UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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 number: 0-22494
AMERISTAR CASINOS, INC.
(Exact name of Registrant as Specified in its Charter)
Nevada 88-0304799
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3773 Howard Hughes Parkway
Suite 490 South
Las Vegas, Nevada 89109
(Address of principal executive offices)
(702) 567-7000
(Registrant's telephone number, including area code)
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 [ ]
As of May 14, 1997, 20,360,000 shares of Common Stock of the
registrant were issued and outstanding.
<PAGE>
AMERISTAR CASINOS, INC.
FORM 10-Q
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1.Financial Statements:
A. Condensed Consolidated Balance
Sheets at March 31, 1997
(unaudited) and December 31, 1996 3 - 4
B. Condensed Consolidated Statements
of Income (unaudited) for the three
months ended March 31, 1997 and
1996 5
C. Condensed Consolidated Statements
of Cash Flows (unaudited) for the
three months ended March 31, 1997
and 1996 6
D. Notes to Condensed Consolidated
Financial Statements 7 - 9
Item 2.Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10 - 16
Item 3.Quantitative and Qualitative Disclosures
About Market Risk 16
Part II. OTHER INFORMATION
Item 1.Legal Proceedings 17 - 18
Item 6.Exhibits and Reports on Form 8-K 18
SIGNATURE 19
<PAGE>PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<S> <C> <C>
March 31, December 31,
1997 1996
---------- ----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 20,807 $ 10,724
Restricted cash 328 418
Accounts receivable, net 1,125 1,408
Inventories 2,137 2,385
Prepaid expenses and deferred
income taxes 4,843 5,219
-------- --------
Total current assets 29,240 20,154
PROPERTY AND EQUIPMENT AND
LEASEHOLD INTERESTS, at cost,
less accumulated depreciation and
amortization of $59,985 and
$56,253, respectively 227,855 225,470
PREOPENING COSTS 2,884 2,594
EXCESS OF PURCHASE PRICE OVER FAIR
MARKET VALUE OF NET ASSETS
ACQUIRED 19,043 19,043
DEPOSITS AND OTHER ASSETS 2,734 2,791
-------- --------
$281,756 $270,052
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
March 31, December 31,
1997 1996
---------- -----------
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 4,949 $ 7,303
Construction contracts payable 3,300 5,336
Accrued liabilities 13,395 13,564
Current obligations under
capitalized leases 513 506
Current maturities of notes
payable and long-term debt 7,543 19,740
Federal income tax payable 1,475 49
-------- --------
Total current liabilities 31,175 46,498
-------- --------
OBLIGATIONS UNDER CAPITALIZED
LEASES, net of current maturities 8,195 8,333
-------- --------
NOTES PAYABLE AND LONG-TERM DEBT,
net of current maturities 160,223 135,560
-------- --------
DEFERRED INCOME TAXES 8,446 8,446
-------- --------
MINORITY INTEREST 263 271
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par
value:
Authorized - 30,000,000
shares
Issued - None - -
Common stock, $.01 par value:
Authorized - 30,000,000 shares
Issued and outstanding -
20,360,000 shares 204 204
Additional paid-in capital 43,043 43,043
Retained earnings 30,207 27,697
-------- --------
Total stockholders' equity 73,454 70,944
-------- --------
$281,756 $270,052
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months
Ended March 31,
1997 1996
-------- --------
<S> <C> <C>
REVENUES:
Casino $ 42,192 $ 37,379
Food and beverage 7,208 4,731
Rooms 2,164 1,515
General store 551 538
Other 1,297 1,170
-------- --------
53,412 45,333
Less: Promotional allowances 3,799 2,427
-------- --------
Net revenues 49,613 42,906
-------- --------
OPERATING EXPENSES:
Casino 19,661 17,176
Food and beverage 4,580 3,012
Rooms 716 528
General store 506 497
Other 1,246 1,152
Selling, general and administrative 9,301 7,926
Business development 255 423
Utilities and maintenance 2,434 2,321
Depreciation and amortization 3,920 3,270
Preopening costs - 5,856
-------- --------
Total operating expenses 42,619 42,161
-------- --------
Income from operations 6,994 745
OTHER INCOME (EXPENSE):
Interest income 39 193
Interest expense (3,154) (1,908)
Other 106 63
-------- --------
INCOME (LOSS) BEFORE INCOME TAX
PROVISION (BENEFIT) 3,985 (907)
Income tax provision (benefit) 1,475 (335)
-------- --------
NET INCOME (LOSS) $ 2,510 $ (572)
======== ========
EARNINGS (LOSS) PER SHARE $ 0.12 $ (.03)
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING 20,360 20,360
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidate
financial statements.
<PAGE>
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three Months
Ended March 31,
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,510 $ (572)
-------- --------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 3,920 3,270
Amortization of preopening costs - 5,856
Net gain on disposition of assets (143) (63)
Decrease in other current assets 997 700
Increase in income tax receivable - (156)
Increase in federal income tax
payable 1,426 -
Increase (decrease) in other current
liabilities (2,523) 2,729
-------- --------
Total adjustments 3,677 12,336
-------- --------
Net cash provided by operating activities 6,187 11,764
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,203) (12,703)
Decrease in construction contracts
payable (2,036) (5,648)
Proceeds from sale of assets 143 63
Increase in deposits and other non-
current assets (241) (3,654)
-------- --------
Net cash used in investing activities: (7,337) (21,942)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable
and long-term debt 23,000 -
Restricted security deposit - 11,511
Principal payments of notes payable,
long-term debt and capitalized leases (11,767) (2,555)
-------- --------
Net cash provided by financing activities: 11,233 8,956
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 10,083 (1,222)
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 10,724 14,787
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 20,807 $ 13,565
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid during the period for interest
(net of amounts capitalized) $ 3,307 $ 1,731
======== ========
Assets purchased with long-term debt $ 1,102 $ 313
======== ========
Assets purchased with capitalized leases $ - $ 107
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>NOTE 1 - PRINCIPLES OF CONSOLIDATION AND BASIS OF
PRESENTATION
The accompanying condensed consolidated financial statements
include the accounts of Ameristar Casinos, Inc. ("Ameristar") and
its wholly owned and majority owned subsidiaries (collectively, the
"Company"). The Company's principal subsidiaries, all of which are
wholly owned, are Cactus Petes, Inc. ("CPI"), Ameristar Casino
Vicksburg, Inc. ("ACVI"), Ameristar Casino Council Bluffs, Inc.
("ACCBI") and Ameristar Casino Las Vegas, Inc. ("ACLVI"). All
significant intercompany transactions have been eliminated.
CPI owns and operates two casino-hotels in Jackpot, Nevada -
Cactus Petes Resort Casino and The Horseshu Hotel and Casino
(collectively, the "Jackpot Properties"). ACVI owns and operates
Ameristar Vicksburg, a riverboat-themed dockside casino and related
land-based facilities in Vicksburg, Mississippi. ACCBI owns and
operates Ameristar Council Bluffs, a riverboat casino and related
hotel and other land-based facilities in Council Bluffs, Iowa.
Ameristar Council Bluffs opened its steakhouse on February 25, 1997
and its indoor swimming pool and spa on March 3, 1997, thereby
completing its land-based facilities. ACLVI owns and is developing
The Reserve Hotel & Casino ("The Reserve") in the Henderson-Green
Valley suburban area of Las Vegas, Nevada.
The accompanying condensed consolidated financial statements
have been prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission.
Accordingly, the condensed consolidated financial statements do not
include all of the disclosures required by generally accepted
accounting principles. However, the accompanying unaudited
condensed consolidated financial statements do contain all
adjustments that, in the opinion of management, are necessary to
present fairly the financial position and the results of operations
for the interim periods included therein. The interim results
reflected in the condensed consolidated financial statements are
not necessarily indicative of results to be expected for the full
fiscal year.
Certain reclassifications, having no effect on net income,
have been made to the prior period's condensed consolidated
financial statements to conform to the current period's
presentation.
The accompanying condensed consolidated financial statements
should be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996.
<PAGE>NOTE 2 - NOTES PAYABLE AND LONG-TERM DEBT
On July 5, 1995, the Company, as borrower, and its principal
operating subsidiaries, as guarantors, entered into a reducing
revolving credit facility (the "Revolving Credit Facility") with a
syndicate of banks. The maximum principal amount available was
increased to $99.0 million in connection with the Company's
acquisition of The Reserve. The maximum amount available reduced
to $94.5 million on January 1, 1997. As of March 31, 1997, the
Company had drawn the maximum amount available under the Revolving
Credit Facility. The Company has obtained the approval in
principle of the bank syndicate to extend the date of a $4.7
million principal reduction, if a new bank credit facility to
replace the Revolving Credit Facility, which is currently under
negotiation, has not been completed by July 1, 1997. Accordingly,
the accompanying balance sheet classifies the amount of this
scheduled principal reduction as long-term debt.
On March 26, 1997, the Company obtained a $20.0 million short-
term unsecured loan from a bank. The short-term loan bears
interest based either on LIBOR or the bank's prime rate, at the
election of the Company, plus an applicable margin. At March 31,
1997, the applicable interest rate was 8.75 percent per annum. The
loan matures on May 31, 1997 with both principal and interest being
due on that date. Although the bank syndicate for the Revolving
Credit Facility has approved in principle an increase in the
Revolving Credit Facility that would provide sufficient funds to
repay this short-term loan at maturity, the Company has requested
the lender to extend the maturity date pending the completion of
the new bank credit facility currently under negotiation. Based on
the bank syndicate's approval in principle, the accompanying
balance sheet classifies this loan as a long-term obligation.
Although the contemplated modifications to the Revolving Credit
Facility have been approved by the bank syndicate, no assurance can
be given that these modifications will, if necessary, be completed
on a timely basis, if at all.
Notes payable and long-term debt at March 31, 1997 includes an
obligation to the former stockholders (the "Gem Stockholders") of
Gem Gaming, Inc. ("Gem"), for merger consideration in connection
with the October 9, 1996 acquisition of The Reserve. Upon the
merger closing, the Company recorded notes payable of $35,375,000,
the amount at which such notes would have been issued based on
Ameristar's stock price on the closing date of the merger, less a
discount of $1,725,000 to reflect imputed interest during a
noninterest bearing period ending May 31, 1997. As of March 31,
1997, approximately $1,277,000 of the discount had been amortized
to interest expense.
NOTE 3 - ACQUISITION OF THE RESERVE
The amount recorded as notes payable in connection with the
Company's acquisition of The Reserve from Gem, the original
developer of the property, exceeds the fair market value of the net
assets acquired by the Company in the merger. The excess of
purchase price over fair market value of net assets acquired,
recorded as a long-term asset on the Company's consolidated balance
sheet, will be amortized over the estimated 40-year depreciable
life beginning in the period in which the acquired property
commences operations.
<PAGE>NOTE 4 - EARNINGS PER SHARE
In March, 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128 ("SFAS
128"), "Earnings Per Share", effective for fiscal years ending
after December 15, 1997. The Company will adopt SFAS 128 for the
year ending December 31, 1997. SFAS 128 requires the computation
and presentation of basic and diluted earnings per share for all
periods for which an income statement is presented. For the three
months ended March 31, 1997 and 1996, the Company had no material
dilutive securities outstanding.
Options to purchase 531,000 and 550,000 shares of common stock
were outstanding at March 31, 1997 and 1996, respectively, at
exercise prices of $5.56-$16.00 and $5.94-$16.00, respectively.
These options were not included in a pro forma computation of
earnings per share assuming dilution because the options' exercise
prices were greater than the average market price of the common
shares during the respective periods presented.
NOTE 5 - SUBSEQUENT EVENT - ARBITRATION AGAINST FORMER GEM
STOCKHOLDERS
On October 9, 1996, Gem was merged with and into ACLVI
pursuant to a merger agreement entered into on May 31, 1996, as
amended in July and October, 1996 (the "Merger Agreement"). On
March 26, 1997, the Company commenced an arbitration proceeding
against the Gem Stockholders alleging breaches of the Merger
Agreement and the implied covenant of good faith and fair dealing.
The Company and the Gem Stockholders have entered into a
settlement agreement dated as of May 3, 1997, the effectiveness of
which is subject to the approval of the Nevada Gaming Control Board
and the Nevada Gaming Commission. In lieu of the merger
consideration provided for in the Merger Agreement, Ameristar will
pay $32,650,000 to the Gem Stockholders in installments, plus
interest, and reconvey to an affiliate of one of the Gem
Stockholders Ameristar's interests in certain aviation-related
assets acquired in July 1996. Based on the effective date of the
settlement agreement, Ameristar will make a payment of either $4.0
million or $4.25 million to the Gem Stockholders on the effective
date and will issue subordinated unsecured promissory notes for the
balance of the cash consideration. The per annum interest rate on
these notes will be 8 percent, subject to increase (up to a maximum
of 18 percent per annum) following one or more failures to make
payments under the notes by scheduled dates. Interest will be paid
initially on a quarterly basis and on a monthly basis after October
1998. The notes will require annual principal payments of up to
$3.0 million commencing in November 1998 and will mature on
December 31, 2004. The notes may be prepaid at any time without
penalty and will be subordinate to up to $250 million in senior
indebtedness selected by Ameristar.
Upon the effectiveness of the settlement agreement, the
amounts recorded on the Company's balance sheet as notes payable to
the Gem Stockholders and the excess of purchase price over fair
market value of net assets acquired will be adjusted to reflect the
modified terms set forth in the settlement agreement.
<PAGE>ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The Company
Ameristar Casinos, Inc. ("Ameristar" or "ACI") develops, owns
and operates casinos and related hotel, food and beverage,
entertainment and other facilities, with four properties in
operation in Nevada, Mississippi and Iowa and a fifth property
under development in Nevada. Ameristar's principal operations are
conducted through four wholly owned subsidiaries: Cactus Petes,
Inc. ("CPI"); Ameristar Casino Vicksburg, Inc. ("ACVI"); Ameristar
Casino Council Bluffs, Inc. ("ACCBI"); and Ameristar Casino Las
Vegas, Inc. ("ACLVI"). Ameristar and its wholly owned and majority
owned subsidiaries are collectively referred to herein as the
"Company."
CPI owns and operates Cactus Petes Resort Casino ("Cactus
Petes") and The Horseshu Hotel and Casino (collectively, the
"Jackpot Properties"), two casino-hotels located in Jackpot, Nevada
at the Idaho border. ACVI owns and operates a riverboat-themed
dockside casino (the "Vicksburg Casino") and related land-based
facilities (collectively, "Ameristar Vicksburg") in Vicksburg,
Mississippi. ACVI is also developing a 144-room hotel at Ameristar
Vicksburg expected to open in late 1997. ACCBI owns and operates a
riverboat casino (the "Council Bluffs Casino") and related land-
based hotel and other facilities (collectively, "Ameristar Council
Bluffs") in Council Bluffs, Iowa across the Missouri River from
Omaha, Nebraska. Ameristar Council Bluffs was opened in stages
during 1996 and early 1997. The Council Bluffs Casino opened on
January 19, 1996, and most of the land-based facilities opened
during the second and fourth quarters of 1996. The land-based
facilities were completed during the first quarter of 1997, with
the opening of the steakhouse on February 25 and the indoor
swimming pool and spa on March 3, 1997.
ACLVI is developing The Reserve Hotel & Casino ("The Reserve")
in Henderson, Nevada at the intersection of Interstate 515 and Lake
Mead Drive. The Company acquired The Reserve on October 9, 1996,
through the merger of Gem Gaming, Inc. ("Gem"), the initial
developer of The Reserve, into ACLVI. ACLVI will complete
construction of The Reserve and will operate the property. In late
March 1997, the Company announced its intention to suspend
construction on The Reserve resulting from its inability to
complete a major financing transaction due to uncertainties
concerning the form and amount of merger consideration payable in
connection with the acquisition of The Reserve. At that time, the
Company commenced an arbitration proceeding against the former
stockholders of Gem (the "Gem Stockholders") alleging breaches of
contract and the implied covenant of good faith and fair dealing.
In early May 1997, the Company and the Gem Stockholders entered
into a settlement agreement (the "Gem Settlement Agreement") fixing
the amount and terms of payment of the merger consideration.
Pending the effectiveness of the settlement, which is subject to
regulatory approval, the Company is completing the development
plans for The Reserve and is seeking to obtain the financing
necessary to accelerate construction of The Reserve. See
"Liquidity and Capital Resources" in this section and "Part II.
Item 1. Legal Proceedings" below.
The Company's quarterly and annual operating results may be
affected by competitive pressures, the timing of the commencement
of new gaming operations, the amount of preopening costs incurred
by the Company, construction at existing facilities and general
weather conditions. Consequently, the Company's operating results
for any quarter or year may not be indicative of results to be
expected for future periods.
<PAGE>
Summary of Operating Results
Ameristar showed continuing overall growth in revenues and
income from operations for the quarter ended March 31, 1997
compared to the quarter ended March 31, 1996. A full quarter of
operations for the Council Bluffs Casino accompanied by the
substantially complete land-based amenities, none of which were
open during the 1996 quarter, was the main factor for the increase.
Consolidated net revenues for the quarter ended March 31, 1997
showed a 16 percent increase to $49.6 million compared to $42.9
million for the quarter ended March 31, 1996.
Income from operations for the quarter ended March 31, 1997
was $7.0 million compared to $6.6 million before preopening costs
for the same quarter in 1996. Total operating expenses before
preopening costs as a percentage of net revenues were relatively
stable on a year-to-year basis, at 86 percent and 85 percent for
the quarters ended March 31, 1997 and 1996, respectively.
