UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file 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 Identification
Incorporation or Organization) No.)
3773 HOWARD HUGHES PARKWAY
SUITE 490 SOUTH
LAS VEGAS, NEVADA 89109
(Address of Principal Executive Offices)
Registrant's Telephone Number: (702) 567-7000
Securities registered pursuant to Section 12(b) of the Act:
NONE
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 15, 2000, 20,375,264 shares of Common Stock of the
registrant were issued and outstanding. The aggregate market
value of the voting stock of the registrant held by non-
affiliates as of March 15, 2000 was approximately $10,621,000,
based on the Nasdaq-NMS closing price for the registrant's Common
Stock on such date.
Portions of the registrant's definitive Proxy Statement for its
June 16, 2000 Annual Meeting of Stockholders (which has not been
filed as of the date of this filing) are incorporated by
reference into Part III.
This Report contains certain forward-looking statements,
including the plans and objectives of management for the business,
operations and economic performance of the Company. These
forward-looking statements generally can be identified by the context
of the statement or the use of words such as the Company or its
management "believes," "anticipates," "intends," "expects," "plans,"
or words of similar meaning. Similarly, statements that describe the
Company's future operating performance, financial results, plans,
objectives, strategies or goals are forward-looking statements.
Although management believes that the assumptions underlying the
forward-looking statements are reasonable, these assumptions and the
forward-looking statements are subject to various factors, risks and
uncertainties, many of which are beyond the control of the Company.
Accordingly, actual results could differ materially from those
contemplated by the forward-looking statements. In addition to the
other cautionary statements relating to certain forward-looking
statements throughout this Report, attention is directed to "Item 1.
- - Business - Risk Factors" below for discussion of some of the
factors, risks and uncertainties that could affect the outcome of
future results contemplated by forward-looking statements.
PART I
ITEM 1. BUSINESS
INTRODUCTION
Ameristar Casinos, Inc. is a multi-jurisdictional gaming company
that owns and operates casinos and related hotel, food and beverage,
entertainment and other facilities, with five properties in operation
in Nevada, Mississippi and Iowa. All of the Company's principal
operations are conducted through wholly owned subsidiaries. Unless
otherwise indicated, or the context otherwise requires, the term
"Ameristar" or "ACI" refers to Ameristar Casinos, Inc., a Nevada
corporation, and the term the "Company" or "we" refers to Ameristar
and its subsidiaries. The Company's properties are:
THE JACKPOT PROPERTIES - Cactus Petes Resort Casino ("Cactus
Petes") and The Horseshu Hotel & Casino ("The Horseshu"; and
collectively with Cactus Petes, the "Jackpot Properties"), were the
Company's first two casino-hotels and are located on U.S. Highway 93
in Jackpot, Nevada at the Idaho border.
AMERISTAR VICKSBURG - Ameristar Casino Vicksburg is located in
Vicksburg, Mississippi, one-quarter mile north of Interstate 20, the
main east-west thoroughfare connecting Atlanta and Dallas,
approximately 45 miles west of Jackson, Mississippi. Ameristar
Vicksburg includes a permanently moored, dockside casino (the
"Vicksburg Casino") and related land-based facilities, including a
150-room hotel which opened in June 1998 (collectively, "Ameristar
Vicksburg").
AMERISTAR COUNCIL BLUFFS - Ameristar Casino Hotel Council Bluffs
is located near the Nebraska Avenue exit on Interstate 29 in Council
Bluffs, Iowa, across the Missouri River from Omaha, Nebraska.
Ameristar Council Bluffs includes a cruising riverboat casino (the
"Council Bluffs Casino"), an Ameristar hotel and other related land-
based facilities (collectively, "Ameristar Council Bluffs").
THE RESERVE - The Reserve Hotel Casino ("The Reserve"),
featuring an African safari and big game reserve theme that includes
statues of elephants, giraffes and other animals, opened on February
10, 1998 at the junction of Lake Mead Drive and Interstate 515 in
Henderson, Nevada, a suburb of Las Vegas.
BUSINESS AND MARKETING STRATEGIES
The Company's business strategy is to (1) emphasize quality
dining, lodging, entertainment and other non-gaming amenities at
affordable prices to complement and enhance its gaming operations,
(2) promote its properties as entertainment destinations, (3)
construct facilities appropriate to individual markets, (4) emphasize
courteous and responsive service to develop customer loyalty and (5)
utilize marketing programs to promote customer retention. The Company
believes this strategy will continue to distinguish the Company from
its competitors, many of whom outside of Las Vegas have not
emphasized non-gaming amenities in their operations to the same
extent as the Company.
The Company's properties emphasize slot machine play, and the
Company invests on an ongoing basis in new slot equipment to promote
customer satisfaction and loyalty. Historically, slot revenues at
each property have exceeded 65% of total gaming revenue. All of the
Company's properties include table games such as blackjack, craps and
roulette. In addition, Cactus Petes and Ameristar Vicksburg offer
poker, the Jackpot Properties and The Reserve offer keno and sports
book wagering and The Reserve offers bingo. The Company generally
emphasizes competitive minimum and maximum betting limits based on
each market.
The Company's gaming revenues are derived and are expected to
continue to be derived from a broad base of customers, and therefore
the Company does not depend upon high-stakes players. The Company
extends credit to its Nevada and Mississippi gaming customers only in
limited circumstances and limited amounts on a short-term basis and
in accordance with the credit restrictions imposed by gaming
regulatory authorities. The Iowa gaming statutes prohibit the
issuance of casino credit.
The Company's marketing strategy is to develop a loyal customer
base by promoting the quality of the Company's gaming, leisure and
entertainment amenities that emphasize high standards of service and
customer satisfaction. The Company uses players clubs at each
property to identify and retain preferred players and develop
promotions and special events to encourage increased gaming activity
by these customers. Ameristar introduced the first self-comping
players club to the Las Vegas market at The Reserve.
The Company's marketing programs also include a number of
promotions, designed primarily to increase the frequency of customer
visits within local markets particularly tied to gaming activities,
as well as tour and travel promotional packages in certain markets.
The Company uses a variety of advertising media to market its
properties, including print, television, radio, outdoor and internet
advertising and direct mail promotions. The level of marketing and
promotional efforts varies among properties based on competitive and
seasonal factors in each market.
EXPANSION STRATEGY
The Company seeks to expand its operations through a variety of
means, including entering new North American markets created by the
legalization of casino gaming, developing new casinos or buying
existing casinos in established North American casino gaming markets,
expanding through continued growth in its existing facilities, and
selectively pursuing expansion projects through Native American
reservations in North America. Although the Company's preference is
to own and operate each of its gaming properties, the Company also
considers expansion opportunities involving management contracts or
joint ventures.
On October 28, 1999, Ameristar Casino St. Louis, Inc. ("ACSLI"),
a newly formed wholly owned subsidiary of ACI, filed an application
with the Missouri Gaming Commission seeking a gaming license for a
site along the Mississippi River in Lemay, Missouri, a community in
South St. Louis County. In conjunction with this application, ACSLI
has entered into an agreement with the current lessee of the proposed
site for the assignment of the lease. The Company has also recently
obtained a commitment to refinance its Revolving Credit Facility,
increasing its available borrowing capacity to $265 million to fund
a substantial portion of the development costs for this project. The
balance of the financing for this project will be provided primarily
by operating cash flow.
The Company's current plans for the Ameristar Casino St. Louis
at Lemay call for a floating barge located within a basin and
integrated within a larger main frame structure that is adjacent to
the Mississippi River. The Company expects that the project will
consist of a single level building of approximately 215,920
square feet and that the casino will consist of 70,000 square feet of
floating gaming area with 2,000 slot machines, 50 blackjack tables,
two Roulette or big wheel games, eight crap/dice games, one cashier
coin cage with slot and table fills and three change booths with
beverage dispensing counters. The project is expected to include two
casino bars with service stations, including a 50-seat entertainment
lounge, as well as several restaurants, meeting rooms, a Missouri
retail shop and a VIP lounge. The total cost for the development and
construction of the project is expected to be approximately $150 million.
The project also calls for a 150-room hotel adjacent to the casino
to be built by a strtegic partner.
This project is in the preliminary stages and subject to
numerous contingencies, including, for example, the satisfactory
completion of due diligence concerning the proposed site, the
selection of the Company's application for investigation by the
Missouri Gaming Commission, obtaining various other regulatory
permits and approvals and completing financing arrangements for the
project. The project is also subject to various development and
construction risks typical of large-scale development projects of
this type. The Company recently submitted a revised application for a
gaming license to the Missouri Gaming Commission and expects the
Missouri Gaming Commission to take action with respect to its
application during 2000. See "Risk Factors - Our Potential
Development of a Casino in Lemay, Missouri Will Require Significant
Capital Expenditure and We Cannot Predict Whether the Casino Will Be
Successful" and "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation - Liquidity and Capital
Resources."
The Company also seeks growth in its business through the
expansion and improvement of its existing properties. For example,
the Company recently completed restaurant and meeting room
enhancements at The Reserve, expanded the casino, remodeled
restaurants and added parking at Ameristar Vicksburg and added a
third deck to the casino and a parking garage at Ameristar Council
Bluffs. Management considers enhancement projects for each of the
Company's properties on an ongoing basis. In doing so, management
evaluates the operating performance of each property, the anticipated
relative costs and benefits of the projects under consideration, the
availability of cash flow and debt financing to fund capital
expenditures and competitive and other relevant factors.
Management believes that the Company's long-term success in its
current markets and expanding into new markets will depend in part on
the Company's ability to distinguish its operations from those of its
competitors. The Company's strategy of including quality non-gaming
amenities in its facilities, such as lodging, dining and
entertainment, is intended to provide these competitive distinctions.
The scope of non-gaming amenities to be offered at existing
properties and future expansion projects will be determined in part
by competitive factors within a particular market and the nature of
the Company's participation in a particular project. In addition,
management believes the selection of attractive expansion markets and
quality locations within those markets will continue to be important
to the growth of the Company. In selecting expansion opportunities,
the Company seeks a strong demographic market with a favorable
competitive environment and a site in the market with an attractive,
prominent location and ease of access that will support the size and
scope of the Company's development plans.
The timing, cost and scope of any expansion or capital
improvement project of the Company will depend on, among other
factors, the Company's operating cash flow and the resulting ability
of the Company to apply operating cash flow to capital expenditures
and to incur additional indebtedness under the Company's Revolving
Credit Facility or other debt instruments. See "Item 7.
Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."
PROPERTY PROFILES
The following table presents selected statistical and other
information concerning the Company's properties as of March 1, 2000.
AMERISTAR AMERISTAR
CACTUS THE VICKSBURG COUNCIL THE
PETES HORSESHU (VICKSBUR BLUFFS RESERVE
(JACKPOT, (JACKPOT, G, MS) (COUNCIL
NV) NV) BLUFFS, (HENDERSON,
IA) NV)
OPENING 1956 1956 Feb. 1994 Jan. 1996 Feb. 1998
DATE
CASINO
SQUARE 25,000 3,500 43,000 42,500 41,500
FOOTAGE
(APPROX.)
SLOT 808 124 1,291 1,446 1,430
MACHINES
TABLE 38 8 50 51 26
GAMES
HOTEL 300 120 150 348(1) 224
ROOMS
NUMBER OF
RESTAURANT 4/3 1/1 3/4 4/4 6/3
S/BARS
RESTAURANT
/BAR 460/80 124/40 564/46 975/93 1,210/110
SEATING
CAPACITY
GUEST
PARKING 908 226 1,730 1,955(4) 1,900
SPACES
OTHER 356-Seat Keno; 364-Seat Kids Quest Sports
AMENITIES Showroom; Swimming Showroom; Children's Book;
Sports Pool; Gift Shop Activity Keno;
Book; General Center Meeting
Keno; Store; (2); Space;
Meeting Service Meeting Swimming
Space; Station Space; Pool;
Swimming Indoor Bingo;
Pool; Swimming Gift
Gift Pool & Shop;
Shop; Spa; Amusement
Amusement Exercise Arcade
Arcade Facility;
Gift Shop;
Amusement
Arcade
OPERATING Cactus CPI Ameristar Ameristar Ameristar
SUBSIDIARY Pete's, Casino Casino Casino
OR Inc. Vicksburg Council Las
SUBSIDIARI ("CPI") , Inc. Bluffs, Vegas,
ES ("ACVI") Inc. Inc.
and AC ("ACCBI") ("ACLVI")
Hotel
Corp. (3)
(1) Includes a full service 160-room Ameristar hotel owned and
operated by the Company and a limited service 188-room Holiday Inn
Suites Hotel owned and operated by a third party under a ground
lease from the Company. In addition, a Hampton Inn adjoining the
Holiday Inn Suites Hotel with approximately 100 rooms is expected
to be completed in the Fall of 2000.
(2) Operated by a third party.
(3) AC Hotel Corp., a wholly owned subsidiary of ACVI, owns the
hotel at Ameristar Vicksburg.
(4) ACCBI opened approximately 1,000 additional parking spaces in
its new parking garage in March 2000 bringing the total number of
guest parking spaces to approximately 3,000.
THE JACKPOT PROPERTIES
The Jackpot Properties, which have been operating since 1956,
have been designed and developed and are marketed to appeal to three
separate markets: budget, quality and luxury. The Company sets its
prices for hotel rooms, food and other non-gaming amenities at levels
that are affordable to its separate customer bases. The Company's
objective is to be perceived by its customers as providing good value
and high quality for the price charged. The Company promotes Cactus
Petes as a destination resort primarily in the northwestern United
States and southwestern Canada. The Jackpot Properties are open 24
hours a day, seven days a week.
Cactus Petes completed a major expansion project in 1991. In
addition, the Company substantially completed a remodeling of the
casino at The Horseshu in late 1997. Since 1993, Cactus Petes has
annually received a Four Diamond rating from the American Automobile
Association. The Horseshu Hotel has a Three Diamond rating from the
American Automobile Association. The food and beverage operations at
the Jackpot Properties include a buffet, a fine dining restaurant, a
24-hour casual dining restaurant, a coffee shop and a snack bar, a
showroom that features nationally known entertainment, and cocktail
lounges with entertainment.
Market. Management believes that approximately 50% of the
customer base of the Jackpot Properties consists of residents of
Idaho who generally frequent the properties on an overnight or
turnaround basis. The balance of the Jackpot Properties' customers
come primarily from Oregon, Washington, Montana, northern California
and the southwestern Canadian provinces. Although many of the
customers from beyond southern Idaho are tourists traveling to other
destinations, a significant portion of these customers come to
Jackpot as a final destination.
Competition. The Company has developed a dominant share of the
market capacity in Jackpot. The Jackpot Properties compete with four
other hotels and motels (three of which also have casinos). As of
March 15, 2000, the Jackpot Properties accounted for approximately
55% of the lodging rooms, 55% of the slot machines and 77% of the
table games in Jackpot. Management believes Cactus Petes offers a
more attractive environment and a broader and higher quality range of
gaming and leisure activities than those of its competitors. The
Company is not aware of any expansion plans by existing or potential
competitors in Jackpot.
At least two casinos with video lottery terminals ("VLT")
similar to slot machines are operated on Native American land in
Idaho, including one with approximately 200 VLT machines near
Pocatello that has been in operation for approximately five years.
Casino gaming began on Native American lands in both western
Washington and northeast Oregon in 1995, and casinos also operate in
Alberta, Canada. In addition, the Shoshone-Bannock Tribes in Southern
Idaho recently signed a Compact with the State of Idaho allowing
gaming on the Tribes' lands in the forms to be determined by a
federal court. The Compact has been ratified by the Idaho House of
Representatives and is now awaiting action in the Idaho Senate. The
Company expects to face increased competition depending on the forms
of gaming permitted on the Tribes' lands. See "Item 1. - Business -
Risk Factors - If We Cannot Compete Successfully with Other Hotel
Casino Operators, Our Future Operations May be Materially Adversely
Affected."
AMERISTAR VICKSBURG
Ameristar Vicksburg, which opened in February 1994, represents
the Company's first expansion project outside of Jackpot. Management
believes Ameristar Vicksburg provides superior and larger facilities
than its current competitors in the Vicksburg area and has
competitive advantages by virtue of its close proximity to Interstate
20. Nonetheless, Vicksburg is a competitive gaming market and
Ameristar Vicksburg's operations to date have been dependent to a
substantial degree upon a continuous casino marketing and promotional
campaign.
The permanently moored, dockside Vicksburg Casino is
approximately 315 feet long and approximately 120 feet wide. Due to
the width of the Vicksburg Casino, the casino, restaurants and
showroom have the spacious feel of a land-based facility. The
Vicksburg Casino has three levels, which are connected by escalators
and elevators. The casino is on the bottom and middle levels and has
wide aisles with an open feel that provides a comfortable and
inviting atmosphere. During 1999, the casino floor was upgraded and
expanded, with 254 new innovative slot machines being added and 232
older slot machines being replaced with newer slot machines. The
Vicksburg Casino has entrances on both the lower and middle levels,
with the lower-level entrance providing access from valet parking and
the middle-level entrance providing access from the self-parking
area. The Vicksburg Casino is open 24 hours a day, seven days a week.
The food and beverage operations at the Vicksburg Casino include
three restaurants (a new upscale steakhouse, which opened in December
1999, a buffet and a 24-hour casual dining restaurant which was
remodeled during 1999), four bars (one of which offers live cabaret-
style entertainment) and a showroom (which is used on an intermittent
basis for entertainment and players club promotions). In addition,
approximately 600 new parking spaces were added during 1999, bringing
the total number of guest parking spaces to over 1,700.
Management believes Ameristar Vicksburg's competitive advantages
include its location, the size and design of the project and the
range and quality of its amenities. The primary locational advantages
of Ameristar Vicksburg are its proximity to Interstate 20 and its
ease of access. As discussed above, the Vicksburg Casino is
significantly wider than typical riverboat casinos. As part of a long-
term plan to enhance Ameristar Vicksburg, the Company acquired 18
acres of raw land across from the main entrance to the Vicksburg
Casino for the future development of additional improvements. The
Company constructed a 150-room hotel, which opened in June 1998, on a
portion of this parcel. In addition, management believes the overall
range and quality of the facilities, food service and entertainment
at Ameristar Vicksburg are superior to those available at its
existing competitors.
Market. The primary market for Ameristar Vicksburg is residents
of the Jackson and Vicksburg, Mississippi and Monroe, Louisiana
areas; tourists coming to Vicksburg primarily to visit the Vicksburg
National Military Park; and other traffic traveling on Interstate 20,
a major east-west thoroughfare that connects Atlanta and Dallas.
Vicksburg, with a population of approximately 30,000 persons, is
located 45 miles west of Jackson, the capital of Mississippi.
According to the 1990 U.S. Census, the Jackson and Vicksburg
metropolitan areas had a total population of approximately 460,000
persons. Approximately 1.5 million people live within a 100-mile
radius of Vicksburg. The Vicksburg National Military Park, located
within three miles of Ameristar Vicksburg, draws over 1,000,000
registered visitors a year. Interstate 20 (which connects Atlanta and
Dallas) passes directly through Vicksburg. According to the
Mississippi Department of Transportation, approximately 8.0 million
vehicles drove across the Interstate 20 bridge at Vicksburg during
1999. As of March 1, 2000, Vicksburg had approximately 1,900 lodging
rooms. The Vicksburg Chamber of Commerce has estimated that the 1999
average hotel occupancy rate in Vicksburg was approximately 65%.
Gaming revenues in Warren County, Mississippi for the 52 weeks ended
December 18, 1999, were approximately $213.4 million.
Competition. Ameristar Vicksburg is subject to competition from
three local competitors, from casinos in Shreveport and Bossier City,
Louisiana, and from a Native American casino in Philadelphia,
Mississippi. Ameristar Vicksburg has approximately 1,600 gaming
positions or 36.7% of the total number of positions in Warren County
(the number of gaming positions increased by approximately 200 during
1999). Based on available data, Ameristar Vicksburg is currently the
market leader in Warren County and generated gaming revenues in 1998
and 1999 representing approximately 31.5% and 33.4%, respectively, of
the total market gaming revenues. Management attributes Ameristar
Vicksburg's leading market share position to the effectiveness of the
Company's marketing and promotional strategy, the property's
proximity to and visibility from Interstate 20, its ease of access,
the size and design of the facility and the range and quality of the
amenities offered.
Several potential gaming sites still exist in Warren County and
Vicksburg and from time to time potential competitors propose the
development of additional casinos in or near Vicksburg. The Company
is currently involved in legal proceedings in which it is alleged
that the Company and certain other parties engaged in conduct to
oppose the development of a casino between Vicksburg and Jackson in
violation of Mississippi's antitrust and gaming regulatory laws.
See "Item 1. - Business - Risk Factors - If We Cannot Compete
Successfully with Other Hotel Casino Operators, Our Future Operations
May be Materially Adversely Affected."- Ameristar Vicksburg." and
"Item 3. - Legal Proceedings."
AMERISTAR COUNCIL BLUFFS
The Company opened Ameristar Council Bluffs in January 1996
under one of three gaming licenses currently issued for Pottawattamie
County, Iowa. On the bank of the Missouri River across from Omaha,
Nebraska, Ameristar Council Bluffs is adjacent to the Nebraska Avenue
exit on Interstate 29 immediately north of the junction of Interstate
29 and Interstate 80. The Company designed Ameristar Council Bluffs
as a destination resort intended to serve as an entertainment
centerpiece of the region. Ameristar Council Bluffs features
architecture reminiscent of a gateway river town in the late 1800s.
The design complements existing characteristics of Council Bluffs
while giving the facility its own distinctive personality. Ameristar
Council Bluffs opened in stages during 1996 and early 1997. The
approximately 50-acre Ameristar Council Bluffs site is large enough
to accommodate future land-based expansion.
In 1999, Ameristar Council Bluffs was awarded the prestigious
Four-Diamond designation from the American Automobile Association.
The facility is the only riverboat property in the nation to carry
this designation.
The Council Bluffs Casino is an approximately 52,000 square foot
three-level riverboat measuring 272 feet long by 98 feet wide with a
casino of approximately 42,500 square feet. The third level addition
to the riverboat was completed in November 1999 which increased the
number of gaming positions by approximately 400. By building the
vessel with high ceilings and making it 98 feet wide, the casino has
the spacious feel of a land-based facility. Escalators and an
elevator connect all levels of the riverboat. The casino is open 24
hours a day, seven days a week and is required to make a two-hour
cruise a minimum of 100 days per year during the "excursion season,"
which is defined as April 1 through October 31. If the riverboat
fails to satisfy this cruising requirement, it will not be allowed to
operate during the balance of the year. However, the Company
believes that the Iowa Racing and Gaming Commission would grant a
release from this requirement should dangerous cruising conditions
preclude the riverboat from making the minimum number of cruises.
Guests enter the riverboat from shore via an enclosed ramp from
the 68,000-square foot Main Street Pavilion and from the newly
completed, fully enclosed parking garage. The Main Street Pavilion is
a self-contained complex featuring an Ameristar hotel, restaurants
and entertainment options for children and adults. The interior of
the Pavilion is designed to replicate a Victorian-era main street.
The main level of the Pavilion includes a buffet, a 24-hour casual
dining restaurant, a steak house and a sports bar cabaret, all of
which are operated by the Company. Rising above the Pavilion is a
five-story, 160-room, full-service Ameristar hotel that offers a
panoramic view of the Missouri River and the Council Bluffs Casino.
The Main Street Pavilion also includes a children's activity center
operated by New Horizon Kids Quest, Inc. and owned by a joint venture
between that company and Ameristar Council Bluffs. A 1,000 space
parking garage, adjacent to the pavilion, was substantially completed
in March 2000 and will be fully operational by the beginning of April
2000.
The Company has leased a portion of the Ameristar Council Bluffs
site to an entity controlled by Iowa-based Kinseth Hotel Corporation
for a 188-room, limited-service Holiday Inn Suites hotel that opened
on March 31, 1997 and was expanded during 1999. The Kinseth Hotel
Corporation developed and operates this hotel. The Holiday Inn Suites
hotel and the Main Street Pavilion are connected by a climate-
controlled walkway that also connects to the indoor pool and spa and
the exercise room. The Company has leased another portion of the
Ameristar Council Bluffs site to Kinseth Hotel Corporation for the
development of an approximately 100-room Hampton Inn hotel. Kinseth
Hotel Corporation will also operate this hotel, which will be
connected to the Holiday Inn Suites Hotel and/or directly to the Main
Street Pavilion by a climate-controlled walkway. The Hampton Inn
hotel is expected to be completed in the Fall of 2000.
Market. Council Bluffs has a population of approximately 54,000
people. Council Bluffs forms part of the greater Omaha,
Nebraska/Council Bluffs, Iowa metropolitan area, which has a
population of approximately 690,000. Approximately 1.0 million people
live within a 50-mile radius, and approximately 1.7 million people
live within a 100-mile radius, of Council Bluffs. The median
household income of the greater metropolitan area is approximately
$42,000, with an unemployment rate of approximately 2.1%. Based on
available data, Council Bluffs is currently the strongest gaming
market in Iowa. Gaming revenues in Pottawattamie County, Iowa for the
12 months ended January 31, 2000, were $329.1 million, an increase of
$32.4 million over the prior 12-month period.
Competition. Three gaming licenses have been issued for
Pottawattamie County, Iowa to Iowa West Racing Association. ACCBI
operates the Council Bluffs Casino pursuant to an operating agreement
with Iowa West Racing Association. The other casinos operating under
these licenses are Harveys Casino Hotel ("Harveys"), which operates a
riverboat casino in close proximity to Ameristar Council Bluffs, and
Bluffs Run Casino ("Bluffs Run"), a year-round dog track and casino
owned by a subsidiary of Harveys Casino Resorts, the parent company
of Harveys, which acquired the property from Iowa West Racing
Association in October 1999. Bluffs Run's gaming license limits the
casino to the operation of reel-style and video slot machines that
meet the definition of "games of chance" under the Iowa statutes.
Bluffs Run, which opened in March 1995, has approximately 1,250 slot
machines, a restaurant, a buffet, and lounge entertainment. The
Company believes that Bluffs Run will continue to provide significant
competition due to its advantage of being the only land-based
facility in the market. Management believes Harveys also provides
serious competition for Ameristar Council Bluffs. The Harveys casino
opened on January 1, 1996, and substantially all the other Harveys
facilities opened in May 1996, except for a restaurant that opened in
May 1997. A third level addition to the Harveys riverboat in early
1998 added approximately 200 more slot machines. In 1999, a 1,600
space parking garage was added along with a car wash and 70
additional slot machines.
The average monthly market share of gaming revenues of Ameristar
Council Bluffs was approximately 30.9% for the twelve month period
from February 1999 through January 2000, approximately 4.0 and 3.2
percentage points behind Bluffs Run and Harveys, respectively. From
the time the third deck of the casino opened on November 22, 1999
through March 19, 2000, Ameristar Council Bluffs' market share was
32.6%, approximately 0.5 and 1.7 percentage points behind Bluffs Run
and Harveys, respectively. See also "Item 1. - Business - Risk
Factors - If We Cannot Compete Successfully with Other Hotel Casino
Operators, Our Future Operations May be Materially Adversely
Affected. - Ameristar Council Bluffs."
THE RESERVE
The Reserve, featuring an African safari and big game reserve
theme that includes statues of elephants, giraffes and other animals,
opened on February 10, 1998, at the southeast corner of the junction
of Lake Mead Drive and Interstate 515 in Henderson, Nevada. The
Company acquired The Reserve under construction on October 9, 1996.
In connection with the acquisition, the Company redesigned The
Reserve to expand and enhance the project.
The Reserve, which is open 24 hours a day, seven days a week,
includes approximately 42,000 square feet of casino space (with
approximately 1,430 slot machines and approximately 26 table games),
224 hotel rooms, six restaurants (a buffet, a 24-hour casual dining
restaurant, a steakhouse, an Italian restaurant and two fast food
outlets), three bars and lounges, a sports book, keno, bingo,
approximately 1,900 surface parking spaces and a swimming pool. In
1999, the Company remodeled the Italian restaurant, expanded the 24-
hour casual dining restaurant and added the two fast food outlets.
Meeting rooms were also added. The food and beverage operations and
back-of-house facilities were designed to support the potential
future expansion of The Reserve.
The ultimate master plan for The Reserve has been designed for
phased expansions of the gaming areas, additional hotel towers, multi-
level parking, and other amenities such as additional restaurants as
warranted by market and competitive conditions.
Market. The gaming market in the greater metropolitan Las Vegas
area includes segments for local residents and visitors, and both
segments of this market are subject to intense and dynamic
competition. The Reserve competes primarily for local customers in
the Henderson-Green Valley suburban community. The Company also
markets The Reserve to visitors, including persons driving to and
from Arizona via Interstate 515, persons driving between California
and Lake Mead and other visitors to the Las Vegas area who desire
lodging in Henderson-Green Valley.
The Las Vegas metropolitan area was the fastest growing
metropolitan area, and Henderson was the fastest growing city in the
United States, during the first half of the 1990s, with population
increases of 26% and 57%, respectively. The population of Clark
County increased by 5.0% during 1998 and the population of Henderson
increased by 9.6% for the same period. In 1998 the population of
Clark County, Nevada was 1.2 million, and the population of Henderson
and Boulder City (a community south of Henderson) was 180,000.
According to the Nevada Department of Transportation, approximately
80,000 vehicles per day currently pass through the junction of
Interstate 515 and Lake Mead Drive, the site of The Reserve. In
addition, the Interstate 215 beltway, which will intersect Interstate
515 adjacent to The Reserve, is scheduled for completion in May 2000,
though no assurance can be given of the actual completion date. No
assurance can be given that the Las Vegas metropolitan area and
Henderson-Green Valley will continue to experience population growth
or that growth will continue for any particular period of time or at
the same rates as in the recent past.
Competition. Three large local-market casino hotels are located
within 11 miles of The Reserve. This includes Sunset Station, a
casino-hotel operated by Station Casinos, Inc. located approximately
3.5 miles north of The Reserve along Interstate 515. Sunset Station
is larger than The Reserve and Station Casinos has operated casinos
aimed at local Las Vegas residents for many years. Station Casinos
has also announced plans for the development of a casino-hotel resort
approximately 3.5 miles west of The Reserve, near the junction of
Green Valley Parkway and Lake Mead Drive. Station Casinos expects
this new development to open in the fourth quarter of 2001. In
addition, The Reserve competes to a lesser extent with a number of
small, limited service casinos that currently operate within a five-
mile radius. Additional competition in this area is anticipated over
time. See "Item 1. - Business - Risk Factors - If We Cannot Compete
Successfully with Other Hotel Casino Operators, Our Future Operations
May Be Materially Adversely Affected - The Reserve."
EMPLOYEES
As of March 1, 2000, the Company employed approximately 4,300
employees. None of the Company's current employees is employed
pursuant to collective bargaining or other union arrangements.
Management believes its employee relations are good.
RISK FACTORS
IF WE CANNOT COMPETE SUCCESSFULLY WITH OTHER HOTEL CASINO
OPERATORS, OUR FUTURE OPERATIONS MAY BE MATERIALLY ADVERSELY
AFFECTED.
General. We compete for customers primarily on the basis of (1)
the location and quality of our properties, (2) the quality, range
and pricing of non-gaming amenities such as hotels, restaurants and
entertainment, and (3) the strength of our marketing and promotional
campaigns. Some of our existing competitors have greater name
recognition and financial and marketing resources than we have.
Other companies with greater name recognition and financial and
marketing resources than we have could enter our current markets and
become competitors in the future. The entry into our current markets
of additional competitors could materially adversely affect our
business, financial condition and results of operations.
In addition, four out of our five operating properties are
located in jurisdictions that restrict gaming to certain areas and/or
borders a state that prohibits or restricts gaming operations. These
restrictions and prohibitions provide substantial benefits to our
business and our ability to attract and retain customers. The
legalization or expanded legalization or authorization of gaming
within a market area of one of these properties could have a material
adverse effect on our business, financial condition and results of
operations.
The Jackpot Properties. The Jackpot Properties compete with
three other casinos in the Jackpot area. We could be materially
adversely affected by the renovation or expansion of the existing
casinos, or the development of new casinos, in the Jackpot area. We
do not currently know of any plans by parties operating in the
Jackpot area to expand their existing casinos or by any other parties
to develop new casinos in the Jackpot area.
In addition to local casinos, the Jackpot Properties compete
with casinos in other portions of the Pacific Northwest, including
existing casinos on Native American lands near Pocatello, Idaho and
in western Washington, northeastern Oregon and Alberta, Canada. We
cannot predict the future competitive effects of these casinos on the
Jackpot Properties. Any expansion of casino gaming on Native
American lands in southern Idaho, eastern Oregon or eastern
Washington could have a material adverse effect on the Jackpot
Properties and us.
The Indian Gaming Regulatory Act of 1988 ("IGRA") restricts
gaming operations on Native American land to those allowed under
state law, and the Idaho Constitution prohibits all forms of casino
gaming. However, video lottery terminal ("VLT") casinos, including
one near Pocatello, are currently being operated on Native American
lands in Idaho. While these VLT casinos may be in violation of IGRA,
federal officials have not taken any enforcement action against these
operations. The failure of the federal government to take such
enforcement action could lead to the expansion of casino gaming on
Native American lands in Idaho. This could have a material adverse
effect on the Jackpot Properties and on us.
In addition, the Shoshone-Bannock Tribes in Southern Idaho
recently signed a Compact with the Idaho Governor that allows the
parties to seek a declaratory judgment from federal court to
determine what forms of gaming may be conducted on the Tribes' lands.
The Compact has been ratified by the Idaho House and is now awaiting
action in the Idaho Senate. If the Compact is ratified and a federal
court determines that a broad range of gaming is allowed under IGRA
and the Idaho Constitution, the Jackpot Properties will likely face
increased competition and could be materially adversely affected.
Ameristar Vicksburg. Ameristar Vicksburg competes with three
local competitors, casinos in Shreveport and Bossier City, Louisiana,
and a Native American casino in Philadelphia, Mississippi. Due to
the intensity of competition in the Vicksburg market, the success of
Ameristar Vicksburg's business depends upon continuous and aggressive
marketing and promotional efforts. We believe that competition from
the casinos in Shreveport and Bossier City, Louisiana and
Philadelphia, Mississippi has resulted in a shrinkage in the
territorial size of the Vicksburg gaming market, placing increased
competitive pressures on the casinos operating in Vicksburg. Any
further reduction in the territorial size of the Vicksburg gaming
market could have a material adverse effect on Ameristar Vicksburg
and on us.
Several potential gaming sites still exist in Warren County and
Vicksburg. From time to time, potential competitors propose the
development of additional casinos in or near Vicksburg. We cannot
assure you that additional competitors will not enter the Vicksburg
market, and additional competition in Vicksburg could have a material
adverse effect on our business, financial condition and results of
operations.
In addition, we are aware of potential sites on the Big Black
River near Interstate 20 between Jackson and Vicksburg, which, if
developed, would provide a significant competitive advantage over
Ameristar Vicksburg and other gaming operations in Warren County due
to their closer proximity to Jackson. However, there currently is no
exit off Interstate 20 in the vicinity of these sites, the area
surrounding these sites is undeveloped and lacks any infrastructure
and these sites may not meet the requirements of Mississippi law for
the development of a casino. In December 1996, the Mississippi
Gaming Commission rejected an application for the development of a
casino at one of these sites by ruling the site to be unsuitable for
a casino. This denial was appealed by an adjoining landowner and the
license applicant. In December 1997, a Mississippi circuit court
issued an order reversing the decision of the Mississippi Gaming
Commission and remanded the application to the Mississippi Gaming
Commission for further proceedings. The Mississippi Gaming
Commission has appealed this court order to the Mississippi Supreme
Court, and we expect the Supreme Court will issue a decision later in
2000. The development of a casino on the Big Black River likely
would have a material adverse effect on Ameristar Vicksburg and us.
In addition, we are involved in two lawsuits in which it is
alleged that we and certain other parties engaged in conduct to
oppose the gaming license application for the Big Black River site in
violation of Mississippi's antitrust and gaming regulatory laws. One
of these lawsuits has been tried in a Mississippi state court in Pike
County and resulted in a verdict against us and other defendants in
the amount of $3,792,000, of which our pro rata portion is
$1,685,333. We have appealed this case to the Mississippi Supreme
Court. A second law suit containing similar allegations and claims
was filed by other plaintiffs in state court in Pike County,
Mississippi in December 1999. We and the other defendants have
removed this case to the federal court in Jackson. The plaintiffs
are attempting to have the case remanded by the federal court back to
the Pike County state court, which we and the other defendants are
resisting. We believe that our conduct was a proper exercise of our
legal rights, and we are continuing to vigorously defend these
lawsuits.
If Mississippi law was amended to permit gaming in Hinds County,
the development of one or more casinos there would materially
adversely affect us. We are not aware of any current proposals that
would permit an expansion of gaming into Hinds County.
Ameristar Council Bluffs. Ameristar Council Bluffs currently
competes in Council Bluffs with two other casinos. One of these
casinos, at the Bluffs Run dog racing track, has a significant
competitive advantage as a land-based facility. Bluffs Run was the
local market leader in gaming revenues for the year ended December
31, 1999 even though its license limits its gaming operations to reel-
style and video slot machines that meet the definition of "games of
chance". We believe that the other competitor in Council Bluffs, a
riverboat casino operated by Harveys Casino Resorts, also provides
and will continue to provide serious competition for Ameristar
Council Bluffs. Bluffs Run was recently acquired by Harveys Casino
Resorts. This consolidation could lead to increased competitive
pressures for Ameristar Council Bluffs.
In September 1998, the Iowa Racing and Gaming Commission passed
a regulation limiting the number of gaming licenses in the State of
Iowa to those currently issued. Unless legislative action is taken
to overrule or modify that regulation, there will be no more licenses
granted in the State of Iowa. However, we cannot assure you that
this regulation will not be overruled by the Iowa legislature or
modified by the Iowa Racing and Gaming Commission. The development
of any new casinos in the Council Bluffs area could have a material
adverse effect on Ameristar Council Bluffs and on us.
A ballot initiative was proposed in 1996 that would have
authorized slot machines and casino gaming at certain locations in
Nebraska, including Omaha, which is across the Missouri River from
Council Bluffs. This initiative was not placed on the ballot due to
the determination by the Nebraska Secretary of State that an
insufficient number of petition signatures had been obtained. We
believe that it is unlikely that any further legislative action or
voting referendum that would authorize casino gaming in Nebraska will
be acted upon prior to 2001. However, we cannot assure you that
casino gaming will not become permitted in Nebraska at some time in
the near future, including before 2001. The introduction of casino
gaming in Nebraska, especially in the Omaha area, would likely have a
material adverse effect on Ameristar Council Bluffs and on us.
The Reserve. Three large local-market casino hotels are located
within 11 miles of The Reserve. This includes Sunset Station, a
casino-hotel operated by Station Casinos, Inc. located approximately
3.5 miles north of The Reserve along Interstate 515. Sunset Station
is larger than The Reserve, and Station Casinos has operated casinos
aimed at local Las Vegas residents for many years. Station Casinos
has also announced plans for the development of a casino-hotel resort
approximately 3.5 miles west of The Reserve, near the junction of
Green Valley Parkway and Lake Mead Drive. Station Casinos expects
this new development to open in the fourth quarter of 2001.
We are aware of several other sites in Henderson-Green Valley
that have been zoned for casino-hotels. Additional casino resorts
may be developed in Henderson-Green Valley and other portions of the
southeastern Las Vegas metropolitan area. The development of
additional casino-hotels in Henderson-Green Valley and other portions
of the southeastern Las Vegas metropolitan area, including the
completion of the project announced by Station Casinos, will place
additional competitive pressures on The Reserve and could have a
material adverse effect on The Reserve and on us. Other than Station
Casinos' announcement described above, to date, no meaningful
announcements have been made related to any future casino development
in the immediate market in which The Reserve operates.
Interstate 215 is expected to be extended from the west to
intersect Interstate 515 adjacent to The Reserve. This interchange
is currently in the design stages, and we expect that the design will
have some adverse effects on The Reserve that may not be overcome by
the benefits of the improved roadways. In addition, construction of
Interstate 215, which is currently ongoing, has adversely affected
and will continue to adversely affect traffic flow on Lake Mead
Drive.
OUR SUBSTANTIAL LEVERAGE MAY AFFECT OUR ABILITY TO SATISFY
DEBT OBLIGATIONS AND MAY CONSTRAIN OUR ABILITY TO OPERATE
OUR BUSINESS.
We are highly leveraged and have substantial fixed debt service
in addition to our operating expenses. The degree to which we are
leveraged could have important adverse consequences to the holders of
our securities. These effects include, without limitation:
Impaired ability to make scheduled payments of principal or
interest on our indebtedness, to refinance our indebtedness or to pay
premiums (if any) required in connection with our indebtedness;
Impaired ability to obtain additional financing in the future
for working capital, capital expenditures, acquisitions or other
purposes;
Limited flexibility in planning for or reacting to changes in
market conditions; and
Increased vulnerability to any downturn in the general market or
in our operations specifically.
Our principal long-term debt instruments contain restrictive
covenants. These include limitations on our ability to:
incur additional indebtedness;
create liens and other encumbrances;
make certain payments and investments;
enter into transactions with affiliates; and
sell or otherwise dispose of assets or merge or consolidate with
another entity.
Although the covenants are subject to various exceptions that
are intended to allow us to operate without undue restraint in
certain anticipated circumstances, we cannot assure you that these
covenants will not adversely affect our ability to finance future
operations or capital needs or to engage in other activities that may
be in our best interest. In addition, our long-term debt requires us
to maintain certain financial ratios. Our ability to comply with
these provisions will depend upon our future performance, which will
be affected by prevailing economic conditions and financial,
business, competitive, regulatory and other factors. Many of these
factors are beyond our control. Accordingly, we cannot assure you
that we will maintain a level of operating cash flow that will permit
us to service our obligations and to satisfy applicable financial
covenants. A breach of any of these covenants or our inability to
comply with the required financial ratios could result in us being
required to repay outstanding principal and/or an inability to obtain
additional borrowings under existing debt facilities. It could also
result in a default under one or more of our long-term debt
instruments. This would severely limit our ability to improve or
expand our existing properties or to develop new properties. Any
long-term debt instruments or credit facilities that we enter into in
the future will likely contain restrictions similar to those
described above.
MANY FACTORS, SOME OF WHICH ARE BEYOND OUR CONTROL, COULD
ADVERSELY AFFECT OUR ABILITY TO SUCCESSFULLY COMPLETE OUR
CONSTRUCTION AND DEVELOPMENT PROJECTS AS PLANNED.
General Construction Risks - Delays and Cost Overruns.
Construction and expansion projects under consideration for our
properties entail significant risks. These risks include:
shortages of materials (including slot machines or other gaming
equipment);
shortages of skilled labor or work stoppages;
unforeseen construction scheduling, engineering, environmental
or geological problems;
weather interference;
floods, fires or other casualty losses; and
unanticipated cost increases.
Our anticipated costs and construction periods for construction
projects are based upon budgets, conceptual design documents and
construction schedule estimates prepared by us in consultation with
our architects and contractors. The cost of any construction project
undertaken by us may vary significantly from initial current
expectations, and we may have a limited amount of capital resources
to fund cost overruns on any project. If we cannot finance cost
overruns on a timely basis, the completion of one or more projects
may be delayed until adequate cash flow from operations or other
financing is available. The completion date of any of our
construction projects could also differ significantly from initial
expectations for construction-related or other reasons. We cannot
assure you that any project will be completed, if at all, on time or
within established budgets. Significant delays or cost overruns on
our construction projects could have a material adverse effect on our
business, financial condition and results of operations.
We employ "fast-track" design and construction methods in some
of our construction and development projects. This involves the
design of future stages of construction while earlier stages of
construction are underway. Although we believe that the use of fast-
track design and construction methods can reduce the overall
construction time, these methods may not always result in such
reductions, may involve additional construction costs than otherwise
would be incurred and may increase the risk of disputes with
contractors.
Construction Dependent upon Available Financing and Operations.
The availability of funds under our principal credit facility at any
time is dependent upon the amount of our consolidated EBITDA (as
defined) during the preceding four full fiscal quarters. Our future
operating performance will be subject to financial, economic,
business, competitive, regulatory and other factors, many of which
are beyond our control. Accordingly, we cannot assure you that our
future consolidated EBITDA and the resulting availability of
operating cash flow or borrowing capacity will be sufficient to allow
us to undertake or complete future construction projects.
As a result of operating risks, including those described in
this section, and other risks associated with a new venture, we
cannot assure you that, once completed, any development project will
increase our operating profits or operating cash flow.
OUR POTENTIAL DEVELOPMENT OF A CASINO IN LEMAY, MISSOURI WILL REQUIRE
SIGNIFICANT CAPITAL EXPENDITURE AND WE CANNOT PREDICT WHETHER THE
CASINO WILL BE SUCCESSFUL.
The Ameristar Casino St. Louis at Lemay is currently in the
initial planning stages and remains subject to numerous
contingencies. These contingencies include, for example, the
satisfactory completion of due diligence concerning the proposed
site, the selection of our application for investigation by the
Missouri Gaming Commission, obtaining various other regulatory
permits and approvals and completing financing arrangements for the
project. We have already devoted substantial resources to this
project and expect to devote significant additional resources during
the planning and construction stages of this project. However, we
cannot assure you when or if our application for investigation will
be selected by the Missouri Gaming Commission or that we will
otherwise be able to complete the development of the Ameristar Casino
St. Louis at Lemay. If we do complete this project, we cannot assure
you that we will be able operate the property profitably or that we
will be able to obtain any return on our investment in the project.
OUR MAJORITY STOCKHOLDER'S OWNERSHIP RESULTS IN LIMITED
LIQUIDITY IN THE MARKET FOR OUR COMMON STOCK.
Craig H. Neilsen, our president and chief executive officer,
owns approximately 86.9% of our outstanding shares of Common Stock.
As a result, Mr. Neilsen controls our management and daily operations
and his substantial ownership results in limited liquidity in the
market for our Common Stock.
A CHANGE IN CONTROL COULD RESULT IN THE ACCELERATION OF
CERTAIN OF OUR DEBT OBLIGATIONS.
Certain changes in control could result in the acceleration of
our principal long-term credit facilities. This acceleration could
be triggered in the event of Mr. Neilsen's death if his estate, heirs
or devisees must sell a substantial number of shares of our Common
Stock to obtain funds to pay inheritance tax liabilities. We cannot
assure you that we would be able to repay any indebtedness that is
accelerated as a result of a change in control, and this would likely
materially adversely affect our financial condition.
IF OUR KEY PERSONNEL LEAVES US, OUR BUSINESS WILL BE
SIGNIFICANTLY ADVERSELY AFFECTED.
We depend on the continued performance of Mr. Neilsen and his
management team. The loss of the services of Mr. Neilsen or any of
our other executive officers could have a material adverse effect on
our business.
THE MARKET FOR QUALIFIED OPERATING AND CORPORATE MANAGEMENT
PERSONNEL IS SUBJECT TO INTENSE COMPETITION.
We have experienced and expect to continue to experience strong
competition in hiring and retaining qualified operating and corporate
management personnel. We believe that a number of factors have
contributed to our difficulties in attracting and retaining qualified
management personnel, including:
the recent proliferation and expansion of gaming facilities
throughout the United States;
the additional burdens on our existing management personnel due
to the lack of depth in other positions; and
our reluctance to match or exceed compensation packages offered
by some of our competitors.
Recruiting and retaining qualified management personnel is
particularly difficult in Vicksburg and Jackpot due to local market
conditions. If we are unable to successfully recruit and retain
qualified management personnel at our properties and at our corporate
level, our results of operations could be materially adversely
affected.
RESTRICTIONS AND LIMITATIONS IMPOSED BY GAMING REGULATORY
AUTHORITIES ADVERSELY AFFECT OUR BUSINESS.
The ownership and operation of casino gaming facilities are
subject to extensive state and local regulation. The States of Iowa,
Mississippi and Nevada and the applicable local authorities require
various licenses, findings of suitability, registrations, permits and
approvals to be held by us and our subsidiaries. The Iowa Racing and
Gaming Commission, the Mississippi Gaming Commission and the Nevada
Gaming Commission may, among other things, limit, condition, suspend,
revoke or not renew a license or approval to own the stock of any of
Ameristar's Iowa, Mississippi or Nevada subsidiaries, respectively,
for any cause deemed reasonable by such licensing authority. Our
gaming license in Mississippi must be renewed every three years and
our gaming license in Iowa must be renewed every year. If we violate
gaming laws or regulations, substantial fines could be levied against
us, our subsidiaries and the persons involved, and we could be forced
to forfeit portions of our assets. The suspension, revocation or non-
renewal of any of our licenses or the levy on us of substantial fines
or forfeiture of assets would have a material adverse effect on our
business, financial condition and results of operations. We are also
subject to substantial gaming taxes and fees imposed by various
governmental authorities, which are subject to increase.
To date, we have obtained all governmental licenses, findings of
suitability, registrations, permits and approvals necessary for the
operation of our currently operating gaming activities. However,
gaming licenses and related approvals are deemed to be privileges
under Iowa, Mississippi and Nevada law. We cannot assure you that
our existing licenses, permits and approvals will be maintained or
extended. We also cannot assure you that any new licenses, permits
and approvals that may be required in the future will be granted to
us.
Changes in law could restrict or prohibit our gaming operations
in any jurisdiction. In addition, certain jurisdictions, including
Iowa, require the periodic reauthorization of gaming activities.
This reauthorization of gaming activities in Iowa will next occur in
2002. We cannot assure you that gaming operations of the type we
conduct will continue to be authorized in any jurisdiction. A change
in law restricting or prohibiting our gaming operations or the
failure to reauthorize gaming activities in the jurisdiction in which
we operate could substantially diminish the value of our assets in
those jurisdictions. This could have a material adverse effect on
our business, financial condition and results of operations.
THE ADOPTION OF CERTAIN ANTI-GAMING INITIATIVES IN
MISSISSIPPI WOULD SUBSTANTIALLY DIMINISH THE VALUE OF
AMERISTAR VICKSBURG AND WOULD HAVE A MATERIAL ADVERSE EFFECT
ON US.
In 1998, two referenda were proposed seeking to amend the
Mississippi Constitution to ban gaming in Mississippi. Neither of
these initiatives were placed on the ballot for public election based
on procedural defects. However, it is likely that at some point a
revised initiative will be filed that does not suffer procedural
defects and therefore is placed on the ballot. The adoption by
Mississippi voters of any proposal to ban or significantly limit
gaming in Mississippi would substantially diminish the value of
Ameristar Vicksburg and would have a material adverse effect on our
business, financial condition and results of operations.
THE LOSS OF OUR RIVERBOAT AND DOCKSIDE FACILITIES FROM
SERVICE COULD MATERIALLY ADVERSELY EFFECT US.
Our riverboat and dockside facilities in Mississippi and Iowa
could be lost from service due to casualty, mechanical failure,
extended or extraordinary maintenance, floods or other severe weather
conditions. Cruises of the Council Bluffs Casino are subject to risks
generally incident to the movement of vessels on inland waterways,
including risks of casualty due to river turbulence and severe
weather conditions. In addition, United States Coast Guard
regulations set limits on the operation of vessels and require that
vessels be operated by a minimum complement of licensed personnel.
The United States Coast Guard also requires all US flagged
passenger vessels operating exclusively in fresh water to conduct a
thorough dry-dock inspection of underwater machinery, valves and hull
every five years. Less stringent inspection requirements apply to
permanently moored dockside vessels like the Vicksburg Casino. The
Ameristar Council Bluffs riverboat is due for its dry-dock inspection
in November 2000, but we have been accepted into a United States
Coast Guard program that would allow us to obtain a 30-month
extension of the dry-dock requirement. To obtain this extension, the
Ameristar Council Bluffs riverboat must undergo a thorough underwater
inspection in the fall of 2000 after the cruising season. However,
if we do not obtain this extension, the Council Bluffs Casino would
be out of service for a substantial period of time for its dry-dock
inspection. This would have a material adverse effect on Ameristar
Council Bluffs and on our business, financial condition and results
of operations. We cannot assure you that we will actually obtain an
extension of the dry-dock requirement or that similar extensions will
be obtained in the future.
