farahi as guarantors, the Lenders as
defined therein, and Wells Fargo Bank as administrative and
collateral Agent for the Lenders, Swingline Lender and L/C Issuer
is incorporated herein by reference to the Company's Form 10-Q
report (SEC File 0-22088) for the fiscal quarter ended June 30,
1998, Item 6(a), Exhibit 10.01.
10.04 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 is incorporated herein by reference to the
Company's Form 10-Q report (SEC File 0-22088) for the fiscal
quarter ended September 30, 1998, Item 6(a), Exhibit 10.01.
10.05 Schedule to Master Loan Agreement, dated as of December 16, 1998;
Master Loan Agreement, dated as of October 3, 1998; and
Guaranties, dated as of September 9, 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 Leasing and Financial as Lender is incorporated herein
by reference to the Company's Form 10-K report (SEC File 0-22088)
for the fiscal year ended December 31, 1998, Item 14(c), Exhibit
10.05.
10.06 Agreement dated April 20, 1998, between Golden Road Motor Inn,
Inc. and Krump Construction, Inc. is incorporated herein by
reference to the Company's Form 10-Q report (SEC File 0-22088) for
the fiscal quarter ended March 31, 1998, Item 6(a), Exhibit 10.01.
10.07 Agreement dated June 12, 1998, between Golden Road Motor Inn, Inc.
and Perini Building Company, Inc. is incorporated herein by
reference to the Company's Form 10-Q report (SEC File 0-22088) for
the fiscal quarter ended June 30, 1998, Item 6(a), Exhibit 10.02.
10.08 Lease, by and between Sierra Development Company, dba Club Cal-
Neva, Tenant, and Golden Road Motor Inn, Inc., dba Clarion Hotel
and Casino, Landlord, dated June 10, 1991 is incorporated herein
by reference from the Company's Form S-1 registration statement
(SEC File 33-64556), Part II, Item 16, Exhibit 10.03.
10.09 Agreement for Purchase of Real Property between Marcelle M.
Caramella, a widow, individually and Marcelle Margaret Caramella,
as trustee of the Trust created under the Last Will and Testament
of Ernest John Caramella, deceased, Ben A. Caramella and Cecile
D. Caramella, as trustees of the Caramella Family Trust Agreement
dated December 1, 1989, Marcelle Margaret Caramella, Erma V.
Pezzi, Trustee of the Erma V. Pezzi Trust Agreement dated
November 21, 1991, Golden Road Motor Inn, Inc. and Farahi
Investment Company, dated June 1, 1993 is incorporated herein by
reference from the Company's Form S-1 registration statement (SEC
File 33-64556), Part II, Item 16, Exhibit 10.04.
10.10 Agreement between Monarch Casino & Resort, Inc. and Peter Wilday
dated May 13, 1994; First Amendment to Agreement between Monarch
Casino & Resort, Inc. and Peter Wilday dated June 8, 1994; and
Second Amendment to Agreement between Monarch Casino & Resort,
Inc. and Peter Wilday dated March 23, 1995 are incorporated
herein by reference from the Company's Form 10-K report (SEC File
0-22088) for the fiscal year ended December 31, 1994, Item
14(a)(3), Exhibit 10.20.
10.11 Nonstandardized 401(k) Plan Adoption Agreement between Monarch
Casino & Resort, Inc. and Smith Barney Shearson dated November 7,
1995 is incorporated herein by reference to the Company's Form
10-K report (SEC File 0-22088) for the fiscal year ended December
31, 1995, Item 14(a)(3), Exhibit 10.21.
-48-
10.12 Recordkeeping Service Agreement between Monarch Casino & Resort,
Inc. and Travelers Recordkeeping dated June 29, 1995 is
incorporated herein by reference to the Company's Form 10-K
report (SEC File 0-22088) for the fiscal year ended December 31,
1995, Item 14(a)(3), Exhibit 10.22.
10.13 Trademark Agreement between Golden Road Motor Inn, Inc. and
Atlantis Lodge, Inc., dated February 3, 1996 is incorporated
herein by reference to the Company's Form 10-K report (SEC File
0-22088) for the fiscal year ended December 31, 1995, Item
14(a)(3), Exhibit 10.23.
10.14 Business Loan Agreement between Golden Road Motor Inn, Inc. and ......... 50
Colonial Bank, dated November 17, 1999; Promissory Note by Golden
Road Motor Inn, Inc. in favor of Colonial Bank, dated November 17,
1999; Commercial Guaranty issued by John Farahi in favor of
Colonial Bank, dated November 17, 1999; Commercial Guaranty issued
by Bahram Farahi in favor of Colonial Bank, dated November 17,
1999; and Commercial Guaranty issued by Ben Farahi, dated
November 17, 1999.
10.15 Schedule to Master Loan Agreement, dated as of April 1, 1999; ........... 94
Master Loan Agreement, dated as of October 3, 1998; and
Guaranties, dated as of September 9, 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 Leasing and Financial as Lender.
10.16 Schedule to Master Loan Agreement, dated as of April 19, 1999; ..........113
Master Loan Agreement, dated as of October 3, 1998; and
Guaranties, dated as of September 9, 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 Leasing and Financial as Lender.
10.17 Schedule to Master Loan Agreement, dated as of May 5, 1999; ............132
Master Loan Agreement, dated as of October 3, 1998; and
Guaranties, dated as of September 9, 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 Leasing and Financial as Lender.
10.18 Schedule to Master Loan Agreement, dated as of May 24, 1999; ...........151
Master Loan Agreement, dated as of October 3, 1998; and
Guaranties, dated as of September 9, 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 Leasing and Financial as Lender.
10.19 Schedule to Master Loan Agreement, dated as of June 23, 1999; ..........170
Master Loan Agreement, dated as of October 3, 1998; and
Guaranties, dated as of September 9, 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 Leasing and Financial as Lender.
21.01 Amended and Restated List of Subsidiaries of Monarch Casino & ..........189
Resort, Inc.
27.01 Financial Data Schedule
</TABLE>
-49-
PROMISSORY NOTE
Principal $1,000,000: Loan Date 11-17-1999: Maturity 04-05-2001:
Loan No. 982000806: Call 50: Collateral 010: Account --:
Officer TMN: Initials --
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Borrower: GOLDEN ROAD MOTOR INN, INC. Lender: COLONIAL BANK
dba: ATLANTIS CASINO RESORT P.O. Box 7498
1175 West Moana Lane Reno, NV 89510
Reno, NV 89509
Principal Amount: $1,000,000.00 Initial Rate: 9.000%
Date of Note: November 17, 1999
PROMISE TO PAY. GOLDEN ROAD MOTOR INN, INC. dba ATLANTIS CASINO RESORT
("Borrower") promises to pay to COLONIAL BANK ("Lender"), or order, in lawful
money of the United States of America, the principal amount of One Million &
00/100 Dollars ($1,000,000.00) or so much as may be outstanding, together with
interest on the unpaid outstanding principal balance of each advance. Interest
shall be calculated from the date of each advance until repayment of each
advance. The interest rate will not increase above 18.000%.
PAYMENT. Borrower will pay this loan in one payment of all outstanding
principal plus all accrued unpaid interest on April 5, 2001. In addition,
Borrower will pay regular monthly payments of accrued unpaid interest beginning
December 17, 1999, and all subsequent interest payments are due on the same day
of each month after that. The annual interest rate for this Note is computed
on a 365/360 basis; that is, by applying the ratio of the annual interest rate
over a year of 360 days, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal balance is outstanding.
Borrower will pay Lender at Lender's address shown above or at such other place
as Lender may designate in writing. Unless otherwise agreed or required by
applicable law, payments will be applied first to accrued unpaid interest, then
to principal, and any remaining amount to any unpaid collection costs and late
charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an independent index which is the
Colonial Bank Base Rate (the "Index"). The Index is not necessarily the lowest
rate charged by Lender on its loans. If the Index becomes unavailable during
the term of this loan, Lender may designate a substitute index after notice to
the Borrower. Lender will tell Borrower the current Index rate upon Borrower's
request. Borrower understands that Lender may make loans based on other rates
as well. The interest rate change will not occur more often than each day.
The Index currently is 8.500% per annum. The interest rate to be applied to
the unpaid principal balance of this Note will be at a rate of 0.500 percentage
points over the Index, adjusted if necessary for the minimum and maximum rate
limitations described below, resulting in an initial rate of 9.000% per annum.
Notwithstanding any other provision of this Note, the variable interest rate or
rates provided for in this Note will be subject to the following minimum and
maximum rates. NOTICE: Under no circumstances will the interest rate on this
Note be less than 5.000% per annum or more than (except for any higher default
rate shown below) the lesser of 18.000% per annum or the maximum rate allowed
by applicable law.
-50-
PROMISSORY NOTE
11-17-1999 (Continued) Page 2
Loan No 982000806
PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon full prepayment
of this Note, Borrower understands that Lender is entitled to a minimum
interest charge of $50.00. Other than Borrower's obligation to pay any minimum
interest charge, Borrower may pay without penalty all or a portion of the
amount owed earlier than it is due. Early payments will not, unless agreed to
by Lender in writing, relieve Borrower of Borrower's obligation to continue to
make payments of accrued unpaid interest. Rather, they will reduce the
principal balance due.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
10.000% of the unpaid portion of the regularly scheduled payment or $150.00,
whichever is less.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Borrower defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other
agreement, in favor of any other creditor or person that may materially affect
any of Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d)
Any representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor
tries to take any of Borrower's property on or in which Lender has a lien or
security interest. This includes a garnishment of any of Borrower's accounts
with Lender. (g) Any guarantor dies or any of the other events described in
this default section occurs with respect to any guarantor of this Note. (h) A
material adverse change occurs in Borrower's financial conditions, or Lender
believes the prospect of payment or performance of the Indebtedness is
impaired.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including
failure to pay upon final maturity, Lender, at its option, may also, if
permitted under applicable law, increase the variable interest rate on this
Note to 5.500 percentage points over the Index. The interest rate will not
exceed the maximum rate permitted by applicable law. Lender may hire or pay
someone else to help collect this Note if Borrower does not pay. Borrower will
also pay Lender that amount. This includes, subject to any limits under
applicable law, Lender's attorneys' fees and Lender's legal expenses whether or
not there is a lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection
services. If not prohibited by applicable law, Borrower also will pay any
court costs, in addition to all other sums provided by law.
-51-
PROMISSORY NOTE
11-17-1999 (Continued) Page 3
Loan No 982000806
This Note has been delivered to Lender and accepted by Lender in the State of
Nevada. If there is a lawsuit, Borrower agrees upon Lender's request to submit
to the jurisdiction of the courts of Washoe County, the State of Nevada
(Initial Here /s/ BF /s/ BF). This Note shall be governed by and construed in
accordance with the laws of the State of Nevada.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account),including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to
charge or setoff all sums owing on this Note against any and all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
under this Note may be requested only in writing by Borrower or by an
authorized person. All communications, instructions, or directions by
telephone or otherwise to Lender are to be directed to Lender's office shown
above. The following party or parties are authorized to request advances under
the line of credit until Lender receives from Borrower at Lender's address
shown above written notice of revocation of their authority: JOHN FARAHI, CHIEF
EXECUTIVE OFFICER; and BEN FARAHI, CHIEF FINANCIAL OFFICER. Borrower agrees to
be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower's
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. Lender will have no obligation
to advance funds under this Note if: (a) Borrower or any guarantor is in
default under the terms of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (b) Borrower or any guarantor ceases doing business or is
insolvent; (c) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor's guarantee of this Note or any other loan with
Lender; or (d) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender.
CERTIFICATION OF FINANCIAL STATEMENTS. An exhibit, titled "CERTIFICATION OF
FINANCIAL STATEMENTS," is attached to this Note and by this references is made
a part of this Note just as if all the provisions, terms and conditions of the
Exhibit had been fully set forth in this Note.
AGREEMENT TO PROVIDE FINANCIAL INFORMATION. An exhibit, titled "AGREEMENT TO
PROVIDE FINANCIAL INFORMATION," is attached to this Note and by this reference
is made a part of this Note just as if all the provisions, terms and conditions
of the Exhibit had been fully set forth in this Note.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
-52-
PROMISSORY NOTE
11-17-1999 (Continued) Page 4
Loan No 982000806
presentment, demand for payment, protest and notice of dishonor. Upon any
change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan, or release any party or guarantor or collateral; or impair,
fail to realize upon or perfect Lender's security interest in the collateral;
and take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
GOLDEN ROAD MOTOR INN, INC, dba ATLANTIS CASINO RESORT
By: /s/ Bahram Farahi By: /s/ Ben Farahi
------------------------------- -------------------------------------
BAHRAM FARAHI, PRESIDENT BEN FARAHI, CHIEF FINANCIAL OFFICER
-53-
Date: November 17, 1999
ADDENDUM TO LOAN DOCUMENTS DATED November 17, 1999 covering the loan to Golden
Road Motor Inn, Inc, from Colonial Bank of Nevada.
The following modifications supercede the document language listed in the loan
documents under loan number 982000806 date November 17, 1999.
1. Signers on the Loan Documents will be Bahram (Bob) Farahi and Ben Farahi.
2. Business Loan Agreement: Under the section Events of Default, the death or
incompetence of a guarantor will not be considered and event of default.
Under the section, Negative Covenants, prior consent is not required to seek
additional debt or liens, or be affected by any language under Continuity of
Operations and the section pertaining to Loans, Acquisitions and Guaranties.
This credit extension is considered unsecured, therefore any reference to
collateral or related issues concerning collateral in the agreements is void.
Should for any reason this loan be out participated to another lender, the
borrower will be placed on advance notice and the participating lender will be
no less than an acceptable commercial banking institution.
Please acknowledge these changes
accordingly: /s/ Bob Farahi Date: 11/17/99
----------------------- ----------
/s/ Ben Farahi 11/18/99
----------------------- ----------
By:
/s/ Tom Newman
- ------------------
Tom Newman
Vice President
-54-
BUSINESS LOAN AGREEMENT
Principal $1,000,000: Loan Date 11-17-1999: Maturity 04-05-2001:
Loan No. 982000806: Call 50: Collateral 010: Account --:
Officer TMN: Initials --
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Borrower: GOLDEN ROAD MOTOR INN, INC. Lender: COLONIAL BANK
dba: ATLANTIS CASINO RESORT P.O. Box 7498
1175 West Moana Lane Reno, NV 89510
Reno, NV 89509
THIS BUSINESS LOAN AGREEMENT between GOLDEN ROAD MOTOR INN, INC. dba ATLANTIS
CASINO RESORT ("Borrower") and COLONIAL BANK ("Lender") is made and executed on
the following terms and conditions. Borrower has received prior commercial
loans from Lender or has applied to Lender for a commercial loan or loans and
other financial accommodations, including those which may be described on any
exhibit or schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations
from Lender to Borrower, are referred to in this Agreement individually as the
"Loan" and collectively as the "Loans." Borrower understands and agrees that:
(a) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements, as set forth in this
Agreement; (b) the granting, renewing, or extending of any Loan by Lender at
all times shall be subject to Lender's sole judgement and discretion; and (c)
all such Loans shall be and shall remain subject to the following terms and
conditions of this Agreement.
TERM. This Agreement shall be effective as of November 17, 1999, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parities terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement shall have
the meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
Agreement. The word "Agreement" means this Business Loan Agreement, as
this business Loan Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this Business
Loan Agreement from time to time.
Borrower. The word "Borrower" means GOLDEN ROAD MOTOR INN, INC. dba
ATLANTIS CASINO RESORT. The "Borrower" also includes, as applicable,
all subsidiaries and affiliates of Borrower as provided below in the
paragraph titled "Subsidiaries and Affiliates."
CERCLA. The word "CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
Collateral. The word "Collateral" means and includes without limitation
all property and assets granted as collateral security for a Loan,
whether real or personal property, whether granted directly or
-55-
11-17-1999 BUSINESS LOAN AGREEMENT Page 2
Loan No 982000806 (Continued)
indirectly, whether granted now or in the future, and whether granted in
the form of a security interest, mortgage, deed of trust, assignment,
pledge, chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or title retention
contract, lease or consignment intended as a security device, or any
other security or lien interest whatsoever, whether created by law,
contract, or otherwise.
ERISA. The word "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "EVENTS OF DEFAULT."
Grantor. The word "Grantor" means and includes without limitation each
and all of the persons or entities granting a Security Interest in any
Collateral for the Indebtedness, including without limitation all
Borrowers granting such a Security Interest.
Guarantor. The word "Guarantor" means and includes without limitation
each and all of the guarantors, sureties, and accommodation parties in
connection with any Indebtedness.
Indebtedness. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations, debts and
liabilities of Borrower to Lender, or any one or more of them, as well
as all claims by Lender against Borrower, or any one or more of them;
whether now or hereafter existing, voluntary or involuntary, due or not
due, absolute or contingent, liquidated or unliquidated; whether
Borrower may be liable individually or jointly with others; whether
Borrower may be obligated as a guarantor, surety, or otherwise; whether
recovery upon such Indebtedness may be hereafter may become barred by
any statute of limitations; and whether such Indebtedness may be or
hereafter may become otherwise unenforceable.
Lender. The word "Lender" means COLONIAL BANK, its successors and
assigns.
Loan. The word "Loan" or "Loans" means and includes without limitation
any and all commercial loans and financial accommodations from Lender to
Borrower, whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations
described herein or described on any exhibit or schedule attached to
this Agreement from time to time.
Note. The word "Note" means and includes without limitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations
in favor of Lender, as well as any substitute, replacement or
refinancing note or notes therefor.
Permitted Liens. The words "Permitted Liens" mean: (a) liens and
security interests securing Indebtedness owed by Borrower to Lender; (b)
liens for taxes, assessments, or similar charges either not yet due or
-56-
11-17-1999 BUSINESS LOAN AGREEMENT Page 3
Loan No 982000806 (Continued)
being contested in good faith; (c) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary
course of business and securing obligations which are not yet
delinquent; (d) purchase money liens or purchase money security
interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure Indebtedness outstanding on the
date of the Agreement or permitted to be incurred under the paragraph of
this Agreement titled "Indebtedness and Liens"; (e) liens and security
interests which, as of the date of this Agreement, have been disclosed
to and approved by the Lender in writing; and (f) those liens and
security interests which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of
Borrower's assets.
Related Documents. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the Indebtedness.
Security Agreement. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
Security Interest. The words "Security Interest" mean and include
without limitation any type of collateral security, whether in the form
of a lien, charge, mortgage, deed of trust, assignment, pledge, chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional
sale, trust receipt, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.
SARA. The word "SARA" means the Superfund Amendments and
Reauthorization Act of 1986 as now or hereafter amended.
CONDITIONS PRECENDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all the conditions set
forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender in form satisfactory
to lender the following documents for the Loan: (a) the Note, (b)
Security Agreements granting to Lender security interests in the
Collateral, (c) Financing Statements perfecting Lender's Security
Interests; (d) evidence of insurance as required below; and (e) any
other documents required under this Agreement or by Lender or its
counsel, including without limitation any guaranties described below.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and
-57-
11-17-1999 BUSINESS LOAN AGREEMENT Page 4
Loan No 982000806 (Continued)
the Related Documents, and such other authorizations and other documents
and instruments as Lender or its counsel, in their sole discretion, may
require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all
fees, charges, and other expenses which are then due and payable as
specified in this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document
or certificate delivered to Lender under this Agreement are true and
correct.
No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this
Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
Organization. Borrower is a corporation which is duly organized,
validly existing, and in good standing under the laws of the State of
Nevada and is validly existing and in good standing in all states in
which Borrower is doing business. Borrower has the full power and
authority to own its properties and to transact the businesses in which
it is presently engaged or presently proposes to engage. Borrower also
is duly qualified as a foreign corporation and is in good standing in
all states in which the failure to so qualify would have a material
adverse effect on its businesses or financial condition.
Authorization. The execution, delivery, and performance of this
Agreement and all Related Documents by Borrower, to the extent to be
executed, delivered or performed by Borrower, have been duly authorized
by all necessary action by Borrower; do not require the consent or
approval of any other person, regulatory authority or governmental body;
and do not conflict with, result in a violation of, or constitute a
default under (a) any provision of its articles of incorporation or
organization, or bylaws, or any agreement or other instrument binding
upon Borrower or (b) any law, governmental regulation, court degree, or
order applicable to Borrower.
Financial Information. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as
of the date of the statement, and there has been no material adverse
change in Borrower's financial condition subsequent to the date of the
most recent financial statement supplied to Lender. Borrower has no
material contingent obligations except as disclosed in such financial
statements.
Legal Effect. This Agreement constitutes, and any instrument or
agreement required hereunder to be given by Borrower when delivered will
-58-
11-17-1999 BUSINESS LOAN AGREEMENT Page 5
Loan No 982000806 (Continued)
constitute, legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and
as accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interest, and has
not executed any security documents or financing statements relating to
such properties. All of Borrower's properties are titled in Borrower's
legal name, and Borrower has not used, or filed a financing statement
under, any other name for at least the last five (5) years.
Hazardous Substances. The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as used in
this Agreement, shall have the same meanings as set forth in the
"CERCLA," "SARA," the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq., or other applicable state or Federal laws,
rules, or regulations adopted pursuant to any of the foregoing. Except
as disclosed to and acknowledged by Lender in writing, Borrower
represents and warrants that: (a) During the period of Borrower's
ownership of the properties, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened release
of any hazardous waste or substance by any person on, under, about or
from any of the properties. (b) Borrower has no knowledge of, or reason
to believe that there has been (i) any use, generation, manufacture,
storage, treatment, disposal, release, or threatened release of any
hazardous waste or substance on, under, about or from the properties by
any prior owners or occupants of any of the properties, or (ii) any
actual or threatened litigation or claims of any kind by any person
relating to such matters. (c) Neither Borrower nor any tenant,
contractor, agent or other authorized user of any of the properties
shall use, generate, manufacture, store, treat, dispose of, or release
any hazardous waste or substance on, under, about or from any of the
properties; and any such activity shall be conducted in compliance with
all applicable federal, state, and local laws, regulations, and
ordinances, including without limitation those laws, regulations and
ordinances described above. Borrower authorizes Lender and its agents
to enter upon the properties to make such inspections and test as Lender
may deem appropriate to determine compliance of the properties with this
section of the Agreement. Any inspections or tests made by Lender shall
be at Borrower's expense and for Lender's purposes only and shall not be
construed to create any responsibility or liability on the part of
Lender to Borrower or to any other person. The representations and
warranties contained herein are based on Borrower's due diligence in
investigating the properties for hazardous waste and hazardous
substances. Borrower hereby (a) releases and waives any future claims
against Lender for indemnity or contribution in the event Borrower
becomes liable for cleanup or other costs under any such laws, and (b)
agrees to indemnify and hold harmless Lender against any and all claims,
losses, liabilities, damages, penalties, and expenses which Lender may
directly or indirectly sustain or suffer resulting from a breach of this
-59-
11-17-1999 BUSINESS LOAN AGREEMENT Page 6
Loan No 982000806 (Continued)
section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release of a
hazardous waste or substance on the properties. The provisions of this
section of the Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the termination or
expiration of this Agreement and shall not be affected by Lender's
acquisition of any interest in any of the properties, whether by
foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid
taxes) against Borrower is pending or threatened, and no other event has
occurred which may materially adversely affect Borrower's financial
condition or properties, other than litigation, claims, or other events,
if any, that have been disclosed to and acknowledged by Lender in
writing.
Taxes. To the best of Borrower's knowledge, all tax returns and reports
of Borrower that are or were required to be filed, have been filed, and
all taxes, assessments and other governmental charges have been paid in
full, except those presently being or to be contested by Borrower in
good faith in the ordinary course of business and for which adequate
reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in
writing, Borrower has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security
Interests on or affecting any of the Collateral directly or indirectly
securing repayment of Borrower's Loan and Note, that would be prior or
that may in any way be superior to Lender's Security Interests and
rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements
directly or indirectly securing repayment of Borrower's Loan and Note
and all of the Related Documents are binding upon Borrower as well as
upon Borrower's successors, representatives and assigns, and are legally
enforceable in accordance with their respective terms.
Commercial Purposes. Borrower intends to use the Loan proceeds solely
for business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower
may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable
Event nor Prohibited Transaction (as defined in ERISA) has occurred with
respect to any such plan, (ii) Borrower has not withdrawn from any such
plan or initiated steps to do so, (iii) no steps have been taken to
terminate any such plan, and (iv) there are no unfunded liabilities
other than those previously disclosed to Lender in writing.
Location of Borrower's Offices and Records. Borrower's place of
business, or Borrower's Chief executive office, if Borrower has more
than one place of business, is located at 1175 West Moana Lane, Reno, NV
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11-17-1999 BUSINESS LOAN AGREEMENT Page 7
Loan No 982000806 (Continued)
89509. Unless Borrower has designated otherwise in writing this
location is also the office or offices where Borrower keeps its records
concerning the Collateral.
Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender
will be, true and accurate in every material respect on the date as of
which such information is dated or certified; and none of such
information is or will be incomplete by omitting to state any material
fact necessary to make such information not misleading.
Survival of Representations and Warranties. Borrower understands and
agrees that Lender, without independent investigation, is relying upon
the above representations and warranties in extending Loan Advances to
Borrower, Borrower further agrees that the foregoing representations and
warranties shall be continuing in nature and shall remain in full force
and effect until such time as Borrower's Indebtedness shall be paid in
full, or until this Agreement shall be terminated in the manner provided
above, whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material
adverse changes in Borrower's financial condition, and (b) all existing
and all threatened litigation, claims, investigations, administrative
proceedings or similar actions affecting Borrower or any Guarantor which
could materially affect the financial condition of Borrower or the
financial condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at
all reasonable times.
Financial Statements. Furnish Lender with, as soon as available, but in
no event later than forty five (45) days after the end of each fiscal
year, Borrower's balance sheet and income statement for the year ended,
compiled by a certified public accountant satisfactory to Lender. All
financial reports required to be provided under this Agreement shall be
prepared in accordance with generally accepted accounting principles,
applied on a consistent basis, and certified by Borrower as being true
and correct.
Additional Information. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and
other reports with respect to Borrower's financial condition and
business operations as Lender may request from time to time.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
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11-17-1999 BUSINESS LOAN AGREEMENT Page 8
Loan No 982000806 (Continued)
to Borrower's properties and operations, in form, amounts, coverages and
with insurance companies reasonably acceptable to Lender. Borrower,
upon request of Lender, will deliver to Lender from time to time the
policies or certificates of insurance in form satisfactory to Lender,
including stipulations that coverages will not be cancelled or
diminished without at least ten (10) days' prior written notice to
Lender. Each insurance policy also shall include an endorsement
providing that coverage in favor of Lender will not be impaired in any
way by any act, omission or default of Borrower or any other person. In
connection with all policies covering assets in which Lender holds or is
offered a security interest for the Loans, Borrower will provide Lender
with such loss payable or other endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports
on each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the
policy; (d) the properties insured; (e) the then current property values
on the basis of which insurance has been obtained, and the manner of
determining those values; and (f) the expiration date of the policy. In
addition, upon request of Lender (however not more often than annually),
Borrower will have an independent appraiser satisfactory to Lender
determine, as applicable, the actual cash value or replacement cost of
any Collateral. The cost of such appraisal shall be paid by Borrower.
Guaranties. Prior to disbursement of any Loan proceeds, furnish
executed guaranties of the Loans in favor of Lender, executed by the
guarantors named below, on Lender's forms, and in the amounts and under
the conditions spelled out in those guaranties.
Guarantors Amounts
---------- -------
JOHN FARAHI Unlimited
BAHRAM FARAHI Unlimited
BEN FARAHI Unlimited
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
Loan Fees and Charges. In addition to all other agreed upon fees and
charges, pay the following: $250.00 Document Preparation Fee.
Loan Proceeds. Use all Loan Proceeds solely for the following specific
purposes: Working Capital.
Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every
kind and nature, imposed upon borrower or its properties, income, or
profits, prior to the date on which penalties would attach, and all
lawful claims that, if unpaid, might become a lien or charge upon any of
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11-17-1999 BUSINESS LOAN AGREEMENT Page 9
Loan No 982000806 (Continued)
Borrower's properties, income, or profits. Provided however, Borrower
will not be required to pay and discharge any such assessment, tax,
charge, levy, lien or claim so long as (a) the legality of the same
shall be contested in good faith by appropriate proceedings, and (b)
Borrower shall have established on its books adequate reserves with
respect to such contested assessment, tax, charge, levy, lien, or claim
in accordance with generally accepted accounting practices. Borrower,
upon demand of Lender, will furnish to Lender evidence of payment of the
assessments, taxes, charges, levies, liens and claims and will authorize
the appropriate governmental official to deliver to Lender at any time a
written statement of any assessments, taxes, charges, levies, liens and
claims against Borrower's properties, income, or profits.
Performance. Perform and comply with all terms, conditions, and
provisions set forth in this Agreement and in the Related Documents in a
timely manner, and promptly notify Lender if Borrower learns of the
occurrence of any event which constitutes and Event of Default under
this Agreement or under any of the Related Documents.
Operations. Maintain executive and management personnel with
substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender of
any change in executive and management personnel; conduct its business
affairs in a reasonable and prudent manner and in compliance with all
applicable federal, state and municipal laws, ordinances, rules and
regulations respecting its properties, charters, businesses and
operation, including without limitation, compliance with the Americans
With Disabilities Act and with all minimum funding standards and other
requirements of ERISA and other laws applicable to Borrower's employee
benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable time
to inspect any and all Collateral for the Loan or Loans and Borrower's
other properties and to examine or audit Borrower's books, accounts, and
records and to make copies and memoranda of Borrower's books, accounts,
and records. If Borrower now or at any time hereafter maintains any
records (including without limitation computer generated records and
computer software programs for the generation of such records) in the
possession of a third party, Borrower, upon request of Lender, shall
notify such party to permit Lender free access to such records at all
reasonable times and to provide Lender with copies of any records it may
request, all at Borrower's expense.
Compliance Certificate. Unless waived in writing by Lender, provide
Lender at least annually and at the time of each disbursement of Loan
proceeds with a certificate executed by Borrower's chief financial
officer, or other officer or person acceptable to Lender, certifying
that the representations and warranties set forth in this Agreement are
true and correct as of the date of the certificate and further
certifying that, as of the date of the certificate, no Event of Default
exists under this Agreement.
Environmental Compliance and Reports. Borrower shall comply in all
respects with all environmental protection federal, state and local
-63-
11-17-1999 BUSINESS LOAN AGREEMENT Page 10
Loan No 982000806 (Continued)
laws, statutes, regulations and ordinances; not cause or permit to
exist, as a result of an intentional or unintentional action or omission
on its part or on the part of any third party, on property owned and/or
occupied by Borrower, any environmental activity where damage may result
to the environment, unless such environmental activity is pursuant to
and in compliance with the conditions of a permit issued by the
appropriate federal, state or local governmental authorities; shall
furnish to Lender promptly and in any event within thirty (30) days
after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter or other communication from any governmental agency or
instrumentality concerning any intentional or unintentional action or
omission on Borrower's part in connection with any environmental
activity whether or not there is damage to the environment and/or other
natural resources.
Additional Assurances. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements,
financing statements, instruments, documents and other agreements as
Lender or its attorneys may reasonably request to evidence and secure
the Loans and to perfect all Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent
of Lender:
Indebtedness and Liens. (a) Except for trade debt incurred in the
normal course of business and indebtedness to Lender contemplated by
this Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (b) except as allowed as a Permitted Lien,
sell, transfer, mortgage, assign, pledge, lease, grant a security
interest in, or encumber any of Borrower's assets, or (c) sell with
recourse any of Borrower's accounts, except to Lender.
Continuity of Operations. (a) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (b) cease operations, liquidate, merge, transfer, acquire or
consolidate with any other entity, change ownership, change its name,
dissolve or transfer or sell Collateral out of the ordinary course of
Business, (c) pay any dividends on Borrower's stock (other than
dividends payable in its stock), provided, however that notwithstanding
the foregoing, but only so long as no Event of Default has occurred and
is continuing or would result from the payment of dividends, if Borrower
is a "Subchapter S Corporation" (as defined in the Internal Revenue Code
of 1986, as amended), Borrower may pay cash dividends on its stock to
its shareholders from time to time in amounts necessary to enable the
shareholders to pay income taxes and make estimated income tax payments
to satisfy their liabilities under federal and state law which arise
solely from their status as Shareholders of a Subchapter S Corporation
because of their ownership of shares of stock of Borrower, or (d)
purchase or retire any of Borrower's outstanding shares or alter or
amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance
money or assets, (b) purchase, create or acquire any interest in any
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11-17-1999 BUSINESS LOAN AGREEMENT Page 11
Loan No 982000806 (Continued)
other enterprise or entity, or (c) incur any obligation as surety or
guarantor other than in the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement
or any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; or (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or
any other loan with Lender.
OUT OF DEBT PERIOD. An out of debt period will be required for 90 days during
the term of the loan. Loan will be considered in default if obligations with
other lenders are in default.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to
charge or setoff all sums owing on the Indebtedness against any and all such
accounts.
EVENTS OF DEFAULT. Each of the following shall constitute and Event of Default
under this Agreement:
Default of Indebtedness. Failure of Borrower to make any payment when
due on the Loans.
Other Defaults. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or
failure of Borrower to comply with or to perform any other term,
obligation, covenant or condition contained in any other agreement
between Lender and Borrower.
Default in Favor of Third Parties. Should Borrower or any Grantor
default under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any
other creditor or person that may materially affect any of Borrower's
property or Borrower's or any Grantor's ability to repay the Loans or
perform their respective obligations under this Agreement or any of the
Related Documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under
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11-17-1999 BUSINESS LOAN AGREEMENT Page 12
Loan No 982000806 (Continued)
this Agreement or Related Documents is false or misleading in any
material respect at the time made or furnished, or becomes false or
misleading at any time thereafter.
Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any Security Agreement to create a valid and perfected Security
Interest) at any time and for any reason.
Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower's property, any assignment for the
benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against
Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any
creditor of any Grantor against any collateral securing the
Indebtedness, or by any governmental agency. This includes a
garnishment, attachment, or levy on or of any of Borrower's deposit
accounts with Lender.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness.
Change In Ownership. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or
performance of the Indebtedness is impaired.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except,
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan Advances or disbursements), and, at Lender's option,
all Indebtedness immediately will become due and payable, all without notice of
any kind to Borrower, except that in the case of and Event of Default of the
type described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's
rights and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude
pursuit of any other remedy, and an election to make expenditures or to take
action to perform an obligation of Borrower or of any Grantor shall not affect
Lender's right to declare a default and to exercise its rights and remedies.
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11-17-1999 BUSINESS LOAN AGREEMENT Page 13
Loan No 982000806 (Continued)
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment
to this Agreement shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration
or amendment.
Applicable Law. This Agreement has been delivered to Lender and
accepted by Lender in the State of Nevada. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of
the courts of Washoe County, the State of Nevada (Initial Here /s/ BF
/s/ BF). This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or define
the provisions of this Agreement.
Multiple Parties; Corporate Authority. All obligations of Borrower
under this Agreement shall be joint and several, and all references to
Borrower shall mean each and every Borrower. This means that each of
the persons signing below is responsible for all obligations in this
Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interest in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any
other matter relating to the Loan, and Borrower hereby waives any rights
to privacy it may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such
participation interests. Borrower also agrees that the purchasers of
any such participation interests will be considered as the absolute
owners of such interests in the Loans and will have all the rights
granted under the participation agreement or agreements governing the
sale of such participation interests. Borrower further waives all
rights of offset or counterclaim that it may have now or later against
Lender or against any purchaser of such a participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loans irrespective of the failure or
insolvency of any holder of any interest in the Loans. Borrower further
agrees that the purchaser of any such participation interests may
enforce its interest irrespective of any personal claims or defenses
that Borrower may have against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
expenses, including without limitation attorneys' fees, incurred in
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11-17-1999 BUSINESS LOAN AGREEMENT Page 14
Loan No 982000806 (Continued)
connection with the preparation, execution, enforcement, modification
and collection of this Agreement or in connection with the Loans made
pursuant to this Agreement. Lender may pay someone else to help collect
the Loans and to enforce this Agreement, and Borrower will pay that
amount. This includes, subject to any limits under applicable law,
Lender's attorneys' fees and Lender's legal expenses, whether or not
there is a lawsuit, including attorneys' fees for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collections
services. Borrower also will pay any court costs, in addition to all
other sums provided by law.
Notices. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile (unless otherwise
required by law), and shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier or deposited in
the United States mail, first class, postage prepaid, addressed to the
party to whom the notice is to be given at the address shown above. Any
party may its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of the
notice is to change the party's address. To the extent permitted by
applicable law, if there is more than one Borrower, notice to any
Borrower will constitute notice to all Borrowers. For notice purposes,
Borrower will keep Lender informed at all times of Borrower's current
address(es).
Severability. If a court of competent jurisdiction finds any provision
of this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible,
any such offending provision shall be deemed to be modified to be within
the limits of enforceability or validity; however, if the offending
provision cannot be so modified, it shall be stricken and all other
provisions of this Agreement in all other respects shall remain valid
and enforceable.
Subsidiaries and Affiliates of Borrower. To the extent the context of
any provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower"
as used herein shall include all subsidiaries and affiliates of
Borrower. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or
other financial accommodation to any subsidiary or affiliate of
Borrower.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure
to the benefit of Lender, its successors and assigns. Borrower shall
not, however, have the right to assign its rights under this Agreement
or any interest therein, without the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by
Borrower in this Agreement or in any certificate or other instrument
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11-17-1999 BUSINESS LOAN AGREEMENT Page 15
Loan No 982000806 (Continued)
delivered by Borrower to Lender under this Agreement shall be considered
to have been relied upon by Lender an will survive the making of the
Loan and delivery to Lender of the Related Documents, regardless of any
investigation made by Lender or on Lender's behalf.
Time Is of the Essence. Time is of the essence in the performance of
this Agreement.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Agreement shall not prejudice or
constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this Agreement.
No prior waiver by Lender, nor any course of dealing between Lender and
Borrower, or between Lender and any Grantor, shall constitute a waiver
of any of Lender's rights or of any obligations of Borrower or of any
Grantor as to any future transactions. Whenever the consent of Lender
is required under this Agreement, the granting of such consent by Lender
in any instance shall not constitute continuing consent in subsequent
instances where such consent is required, and in all cases such consent
may be granted or withheld in the sole discretion of Lender.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
November 17, 1999.
BORROWER:
GOLDEN ROAD MOTOR INN, INC. dba ATLANTIS CASINO RESORT
By: /s/ BAHRAM FARAHI By: /s/ BEN FARAHI
--------------------------- -------------------------------------
BAHRAM FARAHI, PRESIDENT BEN FARAHI, CHIEF FINANCIAL OFFICER
LENDER:
COLONIAL BANK
By: /s/ TOM NEWMAN
---------------------
Authorized Officer
-69-
COMMERCIAL GUARANTY
Principal $1,000,000: Loan Date 11-17-1999: Maturity 04-05-2001:
Loan No. 982000806: Call 50: Collateral 010: Account --:
Officer TMN: Initials --
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Borrower: GOLDEN ROAD MOTOR INN, INC. Lender: COLONIAL BANK
dba: ATLANTIS CASINO RESORT P.O. Box 7498
1175 West Moana Lane Reno, NV 89510
Reno, NV 89509
Guarantor: JOHN FARAHI
4095 Odile Court
Reno, NV 89511
AMOUNT OF GUARANTY. The amount of this Guaranty is Unlimited.
CONTINUING UNLIMITED GUARANTY. For good and valuable consideration, JOHN
FARAHI ("Guarantor") absolutely and unconditionally guarantees and promises to
pay to COLONIAL BANK ("Lender") or its order, in legal tender of the United
States of America, the Indebtedness (as that term is defined below) of GOLDEN
ROAD MOTOR INN, INC. dba ATLANTIS CASINO RESORT ("Borrower") to Lender on the
terms and conditions set forth in this Guaranty. Under this Guaranty, the
liability of Guarantor is unlimited and the obligations of Guarantor are
continuing.
DEFINITIONS. The following words shall have the following meanings when used
in this Guaranty:
Borrower. The word "Borrower" means GOLDEN ROAD MOTOR INN, INC. dba
ATLANTIS CASINO RESORT.
Guarantor. The word "Guarantor" means JOHN FARAHI.
Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for
the benefit of Lender dated November 17, 1999.
Indebtedness. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower's liabilities,
obligations, debts, and indebtedness to Lender, now existing or
hereinafter incurred or created, including, without limitation, all
loans, advances, interest, costs, debts, overdraft indebtedness, credit
card indebtedness, lease obligations, other obligations, and liabilities
of Borrower, or any of them, and any present or future judgments against
Borrower, or any of them; and whether any such Indebtedness is
voluntarily or involuntarily incurred, due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined;
whether Borrower may be liable individually or jointly with others, or
primarily or secondarily, or as guarantor or surety; whether recovery on
the Indebtedness may be or may become barred or unenforceable against
Borrower for any reason whatsoever; and whether the Indebtedness arises
from transactions which may be voidable on account of infancy, insanity,
ultra vires, or otherwise.
