EX-6 7 exee.txt COMPLIANCE CERTIFICATE TO: WELLS FARGO BANK, National Association, as Agent Bank Reference is made to that certain Credit Agreement dated as of February 20, 2004 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), by and among Golden Road Motor Inn, Inc., a Nevada corporation (the "Borrower"), Monarch Casino & Resort, Inc., a Nevada corporation, the Lenders therein named (each, together with their respective successors and assigns, individually being referred to as a "Lender" and collectively as the "Lenders"), Wells Fargo Bank, National Association, as the swingline lender (herein in such capacity, together with its successors and assigns, the "Swingline Lender"), Wells Fargo Bank, National Association, as the issuer of letters of credit thereunder (herein in such capacity, together with their successors and assigns, the "L/C Issuer") and Wells Fargo Bank, National Association, as 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"). Terms defined in the Credit Agreement and not otherwise defined in this Compliance Certificate ("Certificate") shall have the meanings defined and described in the Credit Agreement. This Certificate is delivered in accordance with Section 5.08(g) of the Credit Agreement. The period under review is the Fiscal Quarter ended [INSERT DATE], together with, where indicated, the three (3) immediately preceding Fiscal Quarters on a rolling four (4) Fiscal Quarter basis. I. COMPLIANCE WITH AFFIRMATIVE COVENANTS A. FF&E (Section 5.01): Please state whether or not all FF&E has been purchased and installed in the Hotel/Casino Facility free and clear of all liens, encumbrances or claims, other than Permitted Encumbrances. yes/no B. Liens Filed (Section 5.03): Report any liens filed against the Real Property and the amount claimed in such liens. Describe actions being taken with respect thereto. $ ------------- C. Additional Real Property (Section 5.06): a. Other than the Real Property presently encumbered by the Deed of Trust, attach a legal description of any other real property or rights to the use of real property which is used in any material manner in connection with the Hotel/Casino Facility and describe such use. Attach evidence that such real property or rights to the use of such real property has been added as Collateral under the Credit Agreement. ------------- -1- b. Other than with respect to the Adjacent Driveway Lease, have Borrower or MCRI entered into any additional leases, licenses, rental or other arrangements for the use or occupancy of all or any portion of the Village Shopping Center? yes/no If so, are such arrangements planned or projected to be or become an integral part of the operation at the Real Property and/or the Hotel/Casino Facility? yes/no If so, have such arrangements been consented to by Agent Bank or Requisite Lenders? yes/no D. Permitted Encumbrances (Section 5.11): Describe any Lien attachment, levy, distraint or other judicial process or burden affecting the Collateral other than the Permitted Encumbrances. Describe any matters being contested in the manner described in Sections 5.03 and 5.10 of the Credit Agreement. ------------- E. Suits or Actions (Section 5.17): Describe on a separate sheet any matters requiring advice to Agent Bank under Section 5.17. ------------- F. Tradenames, Trademarks and Servicemarks (Section 5.19): Describe on a separate sheet any matters requiring advice to Agent Bank under Section 5.19. ------------- G. Notice of Hazardous Materials (Section 5.20): State whether or not to your knowledge there are any matters of which Banks should be advised under Section 5.20. If so, attach a detailed summary of such matter(s). ------------- H. Compliance and Modification of Pedestrian Crossing Air Space License (Section 5.23): Describe all defaults, if any, which occurred during the period under review under the Pedestrian Crossing Air Space License. Describe any modifications or amendments to the Pedestrian Crossing Air Space License. State whether or not such modifications or amendments have been consented to by Agent Bank or Requisite Lenders as required under Section 5.23 of the Credit Agreement. ------------- -2- I. Compliance and Modification of Adjacent Driveway Lease (Section 5.24): Describe all defaults, if any, which occurred during the period under review under the Adjacent Driveway Lease. Describe any modifications or amendments to the Adjacent Driveway Lease. State whether or not such modifications or amendments have been consented to by Agent Bank or Requisite Lenders as required under Section 5.24 of the Credit Agreement. ------------- II. FINANCIAL COVENANTS A. Leverage Ratio (Section 6.01): To be calculated with reference to the Borrower commencing with the Fiscal Quarter ending March 31, 2004 and continuing as of each Fiscal Quarter end until Bank Facility Termination: $ ------------- FUNDED DEBT: a. The daily average of the Funded Outstandings on the Credit Facility during the last month of the Fiscal Quarter under review. $ ------------- b. Plus the daily average of the Swingline Outstandings on the Swingline Facility during the Fiscal Quarter under review. + $ ------------- c. Plus the daily average of the L/C Exposure on the L/C Facility