The Ameristar Vicksburg site has experienced some instability
that has required periodic maintenance and improvements. Although we
have recently completed the process of reinforcing the cofferdam
basin in which the vessel floats, further reinforcements may be
necessary. We are also monitoring the site to evaluate what further
steps, if any, may be necessary to stabilize the site to permit
operations to continue. A site failure would require Ameristar
Vicksburg to limit or cease operations. The loss of a riverboat or
dockside facility from service for any period of time likely would
adversely affect our operating results and borrowing capacity under
our long-term debt facilities. It could also result in the
occurrence of an event of a default under one or more of our credit
facilities or contracts.
WE COULD FACE SEVERE PENALTIES AND MATERIAL REMEDIATION
COSTS IF WE FAIL TO COMPLY WITH APPLICABLE ENVIRONMENTAL
REGULATIONS.
As is the case with any owner or operator of real property, we
are subject to a variety of federal, state and local governmental
regulations relating to the use, storage, discharge, emission and
disposal of hazardous materials. Failure to comply with environmental
laws could result in the imposition of severe penalties or
restrictions on operations by government agencies or courts of law,
which could adversely affect operations. We do not have environmental
liability insurance to cover most such events, and the environmental
liability insurance coverage we maintain to cover certain events
includes significant limitations and exclusions. In addition, if we
discover any significant environmental contamination affecting any of
our properties, we could face material remediation costs or
additional development costs for future expansion activities.
SYSTEMS FAILURES RESULTING FROM THE YEAR 2000 ISSUE COULD MATERIALLY
ADVERSELY AFFECT OUR OPERATIONS.
In the past, many computer software programs were written using
two digits rather than four to define the applicable year. As a
result, date-sensitive computer software may recognize a date using
"00" as the year 1900 rather than the year 2000. This is generally
referred to as the "Year 2000 issue." If this situation occurs, the
potential exists for computer system failures or miscalculations by
computer programs, which could disrupt operations. Prior to the
rollover to the Year 2000, we evaluated all of our computer systems,
including our front- and back-of-the-house computer operations, our
back-of-the-house accounting systems and our financial software
programs, and upgraded these systems as necessary to ensure that,
according to the applicable vendors, all of our computer systems were
Year 2000 compliant. We also made appropriate inquiries of third
parties with whom we do significant business, such as vendors and
suppliers, as to their Year 2000 readiness. Although we have not
experienced any significant Year 2000 problems to date, it is still
possible for Year 2000-related problems to occur. In the event that
we or any of our third party vendors or service providers suffer
system failures due to the Year 2000 issue, our operations could be
substantially adversely affected.
GOVERNMENT REGULATIONS
The ownership and operation of casino gaming facilities are
subject to extensive state and local regulations. The Company is
required to obtain and maintain gaming licenses in each of the
jurisdictions in which the Company conducts gaming. The limitation,
conditioning or suspension of gaming licenses could (and the
revocation or non-renewal of gaming licenses, or the failure to
reauthorize gaming in certain jurisdictions, would) materially
adversely affect the operations of the Company in that jurisdiction.
In addition, changes in law that restrict or prohibit gaming
operations of the Company in any jurisdiction could have a material
adverse effect on the Company.
NEVADA. The ownership and operation of casino gaming facilities
in Nevada are subject to (1) the Nevada Gaming Control Act and
the regulations promulgated thereunder (collectively, "Nevada Act");
and (2) various local regulations. The Company's operations are
subject to the licensing and regulatory control of the Nevada Gaming
Commission ("Nevada Commission"), the Nevada State Gaming Control
Board ("Nevada Board"), and, in the case of the Jackpot Properties,
the Liquor Board of Elko County. The Company's operations at The
Reserve are subject to the licensing and regulatory control of the
City of Henderson. The Nevada Commission, the Nevada Board, the City
of Henderson and the Liquor Board of Elko County are collectively
referred to in this section as the "Nevada Gaming Authorities."
The laws, regulations and supervisory procedures of the Nevada
Gaming Authorities are based upon declarations of public policy which
are concerned with, among other things, (1) the prevention of
unsavory or unsuitable persons from having a direct or indirect
involvement with gaming at any time or in any capacity; (2) the
establishment and maintenance of effective controls over the
financial practices of licensees, including the establishment of
minimum procedures for internal fiscal affairs and the safeguarding
of assets and revenues, (3) providing reliable record keeping and
requiring the filing of periodic reports with the Nevada Gaming
Authorities; (4) the prevention of cheating and fraudulent practices;
and (5) providing a source of state and local revenues through
taxation and licensing fees. Change in such laws, regulations and
procedures could have an adverse effect on the Company's gaming
operations.
CPI, which operates the Jackpot Properties, and ACLVI, which
operates The Reserve, are required to be licensed by the Nevada
Gaming Authorities. The gaming licenses require the periodic payment
of fees and taxes and are not transferable. Ameristar is registered
by the Nevada Commission as a publicly traded corporation (a
"Registered Corporation") and has been found suitable to own the
stock of CPI and ACLVI, which are corporate licensees (each a
"Corporate Licensee") under the terms of the Nevada Act. As a
Registered Corporation, Ameristar is required periodically to submit
detailed financial and operating reports to the Nevada Commission and
furnish any other information that the Nevada Commission may require.
No person may become a stockholder of, or receive any percentage of
profits from, a Corporate Licensee without first obtaining licenses
and approvals from the Nevada Gaming Authorities. The Company, CPI
and ACLVI have obtained from the Nevada Gaming Authorities the
various registrations, findings of suitability, approvals, permits
and licenses currently required in order to engage in gaming
activities in Nevada.
The Nevada Gaming Authorities may investigate any individual who
has a material relationship to, or material involvement with, CPI,
ACLVI or Ameristar in order to determine whether such individual is
suitable or should be licensed as a business associate of a gaming
licensee. Officers, directors and certain key employees of CPI and
ACLVI must file applications with the Nevada Gaming Authorities and
may be required to be licensed or found suitable by the Nevada Gaming
Authorities. Officers, directors and key employees of Ameristar who
are actively and directly involved in gaming activities of CPI or
ACLVI may be required to be reviewed or found suitable by the Nevada
Gaming Authorities. The Nevada Gaming Authorities may deny an
application for licensing for any cause that they deem reasonable. A
finding of suitability is comparable to licensing, and both require
submission of detailed personal and financial information followed by
a thorough investigation. The applicant for licensing or a finding of
suitability must pay all the costs of the investigation. Changes in
licensed positions must be reported to the Nevada Gaming Authorities,
and in addition to their authority to deny an application for a
finding of suitability or licensure, the Nevada Gaming Authorities
have jurisdiction to disapprove a change in a corporate position.
If the Nevada Gaming Authorities were to find an officer,
director or key employee unsuitable for licensing or unsuitable to
continue having a relationship with CPI, ACLVI or Ameristar, the
companies involved would have to sever all relationships with such
person. In addition, the Nevada Commission may require CPI, ACLVI or
Ameristar to terminate the employment of any person who refuses to
file appropriate applications. Determinations of suitability or of
questions pertaining to licensing are not subject to judicial review
in Nevada.
CPI, ACLVI and Ameristar are required to submit detailed
financial and operating reports to the Nevada Commission.
Substantially all material loans, leases, sales of securities and
similar financing transactions by Ameristar, CPI and ACLVI must be
reported to, or approved by, the Nevada Commission.
If it were determined that the Nevada Act was violated by CPI or
ACLVI, the gaming licenses it holds or has applied for could be
limited, denied, conditioned, suspended or revoked, subject to
compliance with certain statutory and regulatory procedures. In
addition, CPI, ACLVI, Ameristar and the persons involved could be
subject to substantial fines for each separate violation of the
Nevada Act at the discretion of the Nevada Commission. Further, a
supervisor could be appointed by the Nevada Commission to operate
CPI's or ACLVI's gaming properties and, under certain circumstances,
earnings generated during the supervisor's appointment (except for
the reasonable rental value of the premises) could be forfeited to
the State of Nevada. Limitation, conditioning or suspension of any
gaming license or the appointment of a supervisor could (and denial
or revocation of any gaming license would) materially adversely
affect Ameristar's gaming operations.
Any beneficial holder of Ameristar's voting securities,
regardless of the number of shares owned, may be required to file an
application, be investigated, and have his suitability as a
beneficial holder of Ameristar's voting securities determined if the
Nevada Commission has reason to believe that such ownership would
otherwise be inconsistent with the declared policy of the State of
Nevada. The applicant must pay all costs of investigation incurred by
the Nevada Gaming Authorities in conducting any such investigation.
The Nevada Act requires any person who acquires beneficial
ownership of more than 5% of a Registered Corporation's voting
securities to report the acquisition to the Nevada Commission. The
Nevada Act requires that beneficial owners of more than 10% of a
Registered Corporation's voting securities apply to the Nevada
Commission for a finding of suitability within thirty days after the
Chairman of the Nevada Board mails the written notice requiring such
filing. Under certain circumstances, an "institutional investor", as
defined in the Nevada Act, which acquires more than 10%, but not more
than 15%, of a Registered Corporation's voting securities may apply
to the Nevada Commission for a waiver of such finding of suitability
if such institutional investor holds the voting securities for
investment purposes only. An institutional investor shall not be
deemed to hold voting securities for investment purposes unless the
voting securities were acquired and are held in the ordinary course
of business as an institutional investor and not for the purpose of
causing, directly or indirectly, the election of a majority of the
members of the board of directors of the Registered Corporation, any
change in the Registered Corporation's corporate charter, bylaws,
management, policies or operations of the Registered Corporation, or
any of its gaming affiliates, or any other action which the Nevada
Commission finds to be inconsistent with holding the Registered
Corporation's voting securities for investment purposes only.
Activities which are not deemed to be inconsistent with holding
voting securities for investment purposes only include (1) voting on
all matters voted on by stockholders; (2) making financial and other
inquiries of management of the type normally made by securities
analysts for informational purposes and not to cause a change in its
management, policies or operations; and (3) such other activities as
the Nevada Commission may determine to be consistent with such
investment intent. If the beneficial holder of voting securities who
must be found suitable is a corporation, partnership or trust, it
must submit detailed business and financial information including a
list of beneficial owners. The applicant is required to pay all costs
of investigation.
Any person who fails or refuses to apply for a finding of
suitability or a license within 30 days after being ordered to do so
by the Nevada Commission or the Chairman of the Nevada Board, may be
found unsuitable. The same restrictions apply to a record owner if
the record owner, after request, fails to identify the beneficial
owner. Any stockholder found unsuitable and who holds, directly or
indirectly, any beneficial ownership of the common stock of a
Registered Corporation beyond such period of time as may be
prescribed by the Nevada Commission may be guilty of a criminal
offense. Ameristar is subject to disciplinary action if, after it
receives notice that a person is unsuitable to be a stockholder or to
have any other relationship with Ameristar, CPI or ACLVI, Ameristar,
(1) pays that person any dividend or interest upon voting securities
of Ameristar, (2) allows that person to exercise, directly or
indirectly, any voting right conferred through securities held by the
person, (3) pays remuneration in any form to that person for services
rendered or otherwise, or (4) fails to pursue all lawful efforts to
require such unsuitable person to relinquish his voting securities
including, if necessary, the immediate purchase of said voting
securities by Ameristar, for cash at fair market value. Additionally,
the Liquor Board of Elko County and the City of Henderson have the
authority to approve all persons owning or controlling the stock of
any corporation controlling a gaming license within their
jurisdictions.
The Nevada Commission may, at its discretion, require the holder
of any debt security of a Registered Corporation to file
applications, be investigated and be found suitable to own the debt
security of a Registered Corporation if it has reason to believe that
such holder's acquisition of such ownership would otherwise be
inconsistent with the declared policy of the State of Nevada. If the
Nevada Commission determines that a person is unsuitable to own such
security, then pursuant to the Nevada Act, the Registered Corporation
can be sanctioned, including the loss of its approvals, if without
the prior approval of the Nevada Commission, it (1) pays to the
unsuitable person any dividend, interest, or any distribution
whatsoever; (2) recognizes any voting right by such unsuitable person
in connection with such securities; (3) pays the unsuitable person
remuneration in any form; or (4) makes any payment to the unsuitable
person by way of principal, redemption, conversion, exchange,
liquidation or similar transaction.
Ameristar is required to maintain a current stock ledger in
Nevada, which may be examined by the Nevada Gaming Authorities at any
time. If any securities are held in trust by an agent or by a
nominee, the record holder may be required to disclose the identity
of the beneficial owner to the Nevada Gaming Authorities. A failure
to make such disclosure may be grounds for finding the record holder
unsuitable. Ameristar is also required to render maximum assistance
in determining the identity of the beneficial owner. The Nevada
Commission has the power to require Ameristar stock certificates to
bear a legend indicating that the securities are subject to the
Nevada Act. However, to date, the Nevada Commission has not imposed
such a requirement on Ameristar.
Ameristar may not make a public offering of its securities
without the prior approval of the Nevada Commission if the securities
or the proceeds therefrom are intended to be used to construct,
acquire or finance gaming facilities in Nevada, or to retire or
extend obligations incurred for such purposes. In addition,
restrictions on the transfer of an equity security issued by a
Corporate Licensee, and agreements not to encumber such securities
(collectively, "Stock Restrictions") are ineffective without the
prior approval of the Nevada Commission. Any such approvals do not
constitute a finding, recommendation or approval by the Nevada
Commission or the Nevada Board as to the accuracy or adequacy of the
prospectus or the investment merits of the securities offered. Any
representation to the contrary is unlawful. The Company has obtained
all such approvals required to date.
Changes in control of Ameristar through merger, consolidation,
stock or asset acquisitions, management or consulting agreements, or
any act or conduct by a person whereby he obtains control, may not
occur without the prior approval of the Nevada Commission. Entities
seeking to acquire control of a Registered Corporation must satisfy
the Nevada Board and Nevada Commission in a variety of stringent
standards prior to assuming control of such Registered Corporation.
The Nevada Commission may also require controlling stockholders,
officers, directors and other persons having a material relationship
or involvement with the entity proposing to acquire control, to be
investigated and licensed as part of the approval process relating to
the transaction.
The Nevada legislature has declared that some corporate
acquisitions opposed by management, repurchases of voting securities
and corporate defense tactics affecting Nevada Corporate Licensee
gaming licensees, and Registered Corporations that are affiliated
with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory
scheme to ameliorate the potentially adverse effects of these
business practices upon Nevada's gaming industry and to further
Nevada's policy to (1) assure the financial stability of Corporate
Licensees and their affiliates; (2) preserve the beneficial aspects
of conducting business in the corporate form; and (3) promote a
neutral environment for the orderly governance of corporate affairs.
Approvals are, in certain circumstances, required from the Nevada
Commission before the Registered Corporation can make exceptional
repurchases of voting securities above the current market price
thereof and before a corporate acquisition opposed by management can
be consummated. The Nevada Act also requires prior approval of a plan
of recapitalization proposed by the Registered Corporation's Board of
Directors in response to a tender offer made directly to the
Registered Corporation's stockholders for the purposes of acquiring
control of the Registered Corporation.
License fees and taxes, computed in various ways depending on
the type of gaming or activity involved, are payable to the State of
Nevada and to the counties and cities in which the Nevada licensee's
respective operations are conducted. Depending upon the particular
fee or tax involved, these fees and taxes are payable monthly,
quarterly or annually and are based upon either (1) a percentage of
the gross revenues received; (2) the number of gaming devices
operated; or (3) the number of table games operated. The license fee
payable to the State of Nevada is based upon "gaming receipts"
(generally defined as gross receipts less payouts to customers as
winnings) and equals 3% of gaming receipts of $50,000 or less per
month, 4% of gaming receipts over $50,000 and less than $134,000 per
month, and 6.25% of gaming receipts over $134,000 per month A casino
entertainment tax is also paid by casino operations where
entertainment is furnished in connection with the selling or serving
of food and refreshments, or the selling of merchandise.
Any person who is licensed, required to be licensed, registered,
required to be registered, or is under common control with such
persons (collectively, "Licensees"), and who proposes to become
involved in a gaming venture outside of Nevada is required to deposit
with the Nevada Board, and thereafter maintain, a revolving fund in
the amount of $10,000 to pay the expenses of investigation of the
Nevada Board of their participation in such foreign gaming. The
revolving fund is subject to increase or decrease at the discretion
of the Nevada Commission. Thereafter, Licensees are required to
comply with certain reporting requirements imposed by the Nevada Act.
Licensees are also subject to disciplinary action by the Nevada
Commission if they knowingly violate any laws of the foreign
jurisdiction pertaining to the foreign gaming operation, fail to
conduct the foreign gaming operation in accordance with the standards
of honesty and integrity required of Nevada gaming operations, engage
in activities or enters into associations that are harmful to the
State of Nevada or its ability to collect gaming taxes and fees, or
employs, contracts with or associates with a person in the foreign
operation who has been denied a license or finding of suitability in
Nevada on the ground of unsuitability.
MISSISSIPPI. The ownership and operation of casino facilities
in Mississippi are subject to extensive state and local regulation,
but primarily the licensing and regulatory control of the Mississippi
Gaming Commission (the "Mississippi Commission") and the Mississippi
State Tax Commission.
The Mississippi Gaming Control Act (the "Mississippi Act"),
which legalized dockside casino gaming in Mississippi, is similar to
the Nevada Gaming Control Act. The Mississippi Commission has adopted
regulations which are also similar in many respects to the Nevada
gaming regulations.
The laws, regulations and supervisory procedures of Mississippi
and the Mississippi Commission seek to (1) prevent unsavory or
unsuitable persons from having any direct or indirect involvement
with gaming at any time or in any capacity; (2) establish and
maintain responsible accounting practices and procedures; (3)
maintain effective control over the financial practices of licensees,
including establishing minimum procedures for internal fiscal affairs
and safeguarding of assets and revenues, providing reliable record
keeping and making periodic reports to the Mississippi Commission;
(4) prevent cheating and fraudulent practices; (5) provide a source
of state and local revenues through taxation and licensing fees; and
(6) ensure that gaming licensees, to the extent practicable, employ
Mississippi residents. The regulations are subject to amendment and
interpretation by the Mississippi Commission. Changes in Mississippi
law or regulations may limit or otherwise materially effect the types
of gaming that may be conducted and could have an adverse effect on
the Company and the Company's Mississippi gaming operations.
The Mississippi Act provides for legalized dockside gaming at
the discretion of the 14 eligible counties that border either the
Mississippi Gulf Coast or the Mississippi River, but only if the
voters in such counties have not voted to prohibit gaming in that
county. Certain amendments to the Mississippi Constitution have been
proposed for adoption through the initiative and referendum process
which, if a sufficient number of signatures are gathered to place the
matter on the ballot and if adopted by the voters of the state, would
prohibit gaming in Mississippi. See "Item 1. Risk Factors - The
Adoption of Certain Anti-Gaming Initiatives in Mississippi Would
Substantially Diminish the Value of Ameristar Vicksburg and Would
Have a Material Adverse Effect on Us." As of March 1, 2000, dockside
gaming was permissible in nine of the 14 eligible counties in the
State and gaming operations had commenced in Adams, Coahoma, Hancock,
Harrison, Tunica, Warren and Washington counties. Under Mississippi
law, gaming vessels must be located on the Mississippi River or on
navigable waters in eligible counties along the Mississippi River, or
in the waters of the State of Mississippi lying south of the State in
eligible counties along the Mississippi Gulf Coast. In December 1996,
the Mississippi Commission rejected an application for the
development of a casino on a site on the Big Black River in Warren
County near Interstate 20 between Jackson and Vicksburg, which was
appealed by an adjoining landowner and the license applicant. In
December 1997, a Mississippi circuit court issued an order reversing
the decision of the Mississippi Commission and remanded the
application to the Mississippi Commission for further proceedings.
The decision of the court was appealed by the Mississippi Commission
to the Mississippi Supreme Court and an oral argument was heard by
the Supreme Court on March 6, 2000. It is expected that the Supreme
Court will issue its decision in 2000. The Mississippi Commission has
also adopted a regulation that prohibits gaming on the Big Black
River; however, the Mississippi Commission has taken the position
that the Mississippi Commission may be prohibited from applying the
regulation to the existing applicant which appealed the initial
siting decision. In addition, the Company is involved in legal
proceedings in which it is alleged that the Company and certain other
parties engaged in conduct to oppose this application in violation of
Mississippi's antitrust and gaming regulatory laws. See "Item 3. -
Legal Proceedings."
The Mississippi Act permits unlimited stakes gaming on
permanently moored vessels on a 24-hour basis and does not restrict
the percentage of space which may be utilized for gaming. The
Mississippi Act permits substantially all traditional casino games
and gaming devices.
Ameristar, and each subsidiary of Ameristar that operates a
casino in Mississippi (a "Gaming Subsidiary"), is subject to the
licensing and regulatory control of the Mississippi Commission.
Ameristar is registered as a publicly traded holding company of ACVI
under the Mississippi Act. Ameristar is required periodically to
submit detailed financial and operating reports to the Mississippi
Commission and furnish any other information that the Mississippi
Commission may require. If Ameristar is unable to continue to satisfy
the registration requirements of the Mississippi Act, Ameristar and
its Gaming Subsidiaries cannot own or operate gaming facilities in
Mississippi. Each Gaming Subsidiary must obtain a gaming license from
the Mississippi Commission to operate casinos in Mississippi. A
gaming license is issued by the Mississippi Commission subject to
certain conditions, including continued compliance with all
applicable state laws and regulations and physical inspection of the
casinos prior to opening. There are no limitations on the number of
gaming licenses that may be issued in Mississippi.
Gaming licenses are not transferable, are issued for a three-
year period (and may by continued for two additional three year
periods) and must be renewed periodically thereafter. ACVI was
granted a renewal of its gaming license by the Mississippi Commission
on December 18, 1999. No person may become a stockholder of or
receive any percentage of profits from a gaming licensee subsidiary
of a holding company without first obtaining licenses and approvals
from the Mississippi Commission. Ameristar has obtained such
approvals in connection with ACVI's gaming license.
Certain officers and employees of Ameristar and the officers,
directors and certain key employees of each Gaming Subsidiary must be
found suitable or be licensed by the Mississippi Commission. The
Company believes it has obtained or applied for all necessary
findings of suitability with respect to such persons associated with
Ameristar or ACVI, although the Mississippi Commission, in its
discretion, may require additional persons to file applications for
findings of suitability. Employees associated with gaming must obtain
work permits that are subject to immediate suspension under certain
circumstances. In addition, any person having a material relationship
or involvement with the Company may be required to be found suitable,
in which case those persons must pay the costs and fees associated
with such investigation. The Mississippi Commission may deny an
application for a finding of suitability for any cause that it deems
reasonable. Changes in certain licensed positions must be reported to
the Mississippi Commission. In addition to its authority to deny an
application for a license, the Mississippi Commission has
jurisdiction to disapprove a change in a licensed position. The
Mississippi Commission has the power to require any Gaming Subsidiary
or Ameristar to suspend or dismiss officers, directors and other key
employees or sever relationships with other persons who refuse to
file appropriate applications or whom the authorities find unsuitable
to act in such capacities.
Employees associated with gaming must obtain work permits that
are subject to immediate suspension. The Mississippi Commission will
refuse to issue a work permit to a person convicted of a felony and
it may refuse to issue a work permit to a gaming employee if the
employee has committed various misdemeanors or knowingly violated the
Mississippi Act or for any reasonable cause.
At any time, the Mississippi Commission has the power to
investigate and require the finding of suitability of any record or
beneficial stockholder of Ameristar. Mississippi law requires any
person who acquires more than 5% of Ameristar's common stock to
report the acquisition to the Mississippi Commission, and such person
may be required to be found suitable. Also, any person who becomes a
beneficial owner of more than 10% of Ameristar's common stock, as
reported to the Securities and Exchange Commission, must apply for a
finding of suitability by the Mississippi Commission and must pay the
costs and fees that the Mississippi Commission incurs in conducting
the investigation. The Mississippi Commission has generally exercised
its discretion to require a finding of suitability of any beneficial
owner of more than 5% of a public company's common stock. However,
the Mississippi Commission has adopted a policy that may permit
certain institutional investors to own beneficially up to 15% of a
public company's common stock without a finding of suitability. If a
stockholder who must be found suitable is a corporation, partnership
or trust, it must submit detailed business and financial information
including a list of beneficial owners.
Any person who fails or refuses to apply for a finding of
suitability or a license within thirty (30) days after being ordered
to do so by the Mississippi Commission may be found unsuitable. The
same restrictions apply to a record owner if the record owner, after
request, fails to identify the beneficial owner. Management believes
that compliance by Ameristar with the licensing procedures and
regulatory requirements of the Mississippi Commission will not affect
the marketability of its securities. Any person found unsuitable and
who holds, directly or indirectly, any beneficial ownership of the
securities of Ameristar beyond such time as the Mississippi
Commission prescribes, may be guilty of a misdemeanor. Ameristar is
subject to disciplinary action if, after receiving notice that a
person is unsuitable to be a stockholder or to have any other
relationship with Ameristar or its Gaming Subsidiaries, Ameristar:
(1) pays the unsuitable person any dividend or other distribution
upon the voting securities of Ameristar; (2) recognizes the exercise,
directly or indirectly, of any voting rights conferred by securities
held by the unsuitable person; (3) pays the unsuitable person any
remuneration in any form for services rendered or otherwise, except
in certain limited and specific circumstances; or (4) fails to pursue
all lawful efforts to require the unsuitable person to divest himself
of the securities, including, if necessary, the immediate purchase of
the securities for cash at a fair market value.
Ameristar may be required to disclose to the Mississippi
Commission, upon request, the identities of debt security holders. In
addition, the Mississippi Commission under the Mississippi Act may,
in its discretion, (1) require holders of debt securities of
Ameristar to file applications, (2) investigate such holders, and (3)
require such holders to be found suitable to own such debt securities
or receive distributions thereon. If the Mississippi Commission
determines that a person is unsuitable to own such security, then the
issuer may be sanctioned, including the loss of its approvals, if
without the prior approval of the Mississippi Commission, it (1) pays
to the unsuitable person any dividend, interest, or any distribution
whatsoever; (2) recognizes any voting right by such unsuitable person
in connection with such securities; (3) pays the unsuitable person
remuneration in any form; or (4) makes any payment to the unsuitable
person by way of principal, redemption, conversion, exchange,
liquidation, or similar transaction. Although the Mississippi
Commission generally does not require the individual holders of
obligations such as notes to be investigated and found suitable, the
Mississippi Commission retains the discretion to do so for any
reason, including but not limited to, a default, or where the holder
of the debt instrument exercises a material influence over the gaming
operations of the entity in question. Any holder of debt securities
required to apply for a finding of suitability must pay all
investigative fees and costs of the Mississippi Commission in
connection with such an investigation.
ACVI must maintain in its principal office in Mississippi a
current stock ledger with respect to its equity securities and
Ameristar must maintain in the principal office of ACVI a current
list of stockholders, which must reflect the record ownership of each
outstanding share of any class of equity security issued by
Ameristar. The ledger and stockholder lists must be available for
inspection by the Mississippi Commission at any time. If any
securities of Ameristar are held in trust by an agent or by a
nominee, the record holder may be required to disclose the identity
of the beneficial owner to the Mississippi Commission. A failure to
make such disclosure may be grounds for finding the record holder
unsuitable. Ameristar must also render maximum assistance in
determining the identity of the beneficial owner.
The Mississippi Act requires that the certificates representing
securities of a publicly traded corporation that has a Gaming
Subsidiary bear a legend to the general effect that such securities
are subject to the Mississippi Act and the regulations of the
Mississippi Commission. Ameristar has received an exemption from this
legend requirement from the Mississippi Commission. The Mississippi
Commission has the power to impose additional restrictions on the
holders of Ameristar's securities at any time.
Substantially all loans, leases, sales of securities and similar
financing transactions by a Gaming Subsidiary must be reported to or
approved by the Mississippi Commission. A Gaming Subsidiary may not
make a public offering of its securities but may pledge or mortgage
casino facilities. Ameristar may not make an issuance or a public
offering of its securities without the prior approval of the
Mississippi Commission if any part of the proceeds of the offering is
to be used to finance the construction, acquisition or operation of
gaming facilities in Mississippi or to retire or extend obligations
incurred for one or more such purposes. Such approval, if given, does
not constitute a recommendation or approval of the investment merits
of the securities subject to the offering. Ameristar has received a
waiver of the prior approval requirement for its securities
offerings, subject to certain conditions.
Under the regulations of the Mississippi Commission, a Gaming
Subsidiary may not guarantee a security issued by an affiliated
company pursuant to a public offering, or pledge its assets to secure
payment or performance of the obligations evidenced by the security
issued by the affiliated company, without the prior approval of the
Mississippi Commission. The pledge of the stock of a Gaming
Subsidiary and the foreclosure of such a pledge is ineffective
without the prior approval of the Mississippi Commission. Moreover,
restrictions on the transfer of an equity security issued by a Gaming
Subsidiary and agreements not to encumber such securities (the "Stock
Restrictions") are ineffective without the prior approval of the
Mississippi Commission. The Company has obtained approvals from the
Mississippi commission for such guarantees, pledges and restrictions,
subject to certain restrictions.
Changes in control of Ameristar through merger, consolidation,
acquisition of assets, management or consulting agreements or any
form of takeover, and certain recapitalizations and stock repurchases
by Ameristar, cannot occur without the prior approval of the
Mississippi Commission. Entities seeking to acquire control of a
registered corporation must satisfy the Mississippi Commission in a
variety of stringent standards prior to assuming control of such
registered corporation. The Mississippi Commission may also require
controlling stockholders, officers, directors and other persons
having a material relationship or involvement with the entity
proposing to acquire control, to be investigated and licensed as part
of the approval process relating to the transaction.
The Mississippi legislature has declared that some corporate
acquisitions opposed by management, repurchases of voting securities
and other corporate defense tactics that affect corporate gaming
licensees in Mississippi and corporations whose stock is publicly
traded that are affiliated with those licensees, may be injurious to
stable and productive corporate gaming. The Mississippi Commission
has established a regulatory scheme to ameliorate the potentially
adverse effects of these business practices upon Mississippi's gaming
industry and to further Mississippi's policy to (1) assure the
financial stability of corporate gaming operations and their
affiliates; (2) preserve the beneficial aspects of conducting
business in the corporate form; and (3) promote a neutral environment
for the orderly governance of corporate affairs. Approvals are, in
certain circumstances, required from the Mississippi Commission
before Ameristar may make exceptional repurchases of voting
securities in excess of the current market price of its common stock
(commonly called "greenmail") or before a corporate acquisition
opposed by management may be consummated. Mississippi's gaming
regulations will also require prior approval by the Mississippi
Commission if Ameristar adopts a plan of recapitalization proposed by
its Board of Directors opposing a tender offer made directly to the
stockholders for the purpose of acquiring control of Ameristar.
Neither Ameristar nor any subsidiary may engage in gaming
activities in Mississippi while also conducting gaming operations
outside of Mississippi without approval of the Mississippi Commission
or a waiver of such approval. The Mississippi Commission may require
determinations that, among others, there are means for the
Mississippi Commission to have access to information concerning the
out-of-state gaming operations of the Company and its affiliates.
Ameristar has previously obtained a waiver of foreign gaming approval
from the Mississippi Commission for operations in other states in
which Ameristar conducts gaming operations and will be required to
obtain the approval or a waiver of such approval from the Mississippi
Commission prior to engaging in any additional future gaming
operations outside of Mississippi.
If the Mississippi Commission decides that a Gaming Subsidiary
violated a gaming law or regulation, the Mississippi Commission could
limit, condition, suspend or revoke the license of the Gaming
Subsidiary. In addition, a Gaming Subsidiary, Ameristar and the
persons involved could be subject to substantial fines for each
separate violation. Because of such a violation, the Mississippi
Commission could seek to appoint a supervisor to operate the casino
facilities. Limitation, conditioning or suspension of any gaming
license or the appointment of a supervisor could (and revocation of
any gaming license would) materially adversely affect Ameristar's and
the Gaming Subsidiary's gaming operations.
License fees and taxes, computed in various ways depending on
the type of gaming involved, are payable to the State of Mississippi
and to the counties and cities in which a Gaming Subsidiary's
respective operations are conducted. Depending upon the particular
fee or tax involved, these fees and taxes are payable either monthly,
quarterly or annually and are based upon (1) a percentage of the
gross gaming revenues received by the casino operation, (2) the
number of slot machines operated by the casino or (3) the number of
table games operated by the casino. The license fee payable to the
State of Mississippi is based upon "gaming receipts" (generally
defined as gross receipts less payouts to customers as winnings) and
equals 4% of gaming receipts of $50,000 or less per month, 6% of
gaming receipts over $50,000 and less than $134,000 per month, and 8%
of gaming receipts over $134,000 per month. The foregoing license
fees are allowed as a credit against the Company's Mississippi income
tax liability for the year paid. The gross revenue fee imposed by the
City of Vicksburg equals approximately 4% of the gaming receipts.
The Mississippi Commission's regulations require as a condition
of licensure or license renewal that an existing licensed gaming
establishment's plan include a 500-car parking facility in close
proximity to the casino complex and infrastructure facilities which
amount to at least 25% of the casino cost. The Company believes that
ACVI is in compliance with this requirement with the opening of a 150-
room hotel at Ameristar Vicksburg in June 1998. The Mississippi
Commission recently adopted a regulation that requires any new
licensee to spend 100% of its casino cost on land-based
infrastructure facilities, but this increase does not apply to
operators that were already licensed at the time the regulation was
adopted such as Ameristar Vicksburg.
Both the City of Vicksburg and the Alcoholic Beverage Control
Division of the Mississippi Tax Commission (the "ABC") license,
control and regulate the sale of alcoholic beverages by ACVI. ACVI is
in an area designated as a special resort, which allows ACVI to serve
alcoholic beverages on a 24-hour basis. The ABC has the full power to
limit, condition, suspend or revoke any license for the serving of
alcoholic beverages or to place a licensee on probation with or
without conditions. Any disciplinary action could, and revocation
would, have a material adverse effect upon ACVI's operations. ACVI's
key officers and managers must be investigated by the ABC in
connection with AVCI's liquor permits and changes in key positions
must be approved by the ABC.
IOWA. The Company's Council Bluffs operations are conducted by
ACCBI and are subject to Chapter 99F of the Iowa Code and the
regulations promulgated thereunder. The Company's gaming operations
are subject to the licensing and regulatory control of the Iowa
Racing and Gaming Commission (the "Iowa Gaming Commission").
Under Iowa law, wagering on a "gambling game" is legal, when
conducted by a licensee on an "excursion gambling boat." An
"excursion gambling boat" is a self-propelled excursion boat.
"Gambling game" means any game of chance authorized by the Iowa
Gaming Commission. The excursion season is from April 1st through
October 31st of each calendar year. The vessel must operate at least
one excursion each day for 100 days during the excursion season to
operate during the off season. Each excursion must consist of a
minimum of two hours. The Council Bluffs Casino satisfied the
requirements of Iowa law for the conduct of off-season operations
during each of 1997, 1998 and 1999.
The legislation permitting riverboat gaming in Iowa authorizes
the granting of licenses to "qualified sponsoring organizations." A
"qualified sponsoring organization" is defined as a person or
association that can show to the satisfaction of the Iowa Gaming
Commission that the person or association is eligible for exemption
from federal income taxation under sec. 501(c)(3), (4), (5), (6),
(7), (8), (10) or (19) of the Internal Revenue Code (hereinafter "not-
for-profit corporation"). The not-for-profit corporation is permitted
to enter into operating agreements with persons qualified to conduct
riverboat gaming operations. Such operators must be approved and
licensed by the Iowa Gaming Commission. On January 27, 1995, the Iowa
Gaming Commission authorized the issuance of a license to conduct
gambling games on an excursion gambling boat to the Iowa West Racing
Association, a not-for-profit corporation organized for the purpose
of facilitating riverboat gaming in Council Bluffs, Iowa (the
"Association"). The Association entered into an agreement with ACCBI
authorizing ACCBI to operate riverboat gaming operations in Council
Bluffs under the Association's gaming license (the "Operator's
Contract"). The Iowa Gaming Commission approved this contract. The
term of the Operator's Contract runs until December 31, 2002, with
two five-year renewal options. The current license awarded by the
Iowa Gaming Commission for the Ameristar Council Bluffs Casino
expires on March 31, 2001.
Under Iowa law, a license to conduct gambling games may be
issued in a county only if the county electorate has approved such
gambling games. Although the electorate of Pottawattamie County,
which includes the City of Council Bluffs, approved by referendum the
gambling games conducted by ACCBI, a reauthorization referendum must
be submitted to the electorate in the general election to be held in
2002 and each eight years thereafter. Each such referendum requires
the vote of a majority of the persons voting thereon. If any such
reauthorization referendum is defeated, Iowa law provides that any
previously issued gaming license will remain valid and subject to
periodic renewal for a total of nine years from the date of original
issuance, subject to earlier revocation as discussed below. The
original issuance date of the gaming license for Ameristar Council
Bluffs was January 27, 1995.
Substantially all of ACCBI's material transactions are subject
to review and approval by the Iowa Gaming Commission. All contracts
or business arrangements, verbal or written, with any related party
or in which the term exceeds three years or the total value of the
contract exceeds $50,000 must be submitted in advance to the Iowa
Gaming Commission for approval. Additionally, contracts negotiated
between ACCBI and a related party must be accompanied by economic and
qualitative justification.
ACCBI is required to notify the Iowa Gaming Commission of the
identity of each director, corporate officer and owner, partner,
joint venturer, trustee or any other person who has a beneficial
interest of five percent (5%) or more, direct or indirect, in ACCBI.
The Iowa Gaming Commission may require ACCBI to submit background
information on such persons. The Iowa Gaming Commission may request
ACCBI to provide a list of persons holding beneficial ownership
interests in ACCBI of less than five percent (5%). For purposes of
these rules, "beneficial interest" includes all direct and indirect
forms of ownership or control, voting power or investment power held
through any contract, lien, lease, partnership, stockholding,
syndication, joint venture, understanding, relationship, present or
reversionary right, title or interest, or otherwise. The Iowa Gaming
Commission may suspend or revoke the license of a licensee in which a
director, corporate officer or holder of a beneficial interest
includes or involves any person or entity which is found to be
ineligible as a result of want of character, moral fitness, financial
responsibility, professional responsibility or due to failure to meet
other criteria employed by the Iowa Gaming Commission.
ACCBI must submit detailed financial, operating and other
reports to the Iowa Gaming Commission. ACCBI must file monthly gaming
reports indicating adjusted gross receipts received from gambling
games and the total number and amount of money received from
admissions. Additionally ACCBI must file annual financial statements
covering all financial activities related to its operations for each
fiscal year. ACCBI must also keep detailed records regarding its
equity structure and owners.
Iowa has a graduated wagering tax equal to five percent (5%) of
the first $1.0 million of annual adjusted gross receipts, ten percent
(10%) on the next $2.0 million of annual adjusted gross receipts and
twenty percent (20%) on annual adjusted gross receipts over $3.0
million. In addition, the state charges other fees on a per customer
basis. Additionally, ACCBI pays to the City of Council Bluffs a fee
equal to $0.50 per passenger.
Under the Operator's Contract, ACCBI also pays the Association
an admissions fee of $1.50 per passenger. ACCBI has interpreted the
Operator's Contract to mean that a person may leave and re-enter
Council Bluffs Casino (for example, to visit the restaurants at
Ameristar Council Bluffs) without ACCBI being obligated to pay an
additional admissions fee to the Association. ACCBI received a letter
from the Association in August 1996 in which the Association asserted
that an additional fee is due each time a person enters the Council
Bluffs Casino, including re-entries. The Association has advised the
Company that the board of directors of the Association discussed a
proposal to settle this dispute at an October 1997 meeting but
declined to take any action either to approve the proposed settlement
or to pursue the previously threatened claim. Accordingly, the
Association has advised ACCBI that it does not currently intend to
pursue this claim, but the Association has not formally waived or
released the claim.
If the Iowa Gaming Commission decides that a gaming law or
regulation has been violated, the Iowa Gaming Commission has the
power to assess fines, revoke or suspend licenses or to take any
other action as may be reasonable or appropriate to enforce the
gaming rules and regulations.
REGULATORY REQUIREMENTS APPLICABLE TO OWNERS OF CERTAIN NOTES.
A record or beneficial owner of the promissory notes issued by the
Company in connection with the acquisition of The Reserve (the "Gem
Notes") could be required by one or more gaming regulatory
authorities to be found suitable, and such owner would be required to
apply for a finding of suitability within 30 days after request of
such gaming authority or within such other time period prescribed by
such gaming authority. If such a record or beneficial owner is
required to be found suitable and is not found suitable by such
gaming regulatory authority, such owner may be required by law to
dispose of the Gem Notes. If any gaming regulatory authority
determines that a person is unsuitable to own the Gem Notes, then the
Company may be subject to sanctions, including the loss of its
regulatory approvals, if, without the prior approval of the
applicable gaming regulatory authorities, it (1) pays interest on the
Gem Notes to the unsuitable person, (2) pays the unsuitable person
remuneration in any form or (3) makes any payment to the unsuitable
person by way of principal, redemption, conversion, exchange,
liquidation or similar transaction. In denying applications for
findings of suitability for certain purposes in early 1997 submitted
by the persons to whom the Gem Notes were issued, the Nevada
Commission did not find either of them to be unsuitable to hold any
debt obligations of Ameristar, and, as of the date of this report, no
gaming regulatory authority has required either of such persons to
apply for a finding of suitability to own the Gem Notes. However, one
or more gaming regulatory authorities could require a holder of the
Gem Notes to submit such an application in the future.
These regulatory requirements are applicable with respect to
other debt securities issued by the Company, including the Company's
Senior Subordinated Notes. However, unlike the Gem Notes, the Senior
Subordinated Notes include provisions requiring a holder who is found
to be unsuitable to dispose of its Senior Subordinated Notes. In
certain circumstances, the Company is permitted to redeem Senior
Subordinated Notes of an unsuitable holder.
OTHER JURISDICTIONS. The Company expects to be subject to
similar rigorous regulatory standards in each jurisdiction in which
it seeks to conduct gaming operations, including in Missouri where
the Company is currently seeking a license to develop a casino in
Lemay. See "Item 1. Business - Expansion Strategy." There can be no
assurance that regulations adopted or taxes imposed by other
jurisdictions will permit profitable operations by the Company.
FEDERAL REGULATION OF SLOT MACHINES. The Company is required to
make annual filings with the U.S. Attorney General in connection with
the sale, distribution or operation of slot machines. All requisite
filings for the most recent year and the current year have been made.
CURRENCY TRANSACTION REPORTING REQUIREMENTS. Pursuant to a 1985
agreement between the State of Nevada and the United States
Department of the Treasury (the "Treasury"), the Nevada Commission
and the Nevada Board have authority to enforce their own cash
transaction reporting laws applicable to casinos, which substantially
parallel the Federal Bank Secrecy Act. Under the Money Laundering
Suppression Act of 1994, which was passed by Congress, the Secretary
of the Treasury retained the ability to permit states, including
Nevada, to continue to enforce their own cash transaction reporting
laws applicable to casinos. The Nevada Act and related regulations
require most gaming licensees to file reports with respect to various
gaming-related and other cash transactions if such transactions
aggregate more than $10,000 in a 24-hour period. Casinos are required
to monitor receipts and disbursements of currency in excess of
$10,000 and report them to the Treasury. Although it is not possible
to quantify the full impact of these requirements on the Company's
business, the changes are believed to have had some adverse effect on
results of operations since inception.
On November 28, 1994, the Treasury enacted amendments (effective
December 1, 1994) to the federal regulations under the Bank Secrecy
Act. The amendments require casinos subject to the Bank Secrecy Act
to implement written programs no later than June 1, 1995 to assure
and monitor compliance with the Bank Secrecy Act. Such programs must
include "know your customer" and suspicious transaction reporting
components. Although Nevada casinos are exempt from Title 31, the
Nevada Commission has adopted regulations under the Nevada Act that
parallel in several respects the amendments to the Bank Secrecy Act.
In June 1998, ACVI received a letter from the Financial Crimes
Enforcement Network ("FinCEN") of the Department of Treasury
identifying 26 alleged currency transaction reporting failures or
errors that were discovered in an audit by the Internal Revenue
Service covering an approximately 13-month period following the
opening of Ameristar Vicksburg. In early 2000, the Company settled
this matter with FinCEN by agreeing to pay a civil monetary penalty.
In addition to paying the civil penalty, ACVI has implemented various
steps intended to improve compliance with the currency transaction
reporting requirements.
POTENTIAL CHANGES IN TAX AND REGULATORY REQUIREMENTS. From time
to time, federal and state legislators and officials have proposed
changes in tax law, or in the administration of such laws, affecting
the gaming industry. Recent proposals have included a federal gaming
tax and increases in state or local gaming taxes. They have also
included limitations on the federal income tax deductibility of the
cost of furnishing complimentary promotional items to customers, as
well as various measures that would require withholding on amounts
won by customers or on negotiated discounts provided to customers on
amounts owed to gaming companies. It is not possible to determine
with certainty the likelihood of possible changes in tax law or in
the administration of such law. Such changes, if adopted, could have
a materially adverse effect on the Company's financial results.
A National Gambling Impact Study Commission (the "National
Commission") has been established by the United States Congress to
conduct a comprehensive study of the social and economic impact of
gaming in the United States. On April 28, 1999, the National
Commission issued a final report of its findings and conclusions,
together with recommendations for legislature and administrative
actions. Below are some of those recommendations:
Legal gaming should be restrictive to those at least 21 years of
age;
Betting on college and amateur sports should be banned;
The introduction of casino-style gambling at pari-mutual racing
facilities for the primary purpose of saving the pari-mutual facility
should be prohibited;
The types of gaming activities allowed by Indian tribes within a
given state should not be inconsistent with the gaming activities
allowed to other persons in that state; and
State, local and tribal governments should recognize that casino
gaming provides economic development, particularly for economically
depressed areas. The National Commission differentiated casino gaming
from stand-alone slot machines (i.e. in convenience stores), Internet
gaming and lotteries which the commission stated do not provide the
same economic development.
Any additional regulation of the gaming industry which may result the
National Commission's report may have an adverse effect on the gaming
industry, including Ameristar.
NON-GAMING REGULATIONS. The sale of alcoholic beverages by the
Company is subject to the licensing, control and regulation in
Jackpot by the Liquor Board of Elko County, in Henderson by the City
of Henderson, in Vicksburg by both the City of Vicksburg and the
Alcoholic Beverage Control Division of the Mississippi State Tax
Commission, and in Council Bluffs by the Alcoholic Beverage Division
of the Iowa Department of Commerce (collectively, the "Liquor License
Authorities"). In Mississippi, Ameristar Vicksburg has been
designated as a special resort area, which allows ACVI to serve
alcoholic beverages on a 24-hour basis. In Nevada, the applicable
liquor laws allow 24-hour service of alcoholic beverages without any
additional permits. In Iowa, the applicable liquor laws allow the
sale of liquor during legal hours which are Monday through Saturday
from 6 a.m. to 2 a.m. and Sunday from 8 a.m. to 2 a.m. All licenses
are revocable and not transferable. The Liquor License Authorities
have the full power to limit, condition, suspend or revoke any such
license or to place a liquor licensee on probation with or without
conditions. Any such disciplinary action could (and revocation would)
have a material adverse effect upon the operations of the Company's
business.
Certain officers and managers of ACVI and ACLVI must be
investigated by the applicable Liquor License Authorities in
connection with ACVI's and ACLVI's liquor permits. The applicable
Liquor License Authorities must approve any changes in licensed
positions.
All cruising vessels operated by the Company must comply with
U.S. Coast Guard requirements as to safety and must hold a
Certificate of Inspection. These requirements set limits on the
operation of the vessel and require that each vessel be operated by a
minimum complement of licensed personnel. Loss of the vessel's
Inspection Certificate would preclude its use as a riverboat. Every
five years, US flagged passenger vessels operating exclusively in
fresh water must conduct a thorough dry-dock inspection of underwater
machinery, valves and hull. The Ameristar Council Bluffs riverboat is
due for its dry-dock inspection in November 2000. This dry-dock
inspection could result in a loss of service that may have a material
adverse effect on the Company. The Company has been accepted into a
United States Coast Guard program that would allow it to obtain a 30-
month extension of the dry-dock requirement. To obtain this
extension, the Ameristar Council Bluffs riverboat must undergo a
thorough underwater inspection in the fall of 2000 after the cruising
season. The Company expects that its underwater inspection will
satisfy the United States Coast Guard requirement and expects to
obtain an extension of the dry-dock interval, but there can be no
assurance that such an extension will actually be obtained or that
future extensions will be obtained. Currently, Ameristar Council
Bluffs is the only property that operates a cruising vessel subject
to these requirements. Less stringent rules apply to permanently
moored vessels.
In order to comply with the federal Merchant Marine Act of 1936,
as amended, and the federal Shipping Act of 1916, as amended, and
applicable regulations thereunder, the Company's Bylaws contain
provisions designed to prevent persons who are not citizens of the
United States from holding, in the aggregate, more than 24.9% of the
Company's outstanding common stock.
All shipboard employees of the Company employed on U.S. Coast
Guard-approved vessels, even those who have nothing to do with the
actual operations of the vessel, such as dealers, waiters and
security personnel, may be subject to the Jones Act, which, among
other things, exempts those employees from state limits on workers'
compensation awards.
The Company is also required to comply with various
environmental regulations.
ITEM 2. PROPERTIES
JACKPOT. Cactus Petes is located on a 35-acre site and The
Horseshu is located on a 30-acre site. The Cactus Petes and The
Horseshu sites are across from each other on U.S. Highway 93. The
Company also owns 204 housing units in Jackpot, including 90 units in
two apartment complexes developed as United States Department of
Agriculture Rural Economic and Community Development Services Multi-
Family Housing Program ("USDA") projects. These housing units
support the primary operations of the Jackpot Properties. The
Jackpot Properties are subject to deeds of trust securing the
Company's obligations under its Revolving Credit Facility, and the
USDA housing projects are subject to mortgage loans in favor of the
USDA.
The Company owns a gas station adjacent to Highway 93 in
Jackpot, which it operates under a franchise from Chevron.
Management believes that this facility is in material compliance with
applicable environmental and other regulatory requirements. The
Company has previously operated two other gas stations at the Jackpot
Properties, one of which was abandoned prior to the adoption of
modern environmental abandonment standards. Although management
believes that all tanks for this gas station were removed in the mid-
1970s, the Company has not conducted tests for the presence of any
environmental contamination from this gas station. Management
believes that the likelihood of a material unfavorable outcome with
respect to potential environmental liabilities relating to this
former gas station is remote.
VICKSBURG. In connection with the development of Ameristar
Vicksburg, the Company has acquired eight parcels in Vicksburg along
Washington Street near Interstate 20. These parcels comprise
approximately 48 acres, approximately 34 of which are developable.
The Company owns six of the parcels and leases the remaining two. The
Company plans to exercise the option for one of the leasehold parcels
within the next year. The Vicksburg Casino and substantially all of
the Company's leasehold and fee interests comprising the Ameristar
Vicksburg site serve as collateral for the Company's obligations
under its Revolving Credit Facility and other indebtedness. The
hotel at Ameristar Vicksburg and the underlying property are subject
to a deed of trust securing the loan that funded a portion of the
hotel construction costs.
In addition, the Company has developed a 20-acre mobile home
park with 30 single- and 20 double-wide mobile homes. This mobile
home park is located seven miles from Ameristar Vicksburg and sites
are available for rent by employees and other persons. The mobile
home park rental rates are competitive with the local market.
COUNCIL BLUFFS. Ameristar Council Bluffs is on an approximately
50-acre site along the bank of the Missouri River and adjacent to the
Nebraska Avenue exit on Interstate 29 immediately north of the
junction of Interstates 29 and 80. The Company owns approximately 27
acres of this site and has rights to use the remaining portion of the
site that is owned by the State of Iowa for a 50-year term. The
Company has leased 0.623 acres of the Ameristar Council Bluffs site
to Kinseth Hotel Corporation for the development and operation by
Kinseth of a 188-room limited service Holiday Inn Suites Hotel that
opened on March 31, 1997 and was expanded during 1999. The Company
has also leased 0.426 acres of the Ameristar Council Bluffs site to
Kinseth Hotel Corporation for the development and operation of an
approximately 100-room Hampton Inn hotel, which is expect to be
completed in the Fall of 2000. All of the Company's interests in
Ameristar Council Bluffs serve as collateral for the Company's
obligations under its Revolving Credit Facility and other
indebtedness.