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11-17-1999 COMMERCIAL GUARANTY Page 2
Loan No 982000806 (Continued)
Lender. The word "Lender" means COLONIAL BANK, its successors and
assigns.
Related Documents. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the Indebtedness.
NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open
and continuous for so long as this Guaranty remains in force. Guarantor
intends to guarantee at all times the performance and prompt payment when due,
whether at maturity or earlier by reason of acceleration or otherwise, of all
Indebtedness. Accordingly, no payments made upon the Indebtedness will
discharge or diminish the continuing liability of Guarantor in connection with
any remaining portions of the Indebtedness or any of the Indebtedness which
subsequently arises or is thereafter incurred or contracted.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor
or to Borrower, and will continue in full force until all Indebtedness incurred
or contracted before receipt by Lender of any notice of revocation shall have
been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full. If Guarantor
elects to revoke this Guaranty, Guarantor may only do so in writing.
Guarantor's written notice of revocation must be mailed to Lender, by certified
mail, at the address of Lender listed above or such other place as Lender may
designate in writing. Written revocation of this Guaranty will apply only to
advances or new Indebtedness created after actual receipt by Lender of
Guarantor's written revocation. For this purpose and without limitation, the
term "new Indebtedness" does not include Indebtedness which at the time of
notice of revocation is contingent, unliquidated, undetermined or not due and
which later becomes absolute, liquidated, determined or due. This Guaranty
will continue to bind Guarantor for all Indebtedness incurred by Borrower or
committed by Lender prior to receipt of Guarantor's written notice of
revocation, including any extensions, renewals, substitutions or modifications
of the Indebtedness. All renewals, extensions, substitutions, and
modifications of the Indebtedness granted after Guarantor's revocation, are
contemplated under this Guaranty and, specifically will not be considered to be
new Indebtedness. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or incapacity of
Guarantor, regardless of Lender's actual notice of Guarantor's death. Subject
to the foregoing, Guarantor's executor or administrator or other legal
representative may terminate this Guaranty in the same manner in which
Guarantor might have terminated it and with the same effect. Release of any
other guarantor or termination of any other guaranty of the Indebtedness shall
not affect the liability of Guarantor under this Guaranty. A revocation
received by Lender from any one or more Guarantors shall not affect the
liability of any remaining Guarantors under this Guaranty. It is anticipated
that fluctuations may occur in the aggregate
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Loan No 982000806 (Continued)
amount of Indebtedness covered by this Guaranty, and it is specifically
acknowledged and agreed by Guarantor that reductions in the amount of
Indebtedness, even to zero dollars ($0.00), prior to written revocation of this
Guaranty by Guarantor shall not constitute a termination of this Guaranty.
This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and
assigns so long as any of the guaranteed Indebtedness remains unpaid and even
though the Indebtedness guaranteed may from time to time be zero dollars
($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either
before or after any revocation hereof, without notice or demand and without
lessening Guarantor's liability under this Guaranty, from time to time: (a)
prior to revocation as set forth above, to make one or more additional secured
or unsecured loans to Borrower, to lease equipment or other goods to Borrower,
or otherwise to extend additional credit to Borrower; (b) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(c) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (d) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (e) to determine how, when and what
application of payments and credits shall be made on the Indebtedness; (f) to
apply such security and direct the order or manner of sale thereof, including
without limitation, any nonjudicial sale permitted by the terms of the
controlling security agreement or deed of trust, as Lender in its discretion
may determine; (g) to sell, transfer, assign, or grant participations in all or
any part of the Indebtedness; and (h) to assign or transfer this Guaranty in
whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this
Guaranty; (b) this Guaranty is executed at Borrower's request and not at the
request of Lender; (c) Guarantor has full power, right and authority to enter
into this Guaranty; (d) the provisions of this Guaranty do not conflict with or
result in a default under any agreement or other instrument binding upon
Guarantor and do not result in a violation of any law, regulation, court decree
or order applicable to Guarantor; (e) Guarantor has not and will not, without
the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets, or any interest therein; (f) upon Lender's request,
Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has
been, and all future financial information which will be provided to Lender is
and will be true and correct in all material respects and fairly present the
financial condition of Guarantor as of the dates the financial information is
provided; (g) no material adverse change has occurred in Guarantor's financial
condition since the date of the most recent financial
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Loan No 982000806 (Continued)
statements provided to Lender and no event has occurred which may materially
adversely affect Guarantor's financial condition; (h) no litigation, claim,
investigation, administrative proceeding or similar action (including those for
unpaid taxes) against Guarantor is pending or threatened; (i) Lender has made
no representation to Guarantor as to the creditworthiness of Borrower; and (j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition.
Guarantor agrees to keep adequately informed from such means of any facts,
events, or circumstances which might in any way affect Guarantor's risks under
this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any other
remedy within Lender's power; or (g) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower,
by subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
Guarantor also waives any and all rights or defenses arising by reason of (a)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (b)
any election of remedies by Lender which destroys or otherwise adversely
affects Guarantor's subrogation rights or Guarantor's rights to proceed against
Borrower for reimbursement, including without limitation, any loss of rights
Guarantor may suffer by reason of any law limiting, qualifying, or discharging
the Indebtedness; (c) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the
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Loan No 982000806 (Continued)
cessation of Borrower's liability from any cause whatsoever, other than payment
in full in legal tender, of the Indebtedness; (d) any right to claim discharge
of the Indebtedness on the basis of unjustified impairment of any collateral
for the Indebtedness; (e) any statute of limitations, if at any time any action
or suit brought by Lender against Guarantor is commenced there is outstanding
Indebtedness of Borrower to Lender which is not barred by any applicable
statute of limitations; or (f) any defenses given to guarantors at law or in
equity other than actual payment and performance of the Indebtedness. If
payment is made by Borrower, whether voluntarily or otherwise, or by any third
party, on the Indebtedness and thereafter Lender is forced to remit the amount
of that payment to Borrower's trustee in bankruptcy or to any similar person
under any federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of enforcement of this
Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether such
claim, demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender
by law, Lender shall have, with respect to Guarantor's obligations to Lender
under this Guaranty and to the extent permitted by law, a contractual security
interest in and a right of setoff against, and Guarantor hereby assigns,
conveys, delivers, pledges, and transfers to Lender all of Guarantor's right,
title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, whether held
jointly with someone else, or whether held for safekeeping or otherwise,
excluding however all IRA, Keogh, and trust accounts. Every such security
interest and right of setoff may be exercised without demand upon or notice to
Guarantor. No security interest or right of setoff shall be deemed to have
been waived by any act or conduct on the part of Lender or by any neglect to
exercise such right of setoff or to enforce such security interest or by any
delay in so doing. Every right of setoff and security interest shall continue
in full force and effect until such right of setoff or security interest is
specifically waived or released by an instrument in writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter
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11-17-1999 COMMERCIAL GUARANTY Page 6
Loan No 982000806 (Continued)
acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor
hereby expressly subordinates any claim Guarantor may have against Borrower,
upon any account whatsoever, to any claim that Lender may now or hereafter have
against Borrower. In the event of insolvency and consequent liquidation of the
assets of Borrower, through bankruptcy, by an assignment for the benefit of
creditors, by voluntary liquidation, or otherwise, the assets of Borrower
applicable to the payment of the claims of both Lender and Guarantor shall be
paid to Lender and shall be first applied by Lender to the Indebtedness of
Borrower to Lender. Guarantor does hereby assign to Lender all claims which it
may have or acquire against Borrower or against any assignee or trustee in
bankruptcy of Borrower; provided however, that such assignment shall be
effective only for the purpose of assuring to Lender full payment in legal
tender of the Indebtedness. If Lender so requests, any notes or credit
agreements now or hereafter evidencing any debts or obligations of Borrower to
Guarantor shall be marked with a legend that the same are subject to this
Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender hereby
is authorized, in the name of Guarantor, from time to time to execute and file
financing statements and continuation statements and to execute such other
documents and to take such other actions as Lender deems necessary or
appropriate to perfect, preserve and enforce its rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
Amendments. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Guaranty. No alteration of or amendment
to this Guaranty shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration
or amendment.
Applicable Law. This Guaranty has been delivered to Lender and accepted
by Lender in the State of Nevada. If there is a lawsuit, Guarantor
agrees upon Lender's request to submit to the jurisdiction of the courts
of Washoe County, State of Nevada. (Initial Here ) This Guaranty
shall be governed by and construed in accordance with the laws of the
State of Nevada.
Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's
legal expenses, incurred in connection with the enforcement of this
Guaranty. Lender may pay someone else to help enforce this Guaranty,
and Guarantor shall pay the costs and expenses of such enforcement.
Costs and expenses include Lender's attorneys' fees and legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (and including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Guarantor also shall pay all court
costs and such additional fees as may be directed by the court.
Notices. All notices required to be given by either party to the other
under this Guaranty shall be in writing, may be sent by telefacsimile
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11-17-1999 COMMERCIAL GUARANTY Page 7
Loan No 982000806 (Continued)
(unless otherwise required by law), and, except for revocation notices
by Guarantor, shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier, or when
deposited in the United States mail, first class postage prepaid,
addressed to the party to whom the notice is to be given at the address
shown above or to such other addresses as either party may designate to
the other in writing. All revocation notices by Guarantor shall be in
writing and shall be effective only upon delivery to Lender as provided
above in the section titled "DURATION OF GUARANTY." If there is more
than one Guarantor, notice to any Guarantor will constitute notice to
all Guarantors. For notice purposes, Guarantor agrees to keep Lender
informed at all times of Guarantor's current address.
Interpretation. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and
construction so require; and where there is more than one Borrower named
in this Guaranty or when this Guaranty is executed by more than one
Guarantor, the words "Borrower" and "Guarantor" respectively shall mean
all and any one or more of them. The words "Guarantor," "Borrower," and
"Lender" include the heirs, successors, assigns, and transferees of each
of them. Caption headings in this Guaranty are for convenience purposes
only and are not to be used to interpret or define the provisions of
this Guaranty. If a court of competent jurisdiction finds any provision
of this Guaranty to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances, and all
provisions of this Guaranty in all other respects shall remain valid and
enforceable. If any one or more of Borrower or Guarantor are
corporations or partnerships, it is not necessary for Lender to inquire
into the powers of Borrower or Guarantor or of the officers, directors,
partners, or agents acting or purporting to act on their behalf, and any
Indebtedness made or created in reliance upon the professed exercise of
such powers shall be guaranteed under this Guaranty.
Waiver. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Guaranty shall not prejudice or constitute
a waiver of Lender's right otherwise to demand strict compliance with
that provision or any other provision of this Guaranty. No prior waiver
by Lender, nor any course of dealing between Lender and Guarantor, shall
constitute a waiver of any of Lender's rights or of any of Guarantor's
obligations as to any future transactions. Whenever the consent of
Lender is required under this Guaranty, the granting of such consent by
Lender in any instance shall not constitute continuing consent to
subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of
Lender.
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Loan No 982000806 (Continued)
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED NOVEMBER 17, 1999.
GUARANTOR:
/s/ JOHN FARAHI
- --------------------------------
JOHN FARAHI
-77-
COMMERCIAL GUARANTY
Principal $1,000,000: Loan Date 11-17-1999: Maturity 04-05-2001:
Loan No. 982000806: Call 50: Collateral 010: Account --:
Officer TMN: Initials --
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Borrower: GOLDEN ROAD MOTOR INN, INC. Lender: COLONIAL BANK
dba: ATLANTIS CASINO RESORT P.O. Box 7498
1175 West Moana Lane Reno, NV 89510
Reno, NV 89509
Guarantor: BAHRAM FARAHI
2775 Lakeridge Shores
Reno, NV 89509
AMOUNT OF GUARANTY. The amount of this Guaranty is Unlimited.
CONTINUING UNLIMITED GUARANTY. For good and valuable consideration, BAHRAM
FARAHI ("Guarantor") absolutely and unconditionally guarantees and promises to
pay to COLONIAL BANK ("Lender") or its order, in legal tender of the United
States of America, the Indebtedness (as that term is defined below) of GOLDEN
ROAD MOTOR INN, INC. dba ATLANTIS CASINO RESORT ("Borrower") to Lender on the
terms and conditions set forth in this Guaranty. Under this Guaranty, the
liability of Guarantor is unlimited and the obligations of Guarantor are
continuing.
DEFINITIONS. The following words shall have the following meanings when used
in this Guaranty:
Borrower. The word "Borrower" means GOLDEN ROAD MOTOR INN, INC. dba
ATLANTIS CASINO RESORT.
Guarantor. The word "Guarantor" means BAHRAM FARAHI.
Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for
the benefit of Lender dated November 17, 1999.
Indebtedness. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower's liabilities,
obligations, debts, and indebtedness to Lender, now existing or
hereinafter incurred or created, including, without limitation, all
loans, advances, interest, costs, debts, overdraft indebtedness, credit
card indebtedness, lease obligations, other obligations, and liabilities
of Borrower, or any of them, and any present or future judgments against
Borrower, or any of them; and whether any such Indebtedness is
voluntarily or involuntarily incurred, due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined;
whether Borrower may be liable individually or jointly with others, or
primarily or secondarily, or as guarantor or surety; whether recovery on
the Indebtedness may be or may become barred or unenforceable against
Borrower for any reason whatsoever; and whether the Indebtedness arises
from transactions which may be voidable on account of infancy, insanity,
ultra vires, or otherwise.
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Loan No 982000806 (Continued)
Lender. The word "Lender" means COLONIAL BANK, its successors and
assigns.
Related Documents. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the Indebtedness.
NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open
and continuous for so long as this Guaranty remains in force. Guarantor
intends to guarantee at all times the performance and prompt payment when due,
whether at maturity or earlier by reason of acceleration or otherwise, of all
Indebtedness. Accordingly, no payments made upon the Indebtedness will
discharge or diminish the continuing liability of Guarantor in connection with
any remaining portions of the Indebtedness or any of the Indebtedness which
subsequently arises or is thereafter incurred or contracted.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor
or to Borrower, and will continue in full force until all Indebtedness incurred
or contracted before receipt by Lender of any notice of revocation shall have
been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full. If Guarantor
elects to revoke this Guaranty, Guarantor may only do so in writing.
Guarantor's written notice of revocation must be mailed to Lender, by certified
mail, at the address of Lender listed above or such other place as Lender may
designate in writing. Written revocation of this Guaranty will apply only to
advances or new Indebtedness created after actual receipt by Lender of
Guarantor's written revocation. For this purpose and without limitation, the
term "new Indebtedness" does not include Indebtedness which at the time of
notice of revocation is contingent, unliquidated, undetermined or not due and
which later becomes absolute, liquidated, determined or due. This Guaranty
will continue to bind Guarantor for all Indebtedness incurred by Borrower or
committed by Lender prior to receipt of Guarantor's written notice of
revocation, including any extensions, renewals, substitutions or modifications
of the Indebtedness. All renewals, extensions, substitutions, and
modifications of the Indebtedness granted after Guarantor's revocation, are
contemplated under this Guaranty and, specifically will not be considered to be
new Indebtedness. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or incapacity of
Guarantor, regardless of Lender's actual notice of Guarantor's death. Subject
to the foregoing, Guarantor's executor or administrator or other legal
representative may terminate this Guaranty in the same manner in which
Guarantor might have terminated it and with the same effect. Release of any
other guarantor or termination of any other guaranty of the Indebtedness shall
not affect the liability of Guarantor under this Guaranty. A revocation
received by Lender from any one or more Guarantors shall not affect the
liability of any remaining Guarantors under this Guaranty. It is anticipated
that fluctuations may occur in the aggregate
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Loan No 982000806 (Continued)
amount of Indebtedness covered by this Guaranty, and it is specifically
acknowledged and agreed by Guarantor that reductions in the amount of
Indebtedness, even to zero dollars ($0.00), prior to written revocation of this
Guaranty by Guarantor shall not constitute a termination of this Guaranty.
This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and
assigns so long as any of the guaranteed Indebtedness remains unpaid and even
though the Indebtedness guaranteed may from time to time be zero dollars
($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either
before or after any revocation hereof, without notice or demand and without
lessening Guarantor's liability under this Guaranty, from time to time: (a)
prior to revocation as set forth above, to make one or more additional secured
or unsecured loans to Borrower, to lease equipment or other goods to Borrower,
or otherwise to extend additional credit to Borrower; (b) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(c) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (d) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (e) to determine how, when and what
application of payments and credits shall be made on the Indebtedness; (f) to
apply such security and direct the order or manner of sale thereof, including
without limitation, any nonjudicial sale permitted by the terms of the
controlling security agreement or deed of trust, as Lender in its discretion
may determine; (g) to sell, transfer, assign, or grant participations in all or
any part of the Indebtedness; and (h) to assign or transfer this Guaranty in
whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this
Guaranty; (b) this Guaranty is executed at Borrower's request and not at the
request of Lender; (c) Guarantor has full power, right and authority to enter
into this Guaranty; (d) the provisions of this Guaranty do not conflict with or
result in a default under any agreement or other instrument binding upon
Guarantor and do not result in a violation of any law, regulation, court decree
or order applicable to Guarantor; (e) Guarantor has not and will not, without
the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets, or any interest therein; (f) upon Lender's request,
Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has
been, and all future financial information which will be provided to Lender is
and will be true and correct in all material respects and fairly present the
financial condition of Guarantor as of the dates the financial information is
provided; (g) no material adverse change has occurred in Guarantor's financial
condition since the date of the most recent financial
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Loan No 982000806 (Continued)
statements provided to Lender and no event has occurred which may materially
adversely affect Guarantor's financial condition; (h) no litigation, claim,
investigation, administrative proceeding or similar action (including those for
unpaid taxes) against Guarantor is pending or threatened; (i) Lender has made
no representation to Guarantor as to the creditworthiness of Borrower; and (j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition.
Guarantor agrees to keep adequately informed from such means of any facts,
events, or circumstances which might in any way affect Guarantor's risks under
this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any other
remedy within Lender's power; or (g) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower,
by subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
Guarantor also waives any and all rights or defenses arising by reason of (a)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (b)
any election of remedies by Lender which destroys or otherwise adversely
affects Guarantor's subrogation rights or Guarantor's rights to proceed against
Borrower for reimbursement, including without limitation, any loss of rights
Guarantor may suffer by reason of any law limiting, qualifying, or discharging
the Indebtedness; (c) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the
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11-17-1999 COMMERCIAL GUARANTY Page 5
Loan No 982000806 (Continued)
cessation of Borrower's liability from any cause whatsoever, other than payment
in full in legal tender, of the Indebtedness; (d) any right to claim discharge
of the Indebtedness on the basis of unjustified impairment of any collateral
for the Indebtedness; (e) any statute of limitations, if at any time any action
or suit brought by Lender against Guarantor is commenced there is outstanding
Indebtedness of Borrower to Lender which is not barred by any applicable
statute of limitations; or (f) any defenses given to guarantors at law or in
equity other than actual payment and performance of the Indebtedness. If
payment is made by Borrower, whether voluntarily or otherwise, or by any third
party, on the Indebtedness and thereafter Lender is forced to remit the amount
of that payment to Borrower's trustee in bankruptcy or to any similar person
under any federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of enforcement of this
Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether such
claim, demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender
by law, Lender shall have, with respect to Guarantor's obligations to Lender
under this Guaranty and to the extent permitted by law, a contractual security
interest in and a right of setoff against, and Guarantor hereby assigns,
conveys, delivers, pledges, and transfers to Lender all of Guarantor's right,
title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, whether held
jointly with someone else, or whether held for safekeeping or otherwise,
excluding however all IRA, Keogh, and trust accounts. Every such security
interest and right of setoff may be exercised without demand upon or notice to
Guarantor. No security interest or right of setoff shall be deemed to have
been waived by any act or conduct on the part of Lender or by any neglect to
exercise such right of setoff or to enforce such security interest or by any
delay in so doing. Every right of setoff and security interest shall continue
in full force and effect until such right of setoff or security interest is
specifically waived or released by an instrument in writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter
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11-17-1999 COMMERCIAL GUARANTY Page 6
Loan No 982000806 (Continued)
acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor
hereby expressly subordinates any claim Guarantor may have against Borrower,
upon any account whatsoever, to any claim that Lender may now or hereafter have
against Borrower. In the event of insolvency and consequent liquidation of the
assets of Borrower, through bankruptcy, by an assignment for the benefit of
creditors, by voluntary liquidation, or otherwise, the assets of Borrower
applicable to the payment of the claims of both Lender and Guarantor shall be
paid to Lender and shall be first applied by Lender to the Indebtedness of
Borrower to Lender. Guarantor does hereby assign to Lender all claims which it
may have or acquire against Borrower or against any assignee or trustee in
bankruptcy of Borrower; provided however, that such assignment shall be
effective only for the purpose of assuring to Lender full payment in legal
tender of the Indebtedness. If Lender so requests, any notes or credit
agreements now or hereafter evidencing any debts or obligations of Borrower to
Guarantor shall be marked with a legend that the same are subject to this
Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender hereby
is authorized, in the name of Guarantor, from time to time to execute and file
financing statements and continuation statements and to execute such other
documents and to take such other actions as Lender deems necessary or
appropriate to perfect, preserve and enforce its rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
Amendments. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Guaranty. No alteration of or amendment
to this Guaranty shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration
or amendment.
Applicable Law. This Guaranty has been delivered to Lender and accepted
by Lender in the State of Nevada. If there is a lawsuit, Guarantor
agrees upon Lender's request to submit to the jurisdiction of the courts
of Washoe County, State of Nevada. (Initial Here ) This Guaranty
shall be governed by and construed in accordance with the laws of the
State of Nevada.
Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's
legal expenses, incurred in connection with the enforcement of this
Guaranty. Lender may pay someone else to help enforce this Guaranty,
and Guarantor shall pay the costs and expenses of such enforcement.
Costs and expenses include Lender's attorneys' fees and legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (and including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Guarantor also shall pay all court
costs and such additional fees as may be directed by the court.
Notices. All notices required to be given by either party to the other
under this Guaranty shall be in writing, may be sent by telefacsimile
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11-17-1999 COMMERCIAL GUARANTY Page 7
Loan No 982000806 (Continued)
(unless otherwise required by law), and, except for revocation notices
by Guarantor, shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier, or when
deposited in the United States mail, first class postage prepaid,
addressed to the party to whom the notice is to be given at the address
shown above or to such other addresses as either party may designate to
the other in writing. All revocation notices by Guarantor shall be in
writing and shall be effective only upon delivery to Lender as provided
above in the section titled "DURATION OF GUARANTY." If there is more
than one Guarantor, notice to any Guarantor will constitute notice to
all Guarantors. For notice purposes, Guarantor agrees to keep Lender
informed at all times of Guarantor's current address.
Interpretation. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and
construction so require; and where there is more than one Borrower named
in this Guaranty or when this Guaranty is executed by more than one
Guarantor, the words "Borrower" and "Guarantor" respectively shall mean
all and any one or more of them. The words "Guarantor," "Borrower," and
"Lender" include the heirs, successors, assigns, and transferees of each
of them. Caption headings in this Guaranty are for convenience purposes
only and are not to be used to interpret or define the provisions of
this Guaranty. If a court of competent jurisdiction finds any provision
of this Guaranty to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances, and all
provisions of this Guaranty in all other respects shall remain valid and
enforceable. If any one or more of Borrower or Guarantor are
corporations or partnerships, it is not necessary for Lender to inquire
into the powers of Borrower or Guarantor or of the officers, directors,
partners, or agents acting or purporting to act on their behalf, and any
Indebtedness made or created in reliance upon the professed exercise of
such powers shall be guaranteed under this Guaranty.
Waiver. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Guaranty shall not prejudice or constitute
a waiver of Lender's right otherwise to demand strict compliance with
that provision or any other provision of this Guaranty. No prior waiver
by Lender, nor any course of dealing between Lender and Guarantor, shall
constitute a waiver of any of Lender's rights or of any of Guarantor's
obligations as to any future transactions. Whenever the consent of
Lender is required under this Guaranty, the granting of such consent by
Lender in any instance shall not constitute continuing consent to
subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of
Lender.
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Loan No 982000806 (Continued)
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED NOVEMBER 17, 1999.
GUARANTOR:
/s/ BAHRAM FARAHI
- --------------------------------
BAHRAM FARAHI
-85-
COMMERCIAL GUARANTY
Principal $1,000,000: Loan Date 11-17-1999: Maturity 04-05-2001:
Loan No. 982000806: Call 50: Collateral 010: Account --:
Officer TMN: Initials --
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Borrower: GOLDEN ROAD MOTOR INN, INC. Lender: COLONIAL BANK
dba: ATLANTIS CASINO RESORT P.O. Box 7498
1175 West Moana Lane Reno, NV 89510
Reno, NV 89509
Guarantor: BEN FARAHI
2570 Spinnaker
Reno, NV 89509
AMOUNT OF GUARANTY. The amount of this Guaranty is Unlimited.
CONTINUING UNLIMITED GUARANTY. For good and valuable consideration, BEN FARAHI
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
COLONIAL BANK ("Lender") or its order, in legal tender of the United States of
America, the Indebtedness (as that term is defined below) of GOLDEN ROAD MOTOR
INN, INC. dba ATLANTIS CASINO RESORT ("Borrower") to Lender on the terms and
conditions set forth in this Guaranty. Under this Guaranty, the liability of
Guarantor is unlimited and the obligations of Guarantor are continuing.
DEFINITIONS. The following words shall have the following meanings when used
in this Guaranty:
Borrower. The word "Borrower" means GOLDEN ROAD MOTOR INN, INC. dba
ATLANTIS CASINO RESORT.
Guarantor. The word "Guarantor" means BEN FARAHI.
Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for
the benefit of Lender dated November 17, 1999.
Indebtedness. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower's liabilities,
obligations, debts, and indebtedness to Lender, now existing or
hereinafter incurred or created, including, without limitation, all
loans, advances, interest, costs, debts, overdraft indebtedness, credit
card indebtedness, lease obligations, other obligations, and liabilities
of Borrower, or any of them, and any present or future judgments against
Borrower, or any of them; and whether any such Indebtedness is
voluntarily or involuntarily incurred, due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined;
whether Borrower may be liable individually or jointly with others, or
primarily or secondarily, or as guarantor or surety; whether recovery on
the Indebtedness may be or may become barred or unenforceable against
Borrower for any reason whatsoever; and whether the Indebtedness arises
from transactions which may be voidable on account of infancy, insanity,
ultra vires, or otherwise.
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11-17-1999 COMMERCIAL GUARANTY Page 2
Loan No 982000806 (Continued)
Lender. The word "Lender" means COLONIAL BANK, its successors and
assigns.
Related Documents. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the Indebtedness.
NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open
and continuous for so long as this Guaranty remains in force. Guarantor
intends to guarantee at all times the performance and prompt payment when due,
whether at maturity or earlier by reason of acceleration or otherwise, of all
Indebtedness. Accordingly, no payments made upon the Indebtedness will
discharge or diminish the continuing liability of Guarantor in connection with
any remaining portions of the Indebtedness or any of the Indebtedness which
subsequently arises or is thereafter incurred or contracted.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor
or to Borrower, and will continue in full force until all Indebtedness incurred
or contracted before receipt by Lender of any notice of revocation shall have
been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full. If Guarantor
elects to revoke this Guaranty, Guarantor may only do so in writing.
Guarantor's written notice of revocation must be mailed to Lender, by certified
mail, at the address of Lender listed above or such other place as Lender may
designate in writing. Written revocation of this Guaranty will apply only to
advances or new Indebtedness created after actual receipt by Lender of
Guarantor's written revocation. For this purpose and without limitation, the
term "new Indebtedness" does not include Indebtedness which at the time of
notice of revocation is contingent, unliquidated, undetermined or not due and
which later becomes absolute, liquidated, determined or due. This Guaranty
will continue to bind Guarantor for all Indebtedness incurred by Borrower or
committed by Lender prior to receipt of Guarantor's written notice of
revocation, including any extensions, renewals, substitutions or modifications
of the Indebtedness. All renewals, extensions, substitutions, and
modifications of the Indebtedness granted after Guarantor's revocation, are
contemplated under this Guaranty and, specifically will not be considered to be
new Indebtedness. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or incapacity of
Guarantor, regardless of Lender's actual notice of Guarantor's death. Subject
to the foregoing, Guarantor's executor or administrator or other legal
representative may terminate this Guaranty in the same manner in which
Guarantor might have terminated it and with the same effect. Release of any
other guarantor or termination of any other guaranty of the Indebtedness shall
not affect the liability of Guarantor under this Guaranty. A revocation
received by Lender from any one or more Guarantors shall not affect the
liability of any remaining Guarantors under this Guaranty. It is anticipated
that fluctuations may occur in the aggregate
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11-17-1999 COMMERCIAL GUARANTY Page 3
Loan No 982000806 (Continued)
amount of Indebtedness covered by this Guaranty, and it is specifically
acknowledged and agreed by Guarantor that reductions in the amount of
Indebtedness, even to zero dollars ($0.00), prior to written revocation of this
Guaranty by Guarantor shall not constitute a termination of this Guaranty.
This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and
assigns so long as any of the guaranteed Indebtedness remains unpaid and even
though the Indebtedness guaranteed may from time to time be zero dollars
($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either
before or after any revocation hereof, without notice or demand and without
lessening Guarantor's liability under this Guaranty, from time to time: (a)
prior to revocation as set forth above, to make one or more additional secured
or unsecured loans to Borrower, to lease equipment or other goods to Borrower,
or otherwise to extend additional credit to Borrower; (b) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(c) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (d) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (e) to determine how, when and what
application of payments and credits shall be made on the Indebtedness; (f) to
apply such security and direct the order or manner of sale thereof, including
without limitation, any nonjudicial sale permitted by the terms of the
controlling security agreement or deed of trust, as Lender in its discretion
may determine; (g) to sell, transfer, assign, or grant participations in all or
any part of the Indebtedness; and (h) to assign or transfer this Guaranty in
whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this
Guaranty; (b) this Guaranty is executed at Borrower's request and not at the
request of Lender; (c) Guarantor has full power, right and authority to enter
into this Guaranty; (d) the provisions of this Guaranty do not conflict with or
result in a default under any agreement or other instrument binding upon
Guarantor and do not result in a violation of any law, regulation, court decree
or order applicable to Guarantor; (e) Guarantor has not and will not, without
the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets, or any interest therein; (f) upon Lender's request,
Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has
been, and all future financial information which will be provided to Lender is
and will be true and correct in all material respects and fairly present the
financial condition of Guarantor as of the dates the financial information is
provided; (g) no material adverse change has occurred in Guarantor's financial
condition since the date of the most recent financial
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Loan No 982000806 (Continued)
statements provided to Lender and no event has occurred which may materially
adversely affect Guarantor's financial condition; (h) no litigation, claim,
investigation, administrative proceeding or similar action (including those for
unpaid taxes) against Guarantor is pending or threatened; (i) Lender has made
no representation to Guarantor as to the creditworthiness of Borrower; and (j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition.
Guarantor agrees to keep adequately informed from such means of any facts,
events, or circumstances which might in any way affect Guarantor's risks under
this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any other
remedy within Lender's power; or (g) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower,
by subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
Guarantor also waives any and all rights or defenses arising by reason of (a)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (b)
any election of remedies by Lender which destroys or otherwise adversely
affects Guarantor's subrogation rights or Guarantor's rights to proceed against
Borrower for reimbursement, including without limitation, any loss of rights
Guarantor may suffer by reason of any law limiting, qualifying, or discharging
the Indebtedness; (c) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the
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11-17-1999 COMMERCIAL GUARANTY Page 5
Loan No 982000806 (Continued)
cessation of Borrower's liability from any cause whatsoever, other than payment
in full in legal tender, of the Indebtedness; (d) any right to claim discharge
of the Indebtedness on the basis of unjustified impairment of any collateral
for the Indebtedness; (e) any statute of limitations, if at any time any action
or suit brought by Lender against Guarantor is commenced there is outstanding
Indebtedness of Borrower to Lender which is not barred by any applicable
statute of limitations; or (f) any defenses given to guarantors at law or in
equity other than actual payment and performance of the Indebtedness. If
payment is made by Borrower, whether voluntarily or otherwise, or by any third
party, on the Indebtedness and thereafter Lender is forced to remit the amount
of that payment to Borrower's trustee in bankruptcy or to any similar person
under any federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of enforcement of this
Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether such
claim, demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender
by law, Lender shall have, with respect to Guarantor's obligations to Lender
under this Guaranty and to the extent permitted by law, a contractual security
interest in and a right of setoff against, and Guarantor hereby assigns,
conveys, delivers, pledges, and transfers to Lender all of Guarantor's right,
title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, whether held
jointly with someone else, or whether held for safekeeping or otherwise,
excluding however all IRA, Keogh, and trust accounts. Every such security
interest and right of setoff may be exercised without demand upon or notice to
Guarantor. No security interest or right of setoff shall be deemed to have
been waived by any act or conduct on the part of Lender or by any neglect to
exercise such right of setoff or to enforce such security interest or by any
delay in so doing. Every right of setoff and security interest shall continue
in full force and effect until such right of setoff or security interest is
specifically waived or released by an instrument in writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter
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Loan No 982000806 (Continued)
acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor
hereby expressly subordinates any claim Guarantor may have against Borrower,
upon any account whatsoever, to any claim that Lender may now or hereafter have
against Borrower. In the event of insolvency and consequent liquidation of the
assets of Borrower, through bankruptcy, by an assignment for the benefit of
creditors, by voluntary liquidation, or otherwise, the assets of Borrower
applicable to the payment of the claims of both Lender and Guarantor shall be
paid to Lender and shall be first applied by Lender to the Indebtedness of
Borrower to Lender. Guarantor does hereby assign to Lender all claims which it
may have or acquire against Borrower or against any assignee or trustee in
bankruptcy of Borrower; provided however, that such assignment shall be
effective only for the purpose of assuring to Lender full payment in legal
tender of the Indebtedness. If Lender so requests, any notes or credit
agreements now or hereafter evidencing any debts or obligations of Borrower to
Guarantor shall be marked with a legend that the same are subject to this
Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender hereby
is authorized, in the name of Guarantor, from time to time to execute and file
financing statements and continuation statements and to execute such other
documents and to take such other actions as Lender deems necessary or
appropriate to perfect, preserve and enforce its rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
Amendments. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Guaranty. No alteration of or amendment
to this Guaranty shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration
or amendment.
Applicable Law. This Guaranty has been delivered to Lender and accepted
by Lender in the State of Nevada. If there is a lawsuit, Guarantor
agrees upon Lender's request to submit to the jurisdiction of the courts
of Washoe County, State of Nevada. (Initial Here ) This Guaranty
shall be governed by and construed in accordance with the laws of the
State of Nevada.
Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's
legal expenses, incurred in connection with the enforcement of this
Guaranty. Lender may pay someone else to help enforce this Guaranty,
and Guarantor shall pay the costs and expenses of such enforcement.
Costs and expenses include Lender's attorneys' fees and legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (and including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Guarantor also shall pay all court
costs and such additional fees as may be directed by the court.
Notices. All notices required to be given by either party to the other
under this Guaranty shall be in writing, may be sent by telefacsimile
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11-17-1999 COMMERCIAL GUARANTY Page 7
Loan No 982000806 (Continued)
(unless otherwise required by law), and, except for revocation notices
by Guarantor, shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier, or when
deposited in the United States mail, first class postage prepaid,
addressed to the party to whom the notice is to be given at the address
shown above or to such other addresses as either party may designate to
the other in writing. All revocation notices by Guarantor shall be in
writing and shall be effective only upon delivery to Lender as provided
above in the section titled "DURATION OF GUARANTY." If there is more
than one Guarantor, notice to any Guarantor will constitute notice to
all Guarantors. For notice purposes, Guarantor agrees to keep Lender
informed at all times of Guarantor's current address.
Interpretation. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and
construction so require; and where there is more than one Borrower named
in this Guaranty or when this Guaranty is executed by more than one
Guarantor, the words "Borrower" and "Guarantor" respectively shall mean
all and any one or more of them. The words "Guarantor," "Borrower," and
"Lender" include the heirs, successors, assigns, and transferees of each
of them. Caption headings in this Guaranty are for convenience purposes
only and are not to be used to interpret or define the provisions of
this Guaranty. If a court of competent jurisdiction finds any provision
of this Guaranty to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances, and all
provisions of this Guaranty in all other respects shall remain valid and
enforceable. If any one or more of Borrower or Guarantor are
corporations or partnerships, it is not necessary for Lender to inquire
into the powers of Borrower or Guarantor or of the officers, directors,
partners, or agents acting or purporting to act on their behalf, and any
Indebtedness made or created in reliance upon the professed exercise of
such powers shall be guaranteed under this Guaranty.
Waiver. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Guaranty shall not prejudice or constitute
a waiver of Lender's right otherwise to demand strict compliance with
that provision or any other provision of this Guaranty. No prior waiver
by Lender, nor any course of dealing between Lender and Guarantor, shall
constitute a waiver of any of Lender's rights or of any of Guarantor's
obligations as to any future transactions. Whenever the consent of
Lender is required under this Guaranty, the granting of such consent by
Lender in any instance shall not constitute continuing consent to
subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of
Lender.
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11-17-1999 COMMERCIAL GUARANTY Page 8
Loan No 982000806 (Continued)
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED NOVEMBER 17, 1999.
GUARANTOR:
/s/ BEN FARAHI
- --------------------------------
BEN FARAHI
-93-
LIST OF SUBSIDIARIES OF
MONARCH CASINO & RESORT, INC.
Golden Road Motor Inn, Inc. Ownership Percent: 100%
dba Atlantis Casino Resort State of Incorporation: Nevada
-189-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANT'S
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 6,367,507
<SECURITIES> 0
<RECEIVABLES> 2,603,461
<ALLOWANCES> 649,014
<INVENTORY> 1,456,602
<CURRENT-ASSETS> 13,080,506
<PP&E> 145,660,717
<DEPRECIATION> 27,964,180
<TOTAL-ASSETS> 131,654,425
<CURRENT-LIABILITIES> 20,884,318
<BONDS> 82,235,509
0
0
<COMMON> 95,363
<OTHER-SE> 25,773,218
<TOTAL-LIABILITY-AND-EQUITY> 131,654,425
<SALES> 0
<TOTAL-REVENUES> 78,865,656
<CGS> 0
<TOTAL-COSTS> 43,817,275
<OTHER-EXPENSES> 7,738,029
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,742,475
<INCOME-PRETAX> (944,537)
<INCOME-TAX> (359,672)
<INCOME-CONTINUING> (584,865)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (584,865)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
SCHEDULE TO MASTER LOAN AGREEMENT
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino
1175 W. Moana Lane, Suite 200
Reno, Nevada 89509
$631,250.00 Effective Date 4/1/99 Loan Transaction Number
------
1. THIS SCHEDULE is made between Golden Road Motor Inn, Inc. dba Atlantis
Hotel and Casino, as Debtor, and U.S. BANCORP LEASING & FINANCIAL (which,
together with its successor and assigns, will be called the "Secured Party")
pursuant to the Master Loan Agreement dated as of September 22, 1998 (the
"Loan Agreement"), the terms of which (including the definitions) are
incorporated herein. If any terms hereof are inconsistent with the terms of
the Loan Agreement, the terms hereof shall prevail.
2. FOR VALUE RECEIVED, Debtor hereby promises to pay to the order of Secured
Party the principal amount of Six Hundred Thirty-One Thousand Two Hundred
Fifty and 00/100 Dollars ($631,250.00) with interest on any outstanding
principal balance at the rate(s) specified herein from the Effective Date
hereof until this Schedule shall have been paid in full in accordance with
the following payment schedule: sixty (60) installments of $12,632.97 each,
including the entire amount of interest accrued on this Schedule at the time
of payment of each installment. The first payment shall be due on April 20,
1999 and a like payment shall be due on the same day of each succeeding month
thereafter until the entire principal and interest have been paid. At the
time of the final installment hereon, all unpaid principal and interest shall
be due and owing. Each payment shall be applied first to accrued and unpaid
interest, and the balance to the outstanding principal hereof. As a result,
such final installment may be substantially more or substantially less than
the installments specified herein.
3. The Debtor promises to pay interest on the principal balance outstanding
at a rate of 7.43 percent per annum.
4. The Debtor may prepay this Schedule, in whole or in part, by paying
simultaneously with an in addition to the prepayment, a premium for such
prepayment privilege equal to the specified percent of the amount prepaid in
accordance with the following schedule, one (1) to twelve (12) months: five
(5.0)%, thirteen (13) to twenty-four (24) months: one (1.0)%.
Notwithstanding the foregoing, payments made within 30 days of the date an
installment is due which do not exceed the scheduled amount of such
installment shall not be considered prepayments.
5. Each of Debtor, if more than one, and all other parties who at any time
may be liable hereon in any capacity, hereby jointly and severally waive
diligence, demand, presentment, presentment for payment, protest, notice of
protest and notice of dishonor of this Schedule, and authorize the Secured
Party, without notice, to grant extensions in the time of payment of and
reductions in the rate of interest on any moneys owing on this Schedule.