Net income for the quarter ended March 31, 1997 was $2.5
million, compared to net income of $3.1 million before preopening
costs in the quarter ended March 31, 1996. After taking into
account the pretax write-off of $5.9 million in preopening costs
relating to the Ameristar Council Bluffs casino in the first
quarter of 1996, the Company showed a net loss of $0.6 million for
the quarter ended March 31, 1996. The lower net income before
preopening costs for the first quarter of 1997 compared to the
first quarter of 1996 primarily reflects increased interest
expense, due to higher debt levels and the cessation of interest
capitalization on Ameristar Council Bluffs.
Earnings per share for the quarter ended March 31, 1997 were
$0.12 compared to earnings per share before preopening costs of
$0.15 for the quarter ended March 31, 1996. After the write-off of
preopening costs for the Ameristar Council Bluffs casino, the first
quarter of 1996 showed a net loss of $0.03 per share.
Revenues
A full quarter of operations of the casino and the
substantially completed land-based facilities at Ameristar Council
Bluffs in 1997 compared to only a partial quarter of casino
operations in 1996 propelled Ameristar Council Bluffs' net revenues
to $21.7 million for the quarter ended March 31, 1997, compared to
$14.8 million for the same quarter in 1996, an increase of $6.9
million or 47 percent. Operating income at Ameristar Council
Bluffs increased from $3.4 million (before preopening costs of $5.9
million) in the first quarter of 1996 to $4.1 million in the first
quarter of 1997, despite an aggregate increase of $5.9 million in
depreciation and amortization and selling, general and
administrative expenses relating primarily to the new land-based
facilities.
The Jackpot Properties rebounded in the first quarter of 1997
compared to the first quarter of 1996, posting a 26.1 percent
increase in operating income (from $1.725 million to $2.176
million) on a 5 percent increase in revenues (from $11.7 million to
$12.3 million). Management believes that these increases are the
result of the replacement of older slot machines with 587 state-of-
the-art models, as well as the installation of an enhanced slot
player tracking system and an aggressive marketing strategy. These
actions were taken to offset decreases in revenues experienced in
1996, which management attributed to increased competition in
Jackpot and from Native American and other casinos in the outer
market, including
<PAGE>Washington, Oregon and Alberta, Canada, and recent declines
in the rates of population and economic growth in southern Idaho.
While Ameristar Vicksburg continued to be the gaming revenue
market leader in Warren County, Mississippi in the first quarter of
1997, net revenues decreased approximately 5 percent from $16.3
million for the quarter ended March 31, 1996 to $15.5 million for
the quarter ended March 31, 1997. Management believes that the
decrease in 1997 reflects shrinkage in the territorial size of the
Vicksburg market due to competition from casinos in Shreveport and
Bossier City, Louisiana. Operating income for the first quarter of
1997 decreased approximately 9 percent compared to the first
quarter of 1996, from $3.2 million to $2.9 million. In an effort
to expand the market territory of Ameristar Vicksburg and encourage
longer visits, the Company is constructing a 144-room hotel across
from the main entrance to the casino, which is expected to open in
late 1997.
On a consolidated basis for the quarter ended March 31, 1997
compared to the quarter ended March 31, 1996, casino revenues
increased $4.8 million or 13 percent, food and beverage revenues
increased $2.5 million or 52 percent, and rooms revenues increased
$0.6 million or 43 percent. The increase in consolidated total net
revenues is attributable to a full quarter of operations at the
substantially completed Ameristar Council Bluffs property and the
improvements at the Jackpot Properties partially offset by the net
revenues decrease at Ameristar Vicksburg.
Expenses
Casino expenses increased $2.5 million or 14 percent, food and
beverage expenses increased $1.6 million or 52 percent, and rooms
expenses increased $0.2 million or 36 percent for the quarter ended
March 31, 1997 compared to the 1996 first quarter. As with the
increases in net revenues, the increase in each of these expenses
is primarily attributable to the expanded operations at Ameristar
Council Bluffs.
Selling, general and administrative expenses increased $1.4
million or 17 percent for the quarter ended March 31, 1997 compared
to the same quarter of the prior year, due primarily to the
expanded operations at Ameristar Council Bluffs and other costs
associated with the Company's continued growth.
Business development costs decreased $0.2 million in the first
quarter of 1997 compared to the same period of the prior year as
the Company focused its efforts on current projects, including the
development of The Reserve and the hotel at Ameristar Vicksburg and
the casino enhancements at the Jackpot Properties. The Company
continues to explore gaming development opportunities in other
jurisdictions and potential acquisitions in the gaming industry.
However, pending the availability of additional financing for
construction of The Reserve, the Company does not anticipate
undertaking any additional expansion opportunities that would
require a material amount of capital expenditures by the Company.
Depreciation expenses for the first quarter of 1997 increased
due to the inclusion of the completed Ameristar Council Bluffs
facilities in the Company's depreciable asset base, offset by
modest decreases in depreciation expenses at the Jackpot Properties
and Ameristar Vicksburg.
<PAGE>Interest expense was $3.2 million, net of capitalized
interest of $0.9 million, for the quarter ended March 31, 1997, an
increase of $1.2 million or 65 percent over the same quarter in
1996. The increased interest expense relates primarily to
increased debt incurred to finance construction of Ameristar
Council Bluffs.
The Company's effective federal income tax rate for the
quarter ended March 31, 1997 was 37 percent, versus the federal
statutory rate of 35 percent. The excess of the effective rate
over the statutory rate is due to certain expenses deducted in the
current period for financial reporting purposes which are not
currently deductible for tax purposes.
Liquidity and Capital Resources
The Company's cash flow from operations was $6.2 million for
the quarter ended March 31, 1997 as compared to $11.8 million for
the quarter ended March 31, 1996. The Company had unrestricted
cash of approximately $20.8 million as of March 31, 1997. The
Company historically has funded its daily operations through net
cash provided by operating activities and its significant capital
expenditures primarily through bank debt and other debt financing.
The Company's current assets increased by approximately $9.1
million from December 31, 1996 to March 31, 1997, primarily
resulting from an increase in cash on hand. This increase in cash
resulted from a net increase in borrowings of $11.2 million during
the quarter and the $6.2 million of cash flow from operations,
partially offset by capital expenditures on The Reserve, Ameristar
Council Bluffs and other capital improvement projects.
Ameristar, as borrower, and its principal subsidiaries, as
guarantors, maintain a Revolving Credit Facility with Wells Fargo
Bank, NA ("WFB") and a syndicate of banks (the "Revolving Credit
Facility"). The maximum principal available under the Revolving
Credit Facility at March 31, 1997 was $94.5 million. The Company
may not borrow under the Revolving Credit Facility in excess of 3.5
times its rolling four quarter EBITDA ("Earnings before Interest,
Taxes, Depreciation and Amortization"). As of March 31, 1997, 3.5
times the Company's rolling four quarter EBITDA exceeded the
maximum funds available under the Revolving Credit Facility.
Borrowings under the Revolving Credit Facility bear interest
at a rate based either on LIBOR or WFB's prime rate, at the
election of the Company, and the ratio of the Company's
consolidated total debt to consolidated cash flow, as measured by
an EBITDA formula. As of March 31, 1997, the Company had one LIBOR
draw outstanding for the entire $94.5 million, with a current
interest rate of approximately 8.72 percent per annum.
The maximum borrowings available under the Revolving Credit
Facility reduce semiannually on January 1 and July 1 on a sliding
scale (ranging from $4.7 million to $7.1 million in reductions)
with a final principal payment of $42 million due at maturity on
December 31, 2001.
The Revolving Credit Facility is secured by liens on
substantially all of the real and personal property of the Company.
The Revolving Credit Facility binds the Company to a number of
affirmative and negative covenants, including promises to maintain
certain financial ratios within defined parameters. As of
March 31, 1997, the Company was in compliance with these covenants.
<PAGE>On March 26, 1997, Ameristar obtained a $20.0 million
short-term unsecured loan from WFB. A portion of the proceeds from
this loan was used to repay other short-term loans in the principal
amount of $12.0 million ($10.0 million on March 28, 1997 and $2.0
million on April 10, 1997). The WFB short-term loan bears interest
based either on LIBOR or the bank's prime rate, at the election of
Ameristar, plus an applicable margin. At March 31, 1997, the
applicable interest rate was 8.75 percent per annum. The loan
matures on May 31, 1997.
The Company has obtained the approval in principle of the bank
syndicate under the Revolving Credit Facility to increase the
maximum principal available under the Revolving Credit Facility by
$20.0 million for the repayment of the WFB short-term loan and to
extend the July 1, 1997 scheduled principal reduction of $4.7
million under the Revolving Credit Facility. As a result of the
recent tentative settlement of the Company's arbitration claims
against the Gem Stockholders, the Company has, as described below,
commenced negotiations with WFB and other credit sources for the
replacement of the Revolving Credit Facility and certain other long-
term debt with increased long-term debt facilities. In light of
these circumstances, the Company has requested WFB to extend the
maturity of the $20.0 million short-term loan instead of proceeding
with the amendments to the Revolving Credit Facility. However, if
necessary to avoid a default under the Revolving Credit Facility or
the WFB short-term loan, the Company would seek to complete the
contemplated amendments to the Revolving Credit Facility. Although
these amendments have been approved in principle by the lenders, no
assurance can be given that these amendments will, if necessary, be
completed on a timely basis, if at all.
Upon the effectiveness of the Gem Settlement Agreement, which
is conditioned upon its approval by the Nevada Gaming Control Board
and the Nevada Gaming Commission (the "Nevada Gaming Authorities"),
Ameristar will make aggregate installment payments to the Gem
Stockholders of $32.65 million, plus interest. Ameristar will pay
$4.0 or $4.25 million upon effectiveness of the Gem Settlement
Agreement, and the balance ($28.65 million or $28.4 million) will
be evidenced by subordinated unsecured promissory notes issued by
Ameristar (the "Gem Notes"). The variations in the cash and note
principal amounts will depend on the date that the Gem Settlement
Agreement becomes effective. See "Part II. Item 1. Legal
Proceedings." The per annum interest rate on the Gem Notes will be
8 percent, subject to increase by 3.4 or 3.3 percentage points, up
to a maximum of 18 percent per annum, following one or more
failures to make payments under the Gem Notes by scheduled dates.
Interest is scheduled to be paid initially on a quarterly basis and
on a monthly basis after October 1998. A principal reduction
payment of $2.0 million is scheduled for November 1998, followed by
semiannual principal reduction payments of $1.0 million commencing
in July 1999 until January 2002, when the semiannual principal
reduction payments will increase to $1.5 million. The Gem Notes
may be prepaid in whole or in part at any time without penalty.
The Gem Notes will be subordinate to the Revolving Credit Facility
and other long-term indebtedness of Ameristar specified by
Ameristar up to a maximum of $250 million, plus additional
indebtedness incurred in connection with certain interest rate
protection or similar agreements related to senior indebtedness.
The Gem Notes will be unsecured, will not bind the Company to any
affirmative or negative covenants and will not be subject to
acceleration upon failure to make a scheduled payment.
The Company is currently negotiating with various financing
sources for long-term debt facilities that, if completed for the
amount being sought by the Company, would result in a net increase
of approximately $85.5 million in the maximum principal available
to the Company under long-term debt, excluding the Gem Notes. No
assurance can be given that the contemplated credit facilities will
be obtained in the amounts sought by the Company or on terms
acceptable to the Company.
<PAGE>See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital
Resources" in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 for additional information relating to
Company borrowings.
The Company has begun construction of a 144-room hotel at
Ameristar Vicksburg, which is expected to cost approximately $9.5
million, including capitalized construction period interest and
preopening costs. The Company intends to borrow approximately $7.0
million in 1997 for the purpose of funding a portion of the
construction, with the balance expected to be provided out of
operating cash flow. The Company is currently negotiating with a
private lender for a nonrecourse loan that would be secured by the
hotel. The Company anticipates that this loan will have a maturity
date of not earlier than June 1, 1998 and will require monthly or
quarterly interest payments. However, no assurance can be given
that this or any other loan will be obtained on these terms or
other terms acceptable to the Company.
Capital expenditures in the quarter ended March 31, 1997 were
approximately $6.3 million compared to approximately $13.1 million
for the quarter ended March 31, 1996. First quarter 1997 capital
expenditures included approximately $3.0 million relating to
development of The Reserve and approximately $2.1 million relating
to Ameristar Council Bluffs in addition to other normal capital
improvement projects. The Company funded these capital
expenditures primarily from net cash provided by operating
activities and borrowings.
Excluding The Reserve, the Company anticipates making
additional capital expenditures in 1997 of approximately $13.2
million, including approximately $7.0 million for the development
and construction of the hotel at Ameristar Vicksburg, approximately
$1.4 million for the remaining costs for the completion of
Ameristar Council Bluffs, $3.0 million for slot equipment at the
Jackpot Properties and approximately $1.8 million for capital
improvements at existing facilities and other projects.
The Company anticipates making a minimum of an additional $6.8
million in capital expenditures in 1997 for the development and
construction of The Reserve. This amount is subject to increase,
which may be substantial, based on the amount and timing of
additional debt financing available to the Company. Based on the
Company's design plans that were substantially completed in March
1997, the Company had established a preopening construction budget
for The Reserve of approximately $120 million, including
capitalized construction period interest and preopening costs but
excluding land purchase. The plans for The Reserve, the
construction budget and the construction schedule are currently
being evaluated by the Company as they are dependent upon the
amount and timing of availability of financing to the Company. The
Company does not expect to commit to additional 1997 capital
expenditure obligations related to The Reserve in excess of
approximately $6.8 million in the absence of a favorable assessment
by management with respect to the availability of additional
financing to the Company for these purposes.
Management believes that the above-described minimum capital
expenditure requirements will be funded out of cash on hand,
operating cash flow, the proceeds of a loan for the development of
the Ameristar Vicksburg hotel and purchase money and lease
financing related to the acquisition of furniture, fixtures and
equipment (including gaming equipment). Although no assurance can
be given, the Company anticipates that it will have sufficient
funds to meet these minimum capital expenditure requirements in
1997. However, the Company's ability to meet its capital
expenditure requirements and/or maintain compliance with the terms
of the Revolving Credit Facility or other borrowings may be
adversely affected
<PAGE>by such factors as an adverse change in the Company's
operations or operating cash flow, cost overruns on any project or
other unforeseen contingencies that are not covered by insurance or
otherwise reimbursable.
Factors Affecting Forward-Looking Information
This Report contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Among others, such forward-looking statements include
statements with respect to (i) the effectiveness of the Gem
Settlement Agreement, which is subject to approval by the Nevada
Gaming Authorities, (ii) the availability to the Company of
additional debt financing on terms acceptable to the Company and at
the times necessary to satisfy capital expenditure, debt repayment
and other requirements, (iii) the completion, if necessary, of the
contemplated amendments to the Revolving Credit Facility, (iv) the
availability of operating cash flow in amounts and at the times
anticipated by management, (v) the adequacy of budgeted amounts for
capital expenditure projects and the adequacy of the Company's
liquidity and capital resources generally, (vi) the anticipated
time of completion of capital projects and (vi) the ability of the
Company to continue to satisfy covenant and other requirements
under the Revolving Credit Facility and other debt obligations.
These forward-looking statements involve important risks and
uncertainties, many of which will be beyond the control of the
Company, and which could significantly affect anticipated future
results, both short-term and long-term. As a result, actual
results may differ, in some cases materially, from those
anticipated or contemplated by forward-looking statements in this
Report. In addition to the cautionary statements included in this
section and elsewhere throughout this Report, attention is directed
to the cautionary statements included in the Company's other
publicly available reports filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, including
without limitation the cautionary statements set forth or
referenced in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, as amended by Form 10-K/A-1
(the "1996 10-K"), under the caption "Part II. Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Factors Affecting Forward-Looking Statements."
Item 3.Quantitative and Qualitative Disclosures About
Market Risk
Not applicable.
<PAGE>PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
AMERISTAR CASINOS, INC. AND AMERISTAR CASINO LAS VEGAS, INC.
V. STEVEN W. REBEIL AND DOMINIC J. MAGLIARDITI. The arbitration
proceeding commenced on March 26, 1997, by the Company against
Messrs. Rebeil and Magliarditi, the Gem Stockholders, has been
resolved by the Gem Settlement Agreement, subject to the approval
of the Gem Settlement Agreement by the Nevada Gaming Authorities.
This proceeding arose out of alleged breaches by the Gem
Stockholders of the Merger Agreement, as amended (the "Merger
Agreement"), and the implied covenant of good faith and fair
dealing relating to the October 1996 merger by which Gem was merged
into ACLVI. Additional information concerning this arbitration
proceeding and the Merger Agreement is set forth in the 1996 10-K
under "Part I. Item 1. Business -- Terms of the Merger Agreement;
Dispute with Gem Stockholders."
The Gem Settlement Agreement provides for Ameristar to make
payments to the Gem Stockholders through December 31, 2004,
totaling $32,650,000, plus interest, as described above under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources." The Gem
Settlement Agreement also provides for Ameristar to convey to Gem
Air, Inc., an affiliate of Mr. Rebeil, Ameristar's entire interests
in an aircraft and a limited liability company that owns a hangar
facility in Las Vegas, and for the termination of all agreements
relating to these aviation assets (the "Gem Aviation Agreements").
Ameristar acquired its interests in these aviation assets through
transactions with Gem Air, Inc. in July 1996.