THE RESERVE. The Reserve is at the southeastern corner of the
junction of Lake Mead Drive and Interstate 515 in Henderson, Nevada
on a site containing approximately 33 acres, substantially all of
which is developable. The Reserve site was previously used for
surface waste disposal activities for approximately 50 years. Prior
to 1994, the site had large areas of debris, rubble and some stained
soils resulting from these waste activities. Site studies revealed
asbestos, lead and pesticide concentrations in the surface soils.
Following a surface remediation program by a third party in 1994, the
Nevada Division of Environmental Protection approved a closure of the
remediation and indicated that no further work was required.
A 1995 Phase I environmental assessment on the site owned by the
Company showed that some rubble remained on portions of the property,
but that all hazardous material had been removed. A 1997 Phase I
environmental assessment indicated that the property did not appear
to have been adversely impacted since the completion of the 1994
remediation program. Phase I environmental assessments involve the
conduct of limited procedures and may not identify the existence or
extent of actual environmental conditions.
OTHER. The Company leases approximately 29,400 square feet of
office space in various locations, including for its executive
offices in Las Vegas, Nevada.
ITEM 3. LEGAL PROCEEDINGS
E. L. Pennebaker, Jr., et. al. v. ACI, et. al. On February 23,
1998, E. L. Pennebaker, Jr. filed a complaint in the Circuit Court of
Pike County, Mississippi against ACI, Harrah's Vicksburg Corporation
("HVC"), Riverboat Corporation of Mississippi-Vicksburg ("RCMV"), and
Deposit Guaranty National Bank ("DGNB"). The matter is pending as
case number 98-0047-B (the "Pennebaker case"). The complaint was
amended in February 1998 to add James F. Belisle, Multi Gaming
Management, Inc. and Multi Gaming Management of Mississippi, Inc. as
additional plaintiffs. The complaint was further amended in March
1999 to modify the specific claims alleged by the plaintiffs. The
plaintiffs are property owners or claim to have contract rights in a
proposed casino/racetrack development along the Big Black River in
Warren County, Mississippi. They allege they would have profited if
the Mississippi Gaming Commission had found suitable for a casino a
location along that river that was controlled by Horseshoe Gaming,
Inc. or its affiliates. The plaintiffs further allege that the
defendants entered into an agreement to hinder trade and restrain
competition in the gaming industry in violation of the antitrust laws
and the gaming laws of Mississippi. Specifically, the plaintiffs
allege the defendants conducted an aggressive campaign in opposition
to the application of Horseshoe Gaming, Inc. for a gaming site on the
Big Black River. The plaintiffs also allege that the defendants
tortiuously interfered with the plaintiffs' business relations. The
plaintiffs allege compensatory damages of $38 million and punitive
damages of $200 million.
The trial in this case was held in October 1999, following which
the jury rendered joint and several verdicts in favor of the
plaintiffs against ACI, HVC and DGNB on the conspiracy count and
against ACI and HVC on the restraint of trade and tortious
interference counts. RCMV settled with the plaintiffs prior to
trial, and the damage amounts have been reduced by the settlement
amount paid by RCMV. The net damages awarded to the plaintiffs total
$3,792,000, of which ACI's pro rata portion is $1,685,333. These
damages are compensatory only as the court did not allow the jury to
consider an award of punitive damages. Judgment was entered on
November 8, 1999, and ACI has appealed the case to the Mississippi
Supreme Court and otherwise intends to vigorously defend against the
plaintiffs' claims. Post-judgment interest on the damages will
accrue at the rate of 8 percent per annum, and if an appeal is
unsuccessful, the plaintiffs would also be entitled to a premium of
15% of the damages amount.
Mr. Pennebaker has also filed a petition with the Mississippi
Gaming Commission requesting that the Mississippi Gaming Commission
order ACI, HVC and RCMV to stop opposing the approval and
construction of a casino on the Big Black River and for such other
corrective and punitive action that the Mississippi Gaming Commission
might find appropriate. ACI has been advised that no action is
required by it in connection with this petition unless requested by
the Mississippi Gaming Commission.
Walter H. Gibbes, Jr. and Margaret S. Dozier v. ACI et al. On
November 22, 1999, Mr. Gibbes and Ms. Dozier filed a complaint in the
Circuit Court of Pike County, Mississippi against ACI, HVC, Isle of
Capri Casinos, Inc. (the parent company of RCMV; "ICC") and DGNB.
The matter is pending as cause no. 99-0157-B. ACI believes that the
plaintiffs were partners with Mr. Pennebaker in a partnership that
held an option to a real estate parcel along the Big Black River that
is adjacent to the parcel that was the subject of the Horseshoe
Gaming, Inc. application. The allegations in the complaint are
substantially the same as those in the complaint in the case
previously brought by the plaintiffs in the Pennebaker case. The
plaintiffs seek $4,567,500 in actual damages and an unspecified
amount of punitive damages.
The defendants have removed this case to the United States
District Court for the Southern District of Mississippi on diversity
jurisdiction and federal question grounds. The case is now pending
in federal court as cause no. 3:99cv911WS. The plaintiffs have filed
a motion to remand the case back to the Pike County circuit court,
which has not yet been ruled on by the federal court. ACI intends to
continue to vigorously defend against this cause of action.
Bryan K. and Dawn H. Hafen v. Steven W. Rebeil, et al. This
lawsuit was filed in the Clark County District Court as case number
A347722. A named defendant in the amended complaint, filed on
January 29, 1996, action is Gem Gaming, Inc. ("Gem"). ACLVI is the
successor-in-interest by merger to Gem. The case arises out of the
purchase of land in Mesquite, Nevada by Steven W. Rebeil, a former
Gem stockholder, pursuant to which a jointly owned corporation was to
develop real property contributed by the plaintiffs as a hotel-
casino. The plaintiffs allege that Gem's former stockholders and
their controlled entities (including Gem) engaged in a conspiracy to
defraud the plaintiffs in connection with the plaintiff's
contribution of the land and its subsequent sale to a third party.
The plaintiffs allege violations of Nevada's racketeering statutes,
fraud and unjust enrichment. The plaintiffs do not allege any
improper conduct by Gem following its acquisition by The Company.
The complaint seeks an unspecified amount of damages, although the
plaintiffs have otherwise claimed total compensatory damages of
approximately $10 million. Gem's former stockholders are
contractually required to indemnify ACLVI against the claims in the
Hafen litigation. This case was resolved by settlement in late 1999.
ACLVI did not contribute any amount to the settlement, but the
Company did agree as part of the settlement to take certain actions
to facilitate the settlement between the plaintiffs and the other
defendants. The plaintiffs have acknowledged in the settlement
documents that the Company did not commit any wrongdoing against the
plaintiffs and that ACLVI was named in the suit only because it is
the successor by merger to Gem.
Other Legal Proceedings and Claims. From time to time, the
Company is a party to litigation which arises in the ordinary course
of business. Except for the matters described or referred to above,
the Company is not currently a party to any litigation that
management believes would be likely to have a material adverse effect
on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Ameristar's Common Stock is traded on the Nasdaq National Market
System ("Nasdaq-NMS") under the symbol "ASCA." The following table
sets forth, for the fiscal quarter indicated, the high and low sale
prices for the Common Stock, as reported by Nasdaq:
High Low
1998
First Quarter $ 6.50 $ 4.88
Second Quarter 5.75 5.00
Third Quarter 5.13 2.63
Fourth Quarter 3.25 1.88
1999
First Quarter $ 3.63 $ 2.13
Second Quarter 3.88 2.31
Third Quarter 4.44 3.00
Fourth Quarter 4.31 3.25
On March 15, 2000, there were 285 holders of record of
Ameristar's Common Stock.
No dividends on Ameristar's Common Stock have been declared
during the last two fiscal years. The Company intends to retain all
earnings for use in the development of its business and does not
anticipate paying any cash dividends in the foreseeable future. In
addition, the Company's Revolving Credit Facility and Senior
Subordinated Notes obligate the Company to comply with certain
financial covenants that place limitations on the payment of
dividends. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."
ITEM 6. SELECTED FINANCIAL DATA
The following data has been derived from the audited financial
statements of the Company and should be read in conjunction with
those statements, certain of which are included in this Report.
<TABLE>
AMERISTAR CASINOS, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
For the year ended December 31,
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA: 1995 1996 1997 1998 1999
(amounts in thousands, except per share data)
REVENUES:
Casino $ 99,364 $161,377 $173,019 $216,319 $247,416
Food and beverage 19,303 24,250 30,672 45,853 49,142
Rooms 7,861 7,641 9,685 14,201 17,257
Other 7,756 7,760 8,275 10,401 11,089
134,284 200,989 221,709 286,774 324,904
Less: Promotional 10,417 12,524 15,530 22,092 24,618
allowances
Net revenues 123,867 188,465 206,179 264,682 300,286
COSTS AND EXPENSES:
Casino 44,503 75,685 78,733 103,387 114,357
Food and beverage 11,747 16,773 19,784 31,698 33,207
Rooms 2,404 2,368 3,130 5,809 6,372
Other 8,211 7,054 7,546 10,044 10,203
Selling, general and 29,197 47,758 51,958 75,604 86,142
administrative
Depreciation and 9,721 14,135 16,358 24,191 24,460
amortization
Abandonment loss - - 646 - -
Preopening costs - 7,379 - 10,611 -
Total costs and 105,783 171,152 178,155 261,344 274,741
expenses
INCOME FROM OPERATIONS 18,084 17,313 28,024 3,338 25,545
OTHER INCOME
(EXPENSE):
Interest income 205 354 445 296 300
Interest expense (3,958) (8,303) (12,107) (22,699) (24,449)
Other - (77) (35) (13) (851)
Income (loss) before
income tax provision 14,331 9,287 16,327 (19,078) 545
(benefit)
Income tax provision 5,236 3,390 5,959 (6,363) 340
(benefit)
Income (loss) before 9,095 5,897 10,368 (12,715) 205
extraordinary loss
Extraordinary loss on (657) - (673) - -
early retirement of
debt, net of income
tax benefit of $353
and $387, respectively
NET INCOME (LOSS) $ 8,438 $ 5,897 $ 9,695 $(12,715) $ 205
</TABLE>
<TABLE>
AMERISTAR CASINOS, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
(CONTINUED)
For the year ended December 31,
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA: 1995 1996 1997 1998 1999
(amounts in thousands, except per share data)
EARNINGS PER SHARE:
Income (loss) before
extraordinary item
Basic and diluted $ 0.45 $ 0.29 $ 0.51 $(0.62) $ 0.01
Net income (loss)
Basic and diluted 0.42 0.29 0.48 (0.62) 0.01
WEIGHTED AVERAGE
SHARES OUTSTANDING 20,360 20,360 20,360 20,360 20,362
December 31,
BALANCE SHEET AND OTHER 1995 1996 1997 1998 1999
DATA:
Cash $ 14,787 $ 10,724 $ 13,310 $ 18,209 $ 15,531
Total assets 202,220 270,052 336,186 351,773 378,645
Total notes payable,
long-term debt and 101,869 143,893 193,113 230,399 242,890
capital lease
obligations, net of
current maturities
Stockholders' equity 65,047 70,944 80,639 67,924 68,169
Capital expenditures 63,559 43,087 72,932 32,312 57,590
</TABLE>
Certain revenues and expenses were reclassified beginning in 1998 to
be consistent with classifications used in 1999. The selected
financial data for periods prior to 1998 have not been reclassified,
but the reclassifications are deemed not to be material to the
presentation,
The Council Bluffs Casino opened in mid-January 1996. Portions of
the land-based facilities at Ameristar Council Bluffs opened in June,
November and December 1996. Ameristar Council Bluffs' remaining land-
based facilities opened in February and March 1997. The Reserve
opened February 10, 1998. The Ameristar Vicksburg hotel opened in
June 1998. Casino expansions at Ameristar Council Bluffs and
Ameristar Vicksburg were completed on November 22, 1999 and December
29, 1999, respectively.
No dividends were paid in 1995, 1996, 1997, 1998 and 1999.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the
Company's Consolidated Financial Statements and the Notes thereto
included in this Report. The information in this section and in this
Report generally includes forward-looking statements. See "Item 1. -
Business - Risk Factors."
OVERVIEW
Ameristar Casinos, Inc. ("Ameristar" or "ACI") owns and operates
five casino-hotels in four markets through its wholly owned
subsidiaries. Ameristar and its subsidiaries are collectively
referred to herein as the "Company." The Company's properties
consist of the following:
Cactus Petes Resort Casino and The Horseshu Hotel & Casino
(collectively, the "Jackpot Properties"), two casino-hotels that
have been operating in Jackpot, Nevada at the Idaho border since
1956.
Ameristar Casino Vicksburg ("Ameristar Vicksburg"), located
in Vicksburg, Mississippi, a riverboat-themed dockside casino
and related land-based facilities, including a hotel which
opened in June 1998. The remainder of Ameristar Vicksburg
opened in February and May 1994. On December 29, 1999, Ameristar
Vicksburg completed its casino expansion with 8,000 square feet
of additional gaming space becoming fully operational.
Additional parking facilities also became operational on
December 29, 1999.
Ameristar Casino Hotel Council Bluffs ("Ameristar Council
Bluffs"), a riverboat casino and related land-based hotel and
other facilities in Council Bluffs, Iowa across the Missouri
River from Omaha, Nebraska. The casino opened on January 19,
1996, portions of the land-based Main Street Pavilion opened on
June 17, 1996, the hotel opened on November 1, 1996, and the
remainder of Ameristar Council Bluffs opened in early 1997. The
third deck of the riverboat opened on November 22, 1999 and a
new parking garage will be fully operational by the beginning of
April 2000.
The Reserve Hotel Casino ("The Reserve"), in Henderson,
Nevada at the intersection of Interstate 515 and Lake Mead
Drive, which opened on February 10, 1998. The Company acquired
The Reserve on October 9, 1996 through a merger of the initial
developer of the property into a subsidiary of Ameristar.
Certain of the Company's operations are seasonal in nature. In
particular, in Jackpot, the months of March through October are the
strongest. As a result, the second and third calendar quarters
typically produce a disproportionate amount of the income from
operations of the Jackpot Properties. In addition, adverse weather
conditions may adversely affect the business of the Jackpot
Properties, and operations during the winter months typically vary
from year to year based on the severity of the winter weather
conditions in the northwestern United States. To date, operations in
Council Bluffs have experienced some seasonality, with the winter
months being the slower periods. To date, operations at both
Ameristar Vicksburg and The Reserve have not experienced any material
seasonality.
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 are not necessarily comparable and may not be
indicative of results to be expected for future periods.
The following table highlights the consolidated cash flow
information and results of operations of Ameristar's operating
subsidiaries for its principal properties
<TABLE>
Year Ended December 31,
1997 1998 1999
<S> <C> <C> <C>
Consolidated cash flow information:
Cash flows from operations $ 33,641 $ 23,123 $ 34,287
Cash flows used in investing (63,417) (53,863) (50,048)
Cash flows from financing 32,083 35,918 13,083
Net revenues:
Jackpot Properties $ 54,455 $ 54,671 $ 58,294
Ameristar Vicksburg 63,961 68,538 76,930
Ameristar Council Bluffs 87,763 97,672 112,047
The Reserve - 43,578 52,832
Corporate and other - 223 183
Consolidated net revenues $206,179 $264,682 $300,286
Adjusted operating income (1):
Jackpot Properties $ 10,308 $ 9,638 $ 10,619
Ameristar Vicksburg 13,165 13,562 15,392
Ameristar Council Bluffs 14,251 17,230 20,714
The Reserve - (16,092) (7,089)
Corporate and other (9,054) (10,389) (14,091)
Consolidated operating income $ 28,670 $ 13,949 $ 25,545
Adjusted operating income margins (1):
Jackpot Properties 18.9% 17.6% 18.2%
Ameristar Vicksburg 20.6% 19.8% 20.0%
Ameristar Council Bluffs 16.2% 17.6% 18.5%
The Reserve - (36.9%) (13.4%)
Consolidated operating income margin 13.9% 5.3% 8.5%
EBITDA (2):
Jackpot Properties $ 13,208 $ 13,163 $ 13,743
Ameristar Vicksburg 19,350 20,231 21,092
Ameristar Council Bluffs 21,090 24,322 28,430
The Reserve - (9,519) 426
Corporate and other (8,621) (10,057) (13,686)
Consolidated EBITDA $ 45,027 $ 38,140 $ 50,005
EBITDA Margins (2):
Jackpot Properties 24.3% 24.1% 23.6%
Ameristar Vicksburg 30.3% 29.5% 27.4%
Ameristar Council Bluffs 24.0% 24.9% 25.4%
The Reserve - (21.8%) 0.8%
Consolidated EBITDA margin 21.8% 14.4% 16.7%
</TABLE>
____________________________
(see following page for footnotes)
(1) Adjusted operating income is income from operations (as
reported) before an abandonment loss at Ameristar Vicksburg in
1997 related to the demolition of an existing budget motel for the
construction of a hotel and The Reserve preopening costs in 1998.
(2) EBITDA consists of income from operations plus depreciation
and amortization. EBITDA Margin is EBITDA as a percentage of net
revenues. EBITDA information is presented solely as a
supplemental disclosure because management believes that it is a
widely used measure of operating performance in the gaming
industry and for companies with a significant amount of
depreciation and amortization. EBITDA should not be construed as
an alternative to income from operations (as determined in
accordance with generally accepted accounting principles) as an
indicator of the Company's operating performance, or as an
alternative to cash flows from operating activities (as determined
in accordance with generally accepted accounting principles) as a
measure of liquidity. The Company has significant uses of cash
flows, including capital expenditures and debt principal
repayments that are not reflected in EBITDA. It should also be
noted that not all gaming companies that report EBITDA information
calculate EBITDA in the same manner as the Company.
RESULTS OF OPERATIONS
RECENT OPERATING PERFORMANCE TRENDS
As discussed above, the Company completed significant expansions
of the casinos at Ameristar Council Bluffs and Ameristar Vicksburg in
late 1999. Parking improvements at both of these properties have
also been developed and are substantially complete, including
approximately 1,000 new covered parking spaces at Ameristar Council
Bluffs. Ameristar Vicksburg has also made some restaurant
improvements. In addition, a number of new generation slot machines
have been installed at the Company's properties and some new
marketing programs have been introduced aimed at increasing revenues
and profitability. The initial operating results from these
developments have been positive, and the Company expects to announce
record levels of consolidated net revenues and EBITDA for the first
quarter of 2000. An improvement in operating performance is being
experienced at each of the Company's operating properties.
Although no assurances can be given, the Company expects that
this trend will continue through the end of 2000 as a result of these
developments. In addition, the Company expects to continue to make
improvements at its existing properties and to purchase new slot
products.
YEAR ENDED DECEMBER 31, 1999 VERSUS YEAR ENDED DECEMBER 31, 1998
SUMMARY
Strong improvements in operations at The Reserve and the
continued growth at Ameristar Council Bluffs and Ameristar Vicksburg
brought a year of record growth in Ameristar's consolidated net
revenues and a significant increase in income from operations over
the prior year.
Consolidated net revenues increased by 13.5% to $300.3 million
in 1999 compared to $264.7 million in 1998. The increase was due to
increases in revenues at each of the properties. Consolidated income
from operations increased 83.1% to $25.5 million in 1999 compared to
an adjusted income from operations of $13.9 million in 1998 (before
the $10.6 million charge for preopening costs associated with the
opening of The Reserve). The increase was due to improved operating
results at all of the properties, with The Reserve generating the
greatest improvement. Consolidated income from operations after
preopening costs was $3.3 million in 1998.
Total operating expenses as a percentage of net revenues were
91.5% in 1999 versus 98.7% (94.7% before The Reserve's preopening
costs) in 1998. The improvement in this margin is primarily a result
of the improved operating performance at The Reserve, partially
offset by an increase in corporate overhead related to increased
corporate staffing levels and the greater centralization of certain
management functions.
Net income in 1999 was $0.2 million compared to a net loss of
$12.7 million in 1998, an increase of $12.9 million. If 1998 net
income were adjusted for preopening costs and their related tax
benefit, the loss for the year ended December 31, 1998 would have
been $5.7 million. Earnings per share were $0.01 for 1999 compared to
a 1998 loss per share of $0.62, or $0.28 adjusted to exclude
preopening costs.
REVENUES
Ameristar Council Bluffs had total net revenues of $112.0
million for the year ended December 31, 1999 compared to $97.7
million in 1998, an increase of 14.7%. The increase is attributed to
the popularity of, and the resulting increased revenues from, the
enhanced slot product placed in service during the fourth quarter of
1998 and the first quarter of 1999, the completion of the third level
casino expansion in the fourth quarter of 1999, which increased the
number of gaming positions by approximately 400, as well as continued
growth in the gaming market.
Net revenues for Ameristar Vicksburg were $76.9 million for the
year ended December 31, 1999 compared with $68.5 million for the
prior year, an increase of 12.2%. This increase in revenues in 1999
compared to 1998 is due primarily to an increase in slot revenue and
an increase in hotel revenue from a full year of operating the new
hotel facility. The hotel contributed $2.8 million in net revenues
for 1999 compared to $1.3 million for 1998 when it was opened for a
partial year beginning in June 1998. Management believes Ameristar
Vicksburg will continue to experience growth due to its superior
hotel, casino and restaurant facilities relative to the competing
properties in the Vicksburg market.
The Jackpot Properties produced net revenues of $58.3 million
for the year ended December 31, 1999 compared to $54.7 million in the
prior year, an increase of 6.6%. The improvement was due primarily
to an increase in casino revenues resulting from a higher hold
percentage on table games and upgrades to the slot product.
The Reserve produced net revenues of $52.8 million for the year
ended December 31, 1999 compared to revenues of $43.6 million in the
325 days in 1998 following its opening, an increase of 21.2%. In
addition to the additional days open in 1999, the increase in revenue
was attributable to increased direct-mail marketing and other
marketing programs. As a result of these programs, The Reserve
generated improved play from both slot machines and table games and
increased its hotel occupancy rate. The Company is continuing to seek
further operating improvement for additional revenue enhancement.
COSTS AND EXPENSES
The operating expense ratio for 1999 improved to 91.5% of net
revenues compared to 98.7% of net revenues in 1998 (94.7% before The
Reserve preopening costs). The improvement in this ratio is primarily
the result of the improved operating performance at The Reserve,
partially offset by an increase in corporate overhead related to
increased corporate staffing levels and development costs, and the
greater centralization of certain management functions.
Casino costs and expenses for the year ended December 31, 1999
increased by $11.0 million or 10.6% to $114.4 million from $103.4
million in 1998. As a percentage of casino revenues, casino expenses
decreased to 46.2% in 1999 compared to 47.8% in 1998. The decrease
was due primarily to the improved performance of The Reserve casino
operations compared to the startup operational inefficiencies
experienced in the prior year, partially offset by a slight increase
in casino expenses at Ameristar Council Bluffs relating to increases
in employee compensation and benefits.
The Company's food and beverage costs and expenses increased
$1.5 million to $33.2 million in 1999 compared to $31.7 million in
1998 primarily due to increased revenue. The Company's food and
beverage expense-to-revenue ratio decreased to 67.5% in 1999 compared
to 69.1% in 1998. This improvement is primarily related to the
improved operational efficiencies experienced during 1999 at The
Reserve.
Rooms expenses increased by $0.6 million to $6.4 million in 1999
from $5.8 million in 1998. The increase was primarily due to
increases in costs resulting from a full year of operations of the
hotels in Vicksburg and at The Reserve, compared to a partial year of
operations at both properties in 1998.
Selling, general and administrative costs and expenses
(including utilities and maintenance and business development costs)
increased $10.5 million or 13.9% from 1998 to 1999. The increase was
due primarily to an increase in corporate overhead related to
increased corporate staffing levels and future business development
costs and increases in marketing costs and employee compensation at
Ameristar Council Bluffs, Ameristar Vicksburg and the Jackpot
Properties, partially offset by a decrease in such costs at The
Reserve.
Depreciation expense increased $0.3 million or 1.1% from 1998 to
1999 as the Company's depreciable base increased by including The
Reserve and the Ameristar Vicksburg hotel for the entire year,
partially offset by certain five-year assets in Vicksburg that are
now fully depreciated and are no longer included in depreciation
expense in 1999.
Interest expense, net of capitalized interest of $1.4 million in
1998 and $0.6 million in 1999, increased $1.8 million or 7.7% from
1998 to 1999. This increase primarily reflects the additional debt
incurred to finance the Company's various expansion projects (such as
adding a third level to the casino at Ameristar Council Bluffs,
completing restaurant and meeting room enhancements at The Reserve,
and completing an expansion to the casino, remodeling restaurants and
completing other site improvements at Ameristar Vicksburg) and higher
interest rates on those borrowings. With the opening of The Reserve
in February 1998 and the Ameristar Vicksburg Hotel in June 1998, the
capitalization of interest on funds borrowed to construct these
projects was discontinued. Interest was capitalized on borrowings
for construction related to Ameristar Vicksburg and Ameristar Council
Bluffs improvements during 1999.
The Company's average borrowing rate was 9.84% in 1999 compared
to 10.25% in 1998. The borrowing rate decreased due to the favorable
effect of lower interest rates during the first half of 1999 (See "-
Liquidity and Capital Resources").
The Company's effective tax rate on income was 62.4% in 1999 and
the tax benefit on losses was 33.4% in 1998 versus the Federal
statutory rate of 34% and 35%, respectively. The differences from
the statutory rates are due to the effects of certain expenses
incurred by the Company which are not deductible for Federal income
tax purposes. The total of these expenses did not vary significantly
between periods, however the lower absolute level of income before
taxes in 1999 caused a greater impact to the effective tax rate for
1999.
YEAR ENDED DECEMBER 31, 1998 VERSUS YEAR ENDED DECEMBER 31, 1997
SUMMARY
The completion of The Reserve in early 1998 brought another year
of record growth in Ameristar's consolidated net revenues and
presented challenges in operations.
Consolidated net revenues increased by 28.4% to $264.7 million
in 1998 compared to $206.2 million in 1997. Income from operations
was $13.9 million in 1998 before the $10.6 million charge for
preopening costs associated with the opening of The Reserve. This is
a decline of $14.8 million or 51.7% from income from operations in
1997 before the abandonment loss and is due to an operating loss of
$16.1 million before preopening costs at The Reserve. Income from
operations after preopening costs was $3.3 million in 1998.
Total operating expenses as a percentage of net revenues were
86.4% in 1997 versus 98.7% (94.7% before The Reserve preopening
costs) in 1998. The decline in this margin is primarily a result of
operating inefficiencies associated with the opening of The Reserve
and lower than expected revenues in the intensely competitive
"locals" market in which it operates.
On a year-to-year comparable basis (i.e., before an
extraordinary charge in 1997 and preopening costs in 1998), adjusted
income decreased $16.0 million to a loss of $5.6 million in 1998
compared to net income of $10.4 million in 1997. After the
extraordinary charge and preopening costs, net loss for the year
ended December 31, 1998 was $12.7 million versus net income for the
year ended December 31, 1997 of $9.7 million. Loss per share before
preopening costs was $0.28 for 1998 ($0.62 after preopening costs).
Earnings per share were $0.48 for 1997 after an extraordinary charge
of $0.03 per share for the refinancing of the Company's credit line.
REVENUES
Ameristar Council Bluffs had total net revenues of $97.7 million
in 1998 compared to $87.8 million in 1997, an increase of 11.3%.
This represents growth in the market share of Ameristar Council
Bluffs and in the Council Bluffs gaming market in general.
Net revenues for Ameristar Vicksburg were $68.5 million for the
year ended December 31, 1998 compared with $64.0 million for the
prior year, an increase of 7.0%. This increase in revenues in 1998
compared to 1997 is due to an increase in casino revenue of $3.4
million and a $1.1 million increase in hotel revenue due to the new
hotel facility. Management believes Ameristar Vicksburg maintained
and will continue to hold its leading position in the Vicksburg
market through effective promotional strategies and by continuing to
provide customers with superior service and quality gaming and non-
gaming products.
The Jackpot Properties produced stable net revenues of $54.7
million and $54.5 million for the years ended December 31, 1998 and
1997, respectively. A 2.0% increase in casino revenue in 1998 was
offset by minimal decreases in food and beverage, rooms and other
revenues.
The Reserve produced net revenues of $43.6 million from its
opening on February 10, 1998 to December 31, 1998.
COSTS AND EXPENSES
The operating expense ratio for 1998 increased to 98.7% (94.7%
before preopening) compared to 86.4% of net revenues in 1997. The
increase in this ratio is primarily a result of the initial operating
performance of The Reserve. Excluding the $34.6 million of revenues
and $70.3 million in operating expenses at The Reserve, operating
expenses were 86.4% of net revenue, which is comparable to 1997.
Casino costs and expenses increased by $24.7 million or 31.3%
from $78.7 million in 1997 to $103.4 million in 1998. As a
percentage of casino revenues, casino expenses increased to 47.8% in
1998 compared to 45.5% in 1997. The majority of the increase in
expense ($19.4 million) was associated with the opening of The
Reserve and an increase of $4.6 million in expenses at Ameristar
Council Bluffs associated with additional gaming revenue of $8.4
million.
The Company's food and beverage costs and expenses increased
$11.9 million in 1998 compared to 1997 primarily due to the opening
of The Reserve and partially offset by improvements in this area at
the Jackpot Properties and Ameristar Vicksburg. The Company's food
and beverage expense-to-revenue ratio increased to 69.1% in 1998
compared to 64.5% in 1997. This increase is directly related to the
startup operational inefficiencies experienced in 1998 at The
Reserve.
Rooms expenses increased by $2.7 million to $5.8 million in 1998
from $3.1 million in 1997. The increase was the result of seven
months of operations of the new hotel in Vicksburg and almost 11
months of operations at The Reserve.
Selling, general and administrative costs and expenses
(including utilities and maintenance and business development costs)
increased $23.6 million or 45.5% from 1997 to 1998. Most of the
increase was a result of the opening of The Reserve and additional
expenses associated with salaries, marketing and professional fees at
the corporate level.
Depreciation expense increased $7.8 million or 47.9% from 1997
to 1998 as the Company's depreciable base increased with the opening
of The Reserve and the Ameristar Vicksburg hotel.
Preopening costs of $10.6 million were expensed during 1998
related to the opening of The Reserve.
Interest expense, net of capitalized interest of $4.7 million in
1997 and $1.4 million in 1998, increased $10.6 million or 87.5% from
1997. This increase primarily reflects the additional debt
outstanding to finance the Company's expansion and higher interest
rates on those borrowings. With the opening of The Reserve in
February 1998 and the Ameristar Vicksburg Hotel in June 1998, the
capitalization of interest on funds borrowed to construct these
projects was discontinued. Subsequent interest costs were reflected
as an expense on the statement of operations rather than as an
additional cost of the projects on the balance sheet. Interest was
capitalized on borrowings to construct The Reserve and the Ameristar
Vicksburg hotel during 1997 and 1998 until the projects commenced
operations.
The Company's average borrowing rate was 10.25% in 1998 compared
to 9.9% in 1997. The borrowing rate increased due to the issuance of
$100 million in Senior Subordinated Notes in mid-1997 and an increase
in LIBOR (See "- Liquidity and Capital Resources").
The Company's effective tax rate on income was 36.5% in 1997 and
the tax benefit on losses was 33.4% in 1998 versus the Federal
statutory rate of 35%. The differences from the statutory rates are
due to the effects of certain expenses incurred by the Company which
are not deductible for Federal income tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flows from operations increased $11.2 million
to $34.3 million for the year ended December 31, 1999, as compared to
$23.1 million for the year ended December 31, 1998. The increase was
due primarily to the increase in net income from improved operations
at all of the Company's properties. The Company had unrestricted
cash of approximately $15.5 million as of December 31, 1999 compared
to $18.2 million at December 31, 1998, a decrease of $2.7 million.
This decrease in cash was due primarily to net capital expenditures
of $50.0 million exceeding proceeds from net borrowings and capital
leases of $13.0 million and cash flow from operations of $34.3
million during the year. The Company's current assets decreased by
approximately $2.2 million from December 31, 1998 to December 31,
1999. This was primarily the result of decreases in cash and income
taxes receivable, partially offset by increases in accounts
receivable and prepaid expenses. 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 cash flows used for investing activities decreased
$3.8 million to $50.0 million in 1999 from $53.9 million in 1998. In
1998, the Company made capital expenditures primarily on the
completion of The Reserve and the hotel at Ameristar Vicksburg. In
1999, the Company made capital expenditures primarily for slot
machines, the third deck of the riverboat and parking garage at
Ameristar Council Bluffs, and a new restaurant, casino expansion,
additional parking and coffer dam repair at Ameristar Vicksburg. Cash
flows from financing activities decreased $22.8 million from $35.9
million in 1998 to $13.1 million in 1999 as a result of a reduced
amount of borrowings required to fund capital expenditure projects.
Capital expenditures for the year ended December 31, 1999 were
approximately $57.6 million, consisting of approximately $26.9
million at Ameristar Council Bluffs including adding a third deck
onto the casino and erecting a 1,000 space parking garage, $16.6
million at Ameristar Vicksburg including expanding the casino,
remodeling restaurants and other site improvements, $10.3 million at
The Reserve, including remodeling certain dining and meeting room
areas and the purchase of additional land and approximately $3.0
million for normal capital improvement and maintenance projects at
the Jackpot Properties. The Company funded these capital
expenditures primarily from net cash provided by operating activities
and borrowings.
The Company intends to make capital expenditures of at least
approximately $17.0 million in 2000, including the completion of the
parking garage at Ameristar Council Bluffs. Management believes that
these capital expenditure requirements will be funded out of draws
under the Revolving Credit Facility, cash on hand, operating cash
flow and purchase money and lease financing related to the
acquisition of furniture, fixtures and equipment (including gaming
equipment).
Management considers enhancement projects for each of the
Company's properties on an ongoing basis. In doing so, management
evaluates the operating performance of each property, the anticipated
relative costs and benefits of the projects under consideration, the
availability of cash flow and debt financing to fund capital
expenditures and competitive and other relevant factors. Management
is currently considering several additional capital expenditure
projects at the Company's properties and expects to undertake
additional property improvements in 2000.
On July 15, 1997, the Company refinanced its long-term debt
through a new $125 million revolving bank credit facility with Wells
Fargo Bank, N.A. ("WFB") and a syndicate of banks (the "Revolving
Credit Facility") and the sale of $100 million aggregate principal
amount of 10-1/2% Senior Subordinated Notes due 2004 (the "Senior
Subordinated Notes").
The Revolving Credit Facility was entered into on July 8, 1997,
pursuant to a Credit Agreement among Ameristar and its principal
subsidiaries (the "Borrowers"), a syndicate of bank lenders and WFB
as Agent Bank, Arranger and Swingline Lender. The Borrowers do not
include AC Hotel Corp., which owns the hotel at Ameristar Vicksburg,
and a purchasing subsidiary. The Borrowers made an initial draw of
$114.5 million under the Revolving Credit Facility on July 15, 1997,
which was used to repay $94.5 million in borrowings outstanding under
a prior bank credit facility and a $20.0 million short-term loan from
WFB. The Senior Subordinated Notes were issued by Ameristar at par,
and the net proceeds from the sale of the Senior Subordinated Notes
were used to repay $82.4 million in borrowings and interest under the
Revolving Credit Facility, $13.1 million in other indebtedness and
$0.8 million in loan fees for the Revolving Credit Facility.
Following the application of the net proceeds from the sale of the
Senior Subordinated Notes, the Company made additional draws under
the Revolving Credit Facility to fund a portion of the capital
expenditures for the development of The Reserve and other capital
expenditure projects. At December 31, 1999, the outstanding
principal balance of the Revolving Credit Facility was
$107.0 million.
Following the completion of Phase I of The Reserve, the
Revolving Credit Facility proceeds may be used only for working
capital purposes of the Borrowers and funding ongoing capital
expenditures for existing facilities.
The Borrowers and the lenders amended the Revolving Credit
Facility effective June 30, 1998 and March 31, 1999. Under the
amended Revolving Credit Facility, borrowings under the Revolving
Credit Facility may not exceed 2.75 times the Borrowers' rolling four
quarter EBITDA, and the Borrowers' total funded debt may not exceed
the Borrowers' rolling four-quarter EBITDA multiplied by a factor as
follows: 4.75 commencing December 31, 1999; 4.5 commencing March 31,
2000; and 4.0 commencing September 30, 2000. For purposes of the
Revolving Credit Facility, the Borrowers' EBITDA is generally defined
as net income before interest expense, income taxes, depreciation and
amortization, preopening costs and certain extraordinary and non-cash
items. As of December 31, 1999, the total funded debt of the
Borrowers was 4.38 times the Borrowers' rolling four-quarter EBITDA.
The maximum amount available under the Revolving Credit Facility
reduces semi-annually commencing July 1, 1999 on a sliding scale
(ranging from $2.5 million to $10.0 million in reductions) with a
final reduction of $75.0 million at maturity on June 30, 2003. The
maximum amount available under the Revolving Credit Facility as of
December 31, 1999 was $120.0 million.
The Revolving Credit Facility, as amended, requires the
Borrowers to maintain a gross fixed charge coverage ratio (as
defined) of at least 1.25 to 1.0 until September 30, 1999 and 1.50 to
1.0 thereafter. For purposes of these covenants, principal payments
on the Gem Notes (as defined below) will be included only to the
extent actually paid in the applicable period. As of December 31,
1999, the Company's fixed charge coverage ratio was 1.65. The
Revolving Credit Facility prohibits Ameristar from making any
dividend or other distribution on its capital stock during any period
in which the Borrowers' rolling four-quarter ratio of total funded
debt to EBITDA is greater than 2.0 to 1.0.
The amended Revolving Credit Facility also limits the Borrower's
aggregate capital expenditures in each year to an amount equal to 5%
of their consolidated net revenue for the preceding year and
prohibits the Borrowers from incurring any additional secured
indebtedness without the approval of the lenders. However, the
lenders under the Revolving Credit Facility have waived the maximum
capital expenditure limitation under the Revolving Credit Facility
specifically for certain projects at Ameristar Council Bluffs,
Ameristar Vicksburg and The Reserve. The waiver permits fiscal 1999
and 2000 capital expenditure projects to exceed the 5% limit by
approximately $43.3 million in total.
The amended Revolving Credit Facility requires the Borrowers to
maintain a tangible net worth of at least $50.0 million, plus 90% of
net income (without any reduction for net losses) as of the end of
each quarter beginning March 31, 1999 plus 90% of the net proceeds of
certain future equity offerings. As of December 31, 1999, the
Company's tangible net worth was $3.8 million more than required by
this covenant.
Under the terms of the Revolving Credit Facility, concurrent
with each loan draw, the Borrowers may select the interest rate based
on either the London Interbank Offering Rate ("LIBOR") or WFB's prime
interest rate. The maximum number of outstanding draws at any time
using LIBOR is five, with a minimum draw amount of $5.0 million per
draw. A LIBOR draw can be for a one-, two-, three- or six-month term
with interest accruing monthly and due at the end of the term, but in
no event less frequently than quarterly. The interest rate is fixed
throughout the term of a LIBOR-based draw and, as amended, ranges
from LIBOR plus 1.5 percentage points to LIBOR plus 4.0 percentage
points. On a prime interest rate draw, the interest rate is variable
and, as amended, ranges from a minimum of prime plus 0.25 percentage
points to a maximum of prime plus 2.75 percentage points with
interest payable monthly in arrears. As of December 31, 1999, the
Borrowers have taken LIBOR draws totaling $107.0 million with an
average interest rate of approximately 9.94 percent per annum. The
applicable margins for both LIBOR draws and prime interest rate draws
adjust semiannually based on the ratio of the Company's consolidated
total debt to consolidated cash flows, as measured by an EBITDA
formula.
The Company has entered into an interest rate collar agreement
with WFB to manage interest expense, which is subject to fluctuation
due to the variable-rate nature of the debt under the Company's
Revolving Credit Facility. Under the agreement, which covers $50.0
million of the borrowings on the Revolving Credit Facility, the
Company has a LIBOR floor rate of 5.39 percent and a LIBOR ceiling
rate of 6.75 percent, plus the applicable margin. In 1998, the
Company paid approximately $49,000 in additional interest as a result
of this agreement. The Company did not incur any additional interest
in connection with this agreement in 1999. The agreement terminates
on June 30, 2003 to coincide with the maturity of the Revolving
Credit Facility.
The Revolving Credit Facility is secured by liens on
substantially all of the real and personal property of the Borrowers.
The Revolving Credit Facility prohibits any future secondary liens on
these properties without the prior written approval of the lenders.
Certain changes in control of Ameristar may constitute a default
under the Revolving Credit Facility. The Revolving Credit Facility
binds the Borrowers to a number of additional affirmative and
negative covenants, including promises to maintain certain financial
ratios and tests within defined parameters. As of December 31, 1999,
the Company was in compliance with these covenants, as amended.
The Senior Subordinated Notes were issued under an Indenture
dated July 15, 1997 (the "Indenture"). In addition to Ameristar and
the trustee, all of Ameristar's subsidiaries other than Ameristar
Casino St. Louis, Inc. (the "Guarantors") are parties to the
Indenture for the purpose of guaranteeing (the "Guarantees") payments
on the Senior Subordinated Notes.
The Senior Subordinated Notes will mature on August 1, 2004.
Interest is payable semiannually on February 1 and August 1,
commencing February 1, 1998, at the per annum rate of 10.5%. The
Senior Subordinated Notes and the Guarantees are not secured and are
subordinate to all existing and future Senior Indebtedness (as
defined), which includes the Revolving Credit Facility.
Ameristar may redeem the Senior Subordinated Notes, in whole or
in part, at any time on or after August 1, 2001, at redemption prices
that decline over time from 105.25% to 101.75%. Senior Subordinated
Notes may also be redeemed if the holder or beneficial owner thereof
is required to be licensed, qualified or found suitable under
applicable Gaming Laws (as defined) and is not so licensed, qualified
or found suitable. Ameristar may also be required to redeem a
portion of the Senior Subordinated Notes in the event of certain
asset sales or the loss of a material gaming license, and each holder
of the Senior Subordinated Notes will have the right to require
Ameristar to redeem such holder's Senior Subordinated Notes upon a
Change of Control (as defined) of Ameristar. The Senior Subordinated
Notes are not subject to any mandatory redemption or sinking fund
obligations.
The Indenture includes covenants that restrict the ability of
Ameristar and the Restricted Subsidiaries (as defined and which
includes all Guarantors) from incurring future Indebtedness (as
defined); provided, however, that Ameristar or any Guarantor may
incur Indebtedness if the incurrence thereof would not result in the
Consolidated Coverage Ratio (as defined) being greater than 2.0 to
1.0 on a rolling four-quarter basis. The Indenture also permits
Ameristar or a Restricted Subsidiary to incur Indebtedness without
regard to the Consolidated Coverage Ratio test in certain
circumstances, including borrowings of up to $140 million under the
Revolving Credit Facility, as amended or replaced from time to time,
up to $15.0 million in recourse furniture, fixtures and equipment
financings, up to $7.5 million in borrowings for the construction of
the hotel at Ameristar Vicksburg and up to $5.0 million of other
Indebtedness.
The Indenture also includes certain covenants that, among other
things, limit the ability of Ameristar and its Restricted
Subsidiaries to pay dividends or other distributions (excluding
dividends and distributions from a Restricted Subsidiary to Ameristar
or a Guarantor), make investments, repurchase subordinated
obligations or capital stock, create certain liens (except those
securing Senior Indebtedness), enter into certain transactions with
affiliates, sell assets, issue or sell subsidiary stock, create or
permit restrictions on distributions from subsidiaries or enter into
certain mergers and consolidations.
The Company constructed a 150-room hotel at Ameristar Vicksburg,
which cost approximately $10.3 million, including capitalized
construction period interest and preopening costs. The Company has
obtained a nonrecourse loan facility for $7.5 million with a private
lender for the purpose of funding a portion of the construction
costs, with the balance provided out of operating cash flow. The
loan was to originally mature on July 1, 1998 but was amended to
mature on June 30, 2000 and requires periodic interest payments at
the rate of 15% per annum. The Company is required to pay a non-usage
fee at the rate of 3% per annum on the undrawn loan balance, and
draws are subject to the satisfaction of various conditions typically
applicable to construction loans. As of December 31, 1999, the
outstanding balance on the loan was approximately $7.5 million. The
Company is currently seeking another lender to refinance this loan
facility.
On June 20, 1997, as part of the consideration for the
acquisition of The Reserve, Ameristar issued unsecured subordinated
promissory notes to the former stockholders of Gem Gaming, Inc., the
original developer of The Reserve, in an aggregate principal amount
of $28.7 million (the "Gem Notes"). The per annum interest rate on
the Gem Notes is 8%, subject to increases up to a maximum of 18% per
annum, following one or more failures to make payments under the Gem
Notes by scheduled dates. Any interest not paid when scheduled will
thereafter accrue interest as principal. The Gem Notes require
annual principal reduction payments ranging from $2.0 million to $3.0
million commencing in November 1998. The Gem Notes mature on
December 31, 2004 and may be prepaid in whole or in part without
penalty at any time. The Gem Notes are not subject to acceleration
or other collection efforts upon failure to make a scheduled payment
prior to maturity, and the only remedy for such a failure to make a
scheduled payment is an increase in interest rate as described above.
The Gem Notes are subordinate to the Revolving Credit Facility, the
Senior Subordinated Notes and other long-term indebtedness of
Ameristar specified by Ameristar up to a maximum of $250 million.
At December 31, 1999, the Company had other indebtedness,
including obligations under capitalized leases, in an aggregate
principal amount of $15.8 million.
Because the amount of borrowings permitted to be drawn at any
time under the Revolving Credit Facility is determined in part by the
Company's rolling four-quarter EBITDA (as defined), the Company's
anticipated borrowings under the Revolving Credit Facility to fund a
portion of any capital expenditure project will be dependent upon the
level of the Company's aggregate operating cash flow. At the present
time, the Company does not anticipate undertaking capital expenditure
projects during 2000 that could not be funded out of amounts
anticipated to be available through internally generated cash flow
and the Company's borrowing capacity under the Revolving Credit
Facility.
On October 28, 1999, Ameristar Casino St. Louis, Inc., a newly
formed wholly owned subsidiary of ACI, filed an application with the
Missouri Gaming Commission seeking a gaming license for a site along
the Mississippi River in Lemay, Missouri, a community in South St.
Louis County. If awarded the license, the Company's current plans
call for it to spend approximately $150 million to construct the
first phase of the new casino property. The Company has recently
obtained a commitment to refinance its Revolving Credit Facility,
increasing its available borrowing capacity to $265.0 million to fund
a substantial portion of the development costs for this project. The
balance of the financing for this project will be provided primarily
by operating cash flow.
Ameristar has not declared any dividends on its Common Stock
during the last two fiscal years, and the Company intends for the
foreseeable future to retain all earnings for use in the development
of its business instead of paying cash dividends. In addition, as
described above, the Revolving Credit Facility obligates the Company
to comply with certain financial covenants that may restrict or
prohibit the payment of dividends.
YEAR 2000
In the past, many computer software programs were written using
two digits rather than four to define the applicable year. As a
result, date-sensitive computer software may recognize a date using
"00" as the year 1900 rather than the year 2000. This is generally
referred to as the "Year 2000 issue." If this situation were to
occur, the potential exists for computer system failures or
miscalculations by computer programs, which could disrupt operations.
Prior to the rollover to the Year 2000, the Company evaluated
all of its computer systems, including its front- and back-of-the-
house computer operations, its back-of-the-house accounting systems
and its financial software programs, and upgraded these systems as
necessary to ensure that, according to the applicable vendors, all of
the Company's computer systems were Year 2000 compliant. The Company
also made appropriate inquiries of third parties with whom the
Company does significant business, such as vendors and suppliers, as
to their Year 2000 readiness.
To date, the Company has not experienced any significant Year
2000 problems with its mission-critical systems, including those
relating to providing service to its guests and monitoring
operations, or those of any third parties on which the Company
depends. Although the Company has not experienced any significant
year 2000 problems to date, it is still possible for Year 2000-
related problems to occur and management therefore plans to continue
to monitor the situation closely. Although it is difficult to
calculate the costs the Company incurred in connection with the Year
2000 issue, management believes that these costs have not been and
are not expected to be material to the Company's financial condition
or results of operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Except for the Revolving Credit Facility, under which
$107.0 million was outstanding at December 31, 1999, and certain
other long-term debt outstanding at December 31, 1999 in the
aggregate amount of $6.8 million (collectively, the "Variable Rate
Debt"), all of the Company's other long-term debt bears interest at
fixed rates. The Variable Rate Debt bears interest equal to the WFB
prime interest rate or LIBOR in effect from time to time, in each
case plus an applicable margin determined by the ratio of the
Company's consolidated total debt to consolidated cash flows, as
measured by an EBITDA formula. At December 31, 1999, the average
interest rate applicable to the Variable Rate Debt was 9.84%. An
increase of one percentage point in the average interest rate
applicable to the Variable Rate Debt outstanding at December 31,
1999, would increase the Company's annual interest costs by
approximately $1.1 million. The Company has entered into an interest
rate collar agreement with WFB to manage the effects of fluctuations
in the interest rate applicable to up to $50.0 million in LIBOR draws
under the Revolving Credit Facility.
Although the Company manages its short-term cash assets with a
view to maximizing return with minimal risk, the Company does not
invest in market rate sensitive instruments for trading or other
purposes, including so-called derivative securities, and the Company
is not exposed to foreign currency exchange risks or commodity price
risks in its portfolio transactions.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
The Report of the Company's Independent Public Accountants
appears at page F-1 hereof, and the Consolidated Financial Statements
and Notes to Consolidated Financial Statements of the Company appear
at pages F-2 through F-29 hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT
The information required by this Item is set forth under the
captions "Item 1 - Election of Directors - Information Concerning the
Nominees" and "- Directors and Executive Officers" in the Company's
definitive Proxy Statement to be filed with the Securities and
Exchange Commission and is incorporated herein by this reference as
if set forth in full.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is set forth under the
caption "Executive Compensation" in the Company's definitive Proxy
Statement to be filed with the Securities and Exchange Commission and
is incorporated herein by this reference as if set forth in full.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information required by this Item is set forth under the
caption "Item 1 - Election of Directors - Security Ownership of
Certain Beneficial Owners and Management" in the Company's definitive
Proxy Statement to be filed with the Securities and Exchange
Commission and is incorporated herein by this reference as if set
forth in full.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
The information required by this Item is set forth under the
caption "Certain Transactions" in the Company's definitive Proxy
Statement to be filed with the Securities and Exchange Commission and
is incorporated herein by this reference as if set forth in full.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
The following are filed as part of this Report:
(a)1. Financial Statements
Report of Independent Public Accountants.
Consolidated Balance Sheets as of December 31, 1998
and 1999.
Consolidated Statements of Operations for the years
ended December 31, 1997, 1998 and 1999.
Consolidated Statements of Stockholders' Equity for
the years ended December 31, 1997, 1998 and 1999.
Consolidated Statements of Cash Flows for the years
ended December 31, 1997, 1998 and 1999.
Notes to Consolidated Financial Statements.
(a)2. Financial Statement Schedules
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange
Commission are not required under related instructions or
are inapplicable and therefore have been omitted.
(a)3. Exhibits
The following exhibits listed are filed or incorporated by
reference as part of this Report. Certain of the listed exhibits are
incorporated by reference to previously filed reports of the
registrant under the Securities Exchange Act of 1934, as amended,
including Forms 10-K, 10-Q and 8-K. These reports have been filed
with the Securities and Exchange Commission under file number 0-
22494.
EXHIBI
T DESCRIPTION OF EXHIBIT METHOD OF FILING
NUMBER
3.1 Articles of Incorporation of Incorporated by reference
Ameristar Casinos, Inc. to Exhibit 3.1 to
("ACI"). Registration Statement on
Form S-1 filed by ACI
under the Securities Act
of 1933, as amended (File
No. 33-68936) (the "Form S-
1").
3.2 Bylaws of ACI. Incorporated by reference
to Exhibit 3.2 to ACI's
Annual Report on Form 10-K
for the year ended
December 31, 1995 (the
"1995 10-K").
4.1 Specimen Common Stock Incorporated by reference
Certificate to Exhibit 4 to Amendment
No. 2 to the Form S-1.
4.2(a) Credit Agreement, dated as of Incorporated by reference
July 8, 1997, among ACI, to Exhibits 4.1 and 99.1
Cactus Pete's, Inc. ("CPI"), to the Current Report on
Ameristar Casino Vicksburg, Form 8-K of ACI filed on
Inc. ("ACVI"), Ameristar July 30, 1997 (the "July
Casino Council Bluffs, Inc. 1997 8-K").