6. The following property is hereby made Collateral for all purposes under
the Loan Agreement:
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Various items of Hotel fixtures, furniture, and equipment located at the
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino at 3800 S. Virginia
St., Reno, Nevada 89502; Washoe County and including but not limited to, all
property improvements, miscellaneous upgrades, non-salvageable material, slot
machines, kitchen equipment, casino bars, buffet bars, furniture, room
accessories and partitions, ice machines, and spas.
Whether any of the foregoing is owned now or acquired later; all accessions,
additions, replacements, and substitutions relating to any of the foregoing;
all records of any kind relating to any of the foregoing; all proceeds
relating to any of the foregoing (including insurance, general intangibles
and accounts proceeds).
7. The Collateral hereunder shall be based at the following location(s):
3800 S. Virginia Street
Reno, NV 89502
COUNTY: Washoe
Year 2000. Debtor has reviewed and assessed or will review and assess its
business operations and computer systems and applications to address the
"year 2000 problem" (that is, that computer applications and equipment used
by Debtor, directly or indirectly through third parties, may be unable to
properly perform date-sensitive functions before, during and after January 1,
2000). Debtor reasonable believes that the year 2000 problem will not result
in a material adverse change in Debtor's business condition (financial or
otherwise), operations, properties or prospects or ability to repay Secured
Party. Based upon the review, Debtor has developed or will develop and
implement a plan to address the year 2000 problem, to remediate any material
year 2000 problem, and to complete testing with respect thereto, as soon as
practicable and in any event by June 30, 1999. Debtor will promptly deliver
such information relating to this covenant as Secured Party requests from
time to time.
IN WITNESS WHEREOF, Debtor has executed this Schedule this 15th day of April,
1999.
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino
By /s/Ben Farahi
-------------
Title: An Authorized Officer
-95-
MASTER LOAN AGREEMENT
1.0 PARTIES, COLLATERAL AND OBLIGATIONS
1.1 This Agreement is dated as of September 22, 1998. For valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino (hereinafter called
"Debtor") with offices at 1175 W. Moana Lane, Suite 200, Reno, Nevada 89509
intending to be legally bound, hereby promises to pay to U.S. BANCORP LEASING
& FINANCIAL, an Oregon corporation having offices at P.O. Box 2177, 7659 S.W.
Mohawk Street, Tualatin, Oregon 97062-2177 (hereinafter called "Secured
Party"), any amounts set forth on any Schedule to Master Loan Agreement
hereunder (the "Schedule(s)", all the terms of which are incorporated herein)
and grants a security interest in and assigns, transfers and sets over to and
to the successors and assigns thereof, the property specified in any Schedule
hereunder wherever located, and any and all proceeds thereof, insurance
recoveries, and all replacements, additions, accessions, accessories and
substitutions thereto or therefor (hereafter called the "Collateral"). The
security interest granted hereby is to secure payment of any and all
liabilities or obligations of Debtor to the Secured Party, matured or
unmatured, direct or indirect, absolute or contingent, heretofore arising,
now existing or hereafter arising, and whether under this Agreement or under
any other writing between Debtor and Secured Party (all hereinafter called
the "obligations" and/or the "liabilities").
1.2 Joint and Several Liability; Payment Terms. In the event there is more
than one Debtor, all obligations shall be considered as joint and several
obligations of all Debtors regardless of the source of Collateral or the
particular Debtor with which the obligation originated. Interest shall be
calculated on the basis of a 360-day year. All payments on any Schedule
hereunder shall be made in lawful money of the United States at the post
office address of the Secured Party or at such other place as the Secured
Party may designate to Debtor in writing from time to time. In no event
shall any Schedule hereunder be enforced in any way which permits Secured
Party to collect interest in excess of the maximum lawful rate. Should
interest collected exceed such rate, Secured Party shall refund such excess
interest to Debtor. In such event, Debtor agrees that Secured Party shall
not be subject to any penalties for contracting for or collecting interest in
excess of the maximum lawful rate.
1.3 Late Charge. If any of the obligations remains overdue for more than ten
(10) days, Debtor hereby agrees to pay on demand, as a late charge, an amount
equal to the lesser of (i) five percent (5.0%) of each such overdue amount;
or (ii) the maximum percentage of any such overdue amount permitted by
applicable law as a late charge. Debtor agrees that the amount of such late
charge represents a reasonable estimate of the cost to Secured Party of
processing a delinquent payment and that the acceptance of any late charge
shall not constitute a waiver of default with respect to the overdue amount
or prevent Secured Party from exercising any other available rights and
remedies.
2.0 WARRANTIES AND COVENANTS OF DEBTOR Debtor hereby represents, warrants and
covenants that:
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2.1 Business Organization Status and Authority. (i) Debtor is duly
organized, validly existing and in good standing under the laws of the state
of its organization and is qualified to do business in all states and
countries in which such qualification is necessary; (ii) Debtor has the
lawful power and authority to own its assets and to conduct the business in
which it is engaged; and to execute and comply with the provisions of this
Agreement and any related documents; (iii) the execution and delivery of this
Agreement and any related documents have been duly authorized by all
necessary action; (iv) no authorization, consent, approval, license or
exemption of, or filing or registration with, any or all of the owners of
Debtor or any governmental entity was, is or will be necessary to the valid
execution, delivery, performance or full enforceability of this Agreement and
any related documents. Except as specifically disclosed to Secured Party,
Debtor utilizes no trade names in the conduct of its business and/or has not
changed its name within the past five years.
2.2 Merger; Transfer of Assets. Debtor will not consolidate or merge with or
into any other entity, liquidate or dissolve, distribute, sell, lease,
transfer or dispose of all of its properties or assets or any substantial
portion thereof other than in the ordinary course of its business, unless the
Secured Party shall give its prior written consent, and the surviving, or
successor entity or the transferee of such assets, as the case may be, shall
assume, by a written instrument which is legal, valid and enforceable against
such surviving or successor entity or transferee, all of the obligations of
Debtor to Secured Party or any affiliate of Secured Party.
2.3 No Violation of Covenants or Laws. Debtor is not party to any agreement
or subject to any restriction which materially and adversely affects its
ability to perform its obligations under this Agreement and any related
documents. The execution of and compliance with the terms of this Agreement
and any related documents does not and will not (i) violate any provision of
law, or (ii) conflict with or result in a breach of any order, injunction, or
decree of any court or governmental authority or the formation documents of
Debtor, or (iii) constitute or result in a default under any agreement, bond
or indenture by which Debtor is bound or to which any of its property is
subject, or (iv) result in the imposition of any lien or encumbrance upon any
of Debtor's assets, except for any liens created hereunder or under any
related documents.
2.4 Accurate Information. All financial information submitted to the Secured
Party in regard to Debtor, was prepared in accordance with generally accepted
accounting principles, consistently applied, and fairly and accurately
depicts the financial position and results of operations of Debtor or such
other person, as of the respective dates or for the respective periods, to
which such information pertains. Debtor had good, valid and marketable title
to all the properties and assets reflected as being owned by it on any
balance sheets of Debtor submitted to Secured Party as of the dates thereof.
2.5 Judgments; Pending Legal Action. There are no judgments outstanding
against Debtor, and there are no actions or proceedings pending or, to the
best knowledge of Debtor, threatened against or affecting Debtor or any of
its properties in any court or before any governmental entity which, if
determined adversely to Debtor, would result in any material adverse change
in the business, properties or assets, or in the condition, financial or
-97-
otherwise, of Debtor or would materially and adversely affect the ability of
Debtor to satisfy its obligations under this Agreement and any related
documents.
2.6 No Breach of Other Agreements; Compliance with Applicable Laws. Debtor
is not in breach of or in default under any loan agreement, indenture, bond,
note or other evidence of indebtedness, or any other material agreement or
any court order, injunction or decree or any lien, statute, rule or
regulation. The operations of Debtor comply with all laws, ordinances and
governmental rules and regulations applicable to them. Debtor has filed all
Federal, state and municipal income tax returns which are required to be
filed and has paid all taxes as shown on said returns and on all assessments
billed to it to the extent that such taxes or assessments have become due.
Debtor does not know of any other proposed tax assessment against it or of
any basis for one.
2.7 Sale Prohibited. Debtor will not sell, dispose of or offer to sell or
otherwise transfer the Collateral or any interest therein without the prior
written consent of Secured Party.
2.8 Location of Collateral. The Collateral will be kept at the location(s)
shown on the Schedule(s) hereunder and Debtor will promptly notify Secured
Party of any change in the location(s) of the Collateral. Debtor will not
remove the Collateral from said location(s) without the prior written consent
of Secured Party.
2.9 Collateral not a Fixture. Notwithstanding any presumption of applicable
law, and irrespective of any manner of attachment, the Collateral shall not
be deemed real property but shall retain its character as personal property.
However, Debtor will at the option of Secured Party furnish the latter with a
waiver or waivers in recordable form, signed by all persons having an
ownership interest in the real estate, of any interest in the Collateral
which is or might be deemed to be prior to Secured Party's interest.
2.10 Perfection of Security Interest. Except for (i) the security interest
granted hereby and (ii) any other security interest previously disclosed by
Debtor to Secured Party in writing, Debtor is the owner of the Collateral
free from any adverse lien, security interest or encumbrance. Debtor will
defend the Collateral against all claims and demands of all persons at any
time claiming any interest therein. Except as previously disclosed in
writing to Secured Party, no financing statement covering any Collateral or
any proceeds thereof is on file in any public office. At the request of
Secured Party, Debtor will execute, acknowledge and deliver to Secured Party
in recordable or fileable form, any document or instrument required by
Secured Party to further the purposes of this Agreement, or to perfect its
interest in the Collateral or to maintain such perfected interest in full
force and effect, including (without limitation) any fixture filings and
financial statements and any amendments and continuation statements thereto
pursuant to the Uniform Commercial Code, in form satisfactory to Secured
Party, and will pay the cost of filing the same or filing or recording this
Agreement in all public offices wherever filing or recording is deemed by
Secured Party to be necessary or desirable. Debtor hereby agrees that this
Agreement shall be and constitute a financing statement for purposes of the
Uniform Commercial Code.
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2.11 Insurance. Unless otherwise agreed, Debtor will have and maintain
insurance from financially sound carriers at all times with respect to all
Collateral against risks of fire (including so-called extended coverage),
theft, collision, "mysterious disappearance" and other such risks as Secured
Party may require, containing such terms, in such form, for such periods and
written by such companies as may be satisfactory to Secured Party; each
insurance policy shall name Secured Party as loss payee and
shall be payable to Secured Party and Debtor as their interest may appear;
all policies of insurance shall provide for ten days' written minimum
cancellation notice to Secured Party; Debtor shall furnish Secured Party with
certificates or other evidence satisfactory to Secured Party of compliance
with the foregoing insurance provisions.
2.12 Use of the Collateral. Debtor will use the Collateral for business
purposes only and operate it by qualified personnel in accordance with
applicable manufacturers' manuals. Debtor will keep the Collateral free from
any adverse lien or encumbrance and in good working order, condition and
repair and will not waste or destroy the Collateral or any part thereof;
Debtor will keep the Collateral appropriately protected from the elements,
and will furnish all required parts and servicing (including any contract
service necessary to maintain the benefit of any warranty of the
manufacturer); Debtor will not use the Collateral in violation of any
statute, ordinance, regulation or order; and Secured Party may examine and
inspect the Collateral and any and all books and records of Debtor during
business hours at any time; such right of inspection shall include the right
to copy Debtor's books and records and to converse with Debtor's officers,
employees, agents, and independent accountants.
2.13 Taxes and Assessments. Debtor will pay promptly when due all taxes,
assessments, levies, imposts, duties and charges, of any kind or nature,
imposed upon the Collateral or for its use or operation or upon this
Agreement or upon any instruments evidencing the obligations.
2.14 Financial Statements. Debtor shall furnish Secured Party within ninety
(90) days after the close of each fiscal year of Debtor, its financial
statements (including, without limitation, a balance sheet, a statement of
income and surplus account and a statement of changes in financial position)
for the immediately preceding fiscal year, setting forth the corresponding
figures for the prior fiscal year in comparative form, all in reasonable
detail without any qualification or exception deemed material by Secured
Party. Such financial statements shall be prepared at least as a review by
Debtor's independent certified accountants and, if prepared as an audit,
shall be certified by such accountants. Debtor shall also furnish Secured
Party with any other financial information deemed necessary by Secured Party.
Each financial statement submitted by Debtor to Secured Party shall be
accompanied by a certificate signed by the chief executive officer, the chief
operating officer or the chief financial officer of Debtor, certifying that
(i) such financial statement was prepared in accordance with the generally
accepted accounting principles consistently applied and fairly and accurately
presents the Debtor's financial condition and results of operations for the
period to which it pertains, and (ii) no event of default has occurred under
this Agreement during the period to which such financial statements pertains.
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3.0 EVENTS OF DEFAULT
3.1 the following shall be considered events of default: (i) failure on the
part of Debtor to promptly perform in complete accordance with its
representations, warranties and covenants made in this Agreement or in any
other agreement with Secured Party, including, but not limited to, the
payment of any liability, with interest, when due, or default by Debtor under
the provisions of any other material agreement to which Debtor is party; (ii)
the death of Debtor if an individual or the dissolution of Debtor if a
business organization; (iii) more than one of the present officers of Debtor
leave the business except for reason of the death or disability of an
individual; (iv) the filing of any petition or complaint under the Federal
Bankruptcy Code or other federal or state acts of similar nature, by or
against Debtor; or an assignment for the benefit of creditors by Debtor; (v)
an application for or the appointment of a Receiver, Trustee or Conservator,
voluntary or involuntary, by or against Debtor or for any substantial assets
of Debtor, (vi) insolvency of Debtor under either the Federal Bankruptcy Code
or applicable principles of equity; (vii) entry of judgment, issuance of any
garnishment or attachment, or filing of any lien, claim or government
attachment against the Collateral or which, in Secured Party's sole
discretion, might impair the Collateral; (viii) the determination by Secured
Party that a material misrepresentation of fact has been made by Debtor in
this Agreement or in any writing supplementary or ancillary hereto; (ix) a
determination by Secured Party that Debtor has suffered a material adverse
change in its financial condition from the date of this Agreement; or (x)
bankruptcy, insolvency, termination, dissolution or default of any guarantor
for Debtor.
4.0 REMEDIES
4.1 Upon the happening of any event of default which is not cured within ten
(10) days, or at any time thereafter: (i) all liabilities of Debtor shall, at
the option of Secured Party, become immediately due and payable; (ii) Secured
Party shall have and may exercise all of the rights and remedies granted to a
secured party under the Uniform Commercial Code; (iii) Secured Party shall
have the right, immediately, and without notice or other action, to set-off
against any of Debtor's liabilities to Secured Party any money owed by
Secured Party in any capacity to Debtor, whether or not due, and Secured
Party shall be deemed to have exercised such right of set-off and to have
made a charge against any such money immediately upon the occurrence of such
default event though actual book entries may be made at some time subsequent
thereto; (iv) Secured Party may proceed with or without judicial process to
take possession of all or any part of the Collateral; Debtor agrees that upon
receipt of notice of Secured Party's intention to take possession of all or
any part of said Collateral, Debtor will do everything necessary to make same
available to Secured Party (including, without limitation, assembling the
Collateral and making it available to Secured Party at a place designated by
Secured Party which is reasonably convenient to Debtor and Secured Party);
and so long as Secured Party acts in a commercially reasonable manner, Debtor
agrees to assign, transfer and deliver at any time the whole or any portion
of the Collateral or any rights or interest therein in accordance with the
Uniform Commercial Code and without limiting the scope of Secured Party's
rights thereunder; (v) Secured Party may sell the Collateral at public or
private sale or in any other commercially reasonable manner and, at the
option of Secured
-100-
Party, in bulk or in parcels and with or without having the Collateral at the
sale or other disposition, and Debtor agrees that in case of sale or other
disposition of the Collateral, or any portion thereof, Secured Party shall
apply all proceeds first to all costs and expenses of disposition, including
attorneys' fees, and then to Debtor's obligations to Secured Party, (vi)
Secured Party may elect to retain the Collateral or any part thereof in
satisfaction of all sums due from Debtor upon notice to Debtor and any other
party as may be required by the Uniform Commercial Code. All remedies
provided in this paragraph shall be cumulative. Secured Party may exercise
any one or more of such remedies in addition to any and all other remedies
Secured Party may have under any applicable law or in equity.
4.2 Expenses; Disposition. Upon default, all amounts due and to become due
hereunder shall, without notice, bear interest at the lesser of (i) twelve
percent (12%) per annum or (ii) the maximum rate per annum which Secured
Party is permitted by law to charge from the date such amounts are due until
paid. Debtor shall pay all reasonable expenses of realizing upon the
Collateral hereunder upon default and collecting all liabilities of Debtor to
Secured Party, which reasonable expenses shall include attorneys' fees,
whether or not litigation is commenced and whether incurred at trial, on
appeal, or in any other proceeding. Any notification of a sale or other
disposition of Collateral or of other action by Secured Party required to be
given by Secured Party, will be sufficient if given personally, mailed, or
delivered by facsimile machine or overnight carrier not less than five (5)
days prior to the day on which such sale or other disposition will be made or
action taken, and such notification shall be deemed reasonable notice.
5.0 MISCELLANEOUS
5.1 No Implied Waivers; Entire Agreement. The waiver by Secured Party of any
default hereunder or of any provisions hereof shall not discharge any party
hereto from liability hereunder and such waiver shall be limited to the
particular event of default and shall not operate as a waiver of any
subsequent default. This Agreement and any Schedule hereunder are non-
cancelable. No modification of this Agreement or waiver of any right of
Secured Party, hereunder shall be valid unless in writing and signed by an
authorized officer of Secured Party. No failure on the part of Secured Party
to exercise, or delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right or remedy hereunder preclude any other or further exercise thereof or
the exercise of any other right or remedy. The provisions of this Agreement
and the rights and remedies granted to Secured Party herein shall be in
addition to, and not in limitation of those of any other agreement with
Secured Party or any other evidence of any liability held by Secured Party.
This Agreement and any Schedule hereunder (a "Transaction") embody the entire
agreement between the parties and supersede all prior agreements and
understandings relating to the same subject matter, except in any case where
the Secured Party takes an assignment from a vendor of its security interest
in the same Collateral, in which case the terms of the Transaction shall be
incorporated into the assigned agreement and shall prevail over any
inconsistent terms therein but shall not be construed to create a new
contract.
-101-
5.2 Choice of Law. This Agreement and the rights of the parties hereto shall
be governed by applicable Federal law and the laws of the State of Nevada.
Any action arising out of this Agreement may be litigated under the laws of
Nevada and submitted to the jurisdiction of Nevada, and that service of
process by certified mail, return receipt requested, will be sufficient to
confer personal jurisdiction over the Debtor.
5.3 Protection of the Collateral. At its option, Secured Party may discharge
taxes, liens or other encumbrances at any time levied or placed on the
Collateral, may pay for insurance on the Collateral and may pay for the
maintenance and preservation of the Collateral. Debtor agrees to reimburse
Secured Party on demand for any payment made or any expense incurred by
Secured Party pursuant to the foregoing authorization. Any payments made by
Secured Party shall be immediately due and payable by Debtor and shall bear
interest at the rate of fifteen percent (15%) per annum. Until default,
Debtor may retain possession of the Collateral and use it in any lawful
manner not inconsistent with the provisions of this Agreement and any other
agreement between Debtor and Secured Party, and not inconsistent with any
policy of insurance thereon.
5.4 Binding Agreement; Time of the Essence. This Agreement shall take effect
as a sealed instrument and shall be binding upon and shall inure to the
benefit of the parties hereto, their respective heirs, executors,
administrators, successors, and assigns. Time is of the essence with respect
to the performance of Debtor's obligations under this Agreement and any other
agreement between Debtor and Secured Party.
5.5 Enforceability. Any term, clause or provision of this Agreement or of
any evidence of indebtedness from Debtor to Secured Party which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining terms or clauses of such provision or the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such term,
clause or provision in any other jurisdiction.
5.6 Notices. Any notices or demands required to be given herein shall be
given to the parties in writing by United States first class mail (express,
certified or otherwise) at the addresses set forth on page 1 of this
Agreement or to such other addresses as the parties may hereafter substitute
by written notice given in the manner prescribed in this paragraph.
5.7 Additional Security. If there shall be any other collateral for any of
the obligations, or for the obligations of any guarantor thereof, Secured
Party may proceed against and/or enforce any or all of the Collateral and
such collateral in whatever order it may, in its sole discretion, deem
appropriate. Any amount(s) received by Secured Party from whatever source
and applied by it to any of the obligations shall be applied in such order of
application as Secured Party shall from time to time, in its sole discretion,
elect.
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6.0 ASSIGNMENT
6.1 SECURED PARTY MAY SELL OR ASSIGN ANY AND ALL RIGHT, TITLE AND INTEREST IT
HAS IN THE COLLATERAL AND/OR ARISING UNDER THIS AGREEMENT TO A FINANCIAL
INSTITUTION. DEBTOR SHALL, UPON THE DIRECTION OF SECURED PARTY: 1) EXECUTE
ALL DOCUMENTS NECESSARY TO EFFECTUATE SUCH ASSIGNMENT AND, 2) PAY DIRECTLY
AND PROMPTLY TO SECURED PARTY'S ASSIGNEE WITHOUT ABATEMENT, DEDUCTION OR SET-
OFF, ALL AMOUNTS WHICH HAVE BECOME DUE UNDER THE ASSIGNED AGREEMENTS.
SECURED PARTY'S ASSIGNEE SHALL HAVE ANY AND ALL RIGHTS, IMMUNITIES AND
DISCRETION OF SECURED PARTY HEREUNDER AND SHALL BE ENTITLED TO EXERCISE ANY
REMEDIES OF SECURED PARTY HEREUNDER. ALL REFERENCES HEREIN TO SECURED PARTY
SHALL INCLUDE SECURED PARTY'S ASSIGNEE (EXCEPT THAT SAID ASSIGNEE SHALL NOT
BE CHARGEABLE WITH ANY OBLIGATIONS OR LIABILITIES HEREUNDER OR IN RESPECT
HEREOF). DEBTOR WILL NOT ASSERT AGAINST SECURED PARTY'S ASSIGNEE ANY
DEFENSE, COUNTERCLAIM OR SET-OFF WHICH DEBTOR MAY HAVE AGAINST SECURED PARTY.
6.2 DEBTOR SHALL NOT ASSIGN OR IN ANY WAY DISPOSE OF ALL OR ANY OF ITS RIGHTS
OR OBLIGATIONS UNDER THIS AGREEMENT OR ENTER INTO ANY AGREEMENT REGARDING OF
ALL OR ANY PART OF THE COLLATERAL WITHOUT THE PRIOR WRITTEN CONSENT OF
SECURED PARTY WHICH SHALL NOT BE UNREASONABLY WITHHELD. IN CONNECTION WITH
THE GRANTING OF SUCH CONSENT AND THE PREPARATION OF NECESSARY DOCUMENTATION,
A FEE SHALL BE ASSESSED EQUAL TO ONE PERCENT (1%) OF THE TOTAL REMAINING
BALANCE THEN DUE HEREUNDER.
7.0 POWER OF ATTORNEY
7.1 Secured Party is hereby appointed Debtor's attorney-in-fact to sign
Debtor's name and to make non-material amendments (including completing and
conforming the description of the Collateral) on any document in connection
with this Agreement (including any financing statement) and to obtain,
adjust, settle, and cancel any insurance required by this Agreement and to
endorse any drafts in connection with such insurance.
In Witness Whereof, the parties hereto have caused this Agreement to be duly
executed the 9th day of Sept., 1998.
U.S. BANCORP LEASING & FINANCIAL Golden Road Motor Inn, Inc.
dba Atlantis Hotel and Casino
(Debtor)
By: By: /s/ Ben Farahi
---------------------------- ---------------
An authorized officer thereof Authorized Corporate Officer
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GUARANTY
In order to induce U.S. BANCORP LEASING & FINANCIAL (the "Creditor") to enter
into one or more financing arrangements in the form of lease(s) or loan(s)
(referred to herein as the "Transaction") with, or otherwise directly or
indirectly making property available to GOLDEN ROAD MOTOR INN, INC. dba
Atlantis Hotel & Casino (the "Obligor") and/or to induce Creditor to grant to
Obligor such renewals, extensions, forbearances, releases of collateral or
other relinquishments of rights, whether in connection with the
Transaction(s) or otherwise, as Creditor may in its sole discretion deem
advisable, and in consideration of any agreements heretofore or hereafter
entered into between Creditor and Obligor (any and all such notes, security
agreements, loan agreements, lease agreements, entered into between Obligor
and Creditor together with any and all schedules and riders thereto and any
and all other instruments or agreements including, without limitation, pledge
agreements and assignments, executed and delivered by Obligor in connection
therewith, being hereinafter collectively called the "Agreements"), and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, EACH OF THE UNDERSIGNED (EACH OF WHOM IS HEREINAFTER
CALLED A "GUARANTOR"), INTENDING TO BE LEGALLY BOUND, HEREBY JOINTLY AND
SEVERALLY GUARANTEES THE FULL, PROMPT, COMPLETE AND FINAL PAYMENT AND
PERFORMANCE OF ALL THE OBLIGOR'S OBLIGATIONS PURSUANT TO THE AGREEMENTS OR IN
ANY WAY ARISING THEREFROM AND ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES
OF OBLIGOR TO CREDITOR, WHETHER NOW IN EXISTENCE OR ARISING HEREAFTER, AND
WHETHER DIRECT OR INDIRECT, CONTINGENT OR ABSOLUTE, MATURED OR UNMATURED,
SECURED OR UNSECURED, AND HOWEVER CONTRACTED OR ARISING (ALL SUCH OBLIGATIONS
AND LIABILITIES BEING HEREINAFTER CALLED THE "OBLIGATIONS").
Each Guarantor hereby promises to pay Creditor when due, on demand, all
indebtedness of any kind or nature emanating from the Agreements (including,
without limitation, if an event of default shall occur under the Agreements,
payment on demand of all unpaid sums to become due under the defaulted
Agreements for the entire term thereof), whether now or hereafter arising and
however and whenever evidenced; and each Guarantor agrees to indemnify and
hold Creditor harmless from and against any and all losses, liabilities and
costs emanating from any failure of Obligor to fully, promptly and completely
satisfy the Obligations. For purposes hereof, (i) "losses, liabilities and
costs" shall include (without limitation), all losses, liabilities,
obligations, claims, demands, judgments, costs and expenses of whatever kind
or nature (including, without limitation, attorneys' fees) and (ii)
"emanating" from an event or cause shall include (without limitation) in any
way directly or indirectly being caused by or in any other way arising out of
such event or cause.
Each Guarantor hereby waives any notice of default or nonpayment or of late
or inadequate satisfaction in regard to the Obligations. In particular (and
not in limitation of the foregoing), each Guarantor hereby agrees that, in
enforcing this Guaranty, Creditor shall not be required (i) to demand payment
of the amount due (known as "demand"); (ii) to present for payment any
evidence of the Obligations (known as "presentment" or "presentment for
payment"); (iii) to give notice that amounts due have not been paid (known as
"notice of dishonor"); or (iv) to obtain an official certification of
nonpayment (known as "protest") or to give any Guarantor notice of any such
"protest;" and each Guarantor hereby waives demand,
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presentment, presentment for payment, notice of dishonor, protest and notice
of protest, as aforesaid. Each Guarantor hereby further waives notice of
acceptance hereof and any and all other notices to which such Guarantor may
be entitled.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, the liability of Obligor or any other guarantor of
the Obligations may from time to time, in whole or in part, be extended,
renewed, continued, amended, modified, composed, accelerated, supplemented,
compromised, settled or released in Creditor's sole discretion, and that any
collateral for any of the Obligations or for any guaranty thereof (including
this Guaranty) may from time to time, in whole or part, be exchanged, sold or
surrendered in Creditor's sole discretion. Each Guarantor hereby agrees that
no such extension, renewal, continuation, amendment, modification,
composition, acceleration, supplement, compromise, settlement, release,
exchange, sale or surrender shall in any way impair, affect or release the
liability of any Guarantor hereunder or constitute a waiver of any of
Creditor's rights hereunder.
This Guaranty is unlimited, absolute, irrevocable and unconditional and shall
continue in full force and effect until all the Obligations shall have been
fully, completely and finally satisfied and paid. The obligations of each
Guarantor hereunder shall continue and survive the repossession of any
property or other property leased pursuant to the Agreements (or any property
in which Creditor has a security interest securing any of the Obligations)
whether or not any such repossession constitutes an "election of remedies"
against the Obligor or any other person. Each Guarantor agrees to be
obligated hereunder notwithstanding any termination of the Agreements in
whole or part by operation of law or any unenforceability or invalidity of
the Agreements for any reason whatsoever (including, without limitation,
invalidity or voidness ab initio and/or partial or complete unenforceability
as a result of impossibility or impracticability of performance or
frustration of the purpose of the Agreements). The obligations of the
Guarantors hereunder are joint and several and shall not be subject to any
abatement, setoff, defense or counterclaim for any cause whatsoever.
Each Guarantor hereby agrees that its obligations hereunder are direct and
primary and that Creditor may proceed directly and in the first instance
against each or any Guarantor or combination of Guarantors and have its
remedy hereunder without first being obliged to resort to any other right or
remedy or security for any of the Obligations. Each Guarantor hereby waives
any right to require Creditor to proceed against the Obligor or to proceed
against any other Guarantor or to proceed against any other guarantor of the
Obligations. If there shall be any securities for any of the Obligations, or
for the obligations of any Guarantor hereunder, or for the obligations of any
other guarantor of any of the Obligations, Creditor may proceed against
and/or enforce any or all of such securities in whatever order it may, in its
sole discretion, deem appropriate. Any amount(s) received by Creditor from
whatever source and applied by it to any of the Obligations shall be applied
in such order of application as Creditor shall, in its sole discretion,
elect.
In the event of any default in regard to any Guarantor's obligations
hereunder, or in the event of death, incompetency, termination, dissolution
or insolvency of the Obligor, or if a receiver, liquidator or conservator
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be appointed for any part of the property or assets of the Obligor, or if the
Obligor makes an assignment for the benefit of creditors, or if the Obligor
shall file a voluntary petition in bankruptcy or any involuntary petition in
bankruptcy shall be filed against it then, and in any such case, each
Guarantor agrees to pay to Creditor, upon demand, the full amount which would
be payable hereunder by such Guarantor if all the Obligations and
Indebtedness including, but not limited to, any remaining payments owing
pursuant to the Agreements or any of the other guaranteed Agreements, were
then due and payable.
Notwithstanding any provision hereof or any provision of any other instrument
or agreement, or any presumption of applicable law or principle of legal
construction to the contrary: (i) nothing shall discharge or satisfy any
Guarantor's obligations hereunder except full, complete and final payment and
satisfaction of all the Obligations, Indebtedness and Indemnities; (ii) each
Guarantor hereby waives any and all defenses to its obligations hereunder
including, without limitation, any defense arising by reason of any cessation
of the Obligor's business or any bankruptcy, insolvency or business failure
of the Obligor or any other person; and (iii) no Guarantor shall have any
right of subrogation against the Obligor, and each Guarantor hereby waives
any and all rights of subrogation it may have against the Obligor, to enforce
any right or remedy which Creditor has or may hereafter have against the
Obligor, and waives the benefits of, and any and all rights to participate
in, any security or securities now or hereafter held by Creditor. It is
expressly understood by each Guarantor that payments received by Creditor
from or on behalf of Obligor shall be solely for the benefit of Creditor and
shall not benefit the Guarantor in any way. Each Guarantor hereby further
acknowledges that such Guarantor is not and shall not be construed as a
"Creditor" of Obligor by virtue of this Guaranty.
Each Guarantor hereby represents and warrants to Creditor that all
information concerning such Guarantor, including (without limitation)
financial statements and other financial information, furnished to Creditor
in connection with the Agreements or any of the other Guaranteed Agreements,
was true, complete and accurate as of the date of delivery thereof to
Creditor, and that all such information remains true, complete and accurate,
and that there have been no material adverse changes in such Guarantor's
financial condition as of the date hereof. In the event of any breach of any
Guarantor's representations and warranties herein or any material adverse
change in the financial condition of any Guarantor, upon the request of
Creditor, such Guarantor shall promptly furnish to Creditor such additional
security for the performance of such Guarantor's obligations hereunder as
Creditor may reasonably request.
No notice of termination of this Guaranty shall be effective unless and until
such notice shall be in writing and executed by Guarantor and shall have been
received at Creditor's principal corporate headquarters at P.O. Box 2177,
7659 S.W. Mohawk Street, Tualatin, Oregon 97062-2177; provided, however, that
in the event of such notice, this Guaranty shall continue in full force and
effect with regard to all Obligations created, existing or arising prior to
the date of such receipt. No modification hereof or amendment hereto and no
waiver of any term or provision hereof shall be valid unless in writing and
signed by an authorized officer of Creditor. No delay or failure on the part
of Creditor in the exercise of any right or
-106-
remedy shall operate as a waiver thereof, and no single or partial exercise
by Creditor of any right or remedy shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. No action of
Creditor permitted hereunder shall invalidate or in any way impair this
Guaranty. No waiver of any right or remedy hereunder shall constitute a
waiver of any other or further right or remedy hereunder.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, this Guaranty may be assigned by Creditor and
reassigned, in the sole discretion of Creditor or its assignee. As used
herein, the term "Creditor" includes Creditor and any successor or assign of
Creditor. This Guaranty shall be binding upon each Guarantor, and upon the
legal successors, representatives, and assigns of such Guarantor. Each and
every waiver made herein by any Guarantor is and shall be deemed to be and
construed as an absolute, irrevocable and unconditional waiver of the right
waived.
This Guaranty is intended to be legal, valid, binding and enforceable in
accordance with its terms. Whenever possible, each term and provision of
this Guaranty shall be interpreted so as to be effective and to effectuate
its intent under applicable law. If any term or provision of this Guaranty
shall be unenforceable, invalid or prohibited in any jurisdiction under
applicable law, such term or provision shall be ineffective in such
jurisdiction but only to the extent of such unenforceability, invalidity or
prohibition, and the remainder of such term or provision, and the other terms
and provisions of the Guaranty, shall not thereby be affected or impaired in
such jurisdiction, nor shall any of the terms or provisions of the Guaranty
be thereby affected or impaired in any way in any other jurisdiction.
This Guaranty shall be governed by the construed in accordance with Federal
Law and the laws of the State of Nevada, and that service of process by
certified mail, return receipt requested, will be sufficient to confer
personal jurisdiction over such Guarantor for purposes of litigating any
actions arising hereunder in the courts of such State. This Guaranty is in
addition to, and not in limitation or derogation of, any and all other
guaranties of the Obligations executed by any Guarantor. In the event of any
conflict between the provisions of this Guaranty and those of any such other
guaranty, the provisions of this Guaranty shall govern. Each Guarantor
hereby agrees and acknowledges that time is of the essence with regard to the
performance of such Guarantor's obligations hereunder. This Guaranty shall
take effect as a sealed instrument.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE OBLIGATION OF THE
GUARANTORS TOGETHER HEREUNDER IS LIMITED TO $1,000,000.00, AND IS JOINT AND
SEVERAL.
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IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty to be
duly executed and delivered as of 9th day of Sept., 1998.
Witness: Behrouz Ben Farahi
/s/ John Bydalek /s/Behrouz Ben Farahi
------------ ------------------
Print Name: John Bydalek an Individual
Address: 1175 W. Moana Ln. SS#------------
#200, Reno, NV 89509
Witness: Bahram Bob Farahi
/s/ John Bydalek /s/Bahram Bob Farahi
------------ -----------------
Print Name: John Bydalek an Individual
Address: SS#------------
Witness: John Farahi
/s/ John Bydalek /s/John Farahi
------------ -----------
Print Name: John Bydalek an Individual
Address: SS#------------
GUARNATOR'S SIGNATURE MAY NOT BE WITNESSED BY GUARANTOR'S SPOUSE OR OTHER
FAMILY MEMBER
-108-
GUARANTY
In order to induce U.S. BANCORP LEASING & FINANCIAL (the "Creditor") to enter
into one or more financing arrangements in the form of lease(s) or loan(s)
(referred to herein as the "Transaction") with, or otherwise directly or
indirectly making property available to GOLDEN ROAD MOTOR INN, INC. dba
Atlantis Hotel & Casino (the "Obligor") and/or to induce Creditor to grant to
Obligor such renewals, extensions, forbearances, releases of collateral or
other relinquishments of rights, whether in connection with the
Transaction(s) or otherwise, as Creditor may in its sole discretion deem
advisable, and in consideration of any agreements heretofore or hereafter
entered into between Creditor and Obligor (any and all such notes, security
agreements, loan agreements, lease agreements, entered into between Obligor
and Creditor together with any and all schedules and riders thereto and any
and all other instruments or agreements including, without limitation, pledge
agreements and assignments, executed and delivered by Obligor in connection
therewith, being hereinafter collectively called the "Agreements"), and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, EACH OF THE UNDERSIGNED (EACH OF WHOM IS HEREINAFTER
CALLED A "GUARANTOR"), INTENDING TO BE LEGALLY BOUND, HEREBY JOINTLY AND
SEVERALLY GUARANTEES THE FULL, PROMPT, COMPLETE AND FINAL PAYMENT AND
PERFORMANCE OF ALL THE OBLIGOR'S OBLIGATIONS PURSUANT TO THE AGREEMENTS OR IN
ANY WAY ARISING THEREFROM AND ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES
OF OBLIGOR TO CREDITOR, WHETHER NOW IN EXISTENCE OR ARISING HEREAFTER, AND
WHETHER DIRECT OR INDIRECT, CONTINGENT OR ABSOLUTE, MATURED OR UNMATURED,
SECURED OR UNSECURED, AND HOWEVER CONTRACTED OR ARISING (ALL SUCH OBLIGATIONS
AND LIABILITIES BEING HEREINAFTER CALLED THE "OBLIGATIONS").
Each Guarantor hereby promises to pay Creditor when due, on demand, all
indebtedness of any kind or nature emanating from the Agreements (including,
without limitation, if an event of default shall occur under the Agreements,
payment on demand of all unpaid sums to become due under the defaulted
Agreements for the entire term thereof), whether now or hereafter arising and
however and whenever evidenced; and each Guarantor agrees to indemnify and
hold Creditor harmless from and against any and all losses, liabilities and
costs emanating from any failure of Obligor to fully, promptly and completely
satisfy the Obligations. For purposes hereof, (i) "losses, liabilities and
costs" shall include (without limitation), all losses, liabilities,
obligations, claims, demands, judgments, costs and expenses of whatever kind
or nature (including, without limitation, attorneys' fees) and (ii)
"emanating" from an event or cause shall include (without limitation) in any
way directly or indirectly being caused by or in any other way arising out of
such event or cause.
Each Guarantor hereby waives any notice of default or nonpayment or of late
or inadequate satisfaction in regard to the Obligations. In particular (and
not in limitation of the foregoing), each Guarantor hereby agrees that, in
enforcing this Guaranty, Creditor shall not be required (i) to demand payment
of the amount due (known as "demand"); (ii) to present for payment any
evidence of the Obligations (known as "presentment" or "presentment for
payment"); (iii) to give notice that amounts due have not been paid (known as
"notice of dishonor"); or (iv) to obtain an official certification of
nonpayment (known as "protest") or to give any Guarantor notice of any such
"protest;" and each Guarantor hereby waives demand,
-109-
presentment, presentment for payment, notice of dishonor, protest and notice
of protest, as aforesaid. Each Guarantor hereby further waives notice of
acceptance hereof and any and all other notices to which such Guarantor may
be entitled.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, the liability of Obligor or any other guarantor of
the Obligations may from time to time, in whole or in part, be extended,
renewed, continued, amended, modified, composed, accelerated, supplemented,
compromised, settled or released in Creditor's sole discretion, and that any
collateral for any of the Obligations or for any guaranty thereof (including
this Guaranty) may from time to time, in whole or part, be exchanged, sold or
surrendered in Creditor's sole discretion. Each Guarantor hereby agrees that
no such extension, renewal, continuation, amendment, modification,
composition, acceleration, supplement, compromise, settlement, release,
exchange, sale or surrender shall in any way impair, affect or release the
liability of any Guarantor hereunder or constitute a waiver of any of
Creditor's rights hereunder.
This Guaranty is unlimited, absolute, irrevocable and unconditional and
shall continue in full force and effect until all the Obligations shall
have been fully, completely and finally satisfied and paid. The obligations
of each Guarantor hereunder shall continue and survive the repossession of
any property or other property leased pursuant to the Agreements (or any
property in which Creditor has a security interest securing any of the
Obligations) whether or not any such repossession constitutes an "election of
remedies" against the Obligor or any other person. Each Guarantor agrees to
be obligated hereunder notwithstanding any termination of the Agreements in
whole or part by operation of law or any unenforceability or invalidity of
the Agreements for any reason whatsoever (including, without limitation,
invalidity or voidness ab initio and/or partial or complete unenforceability
as a result of impossibility or impracticability of performance or
frustration of the purpose of the Agreements). The obligations of the
Guarantors hereunder are joint and several and shall not be subject to any
abatement, setoff, defense or counterclaim for any cause whatsoever.
