SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("Second Amendment") is made
and entered into as of the 12th day of June, 1998, by and among GOLDEN ROAD
MOTOR INN, INC., a Nevada corporation (the "Borrower"), MONARCH CASINO &
RESORT, INC., a Nevada corporation ("MCRI"), XXXX XXXXXX, XXXXXX XXXXXX and
XXXXXXX XXXXXX (collectively "Farahi" and together with MCRI, collectively the
"Guarantors") and XXXXX FARGO BANK, National Association, THE FIRST NATIONAL
BANK OF CHICAGO, U.S. BANK NATIONAL ASSOCIATION, FIRST SECURITY BANK, N.A. and
IMPERIAL BANK, as Lenders, and XXXXX FARGO BANK, National Association, as
Swingline Lender and L/C Issuer and as the administrative and collateral agent
for the Lenders, Swingline Lender and L/C Issuer (herein in such capacity
called the "Agent Bank" and, together with the Lenders, Swingline Lender and
L/C Issuer collectively referred to as the "Banks").
R_E_C_I_T_A_L_S:
WHEREAS:
A. Borrower, Guarantors and Banks entered into a Credit Agreement
dated as of December 29, 1997, as amended by First Amendment to Credit
Agreement dated as of the 9th day of January, 1998 (collectively the "Existing
Credit Agreement") for the purpose of establishing a reducing revolving line
of credit in favor of Borrower, to be funded by Lenders up to the maximum
principal amount of Eighty Million Dollars ($80,000,000.00), including a
Swingline Facility to be funded by Swingline Lender up to the maximum amount
of Two Million Five Hundred Thousand Dollars ($2,500,000.00) at any time
outstanding and an additional subfacility for the issuance by L/C Issuer of
standby and commercial letters of credit up to the maximum aggregate amount of
Two Million Five Hundred Thousand Dollars ($2,500,000.00) at any time
outstanding.
B. For the purpose of this Second Amendment, all capitalized words
and terms not otherwise defined herein shall have the respective meanings and
be construed herein as provided in Section 1.01 of the Existing Credit
Agreement and any reference to a provision of the Existing Credit Agreement
shall be deemed to incorporate that provision as a part hereof, in the same
manner and with the same effect as if the same were fully set forth herein.
C. Borrower and Guarantors desire to further amend the Existing
Credit Agreement for the purposes of: (i) increasing the aggregate amount of
secured purchase money Indebtedness and Capital Lease Liabilities which may be
incurred by Borrower to a maximum aggregate amount of Four Million Five
Hundred Thousand Dollars ($4,500,000.00), (ii) permitting Borrower to incur
additional Indebtedness up to the maximum aggregate amount of Ten Million
Dollars ($10,000,000.00), which is structurally and contractually subordinated
to the Bank Facilities, the proceeds of which are to be used to increase the
amount of Available Borrowings by reducing the Funded Outstandings under the
Credit Facility with the net proceeds of the Subordinated Debt received by
Borrower, (iii) permitting the Borrower to refinance the Caramella
Obligations, and (iv) making other modifications of the provisions regarding
construction of the Expansion Project.
X. Xxxxx have agreed to amend the Existing Credit Agreement on the
terms and subject to the conditions and provisions set forth in this Second
Amendment.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do agree to the amendments and modifications
to the Existing Credit Agreement as specifically hereinafter provided as
follows:
1. Definitions. Section 1.01 of the Existing Credit Agreement
entitled "Definitions" shall be and is hereby amended to include the following
definitions. Those terms which are currently defined by Section 1.01 of the
Existing Credit Agreement and which are also defined below shall be superseded
and restated by the applicable definition set forth below:
"Credit Agreement" shall mean the Existing Credit Agreement as amended by
the Second Amendment, together with all Schedules, Exhibits and other
attachments thereto, as it may be further amended, modified, extended, renewed
or restated from time to time.
"Existing Credit Agreement" shall have the meaning set forth in Recital
Paragraph A of the Second Amendment.
"Funded Debt" shall mean with reference to the Borrower for any period
the daily average of the Funded Outstandings for the last month of such
period, plus the total as of the last day of such period of both the long-term
and current portions (without duplication) of all other interest bearing
Indebtedness (exclusive of the Subordinated Debt) and Capitalized Lease
Liabilities.