("ACCBI") and Ameristar
Casino Las Vegas, Inc.
("ACLVI"), as Borrowers, the
Lenders named therein, and
Wells Fargo Bank, National
Association ("WFB") as
Arranger, Agent Bank and
Swingline Lender, together
with a list describing
omitted schedules and
exhibits thereto.
4.2(b) First Amendment to Credit Incorporated by reference
Agreement, dated as of to Exhibit 4.2(b) to ACI's
September 9, 1998, among ACI, Annual Report on Form 10-K
CPI, ACVI, ACCBI, ACLVI, the for the year ended
lenders named therein and December 31, 1998 (the
WFB, as Swingline Lender and "1998 10-K").
Agent Bank.
4.2(c) Interest Rate Collar Incorporated by reference
Agreement, dated August 10, to Exhibit 4.2(b) to the
1998, between ACI and WFB. 1998 10-K.
4.3(a) Indenture, dated as of July Incorporated by reference
15, 1997, among ACI, ACLVI, to Exhibit 4.2 to the July
ACVI, A.C. Food Services, 1997 8-K.
Inc. ("ACFSI"), AC Hotel
Corp. ("ACHC"), ACCBI and
First Trust National
Association, including the
forms of Notes and Subsidiary
Guarantees issued thereunder.
4.3(b) Supplemental Indenture, dated Incorporated by reference
as of October 24, 1997, among to Exhibit 4.1(c) to
ACI, CPI, ACLVI, ACVI, ACFSI, Amendment No. 1 to
ACHC, ACCBI and First Trust Registration Statement on
National Association. Form S-4 filed by ACI,
CPI, ACVI, ACCBI, ACLVI,
ACFSI and ACHC under the
Securities Act of 1933, as
amended (File No. 333-
34381) (the "Form S-4").
4.4 Other Long-Term Debt. See Exhibits 10.9(e)-(j)
See Exhibits 10.9(e)-(j) and and 99.1.
99.1.
*10.1 Employment Agreement, dated Incorporated by reference
(a) November 15, 1993, between to Exhibit 10.1(a) to
ACI and Thomas M. Steinbauer. ACI's Annual Report on
Form 10-K for the year
ended December 31, 1994
(the "1994 10-K").
*10.1 Employment Agreement, dated Incorporated by reference
(b) as of August 23, 1999, to Exhibit 10.1 to ACI's
between Ameristar Casinos, Quarterly Report on Form
Inc. and Gordon R. Kanofsky 10-Q for the quarter ended
September 30, 1999.
*10.2 Ameristar Casinos, Inc. 1993 Incorporated by reference
Non-Employee Director Stock to Exhibit 10.2 to ACI's
Option Plan, as amended and Quarterly Report on Form
restated. 10-Q for the quarter ended
June 30, 1994.
*10.3 Ameristar Casinos, Inc. Incorporated by reference
Management Stock Option to Exhibit 10.3 to ACI's
Incentive Plan, as amended Quarterly Report on Form
and restated. 10-Q for the quarter ended
September 30, 1996.
*10.4 1999 Stock Incentive Plan of Incorporated by reference
Ameristar Casinos, Inc. to Exhibit 10.6 to ACI's
Quarterly Report on Form
10-Q for the quarter ended
June 30, 1999.
*10.5 Form of Indemnification Incorporated by reference
Agreement between ACI and to Exhibit 10.33 to
each of its directors and Amendment No. 2 to the
officers. Form S-1.
*10.6 Housing Agreement, dated Incorporated by reference
November 15, 1993 between CPI to Exhibit 10.17 to the
and Craig H. Neilsen. 1994 10-K.
10.7 Plan of Reorganization, dated Incorporated by reference
November 15, 1993, between to Exhibit 2.1 to the 1994
ACI and Craig H. Neilsen in 10-K.
his individual capacity and
as trustee of the
testamentary trust created
under the last will and
testament of Ray Neilsen
dated October 9, 1963.
10.8 Excursion Boat Sponsorship Incorporated by reference
and Operations Agreement, to Exhibit 10.15 to the
dated September 15, 1994, 1995 10-K.
between Iowa West Racing
Association and ACCBI.
10.9 Merger Agreement, dated as of Incorporated by reference
(a) May 31, 1996, among Gem to Exhibits 10.1 and 99.1
Gaming, Inc. ("Gem"), ACI, to ACI's Quarterly Report
ACLVI, Steven W. Rebeil on Form 10-Q for the
("Rebeil") and Dominic J. quarter ended June 30,
Magliarditi ("Magliarditi"), 1996 (the "June 1996 10-
together with a list Q").
describing omitted schedules
and exhibits thereto.
10.9 First Amendment to Merger Incorporated by reference
(b) Agreement, dated July 2, to Exhibit 10.5 to the
1996, among Gem, ACI, ACLVI, June 1996 10-Q.
Rebeil and Magliarditi.
10.9 Second Amendment to Merger Incorporated by reference
(c) Agreement, dated as of to Exhibits 10.1 and 99.1
September 27, 1996, among to the Current Report on
Gem, ACI, ACLVI, Rebeil and Form 8-K of ACI filed on
Magliarditi, together with a October 24, 1996.
list describing omitted
schedules and exhibits
thereto.
10.9 Settlement Agreement, dated Incorporated by reference
(d) as of May 3, 1997, among ACI, to Exhibit 10.1 to ACI's
ACLVI, Rebeil, Magliarditi, Quarterly Report on Form
Gem Air, Inc. and NVAGAIR. 10-Q for the quarter ended
March 31, 1997.
10.9 Promissory Note, dated as of Incorporated by reference
(e) June 1, 1997, made by ACI to Exhibit 10.8(k) to the
payable to the order of Form S-4.
Rebeil in the original
principal amount of
$13,232,146.
10.9 Promissory Note, dated as of Incorporated by reference
(f) June 1, 1997, made by ACI to Exhibit 10.8(k) to the
payable to the order of Form S-4.
Magliarditi in the original
principal amount of $417,854.
10.9 Non-Negotiable Promissory Filed electronically
(g) Note, dated as of November herewith.
11, 1999, made by ACI payable
to Magliarditi in the
original principal amount of
$179,080.
10.9 Non-Negotiable Promissory Filed electronically
(h) Note, dated as of November herewith.
11, 1999, made by ACI payable
to Magliarditi in the
original principal amount of
$280,100.
10.9 Non-Negotiable Promissory Filed electronically
(i) Note, dated as of November herewith.
11, 1999, made by ACI payable
to Rebeil in the original
principal amount of
$5,670,920.
10.9 Non-Negotiable Promissory Filed electronically
(j) Note, dated as of November herewith.
11, 1999, made by ACI payable
to Rebeil in the original
principal amount of $8,869,900.
10.10 Lease, dated December 11, Incorporated by reference
(a) 1992, between Martha Ker to Exhibit 10.4 to the
Brady Lum et. al. And ACVI as Form S-4.
the assignee of Craig H.
Neilsen.
10.10 First Amendment to Lease Incorporated by reference
(b) Agreement, dated June 1, to Exhibit 10.4(b) to the
1995, between Lawrence O. 1995 10-K.
Branyan, Jr., as trustee of
the Brady-Lum Family Trust
dated May 15, 1993 and ACVI.
10.11 Settlement, Use and Incorporated by reference
Management Agreement and DNR to Exhibits 10.12 and 99.1
Permit, dated May 15, 1995, to ACI's Annual Report on
between the State of Iowa Form 10-K for the year
acting through the Iowa ended December 31, 1996.
Department of Natural
Resources and ACCBI as the
assignee of Koch Fuels, Inc.
10.12**Asset Purchase and Sale Filed electronically
Agreement, dated as of herewith.
February 15, 2000, between
Futuresouth, Inc., Southboat
Lemay, Inc., Southboat
Limited Partnership and
Ameristar Casino St. Louis,
Inc.
21.1 Subsidiaries of ACI. Filed electronically
herewith.
23.1 Consent of Arthur Andersen Filed electronically
LLP. herewith.
27.1 Financial Data Schedule Filed electronically
herewith.
99.1 Agreement to furnish the Filed electronically
Securities and Exchange herewith.
Commission certain
instruments defining the
rights of holders of certain
long-term debt.
_________________________________
* Denotes a management contract or compensatory plan or arrangement.
** Portions of this Exhibit have been deleted pursuant to the
Company's request for confidential treatment pursuant to Rule 24b-2
promulgated under the Securities Exchange Act.
(B) REPORTS ON FORM 8-K
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AMERISTAR CASINOS, INC.
(Registrant)
March 29, 2000 By: /s/ Craig H. Neilsen
Craig H. Neilsen
President, Chairman of the
Board and CEO
Pursuant to the requirements of the Securities Exchanges Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
SIGNATURE NAME AND TITLE DATE
Craig H. Neilsen,
/s/ Craig H. Neilsen President, Chairman of March 29, 2000
the Board and CEO
(principal executive
officer)
Thomas M. Steinbauer,
Senior Vice President of
/s/ Thomas M. Steinbauer Finance and March 29, 2000
Administration (principal
financial officer and
principal accounting
officer) and Director
/s/ Paul I. Corddry Paul I. Corddry, Director March 29, 2000
/s/ Larry A. Hodges Larry A. Hodges, Director March 29, 2000
/s/ Warren E. McCain Warren E. McCain, Director March 29, 2000
On this 29th of March, 2000, Craig H. Neilsen directed Chris
Hinton, in his presence as well as our own, to sign the foregoing
document as "Craig H. Neilsen." Upon viewing the signatures as
signed by Chris Hinton and in our presence, Craig H. Neilsen
declared to us that he adopted them as his own signatures.
/s/Karen Ahmad
Witness
/s/Susan Viccairelli
Witness
STATE OF NEVADA )
):ss.
COUNTY OF CLARK )
I, Margene M. Otten, 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
President and Chief Executive Officer of Ameristar Casinos, Inc.,
the corporation that executed the within instrument or the person
who executed the instrument on behalf of said corporation. Craig
H. Neilsen, who being unable due to physical incapacity to sign
his name or offer his mark, did direct Chris Hinton, in his
presence, as well as my own, to sign his name to the foregoing
document. Craig H. Neilsen, after viewing his name as signed by
Chris Hinton, thereupon adopted the signatures as his own by
acknowledging to me his intention to so adopt them as if he had
personally executed the same both in his individual capacity and
on behalf of said corporation, and further acknowledged to me
that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal this 29th day of March, 2000.
/s/Margene M. Otten
Notary Public
My Commission Expires: July 23, 2002
Residing at: Las Vegas, NV
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Ameristar Casinos, Inc.:
We have audited the accompanying consolidated balance sheets of
Ameristar Casinos, Inc. (a Nevada corporation) and subsidiaries
as of December 31, 1998 and 1999, and the related consolidated
statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1999.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Ameristar Casinos, Inc. and subsidiaries as of
December 31, 1998 and 1999, and the results of their operations
and their cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
As explained in Note 1 of the notes to the consolidated financial
statements, effective January 1, 1999, Ameristar Casinos, Inc.
changed its method of accounting for start-up activities in
accordance with the American Institute of Certified Public
Accountants' Statement of Position 98-5, "Reporting on the Costs
of Start-up Activities."
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
February 18, 2000
(except with respect to the matter discussed in
Note 12, as to which the date is March 1, 2000)
<TABLE>
AMERISTAR CASINOS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
(Amounts in Thousands)
December 31,
1998 1999
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $18,209 $15,531
Restricted cash 118 142
Accounts receivable, net 1,490 2,080
Income tax refund receivable 2,815 1,450
Inventories 3,037 3,268
Prepaid expenses 4,569 5,162
Deferred income taxes 3,906 3,717
Total current assets 34,144 31,350
PROPERTY AND EQUIPMENT, at cost:
Buildings and improvements 260,720 284,518
Building under capitalized
lease 800 800
Furniture, fixtures and
equipment 91,325 100,615
Furniture, fixtures and equipment
under capitalized leases 3,907 4,060
356,752 389,993
Less: Accumulated depreciation and
amortization 92,708 108,949
264,044 281,044
Land 26,485 27,949
Land under capitalized leases 4,865 4,865
Construction in progress 2,426 14,759
297,820 328,617
EXCESS OF PURCHASE PRICE OVER FAIR
MARKET VALUE OF NET ASSETS ACQUIRED 15,046 14,651
DEPOSITS AND OTHER ASSETS 4,763 4,027
$351,773 $378,645
</TABLE>
The accompanying notes are an integral part of these consolidated
balance sheets.
<TABLE>
AMERISTAR CASINOS, INC.
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
(Amounts in Thousands, Except Share Data)
December 31,
1998 1999
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 6,339 $ 9,204
Construction contracts payable 897 6,341
Accrued liabilities 26,395 29,539
Current obligations under
capitalized leases 2,398 2,413
Current maturities of notes payable
and long-term debt 9,924 10,615
Total current liabilities 45,953 58,112
OBLIGATIONS UNDER CAPITALIZED LEASES,
net of current maturities 13,196 11,037
NOTES PAYABLE AND LONG-TERM DEBT,
net of current maturities 217,203 231,853
DEFERRED INCOME TAXES 7,497 9,474
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 at December 31,
1998 and 20,375,264 shares at
December 31, 1999 204 204
Additional paid-in capital 43,043 43,083
Retained earnings 24,677 24,882
67,924 68,169
$351,773 $378,645
</TABLE>
The accompanying notes are an integral part of these consolidated
balance sheets.
<TABLE>
AMERISTAR CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
Years ended December 31,
1997 1998 1999
<S> <C> <C> <C>
REVENUES:
Casino $173,077 $216,319 $247,416
Food and beverage 30,672 45,853 49,142
Rooms 9,685 14,201 17,257
Other 8,275 10,401 11,089
221,709 286,774 324,904
Less: Promotional
allowances 15,530 22,092 24,618
Net revenues 206,179 264,682 300,286
OPERATING EXPENSES:
Casino 78,733 103,387 114,357
Food and beverage 19,784 31,698 33,207
Rooms 3,130 5,809 6,372
Other 7,546 10,044 10,203
Selling, general and
administrative 51,958 75,604 86,142
Depreciation and
amortization 16,358 24,191 24,460
Abandonment loss 646 - -
Preopening costs - 10,611 -
Total operating expenses 178,155 261,344 274,741
Income from operations 28,024 3,338 25,545
OTHER INCOME (EXPENSE):
Interest income 445 296 300
Interest expense (12,107) (22,699) (24,449)
Other (35) (13) (851)
INCOME (LOSS) BEFORE INCOME
TAX PROVISION (BENEFIT) 16,327 (19,078) 545
Income tax provision
(benefit) 5,959 (6,363) 340
INCOME (LOSS) BEFORE
EXTRAORDINARY LOSS 10,368 (12,715) 205
EXTRAORDINARY LOSS ON EARLY
RETIREMENT OF DEBT, net of
income tax benefit of $387, $0
and $0, respectively (673) - -
NET INCOME (LOSS) $ 9,695 $(12,715) $ 205
</TABLE>
<TABLE>
AMERISTAR CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(CONTINUED)
(Amounts in Thousands, Except Per Share Data)
Years ended December 31,
1997 1998 1999
<S> <C> <C> <C>
EARNINGS (LOSS) PER
SHARE:
Income (loss) before
extraordinary loss
Basic and diluted $ 0.51 $(0.62) $ 0.01
Net income (loss)
Basic and diluted $ 0.48 $(0.62) $ 0.01
WEIGHTED AVERAGE
SHARES OUTSTANDING 20,360 20,360 20,362
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<TABLE>
AMERISTAR CASINOS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Amounts in Thousands, Except Number of Shares)
Capital Stock Additional
No. of Paid-In Retained
Shares Balance Capital Earnings Total
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1996 20,360,000 $ 204 $43,043 $27,697 $70,944
Net income - - - 9,695 9,695
Balance,
December 31, 1997 20,360,000 204 43,043 37,392 80,639
Net loss - - - (12,715) (12,715)
Balance,
December 31, 1998 20,360,000 204 43,043 24,677 67,924
Net income - - - 205 205
Issuance of shares
upon exercise of
stock options 15,264 - 40 - 40
Balance,
December 31, 1999 20,375,264 $ 204 $43,083 $24,882 $68,169
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<TABLE>
AMERISTAR CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
Years ended December 31,
1997 1998 1999
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $9,695 $(12,715) $ 205
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and
amortization 16,358 24,191 24,460
Change in deferred income
taxes 2,964 (3,898) 2,166
Net loss on disposition
of assets 505 11 852
Amortization of debt
issuance costs 424 661 668
Preopening costs - 10,611 -
Extraordinary loss on
early retirement of debt 1,060 - -
Changes in current assets
and liabilities:
Restricted cash 265 34 (24)
Accounts receivable, net (643) 561 (590)
Income taxes, net (2,152) (712) 1,365
Inventories 85 (1,314) (231)
Prepaid expenses (374) (669) (593)
Accounts payable (2,531) 1,552 2,865
Accrued liabilities 7,985 4,810 3,144
Total adjustments 23,946 35,838 34,082
Net cash provided by operating
activities 33,641 23,123 34,287
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures (72,932) (32,312) (57,590)
Increase (decrease) in
construction contracts
payable 14,055 (18,478) 5,444
Proceeds from sale of assets 126 - 2,029
Decrease (increase) in
deposits and other assets (4,666) (3,073) 69
Net cash used in investing
activities (63,417) (53,863) (50,048)
</TABLE>
<TABLE>
AMERISTAR CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Amounts in Thousands)
Years ended December 31,
1997 1998 1999
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of
long-term debt $150,786 $42,606 $19,047
Debt issuance costs (4,439) - -
Minority interest income (16) - -
Principal payments of long-
term debt and capitalized
leases (114,248) (6,688) (6,004)
Proceeds from exercise of
stock options - - 40
Net cash provided by financing
activities 32,083 35,918 13,083
NET INCREASE (DECREASE) IN
CASH
AND CASH EQUIVALENTS 2,307 5,178 (2,678)
CASH AND CASH EQUIVALENTS --
BEGINNING OF YEAR 10,724 13,031 18,209
CASH AND CASH EQUIVALENTS --
END OF YEAR $13,031 $18,209 $15,531
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
AMERISTAR CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation and basis of presentation
The consolidated financial statements of Ameristar Casinos,
Inc. ("ACI" or the "Company"), a Nevada corporation, include the
accounts of the Company and its 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"). ACI also operates A.C. Food
Services, Inc., a purchasing subsidiary. ACVI has a wholly owned
subsidiary, AC Hotel Corp., created for the purpose of
constructing and operating a hotel in Vicksburg, Mississippi. The
Company has also formed Ameristar Casino St. Louis, Inc., a
Missouri corporation and a wholly owned subsidiary ("ACSLI"), for
the purpose of potentially developing a new casino in the South
St. Louis County, Missouri area.
CPI owns and operates two casino-hotels in Jackpot, Nevada -
Cactus Petes Resort Casino and The Horseshu Hotel and Casino.
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 associated hotel and other land-based
facilities in Council Bluffs, Iowa. ACLVI owns and operates The
Reserve Hotel Casino ("The Reserve") in the Henderson-Green
Valley suburban area of Las Vegas, Nevada.
The gaming licenses granted to ACVI and ACCBI must be
periodically renewed by the respective state gaming authorities
to continue gaming operations. In addition, ACCBI's gaming
operations are subject to a county-wide reauthorizing referendum
every eight years, commencing in 2002.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Material intercompany accounts and transactions have been
eliminated from the accompanying consolidated financial
statements.
Cash and cash equivalents
The Company considers all highly liquid investments with
maturities of three months or less when purchased to be cash
equivalents. Cash equivalents are carried at cost, which
approximates market, due to the short-term maturities of these
instruments.
Accounts receivable
Gaming receivables are included as part of the Company's
accounts receivable balance. An allowance of $304,000 and
$731,000 at December 31, 1998 and 1999, respectively, has been
applied to reduce receivables to amounts anticipated to be
collected.
Inventories
Inventories are stated at the lower of cost or market. Cost
is determined principally on the weighted average basis.
Interest rate collar agreement
The Company uses an interest rate collar agreement to assist
in managing interest incurred on its long-term debt. The
difference between amounts received and amounts paid under such
agreement, as well as any costs or fees, is recorded as a
reduction of, or addition to, interest expense as incurred over
the life of the collar agreement.
Depreciation and capitalization
Property and equipment is recorded at cost, including
interest charged on funds borrowed to finance construction.
Interest of $4,654,000, $1,434,000 and $561,000 was capitalized
for the years ended December 31, 1997, 1998 and 1999,
respectively. Depreciation is provided on both the straight-line
and accelerated methods in amounts sufficient to relate the cost
of depreciable assets to operations. Amortization of building
and furniture, fixtures and equipment under capitalized leases is
provided over the shorter of the estimated useful life of the
asset or the term of the associated lease (including lease
renewal or purchase options the Company expects to exercise).
Depreciation and amortization is provided over the following
estimated useful lives:
Buildings and improvements 5 to 40 years
Building under capitalized lease 39 years
Furniture, fixtures and equipment 3 to 15 years
Furniture, fixtures
and equipment under
capitalized leases 3 to 5 years
Betterments, renewals and repairs that extend the life of an
asset are capitalized. Ordinary maintenance and repairs are
charged to expense as incurred.
Excess of purchase price over fair market value of net assets
acquired
The excess of purchase price over fair market value of net
assets acquired resulting from the Gem Gaming merger (see note
10) is being amortized over its estimated useful life of 39 years
using the straight line method.
Dividends
The Company intends to retain future earnings for use in the
development of its business and does not anticipate paying any
cash dividends in the foreseeable future.
Gaming revenues and promotional allowances
In accordance with industry practice, the Company recognizes
as gaming revenues the net win from gaming activities, which is
the difference between gaming wins and losses. Gross revenues
include the retail value of complimentary food, beverage and
lodging services furnished to customers. The retail value of
these promotional allowances is deducted to compute net revenues.
The estimated departmental costs of providing such promotional
allowances are included in casino costs and expenses and consist
of the following:
Years ended December 31,
1997 1998 1999
(Amounts in Thousands)
Food and beverage $12,283 $20,399 $20,189
Room 708 1,024 1,336
Other 644 958 1,382
$13,635 $22,381 $22,907
Advertising
The Company expenses advertising costs the first time the
advertising takes place. Advertising expense included in
selling, general and administrative expenses was approximately
$5,453,000, $9,966,000, and $10,690,000 for the years ended
December 31, 1997, 1998 and 1999, respectively.
Business development expenses
Business development expenses are general costs incurred in
connection with identifying, evaluating and pursuing
opportunities to expand into existing or emerging gaming
jurisdictions. Such costs include, among others, legal fees,
land option payments and fees for applications filed with
regulatory agencies and are expensed as incurred.
Preopening costs
Preopening costs primarily represent direct personnel and
other operating costs incurred prior to the opening of new
facilities. The Company changed its method for accounting for
preopening costs effective January 1, 1999 in accordance with the
provisions of American Institute of Certified Public Accountants
issued Statement of Position No. 98-5 "Reporting on the Costs of
Start-up Activities." Prior to 1999, the Company capitalized
preopening costs and expensed such costs upon the commencement of
operations. The adoption of SOP 98-5 did not have a material
impact on the Company's operations in 1999 since the Company was
not developing any new facilities.
Federal income taxes
Income taxes are recorded in accordance with the provisions
of Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes." SFAS No. 109 requires recognition
of deferred income tax assets and liabilities for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled.
Earnings Per Share
In 1997, the Company adopted SFAS No. 128 - Earnings Per
Share. SFAS 128 replaces previously reported earnings per share
with "basic" earnings per share and "diluted" earnings per share.
Basic earnings per share are computed by dividing reported
earnings by the weighted average number of common shares
outstanding during the period. Diluted earnings per share
reflect the additional dilution for all potentially dilutive
securities such as stock options. Basic and diluted earnings per
share are equal for the years ended December 31, 1997 and 1998 as
the outstanding stock options were antidilutive. Basic and
diluted earnings per share are equal in 1999 because the dilution
was not significant enough to reduce basic earnings per share as
reported.
Reclassifications
Certain reclassifications, having no effect on net income,
have been made to the prior periods' consolidated financial
statements to conform with the current year presentation.
NOTE 2 - ACCRUED LIABILITIES
Accrued liabilities consist of the following:
December 31,
1998 1999
(Amounts in Thousands)
Compensation and related
benefits $ 7,164 $8,059
Taxes other than
income taxes 5,649 5,822
Progressive slot machine
jackpots 1,753 1,436
Interest 6,013 6,320
Deposits and other
accruals 5,816 7,902
$26,395 $29,539
NOTE 3 - FEDERAL INCOME TAXES
The components of the income tax provision are as follows:
Years ended December 31,
1997 1998 1999
(Amounts in Thousands)
Current $2,371 $(5,312) $(1,250)
Deferred 3,588 (1,051) 1,540
Provision (benefit) on income
before extraordinary item 5,959 (6,363) 340
Tax benefit of extraordinary item (387) - -
$5,572 $(6,363) $ 340
The reconciliation of income tax at the Federal statutory
rates to income tax expense is as follows:
Years ended December 31,
1997 1998 1999
Federal statutory rate 35.0% (34.0)% 34.0%
Nondeductible political and
lobbying costs 0.3 0.2 11.0
Nondeductible meals and
entertainment 0.3 0.1 4.2
Other nondeductible expenses 0.9 0.3 13.2
36.5% (33.4)% 62.4%
Under SFAS No. 109, deferred income taxes reflect the net
tax effects of temporary differences between the carrying amount
of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Significant components
of the Company's net deferred tax liability consisted of the
following:
December 31,
1998 1999
(Amounts in Thousands)
Deferred tax assets:
Preopening costs $ 4,290 $ 3,019
Accrued book expenses not
currently deductible 2,769 2,757
Alternative minimum tax credit 1 4,716 2,882
Project development costs 1,118 841
Net operating loss carry forward 2 3,745 10,433
Other 519 615
Total deferred tax assets 17,157 20,547
Deferred tax liabilities:
Tax depreciation in excess of
book depreciation (18,482) (22,697)
Book capitalized interest in
excess of tax (451) (444)
Other (1,814) (3,163)
Total deferred tax liabilities (20,747) (26,304)
Net deferred tax liability $(3,590) $(5,757)
_____________
1 The excess of the alternative minimum tax
over regular Federal income tax is a tax
credit which can be carried forward
indefinitely to reduce future Federal income
tax liabilities.
2 The Company has available at December 31,
1999, $30,686,000 of an unused operating loss
carryforward that may be applied against
future taxable income. Of the total
$11,016,000 of the unused operating loss
carryforward will expire in the year 2018 and
$19,670,000 will expire in the year 2019.
NOTE 4 - SUPPLEMENTAL CASH FLOW DISCLOSURES
The Company made cash payments for interest, net of amounts
capitalized, of $8,223,000, $22,515,000 and $23,474,000 for the
years ended December 31, 1997, 1998, and 1999, respectively.
The Company made cash payments for Federal income taxes of
$4,760,000, $350,000, and $200,000 for the years ended
December 31, 1997, 1998 and 1999, respectively.
The Company acquired assets through capitalized leases of
$2,998,000, $7,180,000, and $153,000 during the years ended
December 31, 1997, 1998 and 1999, respectively.
The Company acquired assets through the issuance of notes
payable of $704,000, $0, and $0 during the years ended
December 31, 1997, 1998 and 1999, respectively.
The Company retired the balance of $94,500,000 under the
1995 Revolving Credit Facility by entering into a new Revolving
Credit Facility (see Note 5) during the year ended December 31,
1997.
Adjustments to the excess of purchase price over fair market
value of net assets acquired as of December 31, 1997 due to the
Gem Settlement Agreement (see Note 10) are as follows (amounts in
thousands):
Reduction in value of Gem
Notes $(2,725)
Deferred taxes on land
purchase (1,784)
Dissolution of NVAGAIR
subsidiary 418
Return of aviation asset 271
Miscellaneous receivables 185
Total change in excess
purchase price $(3,635)
NOTE 5 - NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt consist of the following:
December 31,
1998 1999
(Amounts in Thousands)
Revolving Credit Facility (see
below) $90,000 $107,000
10.5 percent Senior Subordinated
Notes, interest only payable
semiannually, principal due
August 1, 2004 100,000 100,000
Notes payable issued to former
stockholders of Gem Gaming, Inc.
with interest at 8 percent,
interest payable quarterly
beginning July 1997 through
October 1998 and then monthly
thereafter, periodic principal
payments beginning November 1998,
due December 31, 2004 (See Note
10) 26,650 25,650
Note payable to lender, with
interest at 15 percent, secured
by a deed of trust on the hotel
at ACVI, interest payable in
periodic payments, principal due
June 30, 2000. 7,453 7,453
Mortgages payable to United States
Department of Agriculture Rural
Economic and Community
Development Services Multi-
Housing Program with variable
interest (effective rate of
approximately 4.2 percent and 4.0
percent for the years ended
December 31, 1998 and 1999,
respectively), collateralized by
a first deed of trust on certain
apartment units and land, due in
variable monthly payments of not
less than $4,725, including
interest, through November 2016
and October 2033. 1,292 1,248
Note payable to financing company,
with interest at 10.75 percent,
collateralized by certain
equipment, due in monthly
principal and interest payments
of $53,177 through June 2000. 877 309
Other 855 808
227,127 242,468
Less: Current maturities 9,924 10,615
$ 217,203 $231,853
On July 5, 1995, the Company, as borrower, and its principal
operating subsidiaries, as guarantors, entered into a Revolving
Credit Facility (the "1995 Revolving Credit Facility") with Wells
Fargo Bank, N.A. ("WFB") and a syndicate of banks.
On July 8, 1997, the Company, as borrower, and its principal
operating subsidiaries, as guarantors, entered into a new $125
million Revolving Credit Facility (the "Revolving Credit
Facility") with WFB and a syndicate of banks. As a result of the
retirement of the 1995 Revolving Credit Facility, the Company
incurred an extraordinary pre-tax loss (related primarily to the
write-off of unamortized loan costs) of $1,060,000.
As of December 31, 1999, the Company had drawn $107.0
million on the Revolving Credit Facility. These borrowings were
used to repay the 1995 Revolving Credit Facility, to fund the
development of The Reserve and to fund certain other capital
expenditures. The proceeds from the Senior Subordinated Notes
offering were used to repay a portion of the Revolving Credit
Facility and fees to Revolving Credit Facility lenders.
Originally, the Company could not borrow under the Revolving
Credit Facility in excess of 3.25 times its rolling four-quarter
EBITDA (earnings before interest, taxes, depreciation and
amortization). The Company was also limited to borrowing no more
than 5.0 times EBITDA in total debt as adjusted per the Revolving
Credit Facility.
The Company and the lenders amended the Revolving Credit
Facility effective June 30, 1998 and March 31, 1999. Under the
amended Revolving Credit Facility, borrowings under the Revolving
Credit Facility may not exceed 2.75 times the Company's rolling
four-quarter EBITDA (earnings before interest, taxes,
depreciation and amortization), and the Company's total funded
debt may not exceed the Company's rolling four-quarter EBITDA
multiplied by a factor as follows: 5.25 commencing June 30, 1998;
5.5 commencing September 30, 1998; 5.25 commencing June 30, 1999;
4.75 commencing December 31, 1999; 4.5 commencing March 31, 2000;
and 4.0 commencing September 30, 2000. As of December 31, 1999,
the total funded debt of the Company was 4.38 times the Company's
rolling four-quarter EBITDA. The maximum amount available under
the Revolving Credit Facility reduces semiannually commencing
July 1, 1999 on a sliding scale (ranging from $2.5 million to
$10.0 million in reductions) with a final reduction of $75.0
million at maturity on June 30, 2003.
The Revolving Credit Facility, as amended, requires the
Company to maintain a gross fixed charge coverage ratio (as
defined) of 1.25 to 1.0 until September 30, 1999, and 1.50 to 1.0
thereafter. As of December 31, 1999, the Company's fixed charge
coverage ratio was 1.65. The amended Revolving Credit Facility
also limits the Company's aggregate capital expenditures in each
year to an amount equal to 5 percent of its consolidated net
revenue for the preceding year and prohibits the Company from
incurring any additional secured indebtedness without the
approval of the lenders. Until March 31, 1999, the amended
Revolving Credit Facility also required the Company to maintain a
tangible net worth of at least $56,000,000, plus 90 percent of
net income (without any reduction for net losses) as of the end
of each quarter beginning September 30, 1998, plus 90 percent of
the net proceeds of certain future equity offerings. The
Revolving Credit Facility was further amended in 1999 to reduce
the minimum tangible net worth requirement commencing March 31,
1999 to $50.0 million, plus 90% of net income (without any
reduction for net losses) as of the end of each quarter beginning
March 31, 1999, plus 90% of the net proceeds of certain future
equity offerings. As of December 31, 1999, the Company's tangible
net worth plus 90% of net income was $3.8 million more than
required by this covenant.
Under the terms of the Revolving Credit Facility, concurrent
with each loan draw, the Company may select the interest rate
based on either the London Interbank Offering Rate ("LIBOR") or
WFB's prime interest rate. The maximum number of outstanding
draws at any time using LIBOR is five, with a minimum draw amount
of $5.0 million per draw. A LIBOR draw can be for a one-, two-,
three- or six-month term with interest accruing monthly and due
at the end of the term, but in no event less frequently than
quarterly. The interest rate is fixed throughout the term of a
LIBOR-based draw and, as amended, ranges from LIBOR plus 1.5
percentage points to LIBOR plus 4.0 percentage points. On a
prime interest rate draw, the interest rate is variable and, as
amended, ranges from a minimum of prime plus 0.25 percentage
points to a maximum of prime plus 2.75 percentage points with
interest payable monthly in arrears. As of December 31, 1999,
the Company has taken LIBOR draws totaling $107.0 million with an
average interest rate of approximately 9.95 percent per annum.
The applicable margins for both LIBOR draws and prime interest
rate draws adjust semiannually based on the ratio of the
Company's consolidated total debt to consolidated cash flows, as
measured by an EBITDA formula.
The Revolving Credit Facility is secured by liens on
substantially all of the real and personal property of the
Company and its subsidiaries. The Revolving Credit Facility
prohibits any secondary liens on these properties without the
prior written approval of the lenders. Certain changes in
control of the Company may constitute a default under the
Revolving Credit Facility. The Revolving Credit Facility also
requires the Company to expend a maximum of 5 percent of the
consolidated net revenues for the preceding year on capital
maintenance annually. However, the lenders under the Revolving
Credit Facility have waived the maximum capital expenditure
limitation under the Revolving Credit Facility specifically for
certain projects at Ameristar Council Bluffs, Ameristar Vicksburg
and The Reserve. The waiver permits fiscal 1999 and 2000 capital
expenditure projects of approximately $43.3 million in addition
to expenditures limited to 5% of net revenues.
The Revolving Credit Facility binds the Company to a number
of other affirmative and negative covenants. These include
promises to maintain certain financial ratios within defined
parameters, not to engage in new businesses without lender
approval and to make certain reports to the lenders. As of
December 31, 1999, the Company was in compliance with these
covenants.
The Company has entered into an interest rate collar
agreement with WFB to manage interest expense, which is subject
to fluctuation due to the variable-rate nature of the debt under
the Company's Revolving Credit Facility. Under the agreement,
which covers $50.0 million of the borrowings on the Revolving
Credit Facility, the Company has a LIBOR floor rate of 5.39
percent and a LIBOR ceiling rate of 6.75 percent, plus the
applicable margin. As of December 31, 1999, the Company had paid
approximately $49,000 in additional interest as a result of this
agreement. The agreement terminates on June 30, 2003 to coincide
with the maturity of the Revolving Credit Facility.
On July 15, 1997, the Company completed an offering of
$100 million in principal amount of 10 1/2% Senior Subordinated
Notes due 2004 (the "Senior Subordinated Notes"). The Senior
Subordinated Notes have a coupon rate of 10.5 percent and were
sold at par. Interest is due semiannually on February 1 and
August 1 of each year, and the maturity date is August 1, 2004.
Proceeds of the offering were used to retire and refinance
existing debt. The Senior Subordinated Notes are not secured and
are subordinate to all existing and future Senior Indebtedness
(as defined), which includes the Revolving Credit Facility.
The indenture governing the Company's Senior Subordinated
Notes (the "Indenture") contains certain customary financial and
other covenants, which among other things, govern the ability of
the Company and its subsidiaries to incur indebtedness (except as
specifically allowed) unless, after giving effect thereto, a 2.0
to 1.0 pro forma Consolidated Coverage Ratio (as defined in the
Indenture) has been met. As of December 31, 1999, the Company
was in compliance with these covenants.
The Senior Subordinated Notes were issued by ACI, and all of
ACI's current subsidiaries other than ACSLI (the "Guarantors")
have jointly and severally, and fully and unconditionally,
guaranteed the Senior Subordinated Notes. Each of the Guarantors
is a wholly owned subsidiary of ACI, and the Guarantors
constitute all of ACI's direct and indirect subsidiaries except
for ACSLI, which is in the development stage and has no
operations and no material assets or liabilities. ACI is a
holding company with no operations or material assets independent
of those of the Guarantors, other than its investment in the
Guarantors, and the aggregate assets, liabilities, earnings and
equity of the Guarantors are substantially equivalent to the
assets, liabilities, earnings and equity of the Company on a
consolidated basis. Separate financial statements and certain
other disclosures concerning the Guarantors are not presented
because, in the opinion of management, such information is not
material to investors. Other than customary restrictions imposed
by applicable corporate statutes, there are no restrictions on
the ability of the Guarantors to transfer funds to ACI in the
form of cash dividends, loans or advances.
In August 1997, AC Hotel Corp. entered into a loan agreement
providing for borrowings of up to $7.5 million for the purpose of
funding a portion of the construction costs of a 150-room hotel
at Ameristar Vicksburg. This nonrecourse loan from a private
lender is secured by a deed of trust on the hotel and the
underlying land senior in priority to the liens securing the
Revolving Credit Facility. Borrowings under this loan bear
interest at 15 percent per annum, payable in periodic
installments. The loan was originally due to mature in July 1998,
but has been amended to extend the maturity to June 30, 2000.
The Company is required to pay a non-usage fee at the rate of 3
percent per annum on the undrawn loan balance, and draws are
subject to the satisfaction of various conditions typically
applicable to construction loans. As of December 31, 1999, the
balance on this loan was approximately $7.5 million.
The mortgages payable to United States Department of
Agriculture Rural Economic and Community Development Services
Multi-Housing Program provide long-term financing for low income
housing facilities constructed by the Company. Monthly principal
and interest payments are determined by a formula based upon
demographics of the tenants. Interest rates on the mortgages may
vary from 1.0 percent to 11.88 percent. Provisions of the loan
agreements require that rents received be used to fund operating
and maintenance expenses, debt service and reserve accounts.
The book value of the Company's long-term debt approximates
fair value due to the predominantly variable-rate nature of the
obligations. Also, fixed rate obligations are at rates that
approximate the Company's incremental borrowing rate for debt
with similar terms and remaining maturities.
Maturities of the Company's borrowings for the next five
years as of December 31, 1999 are as follows (amounts in
thousands):
2000 $10,615
2001 6,545
2002 20,545
2003 88,046
2004 115,696
Thereafter 1,021
$242,468
NOTE 6 - LEASES
The Company has entered into capitalized lease agreements
for land on which Ameristar Vicksburg is situated. Such leases
contained initial terms for rental payments covering the period
of project development and were converted to the primary lease
terms (as defined below) upon the opening of the project.
Ameristar Vicksburg opened on February 27, 1994, at which
time the primary terms of the leases for four parcels of land
became effective. The primary terms of the leases, expiring from
5 to 30 years from the opening date, require total payments of
approximately $655,000 per year. Each lease contains a purchase
option exercisable at various times during the term of the lease
generally in varying amounts based on the time of exercise. The
purchase options lapse in conjunction with the expiration dates
of the primary terms of the corresponding leases. The Company
exercised an option to purchase one of the leasehold parcels for
$50,000 which closed in December 1999 and exercised options for
two of the leasehold parcels for approximately $4.6 million which
closed in March 2000. The monthly rent under the remaining lease
at March 1, 2000 is approximately $11,000. Assuming the Company
defers the exercise of its purchase option under the remaining
lease to the expiration of the purchase option, the Company will
pay approximately $1.5 million in 2004. If the Company were to
accelerate its exercise of the purchase option to the earliest
possible date, the Company would pay approximately $1.3 million
in 2000. The Company plans to exercise the option for this lease
within the next year. The Company entered into a lease for
another parcel, which became effective January 1, 2000. The
initial term of the lease is 3 years and the lease includes
renewal options for an additional 24 years. The initial term of
the lease requires quarterly payments of approximately $20,000.
The lease contains a purchase option exercisable at various times
during the term of the lease that ranges from approximately $1.3
million in 2000 to approximately $1.9 million in 2020.
The Company generally may terminate each lease upon the
payment of termination penalties. In addition, if the leases
were terminated, the Company may be required to restore certain
parcels to their condition prior to the lease commencement date,
including the removal of the cofferdam and other improvements
lying below the water. However, the Company has no plans to
abandon the site.
ACVI has entered into a seven-year capitalized lease for
restaurant equipment, due in monthly payments totaling
approximately $118,000 per year, through April 2001. ACVI also
entered into a five-year capitalized lease for a computer system
that was amended in October 1999. Monthly payments are required
totaling approximately $84,000 per year through September 2002.
CPI has entered into a four-year equipment lease for the
financing of slot equipment at the facility. Monthly principal
payments of $44,000 plus interest are required through May 2001
with a balloon payment in June 2001.
ACLVI has entered into a ten-year capitalized lease
agreement for signage at The Reserve, with monthly payments
totaling approximately $210,000 per year through December 2006.
ACLVI has entered into a four-year equipment lease for the
financing of slot equipment at the facility. Monthly principal
payments of $111,000 plus interest are required through January
2002 with a balloon payment in February 2002. ACVI also entered
into a five-year capitalized lease for a telephone system.
Monthly payments are required totaling approximately $123,000 per
year through February 2003.
Future minimum lease payments required under capitalized
leases for the five years subsequent to December 31, 1999 are as
follows (amounts in thousands):
2000 $3,486
2001 4,694
2002 2,438
2003 756
2004 735
Thereafter 10,484
22,593
Less: Amount representing 9,144
interest
Present value of minimum $ 13,449
lease payments
ACCBI, as lessor, has leased a portion of the Ameristar
Council Bluffs site to an independent hospitality company, which
operates a 188-room hotel on the property. The lease is for a
period of 50 years beginning March 1, 1996. The lease requires
the hospitality company to pay ACCBI base rent of $5,000 per
month and percentage rent equal to 5 percent of the hotel's gross
sales in excess of $2.0 million per year.
ACI has leased office space located in Las Vegas, Nevada to
serve as its corporate offices. The office space is leased under
two operating lease agreements. The agreements require aggregate
monthly payments of approximately $52,500, plus the Company's
share of certain common area maintenance expenses. Payments
under the leases are subject to annual escalation clauses
corresponding to increases in the cost of living. The first
lease agreement, covering approximately 90 percent of the office
space leased by the Company, contains two three-year renewal
options. The initial term of the first lease is through December
2001. The second lease agreement, covering approximately 10
percent of the office space leased by the Company, contains two
two-year renewal options. The initial term of the second lease
was through January 1998 and the first two-year option was
exercised with a new expiration date in January 2000. The
Company recorded rental expense of approximately $533,000 and
$552,000 under these leases in the years ended December 31, 1998,
and 1999, respectively.
NOTE 7 - BENEFIT PLANS
401(k) plan
The Company instituted a defined contribution 401(k) plan in
March 1996 which covers all employees who meet certain age and
length of service requirements and allows an employer
contribution up to 50 percent of the first four percent of each
participating employee's compensation. Plan participants can
elect to defer before-tax compensation through payroll
deductions. These deferrals are regulated under Section 401(k)
of the Internal Revenue Code. The Company's matching
contribution were $570,000, $485,000 and $585,000 for the fiscal
years ended December 31, 1997, 1998, and 1999, respectively.
Insurance plan
The Company has a qualified employee insurance benefit trust
covering all employees on a regular basis who work an average of
32 hours or more per week on a regular basis. The Trust
Committee determines amount of the Company's contribution. The
plan also requires contributions from eligible employees and
their dependents. The Company's contribution expense for the
plan was approximately $3,834,000, $4,950,000 and $6,958,000 for
the years ended December 31, 1997, 1998 and 1999, respectively.
Stock Option Plans
On June 11, 1999, the Company's stockholders approved the
Ameristar Casinos, Inc. 1999 Stock Incentive Plan (the "1999
Stock Incentive Plan"), which had previously been adopted by the
Board of Directors subject to stockholder approval. The 1999
Stock Incentive Plan provides for the grant of options to
purchase Common Stock intended to qualify as incentive stock
options or non-qualified options and also provides for grants of
"restricted stock." All officers, directors, employees,
consultants, advisors, independent contractors and agents are
eligible to receive options and/or restricted stock under the
1999 Stock Incentive Plan, except that only employees may receive
incentive stock options. The maximum number of shares available
for issuance under the 1999 Stock Incentive Plan is 2,600,000;
provided, however, that no award of a stock option or restricted
stock may be made at any time if, after giving effect to such
award, (1) the total number of shares of stock issued upon the
exercise of options under the 1999 Stock Incentive Plan and the
Company's existing Management Stock Option Incentive Plan, as
amended and restated through September 4, 1996 (the "Management
Option Plan" and together with the 1999 Stock Incentive Plan, the
"Stock Incentive Plans"), plus (2) the total number of shares of
stock issuable upon exercise of all outstanding options of the
Company under the Stock Incentive Plans, plus (3) the total
number of shares of stock underlying awards of restricted stock
under the 1999 Stock Incentive Plan (whether or not the
applicable restrictions have lapsed) would exceed 2,600,000
shares. No person eligible to receive options under the 1999
Stock Incentive Plan may receive options for the purchase of more
than 200,000 shares in any calendar year. The 1999 Stock
Incentive Plan is administered by the Board of Directors or, in
its discretion, by a Committee of the Board of Directors.
Upon the approval of the 1999 Stock Incentive Plan by the
Company's stockholders, the issuance of options under the
Company's existing Management Stock Option Incentive Plan (the
"Management Option Plan" and together with the 1999 Stock
Incentive Plan, the "Stock Incentive Plans") was terminated. The
Management Option Plan provided for the grant of options to
purchase Common Stock intended to qualify as incentive stock
options or non-qualified options. All officers, directors,
employees, consultants, advisors, independent contractors and
agents were eligible to receive options under the Management
Option Plan, except that only employees were eligible to receive
incentive stock options. At the time the Management Option Plan
was terminated, 1,262,700 options remained outstanding
thereunder. The maximum number of shares available for issuance
under the Management Option Plan was 1,600,000, and no person was
eligible to receive options under the Management Option Plan for
the purchase of more than an aggregate of 200,000 shares. The
Management Option Plan is administered by the Board of Directors
or, in its discretion, by a Committee of the Board of Directors.
The exercise price of incentive stock options granted under
the Option Plans must be at least equal to the fair market value
of the shares on the date of grant (110 percent of fair market
value in the case of participants who own shares possessing more
than 10 percent of the combined voting power of the Company) and
may not have a term in excess of 10 years from the date of grant
(five years in the case of participants who are more than 10
percent stockholders). With certain limited exceptions, options
granted under the Option Plans are not transferable other than by
will or the laws of descent and distribution.
In December 1998, certain stock options granted under the
Management Option Plan were amended to reduce the per share
exercise prices to $2.64 (the market price on the date of
amendment) from initial exercise prices ranging from $2.78 to
$6.13. Other than the exercise price, the option terms remained
the same with respect to the vesting date and the remaining
contractual life.
The Company previously maintained a Non-Employee Director
Stock Option Plan ("Director Plan") which provided for the grant
of non-qualified options to purchase Common Stock to the non-
employee members of the Company's Board of Directors. The
issuance of new stock options under the Director Plan was
terminated in June 1997. The Director Plan is administered by
the Board of Directors. Under the Director Plan, each non-
employee director was automatically granted an initial option to
purchase 1,000 shares of Common Stock and automatically granted
an option to purchase an additional 1,000 shares of Common Stock
on each anniversary of such date if he remained a non-employee
director on that anniversary date. Options granted under the
Director Plan have an exercise price equal to the fair market
value of the shares on the date of grant and have a term of 10
years from the date of grant. Options granted under the Director
Plan become exercisable one year from the date of grant and are
not transferable other than by will or the laws of descent and
distribution. Options exercisable for 8,000 shares of Common
Stock remain outstanding under the Director Plan.
The Company accounts for its stock option plans under
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," under which no compensation cost has been
recognized. Had compensation cost for these plans been
determined consistent with SFAS No. 123, "Accounting for Stock-
Based Compensation," the Company's net income (loss) and earnings
(loss) per share would have been reduced to the following pro
forma amounts:
Years ended December 31,
1997 1998 1999
(Amounts in Thousands, Except Per Share Data)
Net income (loss): As reported $ 9,695 $(12,715) $ 205
Pro forma 9,491 (13,002) (246)
Earnings (loss) per
share: As reported $ 0.48 $ (0.62) $ 0.01
Pro forma 0.47 (0.64) (0.01)
The fair value of each option granted (or repriced during
the period for which SFAS 123 is effective) is estimated on the
date of grant (or repricing) using the Black-Scholes option
pricing model with the following weighted-average assumptions
used for grants (or repricings) in 1997, 1998 and 1999,
respectively: risk-free interest rates of 6.2, 4.5, and 5.8
percent; expected volatility of 63, 58 and 58 percent. The
expected lives of the options are 5 years for 1997, 1998 and
1999. No dividends are expected to be paid.
Because the SFAS No. 123 method of accounting has not been
applied to options granted prior to January 1, 1995, the
resulting pro forma compensation cost may not be representative
of that to be expected in future years.
Summarized information for the stock option plans is as
follows:
<TABLE>
1997 1998 1999
Wtd. avg. Wtd. avg. Wtd.avg.
Shares ex. price Shares ex. price Shares ex. price
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year 566,000 $ 6.25 594,500 $ 6.12 1,140,110 $ 2.68
Granted 150,000 5.32 833,610 2.69 579,170 3.52
Exercised - - (15,264) 2.64
Canceled (121,500) 9.57 (288,000) 6.22 (262,506) 2.86
Options outstanding,
end of year 594,500 6.12 1,140,110 2.68 1,441,510 2.99
Options available
for grant 1,013,500 467,890 1,158,490
Options exercisable,
end of year 233,800 6.25 184,300 2.75 382,184 2.78
Weighted average
fair value
of options granted $ 3.14 $ 1.18 $ 1.94
</TABLE>
At December 31, 1999, 932,840 of the 1,441,510 options
outstanding have an exercise price of $2.64, with a weighted
average exercise price of $2.64 and a weighted average remaining
contractual life of 7.9 years. 500,670 options outstanding have
exercise prices between $2.75 and $4.14, with a weighted average
exercise price of $3.54 and a weighted average remaining
contractual life of 9.5 years. 6,000 options outstanding have
exercise prices between $5.13 and $6.50, with a weighted average
exercise price of $5.88 and a weighted average remaining
contractual life of 6.2 years. The remaining 2,000 options have
an outstanding exercise price of $16.00, with a remaining
contractual life of 4.2 years.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Litigation
The Company is engaged in several legal actions arising in
the ordinary course of business. With respect to these legal
actions, the Company believes that it has adequate legal
defenses, insurance coverage or indemnification protection and
believes that the ultimate outcome(s) will not have a material
adverse impact on the Company's financial position.
In June 1998, ACVI received a letter from the Financial
Crimes Enforcement Network ("FinCEN") of the Department of
Treasury identifying 26 alleged currency transaction reporting
failures or errors that were discovered in an audit by the
Internal Revenue Service covering an approximately 13-month
period following the opening of Ameristar Vicksburg. In early
2000, the Company settled this matter with FinCEN by agreeing to
pay a civil monetary penalty. In addition to paying the civil
penalty, ACVI has implemented various steps intended to improve
compliance with the currency transaction reporting requirements.
E. L. Pennebaker, Jr., et. al. v. ACI, et. al. On February
23, 1998, E. L. Pennebaker, Jr. filed a complaint in the Circuit
Court of Pike County, Mississippi against ACI, Harrah's Vicksburg
Corporation ("HVC"), Riverboat Corporation of Mississippi-
Vicksburg ("RCMV"), and Deposit Guaranty National Bank ("DGNB").