The Gem Settlement Agreement includes mutual general releases
of the parties to the arbitration proceeding and certain of their
respective related parties with respect to all obligations arising
out of, based upon or relating to the Merger Agreement and the Gem
Aviation Agreements, except for certain excluded claims. The
released claims include the Company's obligation under the Merger
Agreement to pay merger consideration to the Gem Stockholders based
on the proceeds of an offering of Ameristar Common Stock or the
average trading price of Ameristar Common Stock during the last 10
trading days of May 1997. Among the excluded claims under the Gem
Settlement Agreement are certain indemnification obligations of the
Gem Stockholders under the Merger Agreement and claims against the
Gem Stockholders with respect to Excluded Liabilities (as defined
in the Merger Agreement). Approximately $15.0 million of the Gem
Notes will be evidenced by non-negotiable promissory notes that
will permit Ameristar to offset amounts due under such Gem Notes
against any amounts due to the Company from the Gem Stockholders in
respect of the excluded claims or otherwise, regardless of any
transfers of such Gem Notes by the Gem Stockholders to third
parties. The Gem Notes provide that principal reduction payments
due prior to maturity will be applied first against the negotiable
Gem Notes and second against the non-negotiable Gem Notes.
The effectiveness of the Gem Settlement Agreement is
conditioned upon its approval by the Nevada Gaming Authorities by
June 30, 1997, provided that the Company may extend this deadline
to July 31, 1997 so long as it is continuing in good faith to
pursue such approval. Although the Company has made application
for this approval, no assurance can be given that the Nevada Gaming
Authorities will approve the Gem Settlement Agreement by July 31,
1997, if at all.
BRYAN K. AND DAWN H. HAFEN V. STEVEN W. REBEIL, ET. AL. The
obligation of the Gem Stockholders to indemnify the Company against
claims asserted in this legal proceeding will continue as an
excluded claim under the Gem Settlement Agreement. Additional
information concerning this case is set forth in the 1996 10-K
under "Part I. Item 3. Legal Proceedings."
<PAGE>
ROY PATEL V. AMERISTAR CASINO VICKSBURG, INC. As disclosed in
the 1996 10-K, judgment was entered in favor of ACVI in this case
following a jury verdict returned in January 1997. Although the
plaintiff stated an intention to appeal the judgment, the deadline
for the filing of the appeal lapsed in April 1997. Additional
information concerning this case is set forth in the 1996 10-K
under "Part I. Item 3. Legal Proceedings."
ITEM 6. Exhibits and Reports on Form 8-K
A. Exhibits filed as a part of this report
2.1 Plan of acquisition. See Exhibit 10.1
10.1 Settlement Agreement, dated as of May 3, 1997, among ACI,
ACLVI, Steven W. Rebeil and Dominic J. Magliarditi, Gem Air, Inc.
and Nevada AG Air, Ltd.
27 Financial Data Schedule
B. Reports on Form 8-K
Form 8-K filed on March 26, 1997, reporting under Item 5
the issuance of a press release announcing (i) the
commencement of an arbitration proceeding against the
former stockholders of Gem Gaming, Inc. ("Gem"), which
was acquired by the Registrant through a merger in
October 1996, (ii) the postponement by the Registrant's
bank lenders of a previously-scheduled closing of an
increased bank credit facility due to uncertainties
related to the form and amount of merger consideration
payable by the Registrant to the Gem stockholders and
(iii) a delay in the construction of the Registrant's
casino-hotel project, The Reserve, in Henderson, Nevada,
until adequate financing can be obtained.
<PAGE>SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMERISTAR CASINOS, INC.
Registrant
Date: May 14, 1997 /s/ Thomas Steinbauer
Thomas Steinbauer
Senior Vice President of Finance
and Treasurer
(Principal Financial Officer)
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement") is made as of
May 3, 1997, by and among AMERISTAR CASINOS, INC., a Nevada
corporation ("ACI"), AMERISTAR CASINO LAS VEGAS, INC., a Nevada
corporation and a wholly-owned subsidiary of ACI ("ACLVI"),
STEVEN W. REBEIL, as an individual and in his capacity as Trustee
of the Karizma Trust created under that certain Trust Agreement,
dated July 2, 1991, as amended ("Rebeil"), and DOMINIC J.
MAGLIARDITI, an individual ("Magliarditi," and together with
Rebeil, the "Gem Individuals"), GEM AIR, INC., a Nevada
corporation ("Gem Air") and NEVADA AG AIR, LTD., a Nevada limited
liability company ("NAGAL"). ACI, ACLVI, the Gem Individuals,
Gem Air and NAGAL shall hereafter be referred to collectively as
the "Parties".
Recitals
A. Merger Agreement. Gem Gaming, Inc., a Nevada
corporation ("Gem"), ACI, ACLVI and the Gem Individuals are the
parties to that certain Merger Agreement dated as of May 31, 1996
(as amended by that certain First Amendment to Merger Agreement
dated as of July 2, 1996 and that certain Second Amendment to
Merger Agreement dated as of September 27, 1996, the "Merger
Agreement"). Capitalized terms used herein without definition
shall have the respective meanings set forth in the Merger
Agreement.
B. Merger. Pursuant to the Merger Agreement, Gem was
merged with and into ACLVI on October 9, 1996.
C. Escrow. In accordance with the Merger Agreement, ACI,
Rebeil and Magliarditi entered into that certain Gem Individuals'
Notes Escrow Agreement and Escrow Instructions dated as of
September 27, 1996 (the "Escrow Agreement"). Pursuant to the
Escrow Agreement, ACI delivered four promissory notes to First
Security Bank of Nevada, as escrow agent (the "Escrow Agent"), as
follows:
(a) the "Rebeil Note" (as such term is defined in the
Escrow Agreement);
(b) the "Alternative Rebeil Note" (as such term is
defined in the Escrow Agreement);
(c) the "Magliarditi Note" (as such term is defined in
the Escrow Agreement); and
(d) the "Alternative Magliarditi Note" (as such term
is defined in the Escrow Agreement).
D. Escrow Funds. Pursuant to the Merger Agreement, ACI
delivered One Hundred Seventy-Five Thousand Dollars ($175,000.00)
(the "Escrow Funds") to Escrow Agent for disbursement in
accordance with Section 2.12 of the Merger Agreement.
<PAGE>E. Offices. Pursuant to the Merger Agreement, since
the Closing ACLVI has permitted Rebeil to use and occupy, rent
free, the "Premises" as described in the Merger Agreement.
F. The Hangar. In accordance with the Merger Agreement,
Gem Air and ACI formed NAGAL which is owned by ACI and Gem Air.
NAGAL is governed by that certain Operating Agreement of Nevada
AG Air, Ltd., dated as of July 5, 1996, by and between Gem Air
and ACI (the "Operating Agreement"). Pursuant to the Operating
Agreement, Gem Air conveyed its ownership interest in an aircraft
hanger located at 135 East Reno, Las Vegas, Nevada, Suites F-3
and F-7 (the "Hangar") to NAGAL, assigned its interest in that
certain Ground Lease executed by Johnny Ribeiro Builder, Inc. of
Nevada and Gem Air recorded August 24, 1994 in Book 940624 as
Instrument No. 00225, of the Official Records of the Clark County
Recorder (the "Ground Lease") to NAGAL and conveyed its interest
in the "Personal Property" (as defined in the Operating
Agreement) to NAGAL. The Personal Property, NAGAL's interest in
the Ground Lease and the Hangar shall hereinafter be referred to
as the "Hangar Property". NAGAL then leased the Hangar Property
to ACI pursuant to that certain Sublease dated as of June 30,
1996 by and between NAGAL and ACI (the "Hangar Sublease").
G. The Aircraft. By that certain Warranty Bill of Sale
dated July 5, 1996, Gem Air conveyed to ACI an undivided one-half
(1/2) interest in that certain Cessna Citation ISP Aircraft bearing
manufacturers serial no. 501-0236, U.S. Registration Mark 711VF,
and certain related equipment (collectively, the "Aircraft").
ACI and Gem Air also entered into that certain Aircraft Operating
Agreement dated as of July 5, 1996 (the "Aircraft Operating
Agreement") with respect to the operation and ownership of the
Aircraft.
H. Purpose. The Parties now desire to enter into this
Agreement in order (a) to evidence the release of certain
"Claims" (as hereinafter defined) which they may have against
each other, (b) to provide for the delivery to the Gem
Individuals of cash in the aggregate amount of $4,000,000 (the
"Cash Consideration"), (c) to provide for the delivery to the Gem
Individuals of certain additional promissory notes in the
aggregate amount of $13,650,000 (the "Negotiable Note
Consideration"), (d) to provide for the delivery to the Gem
Individuals of certain promissory notes in the aggregate amount
of $15,000,000 (the "Non-Negotiable Note Consideration") and (e)
to conclude and settle certain other related transactions, all as
of the time (the "Effective Date") that (i) this Agreement is
approved by the Nevada Gaming Commission and/or the Nevada State
Gaming Control Board, as appropriate (the "Nevada Gaming
Authority") in accordance with NRS Chapter 463 (and the
regulations promulgated thereunder) or (ii) ACI notifies the Gem
Individuals that ACI has determined, in the exercise of its sole
discretion, that ACI will not require such approval of the Nevada
Gaming Authority, all as more fully set forth herein.
Agreement
NOW, THEREFORE, for good and valuable consideration, the
Parties hereby agree as follows:
<PAGE>1. The Effective Date. The effectiveness of this
Agreement is conditioned upon the occurrence of the Effective
Date, and, until the Effective Date occurs, this Agreement shall
be of no force or effect. ACI shall work in good faith in order
to obtain the approval of this Agreement by the Nevada Gaming
Authority as expeditiously as reasonably possible. The Gem
Parties shall not be obligated to assist in any way in obtaining
the approval of the Nevada Gaming Authority. In the event the
Effective Date does not occur by the "Outside Closing Date" (as
hereinafter defined), then the Parties will have no obligations
under this Agreement and this Agreement shall have no further
effect, and the parties shall have the same rights and
obligations as if this Agreement never had been executed. The
"Outside Closing Date" shall mean June 30, 1997; provided,
however, that if, notwithstanding the continued good faith
efforts of the Parties, the Nevada Gaming Authority has not
approved of this Agreement on or before June 25, 1997, then ACI
shall have the right, by written notice to Rebeil and Magliarditi
on or prior to June 30, 1997, to extend the Outside Closing Date
to July 31, 1997, in which case:
(a) the Cash Contribution shall be increased to
$4,250,000 (rather than the $4,000,000 referenced in Recital H),
and as a consequence (i) the cash payment called for by Section
3(a)(3) below shall be increased to $4,119,899 and (ii) the cash
payment called for by Section 3(b)(3) shall be increased to
$130,101; and
(b) the Non-Negotiable Note Consideration shall be
reduced to $14,750,000, and as a consequence (i) the principal
amount of the Rebeil Non-Negotiable Note shall be reduced to
$14,298,473, and (ii) the principal amount of the Magliarditi Non-
Negotiable Note shall be reduced to $451,527.
2. Escrow Instructions.
(a) Upon receipt of this Agreement duly executed by
the Parties, Escrow Agent is hereby authorized and instructed,
notwithstanding any provision of the Escrow Agreement to the
contrary, to retain the Rebeil Note, the Alternative Rebeil Note,
the Magliarditi Note and the Alternative Magliarditi Note
(collectively, the "Escrow Notes") and not to take any action
with respect to the Escrow Notes until:
(1) ACI has delivered notice to Escrow Agent that
the Effective Date has occurred; or
(2) ACI has delivered notice to Escrow Agent that
the Outside Closing Date has occurred.
(b) Upon receipt of (i) this Agreement duly executed
by the Parties and (ii) notice from ACI that the Effective Date
has occurred, the Escrow Agent is hereby authorized and
instructed to:
(1) Mark each of the Escrow Notes as "CANCELED"
and return each Escrow Note to ACI;
<PAGE> (2) Cease all payments of the Escrow Funds
to Rebeil and pay the remaining portion of the Escrow Funds,
including all accrued interest thereon, to ACI; and
(3) Terminate and cancel the escrow established
by the Escrow Agreement.
(c) Upon receipt of (i) this Agreement duly executed
by the Parties and (ii) notice from ACI that the Outside Closing
Date has occurred, Escrow Agent is authorized and instructed to
proceed in accordance with the terms of the Escrow Agreement with
respect to the Escrow Notes as if the escrow instruction set
forth in clause (a) of this paragraph 2 had not been given.
3. Effective Date Deliveries. On the Effective Date, the
Parties shall take the following actions:
(a) ACI will deliver the following items to Rebeil:
(1) A promissory note (the "Rebeil Negotiable
Note") dated as of the June 1, 1997, duly executed by
ACI, in the amount of Thirteen Million, Two Hundred
Thirty Two Thousand One Hundred Forty-Six Dollars
($13,232,146) (which sum represents approximately the
product of (i) 96.9388% (the "Rebeil Percentage") times
(ii) the Negotiable Note Consideration). The Rebeil
Negotiable Note otherwise shall be substantially in the
form of Exhibit "A-1" attached hereto and incorporated
herein by this reference;
(2) A promissory note (the "Rebeil Non-Negotiable
Note") dated as of the June 1, 1997, duly executed by
ACI, in the amount of Fourteen Million Five Hundred
Forty Thousand Eight Hundred Twenty Dollars
($14,540,820) (which sum represents approximately the
product of (i) the Rebeil Percentage times (ii) the Non-
Negotiable Note Consideration, and which sum is subject
to adjustment in accordance with Section 1 above). The
Rebeil Non-Negotiable Note otherwise shall be
substantially in the form of Exhibit "A-2" attached
hereto and incorporated herein by this reference; and
(3) Three Million Eight Hundred Seventy Seven
Thousand Five Hundred Fifty Two Dollars ($3,877,552)
(which sum represents approximately the product of (i)
the Rebeil Percentage times (ii) the Cash
Consideration, and which sum is subject to adjustment
in accordance with Section 1 above). Said sum shall be
paid in cash or by wire transfer to a bank selected by
Rebeil in the United States of America.
(b) ACI will deliver the following items to
Magliarditi:
<PAGE>(1) A promissory note (the "Magliarditi
Negotiable Note") dated as of June 1, 1997, duly executed by
ACI, in the amount of Four Hundred Seventeen Thousand Eight
Hundred Fifty Four Dollars ($417,854) (which sum represents
approximately the product of (i) 3.0612% (the "Magliarditi
Percentage") times (ii) the Negotiable Note Consideration).
The Magliarditi Negotiable Note otherwise shall be
substantially in the form of Exhibit "B-1" attached hereto
and incorporated herein by this reference;
(2) A promissory note (the "Magliarditi Non-
Negotiable Note") dated as of June 1, 1997, duly
executed by ACI, in the amount of Four Hundred Fifty-
Nine Thousand One Hundred Eighty Dollars ($459,180)
(which sum represents approximately the product of (i)
the Magliarditi Percentage times (ii) the Non-
Negotiable Note Consideration, and which sum is subject
to adjustment in accordance with Section 1 above). The
Magliarditi Non-Negotiable Note otherwise shall be
substantially in the form of Exhibit "B-2" attached
hereto and incorporated herein by this reference; and
(3) One Hundred Twenty Two Thousand Four Hundred
Forty Eight Dollars ($122,448) (which sum represents
approximately the product of (i) the Magliarditi
Percentage times (ii) the Cash Consideration, and which
sum is subject to adjustment in accordance with Section
1 above). Said sum shall be paid in cash or by wire
transfer to a bank selected by Magliarditi located in
the United States of America.
(c) ACI will deliver the following items to Gem Air:
(1) An assignment of Limited Liability Company
Interests (the "NAGAL Assignment"), duly executed by
ACI, substantially in the form of Exhibit "C" attached
hereto and incorporated herein by this reference,
pursuant to which ACI sells, transfers and conveys all
of ACI's right, title and interest in and to NAGAL to
Gem Air; and
(2) A Bill of Sale (the "Aircraft Bill of Sale"),
duly executed by ACI, substantially in the form of
Exhibit "D" attached hereto and incorporated herein by
this reference, pursuant to which ACI sells, transfers
and conveys all of ACI's right, title and interest in
and to the Aircraft to Gem Air.
4. Sale of Interest in NAGAL, the Hangar Property and
Aircraft and the Assumption of the Existing Indebtedness. On the
Effective Date, ACI shall sell, transfer and convey to Gem Air,
and Gem Air will acquire from ACI, all of ACI's right, title and
interest in and to NAGAL, the Hangar Property and the Aircraft
(together, the "Purchased Assets") pursuant to the NAGAL
Assignment and the Aircraft Bill of Sale, respectively, and Gem
Air shall assume ACI's obligations, if any, under and with
respect to (i) the indebtedness evidenced by that certain
Business Loan Agreement dated as of June 15, 1994 by and between
Bank of America Nevada and Gem Air, (ii) the indebtedness
evidenced by that certain Negotiable Promissory Note dated
October 10, 1994 made by Gem Air in favor of The CIT
Group/Equipment Financing Inc., (iii)
<PAGE>the ground lease dated July 21, 1994 by and between
Riebeiro Builder, Inc. of Nevada, as landlord, and Gem Air, Inc.,
as tenant, as amended, and (iv) any instrument or agreements
evidencing or securing any such indebtedness ((i), (ii), (iii),
and (iv) collectively, the "Existing Indebtedness"). The Gem
Related Parties further shall indemnify, protect, defend and hold
the ACI Related Parties harmless from and against any and all
Claims arising out of or related to the Existing Indebtedness,
and the Gem Related Parties further shall pay any other amounts
owed to any Persons (including ACI Related Parties) as of the
Effective Date, to the extent arising out of use or ownership of
the purchased assets. The amounts of the notes referenced in
Paragraphs 3(a) and 3(b) hereof have been calculated to
incorporate the purchase price of the Purchased Assets.