during the Fiscal Quarter under review. + $ ------------- d. Plus the total, as of the last day of the Fiscal Quarter under review, of both the long-term and current portions (without duplication) of all other interest bearing interest bearing Indebtedness (including Contingent Liabilities). + $ ------------- e. Plus the total, as of the last day of the Fiscal Quarter under review, of all Capitalized Lease Liabilities. + $ ------------- -3- f. TOTAL FUNDED DEBT (a + b + c + d + e) $ ------------- Divided (/) by: / Adjusted EBITDA To be calculated on a cumulative basis with respect to the Fiscal Quarter under review and the most recently ended three (3) preceding Fiscal Quarters on a four (4) Fiscal Quarter basis: g. Net Income $ ------------- h. Less interest income reflected in such Net Income - $ ------------- i. Less any extraordinary one-time non-Cash gain reflected in such Net Income - $ ------------- j. Plus any extraordinary losses on sales of assets and other extraordinary losses and one-time non-Cash charges + $ ------------- k. Plus Interest Expense (expensed and capitalized) to the extent deducted in the determination of Net Income + $ ------------- l. Plus the aggregate amount of federal and state taxes on or measured by income for the period under review (whether or not payable during such period) to the extent deducted in the determination of Net Income + $ ------------- m. Plus depreciation, amortization and all other non-cash expenses for the period under review to the extent deducted in the determination of Net Income + $ ------------- n. Total EBITDA (g - h - i + j + k + l + m) $ ------------- o. Less the aggregate of MCRI Corporate Overhead Allocation to the extent not deducted in the determination of Net Income in (g) above - $ ------------- p. ADJUSTED EBITDA (n - o) $ ------------- -4- q. Leverage Ratio (f / p) : 1.0 ------------- Maximum Permitted: 2.25 to 1.00 Provided, however, in the event of the Stock Repurchase Limitation Release, commencing with the next occurring Fiscal Quarter end and continuing as of each Fiscal Quarter end until Bank Facility Termination, the Borrower shall maintain a Leverage Ratio no greater than 2.00 to 1.00. B. Adjusted Fixed Charge Coverage Ratio (Section 6.02): To be calculated on a cumulative basis with respect to the Fiscal Quarter under review and the most recently ended three (3) preceding Fiscal Quarters on a four (4) Fiscal Quarter basis, unless otherwise provided: Numerator a. Total Adjusted EBITDA (Enter II A (p) above) $ -------------- b. Less the aggregate amount of Distributions actually paid (without duplication) - $ -------------- c. Plus the aggregate amount of Distributions actually paid to MCRI used by MCRI exclusively for Share Repurchases + $ -------------- d. Less the aggregate amount of actually paid federal and state taxes on or measured by income - $ -------------- e. Less the aggregate amount of the Capital $ Expenditures during the Fiscal Quarter under -------------- review and the most recently ended seven / 2 (7) Fiscal Quarters - divided by two (2) - $ -------------- f. Total Numerator (a - b + c - d - e) $ -------------- Divided (/) by the sum of: Denominator g. The aggregate amount of Interest Expense (expensed and capitalized) $ -------------- h. Plus the greater of (x) $4,000,000.00, or (y) the aggregate of the Scheduled Reductions actually paid during the period under review + $ -------------- -5- i. Plus the aggregate of payments required to be made on all other interest bearing Indebtedness + $ -------------- j. Plus the aggregate of payments required to be made on Capitalized Lease Liabilities + $ -------------- k. Total Denominator (g + h + i + j) $ -------------- Adjusted Fixed Charge Coverage Ratio (f / k) : 1 -------------- Minimum required: no less than (i) 1.20 to 1.00 during each fiscal period for which the Leverage Ratio as determined above for such period is equal to or greater than 1.60 to 1.00, and (ii) 1.10 to 1.00 during each fiscal period for which the Leverage Ratio as determined above for such period is less than 1.60 to 1.00. C. Minimum Tangible Net Worth (Section 6.03): To be calculated with respect to the Borrower as of the end of the Fiscal Quarter under review: Assets $ -------------- Less intangibles - $ -------------- Less liabilities - $ -------------- Borrower tangible net worth $ -------------- Minimum required (a) 85% of the Tangible Net Worth of the Borrower calculated as of September 30, 2003 $ -------------- (b) Plus, 50% of Net Income after taxes realized as of each Fiscal Quarter end occurring on and after September 30, 2003 (without reduction for any net losses) + $ -------------- (c) Plus, 100% of the Net Proceeds received from all additional Equity Offerings made after the Closing Date + $ -------------- (d) Less, the aggregate amount of Distributions made by Borrower to MCRI following the Stock Repurchase Limitation Release which are used exclusively by MCRI for Share Repurchases - $ -------------- Minimum required Borrower Tangible Net worth (a + b + c - d) $ -------------- -6- D. Restriction on Share Repurchases (Section 6.04): Set forth the cumulative aggregate amount expended by the MCRI Consolidation for Share Repurchases