The matter is pending as case number 98-0047-B (the "Pennebaker
case"). The complaint was amended in February 1998 to add James
F. Belisle, Multi Gaming Management, Inc. and Multi Gaming
Management of Mississippi, Inc. as additional plaintiffs. The
complaint was further amended in March 1999 to modify the
specific claims alleged by the plaintiffs. The plaintiffs are
property owners or claim to have contract rights in a proposed
casino/racetrack development along the Big Black River in Warren
County, Mississippi. They allege they would have profited if the
Mississippi Gaming Commission had found suitable for a casino a
location along that river that was controlled by Horseshoe
Gaming, Inc. or its affiliates. The plaintiffs further allege
that the defendants entered into an agreement to hinder trade and
restrain competition in the gaming industry in violation of the
antitrust laws and the gaming laws of Mississippi. Specifically,
the plaintiffs allege the defendants conducted an aggressive
campaign in opposition to the application of Horseshoe Gaming,
Inc. for a gaming site on the Big Black River. The plaintiffs
also allege that the defendants tortiously interfered with the
plaintiffs' business relations. The plaintiffs allege
compensatory damages of $38 million and punitive damages of $200
million.
The trial in this case was held in October 1999, following
which the jury rendered joint and several verdicts in favor of
the plaintiffs against ACI, HVC and DGNB on the conspiracy count
and against ACI and HVC on the restraint of trade and tortious
interference counts. RCMV settled with the plaintiffs prior to
trial, and the damage amounts have been reduced by the settlement
amount paid by RCMV. The net damages awarded to the plaintiffs
total $3,792,000, of which ACI's pro rata portion is $1,685,333.
These damages are compensatory only as the court did not allow
the jury to consider an award of punitive damages. Judgment was
entered on November 8, 1999, and ACI has appealed the case to the
Mississippi Supreme Court and otherwise intends to vigorously
defend against the plaintiffs' claims. Post-judgment interest on
the damages will accrue at the rate of 8 percent per annum, and
if an appeal is unsuccessful, the plaintiffs would also be
entitled to a premium of 15% of the damages amount.
Mr. Pennebaker has also filed a petition with the
Mississippi Gaming Commission requesting that the Mississippi
Gaming Commission order ACI, HVC and RCMV to stop opposing the
approval and construction of a casino on the Big Black River and
for such other corrective and punitive action that the
Mississippi Gaming Commission might find appropriate. ACI has
been advised that no action is required by it in connection with
this petition unless requested by the Mississippi Gaming
Commission.
Walter H. Gibbes, Jr. and Margaret S. Dozier v. ACI et al.
On November 22, 1999, Mr. Gibbes and Ms. Dozier filed a complaint
in the Circuit Court of Pike County, Mississippi against ACI,
HVC, Isle of Capri Casinos, Inc. (the parent company of RCMV;
"ICC") and DGNB. The matter is pending as cause no. 99-0157-B.
ACI believes that the plaintiffs were partners with Mr.
Pennebaker in a partnership that held an option to a real estate
parcel along the Big Black River that is adjacent to the parcel
that was the subject of the Horseshoe Gaming, Inc. application.
The allegations in the complaint are substantially the same as
those in the complaint in the case previously brought by the
plaintiffs in the Pennebaker case. The plaintiffs seek
$4,567,500 in actual damages and an unspecified amount of
punitive damages.
The defendants have removed this case to the United States
District Court for the Southern District of Mississippi on
diversity jurisdiction and federal question grounds. The case is
now pending in federal court as cause no. 3:99cv911WS. The
plaintiffs have filed a motion to remand the case back to the
Pike County circuit court, which has not yet been ruled on by the
federal court. ACI intends to continue to vigorously defend
against this cause of action.
NOTE 9 - RELATED PARTY TRANSACTIONS
The Company engages Neilsen and Company to provide certain
construction and professional services, office space and other
equipment and facilities. Neilsen and Company is controlled by
the principal stockholder and President of the Company. Total
payments to Neilsen and Company were $43,000, $33,000 and $44,000
for the years ended December 31, 1997, 1998 and 1999,
respectively. The Company also leases office space from the
Lynwood Shopping Center which until recently was controlled by
the principal stockholder and President of the Company. Total
payments to the Lynwood Shopping Center were $31,000, $23,000 and
$7,000 for the years ended December 31, 1997, 1998 and 1999,
respectively. In September 1999, the Lynwood Shopping Center was
sold to an unrelated party. In management's opinion, at the time
the above described transactions were entered into, they were in
the best interest of the Company and on terms as fair to the
Company as could have been obtained from unaffiliated parties.
NOTE 10 - GEM GAMING, INC. MERGER
On October 9, 1996, Gem Gaming, Inc. ("Gem"), a Nevada
Corporation, 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"). Gem was originally
established to develop The Reserve. Activities relating to The
Reserve have been included in the consolidated financial
statements of the Company since October 9, 1996. The merger of
Gem into ACLVI was recorded using the purchase method of
accounting.
In connection with the closing of the Merger Agreement, the
Company originally issued notes payable to the former
stockholders of Gem (the "Gem Stockholders") in the principal
amount of $35,375,000. Due to certain disputes between the Gem
Stockholders and the Company surrounding the Merger Agreement, an
arbitration proceeding brought by the Company was settled by
mutual agreement (the "Gem Settlement Agreement") in June 1997.
The Gem Settlement Agreement provides that the Company will pay
to the Gem Stockholders $32.7 million in installments, plus
interest, in lieu of the consideration provided for in the Merger
Agreement. The Company made an initial payment of $4.0 million
to the Gem Stockholders and issued unsecured subordinated
promissory notes for the balance of $28.7 million (the "Gem
Notes" - See Note 5). The Gem Notes are subordinate to the
Revolving Credit Facility, the Senior Subordinated Notes and
other long-term indebtedness of ACI specified by ACI up to a
maximum of $250 million.
NOTE 11 - OTHER INFORMATION
On October 28, 1999, ACSLI, a newly formed wholly owned
subsidiary of ACI, filed an application with the Missouri Gaming
Commission seeking a gaming license for a site along the
Mississippi River in Lemay, Missouri, a community in South St.
Louis County. In conjunction with this application, ACSLI has
entered into an agreement with the current lessee of the proposed
site for the assignment of the lease. The Company has also
recently obtained a commitment to refinance its Revolving Credit
Facility, increasing its available borrowing capacity to $265
million to fund a substantial portion of the development costs
for this project. The balance of the financing for this project
will be provided primarily by operating cash flow.
The Company's current plans for the Ameristar Casino St.
Louis at Lemay call for a floating barge located within a basin
and integrated within a larger main frame structure that is
adjacent to the Mississippi River. The Company expects that
the project will consist of a single level building of
approximately 215,920 square feet and that the casino will
consist of 70,000 square feet of floating gaming area with 2,000
slot machines, 50 blackjack tables, two Roulette or big wheel
games, eight crap/dice games, one cashier coin cage with slot and
table fills and three change booths with beverage dispensing
counters. The project is expected to include two casino bars
with service stations, including a 50-seat entertainment lounge,
as well as several restaurants, meeting rooms, a Missouri retail
shop and a VIP lounge. The total cost for development and
construction of the project is expected to be approximately $150
million. The project also calls for a 150-room hotel adjacent to
the casino to be built by a strategic partner.
This project is in the preliminary stages and subject to
numerous contingencies, including, for example, the satisfactory
completion of due diligence concerning the proposed site, the
selection of the Company's application for investigation by the
Missouri Gaming Commission, obtaining various other regulatory
permits and approvals and completing financing arrangements for
the project. The project is also subject to various development
and construction risks typical of large-scale development
projects of this type. Accordingly, there can be no assurances
concerning the success of the Company's efforts to obtain a
gaming license and to pursue the development of this project. The
Company recently submitted a revised application for a gaming
license to the Missouri Gaming Commission and expects the
Missouri Gaming Commission to take action with respect to its
application during 2000.
NOTE 12 - SUBSEQUENT EVENTS
In June 1998, ACVI received a letter from the Financial
Crimes Enforcement Network ("FinCEN") of the Department of
Treasury identifying 26 alleged currency transaction reporting
failures or errors that were discovered in an audit by the
Internal Revenue Service covering an approximately 13-month
period following the opening of Ameristar Vicksburg. In early
2000, the Company settled this matter with FinCEN by agreeing to
pay a civil monetary penalty. In addition to paying the civil
penalty, ACVI has implemented various steps intended to improve
compliance with the currency transaction reporting requirements.
The Company entered into a lease for 4.3 acres of land
adjacent to the Ameristar Vicksburg Casino site, which became
effective January 1, 2000. The initial term of the lease is 3
years and the lease includes renewal options for an additional 24
years. The initial term of the lease requires quarterly payments
of approximately $20,000. The lease contains a purchase option
exercisable at various times during the term of the lease that
ranges from approximately $1.3 million in 2000 to approximately
$1.9 million in 2020.
On March 1, 2000, ACVI exercised its purchase option on one
of the parcels of the Ameristar Vicksburg site that had
previously been under lease. The purchase price for the parcel
was $4,579,725.85 and was paid for by ACVI entering into two
promissory notes in favor of the Seller of the parcels, one in
the principal amount of $250,000 and the second in the principal
amount of $4,329,725.85. The $250,000 promissory note bears
interest at the rate of 10.0% per annum, with principal and
interest payable in 12 equal monthly installments. The
$4,329,725.85 promissory note bears interest at the rate of 10.0%
per annum, with principal and interest payable in equal monthly
installments through February 1, 2024.
EXHIBIT DESCRIPTION OF EXHIBIT METHOD OF FILING
NUMBER
3.1 Articles of Incorporation of Incorporated by reference
Ameristar Casinos, Inc. to Exhibit 3.1 to
("ACI"). Registration Statement on
Form S-1 filed by ACI
under the Securities Act
of 1933, as amended (File
No. 33-68936) (the "Form S-
1").
3.2 Bylaws of ACI. Incorporated by reference
to Exhibit 3.2 to ACI's
Annual Report on Form 10-K
for the year ended
December 31, 1995 (the
"1995 10-K").
4.1 Specimen Common Stock Incorporated by reference
Certificate to Exhibit 4 to Amendment
No. 2 to the Form S-1.
4.2(a) Credit Agreement, dated as of Incorporated by reference
July 8, 1997, among ACI, to Exhibits 4.1 and 99.1
Cactus Pete's, Inc. ("CPI"), to the Current Report on
Ameristar Casino Vicksburg, Form 8-K of ACI filed on
Inc. ("ACVI"), Ameristar July 30, 1997 (the "July
Casino Council Bluffs, Inc. 1997 8-K").
("ACCBI") and Ameristar
Casino Las Vegas, Inc.
("ACLVI"), as Borrowers, the
Lenders named therein, and
Wells Fargo Bank, National
Association ("WFB") as
Arranger, Agent Bank and
Swingline Lender, together
with a list describing
omitted schedules and
exhibits thereto.
4.2(b) First Amendment to Credit Incorporated by reference
Agreement, dated as of to Exhibit 4.2(b) to ACI's
September 9, 1998, among ACI, Annual Report on Form 10-K
CPI, ACVI, ACCBI, ACLVI, the for the year ended
lenders named therein and December 31, 1998 (the
WFB, as Swingline Lender and "1998 10-K").
Agent Bank.
4.2(c) Interest Rate Collar Incorporated by reference
Agreement, dated August 10, to Exhibit 4.2(b) to the
1998, between ACI and WFB. 1998 10-K.
4.3(a) Indenture, dated as of July Incorporated by reference
15, 1997, among ACI, ACLVI, to Exhibit 4.2 to the July
ACVI, A.C. Food Services, 1997 8-K.
Inc. ("ACFSI"), AC Hotel
Corp. ("ACHC"), ACCBI and
First Trust National
Association, including the
forms of Notes and Subsidiary
Guarantees issued thereunder.
4.3(b) Supplemental Indenture, dated Incorporated by reference
as of October 24, 1997, among to Exhibit 4.1(c) to
ACI, CPI, ACLVI, ACVI, ACFSI, Amendment No. 1 to
ACHC, ACCBI and First Trust Registration Statement on
National Association. Form S-4 filed by ACI,
CPI, ACVI, ACCBI, ACLVI,
ACFSI and ACHC under the
Securities Act of 1933, as
amended (File No. 333-
34381) (the "Form S-4").
4.4 Other Long-Term Debt. See Exhibits 10.9(e)-(j)
See Exhibits 10.9(e)-(j) and and 99.1.
99.1.
*10.1 Employment Agreement, dated Incorporated by reference
(a) November 15, 1993, between to Exhibit 10.1(a) to
ACI and Thomas M. Steinbauer. ACI's Annual Report on
Form 10-K for the year
ended December 31, 1994
(the "1994 10-K").
*10.1 Employment Agreement, dated Incorporated by reference
(b) as of August 23, 1999, to Exhibit 10.1 to ACI's
between Ameristar Casinos, Quarterly Report on Form
Inc. and Gordon R. Kanofsky 10-Q for the quarter ended
September 30, 1999.
*10.2 Ameristar Casinos, Inc. 1993 Incorporated by reference
Non-Employee Director Stock to Exhibit 10.2 to ACI's
Option Plan, as amended and Quarterly Report on Form
restated. 10-Q for the quarter ended
June 30, 1994.
*10.3 Ameristar Casinos, Inc. Incorporated by reference
Management Stock Option to Exhibit 10.3 to ACI's
Incentive Plan, as amended Quarterly Report on Form
and restated. 10-Q for the quarter ended
September 30, 1996.
*10.4 1999 Stock Incentive Plan of Incorporated by reference
Ameristar Casinos, Inc. to Exhibit 10.6 to ACI's
Quarterly Report on Form
10-Q for the quarter ended
June 30, 1999.
*10.5 Form of Indemnification Incorporated by reference
Agreement between ACI and to Exhibit 10.33 to
each of its directors and Amendment No. 2 to the
officers. Form S-1.
*10.6 Housing Agreement, dated Incorporated by reference
November 15, 1993 between CPI to Exhibit 10.17 to the
and Craig H. Neilsen. 1994 10-K.
10.7 Plan of Reorganization, dated Incorporated by reference
November 15, 1993, between to Exhibit 2.1 to the 1994
ACI and Craig H. Neilsen in 10-K.
his individual capacity and
as trustee of the
testamentary trust created
under the last will and
testament of Ray Neilsen
dated October 9, 1963.
10.8 Excursion Boat Sponsorship Incorporated by reference
and Operations Agreement, to Exhibit 10.15 to the
dated September 15, 1994, 1995 10-K.
between Iowa West Racing
Association and ACCBI.
10.9 Merger Agreement, dated as of Incorporated by reference
(a) May 31, 1996, among Gem to Exhibits 10.1 and 99.1
Gaming, Inc. ("Gem"), ACI, to ACI's Quarterly Report
ACLVI, Steven W. Rebeil on Form 10-Q for the
("Rebeil") and Dominic J. quarter ended June 30,
Magliarditi ("Magliarditi"), 1996 (the "June 1996 10-
together with a list Q").
describing omitted schedules
and exhibits thereto.
10.9 First Amendment to Merger Incorporated by reference
(b) Agreement, dated July 2, to Exhibit 10.5 to the
1996, among Gem, ACI, ACLVI, June 1996 10-Q.
Rebeil and Magliarditi.
10.9 Second Amendment to Merger Incorporated by reference
(c) Agreement, dated as of to Exhibits 10.1 and 99.1
September 27, 1996, among to the Current Report on
Gem, ACI, ACLVI, Rebeil and Form 8-K of ACI filed on
Magliarditi, together with a October 24, 1996.
list describing omitted
schedules and exhibits
thereto.
10.9 Settlement Agreement, dated Incorporated by reference
(d) as of May 3, 1997, among ACI, to Exhibit 10.1 to ACI's
ACLVI, Rebeil, Magliarditi, Quarterly Report on Form
Gem Air, Inc. and NVAGAIR. 10-Q for the quarter ended
March 31, 1997.
10.9 Promissory Note, dated as of Incorporated by reference
(e) June 1, 1997, made by ACI to Exhibit 10.8(k) to the
payable to the order of Form S-4.
Rebeil in the original
principal amount of
$13,232,146.
10.9 Promissory Note, dated as of Incorporated by reference
(f) June 1, 1997, made by ACI to Exhibit 10.8(k) to the
payable to the order of Form S-4.
Magliarditi in the original
principal amount of $417,854.
10.9 Non-Negotiable Promissory Filed electronically
(g) Note, dated as of November herewith.
11, 1999, made by ACI payable
to Magliarditi in the
original principal amount of
$179,080.
10.9 Non-Negotiable Promissory Filed electronically
(h) Note, dated as of November herewith.
11, 1999, made by ACI payable
to Magliarditi in the
original principal amount of
$280,100.
10.9 Non-Negotiable Promissory Filed electronically
(i) Note, dated as of November herewith.
11, 1999, made by ACI payable
to Rebeil in the original
principal amount of
$5,670,920.
10.9 Non-Negotiable Promissory Filed electronically
(j) Note, dated as of November herewith.
11, 1999, made by ACI payable
to Rebeil in the original
principal amount of $8,869,900.
10.10 Lease, dated December 11, Incorporated by reference
(a) 1992, between Martha Ker to Exhibit 10.4 to the
Brady Lum et. al. and ACVI as Form S-4.
the assignee of Craig H.
Neilsen.
10.10 First Amendment to Lease Incorporated by reference
(b) Agreement, dated June 1, to Exhibit 10.4(b) to the
1995, between Lawrence O. 1995 10-K.
Branyan, Jr., as trustee of
the Brady-Lum Family Trust
dated May 15, 1993 and ACVI.
10.11 Settlement, Use and Incorporated by reference
Management Agreement and DNR to Exhibits 10.12 and 99.1
Permit, dated May 15, 1995, to ACI's Annual Report on
between the State of Iowa Form 10-K for the year
acting through the Iowa ended December 31, 1996.
Department of Natural
Resources and ACCBI as the
assignee of Koch Fuels, Inc.
10.12**Asset Purchase and Sale Filed electronically
Agreement, dated as of herewith.
February 15, 2000, between
Futuresouth, Inc., Southboat
Lemay, Inc., Southboat
Limited Partnership and
Ameristar Casino St. Louis,
Inc.
21.1 Subsidiaries of ACI. Filed electronically
herewith.
23.1 Consent of Arthur Andersen Filed electronically
LLP. herewith.
27.1 Financial Data Schedule Filed electronically
herewith.
99.1 Agreement to furnish the Filed electronically
Securities and Exchange herewith.
Commission certain
instruments defining the
rights of holders of certain
long-term debt.
_________________________________
* Denotes a management contract or compensatory plan or
arrangement.
** Portions of this Exhibit have been deleted pursuant to the
Company's request for confidential treatment pursuant to Rule 24b-
2 promulgated under the Securities Exchange Act.
EXHIBIT 10.9(G)
NON-NEGOTIABLE 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"), $179,080 with interest on the unpaid principal
balance at eight percent (8%) per annum simple interest (subject
to Paragraph 2) (the "Interest Rate") from June 1, 1997 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 by wire to Lender's
account at Wells Fargo Bank, N.A., ABA Routing No.: 122402049,
Account No.: 0834-944134, 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 July 20, 1997; (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 $10,147.80 to
Lender as an installment of principal; and
(2) On July 20, 2004, Borrower shall pay $17,908.02 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").
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 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 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 June 1, 1997 or
thereafter 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 owed or owing by Borrower, and (v) any Indebtedness
evidenced by that certain Promissory Note dated as of June 1,
1997 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 $14,540,820, or any
novation(s) thereof, that certain Promissory Note dated as of
June 1, 1997 made by Borrower in favor of Lender in an original
principal amount of $417,854, or any novation(s) thereof, that
certain Promissory Note dated as of June 1, 1997 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 $13,232,146, or any novation(s) thereof, or
the other Magliarditi Note (as defined in Paragraph 7), or any
novation(s) thereof.
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 hereunder by
Borrower to Lender or any other holder of this Note. 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
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.
7. Novation and Pari Passu Provisions. This Note,
together with another Non-Negotiable Promissory Note of even date
herewith of Borrower in favor of Lender in the original principal
amount of $280,100 (collectively, the "Magliarditi Notes"),
constitute a novation of that certain Non-Negotiable Promissory
Note dated as of June 1, 1997 in the original principal amount
$459,180 made by Borrower in favor of Lender (the "Original
Note"). The Magliarditi Notes are and shall be subordinate to
Senior Indebtedness to the same extent as the Original Note, and
any and all statements in any Senior Indebtedness providing for
the subordination of the Original Note to such Senior
Indebtedness shall remain effective for, and applicable to, the
subordination of the Magliarditi Notes. Without limiting the
foregoing, (i) each of the Magliarditi Notes is and constitutes a
"Gem Settlement Note" as defined in and for purposes of that
certain Credit Agreement dated as of July 8, 1997, as amended,
among Borrower and various of its subsidiaries as borrowers, the
lenders named therein and Wells Fargo Bank, National Association,
as Arranger, Agent Bank and Swingline Lender, and (ii) each of
the Magliarditi Notes is and constitutes "Refinancing
Indebtedness" of the "Gem Notes" as such terms are defined in and
for purposes of that certain Indenture dated as of July 15, 1997,
as amended, among First Trust National Association, as Trustee,
Borrower and various subsidiaries of Borrower as guarantors. The
novation of the Original Note is not intended to affect the
limitation on the amount of Senior Indebtedness provided for in
Subparagraph 4.5 of this Note. In the event that Borrower is
unable to make full payment of principal of and/or interest on
both the Magliarditi Notes when due, the total amount paid at
such time by Borrower in respect of the Magliarditi Notes shall
be applied ratably to the payment of the amounts then due and
unpaid on the Magliarditi Notes, without preference or priority
of any kind, according to the amounts due and payable on the
Magliarditi Notes. By the acceptance of this Note, Lender hereby
agrees and consents to such ratable application on behalf of
itself and all subsequent holders of this Note; however, any
acceptance by the holder of this Note of any partial payment of
any amount due under this Note shall not be considered a
forgiveness of indebtedness or a waiver of timely payment. The
respective original holders of the Magliarditi Notes are, and
subsequent holders of the Magliarditi Notes may be, entitled to
certain rights or subject to certain obligations pursuant to the
terms of a Settlement Agreement entered into in September 1999
among Bryan and Dawn Hafen, Steven W. Rebeil, individually and as
Trustee of the Karizma Trust, Dominic Magliarditi, Gem Mesquite,
Ltd., Gem Development Co., Ameristar Casino Las Vegas, Inc. and
Ameristar Casinos, Inc.
IN WITNESS WHEREOF, the parties hereto have executed this
Note as of November 11, 1999.
BORROWER: LENDER:
AMERISTAR CASINOS, INC., a
Nevada corporation
/s/ Dominic J. Magliarditi
DOMINIC J. MAGLIARDITI, an
By: /s/ Thomas M. Steinbauer individual
Name: Thomas M. Steinbauer
Title: Senior Vice President
of Finance
Pay to the order of Bryan and Dawn Hafen
/s/ Dominic J. Magliarditi
DOMINIC J. MAGLIARDITI
DATE: 11/18/99
EXHIBIT 10.9(H)
NON-NEGOTIABLE 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"), $280,100 with interest on the unpaid principal
balance at eight percent (8%) per annum simple interest (subject
to Paragraph 2) (the "Interest Rate") from June 1, 1997 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 by wire to Lender's
account at Wells Fargo Bank, N.A., ABA Routing No.: 122402049,
Account No.: 0834-944134, 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 July 20, 1997; (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 $15,872.20 to
Lender as an installment of principal; and
(2) On July 20, 2004, Borrower shall pay $28,009.98 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").
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 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 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 June 1, 1997 or
thereafter 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 owed or owing by Borrower, and (v) any Indebtedness
evidenced by that certain Promissory Note dated as of June 1,
1997 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 $14,540,820, or any
novation(s) thereof, that certain Promissory Note dated as of
June 1, 1997 made by Borrower in favor of Lender in an original
principal amount of $417,854, or any novation(s) thereof, that
certain Promissory Note dated as of June 1, 1997 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 $13,232,146, or any novation(s) thereof, or
the other Magliarditi Note (as defined in Paragraph 7), or any
novation(s) thereof.
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 hereunder by
Borrower to Lender or any other holder of this Note. 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
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.
7. Novation and Pari Passu Provisions. This Note,
together with another Non-Negotiable Promissory Note of even date
herewith of Borrower in favor of Lender in the original principal
amount of $179,080 (collectively, the "Magliarditi Notes"),
constitute a novation of that certain Non-Negotiable Promissory
Note dated as of June 1, 1997 in the original principal amount
$459,180 made by Borrower in favor of Lender (the "Original
Note"). The Magliarditi Notes are and shall be subordinate to
Senior Indebtedness to the same extent as the Original Note, and
any and all statements in any Senior Indebtedness providing for
the subordination of the Original Note to such Senior
Indebtedness shall remain effective for, and applicable to, the
subordination of the Magliarditi Notes. Without limiting the
foregoing, (i) each of the Magliarditi Notes is and constitutes a
"Gem Settlement Note" as defined in and for purposes of that
certain Credit Agreement dated as of July 8, 1997, as amended,
among Borrower and various of its subsidiaries as borrowers, the
lenders named therein and Wells Fargo Bank, National Association,
as Arranger, Agent Bank and Swingline Lender, and (ii) each of
the Magliarditi Notes is and constitutes "Refinancing
Indebtedness" of the "Gem Notes" as such terms are defined in and
for purposes of that certain Indenture dated as of July 15, 1997,
as amended, among First Trust National Association, as Trustee,
Borrower and various subsidiaries of Borrower as guarantors. The
novation of the Original Note is not intended to affect the
limitation on the amount of Senior Indebtedness provided for in
Subparagraph 4.5 of this Note. In the event that Borrower is
unable to make full payment of principal of and/or interest on
both the Magliarditi Notes when due, the total amount paid at
such time by Borrower in respect of the Magliarditi Notes shall
be applied ratably to the payment of the amounts then due and
unpaid on the Magliarditi Notes, without preference or priority
of any kind, according to the amounts due and payable on the
Magliarditi Notes. By the acceptance of this Note, Lender hereby
agrees and consents to such ratable application on behalf of
itself and all subsequent holders of this Note; however, any
acceptance by the holder of this Note of any partial payment of
any amount due under this Note shall not be considered a
forgiveness of indebtedness or a waiver of timely payment. The
respective original holders of the Magliarditi Notes are, and
subsequent holders of the Magliarditi Notes may be, entitled to
certain rights or subject to certain obligations pursuant to the
terms of a Settlement Agreement entered into in September 1999
among Bryan and Dawn Hafen, Steven W. Rebeil, individually and as
Trustee of the Karizma Trust, Dominic Magliarditi, Gem Mesquite,
Ltd., Gem Development Co., Ameristar Casino Las Vegas, Inc. and
Ameristar Casinos, Inc.
IN WITNESS WHEREOF, the parties hereto have executed this
Note as of November 11, 1999.
BORROWER: LENDER:
AMERISTAR CASINOS, INC., a
Nevada corporation
/s/ Dominic J. Magliarditi
DOMINIC J. MAGLIARDITI, an
individual
By: /s/ Thomas M. Steinbauer
Name: Thomas M. Steinbauer
Title: Senior Vice President
of Finance
EXHIBIT 10.9(I)
NON-NEGOTIABLE 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"), $5,670,920 with interest on the unpaid principal
balance at eight percent (8%) per annum simple interest (subject
to Paragraph 2) (the "Interest Rate") from June 1, 1997 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 by wire to Lender's
account at Bank of America, NT &SA, ABA Routing No.: 121000358,
Account No.: 0202702714, 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 July 20, 1997; (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 $321,351.81 to
Lender as an installment of principal; and
(2) On July 20, 2004, Borrower shall pay $567,091.98 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").
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 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 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 June 1, 1997 or
thereafter 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 owed or owing by Borrower, and (v) any Indebtedness
evidenced by that certain Promissory Note dated as of June 1,
1997 made by Borrower in favor of Dominic J. Magliarditi in an
original principal amount of $417,854, or any novation(s)
thereof, that certain Promissory Note dated as of June 1, 1997
made by Borrower in favor of Lender in an original principal
amount of $13,232,146, or any novation(s) thereof, that certain
Promissory Note dated as of June 1, 1997 made by Borrower in
favor of Dominic J. Magliarditi in an original principal amount
of $459,180, or any novation(s) thereof, or the other Rebeil Note
(as defined in Paragraph 7), or any novation(s) thereof.
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 hereunder by
Borrower to Lender or any other holder of this Note. 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 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.
7. Novation and Pari Passu Provisions. This Note,
together with another Non-Negotiable Promissory Note of even date
herewith of Borrower in favor of Lender in the original principal
amount of $8,869,900 (collectively, the "Rebeil Notes"),
constitute a novation of that certain Non-Negotiable Promissory
Note dated as of June 1, 1997 in the original principal amount
$14,540,820 made by Borrower in favor of Lender (the "Original
Note"). The Rebeil Notes are and shall be subordinate to Senior
Indebtedness to the same extent as the Original Note, and any and
all statements in any Senior Indebtedness providing for the
subordination of the Original Note to such Senior Indebtedness
shall remain effective for, and applicable to, the subordination
of the Rebeil Notes. Without limiting the foregoing, (i) each of
the Rebeil Notes is and constitutes a "Gem Settlement Note" as
defined in and for purposes of that certain Credit Agreement
dated as of July 8, 1997, as amended, among Borrower and various
of its subsidiaries as borrowers, the lenders named therein and
Wells Fargo Bank, National Association, as Arranger, Agent Bank
and Swingline Lender, and (ii) each of the Rebeil Notes is and
constitutes "Refinancing Indebtedness" of the "Gem Notes" as such
terms are defined in and for purposes of that certain Indenture
dated as of July 15, 1997, as amended, among First Trust National
Association, as Trustee, Borrower and various subsidiaries of
Borrower as guarantors. The novation of the Original Note is not
intended to affect the limitation on the amount of Senior
Indebtedness provided for in Subparagraph 4.5 of this Note. In
the event that Borrower is unable to make full payment of
principal of and/or interest on both the Rebeil Notes when due,
the total amount paid at such time by Borrower in respect of the
Rebeil Notes shall be applied ratably to the payment of the
amounts then due and unpaid on the Rebeil Notes, without
preference or priority of any kind, according to the amounts due
and payable on the Rebeil Notes. By the acceptance of this Note,
Lender hereby agrees and consents to such ratable application on
behalf of itself and all subsequent holders of this Note;
however, any acceptance by the holder of this Note of any partial
payment of any amount due under this Note shall not be considered
a forgiveness of indebtedness or a waiver of timely payment. The
respective original holders of the Rebeil Notes are, and
subsequent holders of the Rebeil Notes may be, entitled to
certain rights or subject to certain obligations pursuant to the
terms of a Settlement Agreement, entered into in September 1999
among Bryan and Dawn Hafen, Steven W. Rebeil, individually and as
Trustee of the Karizma Trust, Dominic Magliarditi, Gem Mesquite,
Ltd., Gem Development Co., Ameristar Casino Las Vegas, Inc. and
Ameristar Casinos, Inc.
IN WITNESS WHEREOF, the parties hereto have executed this
Note as of November 11, 1999.
BORROWER: LENDER:
AMERISTAR CASINOS, INC., a
Nevada corporation
/s/ Steven W. Rebeil
By: /s/ Thomas M. Steinbauer STEVEN W. REBEIL, as an
Name: Thomas M. Steinbauer individual and in his capacity
Title: Senior Vice as trustee of the Karizma Trust
President of Finance created under that certain
Trust Agreement dated July 2,
1991, as amended
Pay to the order of Bryan and Dawn Hafen
/s/ Steven W. Rebeil
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
DATE: 11/16/99
EXHIBIT 10.9(J)
NON-NEGOTIABLE 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"), $8,869,900 with interest on the unpaid principal
balance at eight percent (8%) per annum simple interest (subject
to Paragraph 2) (the "Interest Rate") from June 1, 1997 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 by wire to Lender's
account at Bank of America, NT &SA, ABA Routing No.: 121000358,
Account No.: 0202702714, 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 July 20, 1997; (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 $502,627.19 to
Lender as an installment of principal; and
(2) On July 20, 2004, Borrower shall pay $886,990.02 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").
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 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 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 June 1, 1997 or
thereafter 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 owed or owing by Borrower, and (v) any Indebtedness
evidenced by that certain Promissory Note dated as of June 1,
1997 made by Borrower in favor of Dominic J. Magliarditi in an
original principal amount of $417,854, or any novation(s)
thereof, that certain Promissory Note dated as of June 1, 1997
made by Borrower in favor of Lender in an original principal
amount of $13,232,146, or any novation(s) thereof, that certain
Promissory Note dated as of June 1, 1997 made by Borrower in
favor of Dominic J. Magliarditi in an original principal amount
of $459,180, or any novation(s) thereof, or the other Rebeil Note
(as defined in Paragraph 7), or any novation(s) thereof.
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 hereunder by
Borrower to Lender or any other holder of this Note. 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 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.
7. Novation and Pari Passu Provisions. This Note,
together with another Non-Negotiable Promissory Note of even date
herewith of Borrower in favor of Lender in the original principal
amount of $5,670,920 (collectively, the "Rebeil Notes"),
constitute a novation of that certain Non-Negotiable Promissory
Note dated as of June 1, 1997 in the original principal amount
$14,540,820 made by Borrower in favor of Lender (the "Original
Note'). The Rebeil Notes are and shall be subordinate to Senior
Indebtedness to the same extent as the Original Note, and any and
all statements in any Senior Indebtedness providing for the
subordination of the Original Note to such Senior Indebtedness
shall remain effective for, and applicable to, the subordination
of the Rebeil Notes. Without limiting the foregoing, (i) each of
the Rebeil Notes is and constitutes a "Gem Settlement Note" as
defined in and for purposes of that certain Credit Agreement
dated as of July 8, 1997, as amended, among Borrower and various
of its subsidiaries as borrowers, the lenders named therein and
Wells Fargo Bank, National Association, as Arranger, Agent Bank
and Swingline Lender, and (ii) each of the Rebeil Notes is and
constitutes "Refinancing Indebtedness" of the "Gem Notes" as such
terms are defined in and for purposes of that certain Indenture
dated as of July 15, 1997, as amended, among First Trust National
Association, as Trustee, Borrower and various subsidiaries of
Borrower as guarantors. The novation of the Original Note is not
intended to affect the limitation on the amount of Senior
Indebtedness provided for in Subparagraph 4.5 of this Note. In
the event that Borrower is unable to make full payment of
principal of and/or interest on both the Rebeil Notes when due,
the total amount paid at such time by Borrower in respect of the
Rebeil Notes shall be applied ratably to the payment of the
amounts then due and unpaid on the Rebeil Notes, without
preference or priority of any kind, according to the amounts due
and payable on the Rebeil Notes. By the acceptance of this Note,
Lender hereby agrees and consents to such ratable application on
behalf of itself and all subsequent holders of this Note;
however, any acceptance by the holder of this Note of any partial
payment of any amount due under this Note shall not be considered
a forgiveness of indebtedness or a waiver of timely payment. The
respective original holders of the Rebeil Notes are, and
subsequent holders of the Rebeil Notes may be, entitled to
certain rights or subject to certain obligations pursuant to the
terms of a Settlement Agreement, entered into in September 1999
among Bryan and Dawn Hafen, Steven W. Rebeil, individually and as
Trustee of the Karizma Trust, Dominic Magliarditi, Gem Mesquite,
Ltd., Gem Development Co., Ameristar Casino Las Vegas, Inc. and
Ameristar Casinos, Inc.
IN WITNESS WHEREOF, the parties hereto have executed this
Note as of November 11, 1999.
BORROWER: LENDER:
AMERISTAR CASINOS, INC., a
Nevada corporation
/s/ Steven W. Rebeil
STEVEN W. REBEIL, as an
By: /s/ Thomas M. Steinbauer individual and in his capacity
Name: Thomas M. Steinbauer as trustee of the Karizma Trust
Title: Senior Vice President created under that certain
of Finance Trust Agreement dated July 2,
1991, as amended
EXHIBIT 10.12
CERTAIN PORTIONS OF THIS DOCUMENT FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED HAVE BEEN REDACTED. REDACTIONS ARE
INDICATED BY A DOUBLE PAIR OF EMPTY BRACKETS ("[[ ]]").
ASSET PURCHASE AND
SALE AGREEMENT
By and Between
FUTURESOUTH, INC., SOUTHBOAT LEMAY, INC.
and SOUTHBOAT LIMITED PARTNERSHIP,
Seller,
and
AMERISTAR CASINO ST. LOUIS, INC.
Buyer.
Dated as of February 15, 2000
1. Definitions; Construction. 1
1.1 Definitions 1
1.2 Construction 10
2. Assets, Assumed Contracts and Assumed Liabilities. 10
2.1 Assets 10
2.1.1 Lease 10
2.1.2 Project Documents 10
2.2 Assumed Contracts and Liabilities 10
2.3 Assumption of Liabilities 11
3. Purchase Price. 11
3.1 Purchase Price for the Assets. 11
3.1.1 Purchase Price 11
3.1.2 Royalty Payment 11
3.1.3 Sale of Project/Foreclosure 12
3.1.4 No Interest in Project 12
3.1.5 Delivery of Financial Statements 13
4. Closing; Conditions to Closing. 13
4.1 Closing 13
4.2 Seller's Conditions 13
4.3 Buyer's Conditions 14
5. Representations and Warranties of Seller 17
5.1 General Representations and Warranties. 17
5.1.1 Organization 17
5.1.2 Ownership 18
5.1.3 Authorization 18
5.1.4 Subsidiaries and Partnerships 18
5.1.5 No Conflict or Violation 18
5.1.6 No Burdensome Restrictions 19
5.1.7 Litigation and Proceedings 19
5.1.8 Consents and Approvals 19
5.1.9 Disclosures 19
5.2 Representations and Warranties With Respect to the Assets. 19
5.2.1 Title to Assets 20
5.2.2 Leased Site 20
5.2.3 Project Documents 20
5.2.4 Other Assets 20
5.3 Representations and Warranties With Respect to the
Liabilities of Seller. 20
5.3.1 Debts 20
5.3.2 Environmental Matters 20
5.3.3 Insurance 20
5.4 Representations and Warranties With Respect to the
Operations of Seller. 20
5.4.1 Compliance with Laws 21
5.4.2 Condemnation, Eminent Domain, Rezoning and Leasing 21
5.4.3 Improper Payments 21
5.5 Representations and Warranties With Respect to Seller's
Disclosures. 21
5.5.1 Material Omissions 21
5.5.2 Brokers 21
5.5.3 Project Documents 21
6. Representations and Warranties of Buyer 22
6.1 Organization 22
6.2 Authorization 22
6.3 No Conflict or Violation 22
6.4 Litigation and Proceedings 22
6.5 Consents and Approvals 23
6.6 Brokers 23
6.7 No Licensing Problems 23
6.8 Ownership 23
6.9 Financial Statements of ACI 23
7. Affirmative Covenants 23
7.1 Permits 23
7.2 Governmental Investigation 24
7.3 Notices 25
7.4 Contracts 25
7.5 Other Prohibited Transactions 25
7.6 Inspection 25
7.7 Contacts 26
7.8 Condemnation 26
7.9 Project Documents 26
7.10 Improper Payments 26
7.11 Exclusivity 26
7.12 Right of Setoff 27
7.13 Showboat Development Company 27
7.14 Lease Obligations 27
7.15 Information 27
7.16 VIP Privileges 28
7.17 Transfers of Stock of Seller 28
8. Abandonment of Project 29
9. Alternate Site 30
10. Termination; Default. 31
10.1 Termination and Abandonment 31
10.2 Effect of Termination 31
10.3 Default by Seller 31
10.4 Default by Buyer 31
10.5 Notice and Cure Rights 31
11. Indemnification. 31
11.1 Seller 31
11.2 Buyer 32
11.3 Third Person Claims 32
11.4 Indemnification Payments 33
11.5 Limitations 33
11.5.1 On Buyer 33
11.5.2 On Seller 33
12. No Assurances 33
13. General Provisions. 34
13.1 Accounting Terms 34
13.2 Amendment and Modification 34
13.3 Approvals and Consents 34
13.4 Assignments 34
13.5 Business Day 34
13.6 Captions 34
13.7 Confidentiality 34
13.8 Counterpart Facsimile Execution 35
13.9 Counterparts 35
13.10 Entire Agreement 35
13.11 Exhibits 35
13.12 Failure or Delay 35
13.13 Further Assurances 35
13.14 Governing Law 36
13.15 Legal Fees, Costs 36
13.16 Notices 36
13.17 Publicity 37
13.18 Schedules 37
13.19 Severability 37
13.20 Specific Performance and Injunctive Relief 37
13.21 Submission to Jurisdiction 38
13.22 Successors and Assigns 38
13.23 Third-Party Beneficiary 38
13.24 Signature Warranty 38
13.25 Survival 38
14. Arbitration. 39
14.1 Arbitration Proceedings 39
14.2 Limitation on Consolidation or Joinder 39
INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
EXHIBIT A Legal Description of the Leased Site
EXHIBIT B Assignment and Assumption Agreement
EXHIBIT C Bill of Sale
EXHIBIT D Lease
EXHIBIT E Management Agreement
EXHIBIT F Project Documents
EXHIBIT G Promissory Note
EXHIBIT H Collateral Assignment of Lease
EXHIBIT I Security Agreement
EXHIBIT J Opinion of Buyer's Legal Counsel
EXHIBIT K Opinion of Seller's Legal Counsel
EXHIBIT L Certificate of Futuresouth Shareholders
INDEX OF DISCLOSURE SCHEDULES
SCHEDULE DESCRIPTION
5.1.1. Names
5.1.2. Stock Ownership
5.1.4. Seller's Subsidiaries and Partnerships
5.1.7. Litigation and Proceedings
5.1.8. Consents and Approvals Required of Seller
5.3.1. Seller's Debt
5.4.1. Compliance with Laws
5.4.3. Improper Payments
6.5. Consents and Approvals Required of Buyer
ASSET PURCHASE AND SALE AGREEMENT
This Asset Purchase and Sale Agreement is made and entered
into as of the 15th day of February, 2000 among Ameristar Casino
St. Louis, Inc., a Missouri corporation ("Buyer"), Futuresouth,
Inc., a Missouri corporation (herein "Futuresouth"), Southboat
Lemay, Inc., a Nevada corporation (herein "Southboat") and
Southboat Limited Partnership, a Missouri limited partnership
(herein "SLP") (Futuresouth, Southboat and SLP are herein
collectively referred to as "Seller").
RECITALS
A. Futuresouth is the sole shareholder of Southboat.
Southboat is the sole general partner and Futuresouth is the sole
limited partner of SLP.
B. SLP holds a leasehold interest in an undeveloped site
in St. Louis County, Missouri pursuant to that certain Amended
and Restated Lease and Development Agreement by and between SLP,
as tenant, and St. Louis County Port Authority, as landlord,
dated as of February 15, 2000. A legal description of the leased
site is set forth in Exhibit A and by this reference made a part
hereof .
C. Buyer wishes to purchase, and Seller wishes to sell,
the Lease and the Project Documents (as hereinafter defined) upon
the terms set forth herein.
AGREEMENT
In consideration of the foregoing, the mutual covenants
herein contained and other good and valuable consideration (the
receipt, adequacy and sufficiency of which are hereby
acknowledged by the Parties by their execution hereof), the
Parties agree as follows:
1. Definitions; Construction.
1.1 Definitions. For purposes of this Agreement, unless the
context clearly indicates otherwise, the following capitalized
terms have the following meanings:
"ACI" means Ameristar Casinos, Inc., a Nevada
corporation; the parent company of Buyer.
"Affiliate" of any specified Person means: (i) any
other Person, directly or indirectly, controlling or controlled
by or under direct or indirect common control with such specified
Person; (ii) any other Person who is a director or officer (a) of
such specified Person, (b) of any subsidiary of such specified
Person or (c) of any Person described in clause (i) above; or
(iii) any partner (general or limited), trustee, beneficiary,
spouse, child (including an adult child) or sibling of, or member
in a limited liability company with, any Person described in
clause (i) above. For the purposes of this definition, "control"
when used with respect to any Person means the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise, and it shall be conclusively presumed
that the beneficial ownership of 25% or more of the securities
having ordinary voting power for the election of directors (or
comparable positions) of such Person constitutes control; and the
term "controlling" and "controlled" have meanings correlative to
the foregoing.
"Agreement" means this Asset Purchase and Sale
Agreement, including all Exhibits and Schedules hereto.
"Applicable Law" means any law, rule, regulation,
order, decree or other requirement having the force of law and,
where applicable, any interpretation thereof by any authority
having jurisdiction with respect thereto or charged with the
administration thereof.
"Assets" means the Lease and the Project
Documents.
"Assignment and Assumption Agreement" means that
assignment and assumption agreement to be entered into between
Buyer and Seller on the Closing Date, in the form of Exhibit B,
whereby Seller assigns all of its rights under the Lease to Buyer
and Buyer assumes Seller's obligations under the Lease on the
terms set forth therein.
"Basket Amount" means $25,000.00.
"Bill of Sale" means that bill of sale to be
executed and delivered by Seller to Buyer on the Closing Date, in
the form of Exhibit C, whereby Seller conveys the Project
Documents to Buyer.
"Business Day" means a day other than a Saturday,
Sunday or other day on which commercial banks are authorized or
required to close under the laws of the United States of America
or the State of Missouri.
"Buyer" has the meaning set forth in the opening
paragraph of this Agreement.
"Capital Expenditure" means all expenditures
(excluding interest capitalized during construction) which must
be capitalized under GAAP.
"Capitalized Lease Obligation" means the
obligations of a lessee under any lease of property which must be
capitalized under GAAP.
"Closing" has the meaning set forth in Section
4.1.
"Closing Date" has the meaning set forth in
Section 4.1.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commencement of Construction" means the first
turning of the ground in connection with the actual construction
of the Project, excluding any ceremonial ground-breaking.
"Confidential Information" means: (i) information
not available to the general public or not in the public domain
concerning Buyer's business and financial affairs delivered by or
on behalf of Buyer to Seller; (ii) information not available to
the general public concerning Seller's business and financial
affairs (including, but not limited to, the information
respecting the shareholders and partners of Seller) delivered by
or on behalf of Seller to Buyer; and (iii) analyses,
compilations, forecasts, studies and other documents prepared on
the basis of such information prepared by the Parties or their
respective agents, representatives, Affiliates, employees or
consultants.
"Contingent Obligation" means, as to any Person:
(i) any direct or indirect liability, contingent or otherwise, of
such Person with respect to any Debt or Contractual Obligation of
another Person if the purpose or intent of such Person in
incurring the Contingent Obligation is to provide assurance to
the obligees of such Debt or Contractual Obligation that such
Debt or Contractual Obligation will be paid or discharged, that
any agreement relating thereto will be complied with or that any
holder of such Debt or Contractual Obligation will be protected
(in whole or in part) against loss in respect thereof, and (ii)
any contingent liability as determined in accordance with GAAP
(without regard to materiality).
"Contractual Obligation" means any obligation,
agreement or undertaking, whether oral or written and includes,
without limitation, the Lease.
"CPI" means the Consumer Price Index for All Urban
Consumers for the U.S. City Average for All Items 1982-84=100, as
determined by the United States Department of Labor, Bureau of
Labor Statistics.
"Debt" of a Person means (i) all obligations of
such Person for borrowed money; (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar
instruments; (iii) all obligations of such Person to pay the
deferred purchase price of property or services; (iv) all
Capitalized Lease Obligations of such Person; (v) all obligations
or liabilities of others secured by an Encumbrance on any asset
owned by such Person, whether or not such obligation or liability
is assumed by such Person; (vi) all Contingent Obligations of
such Person; and (vii) all other obligations or liabilities of
such Person which are required by GAAP (without regard to
materiality) to be shown as a liability or otherwise disclosed in
financial statements.
"Development Costs" means all Capital Expenditures
of the Project, as made from time to time, excluding Maintenance
Capital Expenditures to the extent funded or deemed to be funded
out of the Maintenance Capital Expenditures Reserve.
"Disclosing Party" has the meaning set forth in
Section 13.7.
"Disclosure Schedule" means those schedule(s)
which sets forth all exceptions to Seller's representations and
warranties contained in Section 5.
"$" means United States of America dollars.
"Encumbrance" means any mortgage, deed of trust,
pledge, hypothecation, assignment, deposit arrangement,
restriction (including any easement, right-of-way or similar
restriction), condition, lease, lien (statutory or otherwise),
security interest, any conditional sale or option contract or
other title retention agreement.
"Environmental Damages" means all losses,
penalties, fines, liabilities (including strict liability), costs
and expenses, including reasonable attorneys' fees and
consultants' fees, any of which are incurred at any time as a
result of the existence of Hazardous Material at, upon, about or
beneath the Leased Site, adjoining or nearby property or a
Hazardous Waste Site or migrating or threatening to migrate to or
from the Leased Site or a Hazardous Waste Site, or the existence
of a violation of Environmental Laws pertaining to the Leased
Site or a Hazardous Waste Site, including: (i) damages for
personal injury, or injury to property or natural resource
occurring upon or off the Leased Site or a Hazardous Waste Site,
foreseeable or unforeseeable, including lost profits,
consequential damages, interest and penalties, and (ii) damages
for the loss of the use or any adverse impact on the marketing or
marketability of rentable space on the Leased Site.
"Environmental Laws" means all Applicable Laws
relating to the environment, including: (i) all requirements
pertaining to reporting, licensing, permitting, investigation and
remediation of emissions, discharges, releases or threatened
releases of Hazardous Material, whether solid, liquid or gaseous
in nature, into the air, surface water, groundwater or land, (ii)
all requirements relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Material, whether solid, liquid or gaseous
in nature; and (iii) all requirements pertaining to the
protection of the health and safety of employees or the public.
"Excess Unexpended Maintenance Capital
Expenditures Reserves" means that amount of the Maintenance
Capital Expenditures Reserve funded or deemed to be funded in
respect of any Fiscal Year that is not expended or deemed to be
expended within two (2) years after the end of such Fiscal Year
in respect of which such amount was reserved. For purposes of
this definition, all disbursements funded or deemed to be funded
out of the Maintenance Capital Expenditures Reserve shall be
deemed to be made on a first-in, first-out (FIFO) basis of
accounting.
"Excursion Gambling Boat" means a casino gambling
facility licensed in accordance with Applicable Law.
"Financial Statements" means the financial
statements of Buyer and, if Buyer engages in activities other
than the Project or activities incidental thereto, of the Project
for the applicable period, audited by a national accounting firm,
containing a balance sheet, statements of income and expense and
of cash flow, prepared in accordance with GAAP on a consistent
basis, and includes all notes thereto.
"Fiscal Year" means the 12-month period designated
by the Buyer as its fiscal year for tax purposes.
"GAAP" means generally accepted accounting
principles from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board.
"Governmental Authority" means any government of
any nation, state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Materials" means any substance: (i) the
presence of which requires investigation or remediation under any
Environmental Law; (ii) which is or becomes defined as a
"hazardous waste" or "hazardous substance" under any
Environmental Law; (iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous and is or becomes regulated by any
Governmental Authority; (iv) the presence of which causes or
threatens to cause a nuisance or poses or threatens to pose a
hazard to property or to the health or safety of Persons; (v)
which contains gasoline, diesel fuel or other petroleum
hydrocarbons; or (vi) which contains polychlorinated biphenyls or
asbestos.
"Hazardous Waste Site" means any site or location,
wherever located (including any well, pit, pond, lagoon, tailings
pile, spoil pile, impoundment, ditch, trench, drain, landfill,
warehouse or waste storage container) where Hazardous Material
has been deposited, stored, treated, reclaimed, disposed of,
placed or otherwise come to be located.
"Indemnified Party" means any Person claiming a
right to indemnification pursuant to any indemnification
provision in this Agreement.
"Indemnifying Party" means any Person obligated to
indemnify another Person pursuant to any indemnification
provision in this Agreement.
"Landlord" means St. Louis County Port Authority,
a public body corporate and politic of the State of Missouri.
"Lease" means that certain Amended and Restated
Lease and Development Agreement by and between SLP and the St.
Louis County Port Authority dated as of February 15, 2000, a copy
of which is attached hereto as Exhibit D, any and all future
amendments thereto permitted hereunder prior to the Closing Date
and the leasehold estate created thereunder.