5. Termination of Aircraft Related Agreements. The
following agreements shall be deemed terminated as of the
Effective Date:
(a) The Aircraft Operating Agreement; and
(b) The Hangar Sublease.
6. Rebeil's Vacation of the Premises. Notwithstanding
Section 2.13 of the Merger Agreement, Rebeil's right to use or
occupy the Premises under Section 2.13 of the Merger Agreement
(and the right of any party using the Premises claiming through
Rebeil) shall be deemed terminated as of the earlier of (a) the
Effective Date and/or (b) the date provided for such termination
in the Merger Agreement. Rebeil (and any party using the
Premises claiming through Rebeil) shall vacate the Premises on or
before the date that is the earlier of (a) three (3) business
days following the Effective Date and/or (b) the date provided
for such termination in the Merger Agreement. Rebeil shall leave
the Premises broom clean and in good order and repair. If Rebeil
(and each party claiming through Rebeil) fails to vacate the
Premises by such date, then Rebeil shall pay to ACI, as
liquidated damages for such failure to timely vacate, a sum equal
to $500 per day up to and including the actual day that the
Premises is vacated in the manner required in this Paragraph.
The parties acknowledge and agree that it is difficult as of the
date hereof to calculate the actual damages that ACI would suffer
as a consequence of such failure to timely vacate, but that such
stipulated daily liquidated damages constitute a reasonable
estimate as of the date hereof of such actual damages.
7. Cessation of Rebeil's Stipend. Notwithstanding Section
2.12 of the Merger Agreement, Rebeil's right to receive Stipend
payments under Section 2.12 of the Merger Agreement shall be
terminated as of the earlier of (a) the Effective Date and/or
(b) the date provided for such termination in the Merger
Agreement.
8. Dismissal of Current Arbitration. ACI shall, promptly
after the Effective Date, file a dismissal with the American
Arbitration Association, Las Vegas, Nevada Office, of the pending
Ameristar Casinos, Inc. et. al. v. Rebeil, et. al. arbitration
proceeding (the "Arbitration Proceeding"). The dismissal shall
state that it is a dismissal with prejudice, except with respect
to "Excluded Claims" (as defined in this Agreement).
<PAGE>9. Definition of "Claims". For purposes of this
Agreement, the term "Claims" shall mean any and all past, present
and potential future claims, causes of action, suits, damages,
demands, costs, expenses, liabilities, breaches of contract, duty
or relationship, acts, omissions, misfeasance, malfeasance, sums
of money, accounts, compensation, contracts, controversies,
promises, obligations, losses and remedies therefor, choses in
action, rights of indemnity or liability of any type, kind,
nature, description or character whatsoever, owed by one Party to
another, and irrespective of how, why, or by reason of what facts
they may have arisen or may arise, whether known or unknown,
whether direct or indirect, whether fixed or contingent, whether
foreseen or unforeseen, and whether arising in law or in equity.
10. Release of Gem Released Parties. As of the Effective
Date, and subject to Section 15 hereof, ACI and ACLVI
(collectively, the "ACI Related Parties") hereby fully and
forever release, waive, discharge, acquit and covenant not to sue
the Gem Individuals, Gem Air, NAGAL or any of their respective
affiliates (including without limitation their affiliates,
officers, directors, shareholders, attorneys, legal
representatives, agents and employees), and each of the
successors, heirs and assigns of any of such persons
(collectively, the "Gem Released Parties"), of, from and against
any and all Claims which any of the ACI Related Parties may now
have, heretofore may have had or hereafter may have against any
of the Gem Released Parties by reason of, arising out of or based
upon or relating to (a) the Merger Agreement, the Escrow
Agreement, the Operating Agreement and the Aircraft Operating
Agreement, (b) any transaction contemplated by any of the
foregoing, (c) the negotiation, exercise, performance, or
consummation of any of the foregoing or (d) the Arbitration
Proceeding.
11. Representations and Warranties of the ACI Related
Parties. The ACI Related Parties hereby represent and warrant to
the Gem Released Parties that each of the following statements is
true and accurate as of the date hereof and shall be true and
accurate as of the Effective Date:
(a) Neither the execution and delivery of this
Agreement by the ACI Related Parties, nor the performance of
their obligations hereunder, requires the consent or
approval of any other person or entity (other than the
approval of the Nevada Gaming Authority (if any such
approval is required) and the approval of the applicable
gaming authorities for the State of Mississippi (if any such
approval is required));
(b) The ACI Related Parties have not heretofore
assigned, transferred or pledged, or purported to assign,
transfer or pledge, to any person, any Claim released by the
ACI Related Parties hereunder or any portion thereof or
interest therein, and the ACI Related Parties agree to
indemnify, defend and hold harmless the Gem Released Parties
from and against any and all Claims based on or arising out
of any such assignment, transfer or pledge or purported
assignment, transfer or pledge;
(c) The ACI Related Parties have had the advice of
legal counsel of their own choosing, duly admitted to
practice in the State of Nevada, in negotiations for and the
preparation of this Agreement. The ACI Related Parties have
read the provisions of this Agreement and are fully apprised
of and understand the provisions of this Agreement and
<PAGE>its legal effect and consequences. The ACI Related
Parties have executed this Agreement after careful and
independent investigation, and the ACI Related Parties are
not executing this Agreement under fraud, duress or undue
influence; and
(d) Except for the Existing Indebtedness, ACI has
neither sold, assigned, transferred, conveyed, mortgaged,
pledged nor encumbered, nor purported to sell, assign,
transfer, convey, mortgage, pledge nor encumber, to any
person, any of ACI's interest in the Purchased Assets and
the ACI Related Parties agree to indemnify, defend and hold
harmless the Gem Released Parties from and against any and
all claims based on or arising out of any such sale,
assignment, conveyance, mortgage, pledge or encumbrance.
12. Release of ACI Released Parties. As of the Effective
Date, and subject to Section 15 hereof, the Gem Individuals, Gem
Air and NAGAL (collectively, the "Gem Related Parties") hereby
fully and forever release, waive, discharge, acquit and covenant
not to sue ACI, ACLVI or any of their respective affiliates
(including without limitation their affiliates, officers,
directors, shareholders, attorneys, legal representatives, agents
and employees), and each of the successors, heirs and assigns of
any of such persons (collectively, the "ACI Released Parties"),
of, from and against any and all Claims which any of the Gem
Related Parties may now have, heretofore may have had or
hereafter may have against any of the ACI Released Parties by
reason of, arising out of or based upon or relating to (a) the
Merger Agreement, the Escrow Agreement, the Operating Agreement
and the Aircraft Operating Agreement, (b) any transaction
contemplated by any of the foregoing, (c) the negotiation,
exercise, performance, or consummation of any of the foregoing or
(d) the Arbitration Proceeding.
13. Representations and Warranties of the Gem Related
Parties. The Gem Related Parties hereby represent and warrant to
the ACI Released Parties that each of the following statements is
true and accurate as of the date hereof and shall be true and
accurate as of the Effective Date:
(a) Neither the execution and delivery of this
Agreement by the Gem Related Parties, nor the performance of
their obligations hereunder, requires the consent or
approval of any other person or entity;
(b) The Gem Related Parties have not heretofore
assigned, transferred or pledged, or purported to assign,
transfer or pledge, to any person, any Claim released by the
Gem Related Parties hereunder or any portion thereof or
interest therein, and the Gem Related Parties agree to
indemnify, defend and hold harmless the ACI Released Parties
from and against any and all Claims based on or arising out
of any such assignment, transfer or pledge or purported
assignment, transfer or pledge; and
(c) The Gem Related Parties have had the advice of
legal counsel of their own choosing, duly admitted to
practice in the State of Nevada, in negotiations for and the
preparation of this Agreement. The Gem Related Parties have
read the provisions of this Agreement and are fully apprised
of and understand the provisions of this Agreement and its
legal effect and consequences. The Gem Related Parties have
executed this Agreement after careful and independent
investigation of all relevant facts (including the past,
present
<PAGE>and future financial conditions and operations of the
ACI Released Parties) and the Gem Related Parties are not
relying on any representation, warranty, or other statement
of any ACI Released Party with respect thereto. The Gem
Related Parties are not executing this Agreement under
fraud, duress or undue influence.
14. Complete Waiver of all Claims. The Gem Related Parties
and the ACI Related Parties each hereby confirm that, except as
provided in Section 15 hereof, they intend by this Agreement to
waive all Claims in accordance with this Agreement as of the
Effective Date, including Claims which any Party does not know or
suspect to exist in such Party's favor at the time of execution
of this Agreement. Each Party to this Agreement hereby waives
the provisions of any applicable laws restricting the release of
claims which such person does not know or suspect to exist at the
time of this Agreement, which, if known, could have materially
affected such Party's decision to agree to execute and deliver
this Agreement.
15. Excluded Claims. Notwithstanding any provision of this
Agreement to the contrary, nothing herein shall be construed as
waiving, releasing or otherwise limiting any of the following
Claims (the "Excluded Claims"): (i) any Claim (including,
without limitation, any Claim for indemnity under Section 11.3(b)
of the Merger Agreement) that results from, arises out of or is
based upon or incident to Damages that (A) are suffered (or
allegedly are suffered) by any Person that is neither a Gem
Released Party nor an ACI Released Party and (B) for which such
Person seeks a remedy against any ACI Related Party, (ii) any
Claim that results from, arises out of or is based upon or
incident to any inaccuracy of the representations and warranties
contained in Section 4.9 of the Merger Agreement titled "No
Conflict or Violation" (excluding, however, any representations
or warranties concerning ACI's ability to obtain gaming
licenses), or Section 4.25 of the Merger Agreement, titled
"Compliance with Environmental Laws," (iii) any Claim that
results from, arises out of or is based upon or incident to this
Agreement or any other agreement or instrument executed pursuant
hereto or any transaction contemplated hereby or thereby, (iv)
any Claim that results from, arises out of or is based upon or
incident to any of the Excluded Liabilities and/or (v) any Claim
based on any bankruptcy or insolvency law. Consequently, and
notwithstanding any provisions of this Agreement to the contrary,
the Parties' obligations under Section 11.3 of the Merger
Agreement with respect to Excluded Claims shall continue in full
force and effect after the Effective Date.
16. Amendments to Merger Agreement. The following
amendments to the Merger Agreement shall be effective as of the
Effective Date:
(a) Notwithstanding anything to the contrary contained
in the Merger Agreement, in no event shall Rebeil's
aggregate liability under Section 11.3 of the Merger
Agreement exceed the sum of the original face amounts of the
notes referenced in Paragraphs 3(a) and 3(b) hereof (such
sum hereinafter referred to as the "Aggregate Note Amount");
provided, such Aggregate Note Amount shall be the only
limitation to Rebeil's aggregate liability under Section
11.3 of the Merger Agreement. In order to reflect the
foregoing, for purposes of Section 11.3(a) of the Merger
Agreement, the "value of the Merger Consideration (the
"Consideration Value")" (as such terms appear in Section
11.3(a) of the Merger Agreement) shall be deemed to equal
the Aggregate Note Amount.
<PAGE>Nothing in this clause (a) is intended to diminish the
negotiability of the Rebeil Negotiable Note or the
Magliarditi Negotiable Note.
(b) Section 2.12 and Section 2.13 of the Merger
Agreement are hereby deleted in their entirety.
(c) Notwithstanding anything to the contrary contained
in the Merger Agreement, the Rules of the American
Arbitration Association or elsewhere, the parties shall use
their respective best efforts to expedite arbitration
proceedings under Section 12.13 of the Merger Agreement
(including seeking the establishment by the arbitrator of
discovery procedures designed to limit discovery to a period
ending no later than the 120th days after appointment of the
arbitrator.)
(d) Except as otherwise provided herein, the Merger
Agreement shall remain in full force and effect.
17. Set-Off. Any of the ACI Related Parties shall be
entitled to set off (a) any liability that any of the Gem Related
Parties owes to any of the ACI Related Parties (without regard to
whether such liability arises under this Agreement, the Merger
Agreement, or any transactions contemplated thereby) against (b)
any amount due and payable by the ACI Related Parties to any of
the Gem Related Parties under the Rebeil Non-Negotiable Note or
the Magliarditi Non-Negotiable Note (collectively, the "Non-
Negotiable Notes"). The following provisions shall apply for
purposes of effecting set offs pursuant to this Paragraph 17:
(i) If, as a consequence of a breach by a Gem Related
Party of its obligations under Section 11.3 of the Merger
Agreement with respect to an Excluded Claim covered by said
Section 11.3, any ACI Related Party incurs any costs, expenses
(including attorneys' fees), losses or liabilities (such costs,
expenses losses and liabilities referred to herein as "Unpaid Gem
Indemnification Obligations"), then ACI shall have the right to
set off the amount of such Unpaid Gem Indemnification Obligations
against the payments next coming due under the Non-Negotiable
Notes. Such set off may be effected by ACI at any time after
such Unpaid Gem Indemnification Obligations are incurred by the
ACI Related Party;
(ii) If an ACI Related Party incurs any other costs,
expenses (including attorneys' fees), losses or liabilities in
connection with an Excluded Claim which the ACI Related Party has
against a Gem Related Party, other than those described in
Section 17(i) above, then ACI only shall be permitted to set off
such costs, expenses, losses or liabilities by application
thereof against the payments scheduled under the terms of the Non-
Negotiable Notes in reverse chronological order, beginning with
the payments last scheduled to be made under the terms of the Non-
Negotiable Notes and, as such payments are exhausted, by
proceeding successively to the immediately preceding payments
scheduled under the terms of the Non-Negotiable Notes; provided,
however, that set offs pursuant to clause (ii) of this Paragraph
17 only shall be effected to reduce the principal balances of the
Non-Negotiable Notes (and thus the principal balances upon which
interest thereafter shall accrue under the Non-Negotiable Notes)
at such time as (A) the costs, expenses, losses or liabilities,
other than those described in Section 17(i) above, forming the
basis for the set off have been determined by a final non-
appealable judgment against an ACI
<PAGE>Related Party and (B) the Gem Related Parties have failed
to pay such amounts to the ACI Related Party for a period of 30
days after such judgment.
18. Miscellaneous. This Agreement and all rights and
duties of the Parties arising from or relating in any way to the
subject matter of this Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada.
This Agreement may be executed in one or more counterparts, each
of which shall be an original but all of which shall constitute
one and the same instrument. If any provision of this Agreement
or the application thereof to any Party or circumstance shall, to
any extent, be held invalid or unenforceable, then the remainder
of this Agreement, or the application of such provision to
persons or circumstances other than those as to whom or which it
is held invalid or unenforceable, shall not be affected thereby,
and each provision of the Agreement shall be valid and
enforceable to the fullest extent permitted by law. This
Agreement contains all of the terms and conditions of the
agreements entered into between the Parties hereto relating to
the releases of Claims and supersedes all prior agreements and
understandings between such Parties relating to the subject
matter, and may not be contradicted by evidence of prior or
contemporaneous agreements of the Parties. There are no oral
agreements. Any presumption that an ambiguity in this Agreement
should be construed against the document drafter or author is
hereby waived and shall not apply with respect to any document
interpretation. Time is of the essence in this Agreement.
Subject to Paragraph 16(c) hereof, all disputes under this
Agreement shall be subject to arbitration in accordance with
Section 12.13 of the Merger Agreement. In the event any Party or
entity refers this to an attorney in order to enforce its rights
or remedies hereunder, then the prevailing Party or entity in any
controversy, litigation, arbitration or similar proceeding shall
be entitled, in addition to any other relief granted in
connection therewith, to an award of its attorneys' fees and
other costs and expenses incurred in connection therewith.
Headings used herein are for convenience only and shall not
affect the interpretation hereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Settlement
Agreement as of the date first above written.
AMERISTAR CASINOS, INC.,
a Nevada corporation
By: /s/ Craig H. Neilsen
Name: Craig H. Neilsen
Title: President and CEO
AMERISTAR CASINO LAS VEGAS, INC.,
a Nevada corporation
By: /s/ Craig H. Neilsen
Name: Craig H. Neilsen
Title: President and CEO
NEVADA AG AIR, LTD.,
a Nevada limited liability company
By: Ameristar Casinos, Inc.,
a Nevada corporation, member
By: /s/ Craig H. Neilsen
Name: Craig H. Neilsen
Title: President and CEO
By: Gem Air, Inc.,
a Nevada corporation, member
By: /s/ Steven W. Rebeil
Name: Steven W. Rebeil
Title: President
STEVEN W. REBEIL,
an individual
/s/ Steven W. Rebeil
STEVEN W. REBEIL,
in his capacity as Trustee of the Karizma Trust created under
that certain Trust Agreement, dated July 2, 1991, as amended
/s/ Steven W. Rebeil
DOMINIC J. MAGLIARDITI,
an individual
/s/ Dominic J. Magliarditi
GEM AIR, INC.,
a Nevada corporation
By: /s/ Steven W. Rebeil
Name: Steven W. Rebeil
Title: President
<PAGE>On this 6th day of May, 1997, Craig H. Neilsen directed
Connie R. Wilson, in his presence as well as our own, to sign the
foregoing document as "Craig H. Neilsen." Upon viewing the
signature as signed by Connie R. Wilson and in our presence,
Craig H. Neilsen declared that he adopted it as his own
signature.