"Payment Subordination Agreement" shall mean the Payment Subordination
Agreement to be executed by each Subordinated Debt Holder intending to loan or
advance all or any portion of the Subordinated Debt to Borrower, which shall
be executed in favor of Agent Bank on behalf of the Lenders prior to any such
loan or advance of funds under the Subordinated Debt in the form of the
Payment Subordination Agreement marked "Exhibit P", affixed to the Second
Amendment and by this reference incorporated herein and made a part hereof.
"Permitted Deferred FF&E Acquisition Costs" shall mean, as of any date of
determination, Five Million Five Hundred Thousand Dollars ($5,500,000.00),
less that portion of the FF&E Acquisition Costs which have, as of such date,
been incurred and paid from third party purchase money financing to the extent
permitted under Section 6.07(a) or (b).
"Schedule of Permitted Deferred Construction Equity" shall mean the
Schedule of Permitted Deferred Construction Equity marked "Schedule 9.13(g)",
affixed to the Second Amendment and by this reference incorporated herein and
made a part hereof, setting forth the Maximum Amount of Permitted Deferred
Construction Equity which is permitted to remain unpaid or unfunded during
each of the therein described Deferred Construction Equity Periods.
"Second Amendment" shall mean the Second Amendment to Credit Agreement.
"Second Amendment Effective Date" shall mean the date upon which each of
the conditions precedent set forth in Paragraph 8 of the Second Amendment
shall have occurred to the satisfaction of Agent Bank.
"Subordinated Debt" shall mean Indebtedness up to the aggregate maximum
amount of Ten Million Dollars ($10,000,000.00), owing by Borrower to the
Subordinated Debt Holder(s) which may or may not be secured by all or any
portion of the Collateral or Collateral Properties which: (a) has been
structurally and contractually subordinated to the Bank Facilities prior to
the incurrence of such Subordinated Debt by execution of a Payment
Subordination Agreement by Borrower, Guarantors and the Subordinated Debt
Holder(s) in favor of Agent Bank; (b) there is no principal or sinking fund
payment requirement maturing or otherwise coming due prior to one (1) year
subsequent to the Maturity Date; (c) the maturity date of the Subordinated
Debt shall not be prior to one (1) year subsequent to the Maturity Date; (d)
all covenants, terms and conditions of the Subordinated Debt shall be less
restrictive on MCRI and the Borrower than those applicable under the Credit
Agreement; (e) the covenants, terms, conditions, representations, events of
default and other provisions of the Subordinated Debt shall be acceptable
(from the perspective of a senior lender) to Requisite Lenders, which
acceptance shall not be unreasonably withheld or delayed; and (f) the net
proceeds of such Subordinated Debt received by Borrower shall only be used to
reduce the Funded Outstandings under the Credit Facility.
"Subordinated Debt Holder(s)" shall mean collective reference to the
Person or Persons who loan or advance funds to Borrower as Subordinated Debt.
2. Amendment of Section 6.07(a). As of the Second Amendment
Effective Date, Section 6.07(a) of the Existing Credit Agreement shall be and
is hereby deleted and the following is substituted as a full restatement
thereof:
"a. Incurrence of secured purchase money Indebtedness and
Capital Lease Liabilities relating to FF&E to be used in connection with the
Hotel/Casino Facility not in excess of the aggregate amount of Four Million
Five Hundred Thousand Dollars ($4,500,000.00) at any time outstanding;"
3. Amendment of Section 6.07(e). As of the Second Amendment
Effective Date, Section 6.07(e) of the Existing Credit Agreement shall be and
is hereby deleted and the following is substituted as a full restatement
thereof:
"e. Indebtedness evidenced by: (i) the Credit Facility, and (ii)
the Subordinated Debt up to the maximum aggregate amount of Ten Million
Dollars ($10,000,000.000."
4. Additional Understandings Regarding Subordinated Debt. The
undersigned further agree to the following with respect to the Subordinated
Debt:
a. The Subordinated Debt shall not be deemed to be "Funded Debt"
for purposes of calculating the Leverage Ratio of the Borrower and the
calculation thereof as set forth on the Pricing Certificate and the Compliance
Certificate shall be made exclusive of the Subordinated Debt;
b. In the event the Subordinated Debt is secured by a Lien on
any portion of the Collateral or Collateral Properties, such Lien shall be
deemed to be a Permitted Encumbrance consented to in writing by Agent Bank
upon the approval of Requisite Lenders as provided in Subsection (vii) of the
definition of Permitted Encumbrances so long as such Lien is structurally and
contractually subordinated to the Liens in favor of the Agent Bank securing
repayment of the Bank Facilities.