Each Guarantor hereby agrees that its obligations hereunder are direct and
primary and that Creditor may proceed directly and in the first instance
against each or any Guarantor or combination of Guarantors and have its
remedy hereunder without first being obliged to resort to any other right or
remedy or security for any of the Obligations. Each Guarantor hereby waives
any right to require Creditor to proceed against the Obligor or to proceed
against any other Guarantor or to proceed against any other guarantor of the
Obligations. If there shall be any securities for any of the Obligations, or
for the obligations of any Guarantor hereunder, or for the obligations of any
other guarantor of any of the Obligations, Creditor may proceed against
and/or enforce any or all of such securities in whatever order it may, in its
sole discretion, deem appropriate. Any amount(s) received by Creditor from
whatever source and applied by it to any of the Obligations shall be applied
in such order of application as Creditor shall, in its sole discretion,
elect.
In the event of any default in regard to any Guarantor's obligations
hereunder, or in the event of death, incompetency, termination, dissolution
or insolvency of the Obligor, or if a receiver, liquidator or conservator
-110-
be appointed for any part of the property or assets of the Obligor, or if the
Obligor makes an assignment for the benefit of creditors, or if the Obligor
shall file a voluntary petition in bankruptcy or any involuntary petition in
bankruptcy shall be filed against it then, and in any such case, each
Guarantor agrees to pay to Creditor, upon demand, the full amount which would
be payable hereunder by such Guarantor if all the Obligations and
Indebtedness including, but not limited to, any remaining
payments owing pursuant to the Agreements or any of the other guaranteed
Agreements, were then due and payable.
Notwithstanding any provision hereof or any provision of any other instrument
or agreement, or any presumption of applicable law or principle of legal
construction to the contrary: (i) nothing shall discharge or satisfy any
Guarantor's obligations hereunder except full, complete and final payment and
satisfaction of all the Obligations, Indebtedness and Indemnities; (ii) each
Guarantor hereby waives any and all defenses to its obligations hereunder
including, without limitation, any defense arising by reason of any cessation
of the Obligor's business or any bankruptcy, insolvency or business failure
of the Obligor or any other person; and (iii) no Guarantor shall have any
right of subrogation against the Obligor, and each Guarantor hereby waives
any and all rights of subrogation it may have against the Obligor, to enforce
any right or remedy which Creditor has or may hereafter have against the
Obligor, and waives the benefits of, and any and all rights to participate
in, any security or securities now or hereafter held by Creditor. It is
expressly understood by each Guarantor that payments received by Creditor
from or on behalf of Obligor shall be solely for the benefit of Creditor and
shall not benefit the Guarantor in any way. Each Guarantor hereby further
acknowledges that such Guarantor is not and shall not be construed as a
"Creditor" of Obligor by virtue of this Guaranty.
Each Guarantor hereby represents and warrants to Creditor that all
information concerning such Guarantor, including (without limitation)
financial statements and other financial information, furnished to Creditor
in connection with the Agreements or any of the other Guaranteed Agreements,
was true, complete and accurate as of the date of delivery thereof to
Creditor, and that all such information remains true, complete and accurate,
and that there have been no material adverse changes in such Guarantor's
financial condition as of the date hereof. In the event of any breach of any
Guarantor's representations and warranties herein or any material adverse
change in the financial condition of any Guarantor, upon the request of
Creditor, such Guarantor shall promptly furnish to Creditor such additional
security for the performance of such Guarantor's obligations hereunder as
Creditor may reasonably request.
No notice of termination of this Guaranty shall be effective unless and until
such notice shall be in writing and executed by Guarantor and shall have been
received at Creditor's principal corporate headquarters at P.O. Box 2177,
7659 S.W. Mohawk Street, Tualatin, Oregon 97062-2177; provided, however, that
in the event of such notice, this Guaranty shall continue in full force and
effect with regard to all Obligations created, existing or arising prior to
the date of such receipt. No modification hereof or amendment hereto and no
waiver of any term or provision hereof shall be valid unless in writing and
signed by an authorized officer of Creditor. No delay or failure on the part
of Creditor in the exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise
-111-
by Creditor of any right or remedy shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. No action of
Creditor permitted hereunder shall invalidate or in any way impair this
Guaranty. No waiver of any right or remedy hereunder shall constitute a
waiver of any other or further right or remedy hereunder.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, this Guaranty may be assigned by Creditor and
reassigned, in the sole discretion of Creditor or its assignee. As used
herein, the term "Creditor" includes Creditor and any successor or assign of
Creditor. This Guaranty shall be binding upon each Guarantor, and upon the
legal successors, representatives, and assigns of such Guarantor. Each and
every waiver made herein by any Guarantor is and shall be deemed to be and
construed as an absolute, irrevocable and unconditional waiver of the right
waived.
This Guaranty is intended to be legal, valid, binding and enforceable in
accordance with its terms. Whenever possible, each term and provision of
this Guaranty shall be interpreted so as to be effective and to effectuate
its intent under applicable law. If any term or provision of this Guaranty
shall be unenforceable, invalid or prohibited in any jurisdiction under
applicable law, such term or provision shall be ineffective in such
jurisdiction but only to the extent of such unenforceability, invalidity or
prohibition, and the remainder of such term or provision, and the other terms
and provisions of the Guaranty, shall not thereby be affected or impaired in
such jurisdiction, nor shall any of the terms or provisions of the Guaranty
be thereby affected or impaired in any way in any other jurisdiction.
This Guaranty shall be governed by the construed in accordance with Federal
Law and the laws of the State of Nevada, and that service of process by
certified mail, return receipt requested, will be sufficient to confer
personal jurisdiction over such Guarantor for purposes of litigating any
actions arising hereunder in the courts of such State. This Guaranty is in
addition to, and not in limitation or derogation of, any and all other
guaranties of the Obligations executed by any Guarantor. In the event of any
conflict between the provisions of this Guaranty and those of any such other
guaranty, the provisions of this Guaranty shall govern. Each Guarantor
hereby agrees and acknowledges that time is of the essence with regard to the
performance of such Guarantor's obligations hereunder. This Guaranty shall
take effect as a sealed instrument.
IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty to be
duly executed and delivered as of 9th day of Sept., 1998.
Monarch Casino & Resort, Inc.
By: /s/ Ben Farahi
---------------
Ben Farahi [Print Name]
----------
CFO [Title]
---
1175 West Moana Lane, Suite 200
Reno, Nevada 89509
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SCHEDULE TO MASTER LOAN AGREEMENT
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino
1175 W. Moana Lane, Suite 200
Reno, Nevada 89509
$660,395.00 Effective Date 4/19/99 Loan Transaction Number
------
1. THIS SCHEDULE is made between Golden Road Motor Inn, Inc. dba Atlantis
Hotel and Casino, as Debtor, and U.S. BANCORP LEASING & FINANCIAL (which,
together with its successor and assigns, will be called the "Secured Party")
pursuant to the Master Loan Agreement dated as of September 22, 1998 (the
"Loan Agreement"), the terms of which (including the definitions) are
incorporated herein. If any terms hereof are inconsistent with the terms of
the Loan Agreement, the terms hereof shall prevail.
2. FOR VALUE RECEIVED, Debtor hereby promises to pay to the order of Secured
Party the principal amount of Six Hundred Sixty Thousand Three Hundred
Ninety-Five and 00/100 Dollars ($660,395.00) with interest on any outstanding
principal balance at the rate(s) specified herein from the Effective Date
hereof until this Schedule shall have been paid in full in accordance with
the following payment schedule: sixty (60) installments of $13,211.60 each,
including the entire amount of interest accrued on this Schedule at the time
of payment of each installment. The first payment shall be due on May 19,
1999 and a like payment shall be due on the same day of each succeeding month
thereafter until the entire principal and interest have been paid. At the
time of the final installment hereon, all unpaid principal and interest shall
be due and owing. Each payment shall be applied first to accrued and unpaid
interest, and the balance to the outstanding principal hereof. As a result,
such final installment may be substantially more or substantially less than
the installments specified herein.
3. The Debtor promises to pay interest on the principal balance outstanding
at a rate of 7.40 percent per annum.
4. The Debtor may prepay this Schedule, in whole or in part, by paying
simultaneously with an in addition to the prepayment, a premium for such
prepayment privilege equal to the specified percent of the amount prepaid in
accordance with the following schedule, one (1) to twelve (12) months: five
(5.0)%, thirteen (13) to twenty-four (24) months: one (1.0)%, twenty-five
(25) to sixty (60): 0%.
Notwithstanding the foregoing, payments made within 30 days of the date an
installment is due which do not exceed the scheduled amount of such
installment shall not be considered prepayments.
5. Each of Debtor, if more than one, and all other parties who at any time
may be liable hereon in any capacity, hereby jointly and severally waive
diligence, demand, presentment, presentment for payment, protest, notice of
protest and notice of dishonor of this Schedule, and authorize the Secured
Party, without notice, to grant extensions in the time of payment of and
reductions in the rate of interest on any moneys owing on this Schedule.
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6. The following property is hereby made Collateral for all purposes under
the Loan Agreement:
Various items of Hotel fixtures, furniture, and equipment located at the
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino at 3800 S. Virginia
St., Reno, Nevada 89502; Washoe County and including but not limited to, all
property improvements, miscellaneous upgrades, non-salvageable material, slot
machines, kitchen equipment, casino bars, buffet bars, furniture, room
accessories and partitions, ice machines, and spas.
Whether any of the foregoing is owned now or acquired later; all accessions,
additions, replacements, and substitutions relating to any of the foregoing;
all records of any kind relating to any of the foregoing; all proceeds
relating to any of the foregoing (including insurance, general intangibles
and accounts proceeds).
7. The Collateral hereunder shall be based at the following location(s):
3800 S. Virginia Street
Reno, NV 89502
COUNTY: Washoe
Year 2000. Debtor has reviewed and assessed or will review and assess its
business operations and computer systems and applications to address the
"year 2000 problem" (that is, that computer applications and equipment used
by Debtor, directly or indirectly through third parties, may be unable to
properly perform date-sensitive functions before, during and after January 1,
2000). Debtor reasonable believes that the year 2000 problem will not result
in a material adverse change in Debtor's business condition (financial or
otherwise), operations, properties or prospects or ability to repay Secured
Party. Based upon the review, Debtor has developed or will develop and
implement a plan to address the year 2000 problem, to remediate any material
year 2000 problem, and to complete testing with respect thereto, as soon as
practicable and in any event by June 30, 1999. Debtor will promptly deliver
such information relating to this covenant as Secured Party requests from
time to time.
IN WITNESS WHEREOF, Debtor has executed this Schedule this 16th day of April,
1999.
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino
By /s/Ben Farahi
-------------
Title: An Authorized Officer
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MASTER LOAN AGREEMENT
1.0 PARTIES, COLLATERAL AND OBLIGATIONS
1.1 This Agreement is dated as of September 22, 1998. For valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino (hereinafter called
"Debtor") with offices at 1175 W. Moana Lane, Suite 200, Reno, Nevada 89509
intending to be legally bound, hereby promises to pay to U.S. BANCORP LEASING
& FINANCIAL, an Oregon corporation having offices at P.O. Box 2177, 7659 S.W.
Mohawk Street, Tualatin, Oregon 97062-2177 (hereinafter called "Secured
Party"), any amounts set forth on any Schedule to Master Loan Agreement
hereunder (the "Schedule(s)", all the terms of which are incorporated herein)
and grants a security interest in and assigns, transfers and sets over to and
to the successors and assigns thereof, the property specified in any Schedule
hereunder wherever located, and any and all proceeds thereof, insurance
recoveries, and all replacements, additions, accessions, accessories and
substitutions thereto or therefor (hereinafter called the "Collateral"). The
security interest granted hereby is to secure payment of any and all
liabilities or obligations of Debtor to the Secured Party, matured or
unmatured, direct or indirect, absolute or contingent, heretofore arising,
now existing or hereafter arising, and whether under this Agreement or under
any other writing between Debtor and Secured Party) (all hereinafter called
the "obligations" and/or the "liabilities").
1.2 Joint and Several Liability; Payment Terms. In the event there is more
than one Debtor, all obligations shall be considered as joint and several
obligations of all Debtors regardless of the source of Collateral or the
particular Debtor with which the obligation originated. Interest shall be
calculated on the basis of a 360-day year. All payments on any Schedule
hereunder shall be made in lawful money of the United States at the post
office address of the Secured Party or at such other place as the Secured
Party may designate to Debtor in writing from time to time. In no event
shall any Schedule hereunder be enforced in any way which permits Secured
Party to collect interest in excess of the maximum lawful rate. Should
interest collected exceed such rate, Secured Party shall refund such excess
interest to Debtor. In such event, Debtor agrees that Secured Party shall
not be subject to any penalties for contracting for or collecting interest in
excess of the maximum lawful rate.
1.3 Late Charge. If any of the obligations remains overdue for more than ten
(10) days, Debtor hereby agrees to pay on demand, as a late charge, an amount
equal to the lesser of (i) five percent (5.0%) of each such overdue amount;
or (ii) the maximum percentage of any such overdue amount permitted by
applicable law as a late charge. Debtor agrees that the amount of such late
charge represents a reasonable estimate of the cost to Secured Party of
processing a delinquent payment and that the acceptance of any late charge
shall not constitute a waiver of default with respect to the overdue amount
or prevent Secured Party from exercising any other available rights and
remedies.
2.0 WARRANTIES AND COVENANTS OF DEBTOR Debtor hereby represents, warrants and
covenants that:
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2.1 Business Organization Status and Authority. (i) Debtor is duly
organized, validly existing and in good standing under the laws of the state
of its organization and is qualified to do business in all states and
countries in which such qualification is necessary; (ii) Debtor has the
lawful power and authority to own its assets and to conduct the business in
which it is engaged; and to execute and comply with the provisions of this
Agreement and any related documents; (iii) the execution and delivery of this
Agreement and any related documents have been duly authorized by all
necessary action; (iv) no authorization, consent, approval, license or
exemption of, or filing or registration with, any or all of the owners of
Debtor or any governmental entity was, is or will be necessary to the valid
execution, delivery, performance or full enforceability of this Agreement and
any related documents. Except as specifically disclosed to Secured Party,
Debtor utilizes no trade names in the conduct of its business and/or has not
changed its name within the past five years.
2.2 Merger; Transfer of Assets. Debtor will not consolidate or merge with or
into any other entity, liquidate or dissolve, distribute, sell, lease,
transfer or dispose of all of its properties or assets or any substantial
portion thereof other than in the ordinary course of its business, unless the
Secured Party shall give its prior written consent, and the surviving, or
successor entity or the transferee of such assets, as the case may be, shall
assume, by a written instrument which is legal, valid and enforceable against
such surviving or successor entity or transferee, all of the obligations of
Debtor to Secured Party or any affiliate of Secured Party.
2.3 No Violation of Covenants or Laws. Debtor is not party to any agreement
or subject to any restriction which materially and adversely affects its
ability to perform its obligations under this Agreement and any related
documents. The execution of and compliance with the terms of this Agreement
and any related documents does not and will not (i) violate any provision of
law, or (ii) conflict with or result in a breach of any order, injunction, or
decree of any court or governmental authority or the formation documents of
Debtor, or (iii) constitute or result in a default under any agreement, bond
or indenture by which Debtor is bound or to which any of its property is
subject, or (iv) result in the imposition of any lien or encumbrance upon any
of Debtor's assets, except for any liens created hereunder or under any
related documents.
2.4 Accurate Information. All financial information submitted to the Secured
Party in regard to Debtor, was prepared in accordance with generally accepted
accounting principles, consistently applied, and fairly and accurately
depicts the financial position and results of operations of Debtor or such
other person, as of the respective dates or for the respective periods, to
which such information pertains. Debtor had good, valid and marketable title
to all the properties and assets reflected as being owned by it on any
balance sheets of Debtor submitted to Secured Party as of the dates thereof.
2.5 Judgments; Pending Legal Action. There are no judgments outstanding
against Debtor, and there are no actions or proceedings pending or, to the
best knowledge of Debtor, threatened against or affecting Debtor or any of
its properties in any court or before any governmental entity which, if
determined adversely to Debtor, would result in any material adverse change
in the business, properties or assets, or in the condition, financial or
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otherwise, of Debtor or would materially and adversely affect the ability of
Debtor to satisfy its obligations under this Agreement and any related
documents.
2.6 No Breach of Other Agreements; Compliance with Applicable Laws. Debtor
is not in breach of or in default under any loan agreement, indenture, bond,
note or other evidence of indebtedness, or any other material agreement or
any court order, injunction or decree or any lien, statute, rule or
regulation. The operations of Debtor comply with all laws, ordinances and
governmental rules and regulations applicable to them. Debtor has filed all
Federal, state and municipal income tax returns which are required to be
filed and has paid all taxes as shown on said returns and on all assessments
billed to it to the extent that such taxes or assessments have become due.
Debtor does not know of any other proposed tax assessment against it or of
any basis for one.
2.7 Sale Prohibited. Debtor will not sell, dispose of or offer to sell or
otherwise transfer the Collateral or any interest therein without the prior
written consent of Secured Party.
2.8 Location of Collateral. The Collateral will be kept at the location(s)
shown on the Schedule(s) hereunder and Debtor will promptly notify Secured
Party of any change in the location(s) of the Collateral. Debtor will not
remove the Collateral from said location(s) without the prior written consent
of Secured Party.
2.9 Collateral not a Fixture. Notwithstanding any presumption of applicable
law, and irrespective of any manner of attachment, the Collateral shall not
be deemed real property but shall retain its character as personal property.
However, Debtor will at the option of Secured Party furnish the latter with a
waiver or waivers in recordable form, signed by all persons having an
ownership interest in the real estate, of any interest in the Collateral
which is or might be deemed to be prior to Secured Party's interest.
2.10 Perfection of Security Interest. Except for (i) the security interest
granted hereby and (ii) any other security interest previously disclosed by
Debtor to Secured Party in writing, Debtor is the owner of the Collateral
free from any adverse lien, security interest or encumbrance. Debtor will
defend the Collateral against all claims and demands of all persons at any
time claiming any interest therein. Except as previously disclosed in
writing to Secured Party, no financing statement covering any Collateral or
any proceeds thereof is on file in any public office. At the request of
Secured Party, Debtor will execute, acknowledge and deliver to Secured Party
in recordable or fileable form, any document or instrument required by
Secured Party to further the purposes of this Agreement, or to perfect its
interest in the Collateral or to maintain such perfected interest in full
force and effect, including (without limitation) any fixture filings and
financial statements and any amendments and continuation statements thereto
pursuant to the Uniform Commercial Code, in form satisfactory to Secured
Party, and will pay the cost of filing the same or filing or recording this
Agreement in all public offices wherever filing or recording is deemed by
Secured Party to be necessary or desirable. Debtor hereby agrees that this
Agreement shall be and constitute a financing statement for purposes of the
Uniform Commercial Code.
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2.11 Insurance. Unless otherwise agreed, Debtor will have and maintain
insurance from financially sound carriers at all times with respect to all
Collateral against risks of fire (including so-called extended coverage),
theft, collision, "mysterious disappearance" and other such risks as Secured
Party may require, containing such terms, in such form, for such periods and
written by such companies as may be satisfactory to Secured Party; each
insurance policy shall name Secured Party as loss payee and
shall be payable to Secured Party and Debtor as their interest may appear;
all policies of insurance shall provide for ten days' written minimum
cancellation notice to Secured Party; Debtor shall furnish Secured Party with
certificates or other evidence satisfactory to Secured Party of compliance
with the foregoing insurance provisions.
2.12 Use of the Collateral. Debtor will use the Collateral for business
purposes only and operate it by qualified personnel in accordance with
applicable manufacturers' manuals. Debtor will keep the Collateral free from
any adverse lien or encumbrance and in good working order, condition and
repair and will not waste or destroy the Collateral or any part thereof;
Debtor will keep the Collateral appropriately protected from the elements,
and will furnish all required parts and servicing (including any contract
service necessary to maintain the benefit of any warranty of the
manufacturer); Debtor will not use the Collateral in violation of any
statute, ordinance, regulation or order; and Secured Party may examine and
inspect the Collateral and any and all books and records of Debtor during
business hours at any time; such right of inspection shall include the right
to copy Debtor's books and records and to converse with Debtor's officers,
employees, agents, and independent accountants.
2.13 Taxes and Assessments. Debtor will pay promptly when due all taxes,
assessments, levies, imposts, duties and charges, of any kind or nature,
imposed upon the Collateral or for its use or operation or upon this
Agreement or upon any instruments evidencing the obligations.
2.14 Financial Statements. Debtor shall furnish Secured Party within ninety
(90) days after the close of each fiscal year of Debtor, its financial
statements (including, without limitation, a balance sheet, a statement of
income and surplus account and a statement of changes in financial position)
for the immediately preceding fiscal year, setting forth the corresponding
figures for the prior fiscal year in comparative form, all in reasonable
detail without any qualification or exception deemed material by Secured
Party. Such financial statements shall be prepared at least as a review by
Debtor's independent certified accountants and, if prepared as an audit,
shall be certified by such accountants. Debtor shall also furnish Secured
Party with any other financial information deemed necessary by Secured Party.
Each financial statement submitted by Debtor to Secured Party shall be
accompanied by a certificate signed by the chief executive officer, the chief
operating officer or the chief financial officer of Debtor, certifying that
(i) such financial statement was prepared in accordance with the generally
accepted accounting principles consistently applied and fairly and accurately
presents the Debtor's financial condition and results of operations for the
period to which it pertains, and (ii) no event of default has occurred under
this Agreement during the period to which such financial statements pertains.
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3.0 EVENTS OF DEFAULT
3.1 the following shall be considered events of default: (i) failure on the
part of Debtor to promptly perform in complete accordance with its
representations, warranties and covenants made in this Agreement or in any
other agreement with Secured Party, including, but not limited to, the
payment of any liability, with interest, when due, or default by Debtor under
the provisions of any other material agreement to which Debtor is party; (ii)
the death of Debtor if an individual or the dissolution of Debtor if a
business organization; (iii) more than one of the present officers of Debtor
leave the business except for reason of the death or disability of an
individual; (iv) the filing of any petition or complain under the Federal
Bankruptcy Code or other federal or state acts of similar nature, by or
against Debtor; or an assignment for the benefit of creditors by Debtor; (v)
an application for or the appointment of a Receiver, Trustee or Conservator,
voluntary or involuntary, by or against Debtor or for any substantial assets
of Debtor, (vi) insolvency of Debtor under either the Federal Bankruptcy Code
or applicable principles of equity; (vii) entry of judgment, issuance of any
garnishment or attachment, or filing of any lien, claim or government
attachment against the Collateral or which, in Secured Party's sole
discretion, might impair the Collateral; (viii) the determination by Secured
Party that a material misrepresentation of fact has been made by Debtor in
this Agreement or in any writing supplementary or ancillary hereto; (ix) a
determination by Secured Party that Debtor has suffered a material adverse
change in its financial condition from the date of this Agreement; or (x)
bankruptcy, insolvency, termination, dissolution or default of any guarantor
for Debtor.
4.0 REMEDIES
4.1 Upon the happening of any event of default which is not cured within ten
(10) days, or at any time thereafter: (i) all liabilities of Debtor shall, at
the option of Secured Party, become immediately due and payable; (ii) Secured
Party shall have and may exercise all of the rights and remedies granted to a
secured party under the Uniform Commercial Code; (iii) Secured Party shall
have the right, immediately, and without notice or other action, to set-off
against any of Debtor's liabilities to Secured Party any money owed by
Secured Party in any capacity to Debtor, whether or not due, and Secured
Party shall be deemed to have exercised such right of set-off and to have
made a charge against any such money immediately upon the occurrence of such
default event though actual book entries may be made at some time subsequent
thereto; (iv) Secured Party may proceed with or without judicial process to
take possession of all or any part of the Collateral; Debtor agrees that upon
receipt of notice of Secured Party's intention to take possession of all or
any part of said Collateral, Debtor will do everything necessary to make same
available to Secured Party (including, without limitation, assembling the
Collateral and making it available to Secured Party at a place designated by
Secured Party which is reasonably convenient to Debtor and Secured Party);
and so long as Secured Party acts in a commercially reasonable manner, Debtor
agrees to assign, transfer and deliver at any time the whole or any portion
of the Collateral or any rights or interest therein in accordance with the
Uniform Commercial Code and without limiting the scope of Secured Party's
rights thereunder; (v) Secured Party may sell the Collateral at public or
private sale or in
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any other commercially reasonable manner and, at the option of Secured Party,
in bulk or in parcels and with or without having the Collateral at the sale
or other disposition, and Debtor agrees that in case of sale or other
disposition of the Collateral, or any portion thereof, Secured Party shall
apply all proceeds first to all costs and expenses of disposition, including
attorneys' fees, and then to Debtor's obligations to Secured Party, (vi)
Secured Party may elect to retain the Collateral or any part thereof in
satisfaction of all sums due from Debtor upon notice to Debtor and any other
party as may be required by the Uniform Commercial Code. All remedies
provided in this paragraph shall be cumulative. Secured Party may exercise
any one or more of such remedies in addition to any and all other remedies
Secured Party may have under any applicable law or in equity.
4.2 Expenses; Disposition. Upon default, all amounts due and to become due
hereunder shall, without notice, bear interest at the lesser of (i) twelve
percent (12%) per annum or (ii) the maximum rate per annum which Secured
Party is permitted by law to charge from the date such amounts are due until
paid. Debtor shall pay all reasonable expenses of realizing upon the
Collateral hereunder upon default and collecting all liabilities of Debtor to
Secured Party, which reasonable expenses shall include attorneys' fees,
whether or not litigation is commenced and whether incurred at trial, on
appeal, or in any other proceeding. Any notification of a sale or other
disposition of Collateral or of other action by Secured Party required to be
given by Secured Party, will be sufficient if given personally, mailed, or
delivered by facsimile machine or overnight carrier not less than five (5)
days prior to the day on which such sale or other disposition will be made or
action taken, and such notification shall be deemed reasonable notice.
5.0 MISCELLANEOUS
5.1 No Implied Waivers; Entire Agreement. The waiver by Secured Party of any
default hereunder or of any provisions hereof shall not discharge any party
hereto from liability hereunder and such waiver shall be limited to the
particular event of default and shall not operate as a waiver of any
subsequent default. This Agreement and any Schedule hereunder are non-
cancelable. No modification of this Agreement or waiver of any right of
Secured Party, hereunder shall be valid unless in writing and signed by an
authorized officer of Secured Party. No failure on the part of Secured Party
to exercise, or delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right or remedy hereunder preclude any other or further exercise thereof or
the exercise of any other right or remedy. The provisions of this Agreement
and the rights and remedies granted to Secured Party herein shall be in
addition to, and not in limitation of those of any other agreement with
Secured Party or any other evidence of any liability held by Secured Party.
This Agreement and any Schedule hereunder (a "Transaction") embody the entire
agreement between the parties and supersede all prior agreements and
understandings relating to the same subject matter, except in any case where
the Secured Party takes an assignment from a vendor of its security interest
in the same Collateral, in which case the terms of the Transaction shall be
incorporated into the assigned agreement and shall prevail over any
inconsistent terms therein but shall not be construed to create a new
contract.
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5.2 Choice of Law. This Agreement and the rights of the parties hereto shall
be governed by applicable Federal law and the laws of the State of Nevada.
Any action arising out of this Agreement may be litigated under the laws of
Nevada and submitted to the jurisdiction of Nevada, and that service of
process by certified mail, return receipt requested, will be sufficient to
confer personal jurisdiction over the Debtor.
5.3 Protection of the Collateral. At its option, Secured Party may discharge
taxes, liens or other encumbrances at any time levied or placed on the
Collateral, may pay for insurance on the Collateral and may pay for the
maintenance and preservation of the Collateral. Debtor agrees to reimburse
Secured Party on demand for any payment made or any expense incurred by
Secured Party pursuant to the foregoing authorization. Any payments made by
Secured Party shall be immediately due and payable by Debtor and shall bear
interest at the rate of fifteen percent (15%) per annum. Until default,
Debtor may retain possession of the Collateral and use it in any lawful
manner not inconsistent with the provisions of this Agreement and any other
agreement between Debtor and Secured Party, and not inconsistent with any
policy of insurance thereon.
5.4 Binding Agreement; Time of the Essence. This Agreement shall take effect
as a sealed instrument and shall be binding upon and shall inure to the
benefit of the parties hereto, their respective heirs, executors,
administrators, successors, and assigns. Time is of the essence with respect
to the performance of Debtor's obligations under this Agreement and any other
agreement between Debtor and Secured Party.
5.5 Enforceability. Any term, clause or provision of this Agreement or of
any evidence of indebtedness from Debtor to Secured Party which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining terms or clauses of such provision or the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such term,
clause or provision in any other jurisdiction.
5.6 Notices. Any notices or demands required to be given herein shall be
given to the parties in writing by United States first class mail (express,
certified or otherwise) at the addresses set forth on page 1 of this
Agreement or to such other addresses as the parties may hereafter substitute
by written notice given in the manner prescribed in this paragraph.
5.7 Additional Security. If there shall be any other collateral for any of
the obligations, or for the obligations of any guarantor thereof, Secured
Party may proceed against and/or enforce any or all of the Collateral and
such collateral in whatever order it may, in its sole discretion, deem
appropriate. Any amount(s) received by Secured Party from whatever source
and applied by it to any of the obligations shall be applied in such order of
application as Secured Party shall from time to time, in its sole discretion,
elect.
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6.0 ASSIGNMENT
6.1 SECURED PARTY MAY SELL OR ASSIGN ANY AND ALL RIGHT, TITLE AND INTEREST IT
HAS IN THE COLLATERAL AND/OR ARISING UNDER THIS AGREEMENT TO A FINANCIAL
INSTITUTION. DEBTOR SHALL, UPON THE DIRECTION OF SECURED PARTY: 1) EXECUTE
ALL DOCUMENTS NECESSARY TO EFFECTUATE SUCH ASSIGNMENT AND, 2) PAY DIRECTLY
AND PROMPTLY TO SECURED PARTY'S ASSIGNEE WITHOUT ABATEMENT, DEDUCTION OR SET-
OFF, ALL AMOUNTS WHICH HAVE BECOME DUE UNDER THE ASSIGNED AGREEMENTS.
SECURED PARTY'S ASSIGNEE SHALL HAVE ANY AND ALL RIGHTS, IMMUNITIES AND
DISCRETION OF SECURED PARTY HEREUNDER AND SHALL BE ENTITLED TO EXERCISE ANY
REMEDIES OF SECURED PARTY HEREUNDER. ALL REFERENCES HEREIN TO SECURED PARTY
SHALL INCLUDE SECURED PARTY'S ASSIGNEE (EXCEPT THAT SAID ASSIGNEE SHALL NOT
BE CHARGEABLE WITH ANY OBLIGATIONS OR LIABILITIES HEREUNDER OR IN RESPECT
HEREOF). DEBTOR WILL NOT ASSERT AGAINST SECURED PARTY'S ASSIGNEE ANY
DEFENSE, COUNTERCLAIM OR SET-OFF WHICH DEBTOR MAY HAVE AGAINST SECURED PARTY.
6.2 DEBTOR SHALL NOT ASSIGN OR IN ANY WAY DISPOSE OF ALL OR ANY OF ITS RIGHTS
OR OBLIGATIONS UNDER THIS AGREEMENT OR ENTER INTO ANY AGREEMENT REGARDING OF
ALL OR ANY PART OF THE COLLATERAL WITHOUT THE PRIOR WRITTEN CONSENT OF
SECURED PARTY WHICH SHALL NOT BE UNREASONABLY WITHHELD. IN CONNECTION WITH
THE GRANTING OF SUCH CONSENT AND THE PREPARATION OF NECESSARY DOCUMENTATION,
A FEE SHALL BE ASSESSED EQUAL TO ONE PERCENT (1%) OF THE TOTAL REMAINING
BALANCE THEN DUE HEREUNDER.
7.0 POWER OF ATTORNEY
7.1 Secured Party is hereby appointed Debtor's attorney-in-fact to sign
Debtor's name and to make non-material amendments (including completing and
conforming the description of the Collateral) on any document in connection
with this Agreement (including any financing statement) and to obtain,
adjust, settle, and cancel any insurance required by this Agreement and to
endorse any drafts in connection with such insurance.
In Witness Whereof, the parties hereto have caused this Agreement to be duly
executed the 9th day of Sept., 1998.
U.S. BANCORP LEASING & FINANCIAL Golden Road Motor Inn, Inc.
dba Atlantis Hotel and Casino
(Debtor)
By: By: /s/ Ben Farahi
-------------------------- ---------------
An authorized officer thereof Authorized Corporate Officer
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GUARANTY
In order to induce U.S. BANCORP LEASING & FINANCIAL (the "Creditor") to enter
into one or more financing arrangements in the form of lease(s) or loan(s)
(referred to herein as the "Transaction") with, or otherwise directly or
indirectly making property available to GOLDEN ROAD MOTOR INN, INC. dba
Atlantis Hotel & Casino (the "Obligor") and/or to induce Creditor to grant to
Obligor such renewals, extensions, forbearances, releases of collateral or
other relinquishments of rights, whether in connection with the
Transaction(s) or otherwise, as Creditor may in its sole discretion deem
advisable, and in consideration of any agreements heretofore or hereafter
entered into between Creditor and Obligor (any and all such notes, security
agreements, loan agreements, lease agreements, entered into between Obligor
and Creditor together with any and all schedules and riders thereto and any
and all other instruments or agreements including, without limitation, pledge
agreements and assignments, executed and delivered by Obligor in connection
therewith, being hereinafter collectively called the "Agreements"), and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, EACH OF THE UNDERSIGNED (EACH OF WHOM IS HEREINAFTER
CALLED A "GUARANTOR"), INTENDING TO BE LEGALLY BOUND, HEREBY JOINTLY AND
SEVERALLY GUARANTEES THE FULL, PROMPT, COMPLETE AND FINAL PAYMENT AND
PERFORMANCE OF ALL THE OBLIGOR'S OBLIGATIONS PURSUANT TO THE AGREEMENTS OR IN
ANY WAY ARISING THEREFROM AND ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES
OF OBLIGOR TO CREDITOR, WHETHER NOW IN EXISTENCE OR ARISING HEREAFTER, AND
WHETHER DIRECT OR INDIRECT, CONTINGENT OR ABSOLUTE, MATURED OR UNMATURED,
SECURED OR UNSECURED, AND HOWEVER CONTRACTED OR ARISING (ALL SUCH OBLIGATIONS
AND LIABILITIES BEING HEREINAFTER CALLED THE "OBLIGATIONS").
Each Guarantor hereby promises to pay Creditor when due, on demand, all
indebtedness of any kind or nature emanating from the Agreements (including,
without limitation, if an event of default shall occur under the Agreements,
payment on demand of all unpaid sums to become due under the defaulted
Agreements for the entire term thereof), whether now or hereafter arising and
however and whenever evidenced; and each Guarantor agrees to indemnify and
hold Creditor harmless from and against any and all losses, liabilities and
costs emanating from any failure of Obligor to fully, promptly and completely
satisfy the Obligations. For purposes hereof, (i) "losses, liabilities and
costs" shall include (without limitation), all losses, liabilities,
obligations, claims, demands, judgments, costs and expenses of whatever kind
or nature (including, without limitation, attorneys' fees) and (ii)
"emanating" from an event or cause shall include (without limitation) in any
way directly or indirectly being caused by or in any other way arising out of
such event or cause.
Each Guarantor hereby waives any notice of default or nonpayment or of late
or inadequate satisfaction in regard to the Obligations. In particular (and
not in limitation of the foregoing), each Guarantor hereby agrees that, in
enforcing this Guaranty, Creditor shall not be required (i) to demand payment
of the amount due (known as "demand"); (ii) to present for payment any
evidence of the Obligations (known as "presentment" or "presentment for
payment"); (iii) to give notice that amounts due have not been paid (known as
"notice of dishonor"); or (iv) to obtain an official certification of
nonpayment (known as "protest") or to give any Guarantor
-123-
notice of any such "protest;" and each Guarantor hereby waives demand,
presentment, presentment for payment, notice of dishonor, protest and notice
of protest, as aforesaid. Each Guarantor hereby further waives notice of
acceptance hereof and any and all other notices to which such Guarantor may
be entitled.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, the liability of Obligor or any other guarantor of
the Obligations may from time to time, in whole or in part, be extended,
renewed, continued, amended, modified, composed, accelerated, supplemented,
compromised, settled or released in Creditor's sole discretion, and that any
collateral for any of the Obligations or for any guaranty thereof (including
this Guaranty) may from time to time, in whole or part, be exchanged, sold or
surrendered in Creditor's sole discretion. Each Guarantor hereby agrees that
no such extension, renewal, continuation, amendment, modification,
composition, acceleration, supplement, compromise, settlement, release,
exchange, sale or surrender shall in any way impair, affect or release the
liability of any Guarantor hereunder or constitute a waiver of any of
Creditor's rights hereunder.
This Guaranty is unlimited, absolute, irrevocable and unconditional and shall
continue in full force and effect until all the Obligations shall have been
fully, completely and finally satisfied and paid. The obligations of each
Guarantor hereunder shall continue and survive the repossession of any
property or other property leased pursuant to the Agreements (or any property
in which Creditor has a security interest securing any of the Obligations)
whether or not any such repossession constitutes an "election of remedies"
against the Obligor or any other person. Each Guarantor agrees to be
obligated hereunder notwithstanding any termination of the Agreements in
whole or part by operation of law or any unenforceability or invalidity of
the Agreements for any reason whatsoever (including, without limitation,
invalidity or voidness ab initio and/or partial or complete unenforceability
as a result of impossibility or impracticability of performance or
frustration of the purpose of the Agreements). The obligations of the
Guarantors hereunder are joint and several and shall not be subject to any
abatement, setoff, defense or counterclaim for any cause whatsoever.
Each Guarantor hereby agrees that its obligations hereunder are direct and
primary and that Creditor may proceed directly and in the first instance
against each or any Guarantor or combination of Guarantors and have its
remedy hereunder without first being obliged to resort to any other right or
remedy or security for any of the Obligations. Each Guarantor hereby waives
any right to require Creditor to proceed against the Obligor or to proceed
against any other Guarantor or to proceed against any other guarantor of the
Obligations. If there shall be any securities for any of the Obligations, or
for the obligations of any Guarantor hereunder, or for the obligations of any
other guarantor of any of the Obligations, Creditor may proceed against
and/or enforce any or all of such securities in whatever order it may, in its
sole discretion, deem appropriate. Any amount(s) received by Creditor from
whatever source and applied by it to any of the Obligations shall be applied
in such order of application as Creditor shall, in its sole discretion,
elect.
In the event of any default in regard to any Guarantor's obligations
hereunder, or in the event of death, incompetency, termination, dissolution
-124-
or insolvency of the Obligor, or if a receiver, liquidator or conservator be
appointed for any part of the property or assets of the Obligor, or if the
Obligor makes an assignment for the benefit of creditors, or if the Obligor
shall file a voluntary petition in bankruptcy or any involuntary petition in
bankruptcy shall be filed against it then, and in any such case, each
Guarantor agrees to pay to Creditor, upon demand, the full amount which would
be payable hereunder by such Guarantor if all the Obligations and
Indebtedness including, but not limited to, any remaining payments owing
pursuant to the Agreements or any of the other guaranteed Agreements, were
then due and payable.
Notwithstanding any provision hereof or any provision of any other instrument
or agreement, or any presumption of applicable law or principle of legal
construction to the contrary: (i) nothing shall discharge or satisfy any
Guarantor's obligations hereunder except full, complete and final payment and
satisfaction of all the Obligations, Indebtedness and Indemnities; (ii) each
Guarantor hereby waives any and all defenses to its obligations hereunder
including, without limitation, any defense arising by reason of any cessation
of the Obligor's business or any bankruptcy, insolvency or business failure
of the Obligor or any other person; and (iii) no Guarantor shall have any
right of subrogation against the Obligor, and each Guarantor hereby waives
any and all rights of subrogation it may have against the Obligor, to enforce
any right or remedy which Creditor has or may hereafter have against the
Obligor, and waives the benefits of, and any and all rights to participate
in, any security or securities now or hereafter held by Creditor. It is
expressly understood by each Guarantor that payments received by Creditor
from or on behalf of Obligor shall be solely for the benefit of Creditor and
shall not benefit the Guarantor in any way. Each Guarantor hereby further
acknowledges that such Guarantor is not and shall not be construed as a
"Creditor" of Obligor by virtue of this Guaranty.
Each Guarantor hereby represents and warrants to Creditor that all
information concerning such Guarantor, including (without limitation)
financial statements and other financial information, furnished to Creditor
in connection with the Agreements or any of the other Guaranteed Agreements,
was true, complete and accurate as of the date of delivery thereof to
Creditor, and that all such information remains true, complete and accurate,
and that there have been no material adverse changes in such Guarantor's
financial condition as of the date hereof. In the event of any breach of any
Guarantor's representations and warranties herein or any material adverse
change in the financial condition of any Guarantor, upon the request of
Creditor, such Guarantor shall promptly furnish to Creditor such additional
security for the performance of such Guarantor's obligations hereunder as
Creditor may reasonably request.