/s/ Latoya Wattree
Witness
/s/ Diane Foster
Witness
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
I, Janice S. Lupton, a Notary Public in and for said county and
state, do hereby certify that Craig H. Neilsen personally
appeared before me and is known or identified to me to be the
person whose name is subscribed to the within instrument. Craig
H. Neilsen, who being unable due to physical incapacity to sign
his name or offer his mark, did direct Connie R. Wilson to sign
the foregoing document as "Craig H. Neilsen." Craig H. Neilsen,
after reviewing his name as signed by Connie R. Wilson thereupon
adopted it as his own by acknowledging to me his intention to so
adopt as if he had personally executed the same.
IN WINTESS WHEREOF, I have hereunto set my hand and official seal
this 6th day of May, 1997.
/s/ Janice S. Lupton
Notary Public
Residing at Henderson, NV
My Commission Expires
October 23, 2000
<PAGE>CONSENT OF SPOUSE OF STEVEN W. REBEIL
The undersigned hereby confirms (i) that she has read,
approved of and agreed with the terms of this Agreement and all
transactions contemplated hereby, (ii) that as the spouse of one
of the signatories hereto, her property (including her interests
in any community property) may be held liable for the obligations
of her spouse under this Agreement and all transactions and other
agreements contemplated hereby, (iii) that she will be bound by
this Agreement and all other agreements contemplated hereby as if
she were a party thereto, and that any agreements,
acknowledgments, representations or warranties made by her spouse
under this Agreement or any other agreements contemplated hereby
shall apply equally to the undersigned as if made by the
undersigned, (iv) that she approves all actions taken to date by
her spouse in connection with this Agreement and all transactions
and other agreements contemplated hereby, and that she has
authorized and empowered her spouse to take any and all further
actions which he deems necessary or appropriate in order to
effect the transactions contemplated thereby, and (v) that the
Parties may rely upon the confirmations set forth in this Consent
of Spouse in entering into and proceeding with this Agreement.
Date: May 5, 1997 /s/ Jilly Rebeil
<PAGE>CONSENT OF SPOUSE OF DOMINIC J. MAGLIARDITI
The undersigned hereby confirms (i) that she has read,
approved of and agreed with the terms of this Agreement and all
transactions contemplated hereby, (ii) that as the spouse of one
of the signatories hereto, her property (including her interests
in any community property) may be held liable for the obligations
of her spouse under this Agreement and all transactions and other
agreements contemplated hereby, (iii) that she will be bound by
this Agreement and all other agreements contemplated hereby as if
she were a party thereto, and that any agreements,
acknowledgments, representations or warranties made by her spouse
under this Agreement or any other agreements contemplated hereby
shall apply equally to the undersigned as if made by the
undersigned, (iv) that she approves all actions taken to date by
her spouse in connection with this Agreement and all transactions
and other agreements contemplated hereby, and that she has
authorized and empowered her spouse to take any and all further
actions which he deems necessary or appropriate in order to
effect the transactions contemplated thereby, and (v) that the
Parties may rely upon the confirmations set forth in this Consent
of Spouse in entering into and proceeding with this Agreement.
Date: May 5, 1997 /s/ Francine R.
Magliarditi
<PAGE>EXHIBIT A-1
Form of Rebeil Negotiable Note
PROMISSORY NOTE
1. Promise to Pay. For good and valuable consideration,
AMERISTAR CASINOS, INC., a Nevada corporation ("Borrower"),
promises to pay to STEVEN W. REBEIL, as an individual and in his
capacity as trustee of the Karizma Trust created under that
certain Trust Agreement dated July 2, 1991, as amended
("Lender"), or order, $13,232,146 with interest on the unpaid
principal balance at eight percent (8%) per annum simple interest
(subject to Paragraph 2) (the "Interest Rate") from the date
hereof until paid in accordance with the terms contained herein.
Interest shall be computed on the basis of a 365-day year and the
actual number of days elapsed. Should any accrued interest not
be paid on any Interest Payment Date, it shall thereafter accrue
interest as principal. All payments shall be made at 93 Spanish
Gate, by wire, or at such other place as the holder of this Note
may from time to time designate. All payments shall be applied
first to accrued interest and then to the principal balance.
2. Payment Schedule. This Note may be prepaid in whole or
in part at any time without penalty. Borrower shall pay interest
accruing under this Note as follows: (a) interest accruing from
the date hereof through July 20, 1997 shall be paid (to the
extent not previously paid) on ____________ [INSERT THE LATER OF
JULY 20, 1997 AND THE "EFFECTIVE DATE," AS SUCH TERM IS DEFINED
IN THE SETTLEMENT AGREEMENT]; (b) interest accruing from and
after July 21, 1997 shall be paid (to the extent not previously
paid) on the twentieth (20th) day of each October, January, April
and July thereafter until October 20, 1998; and (c) interest
accruing from and after October 21, 1998 shall be paid (to the
extent not previously paid) on the twentieth (20th) day of each
calendar month thereafter until the date (the "Payment
Termination Date") that is the earlier of the Maturity Date or
the date when the principal amount of, and all accrued interest
on, this Note has been paid in full. Each date upon which a
payment is required to be made pursuant to the foregoing
provisions of this Section 2 shall be referred to herein as a
"Payment Date." In addition, Borrower shall pay installments of
principal as follows:
(1) On November 20, 1998, Borrower shall pay $1,938,776 to
Lender as an installment of principal;
(2) On July 20, 1999, Borrower shall pay $969,388 to Lender
as an installment of principal;
(3) On January 20, 2000, Borrower shall pay $969,388 to
Lender as an installment of principal;
(4) On July 20, 2000, Borrower shall pay $969,388 to Lender
as an installment of principal;
<PAGE>(5) On January 20, 2001, Borrower shall pay $969,388
to Lender as an installment of principal;
(6) On July 20, 2001, Borrower shall pay $969,388 to Lender
as an installment of principal;
(7) On January 20, 2002, Borrower shall pay $1,454,082 to
Lender as an installment of principal;
(8) On July 20, 2002, Borrower shall pay $1,454,082 to
Lender as an installment of principal;
(9) On January 20, 2003, Borrower shall pay $1,454,082 to
Lender as an installment of principal;
(10) On July 20, 2003, Borrower shall pay $1,454,082 to
Lender as an installment of principal; and
(11) On January 20, 2004, Borrower shall pay $630,102 to
Lender as an installment of principal.
If on any Payment Date before the Payment Termination Date,
Borrower fails to make any payment of interest or principal to
Lender, as required above, and Borrower fails to cure such
failure within ten (10) days after receiving written notice of
such failure from Lender, then, commencing as of the next Payment
Date, the Interest Rate hereunder shall be increased as follows:
(i) With respect to the first such increase, the
Interest Rate shall be increased so that the Interest Rate
shall thereafter equal eleven and four tenths percent
(11.4%) per annum simple interest;
(ii) With respect to the second such increase, the
Interest Rate shall be increased so that the Interest Rate
shall thereafter equal fourteen and seven tenths percent
(14.7%) per annum simple interest; and
(iii) With respect to the third such increase, the
Interest Rate shall be increased so that the Interest Rate
shall thereafter equal eighteen percent (18%) per annum
simple interest. The Interest Rate shall not be increased
to a level greater than eighteen percent (18%) per annum
simple interest.
3. Maturity. All unpaid principal and accrued, but
unpaid, interest shall be due and payable on December 31, 2004
(the "Maturity Date").
<PAGE>4. Subordination.
4.1 Note Subordinated to Senior Indebtedness.
Anything herein to the contrary notwithstanding, each of Borrower
and Lender agrees that the payment of the Obligations with
respect to this Note is subordinated, to the extent and in the
manner provided in this Paragraph 4, to the prior payment in full
in cash of all Senior Indebtedness. The provisions of this
Paragraph 4 are made for the benefit of the holders of Senior
Indebtedness and holders of Senior Indebtedness may enforce the
provisions of this Paragraph 4 without any need to demonstrate
any reliance hereon.
4.2 No Payment on Note in Certain Circumstances.
Unless Subparagraph 4.3 shall be applicable, upon (i) (A) the
occurrence of any default in the payment of all or any portion
then due of principal of, premium, if any, or interest on any
Senior Indebtedness, (B) the occurrence of any event which
entitles one or more persons to act to accelerate the maturity of
any Senior Indebtedness or (C) the existence of any facts or
circumstances which would result in the occurrence of any event
described in clause (A) or clause (B) if Borrower were to make
any payment hereunder (any event described in clause (A) or
clause (B) or facts or circumstances described in clause (C), a
"Senior Indebtedness Default") and (ii) receipt by the Lender
from the indenture trustee or other trustee, agent or
representative for any Senior Indebtedness (the "Representative")
of written notice of such Senior Indebtedness Default, then no
direct or indirect payments or distribution of any assets of
Borrower of any kind or character shall be made by or on behalf
of Borrower on account of the Obligations on this Note or on
account of the purchase or redemption or other acquisition of
this Note whether pursuant to the terms of this Note or upon
acceleration or otherwise unless and until such Senior
Indebtedness Default shall have been cured or waived or shall
have ceased to exist, or such Senior Indebtedness as to which
such Senior Indebtedness Default relates shall have been
discharged or paid in full in cash, after which Borrower shall
resume making any and all required payments in respect of this
Note, including any missed payments. In the event that,
notwithstanding the foregoing, the Lender or any holder of this
Note shall have received any payment or distribution prohibited
by the foregoing provisions of this Subparagraph 4.2, then such
payment or distribution shall be received, segregated from other
funds, and held in trust by Lender or such other holder of this
Note, as the case may be, for the benefit of, and shall
immediately be paid over and delivered forthwith to the
Representatives or as a court of competent jurisdiction shall
direct.
4.3 Note Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of
Borrower. Upon any payment or distribution of assets of Borrower
of any kind or character, whether in cash, property or
securities, upon any dissolution, winding-up, total or partial
liquidation or total or partial reorganization of Borrower
(including, without limitation, in bankruptcy, insolvency or
receivership proceedings or upon any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of
Borrower and whether voluntary or involuntary):
(a) the holders of all Senior Indebtedness shall first
be entitled to receive payments in full in cash of all amounts
payable under Senior Indebtedness before Lender is entitled to
receive any payment with respect to this Note and until all
Obligations with respect to
<PAGE>the Senior Indebtedness are paid in full in cash, any
distribution to which Lender or any other holder of this Note
would be entitled shall be made to the holders of Senior
Indebtedness;
(b) any payment or distribution of assets of Borrower
of any kind or character, whether in cash, property or
securities, to which Lender shall be paid by the liquidating
trustee or agent or other person making such a payment or
distribution, directly to the holders of Senior Indebtedness or
their Representative until all Senior Indebtedness remaining
unpaid shall have been paid in full in cash, after giving effect
to any concurrent payment or distribution to the holders of such
Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing,
any payment or distribution of assets or securities of Borrower
of any kind or character, whether in cash, property or
securities, shall be received by Lender or any other holder of
this Note on account of principal of, premium, if any, or
interest on this Note before all Senior Indebtedness is paid in
full in cash, such payment or distribution shall be received,
segregated from other funds, and held in trust by Lender or such
other holder of this Note, as the case may be, for the benefit
of, and shall immediately be paid over to, the holders of Senior
Indebtedness or their Representative, ratably according to the
respective amounts of Senior Indebtedness held or represented by
each, until all Senior Indebtedness remaining unpaid shall have
been paid in full in cash after giving effect to any concurrent
payment or distribution to or for the holders of Senior
Indebtedness.
4.4 Lender to Be Subrogated to Rights of Holders of
Senior Indebtedness. Subject to the payment in full in cash of
all Senior Indebtedness, Lender shall be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or
distributions of assets of Borrower applicable to the Senior
Indebtedness until all amounts owing on this Note shall be paid
in full in cash.
4.5 Defined Terms. When used in this Note, the
following capitalized terms shall have the meanings set forth
below:
"Existing Senior Indebtedness" means any and all
Indebtedness and other Obligations of Borrower under or evidenced
by (i) that certain Credit Agreement dated as of June 1, 1995 by
and among Borrower, as borrower, First Interstate Bank of Nevada,
N.A., as agent, and the Financial Institutions named therein, as
Lenders, as the same may be amended from time to time, or (ii)
any other document or instrument evidencing or securing such
Indebtedness, including, without limitation, that certain
Promissory Note due December 31, 2001, dated as of July 5, 1995
and made by Ameristar Casinos, Inc. to First Interstate Bank of
Nevada, N.A., as Agent for the Lenders under the Credit Agreement
referred to above, as the same may be amended from time to time,
and that certain Pledge Security Agreement dated as of June 1,
1995 by and between Borrower, as Pledgor, and First Interstate
Bank of Nevada, N.A., as Agent for the Lenders under the Credit
Agreement referred to above, as the same may be amended from time
to time.
"Hedging Obligations" means, with respect to the Senior
Indebtedness of any Person, the obligations of such Person under
(i) interest rate swap agreements, interest rate cap
<PAGE>agreements and interest rate collar agreements relating to
the Obligations under the Senior Indebtedness and (ii) other
agreements or arrangements designed to protect such Person
against fluctuations in interest rates on such Senior
Indebtedness.
"Indebtedness" means with respect to any person,
corporation, trust, partnership, or other entity (a "Person"),
without duplication, (i) all liabilities, contingent or
otherwise, of such Person for borrowed money, evidenced by bonds,
notes, debentures, drafts accepted or similar instruments or
letters of credit, or for the payment of money relating to an
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with U.S. generally
accepted accounting principals; (ii) reimbursement obligations of
such person with respect to letters of credit; (iii) all
liabilities of others of the kind described in the preceding
clause (i) or clause (ii) that such Person has guaranteed or that
is otherwise its legal liability; and (iii) all obligations of
others secured by any mortgage, pledge, lien, encumbrances,
charge or a security interest of any kind to which any of the
properties or assets (including, without limitation, leasehold
interests and any other tangible or intangible property rights)
of such Person are subject, whether or not the obligations
secured thereby shall have been assumed by such Person or shall
otherwise be such Person's legal liability.
"Obligations" means all obligations of every nature
whether for principal, reimbursements, interest, fees, expenses,
indemnities or otherwise, and whether primary, secondary, direct,
indirect, contingent, fixed or otherwise (including obligations
of performance) under the documentation governing any
Indebtedness.
"Senior Indebtedness" means the principal of, premium,
if any, and interest on, and all other Obligations with respect
to, (A) the Existing Senior Indebtedness and/or (B) any other
Indebtedness of Borrower whether outstanding on the date hereof
or hereafter created, incurred, assumed or guaranteed or in
effect guaranteed by Borrower, but with respect to the
Indebtedness described in (B) above, only if the instrument or
document evidencing such Indebtedness expressly provides that
such Indebtedness shall be senior in right of payment to this
Note; provided, however, Borrower shall not enter into any Senior
Indebtedness if entering into such Senior Indebtedness would
cause the aggregate outstanding principal balance of all Senior
Indebtedness, immediately following execution and delivery of
such Senior Indebtedness, to exceed $250,000,000 (excluding, for
purposes of said maximum, Hedging Obligations with respect to
Senior Indebtedness already counted for purposes of the
calculation). "Senior Indebtedness" shall be deemed to include
for all purposes of this Note interest accruing after the filing
of a petition initiating any proceeding pursuant to any federal,
state or foreign bankruptcy law in accordance with and at the
rate (including any rate applicable upon any Senior Indebtedness
Default, to the extent lawful) specified in any document
evidencing the Senior Indebtedness, whether or not the claim for
such interest is allowed as a claim after such filing in any
proceeding under such bankruptcy law. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include (i)
Indebtedness of Borrower to any subsidiary of Borrower, (ii)
Indebtedness to, or guaranteed on behalf of, any shareholder,
director, officer or employee of Borrower or of any subsidiary of
Borrower (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other
amounts incurred in connection with obtaining goods, materials or
services, (iv) any liability for federal, state, local or other
taxes
<PAGE>owed or owing by Borrower, and (v) any Indebtedness
evidenced by that certain Promissory Note of even date herewith
made by Borrower in favor of Dominic J. Magliarditi in an
original principal amount of [AMOUNT OF MAGLIARDITI NEGOTIABLE
NOTE, AS SET FORTH IN THE SETTLEMENT AGREEMENT], that certain
Promissory Note of even date herewith made by Borrower in favor
of Lender in an original principal amount of [AMOUNT OF REBEIL
NON-NEGOTIABLE NOTE, AS SET FORTH IN THE SETTLEMENT AGREEMENT],
or that certain Promissory Note of even date herewith made by
Borrower in favor of Dominic J. Magliarditi in an original
principal amount of [AMOUNT OF MAGLIARDITI NON-NEGOTIABLE NOTE,
AS SET FORTH IN THE SETTLEMENT AGREEMENT].
5. Miscellaneous Provisions. No provision of this Note
may be amended, modified, supplemented, changed, waived,
discharged or terminated unless Lender consents thereto in
writing. In case any one or more of the provisions contained in
this Note should be held to be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be
affected or impaired thereby. In the event of a failure by
Borrower prior to the Maturity Date to pay any amounts due
hereunder as and when due, Lender's sole remedy shall be
adjustment of the Interest Rate as set forth in Paragraph 2;
Lender specifically acknowledges and agrees that it shall not
have the right prior to the Maturity Date to accelerate the
indebtedness hereunder, or take any other actions other than
those set forth in Paragraph 2 hereof, as a consequence of any
such non-payment. This Note shall be binding upon and inure to
the benefit of Borrower, Lender and their respective successors
and assigns. This Note shall be governed by and construed in
accordance with the laws of the State of Nevada. By accepting
this Note, each holder of this Note agrees (a) to be bound by and
to perform all of the obligations of Lender hereunder and
(b) that its rights hereunder are subject to the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Note as of June 1, 1997.