during the period commencing on the Closing Date and continuing through the end of the Fiscal Quarter under review. $ ------------- Maximum Permitted: $5,000,000.00 Provided, however, in the event Borrower achieves a Leverage Ratio determined as of any Fiscal Quarter end following the Closing Date, less than 1.75 to 1.00, the Restriction on Share Repurchases set forth above shall be released and of no further force or effect. E. Investment Restrictions (Section 6.05): a. Set forth the amount and a brief description of each Investment not permitted under Section 6.05. $ ------------- F. Limitation on Subsidiaries (Section 6.06): On a separate sheet, describe any Subsidiaries created by Borrower. State whether or not the creation of such Subsidiaries has been consented to by the Requisite Lenders as required under Section 6.06. ------------- G. Indebtedness (Section 6.07): With respect to the Borrower: a. Set forth the aggregate amount of secured purchase money Indebtedness and Capital Lease Liabilities. $ ------------- Maximum permitted $ 4,000,000 b. Set forth the aggregate amount of unsecured Indebtedness. $ ------------- Maximum permitted $ 5,000,000 Is any of the unsecured Indebtedness subject to financial and other covenants and events of default more onerous or restrictive on Borrower than the terms and provisions of the Credit Agreement? If yes, please explain on a separate sheet. yes/no H. Total Liens (Section 6.08): On a separate sheet describe in detail any and all Liens not permitted under Section 6.08. ------------- I. Sale of Assets, Consolidation, Merger or Liquidation (Section 6.09): -7- a. On a separate sheet describe any and all mergers, consolidations, liquidations and/or dissolutions not permitted under Section 6.09. ------------- b. With respect to the determination of Excess Capital Proceeds, please set forth the amount of Net Proceeds received by the Borrower, during the period commencing on the Closing Date and continuing through the end of the Fiscal Quarter under review, from the Disposition of FF&E and other items of Collateral which have not been replaced with purchased or leased FF&E of equivalent value and utility. ------------- Requirement. For all amounts in excess of $2,500,000.00, must make a Mandatory Commitment Reduction on or before 90 days following each such Disposition resulting in Excess Capital Proceeds. J. Restriction on Transfer of Ownership (Section 6.10): On a separate sheet describe in detail any transfers or hypothecations of MCRI's ownership interest in Borrower not permitted under Section 6.10 ------------- K. Contingent Liabilities (Section 6.11): a. Set forth the amount of all Contingent Liabilities incurred by the Borrower. $ ------------- Maximum Permitted: Cumulative aggregate of $5,000,000.00 at any time, without the prior written consent of Requisite Lenders L. Transactions with Members of the MCRI Consolidation (Section 6.12): Describe on a separate sheet any transactions or payments made by Borrower to any member of the MCRI Consolidation which are not allowed under Section 6.12. ------------- M. Limitation on Consolidated Tax Liability (Section 6.13): Describe on a separate sheet any federal income taxes paid by Borrower which are not allowed under Section 6.13. ------------- N. ERISA (Section 6.14): Describe on a separate sheet any matters requiring advice to Agent Bank under Section 6.14. ------------- O. Margin Regulations (Section 6.15): Set forth the amount(s) of and describe on a separate sheet of paper any proceeds of any portion of the Credit Facility, used by Borrower to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. ------------- -8- III. COMMITMENT FEE CALCULATION (Section 2.10b): to be calculated with respect to the Fiscal Quarter under review: a. Daily average of Maximum Permitted Balance $ ------------- b. Less daily average of Funded Outstandings - $ ------------- c. Amount of Nonusage (a minus b) $ ------------- d. Leverage Ratio (See II A(o) above) : 1 ------------- e. Applicable Commitment Percentage: % ------------- See Table Two in definition of Applicable Margin f. Gross Commitment Fee (c times e) $ ------------- g. Number of days in Fiscal Quarter under review ------------- h. Commitment Fee for Fiscal Quarter under review $ (f / 360 x g) ------------- IV. PERFORMANCE OF OBLIGATIONS A review of the activities of the Borrower during the fiscal period covered by the attached financial statements has been made under my supervision with a view to determining whether during such fiscal period any Default or Event of Default has occurred and is continuing. Except as described in an attached document or in an earlier Certificate, to the best of my knowledge, as of the date of this Certificate, there is no Default or Event of Default that has occurred and remains continuing. -9- V. NO MATERIAL ADVERSE CHANGE To the best of my knowledge, except as described in an attached document or in an earlier Certificate, no Material Adverse Change has occurred since the date of the most recent Certificate delivered to the Banks. DATED this ____ day of _____________, 200___. BORROWER: GOLDEN ROAD MOTOR INN, INC., a Nevada corporation Name: Title Authorized Officer Print Name -10-