"Leased Site" means that real property and any
appurtenances thereto located in St. Louis County, Missouri
containing approximately twenty-nine (29) acres all as set forth
and legally described in Exhibit A.
"Lender" means a Person who lends money to Buyer
and/or ACI in connection with the Project in an arms' length
transaction.
"Maintenance Capital Expenditures" means those
Capital Expenditures of Buyer made for the purpose of replacing
or renovating then existing assets and/or components of the
Project, including but not limited to slot machine and other
gaming equipment replacements, restaurant renovations, casino
signage renovation or replacement, hotel room renovations and
replacements and other furniture, fixture and equipment
renovations and replacements.
"Maintenance Capital Expenditures Reserve" means
an unsegregated reserve account for Maintenance Capital
Expenditures to be funded or deemed funded annually from and
after the Opening Date. The initial annual funding rate shall be
equal to 3.5% of the total Development Costs on a weighted
average during the Fiscal Year in question. If the Opening Date
occurs on a date other than the first day of a Fiscal Year, the
amount to be funded or deemed funded shall be prorated for such
Fiscal Year. Commencing with the second full Fiscal Year
following the Opening Date, the annual funding rate shall be
increased annually, in the sole discretion of Buyer, to a
percentage not to exceed the prior year annual rate multiplied by
the increase, if any, in the CPI during the immediately preceding
Fiscal Year. The annual funding percentage shall not be subject
to decrease in the event of any decrease in the CPI. For
example, after Fiscal Year 1, assuming the year to year increase
in the CPI is 2%, then the maximum annual funding percentage
increase is 3.5% times 2.0%, or .07%, thus making the revised
annual percentage a maximum of 3.5% plus .07%, or 3.57%. Buyer,
in its sole discretion, may either fund the Maintenance Capital
Expenditure Reserve or deem the Maintenance Capital Expenditure
Reserve funded for each applicable Fiscal Year. In the event the
Maintenance Capital Expenditure Reserve is not actually funded in
any given Fiscal Year, it shall be deemed funded. The
Maintenance Capital Expenditures Reserve shall be reduced from
time to time, but not below zero, by the amount of Maintenance
Capital Expenditures incurred by Buyer (in the manner set forth
under the definition of "Excess Unexpended Maintenance Capital
Expenditure Reserves") and by the amount, if any, of Excess
Unexpended Maintenance Capital Expenditure Reserves.
"Management Agreement" means that certain
Management and Administrative Services Agreement in form and
substance as set out in Exhibit E by and between Buyer and ACI
relating to the Project. The Management Fee, as defined in the
Management Agreement (not to exceed 4% of the gross revenues of
the Project), shall be considered as an operating expense of the
Project, but any and all interest payable thereon pursuant to the
Management Agreement shall be excluded as an operating expense of
the Project.
"Material Adverse Change" means a material adverse
change in any of: (i) the condition of the business,
performance, prospects, operation or assets of Seller (financial
or otherwise), including without limitation the suitability of
the Leased Site for the development of the Project; (ii) the
value of the Leased Site as a location for the Project; (iii) the
legality, validity or enforceability of this Agreement; (iv) the
rights and remedies of Buyer under this Agreement; or (v)
Applicable Law.
"Material Adverse Effect" means one or more
effects that, individually or in the aggregate, could result from
a Material Adverse Change.
"Net Free Cash Flow" means a sum determined and
calculated at the end of each Fiscal Year upon the issuance of
the Financial Statements for such Fiscal Year as follows:
The operating income (loss) for the Project for an
applicable Fiscal Year as determined in accordance with GAAP
and other accounting principles employed by ACI in the
preparation and issuance of its consolidated financial
statements, each applied on a consistent basis, adjusted to
add or subtract (as indicated) the following items for such
Fiscal Year:
1. Additions to operating income (loss):
(a) depreciation and amortization of assets;
(b) Excess Unexpended Maintenance Capital
Expenditures Reserves;
(c) Project-Related Interest Income.
2. Deductions from operating income (loss):
(a) interest expense on any and all Project-
Related Debt;
(b) required principal payments on Project-Related Debt;
(c) all sums required to be paid into any and all sinking funds
or reserves for the purpose of retirement of all or a
portion of the principal amount of any or all Project-
Related Debt at scheduled maturity, if such sinking fund
or reserve is required by the holder of such Debt and
such holder is not an Affiliate of Buyer;
(d) the actual or deemed funding of the Maintenance Capital
Expenditures Reserve;
(e) an amount necessary to provide ACI a non-cumulative
preferred rate of return of [[ ]] percent per annum on its
Unreturned Project Equity for such Fiscal Year; provided
that such deduction shall be limited to the extent necessary
to prevent the Net Free Cash Flow of Buyer for such Fiscal
Year being reduced to below zero;
(f) deductions shall not be double counted if the same payment
fits under more than one category.
"Opening Date" means the date on which the
Excursion Gambling Boat included in the Project opens for
business.
"Party" means a Person named as entering into this
Agreement.
"Permit" means all approvals, authorizations,
consents, licenses, franchises, orders and other permits of any
Governmental Authority.
"Permitted Encumbrances" means: (i) taxes and
assessments, general and specific, not due and payable on or
before the Closing Date; and (ii) those title exceptions listed
in the commitment for title insurance to be obtained by Buyer
which do not or will not, in the sole discretion of Buyer, impair
the leasehold interest in, or the intended development, use,
operation or occupancy of, the Leased Site.
"Person" means any natural person, corporation,
joint venture, association, company, trust, joint stock company,
bank, trust company, land trust, vehicle trust, business trust,
real estate investment trust, limited liability company, limited
liability partnership, limited liability trust, partnership or
other organization irrespective of whether it is a legal entity,
and any Governmental Authority.
"Prime Rate" means the prime rate as published
from time to time by Wells Fargo Bank, N.A. or if such rate
ceases to be published, then the prime rate as published daily in
The Wall Street Journal.
"Prime Territory" has the meaning set forth in
Section 4.3.14.
"Project" means Buyer's proposed development of
the Leased Site, including a casino with approximately 2,000 slot
machines and 60 table games, or approximately 2,360 gaming
positions, and related improvements such as restaurants and
parking. It is currently contemplated that there will be
multiple restaurant offerings with total seating for
approximately 700 to 750 guests. The term "Project" includes
such additional improvements, renovations and/or expansions of
existing improvements as Buyer may, at its sole discretion, elect
to develop. Buyer may, at its sole discretion, elect from time
to time to change the scope of the Project, but not the Purchase
Price or the Royalty payable to Seller.
"Project Costs" means all costs and obligations
incurred by Buyer in developing, constructing, financing and
operating the Project.
"Project Documents" means all engineering studies,
architectural and engineering drawings or plans, elevations, site
studies, Coast Guard permit applications (if any), U.S. Army
Corps Of Engineers' permit application(s), if any, the Seller's
and its predecessor's Missouri Gaming Commission license
application(s), title insurance commitment(s) and policies, if
any (including all copies of recorded or unrecorded documents
listed as exceptions to the title of the Leased Site), surveys,
environmental reports, market studies, applications for zoning or
rezoning of all or a portion of the Leased Site, all
correspondence, documents and/or agreements pertaining to the
Lease and/or all or any portion of the Leased Site; all
correspondence, documents and/or agreements relating to nearby or
adjoining property to the Leased Site, information, presentations
and other material used or useful in connection with any attempts
by Seller to develop the Project. A list of such documents is
attached hereto as Exhibit F.
"Project Equity" means the equity investment of
ACI in Buyer for the Project plus the retained earnings
accumulated within the Buyer to the extent that any such
undistributed retained earnings are used for capital expansion,
additions and improvements, excluding Maintenance Capital
Expenditures funded out of the Maintenance Capital Expenditures
Reserve.
"Project-Related Debt" means all bona fide
indebtedness incurred by or allocated to Buyer in connection with
the development, construction, maintenance, operation, expansion
or improvement of the Project and all refinancing indebtedness in
respect thereof, including any and all loans to Buyer from one
(1) or more Affiliates of Buyer on which the rate of interest
shall be the Prime Rate plus five and one-half (5.5) percentage
points. Notwithstanding any provision hereof to the contrary:
(x) any indebtedness incurred or guaranteed by Buyer for the
purposes set forth in the immediately preceding sentence which is
also incurred by any Affiliate(s) of Buyer as co-borrower(s)
and/or guaranteed by any Affiliate(s) of Buyer shall be deemed to
be indebtedness incurred by such Affiliate(s) of Buyer and loaned
to Buyer, such that Buyer shall be obligated to pay to such
Affiliate(s) any difference between the actual rate of interest
payable to the third party lender(s) and the lesser of (i) such
actual rate of interest plus five (5) percentage points, or (ii)
the Prime Rate plus five and one-half (5.5) percentage points;
and (y) Project-Related Debt does not include the Promissory Note
nor indebtedness otherwise incurred by or allocated to Buyer in
order to make loans to one (1) or more Affiliates or as part of a
consolidated borrowing group with one (1) or more Affiliates.
"Project-Related Interest Income" means the
interest income earned by Buyer as reported on the Buyer's
Financial Statements, excluding interest income earned on loans
or advances to Affiliates of the Buyer or on loans or advances to
third parties not in the ordinary course of Buyer's business.
"Promissory Note" means that negotiable promissory
note in the original principal amount of [[ ]] to be executed
by Buyer, payable to the order of Seller and which is to be in
the form of Exhibit G.
"Purchase Price" has the meaning set forth in
Section 3. 1. 1.
"Responsible Officer" means: (i) in the case of a
corporation, the president, the chief executive officer, the
chief financial officer, a vice president or a treasurer of such
corporation; (ii) in the case of a partnership, a general partner
therein; or (iii) in the case of a limited liability company, a
manager of such entity.
"Royalty" means that portion of the Purchase Price
set forth in Section 3.1.2.
"Seller" has the meaning set forth in the opening
paragraph of this Agreement. Unless otherwise indicated by the
context of usage (e.g., "any entity comprising Seller"),
references to Seller herein shall be deemed to refer to each of
Futuresouth, Southboat and SLP individually and all such entities
collectively, and their respective successors and permitted
assigns, if any. The Persons comprising Seller shall be jointly
and severally liable for all obligations of Seller pursuant to
this Agreement and the Transfer Documents.
"Seller Collateral" means the collateral which
secures the Promissory Note and the Royalty, namely a collateral
assignment of the Lease in the form attached hereto as Exhibit H
and a security interest in the Project Documents pursuant to a
security agreement in the form attached hereto as Exhibit I,
which collateral liens shall be subordinated to any lien on the
same collateral held from time to time by a holder of Project-
Related Debt that is not an Affiliate of Buyer, whether such
holder is the original holder of such lien or an assignee.
"Showboat" means Showboat Development Company, a
Nevada corporation.
"Stock" means shares of capital stock (including
common and preferred stock) or other equity interests (regardless
of how designated) of or in a corporation or comparable entity
(including, without limitation, a partnership, joint venture,
limited liability company or liquidating trust), whether voting
or nonvoting, general or limited.
"Stock Equivalents" means all securities
convertible into or exchangeable for Stock and all warrants,
options and other rights to purchase or subscribe for any Stock,
or other Stock Equivalents, whether or not presently convertible,
exchangeable or exercisable.
"Subsidiary" with respect to Seller means any
corporation of which Seller and its other Subsidiaries own not
less than 50% of the outstanding Stock of such corporation having
ordinary voting power for the election of directors of such
corporation.
"Tax" means any tax, charge, fee, levy, duty,
withholding or other assessment, together with any interest and
penalties, additions to tax and additional amounts imposed by any
Governmental Authority.
"Third Person" means a Person other than a Party
or an Affiliate of a Party.
"Transfer Documents" means the Assignment and
Assumption Agreement, the Bill of Sale and all other assignments,
certificates of title and other documents referred to in Section
4.3.
"Unreturned Project Equity" for any Fiscal Year
means: (i) the Project Equity as of the first day of such Fiscal
Year plus (ii) the weighted average of all additions to the
Project Equity during such Fiscal Year, reduced by (x) (but not
below zero) ninety percent (90%) of the aggregate amount of Net
Free Cash Flow of Buyer for the immediately preceding Fiscal
Year, and further reduced by (y) the aggregate amount of all
reductions pursuant to the preceding clause (x) for all Fiscal
Years preceding the immediately preceding Fiscal Year.
1.2 Construction. Unless the context of this Agreement
clearly requires otherwise; (i) references to the plural include
the singular and vice versa; (ii) references to any Person include
such Person's successors and assigns but, if applicable, only if
such successors and assigns are permitted by this Agreement;
(iii) references to one gender include all genders; (iv)
"including" is not limiting; (v) "or" has the inclusive meaning
represented by the phrase "and/or"; (vi) the words "hereof",
"herein", "hereby", "hereunder" and similar terms in this
Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement; (vii) section, clause,
Exhibit and Schedule references are to this Agreement unless
otherwise specified; (viii) reference to any agreement (including
this Agreement), document or instrument means such agreement,
document or instrument as amended or modified and in effect from
time to time in accordance with the terms thereof and, if
applicable, the terms hereof, and general or specific references
to any Applicable Law means such Applicable Law as amended,
modified, codified or reenacted, in whole or in part, and in
effect from time to time.
2. Assets, Assumed Contracts and Assumed Liabilities.
2.1 Assets. Subject to the terms and conditions hereof,
on the Closing Date, Seller agrees to sell, assign, transfer, grant,
bargain, deliver and convey to Buyer, and Buyer agrees to
purchase from Seller, the Assets. The conveyances of the Assets
are to be made as follows:
2.1.1 Lease. Seller agrees to execute and deliver
to Buyer, or cause to be executed and delivered to Buyer, at the
Closing, the Assignment and Assumption Agreement respecting the
Leased Site.
2.1.2 Project Documents. Seller agrees to execute
and deliver to Buyer at the Closing, the Bill of Sale conveying to
Buyer all the Project Documents.
2.2 Assumed Contracts and Liabilities. Subject to the
terms and conditions hereof, Buyer agrees to execute and deliver
to Seller, and Seller agrees to execute and deliver to Buyer, at
the Closing the Assignment and Assumption Agreement whereby Buyer
assumes, upon the terms set forth therein, the Lease.
2.3 Assumption of Liabilities. Except for the Lease,
Buyer and Seller agree that Buyer is not assuming any liability of
Seller or of any Affiliate of Seller (including, but not limited to,
obligations, if any, to Showboat) and hereby disclaims
responsibility for any Debts, Contractual Obligations, or other
obligations of Seller or of any Affiliate of Seller not so
specifically assumed. Except for obligations accruing or arising
under the Lease from and after the Closing Date, the Parties
intend that Buyer is not, nor is it to be deemed, a successor of
Seller or of any Affiliate of Seller with respect to any of
Seller's or of any such Affiliate's Debts, Contractual
Obligations or other obligations to Third Persons arising or
accruing before, on or after the Closing Date.
3. Purchase Price.
3.1 Purchase Price for the Assets.
3.1.1 Purchase Price. The purchase price payable
by Buyer to Seller for all the Assets is the sum of [[ ]]
(the "Base Purchase Price") plus the Royalty as set forth in
Section 3.1.2 (the Base Purchase Price and the Royalty are
collectively called the "Purchase Price"), all to be paid by wire
transfer or such other means as Seller may reasonably direct.
The Base Purchase Price is payable as follows:
(i) [[ ]] upon the execution and delivery of a
letter of intent relating to this Agreement, which amount Buyer
has previously paid to Seller.
(ii) [[ ]] upon the selection for investigation
by the Missouri Gaming Commission of Buyer's gaming license
application to own and operate an Excursion Gambling Boat as part
of the Project.
(iii) [[ ]] evidenced by the Promissory Note
payable in twelve (12) equal quarterly installments of [[ ]]
each, with the first installment due and payable upon the
Commencement of Construction of the Project by Buyer, and
subsequent installments due every three (3) months thereafter,
together with interest on the unpaid principal balance accrued at
the rate of [[ ]] percent per annum from the date of the
Commencement of Construction. The outstanding principal may be
prepaid at any time, at the option of Buyer, without penalty.
3.1.2 Royalty Payment. Buyer shall, from and
after the Opening Date and for so long as an Excursion Gambling
Boat is operated as part of the Project during the term of the
Lease, pay to Seller an annual payment (the "Royalty") as follows:
(i) The annual payment shall be equal to the
lesser of (a) [[ ]] percent of the Net Free
Cash Flow for each Fiscal Year beginning with
the Fiscal Year in which the Opening Date
occurs, as certified by Buyer's or ACI's
chief financial officer, or (b) [[ ]],
prorated for any partial Fiscal Year. Such
certification shall contain a detailed
calculation of the Royalty showing all
components of such calculation. Buyer's
independent auditors will verify the
determination of the Royalty, and Buyer shall
deliver such verification together with
Buyer's certification of the Royalty. The
foregoing notwithstanding, beginning with the
first full Fiscal Year after the Opening
Date, the amount of annual Royalty payment
for each full Fiscal Year shall not be less
than [[ ]].
(ii) The Royalty payment shall be due and payable
on or before the later of:
(a) Ninety (90) days following the close of
Buyer's Fiscal Year, or
(b) Upon the delivery to Seller of Buyer's
annual Financial Statements as required
pursuant to Section 3.1.5.
(iii) If Buyer shall fail to pay any Royalty
payment when due and shall not cure such
failure within the later of (x) five (5) days
after delivery of written notice of such
failure by Seller to Buyer, or (y) fifteen
(15) days after the due date, then Buyer
shall pay interest thereon at the rate of
twelve percent (12%) per annum from the date
due until paid.
3.1.3 Sale of Project/Foreclosure. In the event
of the sale by Buyer of the Project or the Buyer's leasehold
interest pursuant to the Lease, except as provided below, Buyer
shall require the purchaser (hereinafter sometimes called "Buyer's
Successor") to assume all obligations of Buyer under this
Agreement thereafter arising, including the obligations pursuant
to Section 3.1.2 to pay the Royalty and pursuant to Section 3.1.5
to provide Financial Statements. The Buyer shall remain jointly
and severally liable with Buyer's Successor for performance of
all such obligations; provided that Buyer shall be deemed to be
released from any and all further obligations hereunder (i) if
Buyer's Successor has a tangible net worth at the time of the
closing of such sale greater than $25,000,000.00, (ii) five (5)
years following the date of closing of such sale, or (iii) upon
the subsequent sale of the Project or the leasehold interest
pursuant to the Lease to any Person that is not an Affiliate of
Buyer or of Buyer's Successor. Notwithstanding the foregoing, the
obligations to pay the Royalty and provide the Financial
Statements and Buyer's obligations under Section 7.16 shall not
apply and shall be released forever (a) in the event of a
foreclosure sale by a Lender which is not an Affiliate of Buyer,
or (b) the sale of the Project or the Buyer's leasehold interest
pursuant to the Lease by Buyer, or the direct or indirect sale of
the stock of Buyer by ACI to a Third Person, in either case
described in this clause (b) following any period of three
consecutive full Fiscal Years following the Opening Date in each
of which Buyer has a negative Net Free Cash Flow; provided that
in the event of a sale of the type referenced in clause (b)
above, Buyer shall pay to Seller [[ ]] percent of the net
proceeds, if any, of any such sale in excess of the sum of the
then outstanding Project-Related Debt and Unreturned Project
Equity as and when such net proceeds are received by Buyer.
3.1.4 No Interest in Project. Seller's right to
receive the Royalty shall not entitle Seller to, nor constitute any
legal or equitable interest in, the Project nor in the ownership of
Buyer. The relationship between Buyer and Seller with respect to the
Royalty is solely that of debtor and creditor and none other, and
it is expressly acknowledged and agreed that Buyer is not a
fiduciary for or in respect of Seller.
3.1.5 Delivery of Financial Statements. Following
the Commencement of Construction, Buyer will deliver a copy of its
Financial Statements to Seller within 120 days after the end of
each Fiscal Year or when publicly released, whichever is earlier.
Seller may engage its own auditors, at its expense, to review any
such Financial Statements and the underlying financial records,
during the normal business hours of Buyer's finance department,
upon reasonable advance notice. Such right of review may be
exercised not more than once with respect to the Financial
Statements for each Fiscal Year. Buyer will also provide to
Seller copies of unaudited quarterly financial statements within
sixty (60) days after the end of each fiscal quarter.
4. Closing; Conditions to Closing.
4.1 Closing. The closing of the purchase and sale contemplated
herein (the "Closing") is to occur at the offices of Stinson, Mag
& Fizzell, P.C., 100 South Fourth Street, Suite 700, St. Louis,
Missouri 63102, on September 28, 2001 or a mutually convenient
date and time within thirty (30) days following the satisfaction
of or written waiver of the conditions set forth in Sections 4.2
and 4.3 of this Agreement, whichever first occurs (the "Closing
Date"). Buyer, at its option, has the right to extend the
Closing Date for up to two (2) additional twelve (12)-month
periods, by delivering to Seller written notice thereof within
thirty (30) days prior to any such date. The foregoing
notwithstanding, the Closing Date shall occur on or before the
Commencement Date (as defined in the Lease) so that the
Commencement Date Fee and the Annual Rent (as defined in the
Lease) shall be payable by Buyer, not Seller. On the Closing
Date, Seller shall convey all of its right, title, and interest
in, and shall surrender possession of, all the Assets to Buyer.
4.2 Seller's Conditions. All of the obligations of
Seller hereunder to be performed at the Closing are subject to the
satisfaction of every one of the following conditions precedent
unless waived in writing by Seller:
4.2.1 the representations and warranties of Buyer
herein are true and correct in all material respects as of the
Closing Date;
4.2.2 Buyer is in compliance with all covenants,
agreements and undertakings of Buyer herein,
4.2.3 all consents, approvals or other authorizations
of third parties, including any Governmental Authorities, required
for the consummation of the transactions contemplated hereby have
been received by Seller,
4.2.4 no proceeding, investigation or inquiry is
pending or threatened by or before any arbitrator or Governmental
Authority to enjoin, restrain or prohibit, or to obtain material
damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated
hereby.
4.2.5 at the Closing, Buyer tenders to Seller the
following documents, executed in a manner and otherwise in form and
substance reasonably satisfactory to Seller:
4.2.5.1 a copy of resolutions duly adopted
by the board of directors of Buyer authorizing the execution and
delivery of this Agreement by Buyer and the consummation of the
transactions herein contemplated to be consummated by Buyer,
including the Promissory Note, and the Assignment and Assumption
Agreement, duly certified, as of the Closing Date, by the secretary
or any assistant secretary of Buyer;
4.2.5.2 a certificate, dated as of the Closing
Date, of a Responsible Officer of Buyer to the effect that all of the
conditions precedent to Buyer's obligations in Section 4.3 that
have not been waived by Buyer have been satisfied, and that the
representations and warranties of Buyer herein are true and
correct in all material respects as of the Closing Date;
4.2.5.3 a certificate of the secretary or
assistant secretary of Buyer certifying the names and signatures of
the officers of Buyer who have been authorized to execute and deliver
this Agreement and any other agreement executed and delivered on
behalf of Buyer in connection herewith;
4.2.5.4 a copy of the articles or certificate
of incorporation of Buyer certified as correct and complete as of
a recent date by the Secretary of State or comparable official of
the jurisdiction of incorporation of Buyer, together with a certificate
containing the attestation of such official as to the good standing of
Buyer in such jurisdiction, and a copy of the bylaws of Buyer,
certified as correct and complete as of the Closing Date by the
secretary or assistant secretary of Buyer;
4.2.5.5 the Promissory Note;
4.2.5.6 the Assignment and Assumption Agreement;
4.2.5.7 the collateral assignment of the Lease,
security agreement and UCC-1 financing statements constituting and
evidencing the Seller Collateral;
4.2.5.8 the legal opinion of counsel for Buyer
in form and substance as set out in Exhibit J; and
4.2.5.9 all conditions under the Lease to the
assignment of the Lease to Buyer have been satisfied or waived by Landlord.
4.3 Buyer's Conditions. All of the obligations of Buyer
hereunder to be performed at the Closing are subject to the
satisfaction of every one of the following conditions precedent
unless, waived in writing by Buyer;
4.3.1 the representations and warranties of Seller
herein are true and correct in all material respects as of the Closing
Date,
4.3.2 Seller is in compliance with all covenants,
agreements and undertakings of Seller herein;
4.3.3 no Material Adverse Change has occurred;
4.3.4 all consents, approvals or other authorizations
of third parties, including any Governmental Authorities, required
for the consummation of the transactions contemplated hereunder
have been received by Buyer and/or ACI (including the approval of
St. Louis County if and to the extent required by Buyer);
4.3.5 No proceeding, investigation or inquiry is
pending or threatened by or before any arbitrator or Governmental
Authority to enjoin, restrain or prohibit, or to obtain material
damages in respect of, or which is related to or arises out of, this
Agreement or the consummation of the transactions contemplated
hereby, or which could reasonably be expected to result in a
Material Adverse Effect;
4.3.6 Buyer has obtained current judgment,
tax and other lien and Uniform Commercial Code financing statement
search reports showing no liens against the Leased Site or any of
the Assets, other than taxes not yet due and payable;
4.3.7 on or before the Closing, Seller shall have
tendered to Buyer the following documents, executed in a manner and
otherwise in form and substance reasonably satisfactory to Buyer:
4.3.7.1 a copy of resolutions duly adopted by
the shareholders and directors of Futuresouth and Southboat
authorizing the execution and delivery of this Agreement by
Seller and the Transfer Documents and the consummation of the
transactions herein and therein contemplated to be consummated by
Seller, duly certified, as of the Closing Date, by the respective
secretary or any assistant secretary of Futuresouth and Southboat;
4.3.7.2 certificates, dated as of the Closing
Date, of Responsible Officers of Futuresouth, Southboat and SLP to
the effect that all of the conditions precedent to Seller's
obligations in Section 4.2 that have not been waived by Seller
have been satisfied, and that the representations and warranties
of Seller herein are true and correct in all material respects as
of the Closing Date;
4.3.7.3 a copy of resolutions duly adopted by
the shareholders and directors of the corporate general partner of
SLP authorizing the execution and delivery of this Agreement by SLP
and the Transfer Documents and the consummation of the transactions
herein and therein contemplated to be consummated by Seller, duly
certified, as of the Closing Date, by the respective secretary or
any assistant secretary of such corporate general partner.
4.3.7.4 a copy of resolutions duly adopted
by the limited partner of SLP authorizing the transactions contemplated
herein and in the Transfer Documents to be consummated by Seller, duly
certified, as of the Closing Date, by the secretary or any
assistant secretary of the corporate general partner.
4.3.7.5 releases and Uniform Commercial Code
termination statements, executed by the appropriate secured parties
and in a form appropriate for recording and filing that are sufficient
to release any and all Encumbrances against the Assets other than
Permitted Encumbrances;
4.3.7.6 copies of the respective articles or
certificates of incorporation of Futuresouth, Southboat and the
corporate general partner of SLP, certified as correct and complete
as of a recent date by the Secretary of State or comparable official
of thejurisdictions of incorporation of Futuresouth, Southboat and
the corporate general partner of SLP together with a certificate
containing the attestation of such official as to the good
standing of Futuresouth, Southboat or the corporate general
partner of SLP as the case may be, in such jurisdiction, and a
copy of the respective bylaws of Futuresouth, Southboat and the
corporate general partner of SLP, certified as correct and
complete as of the Closing Date by the respective secretaries or
assistant secretaries of Futuresouth, Southboat and the corporate
general partner of SLP;
4.3.7.7 a copy of the Amended and Restated
Agreement of Limited Partnership of SLP, certified as correct and
complete as of a recent date by the corporate general partner of SLP,
together with a certificate of the Missouri Secretary of State attesting
to the good standing of SLP and a copy of the certificate of
limited partnership, certified as correct and complete as of a
recent date by the Missouri Secretary of State.
4.3.7.8 a legal opinion of Seller's legal counsel
directed to the Buyer in form and substance as set out in Exhibit K.
4.3.7.9 an estoppel certificate from Landlord,
in form and substance satisfactory to Buyer, certifying that (i) the
Lease is in full force and effect, (ii) there exists no default(s) under
the Lease, (iii) to the Landlord's knowledge, there exists no
event or circumstance that with notice and/or the passage of time
will cause a default to occur under the Lease, and (iv) all
representations and warranties of Landlord set forth in Section 8
of the Lease shall be deemed to have been remade without
qualification or exception by Landlord to Buyer as of the Closing
Date.
4.3.7.10 a certificate from each shareholder of
Futuresouth in form and substance as set out in Exhibit L, delivered
to Buyer prior to the execution and delivery of this Agreement by Buyer
and to be reaffirmed as of the Closing Date; and any disclosures
set forth on any disclosure schedules to such certificates shall
be acceptable to Buyer in its sole discretion; provided that
Buyer shall act in good faith with respect thereto.
4.3.8 The completion to Buyer's satisfaction of
background investigations of all the Seller's entities and their
respective management, personnel and owners pursuant to ACI's
Gaming Compliance Program, as required by the Nevada Gaming
Control Board.
4.3.9 The satisfactory completion, in Buyer's sole
discretion, of its due diligence investigation concerning the
Leased Site and Project, including environmental matters, title
matters, survey, utilities, traffic, highway, soil structure,
zoning, access, the "offsite work conditions" as provided in the
Lease, and the feasibility of developing and operating the
Project on the Leased Site.
4.3.10 The consent of Landlord and any requisite
Governmental Authority to the assignment and assumption of the Lease.
4.3.11 Approval by Landlord, the Missouri Gaming
Commission, the U.S. Army Corps of Engineers, the U.S. Coast Guard,
local land use planning and zoning authorities and all Governmental
Authorities having jurisdiction over the Project, in such a
manner as to not materially decrease the size and scope of the
Project, except as otherwise acceptable to Buyer in its sole
discretion.
4.3.12 Buyer must be reasonably satisfied that the
ingress and egress to the Leased Site shall be improved (and at a cost,
if any, to Buyer, acceptable to Buyer in its sole discretion) in a
manner sufficient to handle the projected traffic flow to and
from the Leased Site. Buyer must be reasonably satisfied that
improvements shall be permitted on the Leased Site and
surrounding properties to enhance the visibility and prominence
of the Leased Site, including the development of an off-site
lighted monument sign and directional signage in the surrounding
area. Buyer shall be satisfied in its sole discretion, that the
hardscape and landscape along the major access roads leading to
the Leased Site shall be satisfactorily improved.
4.3.13 No additional Excursion Gambling Boat or other
casino shall be licensed or approved for development in Missouri that is
within a radius of fifteen (15) miles of the Leased Site and that
is south of Interstate 64 (the "Prime Territory").
4.3.14 Receipt by Buyer, in form and substance
acceptable to Buyer, of a commitment for an ALTA leasehold title
insurance policy from a title insurer selected by Buyer, insuring
Buyer's leasehold interest in the Leased Site, subject only to the
Permitted Encumbrances.
4.3.15 On or before the Closing, Seller shall have
tendered to Landlord the duly executed Assignment Release (as defined
in the Lease).
5. Representations and Warranties of Seller. Notwithstanding
any provision in this Agreement to the contrary, all
representations in this Agreement by Seller, including everything
in this Section 5, are limited by the qualification in this
paragraph. Since Southboat and SLP were controlled and operated
by Showboat prior to December 11, 1997, all representations
herein by Southboat and SLP are limited to the period from and
after December 11, 1997, and do not apply to any periods before
that date. In order to induce Buyer to enter into this Agreement
and to close the transactions contemplated hereunder, Seller
makes the following representations and warranties to Buyer as of
the date hereof and as of the Closing Date:
5.1 General Representations and Warranties.
5.1.1 Organization. Futuresouth and Southboat
are duly organized and validly existing corporations in good
standing under the laws of the jurisdiction of their
respective incorporations, and each has the power and authority
to own, lease and operate its assets and properties and to conduct
its business as now being conducted. Southboat is licensed and
qualified to do business as a foreign corporation and is in good
standing in the State of Missouri. Futuresouth and Southboat
have not conducted business under any name other than their
respective corporate names except as set forth in Disclosure
Schedule 5.1.1. SLP is a duly organized and validly existing
limited partnership in good standing under the laws of the
jurisdiction of its organization, and has the power and authority
to own, lease and operate its assets and properties and to
conduct its business as now being conducted.
5.1.2 Ownership. Futuresouth owns beneficially
and of record all outstanding shares of the capital stock of Southboat.
Disclosure Schedule 5.1.2 is a listing of all beneficial and
record holders of Stock in Futuresouth and the number of shares
of Stock held beneficially and/or of record by each of them.
Except as provided on Disclosure Schedule 5.1.2, no entity
comprising Seller has issued any Stock Equivalents. The only
partners of SLP are Futuresouth and Southboat, and neither such
partner has assigned or agreed to assign any of its interest in
SLP.
5.1.3 Authorization. There is no provision in the
articles of incorporation, certificates of incorporation, bylaws or
agreement of limited partnership or other governing documents of
any entity comprising Seller which prohibits or limits Seller's
ability to consummate the transactions contemplated herein.
Seller has the full right, power and authority to enter into this
Agreement, to consummate all of the transactions contemplated and
to fulfill all of the obligations to be fulfilled by Seller
hereunder. The execution and delivery of the Lease by SLP and
the execution and delivery of this Agreement by Seller and the
due consummation by Seller of the transactions contemplated
hereby will be duly authorized by all necessary action of the
directors and shareholders of Futuresouth and Southboat, the
directors and shareholders of the corporate general partner of
SLP and the limited partner of SLP and Seller has delivered
copies thereof to Buyer prior to the execution and delivery of
this Agreement by Buyer. This Agreement constitutes a legal,
valid and binding agreement of each entity comprising Seller
enforceable against each such entity in accordance with its
terms.
5.1.4 Subsidiaries and Partnerships. No entity
comprising Seller has any Subsidiary, nor owns stock or any other
interest in any corporation or other entity, except for the interests
that Futuresouth owns in Southboat and SLP.
5.1.5 No Conflict or Violation. Assuming all
consents necessary to transfer the Assets to Buyer are obtained in
a timely fashion, neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated
to be consummated by Seller hereby nor compliance by Seller with
any of the provisions hereof will result in: (i) a violation of
or a conflict with any provision of the articles or certificates
of incorporation, limited partnership agreements or comparable
organizational documents or bylaws of any entity comprising
Seller; (ii) to the best of Seller's knowledge, after due
investigation, a breach of, or right of termination, forfeiture
or default under any term, condition or provision of any
Contractual Obligation or Permit to which any entity comprising
Seller is a party or by which any of its assets is bound or
affected, or an event which, with the giving of notice, lapse of
time, or both, would result in any such breach, right of
termination, forfeiture or default; (iii) to the best of Seller's
knowledge, after due investigation, a violation of any Applicable
Law, or order, judgment, writ, injunction, decree or award, or an
event which with the giving of notice, lapse of time, or both,
would result in any such violation; (iv) to the best of Seller's
knowledge, after due investigation, an imposition of any
Encumbrance on any Asset, or an event which, with the giving of
notice, lapse of time, or both, would result in any such
imposition; or (v) to the best of Seller's knowledge, after due
investigation, any Person having the right to enjoin, rescind or
otherwise prevent or impede the transactions contemplated hereby
or to obtain damages from Buyer or to obtain any other judicial
or administrative relief as a result of any transaction carried
out in accordance with the provisions of this Agreement.
5.1.6 No Burdensome Restrictions. No entity
constituting Seller is a party to any Contractual Obligation the
performance of which will result in the creation of an Encumbrance
on any Asset. To the best of Seller's knowledge, after due
investigation, no entity comprising Seller is in breach or
violation of, or in default under or with respect to any
Contractual Obligation which breach, violation or default has any
reasonable likelihood of having a Material Adverse Effect, nor
has any event occurred which constitutes or, with the giving of
notice, lapse of time, or both, would constitute such a breach,
violation or default. No entity comprising Seller is subject to
any Applicable Law, compliance with which has any reasonable
likelihood of having a Material Adverse Effect.
5.1.7 Litigation and Proceedings. Except as
set forth in Disclosure Schedule 5.1.7, there are no actions, suits,
proceedings or investigations pending (other than any
investigation relating to Buyer's application for a license to
operate an Excursion Gambling Boat at the Leased Site) or, to the
best of Seller's knowledge after due investigation, threatened
against or directly affecting any entity comprising Seller or any
of their respective properties or their respective directors,
officers or employees (in their capacities as such) before any
Governmental Authority relating to the Leased Site or the Assets,
nor is there any valid basis for any such action, suit,
proceeding or investigation. No entity constituting Seller has
been charged with, nor, to the best of Seller's knowledge after
due investigation, is under investigation with respect to, any
charge which has not been resolved concerning any violation of
any Applicable Law with respect to any entity comprising Seller
or the Assets nor is there a valid basis for any such charge or
investigation. No judgment, order, writ, injunction, decree or
assessment or other command of any Governmental Authority
affecting any entity comprising Seller or the Assets is entered
or in effect. There is no action, suit, proceeding or
investigation pending or, to the best of Seller's knowledge,
after due investigation, threatened which challenges the validity
of this Agreement or the transactions contemplated hereunder, or
otherwise seeks to prevent, directly or indirectly, the
consummation of such transactions, nor is there any valid basis
for any such action, suit, proceeding or investigation.
5.1.8 Consents and Approvals. No consent,
approval or authorization of any Person, nor any declaration,
filing or registration with any Governmental Authority or other
Person, is required to be made or obtained by any entity constituting
Seller in connection with the execution, delivery and performance by
Seller of the transactions contemplated hereunder, except as set
forth in Disclosure Schedule 5.1.8.
5.1.9 Disclosures. All disclosures made by or on
behalf of any and all entities comprising Seller in connection with
the background investigation under ACI's Gaming Compliance Program
are and will be true, complete and correct.
5.2 Representations and Warranties With Respect to the Assets.
5.2.1 Title to Assets. Since the acquisition of
the Assets by Seller on or about December 11, 1997, there have
been no acquisitions or dispositions of the Assets. Seller has
not, directly or indirectly, by operation of law or otherwise,
transferred or assigned all or part of its right, title or
interest in and to any of the Assets to any other Person.
5.2.2 Leased Site. Seller has no knowledge of
any federal, state, county or municipal pending proceedings to
change any highways or road systems adjoining the Leased Site or
to restrict or change access from any such highway or road to the
Leased Site or of any pending proceedings for improvements which
might result in a special assessment against the Leased Site.
5.2.3 Project Documents. To the best of Seller's
knowledge, Exhibit F is a true, accurate and complete list of all
Project Documents that are possessed by Seller and which were
delivered to Seller by Showboat, and all such Project Documents have
previously been delivered to Buyer by Seller for review and
photocopying.
5.2.4 Other Assets. Neither Seller nor any
Affiliate of Seller owns or possesses any assets, other than the
Assets, respecting the Leased Site or the development thereof. In
the event that any such assets are discovered, Seller shall promptly
deliver written notice thereof to Buyer and shall promptly convey
such assets to Buyer upon Buyer's request.
5.3 Representations and Warranties With Respect to the
Liabilities of Seller.
5.3.1 Debts. Seller has no Debt (whether accrued,
fixed, absolute, contingent or otherwise and whether direct or
indirect, primary or secondary, due or to become due) relating
to the Assets, except liabilities which are set forth in the
Disclosure Schedule 5.3.1. To the best of Seller's knowledge
after due investigation, there is no basis for the assertion against
Seller with respect to the Assets of any liability, obligation,
commitment or Encumbrance which could adversely affect the value
of any of the Assets or the Project or become an Encumbrance on
any of the Assets, except as set forth on such Schedule.
5.3.2 Environmental Matters. Seller has never
been in physical possession of the Leased Site and has never conducted
any environmental site assessments relating to the Leased Site.
Buyer and Seller understand that the Project Documents contain
environmental site assessment materials generated for Showboat;
however, Seller makes no representations or warranties concerning
the correctness or completeness of such materials, except as set
forth in Section 5.5.1. It is agreed that Seller shall not have
any liability for any environmental remediation that may be
necessary on the Leased Site, except in connection with a breach
of the representations, warranties or covenants contained herein.
5.3.3 Insurance. Since January 15, 2000,
Seller has maintained, and as of the Closing will have consistently
maintained general liability insurance coverage with respect to
the Leased Site in an amount of not less than $2,000,000.00 per
occurrence, subject to no deductible.
5.4 Representations and Warranties With Respect to the
Operations of Seller.
5.4.1 Compliance with Laws. Except as set forth
in Schedule 5.4.1, each entity constituting Seller is, to the
best of Seller's knowledge after due investigation, in compliance
with all Applicable Laws. Seller has not received any notice alleging
(or any notice of any investigation related to) any violation by
Seller or any entity constituting Seller of any Applicable Law,
which notice has not been fully and completely resolved as of the
date of this Agreement.
5.4.2 Condemnation, Eminent Domain, Rezoning
and Leasing. No part of the Leased Site is, to the best of Seller's
knowledge, the subject of any pending condemnation, eminent domain,
rezoning or similar proceeding. Seller has not listed the Leased Site
(or any portion thereof) for lease or sub-lease with any real estate
broker, listing agent or similar Person. To the best of Seller's
knowledge, none of the Leased Site is subject to a lease or
similar Contractual Obligation, other than the Lease.
5.4.3 Improper Payments. Except as set forth
in Schedule 5.4.3, neither Seller nor any agent acting on behalf
of Seller has at any time (i) made any contributions to any candidate
for political office in violation of Applicable Law, or failed to
disclose fully any contributions to any candidate for political
office in accordance with any Applicable Law requiring such
disclosure or (ii) made any payment to any local, state, federal
or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, other than
payments required or allowed by Applicable Law.
5.5 Representations and Warranties With Respect to Seller's
Disclosures.
5.5.1 Material Omissions. To the best of Seller's
knowledge, in addition to the foregoing representations and
warranties contained in this Section 5, neither this Agreement
nor any statement, list, certificate or other information furnished
or to be furnished by or on behalf of Seller in connection with this
Agreement or any of the transactions contemplated hereby contains
an untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein
or therein not misleading, or which if disclosed would reasonably
affect the decision of a Person considering a purchase of the
Assets for the Project.
5.5.2 Brokers. No agent, broker or other Person
acting pursuant to express or implied authority of Seller is entitled
to a commission or finder's fee in connection with the transactions
contemplated by this Agreement or, pursuant to express or implied
authority of Seller, will be entitled to make any claim
(including the assertion of an Encumbrance) against Buyer or all
or any portion of the Assets for a commission or finder's fee.
5.5.3 Project Documents. Seller will, at Closing,
quitclaim all of Seller's right, title and interest in and to the
Project Documents to Buyer; however, Seller makes no express or
implied warranties of any kind concerning the Project Documents,
except as otherwise expressly provided herein. Seller shall have no
liability of any kind to Buyer if Buyer cannot legally use the
Project Documents, or if they are not assignable, or for defects
in such documents, or for any other matter related to such
documents, except in connection with a breach of the
representations, warranties or covenants contained herein.
6. Representations and Warranties of Buyer. Buyer makes the
following representations and warranties to Seller:
6.1 Organization. Buyer is a duly organized and validly
existing corporation in good standing under the laws of the
jurisdiction of its incorporation, and has the power and
authority to own, lease and operate its assets and properties and
to conduct its business as now being conducted.
6.2 Authorization. There is no provision in Buyer's
articles or certificate of incorporation or comparable organizational
documents or in its bylaws which prohibits or limits Buyer's
ability to consummate the transactions contemplated hereunder.
Subject to the provisions of Sections 4.3.8 and 4.3.9 and to the
other terms and conditions of this Agreement, Buyer has the full
right, power and authority to enter into this Agreement and to
consummate or cause to be consummated all of the transactions and
to fulfill all of the obligations contemplated hereunder
excepting those matters contemplated herein that are subject to
approval by Governmental Authority. The execution and delivery
of this Agreement by Buyer and the due consummation by Buyer of
the transactions contemplated hereby have been duly authorized by
all necessary action of the board of directors and shareholders
of Buyer. This Agreement constitutes a legal, valid and binding
agreement of Buyer enforceable against Buyer in accordance with
its terms
6.3 No Conflict or Violation. Neither the execution
and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby will result in a material: (i)
violation of or a conflict with any provision of the articles or
certificate of incorporation or comparable organizational
documents or bylaws of Buyer; (ii) breach of, accrual of a right
of termination with respect to, or forfeiture or default under
any term, condition or provision of any Contractual Obligation or
Permit to which Buyer is a party or by which any of its assets is
bound or affected, or an event which, with the giving of notice,
lapse of time, or both, would result in any such breach, right of
termination, forfeiture or default; (iii) violation of any
Applicable Law, or order, judgment, writ, injunction, decree or
award, or an event which, with the giving of notice, lapse of
time, or both, would result in any such violation; or (iv) any
Person having the right to enjoin, rescind or otherwise prevent
or impede the transactions contemplated hereby or to obtain
damages from Seller or to obtain any other judicial or
administrative relief as a result of any transaction carried out
in accordance with the provisions of this Agreement.
6.4 Litigation and Proceedings. There are no actions,
suits, proceedings or investigations pending (other than any
investigation relating to Buyer's application for a license to
operate an Excursion Gambling Boat at the Leased Site) or, to the
best of Buyer's knowledge after due investigation, threatened
against or directly affecting Buyer or any of its properties or
its directors, officers or employees (in their capacities as
such) before any Governmental Authority, nor is there any valid
basis for any such action, suit, proceeding or investigation.
Buyer has not been charged with, nor, to the best of Buyer's
knowledge after due investigation, is under investigation with
respect to, any charge which has not been resolved concerning any
violation of any Applicable Law with respect to Buyer nor is
there a valid basis for any such charge or investigation. No
judgment, order, writ, injunction, decree or assessment or other
command of any Governmental Authority affecting Buyer or any
Affiliate of Buyer is entered or in effect. There is no action,
suit, proceeding or investigation pending or, to the best of
Buyer's knowledge after due investigation, threatened which
challenges the validity of this Agreement or the transactions
contemplated hereunder, or otherwise seeks to prevent, directly
or indirectly, the consummation of such transactions, nor is
there any valid basis for any such action, suit, proceeding or
investigation.
6.5 Consents and Approvals. No consent, approval or
authorization of any Person, nor any declaration, filing or
registration with any Governmental Authority or other Person, is
required to be made or obtained by Buyer in connection with the
execution, delivery and performance by Buyer of the transactions
contemplated to be consummated by Buyer hereunder, except for the
consents and approvals which are contemplated hereunder and such
other consents and approvals as are set out on Disclosure
Schedule 6.5.
6.6 Brokers. No agent, broker or other Person acting
pursuant to express or implied authority of Buyer is entitled to a
commission or finder's fee in connection with the transactions
contemplated by this Agreement or, pursuant to express or implied
authority of Buyer, will be entitled to make any claim (including
the assertion of an Encumbrance) against Seller or the Leased
Site for a commission or finder's fee,
6.7 No Licensing Problems. Buyer is not aware of any
circumstances, whether or not they have been disclosed to the
Missouri Gaming Commission, that would adversely affect Buyer's
ability to obtain a gaming license from the State of Missouri, or
which would adversely affect the ability of Buyer or its
Affiliates to obtain any consents to the Project that they may
need from the gaming authorities of any other state where any of
them do business.
6.8 Ownership. Buyer is wholly owned subsidiary of ACI,
and no other Person has any equity interest in or option to acquire
an equity interest in Buyer.
6.9 Financial Statements of ACI. The audited financial
statements of ACI for its Fiscal Year ended December 31, 1998,
and the unaudited statements of ACI for the nine months ended
September 30, 1999, copies of which have been delivered to
Seller, fairly present the financial condition of ACI as of the
date of said statements and there has been no material adverse
change in the financial condition of ACI since the date of said
statements.
7. Affirmative Covenants. From and after the date hereof, the
Parties covenant and agree as follows:
7.1 Permits. Seller understands and acknowledges that Buyer
has amended and restated the Missouri Riverboat Gaming Applications
previously submitted by Seller or its predecessor, and Seller
hereby reaffirms its consent thereto. On or before the later of
February 11, 2000 and ten (10) days following the execution and
delivery of this Agreement by the Parties, Buyer shall pay to
Seller the sum of $25,000.00 to partially reimburse Seller for
the application fees previously paid by Seller to the Missouri
Gaming Commission. Seller agrees to cooperate with Buyer and to
take all actions reasonably requested by Buyer to assist and
support Buyer in its efforts to obtain all Permits necessary for
the development and operation of the Project. Buyer shall
promptly reimburse Seller for all reasonable out-of-pocket costs
and expenses incurred by Seller in rendering such assistance,
provided that such costs and expenses have been submitted to and
pre-approved by Buyer. Buyer shall bear the costs associated
with all applications for Permits, including the fees of legal
counsel and supporting experts. Seller, if it elects to retain
legal counsel to review such applications, shall bear the cost of
such counsel. In the event any Governmental Authority shall seek
to impose a fee or fees for the investigation of the background
of any entity comprising Seller or any shareholder, officer,
director, partner (limited or general), employee or Affiliate
thereof, such fee and any expenses associated with such
investigation, including legal and accounting fees, shall be paid
by Seller.
7.2 Governmental Investigation. Seller (a) acknowledges
that Buyer's ability to obtain and maintain all Permits necessary
to develop and operate the Project depends in part upon the
completion from time to time to the satisfaction of all relevant
Governmental Authorities, including without limitation the
Missouri Gaming Commission, of a thorough background
investigation and evaluation of Seller, all shareholders,
partners and other Persons with any financial interest or
management role in Seller, and all employees of Seller, which
investigation and evaluation may concern the character,
reputation and criminal records of such Persons; (b) agrees to
cooperate with Buyer to furnish or cause to be furnished all
information and to take or cause to be taken all actions
necessary or expedient to the achievement from time to time of
such satisfactory completion; (c) agrees to promptly notify Buyer
in writing of the occurrence of any changes in the record or
beneficial ownership of any Stock of any of the entities
comprising Seller, which notice shall specify the name of the
entity, the nature of the change or transaction causing the
change, the quantity of Stock involved, and the names and
addresses of all parties to the change or transaction causing the
change; and (d) agrees that, if Buyer is informed, orally or in
writing, through formal notification or otherwise, that any such
Person's interest in or involvement with Seller may or could
delay or jeopardize the ability of Buyer or any Affiliate of
Buyer to obtain or maintain any Permit related to the Project or
otherwise, Buyer shall notify Seller thereof, and, to the extent
permitted by the Missouri Gaming Commission and/or other
Governmental Authority, Seller shall have thirty (30) days after
receipt of such notice in which to try to convince the Missouri
Gaming Commission and/or other Governmental Authority that such
Person's interest does not need to be terminated and should not
delay or jeopardize the ability of Buyer or any Affiliate of
Buyer to obtain or maintain any Permit related to the Project or
otherwise. Buyer agrees to provide Seller with such information
as is made available to Buyer concerning the reasons why the
Missouri Gaming Commission and/or other Governmental Authority
wants such Person's interest terminated or why such Person's
interest in or involvement with Seller may or could delay or
jeopardize the ability of Buyer or any Affiliate of Buyer to
obtain or maintain any Permit related to the Project or
otherwise; provided that Buyer shall have no obligation to obtain
such information or to support or assist Seller in supporting
such Person's continued interest in or involvement with Seller.
The foregoing notwithstanding, Buyer shall, upon receipt of a
written request from Seller, request by letter addressed to the
Missouri Gaming Commission and/or other Governmental Authority
(as the case may be) the disclosure to Seller of such
information; provided that Buyer shall not be obligated to
request such information more than once with respect to any such
Person. If Seller is not successful in said thirty (30) day
period in convincing the Missouri Gaming Commission and/or other
Governmental Authority that such Person's interest does not need
to be terminated, then Seller shall cause such interest or
involvement to be terminated by the sale of such interest to a
suitable Person, the termination of such involvement or
otherwise. Until such termination is effected to the
satisfaction of Buyer or its Affiliate (as the case may be) and
all relevant Governmental Authorities, all rights to any Royalty
payment, payments under the Promissory Note and any other payment
due from Buyer coming due prior to the date on which such
satisfactory termination is effected shall be suspended; provided
that if such satisfactory termination is not effected within
forty-five (45) days following the delivery of the aforesaid
notice to Seller, Seller shall permanently forfeit all rights to
the foregoing payments. Seller agrees that at all times prior to
the termination of such involvement to the satisfaction of Buyer
or its Affiliate (as the case may be) and all relevant
Governmental Authorities, neither Seller nor any Affiliate of
Seller shall have any legal or financial interest or
participation, direct, indirect, attributed or otherwise, in or
to the Project, including any income or revenues therefrom.