BORROWER: LENDER:
AMERISTAR CASINOS, INC., a
Nevada corporation
__________________________________
____
By: STEVEN W. REBEIL, as an
____________________________ individual and in his capacity
Name: as trustee of the Karizma Trust
____________________________ created under that certain
Title: Trust Agreement dated July 2,
____________________________ 1991, as amended
<PAGE>EXHIBIT A-2
Form of Rebeil Non-Negotiable Note
PROMISSORY NOTE
1. Promise to Pay. For good and valuable consideration,
AMERISTAR CASINOS, INC., a Nevada corporation ("Borrower"),
promises to pay to STEVEN W. REBEIL, as an individual and in his
capacity as trustee of the Karizma Trust created under that
certain Trust Agreement dated July 2, 1991, as amended
("Lender"), $14,540,820 subject to adjustment as provided in the
Settlement Agreement Section 1(b) with interest on the unpaid
principal balance at eight percent (8%) per annum simple interest
(subject to Paragraph 2) (the "Interest Rate") from the date
hereof until paid in accordance with the terms contained herein.
Interest shall be computed on the basis of a 365-day year and the
actual number of days elapsed. Should any accrued interest not
be paid on any Interest Payment Date, it shall thereafter accrue
interest as principal. All payments shall be made at 93 Spanish
Gate, by wire, or at such other place as the holder of this Note
may from time to time designate. All payments shall be applied
first to accrued interest and then to the principal balance.
2. Payment Schedule. This Note may be prepaid in whole or
in part at any time without penalty. Borrower shall pay interest
accruing under this Note as follows: (a) interest accruing from
the date hereof through July 20, 1997 shall be paid (to the
extent not previously paid) on ____________ [INSERT THE LATER OF
JULY 20, 1997 AND THE "EFFECTIVE DATE," AS SUCH TERM IS DEFINED
IN THE SETTLEMENT AGREEMENT]; (b) interest accruing from and
after July 21, 1997 shall be paid (to the extent not previously
paid) on the twentieth (20th) day of each October, January, April
and July thereafter until October 20, 1998; and (c) interest
accruing from and after October 21, 1998 shall be paid (to the
extent not previously paid) on the twentieth (20th) day of each
calendar month thereafter until the date (the "Payment
Termination Date") that is the earlier of the Maturity Date or
the date when the principal amount of, and all accrued interest
on, this Note has been paid in full. Each date upon which a
payment is required to be made pursuant to the foregoing
provisions of this Section 2 shall be referred to herein as a
"Payment Date." In addition, Borrower shall pay installments of
principal as follows:
(1) On January 20, 2004, Borrower shall pay $823,979 to
Lender as an installment of principal; and
(2) On July 20, 2004, Borrower shall pay $1,454,082 to
Lender as an installment of principal.
If on any Payment Date before the Payment Termination Date,
Borrower fails to make any payment of interest or principal to
Lender, as required above, and Borrower fails to cure such
failure within ten (10) days after receiving written notice of
such failure from Lender, then, commencing as of the next Payment
Date, the Interest Rate hereunder shall be increased as follows:
<PAGE> (i) With respect to the first such increase, the
Interest Rate shall be increased so that the Interest Rate shall
thereafter equal eleven and four tenths percent (11.4%) per annum
simple interest;
(ii) With respect to the second such increase, the
Interest Rate shall be increased so that the Interest Rate
shall thereafter equal fourteen and seven-tenths percent
(14.7%) per annum simple interest; and
(iii) With respect to the third such increase, the
Interest Rate shall be increased so that the Interest Rate
shall thereafter equal eighteen percent (18%) per annum
simple interest. The Interest Rate shall not be increased
to a level greater than eighteen percent (18%) per annum
simple interest.
3. Maturity. All unpaid principal and accrued, but
unpaid, interest shall be due and payable on December 31, 2004
(the "Maturity Date").
4. Subordination.
4.1 Note Subordinated to Senior Indebtedness.
Anything herein to the contrary notwithstanding, each of Borrower
and Lender agrees that the payment of the Obligations with
respect to this Note is subordinated, to the extent and in the
manner provided in this Paragraph 4, to the prior payment in full
in cash of all Senior Indebtedness. The provisions of this
Paragraph 4 are made for the benefit of the holders of Senior
Indebtedness and holders of Senior Indebtedness may enforce the
provisions of this Paragraph 4 without any need to demonstrate
any reliance hereon.
4.2 No Payment on Note in Certain Circumstances.
Unless Subparagraph 4.3 shall be applicable, upon (i) (A) the
occurrence of any default in the payment of all or any portion
then due of principal of, premium, if any, or interest on any
Senior Indebtedness, (B) the occurrence of any event which
entitles one or more persons to act to accelerate the maturity of
any Senior Indebtedness or (C) the existence of any facts or
circumstances which would result in the occurrence of any event
described in clause (A) or clause (B) if Borrower were to make
any payment hereunder (any event described in clause (A) or
clause (B) or facts or circumstances described in clause (C), a
"Senior Indebtedness Default") and (ii) receipt by the Lender
from the indenture trustee or other trustee, agent or
representative for any Senior Indebtedness (the "Representative")
of written notice of such Senior Indebtedness Default, then no
direct or indirect payments or distribution of any assets of
Borrower of any kind or character shall be made by or on behalf
of Borrower on account of the Obligations on this Note or on
account of the purchase or redemption or other acquisition of
this Note whether pursuant to the terms of this Note or upon
acceleration or otherwise unless and until such Senior
Indebtedness Default shall have been cured or waived or shall
have ceased to exist, or such Senior Indebtedness as to which
such Senior Indebtedness Default relates shall have been
discharged or paid in full in cash, after which Borrower shall
resume making any and all required payments in respect of this
Note, including any missed payments. In the event that,
notwithstanding the foregoing, the Lender or any holder of this
Note shall have received any payment or distribution prohibited
by the foregoing provisions of this Subparagraph 4.2, then such
payment or distribution shall be received,
<PAGE>segregated from other funds, and held in trust by Lender or
such other holder of this Note, as the case may be, for the
benefit of, and shall immediately be paid over and delivered
forthwith to the Representatives or as a court of competent
jurisdiction shall direct.
4.3 Note Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of
Borrower. Upon any payment or distribution of assets of Borrower
of any kind or character, whether in cash, property or
securities, upon any dissolution, winding-up, total or partial
liquidation or total or partial reorganization of Borrower
(including, without limitation, in bankruptcy, insolvency or
receivership proceedings or upon any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of
Borrower and whether voluntary or involuntary):
(a) the holders of all Senior Indebtedness shall first
be entitled to receive payments in full in cash of all amounts
payable under Senior Indebtedness before Lender is entitled to
receive any payment with respect to this Note and until all
Obligations with respect to the Senior Indebtedness are paid in
full in cash, any distribution to which Lender or any other
holder of this Note would be entitled shall be made to the
holders of Senior Indebtedness;
(b) any payment or distribution of assets of Borrower
of any kind or character, whether in cash, property or
securities, to which Lender shall be paid by the liquidating
trustee or agent or other person making such a payment or
distribution, directly to the holders of Senior Indebtedness or
their Representative until all Senior Indebtedness remaining
unpaid shall have been paid in full in cash, after giving effect
to any concurrent payment or distribution to the holders of such
Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing,
any payment or distribution of assets or securities of Borrower
of any kind or character, whether in cash, property or
securities, shall be received by Lender or any other holder of
this Note on account of principal of, premium, if any, or
interest on this Note before all Senior Indebtedness is paid in
full in cash, such payment or distribution shall be received,
segregated from other funds, and held in trust by Lender or such
other holder of this Note, as the case may be, for the benefit
of, and shall immediately be paid over to, the holders of Senior
Indebtedness or their Representative, ratably according to the
respective amounts of Senior Indebtedness held or represented by
each, until all Senior Indebtedness remaining unpaid shall have
been paid in full in cash after giving effect to any concurrent
payment or distribution to or for the holders of Senior
Indebtedness.
4.4 Lender to Be Subrogated to Rights of Holders of
Senior Indebtedness. Subject to the payment in full in cash of
all Senior Indebtedness, Lender shall be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or
distributions of assets of Borrower applicable to the Senior
Indebtedness until all amounts owing on this Note shall be paid
in full in cash.
4.5 Defined Terms. When used in this Note, the
following capitalized terms shall have the meanings set forth
below:
<PAGE> "Existing Senior Indebtedness" means any and all
Indebtedness and other Obligations of Borrower under or evidenced
by (i) that certain Credit Agreement dated as of June 1, 1995 by
and among Borrower, as borrower, First Interstate Bank of Nevada,
N.A., as agent, and the Financial Institutions named therein, as
Lenders, as the same may be amended from time to time, or (ii)
any other document or instrument evidencing or securing such
Indebtedness, including, without limitation, that certain
Promissory Note due December 31, 2001, dated as of July 5, 1995
and made by Ameristar Casinos, Inc. to First Interstate Bank of
Nevada, N.A., as Agent for the Lenders under the Credit Agreement
referred to above, as the same may be amended from time to time,
and that certain Pledge Security Agreement dated as of June 1,
1995 by and between Borrower, as Pledgor, and First Interstate
Bank of Nevada, N.A., as Agent for the Lenders under the Credit
Agreement referred to above, as the same may be amended from time
to time.
"Hedging Obligations" means, with respect to the Senior
Indebtedness of any Person, the obligations of such Person under
(i) interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements relating to the Obligations
under the Senior Indebtedness and (ii) other agreements or
arrangements designed to protect such Person against fluctuations
in interest rates on such Senior Indebtedness.
"Indebtedness" means with respect to any person,
corporation, trust, partnership, or other entity (a "Person"),
without duplication, (i) all liabilities, contingent or
otherwise, of such Person for borrowed money, evidenced by bonds,
notes, debentures, drafts accepted or similar instruments or
letters of credit, or for the payment of money relating to an
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with U.S. generally
accepted accounting principals; (ii) reimbursement obligations of
such person with respect to letters of credit; (iii) all
liabilities of others of the kind described in the preceding
clause (i) or clause (ii) that such Person has guaranteed or that
is otherwise its legal liability; and (iii) all obligations of
others secured by any mortgage, pledge, lien, encumbrances,
charge or a security interest of any kind to which any of the
properties or assets (including, without limitation, leasehold
interests and any other tangible or intangible property rights)
of such Person are subject, whether or not the obligations
secured thereby shall have been assumed by such Person or shall
otherwise be such Person's legal liability.
"Obligations" means all obligations of every nature
whether for principal, reimbursements, interest, fees, expenses,
indemnities or otherwise, and whether primary, secondary, direct,
indirect, contingent, fixed or otherwise (including obligations
of performance) under the documentation governing any
Indebtedness.
"Senior Indebtedness" means the principal of, premium,
if any, and interest on, and all other Obligations with respect
to, (A) the Existing Senior Indebtedness and/or (B) any other
Indebtedness of Borrower whether outstanding on the date hereof
or hereafter created, incurred, assumed or guaranteed or in
effect guaranteed by Borrower, but with respect to the
Indebtedness described in (B) above, only if the instrument or
document evidencing such Indebtedness expressly provides that
such Indebtedness shall be senior in right of payment to this
Note; provided, however, Borrower shall not enter into any Senior
Indebtedness if entering into such
<PAGE>Senior Indebtedness would cause the aggregate outstanding
principal balance of all Senior Indebtedness, immediately
following execution and delivery of such Senior Indebtedness, to
exceed $250,000,000 (excluding, for purposes of said maximum,
Hedging Obligations with respect to Senior Indebtedness already
counted for purposes of the calculation). "Senior Indebtedness"
shall be deemed to include for all purposes of this Note interest
accruing after the filing of a petition initiating any proceeding
pursuant to any federal, state or foreign bankruptcy law in
accordance with and at the rate (including any rate applicable
upon any Senior Indebtedness Default, to the extent lawful)
specified in any document evidencing the Senior Indebtedness,
whether or not the claim for such interest is allowed as a claim
after such filing in any proceeding under such bankruptcy law.
Notwithstanding the foregoing, "Senior Indebtedness" shall not
include (i) Indebtedness of Borrower to any subsidiary of
Borrower, (ii) Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of Borrower or of any
subsidiary of Borrower (including, without limitation, amounts
owed for compensation), (iii) Indebtedness to trade creditors and
other amounts incurred in connection with obtaining goods,
materials or services, (iv) any liability for federal, state,
local or other taxes owed or owing by Borrower, and (v) any
Indebtedness evidenced by that certain Promissory Note of even
date herewith made by Borrower in favor of Dominic J. Magliarditi
in an original principal amount of [AMOUNT OF MAGLIARDITI
NEGOTIABLE NOTE, AS SET FORTH IN THE SETTLEMENT AGREEMENT], that
certain Promissory Note of even date herewith made by Borrower in
favor of Lender in an original principal amount of [AMOUNT OF
REBEIL NEGOTIABLE NOTE, AS SET FORTH IN THE SETTLEMENT
AGREEMENT], or that certain Promissory Note of even date herewith
made by Borrower in favor of Dominic J. Magliarditi in an
original principal amount of [AMOUNT OF MAGLIARDITI NON-
NEGOTIABLE NOTE, AS SET FORTH IN THE SETTLEMENT AGREEMENT].
5. Set-Off. Borrower shall be entitled to set off
(a) any obligations payable by Lender to Borrower (without regard
to whether such obligations of Lender arises under the
transaction that gave rise to this Note or any other transaction
or facts) against (b) amounts due and payable by Borrower to
Lender hereunder. Any such set offs shall be subject to the
provisions of the Settlement Agreement dated as of May 3, 1997 by
and among Borrower, Ameristar Casino Las Vegas, Inc., Lender,
Dominic J. Magliarditi, Gem Air, Inc. and Nevada AG Air, Ltd.
6. Miscellaneous Provisions. No provision of this
Note may be amended, modified, supplemented, changed, waived,
discharged or terminated unless Lender consents thereto in
writing. In case any one or more of the provisions contained in
this Note should be held to be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be
affected or impaired thereby. In the event of a failure by
Borrower prior to the Maturity Date to pay any amounts due
hereunder as and when due, Lender's sole remedy shall be
adjustment of the Interest Rate as set forth in Paragraph 2;
Lender specifically acknowledges and agrees that it shall not
have the right prior to the Maturity Date to accelerate the
indebtedness hereunder, or take any other actions other than
those set forth in Paragraph 2 hereof, as a consequence of any
such non-payment. This Note shall be binding upon and inure to
the benefit of Borrower, Lender and their respective successors
and assigns. This Note shall be governed by and construed in
accordance with the laws of the State of Nevada. By accepting
this Note, each holder of this Note agrees (a) to be bound by and
to
<PAGE>perform all of the obligations of Lender hereunder and
(b) that its rights hereunder are subject to the provisions
hereof. This Note is not negotiable.
IN WITNESS WHEREOF, the parties hereto have executed this
Note as of June 1, 1997.
BORROWER: LENDER:
AMERISTAR CASINOS, INC., a
Nevada corporation
_________________________________
_____
By: STEVEN W. REBEIL, as an
____________________________ individual and in his capacity
Name: as trustee of the Karizma Trust
____________________________ created under that certain
Title: Trust Agreement dated July 2,
____________________________ 1991, as amended
<PAGE>EXHIBIT B-1
Form of Magliarditi Negotiable Note
PROMISSORY NOTE
1. Promise to Pay. For good and valuable consideration,
AMERISTAR CASINOS, INC., a Nevada corporation ("Borrower"),
promises to pay to DOMINIC J. MAGLIARDITI, an individual
("Lender"), or order, $417,854 with interest on the unpaid
principal balance at eight percent (8%) per annum simple interest
(subject to Paragraph 2) (the "Interest Rate") from the date
hereof until paid in accordance with the terms contained herein.
Interest shall be computed on the basis of a 365-day year and the
actual number of days elapsed. Should any accrued interest not
be paid on any Interest Payment Date, it shall thereafter accrue
interest as principal. All payments shall be made at
____________________________________________________, or at such
other place as the holder of this Note may from time to time
designate. All payments shall be applied first to accrued
interest and then to the principal balance.
2. Payment Schedule. This Note may be prepaid in whole or
in part at any time without penalty. Borrower shall pay interest
accruing under this Note as follows: (a) interest accruing from
the date hereof through July 20, 1997 shall be paid (to the
extent not previously paid) on ____________ [INSERT THE LATER OF
JULY 20, 1997 AND THE "EFFECTIVE DATE," AS SUCH TERM IS DEFINED
IN THE SETTLEMENT AGREEMENT]; (b) interest accruing from and
after July 21, 1997 shall be paid (to the extent not previously
paid) on the twentieth (20th) day of each October, January, April
and July thereafter until October 20, 1998; and (c) interest
accruing from and after October 21, 1998 shall be paid (to the
extent not previously paid) on the twentieth (20th) day of each
calendar month thereafter until the date (the "Payment
Termination Date") that is the earlier of the Maturity Date or
the date when the principal amount of, and all accrued interest
on, this Note has been paid in full. Each date upon which a
payment is required to be made pursuant to the foregoing
provisions of this Section 2 shall be referred to herein as a
"Payment Date." In addition, Borrower shall pay installments of
principal as follows:
(1) On November 20, 1998, Borrower shall pay $61,224 to
Lender as an installment of principal;
(2) On July 20, 1999, Borrower shall pay $30,612 to Lender
as an installment of principal;
(3) On January 20, 2000, Borrower shall pay $30,612 to
Lender as an installment of principal;
(4) On July 20, 2000, Borrower shall pay $30,612 to Lender
as an installment of principal;
<PAGE>(5) On January 20, 2001, Borrower shall pay $30,612 to
Lender as an installment of principal;
(6) On July 20, 2001, Borrower shall pay $30,612 to Lender
as an installment of principal;
(7) On January 20, 2002, Borrower shall pay $45,918 to
Lender as an installment of principal;
(8) On July 20, 2002, Borrower shall pay $45,918 to Lender
as an installment of principal;
(9) On January 20, 2003, Borrower shall pay $45,918 to
Lender as an installment of principal;
(10) On July 20, 2003, Borrower shall pay $45,918 to Lender
as an installment of principal; and
(11) On January 20, 2004, Borrower shall pay $19,898 to
Lender as an installment of principal.