No notice of termination of this Guaranty shall be effective unless and until
such notice shall be in writing and executed by Guarantor and shall have been
received at Creditor's principal corporate headquarters at P.O. Box 2177,
7659 S.W. Mohawk Street, Tualatin, Oregon 97062-2177; provided, however, that
in the event of such notice, this Guaranty shall continue in full force and
effect with regard to all Obligations created, existing or arising prior to
the date of such receipt. No modification hereof or amendment hereto and no
waiver of any term or provision hereof shall be valid unless in writing and
signed by an authorized officer of Creditor.
-125-
No delay or failure on the part of Creditor in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise
by Creditor of any right or remedy shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. No action of
Creditor permitted hereunder shall invalidate or in any way impair this
Guaranty. No waiver of any right or remedy hereunder shall constitute a
waiver of any other or further right or remedy hereunder.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, this Guaranty may be assigned by Creditor and
reassigned, in the sole discretion of Creditor or its assignee. As used
herein, the term "Creditor" includes Creditor and any successor or assign of
Creditor. This Guaranty shall be binding upon each Guarantor, and upon the
legal successors, representatives, and assigns of such Guarantor. Each and
every waiver made herein by any Guarantor is and shall be deemed to be and
construed as an absolute, irrevocable and unconditional waiver of the right
waived.
This Guaranty is intended to be legal, valid, binding and enforceable in
accordance with its terms. Whenever possible, each term and provision of
this Guaranty shall be interpreted so as to be effective and to effectuate
its intent under applicable law. If any term or provision of this Guaranty
shall be unenforceable, invalid or prohibited in any jurisdiction under
applicable law, such term or provision shall be ineffective in such
jurisdiction but only to the extent of such unenforceability, invalidity or
prohibition, and the remainder of such term or provision, and the other terms
and provisions of the Guaranty, shall not thereby be affected or impaired in
such jurisdiction, nor shall any of the terms or provisions of the Guaranty
be thereby affected or impaired in any way in any other jurisdiction.
This Guaranty shall be governed by the construed in accordance with Federal
Law and the laws of the State of Nevada, and that service of process by
certified mail, return receipt requested, will be sufficient to confer
personal jurisdiction over such Guarantor for purposes of litigating any
actions arising hereunder in the courts of such State. This Guaranty is in
addition to, and not in limitation or derogation of, any and all other
guaranties of the Obligations executed by any Guarantor. In the event of any
conflict between the provisions of this Guaranty and those of any such other
guaranty, the provisions of this Guaranty shall govern. Each Guarantor
hereby agrees and acknowledges that time is of the essence with regard to the
performance of such Guarantor's obligations hereunder. This Guaranty shall
take effect as a sealed instrument.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE OBLIGATION OF THE
GUARANTORS TOGETHER HEREUNDER IS LIMITED TO $1,000,000.00, AND IS JOINT AND
SEVERAL.
-126-
IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty to be
duly executed and delivered as of 9th day of Sept., 1998.
Witness: Behrouz Ben Farahi
/s/ John Bydalek /s/Behrouz Ben Farahi
------------ ------------------
Print Name: John Bydalek an Individual
Address: 1175 W. Moana Ln. SS#------------
#200, Reno, NV 89509
Witness: Bahram Bob Farahi
/s/ John Bydalek /s/Bahram Bob Farahi
------------ -----------------
Print Name: John Bydalek an Individual
Address: SS#------------
Witness: John Farahi
/s/ John Bydalek /s/John Farahi
------------ -----------
Print Name: John Bydalek an Individual
Address: SS#------------
GUARNATOR'S SIGNATURE MAY NOT BE WITNESSED BY GUARANTOR'S SPOUSE OR OTHER
FAMILY MEMBER
-127-
GUARANTY
In order to induce U.S. BANCORP LEASING & FINANCIAL (the "Creditor") to enter
into one or more financing arrangements in the form of lease(s) or loan(s)
(referred to herein as the "Transaction") with, or otherwise directly or
indirectly making property available to GOLDEN ROAD MOTOR INN, INC. dba
Atlantis Hotel & Casino (the "Obligor") and/or to induce Creditor to grant to
Obligor such renewals, extensions, forbearances, releases of collateral or
other relinquishments of rights, whether in connection with the
Transaction(s) or otherwise, as Creditor may in its sole discretion deem
advisable, and in consideration of any agreements heretofore or hereafter
entered into between Creditor and Obligor (any and all such notes, security
agreements, loan agreements, lease agreements, entered into between Obligor
and Creditor together with any and all schedules and riders thereto and any
and all other instruments or agreements including, without limitation, pledge
agreements and assignments, executed and delivered by Obligor in connection
therewith, being hereinafter collectively called the "Agreements"), and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, EACH OF THE UNDERSIGNED (EACH OF WHOM IS HEREINAFTER
CALLED A "GUARANTOR"), INTENDING TO BE LEGALLY BOUND, HEREBY JOINTLY AND
SEVERALLY GUARANTEES THE FULL, PROMPT, COMPLETE AND FINAL PAYMENT AND
PERFORMANCE OF ALL THE OBLIGOR'S OBLIGATIONS PURSUANT TO THE AGREEMENTS OR IN
ANY WAY ARISING THEREFROM AND ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES
OF OBLIGOR TO CREDITOR, WHETHER NOW IN EXISTENCE OR ARISING HEREAFTER, AND
WHETHER DIRECT OR INDIRECT, CONTINGENT OR ABSOLUTE, MATURED OR UNMATURED,
SECURED OR UNSECURED, AND HOWEVER CONTRACTED OR ARISING (ALL SUCH OBLIGATIONS
AND LIABILITIES BEING HEREINAFTER CALLED THE "OBLIGATIONS").
Each Guarantor hereby promises to pay Creditor when due, on demand, all
indebtedness of any kind or nature emanating from the Agreements (including,
without limitation, if an event of default shall occur under the Agreements,
payment on demand of all unpaid sums to become due under the defaulted
Agreements for the entire term thereof), whether now or hereafter arising and
however and whenever evidenced; and each Guarantor agrees to indemnify and
hold Creditor harmless from and against any and all losses, liabilities and
costs emanating from any failure of Obligor to fully, promptly and completely
satisfy the Obligations. For purposes hereof, (i) "losses, liabilities and
costs" shall include (without limitation), all losses, liabilities,
obligations, claims, demands, judgments, costs and expenses of whatever kind
or nature (including, without limitation, attorneys' fees) and (ii)
"emanating" from an event or cause shall include (without limitation) in any
way directly or indirectly being caused by or in any other way arising out of
such event or cause.
Each Guarantor hereby waives any notice of default or nonpayment or of late
or inadequate satisfaction in regard to the Obligations. In particular (and
not in limitation of the foregoing), each Guarantor hereby agrees that, in
enforcing this Guaranty, Creditor shall not be required (i) to demand payment
of the amount due (known as "demand"); (ii) to present for payment any
evidence of the Obligations (known as "presentment" or "presentment for
payment"); (iii) to give notice that amounts due have not been paid (known as
"notice of dishonor"); or (iv) to obtain an official certification of
nonpayment (known as "protest") or to give any Guarantor
-128-
notice of any such "protest;" and each Guarantor hereby waives demand,
presentment, presentment for payment, notice of dishonor, protest and notice
of protest, as aforesaid. Each Guarantor hereby further waives notice of
acceptance hereof and any and all other notices to which such Guarantor may
be entitled.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, the liability of Obligor or any other guarantor of
the Obligations may from time to time, in whole or in part, be extended,
renewed, continued, amended, modified, composed, accelerated, supplemented,
compromised, settled or released in Creditor's sole discretion, and that any
collateral for any of the Obligations or for any guaranty thereof (including
this Guaranty) may from time to time, in whole or part, be exchanged, sold or
surrendered in Creditor's sole discretion. Each Guarantor hereby agrees that
no such extension, renewal, continuation, amendment, modification,
composition, acceleration, supplement, compromise, settlement, release,
exchange, sale or surrender shall in any way impair, affect or release the
liability of any Guarantor hereunder or constitute a waiver of any of
Creditor's rights hereunder.
This Guaranty is unlimited, absolute, irrevocable and unconditional and
shall continue in full force and effect until all the Obligations shall
have been fully, completely and finally satisfied and paid. The obligations
of each Guarantor hereunder shall continue and survive the repossession of
any property or other property leased pursuant to the Agreements (or any
property in which Creditor has a security interest securing any of the
Obligations) whether or not any such repossession constitutes an "election of
remedies" against the Obligor or any other person. Each Guarantor agrees to
be obligated hereunder notwithstanding any termination of the Agreements in
whole or part by operation of law or any unenforceability or invalidity of
the Agreements for any reason whatsoever (including, without limitation,
invalidity or voidness ab initio and/or partial or complete unenforceability
as a result of impossibility or impracticability of performance or
frustration of the purpose of the Agreements). The obligations of the
Guarantors hereunder are joint and several and shall not be subject to any
abatement, setoff, defense or counterclaim for any cause whatsoever.
Each Guarantor hereby agrees that its obligations hereunder are direct and
primary and that Creditor may proceed directly and in the first instance
against each or any Guarantor or combination of Guarantors and have its
remedy hereunder without first being obliged to resort to any other right or
remedy or security for any of the Obligations. Each Guarantor hereby waives
any right to require Creditor to proceed against the Obligor or to proceed
against any other Guarantor or to proceed against any other guarantor of the
Obligations. If there shall be any securities for any of the Obligations, or
for the obligations of any Guarantor hereunder, or for the obligations of any
other guarantor of any of the Obligations, Creditor may proceed against
and/or enforce any or all of such securities in whatever order it may, in its
sole discretion, deem appropriate. Any amount(s) received by Creditor from
whatever source and applied by it to any of the Obligations shall be applied
in such order of application as Creditor shall, in its sole discretion,
elect.
In the event of any default in regard to any Guarantor's obligations
hereunder, or in the event of death, incompetency, termination, dissolution
-129-
or insolvency of the Obligor, or if a receiver, liquidator or conservator be
appointed for any part of the property or assets of the Obligor, or if the
Obligor makes an assignment for the benefit of creditors, or if the Obligor
shall file a voluntary petition in bankruptcy or any involuntary petition in
bankruptcy shall be filed against it then, and in any such case, each
Guarantor agrees to pay to Creditor, upon demand, the full amount which would
be payable hereunder by such Guarantor if all the Obligations and
Indebtedness including, but not limited to, any remaining payments owing
pursuant to the Agreements or any of the other guaranteed Agreements, were
then due and payable.
Notwithstanding any provision hereof or any provision of any other instrument
or agreement, or any presumption of applicable law or principle of legal
construction to the contrary: (i) nothing shall discharge or satisfy any
Guarantor's obligations hereunder except full, complete and final payment and
satisfaction of all the Obligations, Indebtedness and Indemnities; (ii) each
Guarantor hereby waives any and all defenses to its obligations hereunder
including, without limitation, any defense arising by reason of any cessation
of the Obligor's business or any bankruptcy, insolvency or business failure
of the Obligor or any other person; and (iii) no Guarantor shall have any
right of subrogation against the Obligor, and each Guarantor hereby waives
any and all rights of subrogation it may have against the Obligor, to enforce
any right or remedy which Creditor has or may hereafter have against the
Obligor, and waives the benefits of, and any and all rights to participate
in, any security or securities now or hereafter held by Creditor. It is
expressly understood by each Guarantor that payments received by Creditor
from or on behalf of Obligor shall be solely for the benefit of Creditor and
shall not benefit the Guarantor in any way. Each Guarantor hereby further
acknowledges that such Guarantor is not and shall not be construed as a
"Creditor" of Obligor by virtue of this Guaranty.
Each Guarantor hereby represents and warrants to Creditor that all
information concerning such Guarantor, including (without limitation)
financial statements and other financial information, furnished to Creditor
in connection with the Agreements or any of the other Guaranteed Agreements,
was true, complete and accurate as of the date of delivery thereof to
Creditor, and that all such information remains true, complete and accurate,
and that there have been no material adverse changes in such Guarantor's
financial condition as of the date hereof. In the event of any breach of any
Guarantor's representations and warranties herein or any material adverse
change in the financial condition of any Guarantor, upon the request of
Creditor, such Guarantor shall promptly furnish to Creditor such additional
security for the performance of such Guarantor's obligations hereunder as
Creditor may reasonably request.
No notice of termination of this Guaranty shall be effective unless and until
such notice shall be in writing and executed by Guarantor and shall have been
received at Creditor's principal corporate headquarters at P.O. Box 2177,
7659 S.W. Mohawk Street, Tualatin, Oregon 97062-2177; provided, however, that
in the event of such notice, this Guaranty shall continue in full force and
effect with regard to all Obligations created, existing or arising prior to
the date of such receipt. No modification hereof or amendment hereto and no
waiver of any term or provision hereof shall be valid unless in writing and
signed by an authorized officer of Creditor.
-130-
No delay or failure on the part of Creditor in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise
by Creditor of any right or remedy shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. No action of
Creditor permitted hereunder shall invalidate or in any way impair this
Guaranty. No waiver of any right or remedy hereunder shall constitute a
waiver of any other or further right or remedy hereunder.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, this Guaranty may be assigned by Creditor and
reassigned, in the sole discretion of Creditor or its assignee. As used
herein, the term "Creditor" includes Creditor and any successor or assign of
Creditor. This Guaranty shall be binding upon each Guarantor, and upon the
legal successors, representatives, and assigns of such Guarantor. Each and
every waiver made herein by any Guarantor is and shall be deemed to be and
construed as an absolute, irrevocable and unconditional waiver of the right
waived.
This Guaranty is intended to be legal, valid, binding and enforceable in
accordance with its terms. Whenever possible, each term and provision of
this Guaranty shall be interpreted so as to be effective and to effectuate
its intent under applicable law. If any term or provision of this Guaranty
shall be unenforceable, invalid or prohibited in any jurisdiction under
applicable law, such term or provision shall be ineffective in such
jurisdiction but only to the extent of such unenforceability, invalidity or
prohibition, and the remainder of such term or provision, and the other terms
and provisions of the Guaranty, shall not thereby be affected or impaired in
such jurisdiction, nor shall any of the terms or provisions of the Guaranty
be thereby affected or impaired in any way in any other jurisdiction.
This Guaranty shall be governed by the construed in accordance with Federal
Law and the laws of the State of Nevada, and that service of process by
certified mail, return receipt requested, will be sufficient to confer
personal jurisdiction over such Guarantor for purposes of litigating any
actions arising hereunder in the courts of such State. This Guaranty is in
addition to, and not in limitation or derogation of, any and all other
guaranties of the Obligations executed by any Guarantor. In the event of any
conflict between the provisions of this Guaranty and those of any such other
guaranty, the provisions of this Guaranty shall govern. Each Guarantor
hereby agrees and acknowledges that time is of the essence with regard to the
performance of such Guarantor's obligations hereunder. This Guaranty shall
take effect as a sealed instrument.
IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty to be
duly executed and delivered as of 9th day of Sept., 1998.
Monarch Casino & Resort, Inc.
By: /s/ Ben Farahi
---------------
Ben Farahi [Print Name]
----------
CFO [Title]
---
1175 West Moana Lane, Suite 200
Reno, Nevada 89509
-131-
SCHEDULE TO MASTER LOAN AGREEMENT
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino
1175 W. Moana Lane, Suite 200
Reno, Nevada 89509
$812,862.00 Effective Date 5/5/99 Loan Transaction Number
------
1. THIS SCHEDULE is made between Golden Road Motor Inn, Inc. dba Atlantis
Hotel and Casino, as Debtor, and U.S. BANCORP LEASING & FINANCIAL (which,
together with its successor and assigns, will be called the "Secured Party")
pursuant to the Master Loan Agreement dated as of September 22, 1998 (the
"Loan Agreement"), the terms of which (including the definitions) are
incorporated herein. If any terms hereof are inconsistent with the terms of
the Loan Agreement, the terms hereof shall prevail.
2. FOR VALUE RECEIVED, Debtor hereby promises to pay to the order of Secured
Party the principal amount of Eight Hundred Twelve Thousand Eight Hundred
Sixty-Two and 00/100 Dollars ($812,862.00) with interest on any outstanding
principal balance at the rate(s) specified herein from the Effective Date
hereof until this Schedule shall have been paid in full in accordance with
the following payment schedule: sixty (60) installments of $16,245.63 each,
including the entire amount of interest accrued on this Schedule at the time
of payment of each installment. The first payment shall be due on June 6,
1999 and a like payment shall be due on the same day of each succeeding month
thereafter until the entire principal and interest have been paid. At the
time of the final installment hereon, all unpaid principal and interest shall
be due and owing. Each payment shall be applied first to accrued and unpaid
interest, and the balance to the outstanding principal hereof. As a result,
such final installment may be substantially more or substantially less than
the installments specified herein.
3. The Debtor promises to pay interest on the principal balance outstanding
at a rate of 7.39 percent per annum.
4. The Debtor may prepay this Schedule, in whole or in part, by paying
simultaneously with an in addition to the prepayment, a premium for such
prepayment privilege equal to the specified percent of the amount prepaid in
accordance with the following schedule, one (1) to twelve (12) months: five
(5.0)%, thirteen (13) to twenty-four (24) months: one (1.0)%, twenty-five
(25) to sixty (60): 0%.
Notwithstanding the foregoing, payments made within 30 days of the date an
installment is due which do not exceed the scheduled amount of such
installment shall not be considered prepayments.
5. Each of Debtor, if more than one, and all other parties who at any time
may be liable hereon in any capacity, hereby jointly and severally waive
diligence, demand, presentment, presentment for payment, protest, notice of
protest and notice of dishonor of this Schedule, and authorize the Secured
Party, without notice, to grant extensions in the time of payment of and
reductions in the rate of interest on any moneys owing on this Schedule.
-132-
6. The following property is hereby made Collateral for all purposes under
the Loan Agreement:
Various items of Hotel fixtures, furniture, and equipment located at the
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino at 3800 S. Virginia
St., Reno, Nevada 89502; Washoe County and including but not limited to, all
property improvements, miscellaneous upgrades, non-salvageable material, slot
machines, kitchen equipment, casino bars, buffet bars, furniture, room
accessories and partitions, ice machines, and spas.
Whether any of the foregoing is owned now or acquired later; all accessions,
additions, replacements, and substitutions relating to any of the foregoing;
all records of any kind relating to any of the foregoing; all proceeds
relating to any of the foregoing (including insurance, general intangibles
and accounts proceeds).
7. The Collateral hereunder shall be based at the following location(s):
3800 S. Virginia Street
Reno, NV 89502
COUNTY: Washoe
Year 2000. Debtor has reviewed and assessed or will review and assess its
business operations and computer systems and applications to address the
"year 2000 problem" (that is, that computer applications and equipment used
by Debtor, directly or indirectly through third parties, may be unable to
properly perform date-sensitive functions before, during and after January 1,
2000). Debtor reasonable believes that the year 2000 problem will not result
in a material adverse change in Debtor's business condition (financial or
otherwise), operations, properties or prospects or ability to repay Secured
Party. Based upon the review, Debtor has developed or will develop and
implement a plan to address the year 2000 problem, to remediate any material
year 2000 problem, and to complete testing with respect thereto, as soon as
practicable and in any event by June 30, 1999. Debtor will promptly deliver
such information relating to this covenant as Secured Party requests from
time to time.
IN WITNESS WHEREOF, Debtor has executed this Schedule this 5th day of May,
1999.
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino
By /s/Ben Farahi
-------------
Title: An Authorized Officer
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MASTER LOAN AGREEMENT
1.0 PARTIES, COLLATERAL AND OBLIGATIONS
1.1 This Agreement is dated as of September 22, 1998. For valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino (hereinafter called
"Debtor") with offices at 1175 W. Moana Lane, Suite 200, Reno, Nevada 89509
intending to be legally bound, hereby promises to pay to U.S. BANCORP LEASING
& FINANCIAL, an Oregon corporation having offices at P.O. Box 2177, 7659 S.W.
Mohawk Street, Tualatin, Oregon 97062-2177 (hereinafter called "Secured
Party"), any amounts set forth on any Schedule to Master Loan Agreement
hereunder (the "Schedule(s)", all the terms of which are incorporated herein)
and grants a security interest in and assigns, transfers and sets over to and
to the successors and assigns thereof, the property specified in any Schedule
hereunder wherever located, and any and all proceeds thereof, insurance
recoveries, and all replacements, additions, accessions, accessories and
substitutions thereto or therefor (hereafter called the "Collateral"). The
security interest granted hereby is to secure payment of any and all
liabilities or obligations of Debtor to the Secured Party, matured or
unmatured, direct or indirect, absolute or contingent, heretofore arising,
now existing or hereafter arising, and whether under this Agreement or under
any other writing between Debtor and Secured Party (all hereinafter called
the "obligations" and/or the "liabilities").
1.2 Joint and Several Liability; Payment Terms. In the event there is more
than one Debtor, all obligations shall be considered as joint and several
obligations of all Debtors regardless of the source of Collateral or the
particular Debtor with which the obligation originated. Interest shall be
calculated on the basis of a 360-day year. All payments on any Schedule
hereunder shall be made in lawful money of the United States at the post
office address of the Secured Party or at such other place as the Secured
Party may designate to Debtor in writing from time to time. In no event
shall any Schedule hereunder be enforced in any way which permits Secured
Party to collect interest in excess of the maximum lawful rate. Should
interest collected exceed such rate, Secured Party shall refund such excess
interest to Debtor. In such event, Debtor agrees that Secured Party shall
not be subject to any penalties for contracting for or collecting interest in
excess of the maximum lawful rate.
1.3 Late Charge. If any of the obligations remains overdue for more than ten
(10) days, Debtor hereby agrees to pay on demand, as a late charge, an amount
equal to the lesser of (i) five percent (5.0%) of each such overdue amount;
or (ii) the maximum percentage of any such overdue amount permitted by
applicable law as a late charge. Debtor agrees that the amount of such late
charge represents a reasonable estimate of the cost to Secured Party of
processing a delinquent payment and that the acceptance of any late charge
shall not constitute a waiver of default with respect to the overdue amount
or prevent Secured Party from exercising any other available rights and
remedies.
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2.0 WARRANTIES AND COVENANTS OF DEBTOR Debtor hereby represents, warrants and
covenants that:
2.1 Business Organization Status and Authority. (i) Debtor is duly
organized, validly existing and in good standing under the laws of the state
of its organization and is qualified to do business in all states and
countries in which such qualification is necessary; (ii) Debtor has the
lawful power and authority to own its assets and to conduct the business in
which it is engaged; and to execute and comply with the provisions of this
Agreement and any related documents; (iii) the execution and delivery of this
Agreement and any related documents have been duly authorized by all
necessary action; (iv) no authorization, consent, approval, license or
exemption of, or filing or registration with, any or all of the owners of
Debtor or any governmental entity was, is or will be necessary to the valid
execution, delivery, performance or full enforceability of this Agreement and
any related documents. Except as specifically disclosed to Secured Party,
Debtor utilizes no trade names in the conduct of its business and/or has not
changed its name within the past five years.
2.2 Merger; Transfer of Assets. Debtor will not consolidate or merge with or
into any other entity, liquidate or dissolve, distribute, sell, lease,
transfer or dispose of all of its properties or assets or any substantial
portion thereof other than in the ordinary course of its business, unless the
Secured Party shall give its prior written consent, and the surviving, or
successor entity or the transferee of such assets, as the case may be, shall
assume, by a written instrument which is legal, valid and enforceable against
such surviving or successor entity or transferee, all of the obligations of
Debtor to Secured Party or any affiliate of Secured Party.
2.3 No Violation of Covenants or Laws. Debtor is not party to any agreement
or subject to any restriction which materially and adversely affects its
ability to perform its obligations under this Agreement and any related
documents. The execution of and compliance with the terms of this Agreement
and any related documents does not and will not (i) violate any provision of
law, or (ii) conflict with or result in a breach of any order, injunction, or
decree of any court or governmental authority or the formation documents of
Debtor, or (iii) constitute or result in a default under any agreement, bond
or indenture by which Debtor is bound or to which any of its property is
subject, or (iv) result in the imposition of any lien or encumbrance upon any
of Debtor's assets, except for any liens created hereunder or under any
related documents.
2.4 Accurate Information. All financial information submitted to the Secured
Party in regard to Debtor, was prepared in accordance with generally accepted
accounting principles, consistently applied, and fairly and accurately
depicts the financial position and results of operations of Debtor or such
other person, as of the respective dates or for the respective periods, to
which such information pertains. Debtor had good, valid and marketable title
to all the properties and assets reflected as being owned by it on any
balance sheets of Debtor submitted to Secured Party as of the dates thereof.
2.5 Judgments; Pending Legal Action. There are no judgments outstanding
against Debtor, and there are no actions or proceedings pending or, to the
best knowledge of Debtor, threatened against or affecting Debtor or any of
its properties in any court or before any governmental entity which, if
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determined adversely to Debtor, would result in any material adverse change
in the business, properties or assets, or in the condition, financial or
otherwise, of Debtor or would materially and adversely affect the ability of
Debtor to satisfy its obligations under this Agreement and any related
documents.
2.6 No Breach of Other Agreements; Compliance with Applicable Laws. Debtor
is not in breach of or in default under any loan agreement, indenture, bond,
note or other evidence of indebtedness, or any other material agreement or
any court order, injunction or decree or any lien, statute, rule or
regulation. The operations of Debtor comply with all laws, ordinances and
governmental rules and regulations applicable to them. Debtor has filed all
Federal, state and municipal income tax returns which are required to be
filed and has paid all taxes as shown on said returns and on all assessments
billed to it to the extent that such taxes or assessments have become due.
Debtor does not know of any other proposed tax assessment against it or of
any basis for one.
2.7 Sale Prohibited. Debtor will not sell, dispose of or offer to sell or
otherwise transfer the Collateral or any interest therein without the prior
written consent of Secured Party.
2.8 Location of Collateral. The Collateral will be kept at the location(s)
shown on the Schedule(s) hereunder and Debtor will promptly notify Secured
Party of any change in the location(s) of the Collateral. Debtor will not
remove the Collateral from said location(s) without the prior written consent
of Secured Party.
2.9 Collateral not a Fixture. Notwithstanding any presumption of applicable
law, and irrespective of any manner of attachment, the Collateral shall not
be deemed real property but shall retain its character as personal property.
However, Debtor will at the option of Secured Party furnish the latter with a
waiver or waivers in recordable form, signed by all persons having an
ownership interest in the real estate, of any interest in the Collateral
which is or might be deemed to be prior to Secured Party's interest.
2.10 Perfection of Security Interest. Except for (i) the security interest
granted hereby and (ii) any other security interest previously disclosed by
Debtor to Secured Party in writing, Debtor is the owner of the Collateral
free from any adverse lien, security interest or encumbrance. Debtor will
defend the Collateral against all claims and demands of all persons at any
time claiming any interest therein. Except as previously disclosed in
writing to Secured Party, no financing statement covering any Collateral or
any proceeds thereof is on file in any public office. At the request of
Secured Party, Debtor will execute, acknowledge and deliver to Secured Party
in recordable or fileable form, any document or instrument required by
Secured Party to further the purposes of this Agreement, or to perfect its
interest in the Collateral or to maintain such perfected interest in full
force and effect, including (without limitation) any fixture filings and
financial statements and any amendments and continuation statements thereto
pursuant to the Uniform Commercial Code, in form satisfactory to Secured
Party, and will pay the cost of filing the same or filing or recording this
Agreement in all public offices wherever filing or recording
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is deemed by Secured Party to be necessary or desirable. Debtor hereby
agrees that this Agreement shall be and constitute a financing statement for
purposes of the Uniform Commercial Code.
2.11 Insurance. Unless otherwise agreed, Debtor will have and maintain
insurance from financially sound carriers at all times with respect to all
Collateral against risks of fire (including so-called extended coverage),
theft, collision, "mysterious disappearance" and other such risks as Secured
Party may require, containing such terms, in such form, for such periods and
written by such companies as may be satisfactory to Secured Party; each
insurance policy shall name Secured Party as loss payee and
shall be payable to Secured Party and Debtor as their interest may appear;
all policies of insurance shall provide for ten days' written minimum
cancellation notice to Secured Party; Debtor shall furnish Secured Party with
certificates or other evidence satisfactory to Secured Party of compliance
with the foregoing insurance provisions.
2.12 Use of the Collateral. Debtor will use the Collateral for business
purposes only and operate it by qualified personnel in accordance with
applicable manufacturers' manuals. Debtor will keep the Collateral free from
any adverse lien or encumbrance and in good working order, condition and
repair and will not waste or destroy the Collateral or any part thereof;
Debtor will keep the Collateral appropriately protected from the elements,
and will furnish all required parts and servicing (including any contract
service necessary to maintain the benefit of any warranty of the
manufacturer); Debtor will not use the Collateral in violation of any
statute, ordinance, regulation or order; and Secured Party may examine and
inspect the Collateral and any and all books and records of Debtor during
business hours at any time; such right of inspection shall include the right
to copy Debtor's books and records and to converse with Debtor's officers,
employees, agents, and independent accountants.
2.13 Taxes and Assessments. Debtor will pay promptly when due all taxes,
assessments, levies, imposts, duties and charges, of any kind or nature,
imposed upon the Collateral or for its use or operation or upon this
Agreement or upon any instruments evidencing the obligations.
2.14 Financial Statements. Debtor shall furnish Secured Party within ninety
(90) days after the close of each fiscal year of Debtor, its financial
statements (including, without limitation, a balance sheet, a statement of
income and surplus account and a statement of changes in financial position)
for the immediately preceding fiscal year, setting forth the corresponding
figures for the prior fiscal year in comparative form, all in reasonable
detail without any qualification or exception deemed material by Secured
Party. Such financial statements shall be prepared at least as a review by
Debtor's independent certified accountants and, if prepared as an audit,
shall be certified by such accountants. Debtor shall also furnish Secured
Party with any other financial information deemed necessary by Secured Party.
Each financial statement submitted by Debtor to Secured Party shall be
accompanied by a certificate signed by the chief executive officer, the chief
operating officer or the chief financial officer of Debtor, certifying that
(i) such financial statement was prepared in accordance with the generally
accepted accounting principles consistently applied and fairly and accurately
presents the
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Debtor's financial condition and results of operations for the period to
which it pertains, and (ii) no event of default has occurred under this
Agreement during the period to which such financial statements pertains.
3.0 EVENTS OF DEFAULT
3.1 the following shall be considered events of default: (i) failure on the
part of Debtor to promptly perform in complete accordance with its
representations, warranties and covenants made in this Agreement or in any
other agreement with Secured Party, including, but not limited to, the
payment of any liability, with interest, when due, or default by Debtor under
the provisions of any other material agreement to which Debtor is party; (ii)
the death of Debtor if an individual or the dissolution of Debtor if a
business organization; (iii) more than one of the present officers of Debtor
leave the business except for reason of the death or disability of an
individual; (iv) the filing of any petition or complain under the Federal
Bankruptcy Code or other federal or state acts of similar nature, by or
against Debtor; or an assignment for the benefit of creditors by Debtor; (v)
an application for or the appointment of a Receiver, Trustee or Conservator,
voluntary or involuntary, by or against Debtor or for any substantial assets
of Debtor, (vi) insolvency of Debtor under either the Federal Bankruptcy Code
or applicable principles of equity; (vii) entry of judgment, issuance of any
garnishment or attachment, or filing of any lien, claim or government
attachment against the Collateral or which, in Secured Party's sole
discretion, might impair the Collateral; (viii) the determination by Secured
Party that a material misrepresentation of fact has been made by Debtor in
this Agreement or in any writing supplementary or ancillary hereto; (ix) a
determination by Secured Party that Debtor has suffered a material adverse
change in its financial condition from the date of this Agreement; or (x)
bankruptcy, insolvency, termination, dissolution or default of any guarantor
for Debtor.
4.0 REMEDIES
4.1 Upon the happening of any event of default which is not cured within ten
(10) days, or at any time thereafter: (i) all liabilities of Debtor shall, at
the option of Secured Party, become immediately due and payable; (ii) Secured
Party shall have and may exercise all of the rights and remedies granted to a
secured party under the Uniform Commercial Code; (iii) Secured Party shall
have the right, immediately, and without notice or other action, to set-off
against any of Debtor's liabilities to Secured Party any money owed by
Secured Party in any capacity to Debtor, whether or not due, and Secured
Party shall be deemed to have exercised such right of set-off and to have
made a charge against any such money immediately upon the occurrence of such
default event though actual book entries may be made at some time subsequent
thereto; (iv) Secured Party may proceed with or without judicial process to
take possession of all or any part of the Collateral; Debtor agrees that upon
receipt of notice of Secured Party's intention to take possession of all or
any part of said Collateral, Debtor will do everything necessary to make same
available to Secured Party (including, without limitation, assembling the
Collateral and making it available to Secured Party at a place designated by
Secured Party which is reasonably convenient to Debtor and Secured Party);
and so long as Secured
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Party acts in a commercially reasonable manner, Debtor agrees to assign,
transfer and deliver at any time the whole or any portion of the Collateral
or any rights or interest therein in accordance with the Uniform Commercial
Code and without limiting the scope of Secured Party's rights thereunder; (v)
Secured Party may sell the Collateral at public or private sale or in any
other commercially reasonable manner and, at the option of Secured Party, in
bulk or in parcels and with or without having the Collateral at the sale or
other disposition, and Debtor agrees that in case of sale or other
disposition of the Collateral, or any portion thereof, Secured Party shall
apply all proceeds first to all costs and expenses of disposition, including
attorneys' fees, and then to Debtor's obligations to Secured Party, (vi)
Secured Party may elect to retain the Collateral or any part thereof in
satisfaction of all sums due from Debtor upon notice to Debtor and any other
party as may be required by the Uniform Commercial Code. All remedies
provided in this paragraph shall be cumulative. Secured Party may exercise
any one or more of such remedies in addition to any and all other remedies
Secured Party may have under any applicable law or in equity.
4.2 Expenses; Disposition. Upon default, all amounts due and to become due
hereunder shall, without notice, bear interest at the lesser of (i) twelve
percent (12%) per annum or (ii) the maximum rate per annum which Secured
Party is permitted by law to charge from the date such amounts are due until
paid. Debtor shall pay all reasonable expenses of realizing upon the
Collateral hereunder upon default and collecting all liabilities of Debtor to
Secured Party, which reasonable expenses shall include attorneys' fees,
whether or not litigation is commenced and whether incurred at trial, on
appeal, or in any other proceeding. Any notification of a sale or other
disposition of Collateral or of other action by Secured Party required to be
given by Secured Party, will be sufficient if given personally, mailed, or
delivered by facsimile machine or overnight carrier not less than five (5)
days prior to the day on which such sale or other disposition will be made or
action taken, and such notification shall be deemed reasonable notice.
5.0 MISCELLANEOUS
5.1 No Implied Waivers; Entire Agreement. The waiver by Secured Party of any
default hereunder or of any provisions hereof shall not discharge any party
hereto from liability hereunder and such waiver shall be limited to the
particular event of default and shall not operate as a waiver of any
subsequent default. This Agreement and any Schedule hereunder are non-
cancelable. No modification of this Agreement or waiver of any right of
Secured Party, hereunder shall be valid unless in writing and signed by an
authorized officer of Secured Party. No failure on the part of Secured Party
to exercise, or delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right or remedy hereunder preclude any other or further exercise thereof or
the exercise of any other right or remedy. The provisions of this Agreement
and the rights and remedies granted to Secured Party herein shall be in
addition to, and not in limitation of those of any other agreement with
Secured Party or any other evidence of any liability held by Secured Party.
This Agreement and any Schedule hereunder (a "Transaction") embody the entire
agreement between the parties and supersede all prior
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agreements and understandings relating to the same subject matter, except in
any case where the Secured Party takes an assignment from a vendor of its
security interest in the same Collateral, in which case the terms of the
Transaction shall be incorporated into the assigned agreement and shall
prevail over any inconsistent terms therein but shall not be construed to
create a new contract.
5.2 Choice of Law. This Agreement and the rights of the parties hereto shall
be governed by applicable Federal law and the laws of the State of Nevada.
Any action arising out of this Agreement may be litigated under the laws of
Nevada and submitted to the jurisdiction of Nevada, and that service of
process by certified mail, return receipt requested, will be sufficient to
confer personal jurisdiction over the Debtor.
5.3 Protection of the Collateral. At its option, Secured Party may discharge
taxes, liens or other encumbrances at any time levied or placed on the
Collateral, may pay for insurance on the Collateral and may pay for the
maintenance and preservation of the Collateral. Debtor agrees to reimburse
Secured Party on demand for any payment made or any expense incurred by
Secured Party pursuant to the foregoing authorization. Any payments made by
Secured Party shall be immediately due and payable by Debtor and shall bear
interest at the rate of fifteen percent (15%) per annum. Until default,
Debtor may retain possession of the Collateral and use it in any lawful
manner not inconsistent with the provisions of this Agreement and any other
agreement between Debtor and Secured Party, and not inconsistent with any
policy of insurance thereon.
5.4 Binding Agreement; Time of the Essence. This Agreement shall take effect
as a sealed instrument and shall be binding upon and shall inure to the
benefit of the parties hereto, their respective heirs, executors,
administrators, successors, and assigns. Time is of the essence with respect
to the performance of Debtor's obligations under this Agreement and any other
agreement between Debtor and Secured Party.
5.5 Enforceability. Any term, clause or provision of this Agreement or of
any evidence of indebtedness from Debtor to Secured Party which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining terms or clauses of such provision or the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such term,
clause or provision in any other jurisdiction.
5.6 Notices. Any notices or demands required to be given herein shall be
given to the parties in writing by United States first class mail (express,
certified or otherwise) at the addresses set forth on page 1 of this
Agreement or to such other addresses as the parties may hereafter substitute
by written notice given in the manner prescribed in this paragraph.
5.7 Additional Security. If there shall be any other collateral for any of
the obligations, or for the obligations of any guarantor thereof, Secured
Party may proceed against and/or enforce any or all of the Collateral and
such collateral in whatever order it may, in its sole discretion, deem
appropriate. Any amount(s) received by Secured Party from whatever source
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and applied by it to any of the obligations shall be applied in such order of
application as Secured Party shall from time to time, in its sole discretion,
elect.
6.0 ASSIGNMENT
6.1 SECURED PARTY MAY SELL OR ASSIGN ANY AND ALL RIGHT, TITLE AND INTEREST IT
HAS IN THE COLLATERAL AND/OR ARISING UNDER THIS AGREEMENT TO A FINANCIAL
INSTITUTION. DEBTOR SHALL, UPON THE DIRECTION OF SECURED PARTY: 1) EXECUTE
ALL DOCUMENTS NECESSARY TO EFFECTUATE SUCH ASSIGNMENT AND, 2) PAY DIRECTLY
AND PROMPTLY TO SECURED PARTY'S ASSIGNEE WITHOUT ABATEMENT, DEDUCTION OR SET-
OFF, ALL AMOUNTS WHICH HAVE BECOME DUE UNDER THE ASSIGNED AGREEMENTS.
SECURED PARTY'S ASSIGNEE SHALL HAVE ANY AND ALL RIGHTS, IMMUNITIES AND
DISCRETION OF SECURED PARTY HEREUNDER AND SHALL BE ENTITLED TO EXERCISE ANY
REMEDIES OF SECURED PARTY HEREUNDER. ALL REFERENCES HEREIN TO SECURED PARTY
SHALL INCLUDE SECURED PARTY'S ASSIGNEE (EXCEPT THAT SAID ASSIGNEE SHALL NOT
BE CHARGEABLE WITH ANY OBLIGATIONS OR LIABILITIES HEREUNDER OR IN RESPECT
HEREOF). DEBTOR WILL NOT ASSERT AGAINST SECURED PARTY'S ASSIGNEE ANY
DEFENSE, COUNTERCLAIM OR SET-OFF WHICH DEBTOR MAY HAVE AGAINST SECURED PARTY.
6.2 DEBTOR SHALL NOT ASSIGN OR IN ANY WAY DISPOSE OF ALL OR ANY OF ITS RIGHTS
OR OBLIGATIONS UNDER THIS AGREEMENT OR ENTER INTO ANY AGREEMENT REGARDING OF
ALL OR ANY PART OF THE COLLATERAL WITHOUT THE PRIOR WRITTEN CONSENT OF
SECURED PARTY WHICH SHALL NOT BE UNREASONABLY WITHHELD. IN CONNECTION WITH
THE GRANTING OF SUCH CONSENT AND THE PREPARATION OF NECESSARY DOCUMENTATION,
A FEE SHALL BE ASSESSED EQUAL TO ONE PERCENT (1%) OF THE TOTAL REMAINING
BALANCE THEN DUE HEREUNDER.
7.0 POWER OF ATTORNEY
7.1 Secured Party is hereby appointed Debtor's attorney-in-fact to sign
Debtor's name and to make non-material amendments (including completing and
conforming the description of the Collateral) on any document in connection
with this Agreement (including any financing statement) and to obtain,
adjust, settle, and cancel any insurance required by this Agreement and to
endorse any drafts in connection with such insurance.
In Witness Whereof, the parties hereto have caused this Agreement to be duly
executed the 9th day of Sept., 1998.