5. Amendment of Schedule of Permitted Deferred Construction Equity.
As of the Second Amendment Effective Date, the Schedule of Permitted Deferred
Construction Equity, Schedule 9.13(g), shall be and is hereby amended and
fully restated by the Schedule of Permitted Deferred Construction Equity
marked "Schedule 9.13(g)" affixed to the Second Amendment and by this
reference incorporated herein and made a part hereof.
6. Addition of Section 5.22. As of the Second Amendment Effective
Date, Section 5.22 entitled "Prohibition on Prepayment or Defeasance of
Subordinated Debt" shall be and is hereby added to the Credit Agreement as
follows:
"Section 5.22. Prohibition on Prepayment or Defeasance of
Subordinated Debt. Notwithstanding anything contained in this Credit
Agreement to the contrary, neither Borrower nor MCRI shall, except with the
prior written consent of the Requisite Lenders, purchase, redeem, retire or
otherwise acquire for value, or set apart any money for a sinking, defeasance
or other analogous fund for, the purchase, redemption, retirement or other
acquisition of, or make any voluntary payment or prepayment of the principal
of or interest on, or any other amount owing in respect of, the Subordinated
Debt, except for, to the extent not prohibited by the Payment Subordination
Agreement, regularly scheduled payments of interest in respect of such
Subordinated Debt required pursuant to the instruments evidencing such
Subordinated Debt. Any breach of the covenant set forth in the preceding
sentence shall be deemed to be an Event of Default under the Credit
Agreement."
7. Refinance of Caramella Obligations. At any time subsequent to the
Second Amendment Effective Date, Borrower may, at Borrower's discretion,
refinance the Caramella Obligations so long as: (i) the outstanding principal
of the refinancing Indebtedness does not exceed the outstanding balance of
principal on the Caramella Obligations, (ii) the rate of interest on the
refinancing Indebtedness shall not exceed prevailing rates of interest in the
Reno area for similarly secured Indebtedness, and (iii) such refinancing
Indebtedness may only be secured by a first priority deed of trust encumbering
the identical portion of the Hotel/Casino Property securing repayment of the
Caramella Obligations. In the event Borrower refinances the Caramella
Obligations in accordance with the provisions set forth above, Agent Bank
shall and is hereby authorized and directed to execute subordinations of the
Security Documentation and such estoppels as may be reasonably necessary to
perfect a first priority deed of trust in favor of the holder of the
refinancing Indebtedness, as provided in subparagraph (iii) hereinabove.
8. Conditions Precedent to Second Amendment Effective Date. The
occurrence of the Second Amendment Effective Date is subject to Agent Bank
having received the following documents and payments, in each case in a form
and substance reasonably satisfactory to Agent Bank, and the occurrence of
each other condition precedent set forth below on or before June 12, 1998:
a. Due execution by Borrower, Guarantors and Banks of seven (7)
duplicate originals of this Second Amendment;
b. Corporate resolutions or other evidence of requisite
authority of Borrower and Guarantors, as applicable, to execute the Second
Amendment; and
c. Reimbursement to Agent Bank by Borrower for all reasonable
fees and out-of-pocket expenses incurred by Agent Bank in connection with the
Second Amendment, including, but not limited to, reasonable attorneys' fees of
Xxxxxxxxx & Xxxxxx, LLC; and
d. Such other documents, instruments or conditions as may be
reasonably required by Lenders.
9. Representations of Borrower. Borrower hereby represents to the
Banks that:
a. the representations and warranties contained in Article IV of
the Existing Credit Agreement and contained in each of the other Loan
Documents (other than representations and warranties which expressly speak
only as of a different date, which shall be true and correct in all material
respects as of such date) are true and correct on and as of the Second
Amendment Effective Date in all material respects as though such
representations and warranties had been made on and as of the Second Amendment
Effective Date, except to the extent that such representations and warranties
are not true and correct as a result of a change which is permitted by the
Credit Agreement or by any other Loan Document or which has been otherwise
consented to by Agent Bank;
b. Since the date of the most recent financial statements
referred to in Section 5.08 of the Existing Credit Agreement, no Material
Adverse Change has occurred and no event or circumstance which could
reasonably be expected to result in a Material Adverse Change or Material
Adverse Effect has occurred;
c. no event has occurred and is continuing which constitutes a
Default or Event of Default under the terms of the Credit Agreement; and
d. The execution, delivery and performance of this Second
Amendment has been duly authorized by all necessary action of Borrower and
Guarantors and this Second Amendment constitutes a valid, binding and
enforceable obligation of Borrower and Guarantors.