If on any Payment Date before the Payment Termination Date,
Borrower fails to make any payment of interest or principal to
Lender, as required above, and Borrower fails to cure such
failure within ten (10) days after receiving written notice of
such failure from Lender, then, commencing as of the next Payment
Date, the Interest Rate hereunder shall be increased as follows:
(i) With respect to the first such increase, the
Interest Rate shall be increased so that the Interest Rate
shall thereafter equal eleven and four tenths percent
(11.4%) per annum simple interest;
(ii) With respect to the second such increase, the
Interest Rate shall be increased so that the Interest Rate
shall thereafter equal fourteen and seven-tenths percent
(14.7%) per annum simple interest; and
(iii) With respect to the third such increase, the
Interest Rate shall be increased so that the Interest Rate
shall thereafter equal eighteen percent (18%) per annum
simple interest. The Interest Rate shall not be increased
to a level greater than eighteen percent (18%) per annum
simple interest.
3. Maturity. All unpaid principal and accrued, but
unpaid, interest shall be due and payable on December 31, 2004
(the "Maturity Date").
<PAGE>4. Subordination.
4.1 Note Subordinated to Senior Indebtedness.
Anything herein to the contrary notwithstanding, each of Borrower
and Lender agrees that the payment of the Obligations with
respect to this Note is subordinated, to the extent and in the
manner provided in this Paragraph 4, to the prior payment in full
in cash of all Senior Indebtedness. The provisions of this
Paragraph 4 are made for the benefit of the holders of Senior
Indebtedness and holders of Senior Indebtedness may enforce the
provisions of this Paragraph 4 without any need to demonstrate
any reliance hereon.
4.2 No Payment on Note in Certain Circumstances.
Unless Subparagraph 4.3 shall be applicable, upon (i) (A) the
occurrence of any default in the payment of all or any portion
then due of principal of, premium, if any, or interest on any
Senior Indebtedness, (B) the occurrence of any event which
entitles one or more persons to act to accelerate the maturity of
any Senior Indebtedness or (C) the existence of any facts or
circumstances which would result in the occurrence of any event
described in clause (A) or clause (B) if Borrower were to make
any payment hereunder (any event described in clause (A) or
clause (B) or facts or circumstances described in clause (C), a
"Senior Indebtedness Default") and (ii) receipt by the Lender
from the indenture trustee or other trustee, agent or
representative for any Senior Indebtedness (the "Representative")
of written notice of such Senior Indebtedness Default, then no
direct or indirect payments or distribution of any assets of
Borrower of any kind or character shall be made by or on behalf
of Borrower on account of the Obligations on this Note or on
account of the purchase or redemption or other acquisition of
this Note whether pursuant to the terms of this Note or upon
acceleration or otherwise unless and until such Senior
Indebtedness Default shall have been cured or waived or shall
have ceased to exist, or such Senior Indebtedness as to which
such Senior Indebtedness Default relates shall have been
discharged or paid in full in cash, after which Borrower shall
resume making any and all required payments in respect of this
Note, including any missed payments. In the event that,
notwithstanding the foregoing, the Lender or any holder of this
Note shall have received any payment or distribution prohibited
by the foregoing provisions of this Subparagraph 4.2, then such
payment or distribution shall be received, segregated from other
funds, and held in trust by Lender or such other holder of this
Note, as the case may be, for the benefit of, and shall
immediately be paid over and delivered forthwith to the
Representatives or as a court of competent jurisdiction shall
direct.
4.3 Note Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of
Borrower. Upon any payment or distribution of assets of Borrower
of any kind or character, whether in cash, property or
securities, upon any dissolution, winding-up, total or partial
liquidation or total or partial reorganization of Borrower
(including, without limitation, in bankruptcy, insolvency or
receivership proceedings or upon any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of
Borrower and whether voluntary or involuntary):
(a) the holders of all Senior Indebtedness shall first
be entitled to receive payments in full in cash of all amounts
payable under Senior Indebtedness before Lender is entitled to
receive any payment with respect to this Note and until all
Obligations with respect to
<PAGE>the Senior Indebtedness are paid in full in cash, any
distribution to which Lender or any other holder of this Note
would be entitled shall be made to the holders of Senior
Indebtedness;
(b) any payment or distribution of assets of Borrower
of any kind or character, whether in cash, property or
securities, to which Lender shall be paid by the liquidating
trustee or agent or other person making such a payment or
distribution, directly to the holders of Senior Indebtedness or
their Representative until all Senior Indebtedness remaining
unpaid shall have been paid in full in cash, after giving effect
to any concurrent payment or distribution to the holders of such
Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing,
any payment or distribution of assets or securities of Borrower
of any kind or character, whether in cash, property or
securities, shall be received by Lender or any other holder of
this Note on account of principal of, premium, if any, or
interest on this Note before all Senior Indebtedness is paid in
full in cash, such payment or distribution shall be received,
segregated from other funds, and held in trust by Lender or such
other holder of this Note, as the case may be, for the benefit
of, and shall immediately be paid over to, the holders of Senior
Indebtedness or their Representative, ratably according to the
respective amounts of Senior Indebtedness held or represented by
each, until all Senior Indebtedness remaining unpaid shall have
been paid in full in cash after giving effect to any concurrent
payment or distribution to or for the holders of Senior
Indebtedness.
4.4 Lender to Be Subrogated to Rights of Holders of
Senior Indebtedness. Subject to the payment in full in cash of
all Senior Indebtedness, Lender shall be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or
distributions of assets of Borrower applicable to the Senior
Indebtedness until all amounts owing on this Note shall be paid
in full in cash.
4.5 Defined Terms. When used in this Note, the
following capitalized terms shall have the meanings set forth
below:
"Existing Senior Indebtedness" means any and all
Indebtedness and other Obligations of Borrower under or evidenced
by (i) that certain Credit Agreement dated as of June 1, 1995 by
and among Borrower, as borrower, First Interstate Bank of Nevada,
N.A., as agent, and the Financial Institutions named therein, as
Lenders, as the same may be amended from time to time, or (ii)
any other document or instrument evidencing or securing such
Indebtedness, including, without limitation, that certain
Promissory Note due December 31, 2001, dated as of July 5, 1995
and made by Ameristar Casinos, Inc. to First Interstate Bank of
Nevada, N.A., as Agent for the Lenders under the Credit Agreement
referred to above, as the same may be amended from time to time,
and that certain Pledge Security Agreement dated as of June 1,
1995 by and between Borrower, as Pledgor, and First Interstate
Bank of Nevada, N.A., as Agent for the Lenders under the Credit
Agreement referred to above, as the same may be amended from time
to time.
"Hedging Obligations" means, with respect to the Senior
Indebtedness of any Person, the obligations of such Person under
(i) interest rate swap agreements, interest rate cap
<PAGE>agreements and interest rate collar agreements relating to
the Obligations under the Senior Indebtedness and (ii) other
agreements or arrangements designed to protect such Person
against fluctuations in interest rates on such Senior
Indebtedness.
"Indebtedness" means with respect to any person,
corporation, trust, partnership, or other entity (a "Person"),
without duplication, (i) all liabilities, contingent or
otherwise, of such Person for borrowed money, evidenced by bonds,
notes, debentures, drafts accepted or similar instruments or
letters of credit, or for the payment of money relating to an
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with U.S. generally
accepted accounting principals; (ii) reimbursement obligations of
such person with respect to letters of credit; (iii) all
liabilities of others of the kind described in the preceding
clause (i) or clause (ii) that such Person has guaranteed or that
is otherwise its legal liability; and (iii) all obligations of
others secured by any mortgage, pledge, lien, encumbrances,
charge or a security interest of any kind to which any of the
properties or assets (including, without limitation, leasehold
interests and any other tangible or intangible property rights)
of such Person are subject, whether or not the obligations
secured thereby shall have been assumed by such Person or shall
otherwise be such Person's legal liability.
"Obligations" means all obligations of every nature
whether for principal, reimbursements, interest, fees, expenses,
indemnities or otherwise, and whether primary, secondary, direct,
indirect, contingent, fixed or otherwise (including obligations
of performance) under the documentation governing any
Indebtedness.
"Senior Indebtedness" means the principal of, premium,
if any, and interest on, and all other Obligations with respect
to, (A) the Existing Senior Indebtedness and/or (B) any other
Indebtedness of Borrower whether outstanding on the date hereof
or hereafter created, incurred, assumed or guaranteed or in
effect guaranteed by Borrower, but with respect to the
Indebtedness described in (B) above, only if the instrument or
document evidencing such Indebtedness expressly provides that
such Indebtedness shall be senior in right of payment to this
Note; provided, however, Borrower shall not enter into any Senior
Indebtedness if entering into such Senior Indebtedness would
cause the aggregate outstanding principal balance of all Senior
Indebtedness, immediately following execution and delivery of
such Senior Indebtedness, to exceed $250,000,000 (excluding, for
purposes of said maximum, Hedging Obligations with respect to
Senior Indebtedness already counted for purposes of the
calculation). "Senior Indebtedness" shall be deemed to include
for all purposes of this Note interest accruing after the filing
of a petition initiating any proceeding pursuant to any federal,
state or foreign bankruptcy law in accordance with and at the
rate (including any rate applicable upon any Senior Indebtedness
Default, to the extent lawful) specified in any document
evidencing the Senior Indebtedness, whether or not the claim for
such interest is allowed as a claim after such filing in any
proceeding under such bankruptcy law. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include (i)
Indebtedness of Borrower to any subsidiary of Borrower, (ii)
Indebtedness to, or guaranteed on behalf of, any shareholder,
director, officer or employee of Borrower or of any subsidiary of
Borrower (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other
amounts incurred in connection with obtaining goods, materials or
services, (iv) any liability for federal, state, local or other
taxes
<PAGE>owed or owing by Borrower, and (v) any Indebtedness
evidenced by that certain Promissory Note of even date herewith
made by Borrower in favor of Lender in an original principal
amount of [AMOUNT OF MAGLIARDITI NON-NEGOTIABLE NOTE, AS SET
FORTH IN THE SETTLEMENT AGREEMENT], that certain Promissory Note
of even date herewith made by Borrower in favor of Steven W.
Rebeil (in his capacity as an individual and as trustee of the
Karizma Trust created under that certain Trust Agreement dated
July 2, 1991, as amended) in an original principal amount of
[AMOUNT OF REBEIL NON-NEGOTIABLE NOTE, AS SET FORTH IN THE
SETTLEMENT AGREEMENT], or that certain Promissory Note of even
date herewith made by Borrower in favor of Steven W. Rebeil (in
his capacity as an individual and as trustee of the Karizma Trust
created under that certain Trust Agreement dated July 2, 1991, as
amended) in an original principal amount of [AMOUNT OF REBEIL
NEGOTIABLE NOTE, AS SET FORTH IN THE SETTLEMENT AGREEMENT].
5. Miscellaneous Provisions. No provision of this
Note may be amended, modified, supplemented, changed, waived,
discharged or terminated unless Lender consents thereto in
writing. In case any one or more of the provisions contained in
this Note should be held to be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be
affected or impaired thereby. In the event of a failure by
Borrower prior to the Maturity Date to pay any amounts due
hereunder as and when due, Lender's sole remedy shall be
adjustment of the Interest Rate as set forth in Paragraph 2;
Lender specifically acknowledges and agrees that it shall not
have the right prior to the Maturity Date to accelerate the
indebtedness hereunder, or take any other actions other than
those set forth in Paragraph 2 hereof, as a consequence of any
such non-payment. This Note shall be binding upon and inure to
the benefit of Borrower, Lender and their respective successors
and assigns. This Note shall be governed by and construed in
accordance with the laws of the State of Nevada. By accepting
this Note, each holder of this Note agrees (a) to be bound by and
to perform all of the obligations of Lender hereunder and
(b) that its rights hereunder are subject to the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Note as of June 1, 1997.
BORROWER: LENDER:
AMERISTAR CASINOS, INC., a
Nevada corporation
__________________________________
____
By: DOMINIC J. MAGLIARDITI, an
____________________________ individual
Name:
____________________________
Title:
____________________________
<PAGE>EXHIBIT B-2
Form of Magliarditi Non-Negotiable Note
PROMISSORY NOTE
1. Promise to Pay. For good and valuable consideration,
AMERISTAR CASINOS, INC., a Nevada corporation ("Borrower"),
promises to pay to DOMINIC J. MAGLIARDITI, an individual
("Lender"), $459,180 subject to adjustment as provided in the
Settlement Agreement Section 1(b) with interest on the unpaid
principal balance at eight percent (8%) per annum simple interest
(subject to Paragraph 2) (the "Interest Rate") from the date
hereof until paid in accordance with the terms contained herein.
Interest shall be computed on the basis of a 365-day year and the
actual number of days elapsed. Should any accrued interest not
be paid on any Interest Payment Date, it shall thereafter accrue
interest as principal. All payments shall be made at
_______________________________________________________, or at
such other place as the holder of this Note may from time to time
designate. All payments shall be applied first to accrued
interest and then to the principal balance.
2. Payment Schedule. This Note may be prepaid in whole or
in part at any time without penalty. Borrower shall pay interest
accruing under this Note as follows: (a) interest accruing from
the date hereof through July 20, 1997 shall be paid (to the
extent not previously paid) on ____________ [INSERT THE LATER OF
JULY 20, 1997 AND THE "EFFECTIVE DATE," AS SUCH TERM IS DEFINED
IN THE SETTLEMENT AGREEMENT]; (b) interest accruing from and
after July 21, 1997 shall be paid (to the extent not previously
paid) on the twentieth (20th) day of each October, January, April
and July thereafter until October 20, 1998; and (c) interest
accruing from and after October 21, 1998 shall be paid (to the
extent not previously paid) on the twentieth (20th) day of each
calendar month thereafter until the date (the "Payment
Termination Date") that is the earlier of the Maturity Date or
the date when the principal amount of, and all accrued interest
on, this Note has been paid in full. Each date upon which a
payment is required to be made pursuant to the foregoing
provisions of this Section 2 shall be referred to herein as a
"Payment Date." In addition, Borrower shall pay installments of
principal as follows:
(1) On January 20, 2004, Borrower shall pay $26,020 to
Lender as an installment of principal; and
(2) On July 20, 2004, Borrower shall pay $45,918 to
Lender as an installment of principal.
If on any Payment Date before the Payment Termination Date,
Borrower fails to make any payment of interest or principal to
Lender, as required above, and Borrower fails to cure such
failure within ten (10) days after receiving written notice of
such failure from Lender, then, commencing as of the next Payment
Date, the Interest Rate hereunder shall be increased as follows:
<PAGE> (i) With respect to the first such increase, the
Interest Rate shall be increased so that the Interest Rate shall
thereafter equal eleven and four tenths percent (11.4%) per annum
simple interest;
(ii) With respect to the second such increase, the
Interest Rate shall be increased so that the Interest Rate
shall thereafter equal fourteen and seven-tenths percent
(14.7%) per annum simple interest; and
(iii) With respect to the third such increase, the
Interest Rate shall be increased so that the Interest Rate
shall thereafter equal eighteen percent (18%) per annum
simple interest. The Interest Rate shall not be increased
to a level greater than eighteen percent (18%) per annum
simple interest.
3. Maturity. All unpaid principal and accrued, but
unpaid, interest shall be due and payable on December 31, 2004
(the "Maturity Date").
4. Subordination.
4.1 Note Subordinated to Senior Indebtedness.
Anything herein to the contrary notwithstanding, each of Borrower
and Lender agrees that the payment of the Obligations with
respect to this Note is subordinated, to the extent and in the
manner provided in this Paragraph 4, to the prior payment in full
in cash of all Senior Indebtedness. The provisions of this
Paragraph 4 are made for the benefit of the holders of Senior
Indebtedness and holders of Senior Indebtedness may enforce the
provisions of this Paragraph 4 without any need to demonstrate
any reliance hereon.