U.S. BANCORP LEASING & FINANCIAL Golden Road Motor Inn, Inc.
dba Atlantis Hotel and Casino
(Debtor)
By: By: /s/ Ben Farahi
------------------------ ---------------
An authorized officer thereof Authorized Corporate Officer
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GUARANTY
In order to induce U.S. BANCORP LEASING & FINANCIAL (the "Creditor") to enter
into one or more financing arrangements in the form of lease(s) or loan(s)
(referred to herein as the "Transaction") with, or otherwise directly or
indirectly making property available to GOLDEN ROAD MOTOR INN, INC. dba
Atlantis Hotel & Casino (the "Obligor") and/or to induce Creditor to grant to
Obligor such renewals, extensions, forbearances, releases of collateral or
other relinquishments of rights, whether in connection with the
Transaction(s) or otherwise, as Creditor may in its sole discretion deem
advisable, and in consideration of any agreements heretofore or hereafter
entered into between Creditor and Obligor (any and all such notes, security
agreements, loan agreements, lease agreements, entered into between Obligor
and Creditor together with any and all schedules and riders thereto and any
and all other instruments or agreements including, without limitation, pledge
agreements and assignments, executed and delivered by Obligor in connection
therewith, being hereinafter collectively called the "Agreements"), and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, EACH OF THE UNDERSIGNED (EACH OF WHOM IS HEREINAFTER
CALLED A "GUARANTOR"), INTENDING TO BE LEGALLY BOUND, HEREBY JOINTLY AND
SEVERALLY GUARANTEES THE FULL, PROMPT, COMPLETE AND FINAL PAYMENT AND
PERFORMANCE OF ALL THE OBLIGOR'S OBLIGATIONS PURSUANT TO THE AGREEMENTS OR IN
ANY WAY ARISING THEREFROM AND ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES
OF OBLIGOR TO CREDITOR, WHETHER NOW IN EXISTENCE OR ARISING HEREAFTER, AND
WHETHER DIRECT OR INDIRECT, CONTINGENT OR ABSOLUTE, MATURED OR UNMATURED,
SECURED OR UNSECURED, AND HOWEVER CONTRACTED OR ARISING (ALL SUCH OBLIGATIONS
AND LIABILITIES BEING HEREINAFTER CALLED THE "OBLIGATIONS").
Each Guarantor hereby promises to pay Creditor when due, on demand, all
indebtedness of any kind or nature emanating from the Agreements (including,
without limitation, if an event of default shall occur under the Agreements,
payment on demand of all unpaid sums to become due under the defaulted
Agreements for the entire term thereof), whether now or hereafter arising and
however and whenever evidenced; and each Guarantor agrees to indemnify and
hold Creditor harmless from and against any and all losses, liabilities and
costs emanating from any failure of Obligor to fully, promptly and completely
satisfy the Obligations. For purposes hereof, (i) "losses, liabilities and
costs" shall include (without limitation), all losses, liabilities,
obligations, claims, demands, judgments, costs and expenses of whatever kind
or nature (including, without limitation, attorneys' fees) and (ii)
"emanating" from an event or cause shall include (without limitation) in any
way directly or indirectly being caused by or in any other way arising out of
such event or cause.
Each Guarantor hereby waives any notice of default or nonpayment or of late
or inadequate satisfaction in regard to the Obligations. In particular (and
not in limitation of the foregoing), each Guarantor hereby agrees that, in
enforcing this Guaranty, Creditor shall not be required (i) to demand payment
of the amount due (known as "demand"); (ii) to present for payment any
evidence of the Obligations (known as "presentment" or "presentment for
payment"); (iii) to give notice that amounts due have not been paid (known as
"notice of dishonor"); or (iv) to obtain an official certification of
nonpayment (known as "protest") or to give any Guarantor notice of any such
"protest;" and each Guarantor hereby waives demand,
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presentment, presentment for payment, notice of dishonor, protest and notice
of protest, as aforesaid. Each Guarantor hereby further waives notice of
acceptance hereof and any and all other notices to which such Guarantor may
be entitled.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, the liability of Obligor or any other guarantor of
the Obligations may from time to time, in whole or in part, be extended,
renewed, continued, amended, modified, composed, accelerated, supplemented,
compromised, settled or released in Creditor's sole discretion, and that any
collateral for any of the Obligations or for any guaranty thereof (including
this Guaranty) may from time to time, in whole or part, be exchanged, sold or
surrendered in Creditor's sole discretion. Each Guarantor hereby agrees that
no such extension, renewal, continuation, amendment, modification,
composition, acceleration, supplement, compromise, settlement, release,
exchange, sale or surrender shall in any way impair, affect or release the
liability of any Guarantor hereunder or constitute a waiver of any of
Creditor's rights hereunder.
This Guaranty is unlimited, absolute, irrevocable and unconditional and shall
continue in full force and effect until all the Obligations shall have been
fully, completely and finally satisfied and paid. The obligations of each
Guarantor hereunder shall continue and survive the repossession of any
property or other property leased pursuant to the Agreements (or any property
in which Creditor has a security interest securing any of the Obligations)
whether or not any such repossession constitutes an "election of remedies"
against the Obligor or any other person. Each Guarantor agrees to be
obligated hereunder notwithstanding any termination of the Agreements in
whole or part by operation of law or any unenforceability or invalidity of
the Agreements for any reason whatsoever (including, without limitation,
invalidity or voidness ab initio and/or partial or complete unenforceability
as a result of impossibility or impracticability of performance or
frustration of the purpose of the Agreements). The obligations of the
Guarantors hereunder are joint and several and shall not be subject to any
abatement, setoff, defense or counterclaim for any cause whatsoever.
Each Guarantor hereby agrees that its obligations hereunder are direct and
primary and that Creditor may proceed directly and in the first instance
against each or any Guarantor or combination of Guarantors and have its
remedy hereunder without first being obliged to resort to any other right or
remedy or security for any of the Obligations. Each Guarantor hereby waives
any right to require Creditor to proceed against the Obligor or to proceed
against any other Guarantor or to proceed against any other guarantor of the
Obligations. If there shall be any securities for any of the Obligations, or
for the obligations of any Guarantor hereunder, or for the obligations of any
other guarantor of any of the Obligations, Creditor may proceed against
and/or enforce any or all of such securities in whatever order it may, in its
sole discretion, deem appropriate. Any amount(s) received by Creditor from
whatever source and applied by it to any of the Obligations shall be applied
in such order of application as Creditor shall, in its sole discretion,
elect.
In the event of any default in regard to any Guarantor's obligations
hereunder, or in the event of death, incompetency, termination, dissolution
or insolvency of the Obligor, or if a receiver, liquidator or conservator
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be appointed for any part of the property or assets of the Obligor, or if the
Obligor makes an assignment for the benefit of creditors, or if the Obligor
shall file a voluntary petition in bankruptcy or any involuntary petition in
bankruptcy shall be filed against it then, and in any such case, each
Guarantor agrees to pay to Creditor, upon demand, the full amount which would
be payable hereunder by such Guarantor if all the Obligations and
Indebtedness including, but not limited to, any remaining payments owing
pursuant to the Agreements or any of the other guaranteed Agreements, were
then due and payable.
Notwithstanding any provision hereof or any provision of any other instrument
or agreement, or any presumption of applicable law or principle of legal
construction to the contrary: (i) nothing shall discharge or satisfy any
Guarantor's obligations hereunder except full, complete and final payment and
satisfaction of all the Obligations, Indebtedness and Indemnities; (ii) each
Guarantor hereby waives any and all defenses to its obligations hereunder
including, without limitation, any defense arising by reason of any cessation
of the Obligor's business or any bankruptcy, insolvency or business failure
of the Obligor or any other person; and (iii) no Guarantor shall have any
right of subrogation against the Obligor, and each Guarantor hereby waives
any and all rights of subrogation it may have against the Obligor, to enforce
any right or remedy which Creditor has or may hereafter have against the
Obligor, and waives the benefits of, and any and all rights to participate
in, any security or securities now or hereafter held by Creditor. It is
expressly understood by each Guarantor that payments received by Creditor
from or on behalf of Obligor shall be solely for the benefit of Creditor and
shall not benefit the Guarantor in any way. Each Guarantor hereby further
acknowledges that such Guarantor is not and shall not be construed as a
"Creditor" of Obligor by virtue of this Guaranty.
Each Guarantor hereby represents and warrants to Creditor that all
information concerning such Guarantor, including (without limitation)
financial statements and other financial information, furnished to Creditor
in connection with the Agreements or any of the other Guaranteed Agreements,
was true, complete and accurate as of the date of delivery thereof to
Creditor, and that all such information remains true, complete and accurate,
and that there have been no material adverse changes in such Guarantor's
financial condition as of the date hereof. In the event of any breach of any
Guarantor's representations and warranties herein or any material adverse
change in the financial condition of any Guarantor, upon the request of
Creditor, such Guarantor shall promptly furnish to Creditor such additional
security for the performance of such Guarantor's obligations hereunder as
Creditor may reasonably request.
No notice of termination of this Guaranty shall be effective unless and until
such notice shall be in writing and executed by Guarantor and shall have been
received at Creditor's principal corporate headquarters at P.O. Box 2177,
7659 S.W. Mohawk Street, Tualatin, Oregon 97062-2177; provided, however, that
in the event of such notice, this Guaranty shall continue in full force and
effect with regard to all Obligations created, existing or arising prior to
the date of such receipt. No modification hereof or amendment hereto and no
waiver of any term or provision hereof shall be valid unless in writing and
signed by an authorized officer of Creditor. No delay or failure on the part
of Creditor in the exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise
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by Creditor of any right or remedy shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. No action of
Creditor permitted hereunder shall invalidate or in any way impair this
Guaranty. No waiver of any right or remedy hereunder shall constitute a
waiver of any other or further right or remedy hereunder.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, this Guaranty may be assigned by Creditor and
reassigned, in the sole discretion of Creditor or its assignee. As used
herein, the term "Creditor" includes Creditor and any successor or assign of
Creditor. This Guaranty shall be binding upon each Guarantor, and upon the
legal successors, representatives, and assigns of such Guarantor. Each and
every waiver made herein by any Guarantor is and shall be deemed to be and
construed as an absolute, irrevocable and unconditional waiver of the right
waived.
This Guaranty is intended to be legal, valid, binding and enforceable in
accordance with its terms. Whenever possible, each term and provision of
this Guaranty shall be interpreted so as to be effective and to effectuate
its intent under applicable law. If any term or provision of this Guaranty
shall be unenforceable, invalid or prohibited in any jurisdiction under
applicable law, such term or provision shall be ineffective in such
jurisdiction but only to the extent of such unenforceability, invalidity or
prohibition, and the remainder of such term or provision, and the other terms
and provisions of the Guaranty, shall not thereby be affected or impaired in
such jurisdiction, nor shall any of the terms or provisions of the Guaranty
be thereby affected or impaired in any way in any other jurisdiction.
This Guaranty shall be governed by the construed in accordance with Federal
Law and the laws of the State of Nevada, and that service of process by
certified mail, return receipt requested, will be sufficient to confer
personal jurisdiction over such Guarantor for purposes of litigating any
actions arising hereunder in the courts of such State. This Guaranty is in
addition to, and not in limitation or derogation of, any and all other
guaranties of the Obligations executed by any Guarantor. In the event of any
conflict between the provisions of this Guaranty and those of any such other
guaranty, the provisions of this Guaranty shall govern. Each Guarantor
hereby agrees and acknowledges that time is of the essence with regard to the
performance of such Guarantor's obligations hereunder. This Guaranty shall
take effect as a sealed instrument.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE OBLIGATION OF THE
GUARANTORS TOGETHER HEREUNDER IS LIMITED TO $1,000,000.00, AND IS JOINT AND
SEVERAL.
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IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty to be
duly executed and delivered as of 9th day of Sept., 1998.
Witness: Behrouz Ben Farahi
/s/ John Bydalek /s/Behrouz Ben Farahi
------------ ------------------
Print Name: John Bydalek an Individual
Address: 1175 W. Moana Ln. SS#------------
#200, Reno, NV 89509
Witness: Bahram Bob Farahi
/s/ John Bydalek /s/Bahram Bob Farahi
------------ -----------------
Print Name: John Bydalek an Individual
Address: SS#------------
Witness: John Farahi
/s/ John Bydalek /s/John Farahi
------------ -----------
Print Name: John Bydalek an Individual
Address: SS#------------
GUARNATOR'S SIGNATURE MAY NOT BE WITNESSED BY GUARANTOR'S SPOUSE OR OTHER
FAMILY MEMBER
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GUARANTY
In order to induce U.S. BANCORP LEASING & FINANCIAL (the "Creditor") to enter
into one or more financing arrangements in the form of lease(s) or loan(s)
(referred to herein as the "Transaction") with, or otherwise directly or
indirectly making property available to GOLDEN ROAD MOTOR INN, INC. dba
Atlantis Hotel & Casino (the "Obligor") and/or to induce Creditor to grant to
Obligor such renewals, extensions, forbearances, releases of collateral or
other relinquishments of rights, whether in connection with the
Transaction(s) or otherwise, as Creditor may in its sole discretion deem
advisable, and in consideration of any agreements heretofore or hereafter
entered into between Creditor and Obligor (any and all such notes, security
agreements, loan agreements, lease agreements, entered into between Obligor
and Creditor together with any and all schedules and riders thereto and any
and all other instruments or agreements including, without limitation, pledge
agreements and assignments, executed and delivered by Obligor in connection
therewith, being hereinafter collectively called the "Agreements"), and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, EACH OF THE UNDERSIGNED (EACH OF WHOM IS HEREINAFTER
CALLED A "GUARANTOR"), INTENDING TO BE LEGALLY BOUND, HEREBY JOINTLY AND
SEVERALLY GUARANTEES THE FULL, PROMPT, COMPLETE AND FINAL PAYMENT AND
PERFORMANCE OF ALL THE OBLIGOR'S OBLIGATIONS PURSUANT TO THE AGREEMENTS OR IN
ANY WAY ARISING THEREFROM AND ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES
OF OBLIGOR TO CREDITOR, WHETHER NOW IN EXISTENCE OR ARISING HEREAFTER, AND
WHETHER DIRECT OR INDIRECT, CONTINGENT OR ABSOLUTE, MATURED OR UNMATURED,
SECURED OR UNSECURED, AND HOWEVER CONTRACTED OR ARISING (ALL SUCH OBLIGATIONS
AND LIABILITIES BEING HEREINAFTER CALLED THE "OBLIGATIONS").
Each Guarantor hereby promises to pay Creditor when due, on demand, all
indebtedness of any kind or nature emanating from the Agreements (including,
without limitation, if an event of default shall occur under the Agreements,
payment on demand of all unpaid sums to become due under the defaulted
Agreements for the entire term thereof), whether now or hereafter arising and
however and whenever evidenced; and each Guarantor agrees to indemnify and
hold Creditor harmless from and against any and all losses, liabilities and
costs emanating from any failure of Obligor to fully, promptly and completely
satisfy the Obligations. For purposes hereof, (i) "losses, liabilities and
costs" shall include (without limitation), all losses, liabilities,
obligations, claims, demands, judgments, costs and expenses of whatever kind
or nature (including, without limitation, attorneys' fees) and (ii)
"emanating" from an event or cause shall include (without limitation) in any
way directly or indirectly being caused by or in any other way arising out of
such event or cause.
Each Guarantor hereby waives any notice of default or nonpayment or of late
or inadequate satisfaction in regard to the Obligations. In particular (and
not in limitation of the foregoing), each Guarantor hereby agrees that, in
enforcing this Guaranty, Creditor shall not be required (i) to demand payment
of the amount due (known as "demand"); (ii) to present for payment any
evidence of the Obligations (known as "presentment" or "presentment for
payment"); (iii) to give notice that amounts due have not been paid (known as
"notice of dishonor"); or (iv) to obtain an official certification of
nonpayment (known as "protest") or to give any Guarantor notice of any such
"protest;" and each Guarantor hereby waives demand,
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presentment, presentment for payment, notice of dishonor, protest and notice
of protest, as aforesaid. Each Guarantor hereby further waives notice of
acceptance hereof and any and all other notices to which such Guarantor may
be entitled.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, the liability of Obligor or any other guarantor of
the Obligations may from time to time, in whole or in part, be extended,
renewed, continued, amended, modified, composed, accelerated, supplemented,
compromised, settled or released in Creditor's sole discretion, and that any
collateral for any of the Obligations or for any guaranty thereof (including
this Guaranty) may from time to time, in whole or part, be exchanged, sold or
surrendered in Creditor's sole discretion. Each Guarantor hereby agrees that
no such extension, renewal, continuation, amendment, modification,
composition, acceleration, supplement, compromise, settlement, release,
exchange, sale or surrender shall in any way impair, affect or release the
liability of any Guarantor hereunder or constitute a waiver of any of
Creditor's rights hereunder.
This Guaranty is unlimited, absolute, irrevocable and unconditional and
shall continue in full force and effect until all the Obligations shall
have been fully, completely and finally satisfied and paid. The obligations
of each Guarantor hereunder shall continue and survive the repossession of
any property or other property leased pursuant to the Agreements (or any
property in which Creditor has a security interest securing any of the
Obligations) whether or not any such repossession constitutes an "election of
remedies" against the Obligor or any other person. Each Guarantor agrees to
be obligated hereunder notwithstanding any termination of the Agreements in
whole or part by operation of law or any unenforceability or invalidity of
the Agreements for any reason whatsoever (including, without limitation,
invalidity or voidness ab initio and/or partial or complete unenforceability
as a result of impossibility or impracticability of performance or
frustration of the purpose of the Agreements). The obligations of the
Guarantors hereunder are joint and several and shall not be subject to any
abatement, setoff, defense or counterclaim for any cause whatsoever.
Each Guarantor hereby agrees that its obligations hereunder are direct and
primary and that Creditor may proceed directly and in the first instance
against each or any Guarantor or combination of Guarantors and have its
remedy hereunder without first being obliged to resort to any other right or
remedy or security for any of the Obligations. Each Guarantor hereby waives
any right to require Creditor to proceed against the Obligor or to proceed
against any other Guarantor or to proceed against any other guarantor of the
Obligations. If there shall be any securities for any of the Obligations, or
for the obligations of any Guarantor hereunder, or for the obligations of any
other guarantor of any of the Obligations, Creditor may proceed against
and/or enforce any or all of such securities in whatever order it may, in its
sole discretion, deem appropriate. Any amount(s) received by Creditor from
whatever source and applied by it to any of the Obligations shall be applied
in such order of application as Creditor shall, in its sole discretion,
elect.
In the event of any default in regard to any Guarantor's obligations
hereunder, or in the event of death, incompetency, termination, dissolution
or insolvency of the Obligor, or if a receiver, liquidator or conservator
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be appointed for any part of the property or assets of the Obligor, or if the
Obligor makes an assignment for the benefit of creditors, or if the Obligor
shall file a voluntary petition in bankruptcy or any involuntary petition in
bankruptcy shall be filed against it then, and in any such case, each
Guarantor agrees to pay to Creditor, upon demand, the full amount which would
be payable hereunder by such Guarantor if all the Obligations and
Indebtedness including, but not limited to, any remaining payments owing
pursuant to the Agreements or any of the other guaranteed Agreements, were
then due and payable.
Notwithstanding any provision hereof or any provision of any other instrument
or agreement, or any presumption of applicable law or principle of legal
construction to the contrary: (i) nothing shall discharge or satisfy any
Guarantor's obligations hereunder except full, complete and final payment and
satisfaction of all the Obligations, Indebtedness and Indemnities; (ii) each
Guarantor hereby waives any and all defenses to its obligations hereunder
including, without limitation, any defense arising by reason of any cessation
of the Obligor's business or any bankruptcy, insolvency or business failure
of the Obligor or any other person; and (iii) no Guarantor shall have any
right of subrogation against the Obligor, and each Guarantor hereby waives
any and all rights of subrogation it may have against the Obligor, to enforce
any right or remedy which Creditor has or may hereafter have against the
Obligor, and waives the benefits of, and any and all rights to participate
in, any security or securities now or hereafter held by Creditor. It is
expressly understood by each Guarantor that payments received by Creditor
from or on behalf of Obligor shall be solely for the benefit of Creditor and
shall not benefit the Guarantor in any way. Each Guarantor hereby further
acknowledges that such Guarantor is not and shall not be construed as a
"Creditor" of Obligor by virtue of this Guaranty.
Each Guarantor hereby represents and warrants to Creditor that all
information concerning such Guarantor, including (without limitation)
financial statements and other financial information, furnished to Creditor
in connection with the Agreements or any of the other Guaranteed Agreements,
was true, complete and accurate as of the date of delivery thereof to
Creditor, and that all such information remains true, complete and accurate,
and that there have been no material adverse changes in such Guarantor's
financial condition as of the date hereof. In the event of any breach of any
Guarantor's representations and warranties herein or any material adverse
change in the financial condition of any Guarantor, upon the request of
Creditor, such Guarantor shall promptly furnish to Creditor such additional
security for the performance of such Guarantor's obligations hereunder as
Creditor may reasonably request.
No notice of termination of this Guaranty shall be effective unless and until
such notice shall be in writing and executed by Guarantor and shall have been
received at Creditor's principal corporate headquarters at P.O. Box 2177,
7659 S.W. Mohawk Street, Tualatin, Oregon 97062-2177; provided, however, that
in the event of such notice, this Guaranty shall continue in full force and
effect with regard to all Obligations created, existing or arising prior to
the date of such receipt. No modification hereof or amendment hereto and no
waiver of any term or provision hereof shall be valid unless in writing and
signed by an authorized officer of Creditor. No delay or failure on the part
of Creditor in the exercise of any right or
-149-
remedy shall operate as a waiver thereof, and no single or partial exercise
by Creditor of any right or remedy shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. No action of
Creditor permitted hereunder shall invalidate or in any way impair this
Guaranty. No waiver of any right or remedy hereunder shall constitute a
waiver of any other or further right or remedy hereunder.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, this Guaranty may be assigned by Creditor and
reassigned, in the sole discretion of Creditor or its assignee. As used
herein, the term "Creditor" includes Creditor and any successor or assign of
Creditor. This Guaranty shall be binding upon each Guarantor, and upon the
legal successors, representatives, and assigns of such Guarantor. Each and
every waiver made herein by any Guarantor is and shall be deemed to be and
construed as an absolute, irrevocable and unconditional waiver of the right
waived.
This Guaranty is intended to be legal, valid, binding and enforceable in
accordance with its terms. Whenever possible, each term and provision of
this Guaranty shall be interpreted so as to be effective and to effectuate
its intent under applicable law. If any term or provision of this Guaranty
shall be unenforceable, invalid or prohibited in any jurisdiction under
applicable law, such term or provision shall be ineffective in such
jurisdiction but only to the extent of such unenforceability, invalidity or
prohibition, and the remainder of such term or provision, and the other terms
and provisions of the Guaranty, shall not thereby be affected or impaired in
such jurisdiction, nor shall any of the terms or provisions of the Guaranty
be thereby affected or impaired in any way in any other jurisdiction.
This Guaranty shall be governed by the construed in accordance with Federal
Law and the laws of the State of Nevada and that service of process by
certified mail, return receipt requested, will be sufficient to confer
personal jurisdiction over such Guarantor for purposes of litigating any
actions arising hereunder in the courts of such State. This Guaranty is in
addition to, and not in limitation or derogation of, any and all other
guaranties of the Obligations executed by any Guarantor. In the event of any
conflict between the provisions of this Guaranty and those of any such other
guaranty, the provisions of this Guaranty shall govern. Each Guarantor
hereby agrees and acknowledges that time is of the essence with regard to the
performance of such Guarantor's obligations hereunder. This Guaranty shall
take effect as a sealed instrument.
IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty to be
duly executed and delivered as of 9th day of Sept., 1998.
Monarch Casino & Resort, Inc.
By: /s/ Ben Farahi
---------------
Ben Farahi [Print Name]
----------
CFO [Title]
---
1175 West Moana Lane, Suite 200
Reno, Nevada 89509
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SCHEDULE TO MASTER LOAN AGREEMENT
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino
1175 W. Moana Lane, Suite 200
Reno, Nevada 89509
$1,627,810.00 Effective Date 5/24/99 Loan Transaction Number
-------
1. THIS SCHEDULE is made between Golden Road Motor Inn, Inc. dba Atlantis
Hotel and Casino, as Debtor, and U.S. BANCORP LEASING & FINANCIAL (which,
together with its successor and assigns, will be called the "Secured Party")
pursuant to the Master Loan Agreement dated as of September 22, 1998 (the
"Loan Agreement"), the terms of which (including the definitions) are
incorporated herein. If any terms hereof are inconsistent with the terms of
the Loan Agreement, the terms hereof shall prevail.
2. FOR VALUE RECEIVED, Debtor hereby promises to pay to the order of Secured
Party the principal amount of One Million, Six Hundred Twenty-Seven Thousand,
Eight Hundred Ten and 00/100 ($1,627,810.00) with interest on any outstanding
principal balance at the rate(s) specified herein from the Effective Date
hereof until this Schedule shall have been paid in full in accordance with
the following payment schedule: sixty (60) installments of $32,648.92 each,
including the entire amount of interest accrued on this Schedule at the time
of payment of each installment. The first payment shall be due on June 18,
1999 and a like payment shall be due on the same day of each succeeding month
thereafter until the entire principal and interest have been paid. At the
time of the final installment hereon, all unpaid principal and interest shall
be due and owing. Each payment shall be applied first to accrued and unpaid
interest, and the balance to the outstanding principal hereof. As a result,
such final installment may be substantially more or substantially less than
the installments specified herein.
3. The Debtor promises to pay interest on the principal balance outstanding
at a rate of 7.54 percent per annum.
4. The Debtor may prepay this Schedule, in whole or in part, by paying
simultaneously with an in addition to the prepayment, a premium for such
prepayment privilege equal to the specified percent of the amount prepaid in
accordance with the following schedule, one (1) to twelve (12) months: five
(5.0)%, thirteen (13) to twenty-four (24) months: one (1.00)%, twenty-five
(25) to sixty (60): 0%.
Notwithstanding the foregoing, payments made within 30 days of the date an
installment is due which do not exceed the scheduled amount of such
installment shall not be considered prepayments.
5. Each of Debtor, if more than one, and all other parties who at any time
may be liable hereon in any capacity, hereby jointly and severally waive
diligence, demand, presentment, presentment for payment, protest, notice of
protest and notice of dishonor of this Schedule, and authorize the Secured
Party, without notice, to grant extensions in the time of payment of and
reductions in the rate of interest on any moneys owing on this Schedule.
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6. The following property is hereby made Collateral for all purposes under
the Loan Agreement:
Various items of Hotel fixtures, furniture, and equipment located at the
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino at 3800 S. Virginia
St., Reno, Nevada 89502; Washoe County and including but not limited to, all
property improvements, miscellaneous upgrades, non-salvageable material, slot
machines, kitchen equipment, casino bars, buffet bars, furniture, room
accessories and partitions, ice machines, and spas.
Whether any of the foregoing is owned now or acquired later; all accessions,
additions, replacements, and substitutions relating to any of the foregoing;
all records of any kind relating to any of the foregoing; all proceeds
relating to any of the foregoing (including insurance, general intangibles
and accounts proceeds).
7. The Collateral hereunder shall be based at the following location(s):
3800 S. Virginia Street
Reno, NV 89502
COUNTY: Washoe
Year 2000. Debtor has reviewed and assessed or will review and assess its
business operations and computer systems and applications to address the
"year 2000 problem" (that is, that computer applications and equipment used
by Debtor, directly or indirectly through third parties, may be unable to
properly perform date-sensitive functions before, during and after January 1,
2000). Debtor reasonable believes that the year 2000 problem will not result
in a material adverse change in Debtor's business condition (financial or
otherwise), operations, properties or prospects or ability to repay Secured
Party. Based upon the review, Debtor has developed or will develop and
implement a plan to address the year 2000 problem, to remediate any material
year 2000 problem, and to complete testing with respect thereto, as soon as
practicable and in any event by June 30, 1999. Debtor will promptly deliver
such information relating to this covenant as Secured Party requests from
time to time.
IN WITNESS WHEREOF, Debtor has executed this Schedule this 20th day of May,
1999.
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino
By /s/Ben Farahi
--------------
Title: An Authorized Officer
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MASTER LOAN AGREEMENT
1.0 PARTIES, COLLATERAL AND OBLIGATIONS
1.1 This Agreement is dated as of September 22, 1998. For valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino (hereinafter called
"Debtor") with offices at 1175 W. Moana Lane, Suite 200, Reno, Nevada 89509
intending to be legally bound, hereby promises to pay to U.S. BANCORP LEASING
& FINANCIAL, an Oregon corporation having offices at P.O. Box 2177, 7659 S.W.
Mohawk Street, Tualatin, Oregon 97062-2177 (hereinafter called "Secured
Party"), any amounts set forth on any Schedule to Master Loan Agreement
hereunder (the "Schedule(s)", all the terms of which are incorporated herein)
and grants a security interest in and assigns, transfers and sets over to and
to the successors and assigns thereof, the property specified in any Schedule
hereunder wherever located, and any and all proceeds thereof, insurance
recoveries, and all replacements, additions, accessions, accessories and
substitutions thereto or therefor (hereinafter called the "Collateral"). The
security interest granted hereby is to secure payment of any and all
liabilities or obligations of Debtor to the Secured Party, matured or
unmatured, direct or indirect, absolute or contingent, heretofore arising,
now existing or hereafter arising, and whether under this Agreement or under
any other writing between Debtor and Secured Party (all hereinafter called
the "obligations" and/or the "liabilities").
1.2 Joint and Several Liability; Payment Terms. In the event there is more
than one Debtor, all obligations shall be considered as joint and several
obligations of all Debtors regardless of the source of Collateral or the
particular Debtor with which the obligation originated. Interest shall be
calculated on the basis of a 360-day year. All payments on any Schedule
hereunder shall be made in lawful money of the United States at the post
office address of the Secured Party or at such other place as the Secured
Party may designate to Debtor in writing from time to time. In no event
shall any Schedule hereunder be enforced in any way which permits Secured
Party to collect interest in excess of the maximum lawful rate. Should
interest collected exceed such rate, Secured Party shall refund such excess
interest to Debtor. In such event, Debtor agrees that Secured Party shall
not be subject to any penalties for contracting for or collecting interest in
excess of the maximum lawful rate.
1.3 Late Charge. If any of the obligations remains overdue for more than ten
(10) days, Debtor hereby agrees to pay on demand, as a late charge, an amount
equal to the lesser of (i) five percent (5.0%) of each such overdue amount;
or (ii) the maximum percentage of any such overdue amount permitted by
applicable law as a late charge. Debtor agrees that the amount of such late
charge represents a reasonable estimate of the cost to Secured Party of
processing a delinquent payment and that the acceptance of any late charge
shall not constitute a waiver of default with respect to the overdue amount
or prevent Secured Party from exercising any other available rights and
remedies.
153-
2.0 WARRANTIES AND COVENANTS OF DEBTOR Debtor hereby represents, warrants and
covenants that:
2.1 Business Organization Status and Authority. (i) Debtor is duly
organized, validly existing and in good standing under the laws of the state
of its organization and is qualified to do business in all states and
countries in which such qualification is necessary; (ii) Debtor has the
lawful power and authority to own its assets and to conduct the business in
which it is engaged; and to execute and comply with the provisions of this
Agreement and any related documents; (iii) the execution and delivery of this
Agreement and any related documents have been duly authorized by all
necessary action; (iv) no authorization, consent, approval, license or
exemption of, or filing or registration with, any or all of the owners of
Debtor or any governmental entity was, is or will be necessary to the valid
execution, delivery, performance or full enforceability of this Agreement and
any related documents. Except as specifically disclosed to Secured Party,
Debtor utilizes no trade names in the conduct of its business and/or has not
changed its name within the past five years.
2.2 Merger; Transfer of Assets. Debtor will not consolidate or merge with or
into any other entity, liquidate or dissolve, distribute, sell, lease,
transfer or dispose of all of its properties or assets or any substantial
portion thereof other than in the ordinary course of its business, unless the
Secured Party shall give its prior written consent, and the surviving, or
successor entity or the transferee of such assets, as the case may be, shall
assume, by a written instrument which is legal, valid and enforceable against
such surviving or successor entity or transferee, all of the obligations of
Debtor to Secured Party or any affiliate of Secured Party.
2.3 No Violation of Covenants or Laws. Debtor is not party to any agreement
or subject to any restriction which materially and adversely affects its
ability to perform its obligations under this Agreement and any related
documents. The execution of and compliance with the terms of this Agreement
and any related documents does not and will not (i) violate any provision of
law, or (ii) conflict with or result in a breach of any order, injunction, or
decree of any court or governmental authority or the formation documents of
Debtor, or (iii) constitute or result in a default under any agreement, bond
or indenture by which Debtor is bound or to which any of its property is
subject, or (iv) result in the imposition of any lien or encumbrance upon any
of Debtor's assets, except for any liens created hereunder or under any
related documents.
2.4 Accurate Information. All financial information submitted to the Secured
Party in regard to Debtor, was prepared in accordance with generally accepted
accounting principles, consistently applied, and fairly and accurately
depicts the financial position and results of operations of Debtor or such
other person, as of the respective dates or for the respective periods, to
which such information pertains. Debtor had good, valid and marketable title
to all the properties and assets reflected as being owned by it on any
balance sheets of Debtor submitted to Secured Party as of the dates thereof.
2.5 Judgments; Pending Legal Action. There are no judgments outstanding
against Debtor, and there are no actions or proceedings pending or, to the
best knowledge of Debtor, threatened against or affecting Debtor or any of
its properties in any court or before any governmental entity which, if
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determined adversely to Debtor, would result in any material adverse change
in the business, properties or assets, or in the condition, financial or
otherwise, of Debtor or would materially and adversely affect the ability of
Debtor to satisfy its obligations under this Agreement and any related
documents.
2.6 No Breach of Other Agreements; Compliance with Applicable Laws. Debtor
is not in breach of or in default under any loan agreement, indenture, bond,
note or other evidence of indebtedness, or any other material agreement or
any court order, injunction or decree or any lien, statute, rule or
regulation. The operations of Debtor comply with all laws, ordinances and
governmental rules and regulations applicable to them. Debtor has filed all
Federal, state and municipal income tax returns which are required to be
filed and has paid all taxes as shown on said returns and on all assessments
billed to it to the extent that such taxes or assessments have become due.
Debtor does not know of any other proposed tax assessment against it or of
any basis for one.
2.7 Sale Prohibited. Debtor will not sell, dispose of or offer to sell or
otherwise transfer the Collateral or any interest therein without the prior
written consent of Secured Party.
2.8 Location of Collateral. The Collateral will be kept at the location(s)
shown on the Schedule(s) hereunder and Debtor will promptly notify Secured
Party of any change in the location(s) of the Collateral. Debtor will not
remove the Collateral from said location(s) without the prior written consent
of Secured Party.
2.9 Collateral not a Fixture. Notwithstanding any presumption of applicable
law, and irrespective of any manner of attachment, the Collateral shall not
be deemed real property but shall retain its character as personal property.
However, Debtor will at the option of Secured Party furnish the latter with a
waiver or waivers in recordable form, signed by all persons having an
ownership interest in the real estate, of any interest in the Collateral
which is or might be deemed to be prior to Secured Party's interest.
2.10 Perfection of Security Interest. Except for (i) the security interest
granted hereby and (ii) any other security interest previously disclosed by
Debtor to Secured Party in writing, Debtor is the owner of the Collateral
free from any adverse lien, security interest or encumbrance. Debtor will
defend the Collateral against all claims and demands of all persons at any
time claiming any interest therein. Except as previously disclosed in
writing to Secured Party, no financing statement covering any Collateral or
any proceeds thereof is on file in any public office. At the request of
Secured Party, Debtor will execute, acknowledge and deliver to Secured Party
in recordable or fileable form, any document or instrument required by
Secured Party to further the purposes of this Agreement, or to perfect its
interest in the Collateral or to maintain such perfected interest in full
force and effect, including (without limitation) any fixture filings and
financial statements and any amendments and continuation statements thereto
pursuant to the Uniform Commercial Code, in form satisfactory to Secured
Party, and will pay the cost of filing the same or filing or
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recording this Agreement in all public offices wherever filing or recording
is deemed by Secured Party to be necessary or desirable. Debtor hereby
agrees that this Agreement shall be and constitute a financing statement for
purposes of the Uniform Commercial Code.
2.11 Insurance. Unless otherwise agreed, Debtor will have and maintain
insurance from financially sound carriers at all times with respect to all
Collateral against risks of fire (including so-called extended coverage),
theft, collision, "mysterious disappearance" and other such risks as Secured
Party may require, containing such terms, in such form, for such periods and
written by such companies as may be satisfactory to Secured Party; each
insurance policy shall name Secured Party as loss payee and
shall be payable to Secured Party and Debtor as their interest may appear;
all policies of insurance shall provide for ten days' written minimum
cancellation notice to Secured Party; Debtor shall furnish Secured Party with
certificates or other evidence satisfactory to Secured Party of compliance
with the foregoing insurance provisions.
2.12 Use of the Collateral. Debtor will use the Collateral for business
purposes only and operate it by qualified personnel in accordance with
applicable manufacturers' manuals. Debtor will keep the Collateral free from
any adverse lien or encumbrance and in good working order, condition and
repair and will not waste or destroy the Collateral or any part thereof;
Debtor will keep the Collateral appropriately protected from the elements,
and will furnish all required parts and servicing (including any contract
service necessary to maintain the benefit of any warranty of the
manufacturer); Debtor will not use the Collateral in violation of any
statute, ordinance, regulation or order; and Secured Party may examine and
inspect the Collateral and any and all books and records of Debtor during
business hours at any time; such right of inspection shall include the right
to copy Debtor's books and records and to converse with Debtor's officers,
employees, agents, and independent accountants.
2.13 Taxes and Assessments. Debtor will pay promptly when due all taxes,
assessments, levies, imposts, duties and charges, of any kind or nature,
imposed upon the Collateral or for its use or operation or upon this
Agreement or upon any instruments evidencing the obligations.
2.14 Financial Statements. Debtor shall furnish Secured Party within ninety
(90) days after the close of each fiscal year of Debtor, its financial
statements (including, without limitation, a balance sheet, a statement of
income and surplus account and a statement of changes in financial position)
for the immediately preceding fiscal year, setting forth the corresponding
figures for the prior fiscal year in comparative form, all in reasonable
detail without any qualification or exception deemed material by Secured
Party. Such financial statements shall be prepared at least as a review by
Debtor's independent certified accountants and, if prepared as an audit,
shall be certified by such accountants. Debtor shall also furnish Secured
Party with any other financial information deemed necessary by Secured Party.
Each financial statement submitted by Debtor to Secured Party shall be
accompanied by a certificate signed by the chief executive officer, the chief
operating officer or the chief financial officer of Debtor, certifying that
(i) such financial statement was prepared in accordance with the generally
accepted accounting
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principles consistently applied and fairly and accurately presents the
Debtor's financial condition and results of operations for the period to
which it pertains, and (ii) no event of default has occurred under this
Agreement during the period to which such financial statements pertains.
3.0 EVENTS OF DEFAULT
3.1 the following shall be considered events of default: (i) failure on the
part of Debtor to promptly perform in complete accordance with its
representations, warranties and covenants made in this Agreement or in any
other agreement with Secured Party, including, but not limited to, the
payment of any liability, with interest, when due, or default by Debtor under
the provisions of any other material agreement to which Debtor is party; (ii)
the death of Debtor if an individual or the dissolution of Debtor if a
business organization; (iii) more than one of the present officers of Debtor
leave the business except for reason of the death or disability of an
individual; (iv) the filing of any petition or complaint under the Federal
Bankruptcy Code or other federal or state acts of similar nature, by or
against Debtor; or an assignment for the benefit of creditors by Debtor; (v)
an application for or the appointment of a Receiver, Trustee or Conservator,
voluntary or involuntary, by or against Debtor or for any substantial assets
of Debtor, (vi) insolvency of Debtor under either the Federal Bankruptcy Code
or applicable principles of equity; (vii) entry of judgment, issuance of any
garnishment or attachment, or filing of any lien, claim or government
attachment against the Collateral or which, in Secured Party's sole
discretion, might impair the Collateral; (viii) the determination by Secured
Party that a material misrepresentation of fact has been made by Debtor in
this Agreement or in any writing supplementary or ancillary hereto; (ix) a
determination by Secured Party that Debtor has suffered a material adverse
change in its financial condition from the date of this Agreement; or (x)
bankruptcy, insolvency, termination, dissolution or default of any guarantor
for Debtor.