7.3 Notices. Seller shall deliver or cause to be delivered
to Buyer, promptly after receipt or delivery (if applicable) of the
same, copies of all notices from any Governmental Authority or
any Person respecting the Leased Site, the Business or the
Project.
7.4 Contracts. Seller will not, except with Buyer's prior
written consent, amend or terminate the Lease, exercise or waive
any rights under the Lease or enter into any material Contractual
Obligation respecting the Leased Site. In the event that Buyer
requests or requires any further extension of the Investigation
Date (as defined in the Lease), Seller shall not be obligated to
obtain any such extension or to pay any consideration to the
Landlord or any Third Person in connection therewith.
7.5 Other Prohibited Transactions. No Party will, without
the prior written consent of the other, take any action or omit to
take any action, suffer any act or omission, which may result in
any of the representations and warranties of such first mentioned
Party being untrue or in the nonfulfillment of any of the
covenants set forth herein. Seller may not (and will not permit
any of its Affiliates to), without the prior written consent of
Buyer (which consent with respect to subsections (i), (iv) and
(v) shall not be unreasonably withheld, but may be given or
withheld in Buyer's sole discretion with respect to all other
subsections below), directly or indirectly, by operation of law
or otherwise; (i) pay any dividends or otherwise make any
distributions to Seller's shareholders in violation of Applicable
Law; (ii) issue any Stock or Stock Equivalent in Seller; (iii)
borrow money using the Lease or Leased Site as collateral; (iv)
fail to pay any of Seller's Debts, to the extent of Seller's
assets, as the same become due; provided that Seller shall have
the right to diligently contest any claimed Debt; (v) dissolve
Seller and form a liquidating trust, the certificated Stock of
which is issued to the then shareholders of Futuresouth, (vi)
merge or consolidate Seller with any other Person; (vii) engage
in any discussions, or solicit or encourage any discussions,
regarding the Leased Site or the Lease, except as provided for
herein; or (viii) agree to do any of the foregoing. Seller will
promptly notify Buyer in writing upon the occurrence of any
Material Adverse Change or event which could have a Material
Adverse Effect.
7.6 Inspection. Buyer and its employees, officers,
shareholders, directors, attorneys, agents, independent auditors
and representatives have the right to make a full due diligence
investigation of the Assets and the books and records of Seller
pertaining thereto. Buyer may conduct engineering or other
inspections necessary or desirable to enable Buyer to evaluate
the Leased Site, and may apply for any Permits which may be
required of Buyer. Seller will cooperate with Buyer in carrying
out the provisions of this Section and will provide Buyer
promptly with such documents and information pertaining to the
Assets as Buyer may reasonably request, if such documents are
under the control of Seller or any Affiliate of Seller. Buyer
agrees to indemnify, hold harmless and defend Seller against any
loss, damages, claim or liability (including mechanic or
materialmen's liens) suffered by Seller and resulting from the
acts or omissions of Buyer or its employees, officers,
shareholders, directors, attorneys, agents, independent auditors
and representatives in inspecting or investigating the Leased
Site pursuant to this Section. Notwithstanding the preceding
sentence, Buyer has no obligation to indemnify, hold harmless or
defend Seller with respect to any matter arising out of Seller's
own negligence or willful misconduct. Sections 11.3 and 11.4
shall apply with respect to Buyer's indemnification obligations
under this Section 7.6. In no event may Buyer commence any
construction on the Leased Site until it has closed on the
purchase of the Assets.
7.7 Contacts. Seller hereby grants Buyer permission to
contact any parties to the Lease or Project Documents for the
purpose of investigating and ascertaining the status thereof.
7.8 Condemnation. If, after the date hereof but prior
to the Closing, condemnation or eminent domain proceedings are
proposed, threatened or commenced against any portion of the Leased
Site which could have a Material Adverse Effect on the prospects or
operation of the Project, Seller will immediately notify Buyer of
such event. Buyer may elect to terminate its obligations under
this Agreement by notice to Seller within ten (10) Business Days
after Buyer receives such notice from Seller, or elect to close
the purchase and sale contemplated herein and receive any and all
condemnation proceeds or awards (collectively the "Proceeds")
payable as the result of such proceeding (including, any such
Proceeds paid to or for the account of Seller or any Affiliate of
Seller prior to the Closing Date, whether or not such Proceeds
then constitute Assets). If Buyer elects to terminate such
obligations, no Party shall have any further obligation under
this Agreement, except for such obligations as expressly survive
termination. If Buyer elects to close, Seller agrees to execute
such assignment documents as Buyer may reasonably require to
effect the assignment to Buyer of all Proceeds to which Seller
has a right.
7.9 Project Documents. Seller shall, if requested in
writing by Buyer's legal counsel, deliver to Buyer or such legal
counsel letters addressed to each of the professional service
companies which prepared or issued any of the Project Documents,
authorizing such companies to communicate freely and otherwise
cooperate with Buyer. The letters shall be in a form and
substance reasonably acceptable to Buyer and Seller.
7.10 Improper Payments. Neither Seller nor any Affiliate
of Seller nor any agent acting on behalf of any of them will (i)
make any contributions to any candidate for political office in
violation of Applicable Law, or fail to disclose fully any
contributions to any candidate for political office in accordance
with any Applicable Law requiring such disclosure or (ii) make
any payment to any local, state, federal or foreign governmental
officer or official, or other person charged with similar public
or quasi-public duties, other than payments required or allowed
by Applicable Law. The provisions of this Section 7.10 will
survive the Closing and the delivery of the Transfer Documents.
7.11 Exclusivity. So long as this Agreement is in effect,
neither Seller nor any Affiliate of Seller shall participate in
any negotiations or discussions or enter into any understanding
or agreement with any third party concerning the Project or the
Leased Site that would conflict with, preclude or serve as an
alternative or "back-up" to this Agreement or the transactions
contemplated hereunder. If Seller or any Affiliate of Seller
receives any written or oral offers or proposals from third
parties for any such negotiations, discussions, understandings or
agreements respecting the Project or the Leased Site, Seller
shall immediately notify Buyer in writing of the identity of the
Person making such offer or proposal and the substance thereof.
7.12 Right of Setoff. Seller agrees, on its behalf and on
behalf of all subsequent holders of the Promissory Note and any
assignees of the Royalty, that Buyer may (at its election) from
time to time set off any and all amounts due Buyer from Seller
(as and when the same become due) against any and all amounts
then due and owing (or to become due and owing) under the
Promissory Note and the Royalty following the delivery by Buyer
to Seller of not less than twenty-five (25) days prior written
notice thereof, which notice shall state the grounds for any such
setoff and shall include copies of any and all appropriate
supporting documentation. In the event that Seller objects to
any such proposed setoff, Seller shall have the right to cause
the matter to be decided by arbitration in accordance with the
provisions of Section 14 hereof. In order to exercise such
right, Seller shall file a notice of a demand for arbitration
with Buyer and the American Arbitration Association within the
aforesaid twenty-five (25) day period. In the event that such
right is timely exercised by Seller, Buyer shall within twenty-
five (25) days following the receipt of the notice of a demand
for arbitration deposit in escrow with U.S. Title Guaranty
Company, Inc. (or such other party upon whom Buyer and Seller may
agree) the amount set off that is in dispute. If the amount
deposited is greater than $25,000.00, such amount shall be held
by the escrow agent in an interest-bearing account, and the
interest earned thereon shall be paid ratably to the party or
parties to whom the amount deposited is disbursed upon the
resolution of the dispute. The escrow agreement shall provide
that the amount escrowed shall be disbursed by the escrow agent
(i) upon receipt of a joint direction from Buyer and Seller, (ii)
in accordance with the arbitration award, or (iii) in accordance
with an order from a court of competent jurisdiction.
7.13 Showboat Development Company. Seller expressly
acknowledges that it shall satisfy any and all of its responsibilities,
liabilities and obligations owed to Showboat under that certain
Stock Purchase Agreement dated the 11th day of December, 1997 by
and between Showboat and Futuresouth, including any amendments
thereto. Seller further agrees to indemnify, defend and save
Buyer harmless from and against any and all claims, demands,
judgments and expenses, including but not limited to attorneys'
fees and expenses of litigation incurred by Buyer in connection
with any claims made by Showboat, its successors and assigns
against Buyer. Sections 11.1, 11.3 and 11.4 shall apply to such
indemnification obligations of Seller.
7.14 Lease Obligations. Prior to the Closing Date, Buyer
shall not be responsible for the performance of any of the obligations
of SLP under the Lease, except that Buyer agrees, subject to the
limitations and conditions set forth in this Agreement, to
cooperate with Seller in connection with the performance of those
obligations specifically applicable to Assignee (as defined in
the Lease), pursuant to Sections 2(c), 3(b) and (c), 4(a) and 13
of the Lease.
7.15 Information. Buyer agrees to provide reasonable reports
to Seller from time to time concerning the status of the Project and
any material changes therein, to meet with representatives of
Seller not less frequently than quarterly for such purposes, and
to respond to reasonable requests from Buyer for information
concerning the status of the Project.
7.16 VIP Privileges. Subject to the provisions of Section
3.1.3 hereof and compliance with Applicable Law, commencing on the
Opening Date and continuing for as long as the Excursion Gambling
Boat included in the Project remains open for business, (i) each
of the shareholders of Futuresouth, so long as they remain
shareholders of Futuresouth, shall be entitled to use, along with
their guests, on a non-exclusive basis, all of the facilities of
the Project that are available for use from time to time by the
customers of the Project, including any club or other facilities
that are available for use by only a portion of such customers,
and (ii) Buyer shall, subject to Applicable Law, provide to
Seller a credit allowance in the amount of $10,000.00 per
calendar year, which may be utilized by Seller (or such
shareholders, as permitted by Seller) to purchase goods and
services available from time to time for purchase by customers of
the Project at then prevailing prices. Buyer may establish and
modify, from time to time, reasonable policies and procedures for
the exercise of Buyer's rights under this Section 7.16. Such
credit allowance shall be prorated for any calendar year in which
the Project is not open for business during part of such year.
If and to the extent that any portion of the credit allowance for
any calendar year is not used in such calendar year, such unused
portion shall be forfeited.
7.17 Transfers of Stock of Seller. Seller will not permit
any direct or indirect sale, assignment, pledge, hypothecation,
transfer or other disposition of any record or beneficial
interest in any Stock of any entity constituting Seller (a
"Transfer") except in compliance with the following provisions:
(a) Transfers Upon Death. Any Transfer occurring
directly as a result of and upon the occurrence of the death of a
natural person may be made so long as the Transfer is in
compliance with all Applicable Laws and the following additional
requirements: (i) Seller will promptly notify Buyer of the
Transfer as required by Section 7.2; (ii) the transferee will
cooperate with any background investigation with respect to the
transferee pursuant to ACI's Gaming Compliance Program; (iii) the
Transfer will be subject to any investigation and/or approval
required by one or more Governmental Authorities as contemplated
by Section 7.2; and (iv) such Transfer shall not in any way limit
or restrict Buyer's rights under Section 7.2 with respect to the
suspension and/or forfeiture of payments by Buyer to Seller.
Transfers permitted pursuant to this clause do not extend to or
include Transfers by the estate of the deceased natural person to
heirs or devisees or by a testamentary trust of the deceased
natural person to beneficiaries of such trust, which Transfers
are subject to clause (c) of this Section 7.17.
(b) Dissolution or Merger of Entities. Any
Transfer of Stock in Southboat or SLP to Futuresouth deemed to
result from the dissolution and liquidation of Southboat or SLP,
or deemed to result from the merger or consolidation of Southboat
or SLP with and into Futuresouth as the surviving entity, may be
made so long as such Transfer complies with Section 7.5 and all
Applicable Laws and Seller promptly notifies Buyer in writing of
the transaction.
(c) Other Transfers. Any other Transfer may be
made only with the prior written consent of Buyer, which consent
will not be unreasonably delayed or withheld. In connection with
any such proposed Transfer, Seller will provide to Buyer in
writing the details of the proposed Transfer and will cause the
proposed transferee to submit to any background investigation
conducted under ACI's Gaming Compliance Program and to cooperate
with any investigations by one or more Governmental Authorities
as contemplated by Section 7.2. Without limiting the foregoing,
Seller acknowledges and agrees that it will not be unreasonable
for Buyer to withhold its consent if (i) Buyer's background
investigation, if any, concerning the transferee under ACI's
Gaming Compliance Program is not satisfactory; (ii) if Buyer is
informed, orally or in writing, through formal notification or
otherwise, that the proposed transferee's interest in or
involvement with Seller may or could delay or jeopardize the
ability of Buyer or any Affiliate of Buyer to obtain or maintain
any Permit related to the Project or otherwise; or (iii) if any
Permit of any Governmental Authority or other requirement of
Applicable Law for the consummation of such Transfer has not been
obtained or satisfied, as the case may be. If Buyer withholds
its consent pursuant to clause (ii) above, Seller will have the
rights set forth in Section 7.2 to seek to convince the
applicable Governmental Authority that the transferee should be
allowed to acquire an interest in Seller and to cause Buyer to
request information from the applicable Governmental Authority.
(d) Legend. Upon the execution of this Agreement
and thereafter, Seller agrees to cause all outstanding and all
newly issued Stock certificates or other indicia of ownership of
any entity constituting Seller to bear the following legend:
THE SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION,
TRANSFER OR OTHER DISPOSITION OF ANY RECORD
OR BENEFICIAL INTEREST IN THE SECURITIES OR
OTHER EQUITY INTERESTS REPRESENTED BY THIS
CERTIFICATE, AGREEMENT OR INSTRUMENT (A
"TRANSFER") IS SUBJECT TO CERTAIN
RESTRICTIONS AND REQUIREMENTS SET FORTH IN AN
ASSET PURCHASE AND SALE AGREEMENT AMONG
FUTURESOUTH, INC., SOUTHBOAT LEMAY, INC.,
SOUTHBOAT LIMITED PARTNERSHIP (AS SELLER ON A
COLLECTIVE BASIS) AND AMERISTAR CASINO ST.
LOUIS, INC. (AS BUYER) DATED AS OF FEBRUARY
___, 2000 (THE "AGREEMENT"). ANY SUCH
TRANSFER MADE IN VIOLATION OF THE AGREEMENT
SHALL BE NULL AND VOID AB INITIO. A COPY OF
THE AGREEMENT IS ON FILE AT THE PRINCIPAL
EXECUTIVE OFFICE OF THE ISSUER.
(e) Effect of Consent. The consent of Buyer to
any proposed Transfer shall not limit or restrict the exercise of
Buyer's rights under Section 7.2 as and when appropriate.
8. Abandonment of Project. In the event Buyer, in its sole
discretion, determines for any reason and at any time prior to
the Commencement of Construction not to proceed with the Project,
Buyer shall deliver written notice thereof to Seller. Upon
delivery of such notice, this Agreement shall terminate and all
parties shall thereafter be released from all further obligations
hereunder, except as expressly stated in this Section or as
otherwise provided herein. Following the delivery of such
notice, Buyer shall reasonably cooperate with Seller for a
reasonable period of time (not to exceed ninety (90) days) in
Seller's efforts, if any, to substitute another company in the
place of Buyer to pursue the Project. In the event of such
termination, Seller shall have the right, but not the obligation,
to require Buyer to assign to Seller its assignable rights,
assets and entitlements to the Project, including the Lease, the
Project Documents, and all other plans and designs, studies,
inspections, reports and permits for the Project in exchange for
an agreement by Seller, in form and substance satisfactory to
Buyer and Seller, to: (i) assume any and all liabilities and
obligations in respect of such assigned rights, assets and
entitlements, (ii) indemnify, protect, defend and hold harmless
Buyer and ACI against and from such liabilities in accordance
with Sections 11.3 and 11.4 of this Agreement, and (iii) pay One
Hundred Dollars ($100.00) to Buyer and ACI; provided, however,
that Seller will not be required to assume, or to indemnify,
protect, defend or hold harmless Buyer and ACI against or from
any liabilities in respect of any intentional torts or frauds for
which Buyer or ACI is responsible.
9. Alternate Site. Alternate Site. Notwithstanding any
provision to the contrary contained herein, in the event that
Buyer, ACI or any other Affiliate of ACI (herein called an "ACI
Entity") shall, during the term of this Agreement (whether prior
to or after the Closing Date) or within thirty (30) months
following the termination of this Agreement by Buyer (other than
a termination pursuant to Section 10.3 hereof), shall have a
gaming license application accepted for investigation by the
Missouri Gaming Commission for a site, other than the Leased
Site, that is within the Prime Territory (the "Alternate Site"),
and such ACI Entity thereafter receives a gaming license and
commences gaming operations on an Excursion Gambling Boat at the
Alternate Site, then Buyer and ACI shall cause such ACI Entity to
pay to Seller the balance of the Purchase Price with respect to
the operation by the ACI Entity of such Excursion Gambling Boat
and any related facilities in accordance with the provisions of
Section 3 hereof, and all other provisions of this Agreement
respecting the Purchase Price shall likewise be applicable
thereto; provided that the foregoing obligation to pay the
balance of the Purchase Price to Seller shall be conditioned upon
Seller taking all actions reasonably requested by any ACI Entity
to assist, support and cooperate with such ACI Entity in its
efforts to obtain all Permits necessary for the development and
operation of such Excursion Gambling Boat and related facilities.
The foregoing notwithstanding, if this Agreement has been
terminated by Buyer due to a failure to satisfy one (1) or more
of the conditions set forth in Section 4.3 hereof, then the
foregoing obligation to pay the balance of the Purchase Price
shall also be conditioned upon the exclusive endorsement by St.
Louis County of the Alternate Site (to the exclusion of all other
sites within the Prime Territory) for the development and
operation by the ACI Entity of an Excursion Gambling Boat. In
addition, in the event that any ACI Entity shall within eighteen
(18) months following the termination of this Agreement (other
than an termination pursuant to Section 10.3 hereof) have a
gaming license application accepted for investigation by the
Missouri Gaming Commission for a site that is outside the Prime
Territory, but within a radius of fifty (50) miles of the Leased
Site, then Buyer and ACI shall cause such ACI Entity to pay to
Seller the sum of [[ ]] dollars upon the issuance to the ACI
Entity by the Missouri Gaming Commission of a gaming license for
the operation of an Excursion Gambling Boat at such site. Buyer
agrees to keep Seller reasonably informed of the efforts of Buyer
or any other ACI Entity related to the pursuit of a license from
the Missouri Gaming Commission for an Excursion Gambling Boat
within a 50-mile radius of the Leased Site.
10. Termination; Default.
10.1 Termination and Abandonment. This Agreement may be
terminated and abandoned at any time prior to the Closing Date as
follows:
10.1.1 By mutual written consent of the Parties.
10.1.2 By written notice to Seller delivered by
Buyer, if any of the conditions set forth in Section 4.3 hereof
have not been satisfied or waived by the Closing Date, or
10.1.3 By written notice to Buyer delivered by
Seller, if any of the conditions set forth in Section 4.2 hereof
have not been satisfied or waived by the Closing Date.
10.2 Effect of Termination. In the event of the termination
or abandonment of this Agreement pursuant to the provisions of
Section 10.1.1, 10.1.2, 10.1.3 or 10.3, this Agreement shall be
void and of no further effect, except to the extent expressly
provided herein.
10.3 Default by Seller. Subject to Section 10.5, in the
event of a default by Seller on any of its obligations hereunder,
Buyer may elect to either: (i) sue for specific performance as set
forth herein; or (ii) terminate this Agreement and sue for
damages; or (iii) terminate this Agreement.
10.4 Default by Buyer. Subject to Section 10.5, in the
event of a default by Buyer on any of its obligations hereunder,
Seller's sole remedy is to terminate this Agreement and sue Buyer
for any and all damages sustained by Seller as a result of such
default, provided, that Seller shall not be entitled to claim as
damages any consequential damages.
10.5 Notice and Cure Rights. Neither party may terminate
thisb Agreement because of a default hereunder by the other party,
unless the nondefaulting party has given the defaulting party
written notice of such default and such default remains uncured
for more than ten (10) calendar days after such notice is
effective.
11. Indemnification.
11.1 Seller. Seller hereby unconditionally, irrevocably and
absolutely agrees to protect, defend, indemnify and hold harmless
Buyer, and Buyer's past, present and future officers, directors,
shareholders, employees, agents, attorneys, representatives,
trustees and beneficiaries, and each of the foregoing's heirs,
personal representatives, successors and assigns, from any and
all manner of actions, suits, debts, sums of money, interest
owed, accounts, controversies, agreements, guaranties, promises,
undertakings, charges, damages, judgments, executions,
obligations and costs, expenses and fees (including reasonable
attorneys' fees and court costs), counterclaims, claims, demands,
causes of action, liabilities, losses and amounts paid in
settlement incurred, paid or sustained by any of the foregoing,
in each case in connection with, arising out of, based upon,
relating to or otherwise involving: (i) any misrepresentation,
breach of warranty or nonfulfillment of any provision of this
Agreement by Seller; (ii) any material error or omission in any
statement, report, exhibit, schedule or other information
delivered to Buyer by or on behalf of Seller; (iii) any claim or
obligation or Debt of Seller to any party not being assumed by
Buyer hereunder which is asserted against Buyer; or (iv) any act
or omission of Seller, its agents, servants or employees
occurring prior to the close of business on the Closing Date.
11.2 Buyer. Buyer hereby unconditionally, irrevocably and
absolutely agrees to protect, defend, indemnify and hold harmless
Seller, and Seller's past, present and future officers,
directors, shareholders, partners, employees, agents, attorneys,
representatives, trustees and beneficiaries, and each of the
foregoing's heirs, personal representatives, successors and
assigns, from any and all manner of actions, suits, debts, sums
of money, interest owed, accounts, controversies, agreements,
guaranties, promises, undertakings, charges, damages, judgments,
executions, obligations and costs, expenses and fees (including
reasonable attorneys' fees and court costs), counterclaims,
claims, demands, causes of action, liabilities, losses and
amounts paid in settlement incurred, paid or sustained by any of
the foregoing, in each case in connection with, arising out of,
based upon, relating to or otherwise involving: (i) any
misrepresentation, breach of warranty or nonfulfillment of any
provision of this Agreement by Buyer; or (ii) any claim,
obligation or Debt of Seller which is expressly assumed by Buyer
hereunder which is asserted against Seller.
11.3 Third Person Claims. Promptly after any Indemnified
Party has received notice of or has knowledge of any claim by a
Third Person, or of the commencement of any action or proceeding
by a Third Person, the Indemnified Party must, as a condition
precedent to a claim with respect thereto being made against an
Indemnifying Party, give the Indemnifying Party written notice of
such claim or the commencement of such action or proceeding.
Such notice must state the nature and basis of such claim and a
reasonable estimate of the amount thereof. The Indemnifying
Party has the right to defend and settle any such matter, at its
own expense and by its own counsel, which counsel shall be
reasonably acceptable to the Indemnified Party, so long as the
Indemnifying Party diligently pursues the same in good faith. If
the Indemnifying Party undertakes so to defend or settle, it must
promptly notify the Indemnified Party of its intention to do so,
and the Indemnified Party must cooperate with the Indemnifying
Party and its counsel in the defense thereof and in any
settlement thereof. Such cooperation includes furnishing the
Indemnifying Party with any books, records or information
reasonably requested by the Indemnifying Party that are in the
Indemnified Party's possession or control. All Indemnified
Parties must use the same counsel, which is the counsel selected
by the Indemnifying Party, provided that, if counsel to the
Indemnifying Party has a conflict of interest that prevents such
counsel for the Indemnifying Party from representing the
Indemnified Party, the Indemnified Party has the right to
participate in such matter through counsel of its own choosing
and the Indemnifying Party must reimburse the Indemnified Party
for the reasonable fees and expenses of its counsel. After the
Indemnifying Party has notified the Indemnified Party of the
Indemnifying Party's intention to undertake to defend or settle
any such asserted liability, and for so long as the Indemnifying
Party diligently pursues such defense in good faith, the
Indemnifying Party is not liable for any additional legal
expenses incurred by the Indemnified Party in connection with any
defense or settlement of such asserted liability, except to the
extent set forth in the "provided that" clause in the immediately
preceding sentence and except to the extent such participation is
requested by the Indemnifying Party, in which event the
Indemnified Party is to be reimbursed by the Indemnifying Party
for reasonable additional legal expenses and out-of-pocket
expenses. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim and the
Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under the applicable indemnity
provision of this Agreement with respect to such Third Person
claim is limited to the amount so offered in settlement by such
Third Person and the Indemnified Party must reimburse the
Indemnifying Party for any additional costs of defense which it
subsequently incurs with respect to such claim and all additional
costs of settlement or judgment. If the Indemnifying Party does
not undertake to defend such matter to which the Indemnified
Party is entitled to indemnification hereunder, or fails
diligently to pursue such defense in good faith, the Indemnified
Party may undertake such defense through counsel of its choice,
at the cost and expense of the Indemnifying Party, such costs and
expenses to be paid or reimbursed by the Indemnifying Party on an
as-incurred basis, and the Indemnified Party may settle such
matter on a basis which is commercially reasonable under the
circumstances, and the Indemnifying Party must reimburse the
Indemnified Party for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party
in connection therewith. All settlements effected hereunder must
effect a complete release of the Indemnified Party with respect
to the Third Person claim unless the Indemnified Party otherwise
agrees in writing.
11.4 Indemnification Payments. The parties hereto will
make appropriate adjustments in the amount of indemnification payable
to an Indemnified Party for any Tax benefits or Tax detriments in
determining the amount of any indemnification obligation under
this Agreement.
11.5 Limitations. Notwithstanding any other provisions of
this Agreement to the contrary, no action for indemnification, breach
of contract, misrepresentation or any other claim for damages may
be brought by any party more than thirty-six (36) months after
the Closing Date.
11.5.1 On Buyer. Notwithstanding any provision to
the contrary contained herein, no claim for indemnification for
breach of this Agreement or any representation or warranty
hereunder may be made by Buyer against Seller unless or until the
aggregate amount for all such claims by Buyer against Seller
exceeds the Basket Amount.
11.5.2 On Seller. Notwithstanding any provision
to the contrary contained herein, no claim for indemnification for
breach of this Agreement or any representation or warranty
hereunder may be made by Seller against Buyer unless or until the
aggregate amount for all such claims by Seller against Buyer
exceeds the Basket Amount.
12. No Assurances. Buyer neither represents nor provides any
assurances to Seller that Buyer will develop the Project at all,
and if the Project is developed, Buyer does not represent that
the size of the Project, including the scope, Development Costs,
the operating costs or the Net Free Cash Flow will be as
projected or anticipated. Buyer may at any time elect to abandon
the Project, in its sole discretion, regardless of the effect of
such abandonment on Seller. Seller expressly acknowledges that
there are risks associated with the Project, that the Project may
not be developed and that if it is developed it may not provide a
positive Net Free Cash Flow. In no event shall this Agreement be
construed to confer on Seller any vested right to require that
the Project be developed or, if developed, that it be developed,
financed or operated in any particular way or be operated for any
particular length of time.
13. General Provisions.
13.1 Accounting Terms. All accounting terms not specifically
defined herein are to be construed in accordance with GAAP
(consistently applied) as in effect from time to time.
13.2 Amendment and Modification. No amendment, modification,
supplement, termination, consent or waiver of any provision of
this Agreement, nor consent to any departure therefrom, will in
any event be effective unless the same is in writing and is
signed by the Party against whom enforcement of the same is
sought. Any waiver of any provision of this Agreement and any
consent to any departure from the terms of any provision of this
Agreement is to be effective only in the specific instance and
for the specific purpose for which given.
13.3 Approvals and Consents. If any provision hereof requires
the approval or consent of any Party to any act or omission, such
approval or consent is not to be unreasonably withheld or delayed
except as set forth herein.
13.4 Assignments. Except as provided in Section 3.1.3 and
except for assignments, deeds of trust, security interests and other
transfers made to secure or collateralize Project-Related Debt,
no Party may assign or transfer any of its rights or obligations
under this Agreement to any other Person without the prior
written consent of the other Parties. Notwithstanding the
foregoing, Buyer may assign its rights and obligations under this
Agreement to any Affiliate of Buyer without the consent of
Seller; provided that such assignee executes and delivers to
Seller an assumption agreement in form and substance reasonably
satisfactory to Seller assuming all of Buyer's obligations
hereunder; and provided further that such assignment does not
release Buyer from its obligations hereunder for which such
assignee and Buyer shall be jointly and severally liable.
13.5 Business Day. If any day on which any payment is
required to be made hereunder, or on which any notice must be sent,
or on which any time period described herein commences or ends is
not a Business Day, then such day will be deemed for all purposes of
this Agreement to fall on the next succeeding day which is a
Business Day.
13.6 Captions. Captions contained in this Agreement and
the table of contents preceding this Agreement have been inserted
herein only as a matter of convenience and in no way define,
limit, extend or describe the scope of this Agreement or the
intent of any provision hereof.
13.7 Confidentiality. Each Party agrees to maintain as
confidential any Confidential Information that it may receive
from any other Party and may not disclose such information to any
Person without the prior written consent of the Party originally
providing such Confidential Information. However, a Party (the
"Disclosing Party") may disclose such Confidential Information:
(i) to legal counsel and other professional advisors of the
Disclosing Party (but only if they have been informed of the
confidential nature of such Confidential Information and agree in
writing to be bound by the terms of this Section); (ii) to
regulatory officials having jurisdiction over the Disclosing
Party or over any Permit (or application therefor) contemplated
herein; (iii) to Affiliates of Buyer and Seller; and (iv) as
required by law or legal process or in connection with any legal
proceeding to which the Disclosing Party is a party or is
otherwise subject, including, but not limited to, the application
process contemplated herein, but, in each such event, the
Disclosing Party, prior to such disclosure, is to inform the
Party originally furnishing such Confidential Information.
13.8 Counterpart Facsimile Execution. For purposes of
this Agreement, a document (or signature page thereto) signed and
transmitted by facsimile machine or telecopier is to be treated
as an original document. The signature of any Party thereon, for
purposes hereof, is to be considered as an original signature,
and the document transmitted is to be considered to have the same
binding effect as an original signature on an original document.
At the request of any Party, any facsimile or telecopy document
is to be re-executed in original form by the Parties who executed
the facsimile or telecopy document. No Party may raise the use
of a facsimile machine or telecopier or the fact that any
signature was transmitted through the use of a facsimile or
telecopier machine as a defense to the enforcement of this
Agreement or any amendment or other document executed in
compliance with this Section.
13.9 Counterparts. This Agreement may be executed by the
Parties on any number of separate counterparts, and all such
counterparts so executed constitute one agreement binding on all
the Parties, notwithstanding that all the Parties are not signatories
to the same counterparts.
13.10 Entire Agreement. This Agreement constitutes the
entire agreement among the Parties pertaining to the subject
matter hereof and supersedes all prior agreements, letters of
intent, understandings, negotiations and discussions of the
Parties, whether oral or written, including, but not limited to,
any financial projections or estimates of the Tax treatment of
the proceeds to be received by Seller from the transactions
contemplated under this Agreement that may have been prepared by
Buyer.
13.11 Exhibits. All of the Exhibits and Schedules
attached from time to time to this Agreement are deemed incorporated
herein by reference. Any Exhibits or Schedules not attached to
this Agreement at the time of its execution shall be negotiated,
agreed upon and attached to this Agreement not later than
February 7, 2000. Each party shall act in good faith with
respect to the completion and approval of such Exhibits and
Schedules.
13.12 Failure or Delay. No failure on the part of
any Party to exercise, and no delay in exercising, any right,
power or privilege hereunder operates as a waiver thereof, nor
does any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege. No notice to or
demand on any Party in any case entitles such Party to any other
or further notice or demand in similar or other circumstances.
13.13 Further Assurances. The Parties will execute
and deliver such further instruments and do such further acts and
things as may be required to carry out the intent and purpose of
this Agreement.
13.14 Governing Law. This Agreement and the rights
and obligations of the Parties hereunder are to be governed by
and construed and interpreted in accordance with the laws of the
State of Missouri applicable to contracts made and to be
performed wholly within Missouri, without regard to choice or
conflict of laws rules.
13.15 Legal Fees, Costs. Except as otherwise provided
herein, all legal and other costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby are to be paid by the Party incurring such costs and
expenses, In the event any Party brings suit or institutes
arbitration proceedings to construe or enforce the terms hereof,
or raises this Agreement as a defense in a suit or arbitration
proceeding brought by another Party, the prevailing Party in such
suit or arbitration proceeding is entitled to recover its
attorneys' fees and expenses.
13.16 Notices. Any notice or other communication
required or permitted to be given hereunder shall be in writing
and shall be mailed by registered or certified mail, postage prepaid,
return receipt requested, or delivered in person or by commercial
courier against receipt or by facsimile copy with confirmed
receipt, as follows:
if to Buyer:
AMERISTAR CASINO ST. LOUIS, INC.
ATTENTION: Craig H. Neilsen, President
3773 Howard Hughes Parkway, Suite 490 South
Las Vegas, Nevada 89109
Fax: (702) 369-8860
Telephone: (702) 567-7000
and with copies to:
GORDON R. KANOFSKY
Senior Vice President of Legal Affairs
Ameristar Casinos, Inc.
16633 Ventura Boulevard
Suite 1050
Encino, California 91436-1864
Fax: (818) 995-7099
Telephone: (818) 995-7040
and
STEVEN E. KUSHNER
Stinson, Mag & Fizzell, P.C.
100 South Fourth Street
Suite 700
St. Louis, Missouri 63102
FAX: (314) 259-4599
Telephone: (314) 259-4544
If to Seller:
FUTURESOUTH, INC.
ATTN: DENNIS LONG
10205 Gravois Road
St. Louis, MO 63123
Fax: (314) 849-0423
Telephone: (314) 842-5666
with a copy to:
FREDERICK J. BERGER
Riezman & Berger PC
7700 Bonhomme
St. Louis, MO 63105
Fax: (314) 727-6458
Telephone: (314) 727-0101
or to such other address as any Party may designate by notice to
the other Parties in accordance to the terms of this Section. Any
notice or other communication mailed by registered or certified
mail shall be deemed given at the earlier of the time of its
receipt by the addressee or three days after the time of mailing
thereof. Any notice or other communication given by any other
means shall be deemed given at the time of its receipt by the
addressee.
13.17 Publicity. Any publicity release, advertisement,
filing, public statement or announcement made by or at the
request of any Party regarding this Agreement or any of the
transactions contemplated hereby is to be first reviewed by and
must be reasonably satisfactory to the Buyer provided, however,
that Buyer may make disclosures in filings with the Securities
and Exchange Commission, The Nasdaq Stock Market, Inc. and gaming
regulatory authorities in Missouri, Nevada, Iowa and Mississippi
without prior notice to or the consent of Seller.
13.18 Schedules. To the extent necessary to correct,
modify or supplement the information contained herein, the Schedules
hereto may be replaced by mutually agreed upon replacement
Schedules.
13.19 Severability. If all or any portion of any
provision of this Agreement shall be held to be invalid, illegal
or unenforceable in any respect or in any jurisdiction, then such
invalidity, illegality or unenforceability shall not affect any
other provision hereof or thereof, and such provision shall be
limited and construed in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion thereof were not
contained herein or therein.
13.20 Specific Performance and Injunctive Relief.
Seller recognizes that, if it fails to perform, observe or discharge
any of its obligations under this Agreement, Buyer will suffer
irreparable damages and no remedy at law will provide adequate
relief to Buyer. Therefore, Buyer is hereby authorized to demand
and obtain specific performance of this Agreement, and is
entitled to temporary and permanent injunctive relief, in a court
of competent jurisdiction at any time when Seller fails to comply
with any of the provisions of this Agreement applicable to it.
To the extent permitted by Applicable Law, Seller hereby
irrevocably waives any defense that it might have based on the
adequacy of a remedy at law which might be asserted as a bar to
such remedy of specific performance or injunctive relief and
further waives any requirement that Buyer post any bond in
connection with any request for injunctive relief.
13.21 Submission to Jurisdiction. EXCEPT FOR MATTERS
SUBMITTED TO ARBITRATION IN ACCORDANCE WITH SECTION 14 HEREOF,
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY DOCUMENT RELATED
HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF MISSOURI OR
ANY COURT OF THE UNITED STATES OF AMERICA FOR THE EASTERN
DISTRICT OF MISSOURI, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
SUCH COURTS. THE PARTIES IRREVOCABLY WAIVE ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH ANY OF THEM MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING
IN SUCH RESPECTIVE JURISDICTIONS. NOTWITHSTANDING THE FOREGOING,
IN THE EVENT A LAWSUIT IS FILED, EACH PARTY RESERVES THE RIGHT TO
REMOVE THE LAWSUIT TO FEDERAL COURT. EACH PARTY IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF SUCH COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO EACH OF THE
OTHER PARTIES AT ITS ADDRESS PROVIDED HEREIN, SUCH SERVICE TO
BECOME EFFECTIVE 20 DAYS AFTER SUCH MAILING.
13.22 Successors and Assigns. All provisions of
this Agreement are binding upon, inure to the benefit of and are
enforceable by or against the Parties and their respective heirs,
executors, administrators or other legal representatives and
permitted successors and assigns.
13.23 Third-Party Beneficiary. This Agreement is soley
for the benefit of the Parties and their respective successors and
permitted assigns, and no other Person has any right, benefit,
priority or interest under, or because of the existence of, this
Agreement. Following the Closing, Seller shall not be deemed to
be a third party beneficiary of any covenant or provision of the
Lease.
13.24 Signature Warranty. Each Person executing this
Agreement warrants that he is authorized to do so on behalf of
the Party for whom he signs this Agreement.
13.25 Survival. All representations, warranties,
agreements and obligations of the Parties contained herein shall,
notwithstanding any investigation made by any Party hereto,
survive Closing and not be merged into any document delivered at
Closing. Notwithstanding any provision to the contrary contained
herein, the provisions of Sections 8, 11, 13.7, 13.10, 13.14,
13.15, 13.6, 13.17, 13.21 and 14 shall survive any termination of
this Agreement.
14. Arbitration.
14.1 Arbitration Proceedings. The parties desire to avoid and
settle without litigation disputes that may arise between them
relative to the Royalty provided in Section 3.1.2 and/or any
setoff pursuant to Section 7.12 herein. In the event the parties
are unable to resolve a dispute related to the Royalty or Seller
disputes any setoff by Buyer and timely files a notice of a
demand for arbitration as set forth in Section 7.12, then such
dispute shall be submitted to arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association ("Rules"). The hearing location shall be either the
City of St. Louis or St. Louis County, Missouri. The award
rendered by the arbitrator shall be final and binding as between
the parties and judgment on such award may be entered in any
court having jurisdiction thereof. A single neutral arbitrator
shall be appointed by the American Arbitration Association under
the Rules who shall be a certified public accountant. Notice of
a demand for arbitration of any dispute relating to the Royalty
shall be filed in writing with the other party(ies) and with the
American Arbitration Association. The parties agree that after
any such notice has been filed, they shall, before the hearing
thereof, make discovery and disclosure of all materials relative
to such dispute to the extent and in the manner provided by the
Rules and disclosure shall be completed no later than 30 days
after filing of such notice of arbitration unless extended by
such single arbitrator upon a showing of good cause by either
party to the arbitration or by consent of the parties to the
arbitration. The arbitrator may consider any material which is
relevant to the subject matter of such dispute even if the
material might also be relevant to an issue or issues not subject
to arbitration hereunder; provided, however, that the arbitrator
shall not have the power to modify the terms of this Agreement.
A stenographic record shall be made of the arbitration hearing,
which shall be held within ninety (90) days following the
delivery of the aforesaid notice of a demand for arbitration.
Each party shall pay its own costs of the arbitration and the
parties share equally the costs of the American Arbitration
Association and the arbitrator.
14.2 Limitation on Consolidation or Joinder. No arbitration
hereunder may include, by consolidation, joinder or any other
manner, any Person other than Buyer, Seller and other Persons
substantially involved in a common question of fact or law whose
presence is required if complete relief is to be accorded in
arbitration. Consent to arbitration involving an additional
Person does not constitute consent to arbitration of a dispute
not described therein or with a Person not named or described
therein. This Section 14 is enforceable by specific performance
under Applicable Law in a court of competent jurisdiction.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first set out above.
SELLER:
FUTURESOUTH, INC.,
a Missouri Corporation
By: /s/ Dennis P. Long
Title: President
SOUTHBOAT LEMAY, INC.,
a Nevada Corporation
By: /s/ Dennis P. Long
Title: President
SOUTHBOAT LIMITED PARTNERSHIP.,
a Missouri Limited Partnership
By: Southboat Lemay, Inc., its General Partner
By: /s/ Dennis P. Long
Title: President
BUYER:
AMERISTAR CASINO ST. LOUIS, INC.,
a Missouri Corporation
By: /s/ Gordon R. Kanofsky
Title: Authorized Agent
EXHIBIT D
AMENDED AND RESTATED
LEASE AND DEVELOPMENT AGREEMENT
THIS AMENDED AND RESTATED LEASE AND DEVELOPMENT
AGREEMENT (the "Lease") is made and entered into as of this 15th
day of February, 2000 (the "Effective Date"), by and between the
ST. LOUIS COUNTY PORT AUTHORITY, a public body corporate and
politic of the State of Missouri ("Landlord"), and SOUTHBOAT
LIMITED PARTNERSHIP, a Missouri limited partnership ("Tenant");
R E C I T A L S
A. Landlord is the owner, subject to the Exceptions
(defined below), of a certain approximately 80 acre parcel of
real estate, together with the structures thereon, located in the
Lemay area of St. Louis County, Missouri (the "County"), as
described on Attachment A (the "Property"), consisting of a
certain approximately 29 acre site depicted diagrammatically on
Attachment B (the "Premises") and an approximately 51 acre site
depicted diagrammatically on Attachment C (the "Adjacent
Parcel").
B. Landlord is a public body corporate and politic
duly organized and existing pursuant to Chapter 68 of the Revised
Statutes of Missouri and is charged with the responsibility of
developing the riverfront area of the unincorporated portion of
St. Louis County. In connection with such duties and
responsibilities, to promote the general welfare, to encourage
capital investment, and to increase the volume of commerce within
the Lemay area and of the County generally, Landlord has
determined that the Premises should be developed and operated as
a Casino (as hereinafter defined) with related uses (the
"Project").
C. Tenant submitted to Landlord and the St. Louis
County Council (the "Council") a certain Project proposal, which
Project proposal was modified and supplemented by subsequent
correspondence to Landlord and the Council (together, the
"Original Project Proposal").
D. In order to induce acceptance of the Original
Project Proposal by Landlord and the Council, Tenant agreed to
apply to the Missouri Gaming Commission (the "Commission") for
one or more licenses, as necessary, to operate the Project
(including the Casino) at and from the Premises ("Gaming
Licensure"), to pay certain rentals to Landlord in consideration
of the opportunity to develop and operate the Project, and to
designate the County as the "home dock" for the Project, all as
hereinafter set forth.
E. In order to further induce Landlord and the
Council to approve the Original Project Proposal, Showboat, Inc.,
a Nevada corporation ("Original Guarantor") and parent company of
Showboat Lemay, Inc., a Missouri corporation and Tenant's general
partner (the "General Partner"), agreed to issue its
unconditional guarantees (together, the "Original Guarantees") of
(i) payment of the hereinafter specified minimum rent for 15
years (the "Original Rent Guarantee") and (ii) timely completion
of construction of and payment for all Project improvements and
installations (the "Original Completion Guarantee").
F. In order to promote the economic development of
the Lemay area and the County, and in consideration of the
Original Project Proposal, the financial incentives to Landlord,
the Original Guarantees, the special and unique qualifications of
the Original Guarantor in the development and operation elsewhere
of gaming projects, and the covenants and promises of the Tenant
and the Original Guarantor under this Lease and the Original
Guarantees, respectively, Landlord approved the Original Project
Proposal, and the Council enacted Ordinance Number 17,593, as
amended by Ordinance Number 17,739, in support of the Original
Project Proposal and the execution, delivery and performance of
this Lease.
G. Pursuant to the foregoing, Landlord and Tenant
entered into that certain Lease and Development Agreement, dated
as of October 13, 1995 (the "Original Effective Date"), as
amended by a First Amendment to Lease and Development Agreement,
dated as of May 21, 1996, a Second Amendment to Lease and
Development Agreement, dated as of December 12, 1996, a Third
Amendment to Lease and Development Agreement, dated as of
December 12, 1997, a Fourth Amendment to Lease and Development
Agreement, dated as of December 8, 1998, and a Fifth Amendment to
Lease and Development Agreement, dated as of September 20, 1999
(collectively, the "Original Lease").
H. The Investigation Date (as defined in the Original
Lease) did not occur prior to the Investigation Deadline (as
defined in the Original Lease), and pursuant to the
aforementioned Third Amendment to Lease and Development
Agreement, the Original Guarantor was released from its
obligations and liabilities to Landlord under the Original
Guarantees and the Original Guarantees were canceled.
I. In conjunction with the release and discharge of
the Original Guarantor and the cancellation of the Original
Guarantee, Landlord consented to the transfer of all of the stock
of the General Partner to Futuresouth, Inc., subject, however, to
the commitment of Tenant to secure the affiliation and support of
another entity meeting the Stated Criteria (as defined in the
Original Lease).
J. Subject to the terms and conditions set forth
herein, Tenant desires to assign and transfer to Ameristar Casino
St. Louis, Inc., a Missouri corporation ("Assignee"), all of
Tenant's right, title and interest in this Lease (the
"Assignment").
K. Assignee has filed its application for Gaming
Licensure with the Commission and has developed a revised Project
Proposal comprised of the preliminary construction documents
included in Attachment D-1 and the employment and contracting
policies included in Attachment D-2 (together, the "New Project
Proposal"), which Landlord has determined will, if implemented,
yield to Landlord, the County and the Lemay area the benefits
anticipated from the implementation of the Original Project
Proposal.
L. The parent corporation of Assignee, Ameristar
Casinos, Inc., a Nevada corporation ("New Guarantor"), will be
required, in connection with the Assignment, to provide to
Landlord, on or before the Commencement Date, a Guarantee of
Minimum Rent in the form of Attachment E (the "New Rent
Guarantee") and, in conjunction with the Assignment, a Guarantee
of Completion in the form of Attachment F (the "New Completion
Guarantee") (together, the "New Guarantees").
M. In consideration of and as a material inducement
to Landlord granting its consent to the Assignment, Tenant has
acknowledged and agreed that such consent shall be conditioned on
the execution and delivery to Landlord of a Lease Assignment and
Assumption Agreement between Tenant and Assignee in the form of
Attachment G (the "Assignment and Assumption Agreement") and,
from Southboat Limited Partnership, a Release of Landlord and St.
Louis County in the form of Attachment H (the "Assignment
Release").
N. In furtherance of the Assignment, Tenant has
requested that Assignee and New Guarantor, at their sole risk,
cost and expense, have access to the Premises from and after the
Effective Date for the purpose of conducting due diligence in
respect of the Premises and performing certain work incidental to
the proper conduct of due diligence and site preparation, and
Landlord has agreed to grant such right to Assignee and New
Guarantor, subject to the execution and delivery, by Landlord,
Assignee and New Guarantor of a License and Indemnity for Early
Entry onto the Premises in the form of Attachment I (the "Early
Entry License").
O. Landlord and Tenant desire to amend and restate
the Original Lease as set forth herein.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements of the parties contained herein,
Landlord and Tenant agree as follows:
1. Effectiveness of Lease and Assignment.
(a) Demise of Premises. Landlord and Tenant
acknowledge and agree that Landlord demised and leased the
Premises to Tenant, and that Tenant leased and took the Premises
from Landlord for the Term (as hereinafter defined), as of the
Original Effective Date, and that said demise and letting is
subject to all the terms and conditions of this Lease.
(b) Restatement and Amendment of Original Lease.
Upon the execution of this Lease by Landlord and Tenant, the
Original Lease shall be deemed fully restated and amended
pursuant to the terms hereof, as of the Effective Date.
(c) Landlord's Ownership. Landlord represents
and warrants to Tenant that Landlord is the owner of the Premises
subject to the following matters (collectively, the
"Exceptions"): (i) covenants, restrictions, easements, liens,
encumbrances and any other matters of record affecting the
Premises; (ii) present and future federal, state and local zoning
and land use laws, ordinances and restrictions affecting the
Premises, or the use thereof; (iii) any state of facts which an
accurate survey or an inspection of the Premises and the
Mississippi River would show; (iv) special assessments now or
hereafter becoming a lien against the Premises; and (v) general
property taxes and assessments for the current and subsequent tax
fiscal years affecting the Premises.
(d) The Assignment. Landlord hereby consents to
the Assignment, subject, however, to the full and timely
satisfaction of each of the following conditions:
(1) On or before the Investigation Deadline (as
defined herein), the Investigation (as defined herein) shall have
commenced and Landlord shall have received (a) from Tenant and
Assignee a fully executed Assignment and Assumption Agreement,
(b) from Southboat Limited Partnership a fully executed
Assignment Release, (c) from New Guarantor, the New Completion
Guarantee, and (d) from counsel to Assignee and New Guarantor, an
opinion confirming the corporate existence and good standing of
Assignee and New Guarantor, and the due authorization, execution
and delivery by Assignee and/or New Guarantor, as the case may
be, of their respective deliveries to Landlord, including without
limitation the certificate described in subparagraph (5) below.
(2) No default on the part of Tenant shall have
occurred and be continuing under any provision of this Lease.
(3) Assignee or New Guarantor, as the case may
be, shall have delivered true, accurate and complete copies to
Landlord of each and every environmental report, study, test,
investigation, evaluation or work performed or obtained by either
of them, or their respective employees, agents, contractors or
consultants, on or about the Premises.
(4) No failure on the part of Assignee or New
Guarantor, as the case may be, to comply with the following
requirements shall have occurred and be continuing as of the
effective date of the Assignment:
(a) Assignee or New Guarantor, as the case
may be, shall have obtained any required consent of
Landlord in connection with any partnership or
corporate transaction involving Assignee or the New
Guarantor which results in a change of control of the
Assignee or the New Guarantor, unless the transaction
involves the assignment of Assignee's rights under the
Assignment and Assumption Agreement to the New
Guarantor or to any corporation, partnership or limited
liability company controlling or controlled by the New
Guarantor or under common control with Assignee and
meeting the Stated Criteria (as defined in Section
12(b)) or unless any such transaction involving the New
Guarantor meets the Stated Criteria. The procedures
for approval of any proposed assignment requiring
Landlord's consent shall be the same as those set forth
in respect of any such transaction involving Tenant
under this Lease.
(b) Assignee shall have filed its
application for Gaming Licensure and shall not have
withdrawn or effectively abandoned such application
prior to the Investigation Deadline, and in no event
later than 30 days after the Effective Date, Assignee
shall have delivered to Landlord a copy of the
transmittal correspondence for such application to the
Commission, and, promptly thereafter, a copy of each
and every material notice delivered to or received from
the Commission by Assignee. As used in this subsection
(b), a "material notice" shall be any notice
substantively bearing upon the availability of Gaming
Licensure or the Site Permits (as hereinafter defined)
or affecting the occurrence of the Commencement Date or
Project Opening.
(c) Neither Assignee nor New Guarantor (nor
any permitted successor or assign) shall have filed a
voluntary petition in bankruptcy or shall have been
adjudicated bankrupt or insolvent or shall have filed
any petition or answer seeking any reorganization,
readjustment, liquidation, dissolution or similar
relief under any bankruptcy or insolvency statute or
law of the United States or any State, or shall have
sought or consented to or acquiesced in the appointment
of any bankruptcy or insolvency trustee, receiver or
liquidator of Assignee or New Guarantor of all or any
substantial part of either of their respective
properties; nor within 60 days after the commencement
of any involuntary proceeding against Assignee or New
Guarantor seeking reorganization, readjustment,
liquidation, dissolution or similar relief under any
bankruptcy or insolvency statute or law, Assignee or
New Guarantor, as the case may be, shall have failed to
secure a dismissal and discharge thereof.