4.2 No Payment on Note in Certain Circumstances.
Unless Subparagraph 4.3 shall be applicable, upon (i) (A) the
occurrence of any default in the payment of all or any portion
then due of principal of, premium, if any, or interest on any
Senior Indebtedness, (B) the occurrence of any event which
entitles one or more persons to act to accelerate the maturity of
any Senior Indebtedness or (C) the existence of any facts or
circumstances which would result in the occurrence of any event
described in clause (A) or clause (B) if Borrower were to make
any payment hereunder (any event described in clause (A) or
clause (B) or facts or circumstances described in clause (C), a
"Senior Indebtedness Default") and (ii) receipt by the Lender
from the indenture trustee or other trustee, agent or
representative for any Senior Indebtedness (the "Representative")
of written notice of such Senior Indebtedness Default, then no
direct or indirect payments or distribution of any assets of
Borrower of any kind or character shall be made by or on behalf
of Borrower on account of the Obligations on this Note or on
account of the purchase or redemption or other acquisition of
this Note whether pursuant to the terms of this Note or upon
acceleration or otherwise unless and until such Senior
Indebtedness Default shall have been cured or waived or shall
have ceased to exist, or such Senior Indebtedness as to which
such Senior Indebtedness Default relates shall have been
discharged or paid in full in cash, after which Borrower shall
resume making any and all required payments in respect of this
Note, including any missed payments. In the event that,
notwithstanding the foregoing, the Lender or any holder of this
Note shall have received any payment or distribution prohibited
by the foregoing provisions of this Subparagraph 4.2, then such
payment or distribution shall be received,
<PAGE>segregated from other funds, and held in trust by Lender or
such other holder of this Note, as the case may be, for the
benefit of, and shall immediately be paid over and delivered
forthwith to the Representatives or as a court of competent
jurisdiction shall direct.
4.3 Note Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of
Borrower. Upon any payment or distribution of assets of Borrower
of any kind or character, whether in cash, property or
securities, upon any dissolution, winding-up, total or partial
liquidation or total or partial reorganization of Borrower
(including, without limitation, in bankruptcy, insolvency or
receivership proceedings or upon any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of
Borrower and whether voluntary or involuntary):
(a) the holders of all Senior Indebtedness shall first
be entitled to receive payments in full in cash of all amounts
payable under Senior Indebtedness before Lender is entitled to
receive any payment with respect to this Note and until all
Obligations with respect to the Senior Indebtedness are paid in
full in cash, any distribution to which Lender or any other
holder of this Note would be entitled shall be made to the
holders of Senior Indebtedness;
(b) any payment or distribution of assets of Borrower
of any kind or character, whether in cash, property or
securities, to which Lender shall be paid by the liquidating
trustee or agent or other person making such a payment or
distribution, directly to the holders of Senior Indebtedness or
their Representative until all Senior Indebtedness remaining
unpaid shall have been paid in full in cash, after giving effect
to any concurrent payment or distribution to the holders of such
Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing,
any payment or distribution of assets or securities of Borrower
of any kind or character, whether in cash, property or
securities, shall be received by Lender or any other holder of
this Note on account of principal of, premium, if any, or
interest on this Note before all Senior Indebtedness is paid in
full in cash, such payment or distribution shall be received,
segregated from other funds, and held in trust by Lender or such
other holder of this Note, as the case may be, for the benefit
of, and shall immediately be paid over to, the holders of Senior
Indebtedness or their Representative, ratably according to the
respective amounts of Senior Indebtedness held or represented by
each, until all Senior Indebtedness remaining unpaid shall have
been paid in full in cash after giving effect to any concurrent
payment or distribution to or for the holders of Senior
Indebtedness.
4.4 Lender to Be Subrogated to Rights of Holders of
Senior Indebtedness. Subject to the payment in full in cash of
all Senior Indebtedness, Lender shall be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or
distributions of assets of Borrower applicable to the Senior
Indebtedness until all amounts owing on this Note shall be paid
in full in cash.
4.5 Defined Terms. When used in this Note, the
following capitalized terms shall have the meanings set forth
below:
<PAGE> "Existing Senior Indebtedness" means any and all
Indebtedness and other Obligations of Borrower under or evidenced
by (i) that certain Credit Agreement dated as of June 1, 1995 by
and among Borrower, as borrower, First Interstate Bank of Nevada,
N.A., as agent, and the Financial Institutions named therein, as
Lenders, as the same may be amended from time to time, or (ii)
any other document or instrument evidencing or securing such
Indebtedness, including, without limitation, that certain
Promissory Note due December 31, 2001, dated as of July 5, 1995
and made by Ameristar Casinos, Inc. to First Interstate Bank of
Nevada, N.A., as Agent for the Lenders under the Credit Agreement
referred to above, as the same may be amended from time to time,
and that certain Pledge Security Agreement dated as of June 1,
1995 by and between Borrower, as Pledgor, and First Interstate
Bank of Nevada, N.A., as Agent for the Lenders under the Credit
Agreement referred to above, as the same may be amended from time
to time.
"Hedging Obligations" means, with respect to the Senior
Indebtedness of any Person, the obligations of such Person under
(i) interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements relating to the Obligations
under the Senior Indebtedness and (ii) other agreements or
arrangements designed to protect such Person against fluctuations
in interest rates on such Senior Indebtedness.
"Indebtedness" means with respect to any person,
corporation, trust, partnership, or other entity (a "Person"),
without duplication, (i) all liabilities, contingent or
otherwise, of such Person for borrowed money, evidenced by bonds,
notes, debentures, drafts accepted or similar instruments or
letters of credit, or for the payment of money relating to an
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with U.S. generally
accepted accounting principals; (ii) reimbursement obligations of
such person with respect to letters of credit; (iii) all
liabilities of others of the kind described in the preceding
clause (i) or clause (ii) that such Person has guaranteed or that
is otherwise its legal liability; and (iii) all obligations of
others secured by any mortgage, pledge, lien, encumbrances,
charge or a security interest of any kind to which any of the
properties or assets (including, without limitation, leasehold
interests and any other tangible or intangible property rights)
of such Person are subject, whether or not the obligations
secured thereby shall have been assumed by such Person or shall
otherwise be such Person's legal liability.
"Obligations" means all obligations of every nature
whether for principal, reimbursements, interest, fees, expenses,
indemnities or otherwise, and whether primary, secondary, direct,
indirect, contingent, fixed or otherwise (including obligations
of performance) under the documentation governing any
Indebtedness.
"Senior Indebtedness" means the principal of, premium,
if any, and interest on, and all other Obligations with respect
to, (A) the Existing Senior Indebtedness and/or (B) any other
Indebtedness of Borrower whether outstanding on the date hereof
or hereafter created, incurred, assumed or guaranteed or in
effect guaranteed by Borrower, but with respect to the
Indebtedness described in (B) above, only if the instrument or
document evidencing such Indebtedness expressly provides that
such Indebtedness shall be senior in right of payment to this
Note; provided, however, Borrower shall not enter into any Senior
Indebtedness if entering into such
<PAGE>Senior Indebtedness would cause the aggregate outstanding
principal balance of all Senior Indebtedness, immediately
following execution and delivery of such Senior Indebtedness, to
exceed $250,000,000 (excluding, for purposes of said maximum,
Hedging Obligations with respect to Senior Indebtedness already
counted for purposes of the calculation). "Senior Indebtedness"
shall be deemed to include for all purposes of this Note interest
accruing after the filing of a petition initiating any proceeding
pursuant to any federal, state or foreign bankruptcy law in
accordance with and at the rate (including any rate applicable
upon any Senior Indebtedness Default, to the extent lawful)
specified in any document evidencing the Senior Indebtedness,
whether or not the claim for such interest is allowed as a claim
after such filing in any proceeding under such bankruptcy law.
Notwithstanding the foregoing, "Senior Indebtedness" shall not
include (i) Indebtedness of Borrower to any subsidiary of
Borrower, (ii) Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of Borrower or of any
subsidiary of Borrower (including, without limitation, amounts
owed for compensation), (iii) Indebtedness to trade creditors and
other amounts incurred in connection with obtaining goods,
materials or services, (iv) any liability for federal, state,
local or other taxes owed or owing by Borrower, and (v) any
Indebtedness evidenced by that certain Promissory Note of even
date herewith made by Borrower in favor of Steven W. Rebeil (in
his individual capacity and as trustee of the Karizma Trust
created under that certain Trust Agreement dated July 2, 1991, as
amended) in an original principal amount of [AMOUNT OF REBEIL NON-
NEGOTIABLE NOTE, AS SET FORTH IN THE SETTLEMENT AGREEMENT] that
certain Promissory Note of even date herewith made by Borrower in
favor of Lender in an original principal amount of [AMOUNT OF
MAGLIARDITI NEGOTIABLE NOTE, AS SET FORTH IN THE SETTLEMENT
AGREEMENT], or that certain Promissory Note of even date herewith
made by Borrower in favor of Steven W. Rebeil (in his individual
capacity and as trustee of the Karizma Trust created under that
certain Trust Agreement dated July 2, 1991, as amended) in an
original principal amount of [AMOUNT OF REBEIL NEGOTIABLE NOTE,
AS SET FORTH IN THE SETTLEMENT AGREEMENT].
5. Set-Off. Borrower shall be entitled to set off
(a) any obligation payable by Lender to Borrower (without regard
to whether such obligation of Lender arises under the transaction
that gave rise to this Note or any other transaction or facts)
against (b) any amount due and payable by Borrower to Lender
hereunder. Any such set offs shall be subject to the provisions
of the Settlement Agreement dated as of May 3, 1997 by and among
Borrower, Ameristar Casino Las Vegas, Inc., Steven W. Rebeil, as
an individual and in his capacity as Trustee of the Karizma Trust
created under that certain Trust Agreement dated July 2, 1991, as
amended, Lender, Gem Air, Inc. and Nevada AG Air, Ltd.
6 Miscellaneous Provisions. No provision of this
Note may be amended, modified, supplemented, changed, waived,
discharged or terminated unless Lender consents thereto in
writing. In case any one or more of the provisions contained in
this Note should be held to be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be
affected or impaired thereby. In the event of a failure by
Borrower prior to the Maturity Date to pay any amounts due
hereunder as and when due, Lender's sole remedy shall be
adjustment of the Interest Rate as set forth in Paragraph 2;
Lender specifically acknowledges and agrees that it shall not
have the right prior to the Maturity Date to accelerate the
indebtedness hereunder, or take any other actions other than
<PAGE>those set forth in Paragraph 2 hereof, as a consequence of
any such non-payment. This Note shall be binding upon and inure
to the benefit of Borrower, Lender and their respective
successors and assigns. This Note shall be governed by and
construed in accordance with the laws of the State of Nevada. By
accepting this Note, each holder of this Note agrees (a) to be
bound by and to perform all of the obligations of Lender
hereunder and (b) that its rights hereunder are subject to the
provisions hereof. This Note is not negotiable.
IN WITNESS WHEREOF, the parties hereto have executed this
Note as of June 1, 1997.
BORROWER: LENDER:
AMERISTAR CASINOS, INC., a
Nevada corporation
__________________________________
____
By: DOMINIC J. MAGLIARDITI, an
____________________________ individual
Name:
____________________________
Title:
____________________________
<PAGE>EXHIBIT C
Form of Assignment of Limited Liability Company Interests
ASSIGNMENT AND ASSUMPTION OF LIMITED LIABILITY COMPANY INTEREST
This Assignment and Assumption of Limited Liability
Company Interest (the "Agreement") is made and entered into, and
is effective, as of the ___ day of _________, 1997 (the
"Effective Date"), by and between AMERISTAR CASINOS, INC., a
Nevada corporation ("Assignor"), and GEM AIR, INC., a Nevada
corporation ("Assignee"). Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed thereto
in that certain Operating Agreement of Nevada AG Air, Ltd., a
Nevada limited liability company, dated as of July 5, 1996 (the
"Operating Agreement").
RECITALS
A. Assignor is a member of Nevada AG Air, Ltd., a
Nevada limited liability company (the "Company"), and holds a
percentage interest therein equal to 50%.
B. Assignor hereby desires to assign to Assignee, and
Assignee desires to accept an assignment from Assignor of, the
entirety of Assignor's interest in the Company, together with all
duties and obligations related thereto (the "Transferred
Interest"), and each of them intends concurrently therewith that
Assignee shall become a substitute Member (as such term is
defined in the Operating Agreement) of the Company with respect
to the Transferred Interest, subject to the terms of the
Operating Agreement and this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual cove
nants contained herein, and for other good and valuable considera
tion, the receipt and sufficiency which are hereby acknowledged,
the parties hereto, intending to be legally bound, agree as
follows:
1. Covenants, Representations and Warranties of Assignor.
Assignor hereby represents and warrants that:
(a) Assignor owns the Transferred Interest free and
clear of any lien, claim or other encumbrance.
(b) The Transferred Interest has the rights set forth
in, and is subject to the provisions of, the Operating
Agreement, and that, except as set forth in the Operating
Agreement, this Agreement or restrictions imposed by
applicable law, there are no restrictions on or other
agreements relating to the Transferred Interest or the
ownership thereof, or the sale, transfer or other
disposition or hypothecation of the Transferred Interest.
<PAGE> (c) Assignor covenants to execute such other
instruments, and to take such other actions, as Assignee or
Assignor may deem necessary or desirable to effect the
assignment of the Transferred Interest to Assignee, the
assumption by Assignee of the duties and obligations
relating thereto, and the admission of Assignee as a
substitute Member of the Company with respect to the
Transferred Interest.
2. Covenants, Representations and Warranties of Assignee.
Assignee hereby represents and warrants that:
(a) Assignee hereby agrees, as a condition to the
assignment of the Transferred Interest to Assignee pursuant
to this Agreement, to succeed to all of the duties and
obligations of Assignor with respect to the Transferred
Interest and hereby further agrees and consents to be bound,
to the extent of the Transferred Interest, by the terms and
conditions of the Operating Agreement.
(b) Assignee hereby acknowledges that it is accepting
the assignment of the Transferred Interest without any
representations or warranties of any kind, other than as set
forth in Section 1 hereof. By way of example and not
limitation, Assignee acknowledges that Assignor is not
making any representation or warranty as to the condition,
fitness for use or merchantability of any assets or
liabilities of the Company, and Assignee assumes all risks
related thereto.
(c) Assignee covenants to execute such other
instruments, and to take such other actions, as the Company
may deem necessary or desirable to effect the assignment of
the Transferred Interest to Assignee, the assumption by
Assignee of the duties and obligations relating thereto, and
the admission of the Assignee as a substitute Member of the
Company with respect to the Transferred Interest.
3. Agreement to Assign and Accept Transferred Interest.
Effective as of the Effective Date:
(a) Assignor assigns and transfers to Assignee the
Transferred Interest, together with all restrictions,
obligations and liabilities related thereto and to any
assets or liabilities of the Company, including without
limitation, all restrictions, obligations and liabilities
arising out of the Operating Agreement or any applicable
laws.
(b) Assignee accepts the assignment and transfer from
Assignor of said Transferred Interest, together with all
restrictions, obligations and liabilities, including without
limitation, all restrictions, obligations and liabilities
under the Operating Agreement or any applicable laws.
4. Intent of Substitution. Upon consummation of the
transfer of the Transferred Interest, Assignee shall succeed
Assignor as a Member of the Company. Assignee and Assignor
hereby agree to execute such other instruments, and take such
other actions, as may be deemed necessary to admit Assignee as a
substitute Member.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
ASSIGNOR:
AMERISTAR CASINOS, INC.,
a Nevada corporation
By:
Name:
Title:
ASSIGNEE:
GEM AIR, INC.,
a Nevada corporation
By:
Name:
Title:
<PAGE>EXHIBIT D
Form of Bill of Sale
For good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, AMERISTAR CASINOS, INC., a
corporation organized under the laws of Nevada ("Seller"), does
hereby grant, bargain , transfer, sell, assign, convey and
deliver to GEM AIR, INC., a corporation organized under the laws
of Nevada ("Buyer"), without any representation or warranty as to
title, condition, fitness for use, or merchantability or any
other matter, an undivided one-half (1/2) interest in and to that
certain Cessna Citation ISP Aircraft bearing Manufacturer's
Serial No. 501-0236, U.S. Registration Mark 711VF, including
those certain Pratt & Whitney engines bearing Manufacturer's
Serial Nos. 77371 and 77375 and all FAA approved Flight Manuals
and applicable Wiring Diagrams and Maintenance, Repair, Weight
and Balance, Flight Crew Operating, and other documentation in
respect of the Aircraft (collectively the "Aircraft").
Seller, for itself, its successors and assigns hereby covenants
and agrees that, at any time and from time to time forthwith upon
the written request of Buyer, Seller will do, execute,
acknowledge and deliver or cause to be done, executed,
acknowledged and delivered, each and all of such further acts,
deeds, assignments, transfers, conveyances, powers of attorney
and assurances as may reasonably be required by Buyer in order to
assign, transfer, set over, convey, assure and confirm unto and
vest in Buyer, its successors and assigns, title to the assets
sold, conveyed, transferred and delivered by this Bill of Sale.
This Bill of Sale shall be deemed delivered in Las Vegas, Nevada
and shall be governed by, and construed in accordance with Nevada
law.
Executed at Las Vegas, Nevada, this ____ day of ___________,
1997.
SELLER:
AMERISTAR CASINOS, INC.,
a Nevada corporation
By: ____________________________
Name: ____________________________
Title: ____________________________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This data should be reviewed in conjunction with the financial statements
included in this report.
</LEGEND>
<CIK> 0000912145
<NAME> AMERISTAR CASINOS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 20,807
<SECURITIES> 0
<RECEIVABLES> 1,125
<ALLOWANCES> 0
<INVENTORY> 2,137
<CURRENT-ASSETS> 29,240
<PP&E> 287,840
<DEPRECIATION> 59,985
<TOTAL-ASSETS> 281,756
<CURRENT-LIABILITIES> 31,175
<BONDS> 0
0
0
<COMMON> 204
<OTHER-SE> 73,250
<TOTAL-LIABILITY-AND-EQUITY> 281,756
<SALES> 49,613
<TOTAL-REVENUES> 49,613
<CGS> 0
<TOTAL-COSTS> 42,619
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,154
<INCOME-PRETAX> 3,985
<INCOME-TAX> 1,475
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,510
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0
</TABLE>