4.0 REMEDIES
4.1 Upon the happening of any event of default which is not cured within ten
(10) days, or at any time thereafter: (i) all liabilities of Debtor shall, at
the option of Secured Party, become immediately due and payable; (ii) Secured
Party shall have and may exercise all of the rights and remedies granted to a
secured party under the Uniform Commercial Code; (iii) Secured Party shall
have the right, immediately, and without notice or other action, to set-off
against any of Debtor's liabilities to Secured Party any money owed by
Secured Party in any capacity to Debtor, whether or not due, and Secured
Party shall be deemed to have exercised such right of set-off and to have
made a charge against any such money immediately upon the occurrence of such
default event though actual book entries may be made at some time subsequent
thereto; (iv) Secured Party may proceed with or without judicial process to
take possession of all or any part of the Collateral; Debtor agrees that upon
receipt of notice of Secured Party's intention to take possession of all or
any part of said Collateral, Debtor will do everything necessary to make same
available to Secured Party (including, without limitation, assembling the
Collateral and making it available to Secured Party at a place designated by
Secured Party which is reasonably convenient to Debtor and Secured Party);
and so long as Secured Party acts in a commercially reasonable manner, Debtor
agrees to assign,
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transfer and deliver at any time the whole or any portion of the Collateral
or any rights or interest therein in accordance with the Uniform Commercial
Code and without limiting the scope of Secured Party's rights thereunder; (v)
Secured Party may sell the Collateral at public or private sale or in any
other commercially reasonable manner and, at the option of Secured Party, in
bulk or in parcels and with or without having the Collateral at the sale or
other disposition, and Debtor agrees that in case of sale or other
disposition of the Collateral, or any portion thereof, Secured Party shall
apply all proceeds first to all costs and expenses of disposition, including
attorneys' fees, and then to Debtor's obligations to Secured Party, (vi)
Secured Party may elect to retain the Collateral or any part thereof in
satisfaction of all sums due from Debtor upon notice to Debtor and any other
party as may be required by the Uniform Commercial Code. All remedies
provided in this paragraph shall be cumulative. Secured Party may exercise
any one or more of such remedies in addition to any and all other remedies
Secured Party may have under any applicable law or in equity.
4.2 Expenses; Disposition. Upon default, all amounts due and to become due
hereunder shall, without notice, bear interest at the lesser of (i) twelve
percent (12%) per annum or (ii) the maximum rate per annum which Secured
Party is permitted by law to charge from the date such amounts are due until
paid. Debtor shall pay all reasonable expenses of realizing upon the
Collateral hereunder upon default and collecting all liabilities of Debtor to
Secured Party, which reasonable expenses shall include attorneys' fees,
whether or not litigation is commenced and whether incurred at trial, on
appeal, or in any other proceeding. Any notification of a sale or other
disposition of Collateral or of other action by Secured Party required to be
given by Secured Party, will be sufficient if given personally, mailed, or
delivered by facsimile machine or overnight carrier not less than five (5)
days prior to the day on which such sale or other disposition will be made or
action taken, and such notification shall be deemed reasonable notice.
5.0 MISCELLANEOUS
5.1 No Implied Waivers; Entire Agreement. The waiver by Secured Party of any
default hereunder or of any provisions hereof shall not discharge any party
hereto from liability hereunder and such waiver shall be limited to the
particular event of default and shall not operate as a waiver of any
subsequent default. This Agreement and any Schedule hereunder are non-
cancelable. No modification of this Agreement or waiver of any right of
Secured Party, hereunder shall be valid unless in writing and signed by an
authorized officer of Secured Party. No failure on the part of Secured Party
to exercise, or delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right or remedy hereunder preclude any other or further exercise thereof or
the exercise of any other right or remedy. The provisions of this Agreement
and the rights and remedies granted to Secured Party herein shall be in
addition to, and not in limitation of those of any other agreement with
Secured Party or any other evidence of any liability held by Secured Party.
This Agreement and any Schedule hereunder (a "Transaction") embody the entire
agreement between the parties and supersede all prior agreements and
understandings relating to the same subject matter, except in any case where
the Secured Party takes an assignment from a vendor of
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its security interest in the same Collateral, in which case the terms of the
Transaction shall be incorporated into the assigned agreement and shall
prevail over any inconsistent terms therein but shall not be construed to
create a new contract.
5.2 Choice of Law. This Agreement and the rights of the parties hereto shall
be governed by applicable Federal law and the laws of the State of Nevada.
Any action arising out of this Agreement may be litigated under the laws of
Nevada and submitted to the jurisdiction of Nevada, and that service of
process by certified mail, return receipt requested, will be sufficient to
confer personal jurisdiction over the Debtor.
5.3 Protection of the Collateral. At its option, Secured Party may discharge
taxes, liens or other encumbrances at any time levied or placed on the
Collateral, may pay for insurance on the Collateral and may pay for the
maintenance and preservation of the Collateral. Debtor agrees to reimburse
Secured Party on demand for any payment made or any expense incurred by
Secured Party pursuant to the foregoing authorization. Any payments made by
Secured Party shall be immediately due and payable by Debtor and shall bear
interest at the rate of fifteen percent (15%) per annum. Until default,
Debtor may retain possession of the Collateral and use it in any lawful
manner not inconsistent with the provisions of this Agreement and any other
agreement between Debtor and Secured Party, and not inconsistent with any
policy of insurance thereon.
5.4 Binding Agreement; Time of the Essence. This Agreement shall take effect
as a sealed instrument and shall be binding upon and shall inure to the
benefit of the parties hereto, their respective heirs, executors,
administrators, successors, and assigns. Time is of the essence with respect
to the performance of Debtor's obligations under this Agreement and any other
agreement between Debtor and Secured Party.
5.5 Enforceability. Any term, clause or provision of this Agreement or of
any evidence of indebtedness from Debtor to Secured Party which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining terms or clauses of such provision or the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such term,
clause or provision in any other jurisdiction.
5.6 Notices. Any notices or demands required to be given herein shall be
given to the parties in writing by United States first class mail (express,
certified or otherwise) at the addresses set forth on page 1 of this
Agreement or to such other addresses as the parties may hereafter substitute
by written notice given in the manner prescribed in this paragraph.
5.7 Additional Security. If there shall be any other collateral for any of
the obligations, or for the obligations of any guarantor thereof, Secured
Party may proceed against and/or enforce any or all of the Collateral and
such collateral in whatever order it may, in its sole discretion, deem
appropriate. Any amount(s) received by Secured Party from whatever source
and applied by it to any of the obligations shall be applied in such order of
application as Secured Party shall from time to time, in its sole discretion,
elect.
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6.0 ASSIGNMENT
6.1 SECURED PARTY MAY SELL OR ASSIGN ANY AND ALL RIGHT, TITLE AND INTEREST IT
HAS IN THE COLLATERAL AND/OR ARISING UNDER THIS AGREEMENT TO A FINANCIAL
INSTITUTION. DEBTOR SHALL, UPON THE DIRECTION OF SECURED PARTY: 1) EXECUTE
ALL DOCUMENTS NECESSARY TO EFFECTUATE SUCH ASSIGNMENT AND, 2) PAY DIRECTLY
AND PROMPTLY TO SECURED PARTY'S ASSIGNEE WITHOUT ABATEMENT, DEDUCTION OR SET-
OFF, ALL AMOUNTS WHICH HAVE BECOME DUE UNDER THE ASSIGNED AGREEMENTS.
SECURED PARTY'S ASSIGNEE SHALL HAVE ANY AND ALL RIGHTS, IMMUNITIES AND
DISCRETION OF SECURED PARTY HEREUNDER AND SHALL BE ENTITLED TO EXERCISE ANY
REMEDIES OF SECURED PARTY HEREUNDER. ALL REFERENCES HEREIN TO SECURED PARTY
SHALL INCLUDE SECURED PARTY'S ASSIGNEE (EXCEPT THAT SAID ASSIGNEE SHALL NOT
BE CHARGEABLE WITH ANY OBLIGATIONS OR LIABILITIES HEREUNDER OR IN RESPECT
HEREOF). DEBTOR WILL NOT ASSERT AGAINST SECURED PARTY'S ASSIGNEE ANY
DEFENSE, COUNTERCLAIM OR SET-OFF WHICH DEBTOR MAY HAVE AGAINST SECURED PARTY.
6.2 DEBTOR SHALL NOT ASSIGN OR IN ANY WAY DISPOSE OF ALL OR ANY OF ITS RIGHTS
OR OBLIGATIONS UNDER THIS AGREEMENT OR ENTER INTO ANY AGREEMENT REGARDING OF
ALL OR ANY PART OF THE COLLATERAL WITHOUT THE PRIOR WRITTEN CONSENT OF
SECURED PARTY WHICH SHALL NOT BE UNREASONABLY WITHHELD. IN CONNECTION WITH
THE GRANTING OF SUCH CONSENT AND THE PREPARATION OF NECESSARY DOCUMENTATION,
A FEE SHALL BE ASSESSED EQUAL TO ONE PERCENT (1%) OF THE TOTAL REMAINING
BALANCE THEN DUE HEREUNDER.
7.0 POWER OF ATTORNEY
7.1 Secured Party is hereby appointed Debtor's attorney-in-fact to sign
Debtor's name and to make non-material amendments (including completing and
conforming the description of the Collateral) on any document in connection
with this Agreement (including any financing statement) and to obtain,
adjust, settle, and cancel any insurance required by this Agreement and to
endorse any drafts in connection with such insurance.
In Witness Whereof, the parties hereto have caused this Agreement to be duly
executed the 9th day of Sept., 1998.
U.S. BANCORP LEASING & FINANCIAL Golden Road Motor Inn, Inc.
dba Atlantis Hotel and Casino
(Debtor)
By: By: /s/ Ben Farahi
--------------------- ---------------
An authorized officer thereof Authorized Corporate Officer
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GUARANTY
In order to induce U.S. BANCORP LEASING & FINANCIAL (the "Creditor") to enter
into one or more financing arrangements in the form of lease(s) or loan(s)
(referred to herein as the "Transaction") with, or otherwise directly or
indirectly making property available to GOLDEN ROAD MOTOR INN, INC. dba
Atlantis Hotel & Casino (the "Obligor") and/or to induce Creditor to grant to
Obligor such renewals, extensions, forbearances, releases of collateral or
other relinquishments of rights, whether in connection with the
Transaction(s) or otherwise, as Creditor may in its sole discretion deem
advisable, and in consideration of any agreements heretofore or hereafter
entered into between Creditor and Obligor (any and all such notes, security
agreements, loan agreements, lease agreements, entered into between Obligor
and Creditor together with any and all schedules and riders thereto and any
and all other instruments or agreements including, without limitation, pledge
agreements and assignments, executed and delivered by Obligor in connection
therewith, being hereinafter collectively called the "Agreements"), and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, EACH OF THE UNDERSIGNED (EACH OF WHOM IS HEREINAFTER
CALLED A "GUARANTOR"), INTENDING TO BE LEGALLY BOUND, HEREBY JOINTLY AND
SEVERALLY GUARANTEES THE FULL, PROMPT, COMPLETE AND FINAL PAYMENT AND
PERFORMANCE OF ALL THE OBLIGOR'S OBLIGATIONS PURSUANT TO THE AGREEMENTS OR IN
ANY WAY ARISING THEREFROM AND ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES
OF OBLIGOR TO CREDITOR, WHETHER NOW IN EXISTENCE OR ARISING HEREAFTER, AND
WHETHER DIRECT OR INDIRECT, CONTINGENT OR ABSOLUTE, MATURED OR UNMATURED,
SECURED OR UNSECURED, AND HOWEVER CONTRACTED OR ARISING (ALL SUCH OBLIGATIONS
AND LIABILITIES BEING HEREINAFTER CALLED THE "OBLIGATIONS").
Each Guarantor hereby promises to pay Creditor when due, on demand, all
indebtedness of any kind or nature emanating from the Agreements (including,
without limitation, if an event of default shall occur under the Agreements,
payment on demand of all unpaid sums to become due under the defaulted
Agreements for the entire term thereof), whether now or hereafter arising and
however and whenever evidenced; and each Guarantor agrees to indemnify and
hold Creditor harmless from and against any and all losses, liabilities and
costs emanating from any failure of Obligor to fully, promptly and completely
satisfy the Obligations. For purposes hereof, (i) "losses, liabilities and
costs" shall include (without limitation), all losses, liabilities,
obligations, claims, demands, judgments, costs and expenses of whatever kind
or nature (including, without limitation, attorneys' fees) and (ii)
"emanating" from an event or cause shall include (without limitation) in any
way directly or indirectly being caused by or in any other way arising out of
such event or cause.
Each Guarantor hereby waives any notice of default or nonpayment or of late
or inadequate satisfaction in regard to the Obligations. In particular (and
not in limitation of the foregoing), each Guarantor hereby agrees that, in
enforcing this Guaranty, Creditor shall not be required (i) to demand payment
of the amount due (known as "demand"); (ii) to present for payment any
evidence of the Obligations (known as "presentment" or "presentment for
payment"); (iii) to give notice that amounts due have not been paid (known as
"notice of dishonor"); or (iv) to obtain an official certification of
nonpayment (known as "protest") or to give any Guarantor notice of any such
"protest;" and each Guarantor hereby waives demand,
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presentment, presentment for payment, notice of dishonor, protest and notice
of protest, as aforesaid. Each Guarantor hereby further waives notice of
acceptance hereof and any and all other notices to which such Guarantor may
be entitled.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, the liability of Obligor or any other guarantor of
the Obligations may from time to time, in whole or in part, be extended,
renewed, continued, amended, modified, composed, accelerated, supplemented,
compromised, settled or released in Creditor's sole discretion, and that any
collateral for any of the Obligations or for any guaranty thereof (including
this Guaranty) may from time to time, in whole or part, be exchanged, sold or
surrendered in Creditor's sole discretion. Each Guarantor hereby agrees that
no such extension, renewal, continuation, amendment, modification,
composition, acceleration, supplement, compromise, settlement, release,
exchange, sale or surrender shall in any way impair, affect or release the
liability of any Guarantor hereunder or constitute a waiver of any of
Creditor's rights hereunder.
This Guaranty is unlimited, absolute, irrevocable and unconditional and shall
continue in full force and effect until all the Obligations shall have been
fully, completely and finally satisfied and paid. The obligations of each
Guarantor hereunder shall continue and survive the repossession of any
property or other property leased pursuant to the Agreements (or any property
in which Creditor has a security interest securing any of the Obligations)
whether or not any such repossession constitutes an "election of remedies"
against the Obligor or any other person. Each Guarantor agrees to be
obligated hereunder notwithstanding any termination of the Agreements in
whole or part by operation of law or any unenforceability or invalidity of
the Agreements for any reason whatsoever (including, without limitation,
invalidity or voidness ab initio and/or partial or complete unenforceability
as a result of impossibility or impracticability of performance or
frustration of the purpose of the Agreements). The obligations of the
Guarantors hereunder are joint and several and shall not be subject to any
abatement, setoff, defense or counterclaim for any cause whatsoever.
Each Guarantor hereby agrees that its obligations hereunder are direct and
primary and that Creditor may proceed directly and in the first instance
against each or any Guarantor or combination of Guarantors and have its
remedy hereunder without first being obliged to resort to any other right or
remedy or security for any of the Obligations. Each Guarantor hereby waives
any right to require Creditor to proceed against the Obligor or to proceed
against any other Guarantor or to proceed against any other guarantor of the
Obligations. If there shall be any securities for any of the Obligations, or
for the obligations of any Guarantor hereunder, or for the obligations of any
other guarantor of any of the Obligations, Creditor may proceed against
and/or enforce any or all of such securities in whatever order it may, in its
sole discretion, deem appropriate. Any amount(s) received by Creditor from
whatever source and applied by it to any of the Obligations shall be applied
in such order of application as Creditor shall, in its sole discretion,
elect.
In the event of any default in regard to any Guarantor's obligations
hereunder, or in the event of death, incompetency, termination, dissolution
or insolvency of the Obligor, or if a receiver, liquidator or conservator
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be appointed for any part of the property or assets of the Obligor, or if the
Obligor makes an assignment for the benefit of creditors, or if the Obligor
shall file a voluntary petition in bankruptcy or any involuntary petition in
bankruptcy shall be filed against it then, and in any such case, each
Guarantor agrees to pay to Creditor, upon demand, the full amount which would
be payable hereunder by such Guarantor if all the Obligations and
Indebtedness including, but not limited to, any remaining payments owing
pursuant to the Agreements or any of the other guaranteed Agreements, were
then due and payable.
Notwithstanding any provision hereof or any provision of any other instrument
or agreement, or any presumption of applicable law or principle of legal
construction to the contrary: (i) nothing shall discharge or satisfy any
Guarantor's obligations hereunder except full, complete and final payment and
satisfaction of all the Obligations, Indebtedness and Indemnities; (ii) each
Guarantor hereby waives any and all defenses to its obligations hereunder
including, without limitation, any defense arising by reason of any cessation
of the Obligor's business or any bankruptcy, insolvency or business failure
of the Obligor or any other person; and (iii) no Guarantor shall have any
right of subrogation against the Obligor, and each Guarantor hereby waives
any and all rights of subrogation it may have against the Obligor, to enforce
any right or remedy which Creditor has or may hereafter have against the
Obligor, and waives the benefits of, and any and all rights to participate
in, any security or securities now or hereafter held by Creditor. It is
expressly understood by each Guarantor that payments received by Creditor
from or on behalf of Obligor shall be solely for the benefit of Creditor and
shall not benefit the Guarantor in any way. Each Guarantor hereby further
acknowledges that such Guarantor is not and shall not be construed as a
"Creditor" of Obligor by virtue of this Guaranty.
Each Guarantor hereby represents and warrants to Creditor that all
information concerning such Guarantor, including (without limitation)
financial statements and other financial information, furnished to Creditor
in connection with the Agreements or any of the other Guaranteed Agreements,
was true, complete and accurate as of the date of delivery thereof to
Creditor, and that all such information remains true, complete and accurate,
and that there have been no material adverse changes in such Guarantor's
financial condition as of the date hereof. In the event of any breach of any
Guarantor's representations and warranties herein or any material adverse
change in the financial condition of any Guarantor, upon the request of
Creditor, such Guarantor shall promptly furnish to Creditor such additional
security for the performance of such Guarantor's obligations hereunder as
Creditor may reasonably request.
No notice of termination of this Guaranty shall be effective unless and until
such notice shall be in writing and executed by Guarantor and shall have been
received at Creditor's principal corporate headquarters at P.O. Box 2177,
7659 S.W. Mohawk Street, Tualatin, Oregon 97062-2177; provided, however, that
in the event of such notice, this Guaranty shall continue in full force and
effect with regard to all Obligations created, existing or arising prior to
the date of such receipt. No modification hereof or amendment hereto and no
waiver of any term or provision hereof shall be valid unless in writing and
signed by an authorized officer of Creditor. No delay or failure on the part
of Creditor in the exercise of any right or
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remedy shall operate as a waiver thereof, and no single or partial exercise
by Creditor of any right or remedy shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. No action of
Creditor permitted hereunder shall invalidate or in any way impair this
Guaranty. No waiver of any right or remedy hereunder shall constitute a
waiver of any other or further right or remedy hereunder.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, this Guaranty may be assigned by Creditor and
reassigned, in the sole discretion of Creditor or its assignee. As used
herein, the term "Creditor" includes Creditor and any successor or assign of
Creditor. This Guaranty shall be binding upon each Guarantor, and upon the
legal successors, representatives, and assigns of such Guarantor. Each and
every waiver made herein by any Guarantor is and shall be deemed to be and
construed as an absolute, irrevocable and unconditional waiver of the right
waived.
This Guaranty is intended to be legal, valid, binding and enforceable in
accordance with its terms. Whenever possible, each term and provision of
this Guaranty shall be interpreted so as to be effective and to effectuate
its intent under applicable law. If any term or provision of this Guaranty
shall be unenforceable, invalid or prohibited in any jurisdiction under
applicable law, such term or provision shall be ineffective in such
jurisdiction but only to the extent of such unenforceability, invalidity or
prohibition, and the remainder of such term or provision, and the other terms
and provisions of the Guaranty, shall not thereby be affected or impaired in
such jurisdiction, nor shall any of the terms or provisions of the Guaranty
be thereby affected or impaired in any way in any other jurisdiction.
This Guaranty shall be governed by the construed in accordance with Federal
Law and the laws of the State of Nevada, and that service of process by
certified mail, return receipt requested, will be sufficient to confer
personal jurisdiction over such Guarantor for purposes of litigating any
actions arising hereunder in the courts of such State. This Guaranty is in
addition to, and not in limitation or derogation of, any and all other
guaranties of the Obligations executed by any Guarantor. In the event of any
conflict between the provisions of this Guaranty and those of any such other
guaranty, the provisions of this Guaranty shall govern. Each Guarantor
hereby agrees and acknowledges that time is of the essence with regard to the
performance of such Guarantor's obligations hereunder. This Guaranty shall
take effect as a sealed instrument.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE OBLIGATION OF THE
GUARANTORS TOGETHER HEREUNDER IS LIMITED TO $1,000,000.00, AND IS JOINT AND
SEVERAL.
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IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty to be
duly executed and delivered as of 9th day of Sept., 1998.
Witness: Behrouz Ben Farahi
/s/ John Bydalek /s/Behrouz Ben Farahi
------------ ------------------
Print Name: John Bydalek an Individual
Address: 1175 W. Moana Ln. SS#------------
#200, Reno, NV 89509
Witness: Bahram Bob Farahi
/s/ John Bydalek /s/Bahram Bob Farahi
------------ -----------------
Print Name: John Bydalek an Individual
Address: SS#------------
Witness: John Farahi
/s/ John Bydalek /s/John Farahi
------------ -----------
Print Name: John Bydalek an Individual
Address: SS#------------
GUARNATOR'S SIGNATURE MAY NOT BE WITNESSED BY GUARANTOR'S SPOUSE OR OTHER
FAMILY MEMBER
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GUARANTY
In order to induce U.S. BANCORP LEASING & FINANCIAL (the "Creditor") to enter
into one or more financing arrangements in the form of lease(s) or loan(s)
(referred to herein as the "Transaction") with, or otherwise directly or
indirectly making property available to GOLDEN ROAD MOTOR INN, INC. dba
Atlantis Hotel & Casino (the "Obligor") and/or to induce Creditor to grant to
Obligor such renewals, extensions, forbearances, releases of collateral or
other relinquishments of rights, whether in connection with the
Transaction(s) or otherwise, as Creditor may in its sole discretion deem
advisable, and in consideration of any agreements heretofore or hereafter
entered into between Creditor and Obligor (any and all such notes, security
agreements, loan agreements, lease agreements, entered into between Obligor
and Creditor together with any and all schedules and riders thereto and any
and all other instruments or agreements including, without limitation, pledge
agreements and assignments, executed and delivered by Obligor in connection
therewith, being hereinafter collectively called the "Agreements"), and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, EACH OF THE UNDERSIGNED (EACH OF WHOM IS HEREINAFTER
CALLED A "GUARANTOR"), INTENDING TO BE LEGALLY BOUND, HEREBY JOINTLY AND
SEVERALLY GUARANTEES THE FULL, PROMPT, COMPLETE AND FINAL PAYMENT AND
PERFORMANCE OF ALL THE OBLIGOR'S OBLIGATIONS PURSUANT TO THE AGREEMENTS OR IN
ANY WAY ARISING THEREFROM AND ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES
OF OBLIGOR TO CREDITOR, WHETHER NOW IN EXISTENCE OR ARISING HEREAFTER, AND
WHETHER DIRECT OR INDIRECT, CONTINGENT OR ABSOLUTE, MATURED OR UNMATURED,
SECURED OR UNSECURED, AND HOWEVER CONTRACTED OR ARISING (ALL SUCH OBLIGATIONS
AND LIABILITIES BEING HEREINAFTER CALLED THE "OBLIGATIONS").
Each Guarantor hereby promises to pay Creditor when due, on demand, all
indebtedness of any kind or nature emanating from the Agreements (including,
without limitation, if an event of default shall occur under the Agreements,
payment on demand of all unpaid sums to become due under the defaulted
Agreements for the entire term thereof), whether now or hereafter arising and
however and whenever evidenced; and each Guarantor agrees to indemnify and
hold Creditor harmless from and against any and all losses, liabilities and
costs emanating from any failure of Obligor to fully, promptly and completely
satisfy the Obligations. For purposes hereof, (i) "losses, liabilities and
costs" shall include (without limitation), all losses, liabilities,
obligations, claims, demands, judgments, costs and expenses of whatever kind
or nature (including, without limitation, attorneys' fees) and (ii)
"emanating" from an event or cause shall include (without limitation) in any
way directly or indirectly being caused by or in any other way arising out of
such event or cause.
Each Guarantor hereby waives any notice of default or nonpayment or of late
or inadequate satisfaction in regard to the Obligations. In particular (and
not in limitation of the foregoing), each Guarantor hereby agrees that, in
enforcing this Guaranty, Creditor shall not be required (i) to demand payment
of the amount due (known as "demand"); (ii) to present for payment any
evidence of the Obligations (known as "presentment" or "presentment for
payment"); (iii) to give notice that amounts due have not been paid (known as
"notice of dishonor"); or (iv) to obtain an official certification of
nonpayment (known as "protest") or to give any Guarantor notice of any such
"protest;" and each Guarantor hereby waives demand,
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presentment, presentment for payment, notice of dishonor, protest and notice
of protest, as aforesaid. Each Guarantor hereby further waives notice of
acceptance hereof and any and all other notices to which such Guarantor may
be entitled.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, the liability of Obligor or any other guarantor of
the Obligations may from time to time, in whole or in part, be extended,
renewed, continued, amended, modified, composed, accelerated, supplemented,
compromised, settled or released in Creditor's sole discretion, and that any
collateral for any of the Obligations or for any guaranty thereof (including
this Guaranty) may from time to time, in whole or part, be exchanged, sold or
surrendered in Creditor's sole discretion. Each Guarantor hereby agrees that
no such extension, renewal, continuation, amendment, modification,
composition, acceleration, supplement, compromise, settlement, release,
exchange, sale or surrender shall in any way impair, affect or release the
liability of any Guarantor hereunder or constitute a waiver of any of
Creditor's rights hereunder.
This Guaranty is unlimited, absolute, irrevocable and unconditional and
shall continue in full force and effect until all the Obligations shall
have been fully, completely and finally satisfied and paid. The obligations
of each Guarantor hereunder shall continue and survive the repossession of
any property or other property leased pursuant to the Agreements (or any
property in which Creditor has a security interest securing any of the
Obligations) whether or not any such repossession constitutes an "election of
remedies" against the Obligor or any other person. Each Guarantor agrees to
be obligated hereunder notwithstanding any termination of the Agreements in
whole or part by operation of law or any unenforceability or invalidity of
the Agreements for any reason whatsoever (including, without limitation,
invalidity or voidness ab initio and/or partial or complete unenforceability
as a result of impossibility or impracticability of performance or
frustration of the purpose of the Agreements). The obligations of the
Guarantors hereunder are joint and several and shall not be subject to any
abatement, setoff, defense or counterclaim for any cause whatsoever.
Each Guarantor hereby agrees that its obligations hereunder are direct and
primary and that Creditor may proceed directly and in the first instance
against each or any Guarantor or combination of Guarantors and have its
remedy hereunder without first being obliged to resort to any other right or
remedy or security for any of the Obligations. Each Guarantor hereby waives
any right to require Creditor to proceed against the Obligor or to proceed
against any other Guarantor or to proceed against any other guarantor of the
Obligations. If there shall be any securities for any of the Obligations, or
for the obligations of any Guarantor hereunder, or for the obligations of any
other guarantor of any of the Obligations, Creditor may proceed against
and/or enforce any or all of such securities in whatever order it may, in its
sole discretion, deem appropriate. Any amount(s) received by Creditor from
whatever source and applied by it to any of the Obligations shall be applied
in such order of application as Creditor shall, in its sole discretion,
elect.
In the event of any default in regard to any Guarantor's obligations
hereunder, or in the event of death, incompetency, termination, dissolution
or insolvency of the Obligor, or if a receiver, liquidator or conservator
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be appointed for any part of the property or assets of the Obligor, or if the
Obligor makes an assignment for the benefit of creditors, or if the Obligor
shall file a voluntary petition in bankruptcy or any involuntary petition in
bankruptcy shall be filed against it then, and in any such case, each
Guarantor agrees to pay to Creditor, upon demand, the full amount which would
be payable hereunder by such Guarantor if all the Obligations and
Indebtedness including, but not limited to, any remaining payments owing
pursuant to the Agreements or any of the other guaranteed Agreements, were
then due and payable.
Notwithstanding any provision hereof or any provision of any other instrument
or agreement, or any presumption of applicable law or principle of legal
construction to the contrary: (i) nothing shall discharge or satisfy any
Guarantor's obligations hereunder except full, complete and final payment and
satisfaction of all the Obligations, Indebtedness and Indemnities; (ii) each
Guarantor hereby waives any and all defenses to its obligations hereunder
including, without limitation, any defense arising by reason of any cessation
of the Obligor's business or any bankruptcy, insolvency or business failure
of the Obligor or any other person; and (iii) no Guarantor shall have any
right of subrogation against the Obligor, and each Guarantor hereby waives
any and all rights of subrogation it may have against the Obligor, to enforce
any right or remedy which Creditor has or may hereafter have against the
Obligor, and waives the benefits of, and any and all rights to participate
in, any security or securities now or hereafter held by Creditor. It is
expressly understood by each Guarantor that payments received by Creditor
from or on behalf of Obligor shall be solely for the benefit of Creditor and
shall not benefit the Guarantor in any way. Each Guarantor hereby further
acknowledges that such Guarantor is not and shall not be construed as a
"Creditor" of Obligor by virtue of this Guaranty.
Each Guarantor hereby represents and warrants to Creditor that all
information concerning such Guarantor, including (without limitation)
financial statements and other financial information, furnished to Creditor
in connection with the Agreements or any of the other Guaranteed Agreements,
was true, complete and accurate as of the date of delivery thereof to
Creditor, and that all such information remains true, complete and accurate,
and that there have been no material adverse changes in such Guarantor's
financial condition as of the date hereof. In the event of any breach of any
Guarantor's representations and warranties herein or any material adverse
change in the financial condition of any Guarantor, upon the request of
Creditor, such Guarantor shall promptly furnish to Creditor such additional
security for the performance of such Guarantor's obligations hereunder as
Creditor may reasonably request.
No notice of termination of this Guaranty shall be effective unless and until
such notice shall be in writing and executed by Guarantor and shall have been
received at Creditor's principal corporate headquarters at P.O. Box 2177,
7659 S.W. Mohawk Street, Tualatin, Oregon 97062-2177; provided, however, that
in the event of such notice, this Guaranty shall continue in full force and
effect with regard to all Obligations created, existing or arising prior to
the date of such receipt. No modification hereof or amendment hereto and no
waiver of any term or provision hereof shall be valid unless in writing and
signed by an authorized officer of Creditor. No delay or failure on the part
of Creditor in the exercise of any right or
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remedy shall operate as a waiver thereof, and no single or partial exercise
by Creditor of any right or remedy shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. No action of
Creditor permitted hereunder shall invalidate or in any way impair this
Guaranty. No waiver of any right or remedy hereunder shall constitute a
waiver of any other or further right or remedy hereunder.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, this Guaranty may be assigned by Creditor and
reassigned, in the sole discretion of Creditor or its assignee. As used
herein, the term "Creditor" includes Creditor and any successor or assign of
Creditor. This Guaranty shall be binding upon each Guarantor, and upon the
legal successors, representatives, and assigns of such Guarantor. Each and
every waiver made herein by any Guarantor is and shall be deemed to be and
construed as an absolute, irrevocable and unconditional waiver of the right
waived.
This Guaranty is intended to be legal, valid, binding and enforceable in
accordance with its terms. Whenever possible, each term and provision of
this Guaranty shall be interpreted so as to be effective and to effectuate
its intent under applicable law. If any term or provision of this Guaranty
shall be unenforceable, invalid or prohibited in any jurisdiction under
applicable law, such term or provision shall be ineffective in such
jurisdiction but only to the extent of such unenforceability, invalidity or
prohibition, and the remainder of such term or provision, and the other terms
and provisions of the Guaranty, shall not thereby be affected or impaired in
such jurisdiction, nor shall any of the terms or provisions of the Guaranty
be thereby affected or impaired in any way in any other jurisdiction.
This Guaranty shall be governed by the construed in accordance with Federal
Law and the laws of the State of Nevada, and that service of process by
certified mail, return receipt requested, will be sufficient to confer
personal jurisdiction over such Guarantor for purposes of litigating any
actions arising hereunder in the courts of such State. This Guaranty is in
addition to, and not in limitation or derogation of, any and all other
guaranties of the Obligations executed by any Guarantor. In the event of any
conflict between the provisions of this Guaranty and those of any such other
guaranty, the provisions of this Guaranty shall govern. Each Guarantor
hereby agrees and acknowledges that time is of the essence with regard to the
performance of such Guarantor's obligations hereunder. This Guaranty shall
take effect as a sealed instrument.
IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty to be
duly executed and delivered as of 9th day of Sept., 1998.
Monarch Casino & Resort, Inc.
By: /s/ Ben Farahi
--------------
Ben Farahi [Print Name]
----------
CFO [Title]
---
1175 West Moana Lane, Suite 200
Reno, Nevada 89509
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SCHEDULE TO MASTER LOAN AGREEMENT
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino
1175 W. Moana Lane, Suite 200
Reno, Nevada 89509
$427,030.12 Effective Date 6/23/99 Loan Transaction Number
------
1. THIS SCHEDULE is made between Golden Road Motor Inn, Inc. dba Atlantis
Hotel and Casino, as Debtor, and U.S. BANCORP LEASING & FINANCIAL (which,
together with its successor and assigns, will be called the "Secured Party")
pursuant to the Master Loan Agreement dated as of September 22, 1998 (the
"Loan Agreement"), the terms of which (including the definitions) are
incorporated herein. If any terms hereof are inconsistent with the terms of
the Loan Agreement, the terms hereof shall prevail.
2. FOR VALUE RECEIVED, Debtor hereby promises to pay to the order of Secured
Party the principal amount of Four Hundred Twenty-Seven Thousand, Thirty and
12/100 Dollars ($427,030.12) with interest on any outstanding principal
balance at the rate(s) specified herein from the Effective Date hereof until
this Schedule shall have been paid in full in accordance with the following
payment schedule: sixty (60) installments of $8,617.81 each, including the
entire amount of interest accrued on this Schedule at the time of payment of
each installment. The first payment shall be due on July 16, 1999 and a like
payment shall be due on the same day of each succeeding month thereafter
until the entire principal and interest have been paid. At the time of the
final installment hereon, all unpaid principal and interest shall be due and
owing. Each payment shall be applied first to accrued and unpaid interest,
and the balance to the outstanding principal hereof. As a result, such final
installment may be substantially more or substantially less than the
installments specified herein.
3. The Debtor promises to pay interest on the principal balance outstanding
at a rate of 7.80 percent per annum.
4. The Debtor may prepay this Schedule, in whole or in part, by paying
simultaneously with an in addition to the prepayment, a premium for such
prepayment privilege equal to the specified percent of the amount prepaid in
accordance with the following schedule, one (1) to twelve (12) months: five
(5.0)%, thirteen (13) to twenty-four (24) months: one (1.0)%, twenty-five
(25) to sixty (60): 0%.
Notwithstanding the foregoing, payments made within 30 days of the date an
installment is due which do not exceed the scheduled amount of such
installment shall not be considered prepayments.
5. Each of Debtor, if more than one, and all other parties who at any time
may be liable hereon in any capacity, hereby jointly and severally waive
diligence, demand, presentment, presentment for payment, protest, notice of
protest and notice of dishonor of this Schedule, and authorize the Secured
Party, without notice, to grant extensions in the time of payment of and
reductions in the rate of interest on any moneys owing on this Schedule.
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6. The following property is hereby made Collateral for all purposes under
the Loan Agreement:
Various items of Hotel fixtures, furniture, and equipment located at the
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino at 3800 S. Virginia
St., Reno, Nevada 89502; Washoe County and including but not limited to, all
property improvements, miscellaneous upgrades, non-salvageable material, slot
machines, kitchen equipment, casino bars, buffet bars, furniture, room
accessories and partitions, ice machines, and spas.
Whether any of the foregoing is owned now or acquired later; all accessions,
additions, replacements, and substitutions relating to any of the foregoing;
all records of any kind relating to any of the foregoing; all proceeds
relating to any of the foregoing (including insurance, general intangibles
and accounts proceeds).
7. The Collateral hereunder shall be based at the following location(s):
3800 S. Virginia Street
Reno, NV 89502
COUNTY: Washoe
Year 2000. Debtor has reviewed and assessed or will review and assess its
business operations and computer systems and applications to address the
"year 2000 problem" (that is, that computer applications and equipment used
by Debtor, directly or indirectly through third parties, may be unable to
properly perform date-sensitive functions before, during and after January 1,
2000). Debtor reasonable believes that the year 2000 problem will not result
in a material adverse change in Debtor's business condition (financial or
otherwise), operations, properties or prospects or ability to repay Secured
Party. Based upon the review, Debtor has developed or will develop and
implement a plan to address the year 2000 problem, to remediate any material
year 2000 problem, and to complete testing with respect thereto, as soon as
practicable and in any event by June 30, 1999. Debtor will promptly deliver
such information relating to this covenant as Secured Party requests from
time to time.
IN WITNESS WHEREOF, Debtor has executed this Schedule this 15th day of June,
1999.
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino
By /s/Ben Farahi
--------------
Title: An Authorized Officer
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MASTER LOAN AGREEMENT
1.0 PARTIES, COLLATERAL AND OBLIGATIONS
1.1 This Agreement is dated as of September 22, 1998. For valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Golden Road Motor Inn, Inc. dba Atlantis Hotel and Casino (hereinafter called
"Debtor") with offices at 1175 W. Moana Lane, Suite 200, Reno, Nevada 89509
intending to be legally bound, hereby promises to pay to U.S. BANCORP LEASING
& FINANCIAL, an Oregon corporation having offices at P.O. Box 2177, 7659 S.W.
Mohawk Street, Tualatin, Oregon 97062-2177 (hereinafter called "Secured
Party"), any amounts set forth on any Schedule to Master Loan Agreement
hereunder (the "Schedule(s)", all the terms of which are incorporated herein)
and grants a security interest in and assigns, transfers and sets over to and
to the successors and assigns thereof, the property specified in any Schedule
hereunder wherever located, and any and all proceeds thereof, insurance
recoveries, and all replacements, additions, accessions, accessories and
substitutions thereto or therefor (hereafter called the "Collateral"). The
security interest granted hereby is to secure payment of any and all
liabilities or obligations of Debtor to the Secured Party, matured or
unmatured, direct or indirect, absolute or contingent, heretofore arising,
now existing or hereafter arising, and whether under this Agreement or under
any other writing between Debtor and Secured Party) (all hereinafter called
the "obligations" and/or the "liabilities").
1.2 Joint and Several Liability; Payment Terms. In the event there is more
than one Debtor, all obligations shall be considered as joint and several
obligations of all Debtors regardless of the source of Collateral or the
particular Debtor with which the obligation originated. Interest shall be
calculated on the basis of a 360-day year. All payments on any Schedule
hereunder shall be made in lawful money of the United States at the post
office address of the Secured Party or at such other place as the Secured
Party may designate to Debtor in writing from time to time. In no event
shall any Schedule hereunder be enforced in any way which permits Secured
Party to collect interest in excess of the maximum lawful rate. Should
interest collected exceed such rate, Secured Party shall refund such excess
interest to Debtor. In such event, Debtor agrees that Secured Party shall
not be subject to any penalties for contracting for or collecting interest in
excess of the maximum lawful rate.
1.3 Late Charge. If any of the obligations remains overdue for more than ten
(10) days, Debtor hereby agrees to pay on demand, as a late charge, an amount
equal to the lesser of (i) five percent (5.0%) of each such overdue amount;
or (ii) the maximum percentage of any such overdue amount permitted by
applicable law as a late charge. Debtor agrees that the amount of such late
charge represents a reasonable estimate of the cost to Secured Party of
processing a delinquent payment and that the acceptance of any late charge
shall not constitute a waiver of default with respect to the overdue amount
or prevent Secured Party from exercising any other available rights and
remedies.
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2.1 Business Organization Status and Authority. (i) Debtor is duly
organized, validly existing and in good standing under the laws of the state
of its organization and is qualified to do business in all states and
countries in which such qualification is necessary; (ii) Debtor has the
lawful power and authority to own its assets and to conduct the business in
which it is engaged; and to execute and comply with the provisions of this
Agreement and any related documents; (iii) the execution and delivery of this
Agreement and any related documents have been duly authorized by all
necessary action; (iv) no authorization, consent, approval, license or
exemption of, or filing or registration with, any or all of the owners of
Debtor or any governmental entity was, is or will be necessary to the valid
execution, delivery, performance or full enforceability of this Agreement and
any related documents. Except as specifically disclosed to Secured Party,
Debtor utilizes no trade names in the conduct of its business and/or has not
changed its name within the past five years.
2.2 Merger; Transfer of Assets. Debtor will not consolidate or merge with or
into any other entity, liquidate or dissolve, distribute, sell, lease,
transfer or dispose of all of its properties or assets or any substantial
portion thereof other than in the ordinary course of its business, unless the
Secured Party shall give its prior written consent, and the surviving, or
successor entity or the transferee of such assets, as the case may be, shall
assume, by a written instrument which is legal, valid and enforceable against
such surviving or successor entity or transferee, all of the obligations of
Debtor to Secured Party or any affiliate of Secured Party.
2.3 No Violation of Covenants or Laws. Debtor is not party to any agreement
or subject to any restriction which materially and adversely affects its
ability to perform its obligations under this Agreement and any related
documents. The execution of and compliance with the terms of this Agreement
and any related documents does not and will not (i) violate any provision of
law, or (ii) conflict with or result in a breach of any order, injunction, or
decree of any court or governmental authority or the formation documents of
Debtor, or (iii) constitute or result in a default under any agreement, bond
or indenture by which Debtor is bound or to which any of its property is
subject, or (iv) result in the imposition of any lien or encumbrance upon any
of Debtor's assets, except for any liens created hereunder or under any
related documents.