10. Affirmation and Ratification of Continuing Guaranty. Guarantors
join in the execution of this Second Amendment for the purpose of ratifying
and affirming their respective obligations under the Continuing Guaranty for
the guaranty of the full and prompt payment and performance of all of
Borrower's indebtedness and obligations under the Bank Facilities and each of
the Loan Documents, as modified and amended under this Second Amendment.
11. Incorporation by Reference. This Second Amendment shall be and
is hereby incorporated in and forms a part of the Existing Credit Agreement.
12. Governing Law. This Second Amendment to Credit Agreement shall
be governed by the internal laws of the State of Nevada without reference to
conflicts of laws principles.
13. Counterparts. This Second Amendment may be executed in any
number of separate counterparts with the same effect as if the signatures
hereto and hereby were upon the same instrument. All such counterparts shall
together constitute one and the same document.
14. Continuance of Terms and Provisions. All of the terms and
provisions of the Credit Agreement shall remain unchanged except as
specifically modified herein.
15. Additional and Replacement Schedules and Exhibits Attached. The
following additional Schedule and Exhibit are attached hereto and incorporated
herein and made a part of the Credit Agreement as follows:
Schedule 9.13(g) - Schedule of Permitted Deferred Construction
Equity
Exhibit P - Payment Subordination Agreement - Form
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the day and year first above written.
BORROWER:
GOLDEN ROAD MOTOR INN, INC.,
a Nevada corporation
By /s/ Xxx Xxxxxx
----------------------
Xxx Xxxxxx,
Secretary
GUARANTORS:
MCRI:
MONARCH CASINO & RESORT, INC.,
a Nevada corporation
By /s/ Xxx Xxxxxx
----------------------
Xxx Xxxxxx,
Secretary
/s/ Xxxx Xxxxxx
------------------------
Xxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
------------------------
Xxxxxxx Xxxxxx
BANKS:
XXXXX FARGO BANK,
National Association,
Agent Bank, Lender,
Swingline Lender and
L/C Issuer
By /s/ Xxxxxxxx Xxxxxx
----------------------
Xxxxxxxx Xxxxxxx,
Vice President
BANKS:
THE FIRST NATIONAL BANK
OF CHICAGO
By /s/ Xxxx X. Xxxxx
----------------------
Xxxx X. Xxxxx
First Vice President
US BANK NATIONAL
ASSOCIATION
By /s/ Xxxxxx X. Xxxxxx
----------------------
Xxxxxx X. Xxxxxx
Vice President
FIRST SECURITY BANK, N.A.
By /s/ Xxxxx X. Xxxxxxxx
----------------------
Xxxxx X. Xxxxxxxx
Vice President
IMPERIAL BANK
By /s/ Xxxxxx X. Xxxxxxx
----------------------
Xxxxxx X. Xxxxxxx
Senior Vice President
SCHEDULE OF PERMITTED DEFERRED CONSTRUCTION EQUITY
DEFERRED CONSTRUCTION EQUITY MAXIMUM AMOUNT OF PERMITTED
PERIODS DEFERRED CONSTRUCTION EQUITY
=============================================================================
Initial Construction $6,300,000.00
Disbursement Date ("ICDD")
through 90th day following
the ICDD
From the 91st day following 5,300,000.00
the ICDD through the 180th day
following the ICDD
From the 181st day following 4,300,000.00
the ICDD through the 270th day
following the ICDD
From the 271st day following 3,300,000.00
the ICDD through the 360th
day following the ICDD
From the 361st day following 2,300,000.00
the ICDD through the 450th
day following the ICDD
From the 451st day following 0.00 (Zero)
the ICDD through and including
the Completion Date
SCHEDULE 9.13(g)
TO
SECOND AMENDMENT
EXHIBIT P
Payment Subordination Agreement (Form)
[NOT INCLUDED]