2.4 Accurate Information. All financial information submitted to the Secured
Party in regard to Debtor, was prepared in accordance with generally accepted
accounting principles, consistently applied, and fairly and accurately
depicts the financial position and results of operations of Debtor or such
other person, as of the respective dates or for the respective periods, to
which such information pertains. Debtor had good, valid and marketable title
to all the properties and assets reflected as being owned by it on any
balance sheets of Debtor submitted to Secured Party as of the dates thereof.
2.5 Judgments; Pending Legal Action. There are no judgments outstanding
against Debtor, and there are no actions or proceedings pending or, to the
best knowledge of Debtor, threatened against or affecting Debtor or any of
its properties in any court or before any governmental entity which, if
determined adversely to Debtor, would result in any material adverse change
in the business, properties or assets, or in the condition, financial or
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otherwise, of Debtor or would materially and adversely affect the ability of
Debtor to satisfy its obligations under this Agreement and any related
documents.
2.6 No Breach of Other Agreements; Compliance with Applicable Laws. Debtor
is not in breach of or in default under any loan agreement, indenture, bond,
note or other evidence of indebtedness, or any other material agreement or
any court order, injunction or decree or any lien, statute, rule or
regulation. The operations of Debtor comply with all laws, ordinances and
governmental rules and regulations applicable to them. Debtor has filed all
Federal, state and municipal income tax returns which are required to be
filed and has paid all taxes as shown on said returns and on all assessments
billed to it to the extent that such taxes or assessments have become due.
Debtor does not know of any other proposed tax assessment against it or of
any basis for one.
2.7 Sale Prohibited. Debtor will not sell, dispose of or offer to sell or
otherwise transfer the Collateral or any interest therein without the prior
written consent of Secured Party.
2.8 Location of Collateral. The Collateral will be kept at the location(s)
shown on the Schedule(s) hereunder and Debtor will promptly notify Secured
Party of any change in the location(s) of the Collateral. Debtor will not
remove the Collateral from said location(s) without the prior written consent
of Secured Party.
2.9 Collateral not a Fixture. Notwithstanding any presumption of applicable
law, and irrespective of any manner of attachment, the Collateral shall not
be deemed real property but shall retain its character as personal property.
However, Debtor will at the option of Secured Party furnish the latter with a
waiver or waivers in recordable form, signed by all persons having an
ownership interest in the real estate, of any interest in the Collateral
which is or might be deemed to be prior to Secured Party's interest.
2.10 Perfection of Security Interest. Except for (i) the security interest
granted hereby and (ii) any other security interest previously disclosed by
Debtor to Secured Party in writing, Debtor is the owner of the Collateral
free from any adverse lien, security interest or encumbrance. Debtor will
defend the Collateral against all claims and demands of all persons at any
time claiming any interest therein. Except as previously disclosed in
writing to Secured Party, no financing statement covering any Collateral or
any proceeds thereof is on file in any public office. At the request of
Secured Party, Debtor will execute, acknowledge and deliver to Secured Party
in recordable or fileable form, any document or instrument required by
Secured Party to further the purposes of this Agreement, or to perfect its
interest in the Collateral or to maintain such perfected interest in full
force and effect, including (without limitation) any fixture filings and
financial statements and any amendments and continuation statements thereto
pursuant to the Uniform Commercial Code, in form satisfactory to Secured
Party, and will pay the cost of filing the same or filing or recording this
Agreement in all public offices wherever filing or recording is deemed by
Secured Party to be necessary or desirable. Debtor hereby agrees that this
Agreement shall be and constitute a financing statement for purposes of the
Uniform Commercial Code.
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2.11 Insurance. Unless otherwise agreed, Debtor will have and maintain
insurance from financially sound carriers at all times with respect to all
Collateral against risks of fire (including so-called extended coverage),
theft, collision, "mysterious disappearance" and other such risks as Secured
Party may require, containing such terms, in such form, for such periods and
written by such companies as may be satisfactory to Secured Party; each
insurance policy shall name Secured Party as loss payee and
shall be payable to Secured Party and Debtor as their interest may appear;
all policies of insurance shall provide for ten days' written minimum
cancellation notice to Secured Party; Debtor shall furnish Secured Party with
certificates or other evidence satisfactory to Secured Party of compliance
with the foregoing insurance provisions.
2.12 Use of the Collateral. Debtor will use the Collateral for business
purposes only and operate it by qualified personnel in accordance with
applicable manufacturers' manuals. Debtor will keep the Collateral free from
any adverse lien or encumbrance and in good working order, condition and
repair and will not waste or destroy the Collateral or any part thereof;
Debtor will keep the Collateral appropriately protected from the elements,
and will furnish all required parts and servicing (including any contract
service necessary to maintain the benefit of any warranty of the
manufacturer); Debtor will not use the Collateral in violation of any
statute, ordinance, regulation or order; and Secured Party may examine and
inspect the Collateral and any and all books and records of Debtor during
business hours at any time; such right of inspection shall include the right
to copy Debtor's books and records and to converse with Debtor's officers,
employees, agents, and independent accountants.
2.13 Taxes and Assessments. Debtor will pay promptly when due all taxes,
assessments, levies, imposts, duties and charges, of any kind or nature,
imposed upon the Collateral or for its use or operation or upon this
Agreement or upon any instruments evidencing the obligations.
2.14 Financial Statements. Debtor shall furnish Secured Party within ninety
(90) days after the close of each fiscal year of Debtor, its financial
statements (including, without limitation, a balance sheet, a statement of
income and surplus account and a statement of changes in financial position)
for the immediately preceding fiscal year, setting forth the corresponding
figures for the prior fiscal year in comparative form, all in reasonable
detail without any qualification or exception deemed material by Secured
Party. Such financial statements shall be prepared at least as a review by
Debtor's independent certified accountants and, if prepared as an audit,
shall be certified by such accountants. Debtor shall also furnish Secured
Party with any other financial information deemed necessary by Secured Party.
Each financial statement submitted by Debtor to Secured Party shall be
accompanied by a certificate signed by the chief executive officer, the chief
operating officer or the chief financial officer of Debtor, certifying that
(i) such financial statement was prepared in accordance with the generally
accepted accounting principles consistently applied and fairly and accurately
presents the Debtor's financial condition and results of operations for the
period to which it pertains, and (ii) no event of default has occurred under
this Agreement during the period to which such financial statements pertains.
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3.0 EVENTS OF DEFAULT
3.1 the following shall be considered events of default: (i) failure on the
part of Debtor to promptly perform in complete accordance with its
representations, warranties and covenants made in this Agreement or in any
other agreement with Secured Party, including, but not limited to, the
payment of any liability, with interest, when due, or default by Debtor under
the provisions of any other material agreement to which Debtor is party; (ii)
the death of Debtor if an individual or the dissolution of Debtor if a
business organization; (iii) more than one of the present officers of Debtor
leave the business except for reason of the death or disability of an
individual; (iv) the filing of any petition or complain under the Federal
Bankruptcy Code or other federal or state acts of similar nature, by or
against Debtor; or an assignment for the benefit of creditors by Debtor; (v)
an application for or the appointment of a Receiver, Trustee or Conservator,
voluntary or involuntary, by or against Debtor or for any substantial assets
of Debtor, (vi) insolvency of Debtor under either the Federal Bankruptcy Code
or applicable principles of equity; (vii) entry of judgment, issuance of any
garnishment or attachment, or filing of any lien, claim or government
attachment against the Collateral or which, in Secured Party's sole
discretion, might impair the Collateral; (viii) the determination by Secured
Party that a material misrepresentation of fact has been made by Debtor in
this Agreement or in any writing supplementary or ancillary hereto; (ix) a
determination by Secured Party that Debtor has suffered a material adverse
change in its financial condition from the date of this Agreement; or (x)
bankruptcy, insolvency, termination, dissolution or default of any guarantor
for Debtor.
4.0 REMEDIES
4.1 Upon the happening of any event of default which is not cured within ten
(10) days, or at any time thereafter: (i) all liabilities of Debtor shall, at
the option of Secured Party, become immediately due and payable; (ii) Secured
Party shall have and may exercise all of the rights and remedies granted to a
secured party under the Uniform Commercial Code; (iii) Secured Party shall
have the right, immediately, and without notice or other action, to set-off
against any of Debtor's liabilities to Secured Party any money owed by
Secured Party in any capacity to Debtor, whether or not due, and Secured
Party shall be deemed to have exercised such right of set-off and to have
made a charge against any such money immediately upon the occurrence of such
default event though actual book entries may be made at some time subsequent
thereto; (iv) Secured Party may proceed with or without judicial process to
take possession of all or any part of the Collateral; Debtor agrees that upon
receipt of notice of Secured Party's intention to take possession of all or
any part of said Collateral, Debtor will do everything necessary to make same
available to Secured Party (including, without limitation, assembling the
Collateral and making it available to Secured Party at a place designated by
Secured Party which is reasonably convenient to Debtor and Secured Party);
and so long as Secured Party acts in a commercially reasonable manner, Debtor
agrees to assign, transfer and deliver at any time the whole or any portion
of the Collateral or any rights or interest therein in accordance with the
Uniform Commercial Code and without limiting the scope of Secured Party's
rights thereunder; (v) Secured Party may sell the Collateral at public or
private sale or in any other commercially reasonable manner and, at the
option of Secured Party, in bulk or in parcels and with or without having the
Collateral at
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the sale or other disposition, and Debtor agrees that in case of sale or
other disposition of the Collateral, or any portion thereof, Secured Party
shall apply all proceeds first to all costs and expenses of disposition,
including attorneys' fees, and then to Debtor's obligations to Secured Party,
(vi) Secured Party may elect to retain the Collateral or any part thereof in
satisfaction of all sums due from Debtor upon notice to Debtor and any other
party as may be required by the Uniform Commercial Code. All remedies
provided in this paragraph shall be cumulative. Secured Party may exercise
any one or more of such remedies in addition to any and all other remedies
Secured Party may have under any applicable law or in equity.
4.2 Expenses; Disposition. Upon default, all amounts due and to become due
hereunder shall, without notice, bear interest at the lesser of (i) twelve
percent (12%) per annum or (ii) the maximum rate per annum which Secured
Party is permitted by law to charge from the date such amounts are due until
paid. Debtor shall pay all reasonable expenses of realizing upon the
Collateral hereunder upon default and collecting all liabilities of Debtor to
Secured Party, which reasonable expenses shall include attorneys' fees,
whether or not litigation is commenced and whether incurred at trial, on
appeal, or in any other proceeding. Any notification of a sale or other
disposition of Collateral or of other action by Secured Party required to be
given by Secured Party, will be sufficient if given personally, mailed, or
delivered by facsimile machine or overnight carrier not less than five (5)
days prior to the day on which such sale or other disposition will be made or
action taken, and such notification shall be deemed reasonable notice.
5.0 MISCELLANEOUS
5.1 No Implied Waivers; Entire Agreement. The waiver by Secured Party of any
default hereunder or of any provisions hereof shall not discharge any party
hereto from liability hereunder and such waiver shall be limited to the
particular event of default and shall not operate as a waiver of any
subsequent default. This Agreement and any Schedule hereunder are non-
cancelable. No modification of this Agreement or waiver of any right of
Secured Party, hereunder shall be valid unless in writing and signed by an
authorized officer of Secured Party. No failure on the part of Secured Party
to exercise, or delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right or remedy hereunder preclude any other or further exercise thereof or
the exercise of any other right or remedy. The provisions of this Agreement
and the rights and remedies granted to Secured Party herein shall be in
addition to, and not in limitation of those of any other agreement with
Secured Party or any other evidence of any liability held by Secured Party.
This Agreement and any Schedule hereunder (a "Transaction") embody the entire
agreement between the parties and supersede all prior agreements and
understandings relating to the same subject matter, except in any case where
the Secured Party takes an assignment from a vendor of its security interest
in the same Collateral, in which case the terms of the Transaction shall be
incorporated into the assigned agreement and shall prevail over any
inconsistent terms therein but shall not be construed to create a new
contract.
5.2 Choice of Law. This Agreement and the rights of the parties hereto shall
be governed by applicable Federal law and the laws of the State of Nevada.
Any action arising out of this Agreement may be litigated under
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the laws of Nevada and submitted to the jurisdiction of Nevada, and that
service of process by certified mail, return receipt requested, will be
sufficient to confer personal jurisdiction over the Debtor.
5.3 Protection of the Collateral. At its option, Secured Party may discharge
taxes, liens or other encumbrances at any time levied or placed on the
Collateral, may pay for insurance on the Collateral and may pay for the
maintenance and preservation of the Collateral. Debtor agrees to reimburse
Secured Party on demand for any payment made or any expense incurred by
Secured Party pursuant to the foregoing authorization. Any payments made by
Secured Party shall be immediately due and payable by Debtor and shall bear
interest at the rate of fifteen percent (15%) per annum. Until default,
Debtor may retain possession of the Collateral and use it in any lawful
manner not inconsistent with the provisions of this Agreement and any other
agreement between Debtor and Secured Party, and not inconsistent with any
policy of insurance thereon.
5.4 Binding Agreement; Time of the Essence. This Agreement shall take effect
as a sealed instrument and shall be binding upon and shall inure to the
benefit of the parties hereto, their respective heirs, executors,
administrators, successors, and assigns. Time is of the essence with respect
to the performance of Debtor's obligations under this Agreement and any other
agreement between Debtor and Secured Party.
5.5 Enforceability. Any term, clause or provision of this Agreement or of
any evidence of indebtedness from Debtor to Secured Party which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining terms or clauses of such provision or the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such term,
clause or provision in any other jurisdiction.
5.6 Notices. Any notices or demands required to be given herein shall be
given to the parties in writing by United States first class mail (express,
certified or otherwise) at the addresses set forth on page 1 of this
Agreement or to such other addresses as the parties may hereafter substitute
by written notice given in the manner prescribed in this paragraph.
5.7 Additional Security. If there shall be any other collateral for any of
the obligations, or for the obligations of any guarantor thereof, Secured
Party may proceed against and/or enforce any or all of the Collateral and
such collateral in whatever order it may, in its sole discretion, deem
appropriate. Any amount(s) received by Secured Party from whatever source
and applied by it to any of the obligations shall be applied in such order of
application as Secured Party shall from time to time, in its sole discretion,
elect.
6.0 ASSIGNMENT
6.1 SECURED PARTY MAY SELL OR ASSIGN ANY AND ALL RIGHT, TITLE AND INTEREST IT
HAS IN THE COLLATERAL AND/OR ARISING UNDER THIS AGREEMENT TO A FINANCIAL
INSTITUTION. DEBTOR SHALL, UPON THE DIRECTION OF SECURED PARTY: 1) EXECUTE
ALL DOCUMENTS NECESSARY TO EFFECTUATE SUCH ASSIGNMENT AND, 2) PAY DIRECTLY
AND PROMPTLY TO SECURED PARTY'S ASSIGNEE WITHOUT ABATEMENT, DEDUCTION OR
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SET-OFF, ALL AMOUNTS WHICH HAVE BECOME DUE UNDER THE ASSIGNED AGREEMENTS.
SECURED PARTY'S ASSIGNEE SHALL HAVE ANY AND ALL RIGHTS, IMMUNITIES AND
DISCRETION OF SECURED PARTY HEREUNDER AND SHALL BE ENTITLED TO EXERCISE ANY
REMEDIES OF SECURED PARTY HEREUNDER. ALL REFERENCES HEREIN TO SECURED PARTY
SHALL INCLUDE SECURED PARTY'S ASSIGNEE (EXCEPT THAT SAID ASSIGNEE SHALL NOT
BE CHARGEABLE WITH ANY OBLIGATIONS OR LIABILITIES HEREUNDER OR IN RESPECT
HEREOF). DEBTOR WILL NOT ASSERT AGAINST SECURED PARTY'S ASSIGNEE ANY
DEFENSE, COUNTERCLAIM OR SET-OFF WHICH DEBTOR MAY HAVE AGAINST SECURED PARTY.
6.2 DEBTOR SHALL NOT ASSIGN OR IN ANY WAY DISPOSE OF ALL OR ANY OF ITS RIGHTS
OR OBLIGATIONS UNDER THIS AGREEMENT OR ENTER INTO ANY AGREEMENT REGARDING OF
ALL OR ANY PART OF THE COLLATERAL WITHOUT THE PRIOR WRITTEN CONSENT OF
SECURED PARTY WHICH SHALL NOT BE UNREASONABLY WITHHELD. IN CONNECTION WITH
THE GRANTING OF SUCH CONSENT AND THE PREPARATION OF NECESSARY DOCUMENTATION,
A FEE SHALL BE ASSESSED EQUAL TO ONE PERCENT (1%) OF THE TOTAL REMAINING
BALANCE THEN DUE HEREUNDER.
7.0 POWER OF ATTORNEY
7.1 Secured Party is hereby appointed Debtor's attorney-in-fact to sign
Debtor's name and to make non-material amendments (including completing and
conforming the description of the Collateral) on any document in connection
with this Agreement (including any financing statement) and to obtain,
adjust, settle, and cancel any insurance required by this Agreement and to
endorse any drafts in connection with such insurance.
In Witness Whereof, the parties hereto have caused this Agreement to be duly
executed the 9th day of Sept., 1998.
U.S. BANCORP LEASING & FINANCIAL Golden Road Motor Inn, Inc.
dba Atlantis Hotel and Casino
(Debtor)
By: By: /s/ Ben Farahi
----------------------- ---------------
An authorized officer thereof Authorized Corporate Officer
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GUARANTY
In order to induce U.S. BANCORP LEASING & FINANCIAL (the "Creditor") to enter
into one or more financing arrangements in the form of lease(s) or loan(s)
(referred to herein as the "Transaction") with, or otherwise directly or
indirectly making property available to GOLDEN ROAD MOTOR INN, INC. dba
Atlantis Hotel & Casino (the "Obligor") and/or to induce Creditor to grant to
Obligor such renewals, extensions, forbearances, releases of collateral or
other relinquishments of rights, whether in connection with the
Transaction(s) or otherwise, as Creditor may in its sole discretion deem
advisable, and in consideration of any agreements heretofore or hereafter
entered into between Creditor and Obligor (any and all such notes, security
agreements, loan agreements, lease agreements, entered into between Obligor
and Creditor together with any and all schedules and riders thereto and any
and all other instruments or agreements including, without limitation, pledge
agreements and assignments, executed and delivered by Obligor in connection
therewith, being hereinafter collectively called the "Agreements"), and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, EACH OF THE UNDERSIGNED (EACH OF WHOM IS HEREINAFTER
CALLED A "GUARANTOR"), INTENDING TO BE LEGALLY BOUND, HEREBY JOINTLY AND
SEVERALLY GUARANTEES THE FULL, PROMPT, COMPLETE AND FINAL PAYMENT AND
PERFORMANCE OF ALL THE OBLIGOR'S OBLIGATIONS PURSUANT TO THE AGREEMENTS OR IN
ANY WAY ARISING THEREFROM AND ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES
OF OBLIGOR TO CREDITOR, WHETHER NOW IN EXISTENCE OR ARISING HEREAFTER, AND
WHETHER DIRECT OR INDIRECT, CONTINGENT OR ABSOLUTE, MATURED OR UNMATURED,
SECURED OR UNSECURED, AND HOWEVER CONTRACTED OR ARISING (ALL SUCH OBLIGATIONS
AND LIABILITIES BEING HEREINAFTER CALLED THE "OBLIGATIONS").
Each Guarantor hereby promises to pay Creditor when due, on demand, all
indebtedness of any kind or nature emanating from the Agreements (including,
without limitation, if an event of default shall occur under the Agreements,
payment on demand of all unpaid sums to become due under the defaulted
Agreements for the entire term thereof), whether now or hereafter arising and
however and whenever evidenced; and each Guarantor agrees to indemnify and
hold Creditor harmless from and against any and all losses, liabilities and
costs emanating from any failure of Obligor to fully, promptly and completely
satisfy the Obligations. For purposes hereof, (i) "losses, liabilities and
costs" shall include (without limitation), all losses, liabilities,
obligations, claims, demands, judgments, costs and expenses of whatever kind
or nature (including, without limitation, attorneys' fees) and (ii)
"emanating" from an event or cause shall include (without limitation) in any
way directly or indirectly being caused by or in any other way arising out of
such event or cause.
Each Guarantor hereby waives any notice of default or nonpayment or of late
or inadequate satisfaction in regard to the Obligations. In particular (and
not in limitation of the foregoing), each Guarantor hereby agrees that, in
enforcing this Guaranty, Creditor shall not be required (i) to demand payment
of the amount due (known as "demand"); (ii) to present for payment any
evidence of the Obligations (known as "presentment" or "presentment for
payment"); (iii) to give notice that amounts due have not been paid (known as
"notice of dishonor"); or (iv) to obtain an official certification of
nonpayment (known as "protest") or to give any Guarantor notice of any such
"protest;" and each Guarantor hereby waives demand,
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presentment, presentment for payment, notice of dishonor, protest and notice
of protest, as aforesaid. Each Guarantor hereby further waives notice of
acceptance hereof and any and all other notices to which such Guarantor may
be entitled.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, the liability of Obligor or any other guarantor of
the Obligations may from time to time, in whole or in part, be extended,
renewed, continued, amended, modified, composed, accelerated, supplemented,
compromised, settled or released in Creditor's sole discretion, and that any
collateral for any of the Obligations or for any guaranty thereof (including
this Guaranty) may from time to time, in whole or part, be exchanged, sold or
surrendered in Creditor's sole discretion. Each Guarantor hereby agrees that
no such extension, renewal, continuation, amendment, modification,
composition, acceleration, supplement, compromise, settlement, release,
exchange, sale or surrender shall in any way impair, affect or release the
liability of any Guarantor hereunder or constitute a waiver of any of
Creditor's rights hereunder.
This Guaranty is unlimited, absolute, irrevocable and unconditional and shall
continue in full force and effect until all the Obligations shall have been
fully, completely and finally satisfied and paid. The obligations of each
Guarantor hereunder shall continue and survive the repossession of any
property or other property leased pursuant to the Agreements (or any property
in which Creditor has a security interest securing any of the Obligations)
whether or not any such repossession constitutes an "election of remedies"
against the Obligor or any other person. Each Guarantor agrees to be
obligated hereunder notwithstanding any termination of the Agreements in
whole or part by operation of law or any unenforceability or invalidity of
the Agreements for any reason whatsoever (including, without limitation,
invalidity or voidness ab initio and/or partial or complete unenforceability
as a result of impossibility or impracticability of performance or
frustration of the purpose of the Agreements). The obligations of the
Guarantors hereunder are joint and several and shall not be subject to any
abatement, setoff, defense or counterclaim for any cause whatsoever.
Each Guarantor hereby agrees that its obligations hereunder are direct and
primary and that Creditor may proceed directly and in the first instance
against each or any Guarantor or combination of Guarantors and have its
remedy hereunder without first being obliged to resort to any other right or
remedy or security for any of the Obligations. Each Guarantor hereby waives
any right to require Creditor to proceed against the Obligor or to proceed
against any other Guarantor or to proceed against any other guarantor of the
Obligations. If there shall be any securities for any of the Obligations, or
for the obligations of any Guarantor hereunder, or for the obligations of any
other guarantor of any of the Obligations, Creditor may proceed against
and/or enforce any or all of such securities in whatever order it may, in its
sole discretion, deem appropriate. Any amount(s) received by Creditor from
whatever source and applied by it to any of the Obligations shall be applied
in such order of application as Creditor shall, in its sole discretion,
elect.
In the event of any default in regard to any Guarantor's obligations
hereunder, or in the event of death, incompetency, termination, dissolution
or insolvency of the Obligor, or if a receiver, liquidator or conservator
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be appointed for any part of the property or assets of the Obligor, or if the
Obligor makes an assignment for the benefit of creditors, or if the Obligor
shall file a voluntary petition in bankruptcy or any involuntary petition in
bankruptcy shall be filed against it then, and in any such case, each
Guarantor agrees to pay to Creditor, upon demand, the full amount which would
be payable hereunder by such Guarantor if all the Obligations and
Indebtedness including, but not limited to, any remaining payments owing
pursuant to the Agreements or any of the other guaranteed Agreements, were
then due and payable.
Notwithstanding any provision hereof or any provision of any other instrument
or agreement, or any presumption of applicable law or principle of legal
construction to the contrary: (i) nothing shall discharge or satisfy any
Guarantor's obligations hereunder except full, complete and final payment and
satisfaction of all the Obligations, Indebtedness and Indemnities; (ii) each
Guarantor hereby waives any and all defenses to its obligations hereunder
including, without limitation, any defense arising by reason of any cessation
of the Obligor's business or any bankruptcy, insolvency or business failure
of the Obligor or any other person; and (iii) no Guarantor shall have any
right of subrogation against the Obligor, and each Guarantor hereby waives
any and all rights of subrogation it may have against the Obligor, to enforce
any right or remedy which Creditor has or may hereafter have against the
Obligor, and waives the benefits of, and any and all rights to participate
in, any security or securities now or hereafter held by Creditor. It is
expressly understood by each Guarantor that payments received by Creditor
from or on behalf of Obligor shall be solely for the benefit of Creditor and
shall not benefit the Guarantor in any way. Each Guarantor hereby further
acknowledges that such Guarantor is not and shall not be construed as a
"Creditor" of Obligor by virtue of this Guaranty.
Each Guarantor hereby represents and warrants to Creditor that all
information concerning such Guarantor, including (without limitation)
financial statements and other financial information, furnished to Creditor
in connection with the Agreements or any of the other Guaranteed Agreements,
was true, complete and accurate as of the date of delivery thereof to
Creditor, and that all such information remains true, complete and accurate,
and that there have been no material adverse changes in such Guarantor's
financial condition as of the date hereof. In the event of any breach of any
Guarantor's representations and warranties herein or any material adverse
change in the financial condition of any Guarantor, upon the request of
Creditor, such Guarantor shall promptly furnish to Creditor such additional
security for the performance of such Guarantor's obligations hereunder as
Creditor may reasonably request.
No notice of termination of this Guaranty shall be effective unless and until
such notice shall be in writing and executed by Guarantor and shall have been
received at Creditor's principal corporate headquarters at P.O. Box 2177,
7659 S.W. Mohawk Street, Tualatin, Oregon 97062-2177; provided, however, that
in the event of such notice, this Guaranty shall continue in full force and
effect with regard to all Obligations created, existing or arising prior to
the date of such receipt. No modification hereof or amendment hereto and no
waiver of any term or provision hereof shall be valid unless in writing and
signed by an authorized officer of Creditor. No delay or failure on the part
of Creditor in the exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise
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by Creditor of any right or remedy shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. No action of
Creditor permitted hereunder shall invalidate or in any way impair this
Guaranty. No waiver of any right or remedy hereunder shall constitute a
waiver of any other or further right or remedy hereunder.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, this Guaranty may be assigned by Creditor and
reassigned, in the sole discretion of Creditor or its assignee. As used
herein, the term "Creditor" includes Creditor and any successor or assign of
Creditor. This Guaranty shall be binding upon each Guarantor, and upon the
legal successors, representatives, and assigns of such Guarantor. Each and
every waiver made herein by any Guarantor is and shall be deemed to be and
construed as an absolute, irrevocable and unconditional waiver of the right
waived.
This Guaranty is intended to be legal, valid, binding and enforceable in
accordance with its terms. Whenever possible, each term and provision of
this Guaranty shall be interpreted so as to be effective and to effectuate
its intent under applicable law. If any term or provision of this Guaranty
shall be unenforceable, invalid or prohibited in any jurisdiction under
applicable law, such term or provision shall be ineffective in such
jurisdiction but only to the extent of such unenforceability, invalidity or
prohibition, and the remainder of such term or provision, and the other terms
and provisions of the Guaranty, shall not thereby be affected or impaired in
such jurisdiction, nor shall any of the terms or provisions of the Guaranty
be thereby affected or impaired in any way in any other jurisdiction.
This Guaranty shall be governed by the construed in accordance with Federal
Law and the laws of the State of Nevada, and that service of process by
certified mail, return receipt requested, will be sufficient to confer
personal jurisdiction over such Guarantor for purposes of litigating any
actions arising hereunder in the courts of such State. This Guaranty is in
addition to, and not in limitation or derogation of, any and all other
guaranties of the Obligations executed by any Guarantor. In the event of any
conflict between the provisions of this Guaranty and those of any such other
guaranty, the provisions of this Guaranty shall govern. Each Guarantor
hereby agrees and acknowledges that time is of the essence with regard to the
performance of such Guarantor's obligations hereunder. This Guaranty shall
take effect as a sealed instrument.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE OBLIGATION OF THE
GUARANTORS TOGETHER HEREUNDER IS LIMITED TO $1,000,000.00, AND IS JOINT AND
SEVERAL.
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IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty to be
duly executed and delivered as of 9th day of Sept., 1998.
Witness: Behrouz Ben Farahi
/s/ John Bydalek /s/Behrouz Ben Farahi
------------ ------------------
Print Name: John Bydalek an Individual
Address: 1175 W. Moana Ln. SS#------------
#200, Reno, NV 89509
Witness: Bahram Bob Farahi
/s/ John Bydalek /s/Bahram Bob Farahi
------------ -----------------
Print Name: John Bydalek an Individual
Address: SS#------------
Witness: John Farahi
/s/ John Bydalek /s/John Farahi
------------ -----------
Print Name: John Bydalek an Individual
Address: SS#------------
GUARNATOR'S SIGNATURE MAY NOT BE WITNESSED BY GUARANTOR'S SPOUSE OR OTHER
FAMILY MEMBER
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GUARANTY
In order to induce U.S. BANCORP LEASING & FINANCIAL (the "Creditor") to enter
into one or more financing arrangements in the form of lease(s) or loan(s)
(referred to herein as the "Transaction") with, or otherwise directly or
indirectly making property available to GOLDEN ROAD MOTOR INN, INC. dba
Atlantis Hotel & Casino (the "Obligor") and/or to induce Creditor to grant to
Obligor such renewals, extensions, forbearances, releases of collateral or
other relinquishments of rights, whether in connection with the
Transaction(s) or otherwise, as Creditor may in its sole discretion deem
advisable, and in consideration of any agreements heretofore or hereafter
entered into between Creditor and Obligor (any and all such notes, security
agreements, loan agreements, lease agreements, entered into between Obligor
and Creditor together with any and all schedules and riders thereto and any
and all other instruments or agreements including, without limitation, pledge
agreements and assignments, executed and delivered by Obligor in connection
therewith, being hereinafter collectively called the "Agreements"), and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, EACH OF THE UNDERSIGNED (EACH OF WHOM IS HEREINAFTER
CALLED A "GUARANTOR"), INTENDING TO BE LEGALLY BOUND, HEREBY JOINTLY AND
SEVERALLY GUARANTEES THE FULL, PROMPT, COMPLETE AND FINAL PAYMENT AND
PERFORMANCE OF ALL THE OBLIGOR'S OBLIGATIONS PURSUANT TO THE AGREEMENTS OR IN
ANY WAY ARISING THEREFROM AND ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES
OF OBLIGOR TO CREDITOR, WHETHER NOW IN EXISTENCE OR ARISING HEREAFTER, AND
WHETHER DIRECT OR INDIRECT, CONTINGENT OR ABSOLUTE, MATURED OR UNMATURED,
SECURED OR UNSECURED, AND HOWEVER CONTRACTED OR ARISING (ALL SUCH OBLIGATIONS
AND LIABILITIES BEING HEREINAFTER CALLED THE "OBLIGATIONS").
Each Guarantor hereby promises to pay Creditor when due, on demand, all
indebtedness of any kind or nature emanating from the Agreements (including,
without limitation, if an event of default shall occur under the Agreements,
payment on demand of all unpaid sums to become due under the defaulted
Agreements for the entire term thereof), whether now or hereafter arising and
however and whenever evidenced; and each Guarantor agrees to indemnify and
hold Creditor harmless from and against any and all losses, liabilities and
costs emanating from any failure of Obligor to fully, promptly and completely
satisfy the Obligations. For purposes hereof, (i) "losses, liabilities and
costs" shall include (without limitation), all losses, liabilities,
obligations, claims, demands, judgments, costs and expenses of whatever kind
or nature (including, without limitation, attorneys' fees) and (ii)
"emanating" from an event or cause shall include (without limitation) in any
way directly or indirectly being caused by or in any other way arising out of
such event or cause.
Each Guarantor hereby waives any notice of default or nonpayment or of late
or inadequate satisfaction in regard to the Obligations. In particular (and
not in limitation of the foregoing), each Guarantor hereby agrees that, in
enforcing this Guaranty, Creditor shall not be required (i) to demand payment
of the amount due (known as "demand"); (ii) to present for payment any
evidence of the Obligations (known as "presentment" or "presentment for
payment"); (iii) to give notice that amounts due have not been paid (known as
"notice of dishonor"); or (iv) to obtain an official certification of
nonpayment (known as "protest") or to give any Guarantor notice of any such
"protest;" and each Guarantor hereby waives demand,
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presentment, presentment for payment, notice of dishonor, protest and notice
of protest, as aforesaid. Each Guarantor hereby further waives notice of
acceptance hereof and any and all other notices to which such Guarantor may
be entitled.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, the liability of Obligor or any other guarantor of
the Obligations may from time to time, in whole or in part, be extended,
renewed, continued, amended, modified, composed, accelerated, supplemented,
compromised, settled or released in Creditor's sole discretion, and that any
collateral for any of the Obligations or for any guaranty thereof (including
this Guaranty) may from time to time, in whole or part, be exchanged, sold or
surrendered in Creditor's sole discretion. Each Guarantor hereby agrees that
no such extension, renewal, continuation, amendment, modification,
composition, acceleration, supplement, compromise, settlement, release,
exchange, sale or surrender shall in any way impair, affect or release the
liability of any Guarantor hereunder or constitute a waiver of any of
Creditor's rights hereunder.
This Guaranty is unlimited, absolute, irrevocable and unconditional and
shall continue in full force and effect until all the Obligations shall
have been fully, completely and finally satisfied and paid. The obligations
of each Guarantor hereunder shall continue and survive the repossession of
any property or other property leased pursuant to the Agreements (or any
property in which Creditor has a security interest securing any of the
Obligations) whether or not any such repossession constitutes an "election of
remedies" against the Obligor or any other person. Each Guarantor agrees to
be obligated hereunder notwithstanding any termination of the Agreements in
whole or part by operation of law or any unenforceability or invalidity of
the Agreements for any reason whatsoever (including, without limitation,
invalidity or voidness ab initio and/or partial or complete unenforceability
as a result of impossibility or impracticability of performance or
frustration of the purpose of the Agreements). The obligations of the
Guarantors hereunder are joint and several and shall not be subject to any
abatement, setoff, defense or counterclaim for any cause whatsoever.
Each Guarantor hereby agrees that its obligations hereunder are direct and
primary and that Creditor may proceed directly and in the first instance
against each or any Guarantor or combination of Guarantors and have its
remedy hereunder without first being obliged to resort to any other right or
remedy or security for any of the Obligations. Each Guarantor hereby waives
any right to require Creditor to proceed against the Obligor or to proceed
against any other Guarantor or to proceed against any other guarantor of the
Obligations. If there shall be any securities for any of the Obligations, or
for the obligations of any Guarantor hereunder, or for the obligations of any
other guarantor of any of the Obligations, Creditor may proceed against
and/or enforce any or all of such securities in whatever order it may, in its
sole discretion, deem appropriate. Any amount(s) received by Creditor from
whatever source and applied by it to any of the Obligations shall be applied
in such order of application as Creditor shall, in its sole discretion,
elect.
In the event of any default in regard to any Guarantor's obligations
hereunder, or in the event of death, incompetency, termination, dissolution
or insolvency of the Obligor, or if a receiver, liquidator or conservator
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be appointed for any part of the property or assets of the Obligor, or if the
Obligor makes an assignment for the benefit of creditors, or if the Obligor
shall file a voluntary petition in bankruptcy or any involuntary petition in
bankruptcy shall be filed against it then, and in any such case, each
Guarantor agrees to pay to Creditor, upon demand, the full amount which would
be payable hereunder by such Guarantor if all the Obligations and
Indebtedness including, but not limited to, any remaining payments owing
pursuant to the Agreements or any of the other guaranteed Agreements, were
then due and payable.
Notwithstanding any provision hereof or any provision of any other instrument
or agreement, or any presumption of applicable law or principle of legal
construction to the contrary: (i) nothing shall discharge or satisfy any
Guarantor's obligations hereunder except full, complete and final payment and
satisfaction of all the Obligations, Indebtedness and Indemnities; (ii) each
Guarantor hereby waives any and all defenses to its obligations hereunder
including, without limitation, any defense arising by reason of any cessation
of the Obligor's business or any bankruptcy, insolvency or business failure
of the Obligor or any other person; and (iii) no Guarantor shall have any
right of subrogation against the Obligor, and each Guarantor hereby waives
any and all rights of subrogation it may have against the Obligor, to enforce
any right or remedy which Creditor has or may hereafter have against the
Obligor, and waives the benefits of, and any and all rights to participate
in, any security or securities now or hereafter held by Creditor. It is
expressly understood by each Guarantor that payments received by Creditor
from or on behalf of Obligor shall be solely for the benefit of Creditor and
shall not benefit the Guarantor in any way. Each Guarantor hereby further
acknowledges that such Guarantor is not and shall be not construed as a
"Creditor" of Obligor by virtue of this Guaranty.
Each Guarantor hereby represents and warrants to Creditor that all
information concerning such Guarantor, including (without limitation)
financial statements and other financial information, furnished to Creditor
in connection with the Agreements or any of the other Guaranteed Agreements,
was true, complete and accurate as of the date of delivery thereof to
Creditor, and that all such information remains true, complete and accurate,
and that there have been no material adverse changes in such Guarantor's
financial condition as of the date hereof. In the event of any breach of any
Guarantor's representations and warranties herein or any material adverse
change in the financial condition of any Guarantor, upon the request of
Creditor, such Guarantor shall promptly furnish to Creditor such additional
security for the performance of such Guarantor's obligations hereunder as
Creditor may reasonably request.
No notice of termination of this Guaranty shall be effective unless and until
such notice shall be in writing and executed by Guarantor and shall have been
received at Creditor's principal corporate headquarters at P.O. Box 2177,
7659 S.W. Mohawk Street, Tualatin, Oregon 97062-2177; provided, however, that
in the event of such notice, this Guaranty shall continue in full force and
effect with regard to all Obligations created, existing or arising prior to
the date of such receipt. No modification hereof or amendment hereto and no
waiver of any term or provision hereof shall be valid unless in writing and
signed by an authorized officer of Creditor. No delay or failure on the part
of Creditor in the exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise
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by Creditor of any right or remedy shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. No action of
Creditor permitted hereunder shall invalidate or in any way impair this
Guaranty. No waiver of any right or remedy hereunder shall constitute a
waiver of any other or further right or remedy hereunder.
Each Guarantor hereby consents and agrees that without any further notice to,
or assent by Guarantor, this Guaranty may be assigned by Creditor and
reassigned, in the sole discretion of Creditor or its assignee. As used
herein, the term "Creditor" includes Creditor and any successor or assign of
Creditor. This Guaranty shall be binding upon each Guarantor, and upon the
legal successors, representatives, and assigns of such Guarantor. Each and
every waiver made herein by any Guarantor is and shall be deemed to be and
construed as an absolute, irrevocable and unconditional waiver of the right
waived.
This Guaranty is intended to be legal, valid, binding and enforceable in
accordance with its terms. Whenever possible, each term and provision of
this Guaranty shall be interpreted so as to be effective and to effectuate
its intent under applicable law. If any term or provision of this Guaranty
shall be unenforceable, invalid or prohibited in any jurisdiction under
applicable law, such term or provision shall be ineffective in such
jurisdiction but only to the extent of such unenforceability, invalidity or
prohibition, and the remainder of such term or provision, and the other terms
and provisions of the Guaranty, shall not thereby be affected or impaired in
such jurisdiction, nor shall any of the terms or provisions of the Guaranty
be thereby affected or impaired in any way in any other jurisdiction.
This Guaranty shall be governed by the construed in accordance with Federal
Law and the laws of the State of Nevada, and that service of process by
certified mail, return receipt requested, will be sufficient to confer
personal jurisdiction over such Guarantor for purposes of litigating any
actions arising hereunder in the courts of such State. This Guaranty is in
addition to, and not in limitation or derogation of, any and all other
guaranties of the Obligations executed by any Guarantor. In the event of any
conflict between the provisions of this Guaranty and those of any such other
guaranty, the provisions of this Guaranty shall govern. Each Guarantor
hereby agrees and acknowledges that time is of the essence with regard to the
performance of such Guarantor's obligations hereunder. This Guaranty shall
take effect as a sealed instrument.
IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty to be
duly executed and delivered as of 9th day of Sept., 1998.
Monarch Casino & Resort, Inc.
By: /s/ Ben Farahi
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Ben Farahi [Print Name]
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CFO [Title]
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1175 West Moana Lane, Suite 200
Reno, Nevada 89509
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