(5) On the Assignment Date, Assignee and New
Guarantor shall each deliver to Landlord a certificate setting
forth, as to Assignee and New Guarantor, respectively, without
qualification, the same representations and warranties made by
the Tenant to Landlord in Section 8(a) (except that the
representation and warranty set forth in Section 8(a)(i) shall be
revised to reflect the correct type of entity and state of
organization of such entity). Landlord agrees, upon the request
of Tenant or Assignee, to deliver a certificate to Tenant and
Assignee, addressed to Tenant, Assignee and New Guarantor,
containing the same representations and warranties made by the
Landlord to Tenant in Section 8(b); provided, however, that
Landlord shall have no liability to any party whatsoever in the
event that, as a result of any event first occurring subsequent
to the Effective Date, the representation and warranty contained
in Section 8(b)(iii) cannot be made without qualification.
(e) Upon satisfaction of each and every condition set
forth in Section (d)(1) through (5), the effective date of the
Assignment (the "Assignment Date") shall be deemed to have
occurred, Assignee shall have succeeded to all right, title and
interest of Southboat Limited Partnership under this Lease and
for all purposes herein shall be deemed the "Tenant" under this
Lease, the New Guarantor shall be bound under the New Guarantees,
and Southboat Limited Partnership, having delivered the
Assignment Release, shall be released from any obligation or
liability to Landlord accruing under this Lease subsequent to the
Assignment Date.
(f) In the event that prior to the Investigation
Deadline either Tenant or Assignee shall notify Landlord in
writing that the Assignment will not occur in accordance with the
requirements of this Agreement, or in the event, for any reason,
the Assignment shall fail to occur on or before the Investigation
Deadline, this Lease shall be of no further force or effect and
Landlord shall have no obligation or liability to Tenant or
Assignee in respect of the proposed Assignment; provided,
however, that in such event, the Original Lease shall be deemed
automatically reinstated, ratified and reconfirmed by the
parties. Nothing contained in this Lease shall be construed as
creating any privity of estate between Landlord, on the one hand,
and Assignee or New Guarantor, on the other hand, or any
liability or obligation on the part of Landlord to New Guarantor
or to Assignee prior to the Assignment Date except as expressly
set forth in the Early Entry License, and except for enforcement
of the rights granted New Guarantor and Assignee under the Early
Entry License, neither New Guarantor nor, prior to the Assignment
Date, Assignee, shall have any right, standing or privilege to
enforce any obligation of Landlord under this Lease, whether
directly or by assignment from Tenant, or in the name, place or
stead of Tenant, or, except as to the obligations of Landlord
under Section 1(d), as a putative third-party beneficiary of the
rights or privileges of Tenant under this Lease. Nothing
contained in this Section 1(f), however, shall be deemed to limit
Tenant's rights under this Lease.
2. Tenant's Due Diligence and Pre-development Work.
(a) As-Is Delivery of Premises. Except as
expressly provided in this Lease, Landlord makes no
representation and provides no warranty to Tenant or Assignee of
any kind whatsoever regarding (i) the existence or nature of any
Exceptions, (ii) the condition of the Premises or the Mississippi
River (including, without limitation, any environmental matters),
(iii) the suitability of the Premises for any aspect of the
Project, or (iv) the feasibility of Tenant's development and
operation of the Project on, at or from the Premises. Tenant
acknowledges receipt from Landlord of the following: (i) an
owner's policy of title insurance dated October 9, 1987 relating
to the Property and issued by Ticor Title Insurance Company;
(ii) a survey dated July 7, 1987 relating to the Property and
prepared by Pitzman's & Co. Surveyors and Engineers, and
(iii) certain environmental reports and studies conducted in
respect of the Property dated January 30, 1981, March 12, 1981,
January 1986 and June 1986, respectively, and prepared by
Envirodyne Engineers, Inc. Tenant acknowledges that such
materials have been provided solely for informational purposes to
assist Tenant in Tenant's due diligence, that the same do not
constitute representations or warranties by Landlord or the
County, and that Tenant shall rely on Tenant's own evaluations,
inspections and testing of the Premises in determining the
suitability of the Premises and the feasibility of the Project.
The foregoing provisions of this Section 2(a) shall be binding on
Assignee as of the Assignment Date.
(b) Tenant's Access to Premises. Tenant shall
continue to have access to the Premises at any and all times
after the Effective Date and prior to the Assignment Date. The
access of Assignee and New Guarantor to the Premises prior to the
Assignment Date shall be subject to the terms and conditions of
the Early Entry License.
(c) Zoning Condition. At the written request of
Assignee, which request shall be delivered by Tenant to Landlord
not later than 60 days after the Effective Date, Landlord shall
apply to the County Planning Commission for an amendment to the
existing "C-8" classification of the Premises so as to enable
Assignee to construct and operate the Project at and from the
Premises in accordance with the New Project Proposal; provided,
however that Landlord shall not be obligated to incur any out-of-
pocket or third-party costs and expenses in connection with such
application. Tenant shall provide to Landlord or shall cause
Assignee to provide to Landlord such information and
documentation as may be necessary and appropriate to enable
Landlord to apply for the rezoning. In the event the Premises is
not so rezoned (or, if so rezoned, in the event the conditions of
such rezoning are not acceptable to Tenant or Assignee in its
discretion) pursuant to County ordinance prior to the later to
occur of that date which is 180 days after the Effective Date or
that date which is 120 days after the filing of the application
by Landlord (the "Rezoning Deadline"), Tenant shall have the
option, if exercised by delivery of written notice to Landlord
delivered prior to the Rezoning Deadline, to cancel this Lease
without further obligation or liability on the part of either
party to the other; provided, however, that if the aforementioned
rezoning has not occurred on or prior to the Rezoning Deadline
notwithstanding the reasonably diligent efforts of the parties to
secure the rezoning, either party shall have the right to extend
the Rezoning Deadline for an additional period of 60 days.
Tenant shall be responsible for providing or for causing Assignee
to provide to the County Planning Commission all information
required of Tenant or Assignee, as the case may be, by the County
Planning Commission.
(d) Acceptance of Premises. Tenant hereby
accepts the Premises "AS IS", subject only, if applicable, to
(i) the occurrence of the Commencement Date, as defined in
Section 3(a), and (ii) any termination of this Lease occurring
pursuant to the provisions hereof. From and after the Original
Effective Date, Landlord shall not subject, and shall not have
subjected, the Premises to any liens or encumbrances not
expressly permitted by this Lease without the prior written
consent of Tenant. The foregoing provisions of this Section 2(d)
shall be binding on Assignee as of the Assignment Date.
3. Term of Lease.
(a) Commencement Date. The term of this Lease
(the "Term") shall commence (the "Commencement Date") if at all,
at such time as the following have occurred: (i) the Assignment;
(ii) the Missouri Gaming Commission (the "Commission") commences
the investigation of Assignee (the "Investigation") incident to
Assignee's application for Gaming Licensure to operate the
Project in accordance with the New Project Proposal (the
"Investigation Date"); (iii) Assignee has obtained all Site
Permits (as defined in Section 3(b)) (the "Site Permit Date");
and (iv) the New Guarantor shall have executed and delivered to
Landlord the New Rent Guarantee, together with an opinion of
counsel confirming the corporate existence and good standing of
New Guarantor, and the due authorization, execution and delivery
by New Guarantor of the New Rent Guarantee. The Term shall
expire on the 99th anniversary of the day prior to the
Commencement Date. Each successive 12 month annual period
occurring subsequent to the Commencement Date shall be deemed a
"Lease Year" for all purposes under the Lease. Landlord and
Tenant shall each execute a memorandum prepared by Landlord and
reasonably acceptable to Tenant confirming the Commencement Date
of this Lease, such memorandum to become an attachment to this
Lease.
(b) Site Permits and Gaming Licensure. As used
in this Lease, the term "Site Permits" shall mean all permits or
licenses issuable by the U.S. Army Corps of Engineers (the
"Corps") or by other governmental bodies to enable Tenant to
commence dredging of the Mississippi River, and for site
development, grading and excavation work on the Premises,
including, without limitation, the Corps' Section 10 and 404
Permits, a flood plain development permit, a metro sewers and
highway permit and a site plan approval permit, but excluding any
building or construction permits required to enable Tenant to
commence or complete the construction of Tenant's Project
improvements or to occupy and operate the Project. Tenant shall
make application for all Site Permits at the earliest practical
opportunity consistent with the status from time to time of the
Investigation. Tenant and Assignee shall use all reasonable
efforts under the circumstances to obtain the Site Permits and
Gaming Licensure, and Landlord shall fully and actively support,
endorse and diligently assist Tenant and Assignee in such
efforts, provided Landlord shall not be obligated to incur any
out-of-pocket or third party expenses for Tenant's or Assignee's
benefit or pay any monies to Tenant or Assignee. From and after
the Assignment Date, Tenant shall deliver to Landlord a copy of
each and every material notice delivered to or received from the
Commission by Tenant. As used in this subsection (b), a
"material notice" shall be any notice substantively bearing upon
the availability of Gaming Licensure or the Site Permits or
affecting the occurrence of the Commencement Date or Project
Opening. Without the prior written consent of Landlord, such
consent not to be unreasonably withheld or delayed, Tenant shall
not withdraw Tenant's application for any of the Site Permits or
for Gaming Licensure prior to any termination of this Lease.
(c) Early Defeasance of Lease. Landlord or
Tenant shall have the right to terminate this Lease pursuant to
subsection (d) if, for any reason other than an Unavoidable Delay
(as defined in Section 30) or a delay caused by Landlord or the
County, any of the following conditions occur:
(i) notwithstanding Tenant's or Assignee's
diligent pursuit of Gaming Licensure, if the
Investigation Date has not occurred on or
before August 15, 2001 (the "Investigation
Deadline") or Tenant or Assignee reasonably
determines, based on communications with or
information received from the Commission
staff, that the Commission will not commence
the Investigation before the Investigation
Deadline; or
(ii) the Site Permit Date has not occurred on or
before the expiration of the 9 month period
commencing on the Investigation Date (the
"Site Permit Deadline") or the Corps
officially notifies Tenant or Assignee that
it will not permit the construction or
operation of the Project as contemplated in
this Lease; provided, however, in the event
(i) the Investigation Date has timely
occurred, (ii) Tenant or Assignee has
obtained all Site Permits other than the Site
Permits to be issued by the Corps (or
issuance of the remaining Site Permits is
contingent solely on issuance of the Corps'
Site Permits), and (iii) the Corps has not
officially notified Tenant or Assignee that
it will not permit the operation of the
Project at the Premises, Tenant or Assignee
shall have the option to extend the Site
Permit Deadline for 3 successive periods of
60 days each by delivery of written notice of
such election to Landlord not sooner than 30
days prior to, and not later than, the Site
Permit Deadline; provided, however, Tenant or
Assignee has made diligent efforts to secure
the Site Permits to be issued by the Corps
and has cooperated with the Corps by
responding in a reasonably timely fashion to
requests for information or proposed plan
changes from the Corps.
(d) Termination Notice. Termination of this
Lease pursuant to Section 3(c) shall be accomplished by delivery
of written notice to the non-terminating party of such election
on or before the Investigation Deadline or the Site Permit
Deadline, as the case may be (a "Termination Notice"); provided,
however, that no such Termination Notice shall be effective
unless the terminating party shall have sent an initial notice
advising the non-terminating party of its intent to terminate
this Lease at least 30 days prior to the date of the Termination
Notice and the cause or grounds for such termination have not
been cured during such 30-day period.
(e) Post-Commencement Date Defeasance. From and
after the Commencement Date, this Lease may be terminated by
Tenant solely upon the discovery of any hazardous waste,
pollutant, toxic pollutant, hazardous substance, toxic substance,
infectious waste, solid waste or similar material or substance
requiring abatement, removal, remediation or other special
treatment in order to comply with applicable law (collectively,
"Hazardous Substances") beneath the surface of the Premises not
detected by or otherwise made known in writing to Assignee or New
Guarantor prior to the Assignment Date, and costing more than
$3,000,000 to remediate, or upon the repeal, invalidation or
material adverse amendment of the law or regulations permitting
and/or regulating gaming in the State of Missouri and consequent
cessation of Tenant's business at the Premises, or upon the
occurrence of a casualty or condemnation, all in accordance with
the applicable provisions of Sections 4(g), 11(c), 15 or 16,
respectively.
4. Project Construction and Development.
(a) Submission and Approval of Plans. Prior to
commencement of the work for the construction and development of
the Project on the Premises (the "Work"), Tenant shall submit or
shall cause Assignee to submit to Landlord for Landlord's
approval, a final site plan, footprints, utility plans, exterior
renderings, elevations and offsite improvement plans (together,
the "Plans") and a proposed schedule of the Work (the "Work
Schedule"), including the barge-based gaming facility and related
installations for dockside gaming at the Premises (together, the
"Casino"). Landlord's approval of the Plans and Work Schedule
shall not be unreasonably withheld or delayed. In all events,
Landlord shall approve or disapprove any proposed Plans within 10
business days after Landlord's receipt of same, and any
disapproval shall be specific as to the reasons. Tenant, or,
prior to the Assignment Date, Assignee, shall be given adequate
time and opportunity to correct such matters which Landlord has
identified as the basis for such disapproval. If Landlord does
not approve or disapprove such Plans within 10 business days
after submission by Tenant or Assignee, as the case may be, then
such Plans shall be deemed approved for all purposes under this
Agreement. Landlord agrees that the Premises shall be subject to
any utility easements referenced in the approved Plans and to
execute such easement agreements for the benefit of the Project.
Landlord's approval of the Plans shall not be deemed to
constitute acceptance by Landlord of any liability in connection
with the Plans or the Work, such liability and risk being
expressly and exclusively borne by Tenant. The procedures set
forth in this Section 4(a) shall apply with respect to any
changes to the approved Plans or Work Schedule proposed by Tenant
or Assignee, as the case may be.
(b) Construction and Occupancy Permit
Applications. Tenant, at Tenant's sole cost and expense, shall
apply for all permits required to enable Tenant to commence and
complete the construction of Project improvements (the
"Construction Permits") and to occupy and operate the Project
(the "Occupancy Permits"), and Tenant shall prepare all
engineering and construction documents required to apply for or
comply with the terms of any Construction Permit. Landlord shall
endorse and support Tenant's Permit applications to the extent
the same are materially consistent with the approved Plans;
provided Landlord shall not be required to incur any out-of-
pocket or third-party costs or expenses in connection therewith.
(c) Delivery of Premises. The Premises shall be
made available to Tenant for commencement of the Work from and
after the Commencement Date, provided Tenant has first obtained
such Permits (Site Permits or Construction Permits, as the case
may be) as are necessary for commencement of the applicable Work,
executed and delivered the necessary construction contracts,
established the construction disbursing escrow and delivered to
Landlord the insurance certificates, contract assignments,
consents and bonds provided for in Section 4(e). Prior to
commencing any Work on or at the Premises, Tenant, at Tenant's
sole risk, cost and expense, shall cause a resubdivision plat and
revised legal description of the Premises to be prepared by a
licensed Missouri surveyor in accordance with Attachment B and
submitted to Landlord for Landlord's review and approval, which
approval shall not be unreasonably withheld. The legal
description of the Premises shall become Attachment J to this
Lease. The resubdivision plat shall be sufficient to enable
Landlord to cause the Premises to be lawfully subdivided from the
Adjacent Parcel and shall be consistent with Tenant's
contemplated ingress and egress by the public to the Project and
Tenant's access to service roads and work areas as shown on the
Project design plans and renderings. Landlord agrees to
cooperate fully with Tenant in connection with Tenant's
preparation of the legal descriptions and resubdivision plat, but
at no out-of-pocket or third-party cost or expense to Landlord,
except that Landlord shall bear the cost of any surveying of the
Adjacent Parcel required to effect the resubdivision and any
other resubdivision costs allocable to the Adjacent Parcel, with
any such allocation between Tenant and Landlord to be based on
the relative size of the parcels unless the cost in question
relates solely to one parcel.
(d) Coordination and Inspection of Work.
Landlord shall have the right to inspect and monitor the progress
of the Work during regular business hours, on reasonable prior
notice to Tenant and without material interference with the Work.
Tenant shall advise Landlord as to any material claim pending or
threatened by or against Tenant or otherwise involving the
Project and of any anticipated delays in Project Opening. Within
30 days after the Commencement Date, Tenant and Landlord shall
each designate one or more "Project Representatives" who shall
provide liaison services between the Tenant and contractors and
consultants working on the Project on one hand and Landlord and
officials and departments of the County on the other. The
Project Representatives shall confer by telephone and fax
communication, and shall meet with each other regularly or
otherwise on reasonable prior request for the purpose of
conveying and obtaining information and approvals required in
connection with the Work. Notices provided by Project
Representatives shall be sent and received in accordance with the
provisions of Section 29 regarding delivery of Notices.
(e) The Work. After the Commencement Date,
Tenant shall proceed with reasonable diligence to obtain all
Construction Permits not theretofore obtained by Tenant, to
commence and complete the Work in accordance with the Plans and,
subject only to Unavoidable Delays and delays caused by Landlord
or the County, the Work Schedule, and to obtain all Occupancy
Permits and to open the Project (including the Casino) to the
public ("Project Opening"). All Work shall be performed by
Tenant at the sole risk, cost and expense of Tenant (i) in a
first class, workmanlike manner, (ii) free of liens for labor and
materials (subject to Tenant's right to contest liens as provided
in this Lease), (iii) subject to commercial liability, builder's
risk and worker's compensation insurance coverage required under
this Lease, (iv) free of all other claims against Landlord or the
Project (subject to Tenant's right to contest liens as provided
in this Lease), (v) in compliance with the Permits and all
applicable laws, regulations, ordinances and codes ("Governmental
Requirements"), and (vi) as to the Work performed on the Premises
only, subject to construction disbursing escrows with properly
qualified and licensed contractors (collectively, the "Work
Requirements"). Tenant shall be responsible for timely delivery
to Landlord of all insurance certificates, construction
contracts, construction disbursing escrows, collateral
assignments of construction contracts and the contractors'
consents thereto. Tenant shall deliver to Landlord a certificate
of Substantial Completion of the Work issued by Tenant's
architect, and Tenant shall provide evidence of payment of all
construction costs. As used herein, "Substantial Completion"
shall mean that only insubstantial details of finish construction
and installation remain to be performed, and that the Project may
nonetheless be opened to the public. Tenant agrees that all
punch-list items shall be completed as soon as reasonably
practical and in no event later than 180 days after Substantial
Completion. Tenant shall deliver to Landlord a certificate of
Final Completion issued by Tenant's architect and evidencing the
completion of all punch-list items.
(f) Control of Work. Landlord and Tenant agree,
subject to the provisions of the New Project Proposal applicable
to the employment or engagement of local persons or companies,
minorities and women or companies owned by minorities and women,
which provisions are hereby incorporated into this Lease by this
reference, and subject further to applicable Governmental
Requirements, that performance of the Work shall be subject to
the following terms and conditions: (i) Tenant shall have the
sole and exclusive right to select any architect, construction
manager, general contractor and engineer in connection with the
design and construction of the Project; (ii) Tenant shall have
the sole and exclusive right to select any additional
subcontractors, materialmen, suppliers or any other persons or
companies in connection with the construction of the Project; and
(iii) Tenant shall have the sole and exclusive right to manage,
direct, control, coordinate and prosecute the completion of the
Project, and Landlord shall cooperate fully in such regard, but
at no cost or expense to Landlord.
(g) Undetected Contamination. In the event
Tenant, after commencement of the Work and not later than the
date of Project Opening, discovers Hazardous Substances beneath
the surface of the Premises which were not detected prior to the
Effective Date or, if detected, the extent of which was not fully
ascertained by any "Phase II" work or testing performed prior to
the Effective Date (the results of which were made known in
writing to Assignee or New Guarantor) or which were not otherwise
disclosed to Assignee or New Guarantor in writing prior to the
Assignment Date, and in the event the cost to remediate such
Hazardous Substances shall equal or exceed $3,000,000, Tenant
shall have the option, by delivery of written notice to Landlord
within 90 days after Tenant's discovery of such Hazardous
Substances, accompanied by a written bid of Tenant's contractor
confirming such $3,000,000 or greater remediation cost, to
terminate this Lease without further obligation or liability to
Landlord, such termination to take effect no earlier than the
date Tenant shall have (i) paid all costs incurred by Tenant in
connection with the Work, (ii) installed warning signs and
perimeter fencing to secure access to any area made dangerous by
Tenant's excavations, and (iii) surrendered the Premises to
Landlord, free and clear of Tenant's construction equipment and
materials, but otherwise "AS IS." Landlord shall not be
obligated to refund to Tenant the Commencement Date Fee (defined
in Section 5(a)(i)) or any prepaid Annual Rent, and Landlord's
agreement with respect to the cure of any objection raised by
Tenant shall be void and of no further force or effect. Tenant
shall provide Landlord with copies of all reports, test results
and evaluations of Hazardous Substances discovered beneath the
Premises.
(h) Project Opening. Upon, and as a condition
to, Project Opening, Tenant shall pay the Project Opening Fee
described in Section 5(a)(ii). On or before the date of Project
Opening, the parties shall execute a memorandum prepared by
Landlord and reasonably acceptable to Tenant establishing the
Project Opening date (and the date payments of Minimum Rent or
Percentage Rent, as the case may be, shall be due under Section
5), which memorandum shall become an attachment to this Lease.
(i) Relocation of Sewer Line. Landlord hereby
agrees to the relocation of the sewer line running west to east
across the Premises if requested by Tenant in accordance with
plans approved by MSD and to grant MSD an easement as reasonably
necessary to accommodate such relocation, and Tenant hereby
agrees to provide for all costs related to the inspection and
removal, relocation or replacement of such sewer line.
(j) Provision for Additional Wetland Areas.
Landlord hereby agrees to designate wetland areas to replace the
wetland areas located on the Premises and Tenant hereby agrees to
pay for any costs associated with the replacement of the wetland
areas located on the Premises.
(k) Right-of-Ways. Landlord will use its best
efforts, not including litigation, to cause St. Louis County to
vacate the right-of-way for the extension of Arlee Avenue upon
the dedication to St. Louis County of the extension of
Hoffmeister Avenue contemplated by Tenant; provided, however,
that it is understood and agreed that Landlord shall be entitled
to dedicate to St. Louis County a right-of-way up to 82 feet wide
on the Premises for the future northward extension of the
Hoffmeister Avenue Extension. Tenant agrees to take all action
reasonably necessary to effectuate such dedication and to allow
for the construction of such northward extension.
5. Rent.
(a) Key Date Payments and Annual Rent. Tenant
shall pay to Landlord, without setoff or deduction, by corporate
or cashiers check or by wire transfer to such account as may be
directed by Landlord in immediately available U.S. funds, the
following rentals (collectively, "Rent"):
(i) $2,500,000 on the Commencement Date (the
"Commencement Date Fee");
(ii)$2,500,000 on the date of Project Opening
(the "Project Opening Fee"); and
(iii)as annual rent ("Annual Rent"),
(A) commencing on the Commencement Date and
continuing until the date of Project
Opening, $2,000,000 per annum, payable
in equal monthly installments, and
(B) commencing on the date of Project
Opening and continuing until the
expiration of the Term or, subject to
Section 25, termination of the Lease,
the greater of (a) 4% of Adjusted Gross
Receipts ("AGR") ("Percentage Rent") or
(b) applicable Minimum Rent.
(b) Minimum Rent. As used in this Lease, the
term "Minimum Rent" shall mean $3,000,000 during the 1st 12 month
period occurring after Project Opening, $2,800,000 during the 2nd
12 month period occurring after Project Opening, $2,600,000
during the 3rd 12 month period occurring after Project Opening,
$2,400,000 during the 4th 12 month period occurring after Project
Opening, $2,200,000 during the 5th 12 month period occurring
after Project Opening, and $2,000,000 commencing on the 5th
anniversary of the date of Project Opening and continuing through
Lease Year 15. Minimum Rent shall be increased by 10% on the
first day of each successive 10th Lease Year occurring during the
Term, commencing with Lease Year 16.
(c) Payment of Annual Rent. From the
Commencement Date until the date of Project Opening, Annual Rent
shall be paid in equal monthly installments, with each
installment equal to 1/12th of the applicable Minimum Rent. From
and after the date of Project Opening, Annual Rent shall be paid
on a monthly basis as provided in Section 5(a)(iii)(B). In the
event the Commencement Date, the date of Project Opening, or the
date the Term expires occurs on a date which is not the first day
of a month, the relevant monthly installment of Annual Rent shall
be prorated per diem, based on the number of days of such month
included within the applicable Rent period. Payments of Annual
Rent shall be subject to quarterly adjustment as provided in this
subsection (c) in the event and to the extent Minimum Rent
accruing for such quarterly period is exceeded by Percentage Rent
(4% x AGR) accruing for such quarterly period. As used in this
Lease, the term "Adjusted Gross Receipts" or "AGR" shall mean the
gross receipts from licensed gambling games and devices less
winnings paid to wagerers and the 20% tax paid to the State of
Missouri pursuant to Section 318.822 of the Revised Missouri
Statutes. In the event Percentage Rent exceeds Minimum Rent
during any quarter, Tenant shall pay such difference to Landlord,
as an adjustment to Minimum Rent, not later than 45 days after
the end of each quarter. At the end of each Lease Year, Tenant
shall be entitled to a credit against Rent next due to the extent
of any overpayments of Percentage Rent made by Tenant during such
Lease Year. Tenant shall report AGR to Landlord on a quarterly
basis in accordance with the provisions of Section 13.
6. Triple Net Obligation. The Lease shall be what is
commonly known as a "Triple Net" Lease, and Tenant shall be
responsible for the full and timely performance of all
obligations and payment of all costs, charges, fees, expenses and
other sums incurred by or for Tenant's benefit in connection with
Tenant's ownership, leasing, construction, development,
equipping, management, maintenance, repair, replacement,
operation or use of the Project or any component thereof,
including without limitation all salaries, fees, commissions,
rentals, license or permit fees, loan or mortgage payments,
utility charges, trash, sewage and waste water disposal charges,
fuel charges, insurance premiums and deductibles, and all general
real estate, ad valorem, sales, use and other taxes and
assessments, special or general, allocable to the Premises, the
Project or the leasehold estate of Tenant. All sums other than
Rent payable by Tenant hereunder, including without limitation
the amounts due Landlord pursuant to this Section 6 (whether
directly or by reimbursement of any sum paid by Landlord to a
third party in the cure of a default by Tenant as permitted under
this Lease) shall be deemed "Additional Rent" as to which
Landlord shall have the same rights and remedies for enforcement
of payment and collection as Landlord has in respect of Rent.
7. INTENTIONALLY OMITTED.
8. Representations and Warranties.
(a) In order to induce Landlord to enter into
this Lease, Tenant makes the following representations and
warranties to Landlord, as of the Effective Date:
(i) Tenant is duly formed and validly existing as
a Missouri limited partnership;
(ii) the execution and delivery of this Lease and
the performance by Tenant of Tenant's
obligations hereunder have been duly
authorized by all requisite corporate action;
(iii)this Lease constitutes the legal, valid and
binding obligation of Tenant and is
enforceable against Tenant in accordance with
its terms;
(iv) no litigation is pending or, to the best of
Tenant's knowledge, threatened against Tenant
which, if adversely determined, would likely
have a material adverse impact on Tenant or
the Project;
(v) Tenant is not a party to, and neither Tenant
nor Tenant's properties, real or personal,
are subject to, any agreement, order,
proceeding, ruling or other matter in
conflict with any provision of this Lease or
which materially and adversely affects its
ability to perform its obligations hereunder;
(vi) Tenant is solvent and is not a party to any
assignment for the benefit of creditors or
bankruptcy proceeding; and
(vii)Tenant is not in material default of any
contract or agreement to which it is a party
which materially and adversely affects
Tenant's ability to perform its obligations
under this Lease.
(b) In order to induce Tenant to enter into this
Lease, Landlord makes the following representations and
warranties to Tenant as of the Effective Date:
(i) Landlord is a corporate and political body
lawfully existing and in good standing under
the laws of the State of Missouri and has the
power and authority to enter into this Lease,
and the execution and delivery of this Lease
and the performance by Landlord of Landlord's
obligations hereunder have been duly
authorized by all requisite governmental
action;
(ii) this Lease constitutes the legal, valid and
binding obligation of Landlord and is
enforceable against Landlord in accordance
with its terms;
(iii)no litigation is pending or, to the best of
Landlord's knowledge, threatened against
Landlord which, if adversely determined,
would likely have a material adverse impact
on the Project;
(iv) Landlord is solvent and is not a party to any
assignment for the benefit of creditors or
bankruptcy proceeding;
(v) Landlord is not a party to any agreement,
order, proceeding, ruling or other matter in
conflict with any provision of this Lease;
and
(vi) Landlord is not in default of any contract or
agreement to which it is a party which
materially and adversely affects its ability
to perform its obligations under this Lease.
(c) Each party agrees to promptly notify the
other of any occurrence which shall make any representation or
warranty provided by it as of the Effective Date no longer true,
accurate or complete in any material respect.
9. Use of Premises and Quiet Enjoyment.
(a) Designated Use. Tenant shall use the
Premises for the operation of a Casino and for related,
supporting infrastructure, including without limitation a parking
lot, lighting, signage and such additional installations as are
required by Tenant in connection therewith. In addition to the
Casino, Tenant or its permitted subtenants may (but shall not be
obligated to) develop and operate on the Premises such
restaurants, bars, hotels, bowling alleys, movie theaters, stores
and/or other facilities, as Tenant may in its discretion
determine, provided, however, that in all events the Casino shall
contain a minimum of 26,000 square feet of Las Vegas style gaming
area.
(b) Alterations and Improvements. Subject to the
provisions of Section 9(a), Tenant may from time to time, at
Tenant's sole risk, cost and expense, make alterations and
improvements, (i) without Landlord's prior written consent, to
the interior, non-structural components of the Premises which do
not reduce the minimum square footage devoted to Casino gaming,
and (ii) with Landlord's prior written consent, which consent
shall not be unreasonably withheld or delayed, to the exterior or
structural components of the Project; provided, however, that
Landlord shall not be required to consent to any reduction in the
square footage of the Project devoted to Casino gaming. In the
event of a dispute between the parties as to whether Landlord's
consent is required or has been unreasonably withheld, the issue
shall be submitted to binding arbitration in accordance with the
procedures of Section 31. In order to rule in favor of Landlord,
the arbitrators must determine that such proposed new
construction would be detrimental to the Project and Landlord's
realization of the benefits of this Lease.
(c) Compliance With Governmental Requirements.
During the Term, Tenant shall, at its sole cost and expense,
promptly observe and comply with all Governmental Requirements
and the requirements of all insurance companies writing policies
covering the Casino or the parking areas, streets, sidewalks,
vaults, curbs and gutters included within the Project, or the use
and occupation or franchises and privileges connected therewith,
whether or not such Governmental Requirements or insurance
requirements shall necessitate structural changes, improvements,
interference with the use and enjoyment of the Project,
replacements or repairs, extraordinary as well as ordinary,
foreseen or unforeseen. The Casino shall be located within the
Project in such a manner so as not to violate any applicable
Gaming Licensure requirements of the Commission or any Permits
obtained by Tenant. Tenant shall pay all costs, expenses,
claims, fines, penalties and damages that may in any manner arise
out of or be imposed because of the failure of Tenant to comply
with any of the foregoing requirements.
(d) Permitted Contests. Tenant, after notice to
Landlord, may, by appropriate legal proceedings conducted at
Tenant's sole expense, contest in good faith the validity or
enforcement of any Governmental Requirement and may defer
compliance therewith, provided that (i) such noncompliance shall
not constitute a crime, (ii) Tenant shall diligently prosecute
such contest to final determination by a court, governmental
authority, agency, department or other body having final
jurisdiction, (iii) the contest conducted by Tenant will not
operate to extend the Investigation Deadline or the Permit
Deadline, and (iv) the contest conducted by Tenant will not
result in the closing of the Project, any foreclosure or
forfeiture of Tenant's leasehold estate or the imposition of any
charge, fine, lien, penalty or claim against Landlord. Tenant,
after notice to Landlord, may, by appropriate legal proceedings
conducted at Tenant's sole expense, contest in good faith the
validity of any lien for labor or materials imposed against
Tenant or the Project, provided that Tenant first discharges such
lien from the records of the County by posting of bond or other
security reasonably adequate to secure Tenant's performance, and
provided further that such contest will not result in the closing
of the Project or any foreclosure or forfeiture of Tenant's
leasehold estate.
(e) Quiet Enjoyment. Landlord covenants and
agrees that Tenant shall be entitled to lawfully and quietly
hold, occupy and enjoy the Premises during the Term without
hindrance or interference by Landlord or by any party claiming
by, through or under Landlord, in accordance with and subject to
the terms and conditions of this Lease.
10. Exclusivity and Restrictive Covenant.
(a) Grant of Exclusivity. To the fullest extent
permitted by law, and subject only to the provisions of Section
10(b), Landlord hereby grants to Tenant and its permitted
successors and assigns, for a period commencing on the Original
Effective Date and continuing through the 15th Lease Year (the
"Exclusive Rights Period"), the exclusive right to operate any
type of excursion gaming boat, land based or other type of gaming
or gambling facility or facilities on any property which is at
any time during the Exclusive Rights Period owned or controlled,
directly or indirectly, by Landlord and located south of the
River des Peres or, with respect to the development thereof or to
uses which may be made thereof by the owner, tenant or occupant,
under the direct or indirect administrative jurisdiction of
Landlord. Such exclusive rights shall include an obligation on
the part of Landlord to not authorize, endorse, support or
otherwise assist, directly or indirectly, in connection with
issuance by any governmental entity of any license or permit to
or for the development or operation of any potentially competing
gaming project south of the River des Peres for the duration of
the Exclusive Rights Period.
(b) Conditions of Grant. Landlord's grant to
Tenant of exclusivity is subject to the following express
conditions: (i) the Casino shall remain in operation after
Project Opening; (ii) no Event of Default shall have occurred and
be continuing under this Lease on the part of Tenant or on the
part of the New Guarantor under the New Guarantees; (iii) Tenant
and New Guarantor shall honor the restrictive covenant contained
or referenced in Section 10(c); and (iv) Tenant shall not earn
more than $200,000,000 in AGR during any Lease Year; provided
that such amount shall be increased for the sixth (6th) Lease
Year and each Lease Year thereafter by the same percentage as the
percentage increase, if any, in the Consumer Price Index (as
hereinafter defined) between the last month of the fifth (5th)
Lease Year and the last month of the sixth (6th) and each
succeeding Lease Year, as the case may be. For purposes hereof,
the term "Consumer Price Index" means the Consumer Price Index
for All Urban Consumers for the U.S. City Average for All Items
1982-84=100, as determined by the United States Department of
Labor, Bureau of Labor Statistics. In the event that the
publication of the Consumer Price Index is discontinued, such
index as may be published by any United States government bureau
or department to replace the present Consumer Price Index shall
be substituted therefor.
(c) Restrictive Covenant. Tenant covenants and
agrees that during the Exclusive Rights Period, Tenant shall not
participate in any manner in the ownership, sponsorship, control,
management, operation or use of any riverboat gaming facility
along either the Illinois or Missouri banks of the Mississippi
River from the southern boundary of the City of St. Louis to the
northern boundary of Jefferson County. Tenant acknowledges that
the restrictive covenant contained in this Section 10(c) is
reasonable under all of the circumstances. Notwithstanding the
foregoing, the Exclusive Rights Period shall terminate upon any
termination of this Lease other than pursuant to Section 25
hereof.
(d) Right of First Refusal. In the event
Landlord shall elect to support issuance of a second gaming
license south of the River des Peres because Tenant has earned
more than $200,000,000 in AGR, as adjusted pursuant to Section
10(b), during any Lease Year, and provided Tenant is in
compliance with the conditions described in clauses (i), (ii) and
(iii) of Section 10(b), Landlord shall grant Tenant a 180-day
right of first refusal (subject to extension during the pendency
of any arbitration proceeding as hereinafter defined) to commit
in writing to construct and operate a second gaming project in
unincorporated St. Louis County at a mutually acceptable location
(and on terms and conditions mutually acceptable to the parties)
which, if constructed and opened for operation by Tenant within
30 months after Tenant's election (which 30-month period shall be
subject to extension on account of Unavoidable Delays and/or
during the pendency of any arbitration proceeding as hereinafter
provided), shall operate, so long as the Tenant is in compliance
with respect to clauses (i), (ii) and (iii) above, as the same
pertain to both projects, to divest Landlord of the right to
implement or to authorize the implementation of any proposal from
another prospective tenant, developer or operator of a second
gaming facility, whether the proposal in question involves the
sale, lease or licensing of property owned or leased by Landlord
or Landlord's support before the Commission and the St. Louis
County Council with respect to an operation proposed to be
located on privately-owned land. Tenant's failure to elect to
construct and operate a second gaming project by timely written
notice to Landlord shall constitute a waiver of Tenant's right of
first refusal, unless Landlord's proposal does not result in a
sale or lease of the site in question, in which event Tenant's
right of first refusal shall be deemed reinstated. Landlord
agrees to lend all reasonable cooperation to Tenant in connection
with any timely exercise by Tenant of Tenant's right of first
refusal to construct and operate a second gaming project. In the
event of a dispute between Landlord and Tenant regarding any
aspect of Tenant's specific plans for the construction and
operation of a second gaming project or the terms of a lease or
other agreement with Landlord with respect to such second gaming
project (other than rent, which shall be equal to the then-
current Rent payable under this Lease), either party shall have
the right to submit such dispute to binding arbitration in
accordance with the procedures of Section 31.
(e) Memorandum of Restrictive Covenant. The
provisions of this Section 10 shall be incorporated into a
memorandum prepared and recorded by Landlord against the Adjacent
Parcel and any property now or hereafter owned by Landlord and
located south of the River des Peres.
11. Covenant of Continuous Operation.
(a) Maximization of Revenues. The Project
(including the Casino and any barges utilized in connection with
the Project, and all structures, parking lots, driveways,
landscaping, fencing, lighting and signage), shall be maintained,
managed, operated, staffed, serviced, equipped and repaired in
accordance with all Governmental Requirements, insurance
requirements and the highest standards of projects operating
along and from the Mississippi and Missouri Rivers. The Casino
shall remain in operation 24 hours a day, 7 days a week, 365 days
a year, so as to maximize the opportunity of Landlord to earn
Percentage Rent under Section 5(a)(iii), except to the extent
limited by applicable Governmental Requirements, Unavoidable
Delays, casualty or condemnation or by repairs, replacements or
alterations made by Tenant in accordance with the provisions of
Section 9. Tenant shall provide a reasonably adequate complement
of properly trained and equipped security personnel for the
Project at all times.
(b) Particular Operations. The exterior of the
Project and all Project signage shall be illuminated at all times
during which the Project is open. Subject to applicable laws,
Tenant shall have the right to erect or affix such signs and
banners as Tenant may require in its discretion for directional,
informational, promotional or advertising purposes upon windows,
doors and walls (interior and exterior) of Project structures and
otherwise on or about the Project. All signs and banners shall
be in good taste and generally consistent with the themes and
aesthetics of the Project.
(c) Illegality of Gaming Operations.
Notwithstanding the foregoing provisions of this Section 11, in
the event casino gaming shall become illegal in the State of
Missouri by virtue of legislative action taken by the Missouri
General Assembly, popular referendum or otherwise, and in the
further event that the Casino is closed for a period of 365
consecutive days due to such legal impediment, then either party
shall have the right to cancel this Lease by delivery of written
notice of such election to the other party at any time prior to
the date casino gaming again becomes legal in the State of
Missouri. For so long as the Project remains closed due to such
legal impediment, Tenant's obligation to operate the Project and
to pay Rent shall be suspended. Landlord or Tenant shall have
the right but not the obligation to contest the validity of any
legal impediment to the operation of the Project arising under
this subsection (c), and in the event either party elects to
contest such impediment, the other party shall lend all non-
financial assistance reasonably required by the contesting party;
provided, however, Tenant shall not be obligated to participate
in or assist Landlord in connection with such contest if the
Project is closed for 365 days due to such legal impediment and
either party elects to cancel this Lease as provided in this
subsection (c).
12. Assignment and Subletting.
(a) Landlord's Consent Generally. No assignment
or subletting (including licensing) shall be allowed without the
prior written consent of Landlord, which consent shall not be
unreasonably withheld. In no event shall any assignment or
subletting operate by itself to release Tenant from any liability
under this Lease, release New Guarantor from any liability under
the New Guarantees or constitute permission for any further
subletting or assignment. Consent to any one proposed assignment
or sublease shall not be deemed consent to further proposed
assignments or subleases. A partnership or corporate transaction
involving Tenant or the General Partner, including without
limitation a merger or sale or other transfer of the partnership
interests in Tenant or the stock of or partnership interests in
the General Partner, which results in a change of control of the
Tenant or the General Partner, shall constitute an assignment
requiring Landlord's prior written consent. Notwithstanding the
foregoing provisions of this Section 12(a), if the transaction
involves the assignment of this Lease to the New Guarantor or to
any corporation, partnership or limited liability company
controlling or controlled by the New Guarantor or under common
control with Tenant, the consent of Landlord thereto shall not be
required, but no such transaction, by itself, shall release
Tenant from any liability under this Lease. Tenant shall deliver
notice to Landlord of any assignment or sublease which Tenant
believes does not require Landlord's consent under this Section
12(a), together with sufficient information to enable Landlord to
verify that its consent is not required. The assignment or
pledge of the assets of the Project as collateral for financing
purposes shall not be considered an assignment pursuant to this
Section 12 but shall be governed by the provisions of Section 19.
Landlord's consent shall not be required in connection with the
subletting or licensing of portions of the Premises for bar,
restaurant, hotel, retail, recreational, entertainment or other
purposes which are incidental to the operation of the Casino and
which do not reduce the floor space dedicated to Casino gaming
under Section 9; provided that no such subletting or licensing
shall operate to relieve Tenant of any liability under this
Lease.
(b) Procedures for Assignment and Subletting. In
the event Tenant desires to assign its interest in this Lease or
to sublet the use of all or any portion of the Project, and
provided Landlord's consent to such assignment or subletting is
required under Section 12(a), Tenant shall deliver notice of the
proposed transaction to Landlord, together with detailed
information regarding the financial condition and operating
history of the proposed assignee or subtenant (including any
operator) and the terms of the proposed assignment or subletting.
Within 30 days after receipt of the foregoing information, and
subject to the provisions of subsection (a) of this Section 12,
Landlord shall accept or reject Tenant's proposal. Landlord's
rejection shall be based upon (i) the failure of the proposed
assignee or subtenant to meet any of the "Stated Criteria" as
hereinafter defined, or (ii) the occurrence of an Event of
Default, and Landlord shall specifically state the grounds for
Landlord's rejection. If Landlord shall fail to respond to
Tenant within 30 days after receipt of Tenant's proposal,
Landlord shall be deemed to have accepted such proposal. In the
event Tenant shall object to Landlord's rejection of Tenant's
proposal, Tenant's sole remedy shall be to commence arbitration
proceedings in accordance with the provisions of Section 31. The
arbitrators shall either approve or disapprove the proposed
assignment or sublease based on their determination regarding
compliance with the Stated Criteria or whether an Event of
Default has occurred and shall make no other award or
determination. Tenant agrees to indemnify and hold Landlord
harmless from and against any loss, cost, damage, claim, demand
or expense (including attorneys' fees and expenses) incurred by
Landlord in connection with any action brought by or for the
benefit of the proposed assignee or subtenant or seeking relief
other than arbitration as provided herein. In the event an
assignment is approved by Landlord or through arbitration, the
assignee shall be subject to all of the provisions of this Lease.
(c) Stated Criteria. With respect to any
assignee or subtenant (or the general partner, if the assignee or
subtenant is a partnership), the following shall constitute the
Stated Criteria for approving any proposed assignee of Tenant's
interest in this Lease or any proposed subtenant or operator of
the Project:
(i) the assignee, subtenant or parent corporation
of such assignee or subtenant shall have a
net worth of not less than $10,000,000.00,
and if such parent corporation is relied upon
to meet the net worth test, it shall deliver
a guarantee of the Lease suitable to
Landlord;
(ii) the assignee, subtenant or parent corporation
of such assignee or subtenant shall have a
sufficient casino gaming operating history or
reputation in the industry or community or a
manager with such experience or reputation,
in the reasonable judgment of Landlord; and
(iii)the assignee, subtenant or parent corporation
of such assignee or subtenant shall have a
gaming license to operate the Project.
Tenant agrees that Landlord shall not be deemed
unreasonable in rejecting a proposed assignee or subtenant on any
of the above-stated grounds.
(d) Conveyance by Landlord. Landlord shall
promptly notify Tenant in writing of any conveyance of the
Premises, in whole or in part, or any interest therein, to any
party. Landlord shall not convey the Premises, in whole or in
part, or any interest therein to any party if such conveyance
shall impair Tenant's rights under this Lease or jeopardize
Gaming Licensure. Landlord's right to transfer title to the
Premises or to assign rentals derived therefrom to any
governmental body shall not be deemed to constitute any such
impairment or jeopardy.
13. Reporting Covenants. Tenant shall report, or,
prior to the Assignment Date, shall cause Assignee to report,
each month in writing to Landlord the progress of the Gaming
Licensure and Permit application process, the progress of
construction, and, after Project Opening, on a quarterly basis,
AGR realized by Tenant. Tenant also shall provide, or, prior to
the Assignment Date, shall cause Assignee to provide, Landlord
with such other information regarding the development and
operation of the Project as Landlord may reasonably request,
including the status of Tenant's obligations under the Lease.
All reports of AGR shall be certified as to accuracy and
completeness by an officer of Tenant. In addition, copies of
annual audit statements shall be provided to Landlord by Tenant,
and Landlord shall have the right, at Landlord's sole cost and
expense, except as hereinafter provided, to conduct an audit of
the books and records of Tenant, not more frequently than once
during any Lease Year, in order to verify the accuracy of AGR
reported by Tenant and Tenant's compliance with the various
operating and reporting covenants contained in this Lease.
Tenant shall maintain Tenant's books and records in support of
Tenant's computations and reporting of AGR in accordance with
generally accepted principles of accounting consistently applied.
Tenant's books and records shall be retained or made available in
the St. Louis metropolitan area, available for inspection and
audit by Landlord during regular business hours on reasonable
prior notice to Tenant and without material interruption of
Tenant's business. In the event Landlord's audit or any audit
conducted by the Commission discloses that AGR has been under-
reported such that Landlord is entitled to receive an additional
payment of Annual Rent, Tenant shall promptly make payment to
Landlord of the entire sum due Landlord. In the event the amount
due exceeds 5% of the amount paid by Tenant, Tenant also shall
pay Landlord's reasonable expenses in conducting such audit.
Upon Landlord's request, Tenant also shall provide Landlord with
a copy of each financial statement, report and filing issued by
or on its behalf and provided to any regulatory body, including,
without limitation, the Missouri Gaming Commission, the
Securities and Exchange Commission and other authorities,
agencies and commissions having jurisdiction over Tenant's
operations. Tenant shall promptly report to Landlord any notice
received by it from any governmental authority or in respect of
any proceedings at law or in equity to which Tenant is a party
alleging violation of any Governmental Requirements by Tenant,
and Tenant shall provide to Landlord such information as Landlord
may request in connection therewith. Upon Landlord's request,
Tenant shall present to Landlord on an annual basis the Coast
Guard certificate of inspection obtained for the Casino. Tenant
hereby irrevocably designates St. Louis County as the "home dock"
for the Project during the Term for all purposes under Section
313.822 of the Revised Missouri Statutes, and Tenant agrees to
confirm the status of the County as the "home dock" for the
Project as and when requested to do so by Landlord or the
Commission.
14. Insurance.
(a) Types of Insurance. Throughout the Term,
Tenant shall maintain in full force and effect the following
insurance coverage:
(i) commercial liability insurance on an
"occurrence basis" against claims for
"personal injury" including, without
limitation, bodily injury, death or property
damage occurring on, in or about the Project
or in connection with any other operations of
Tenant related to the Project (such as, by
way of example, off-site bus or shuttle
service), such insurance to afford immediate
minimum protection of $5,000,000 combined
single limit/per occurrence and $10,000,000
aggregate, and, (a) with respect to the
Project exclusive of any boat hull, a
deductible not greater than $75,000, and, (b)
with respect to any boat hull, a deductible
not greater than 1% of the value of the boat;
(ii) property insurance against loss or damage to
the Project (including the Casino) by fire
and other risks covered by insurance of the
type now known as "fire and extended
coverage" in an amount equal to the
replacement value of the Casino and remainder
of the Project and with a deductible not
greater than $75,000 from the loss payable
for any casualty;
(iii)protection and indemnity insurance including
collision liability covering collisions with
all fixed or floating objects with a minimum
limit of $5,000,000 per occurrence and a
deductible not greater than $75,000;
(iv) worker's compensation insurance in full
compliance with all applicable state and
federal laws and regulations, including a
specific endorsement covering liability for
Federal Longshoremen's and Harbor Workers'
Compensation Act;
(v) employers liability insurance in the minimum
amounts of $1,000,000 per individual claim,
not to exceed $10,000,000 in the aggregate,
with a deductible not greater than $350,000,
covering injury or death to any employee
which may be outside of or in addition to
liability under any worker's compensation
statutory coverage;
(vi) excess or umbrella insurance providing a
minimum of $10,000,000 in excess of
underlying limits and coverage provided by
commercial general liability, protection and
indemnity and employer's liability policies;
and
(vii)personal property insurance covering Tenant's
trade fixtures, equipment, goods and
inventory in an amount not less than 95%
replacement value.
(b) Quality of Coverage. All such policies shall
be issued by insurance companies licensed to do business in the
State of Missouri and approved by Landlord as to form and as to
surety and reserving the right of recovery by the Landlord in the
event of damage to its property and issued in the name of Tenant
and naming Landlord as additional insured, as its interest may
appear. In addition, one or more of the policies shall include
special dram shop and vehicular endorsements and a contractual
liability endorsement covering the indemnification agreements of
Tenant contained in this Lease. Policy certificates shall be
delivered to Landlord on the Effective Date and shall state that
the coverage afforded thereby shall not be modified or canceled
without 30 days' prior written notice to Landlord, delivered by
registered mail. Provided no Event of Default has occurred and
is continuing, all loss proceeds shall be made available to
Tenant to restore and repair the Project (including the Casino)
as provided in Section 15. Permitted deductibles may be
increased by an amount equal to any increased inflation in the
value of U. S. currency.
(c) Renewal of Coverage. Certificates of
insurance with reasonably satisfactory evidence of payment of the
premium thereof, shall be delivered to Landlord on or before the
Commencement Date or date of Project Opening, as appropriate, and
upon renewals of such policies, not less than 30 days after
renewal. Not less than 30 days prior to the expiration of any
such coverage, Tenant will provide evidence to Landlord of
continuing insurability by means of letters from qualified
carriers confirming intent to renew or provide the required
coverage. If Tenant at any time fails or refuses to procure or
maintain the required amount of insurance, then the Landlord may,
and without notice to Tenant, obtain same for and on behalf of
Tenant and charge the cost thereof to Tenant, such charge to be
due and payable upon demand and to constitute Additional Rent
hereunder.
(d) Waiver of Subrogation and Right of Recovery.
Tenant, and all parties claiming under or through Tenant, hereby
expressly release and discharge Landlord and the County from any
claim or liability, whether based on negligence or any reason
whatsoever, for any personal injury or property damage. All
insurance policies of Tenant shall contain an endorsement
containing an express waiver of any right of subrogation by the
insurance company against Landlord and the County.
(e) Additional Insurance. Tenant shall obtain
such other insurance in such amounts as may from time to time be
reasonably required by the Landlord against other insurable
hazards, and the Landlord may require the amount of any policy of
insurance Tenant is required to maintain pursuant to the
provisions of this Lease to be reasonably increased. Tenant
shall not carry separate or additional insurance concurrent in
form or contributing in the event of any loss or damage with any
insurance required to be obtained by Tenant under this Lease, if
the effect of such insurance would be to reduce the protection or
payment to be made under insurance required hereunder. In the
event Tenant objects to any increased or additional coverage
required by Landlord on the grounds that such coverage is not
required of, or is not commercially available to, other operators
of facilities similar to the Project, and Landlord disagrees, the
issue shall be submitted to binding arbitration in accordance
with the provisions of Section 31 hereof.
15. Damage and Destruction.
(a) Casualty Termination. If, at any time during
the last 10 years of the Term, the Project is damaged by any
cause or casualty in an amount exceeding 15% of the then
replacement cost of the Project, Tenant shall have the right to
terminate this Lease by written notice to Landlord within 60 days
of the happening of the casualty causing such damage or
destruction. In such event, Landlord (subject to the
requirements of any Leasehold Mortgage (as defined in Section
19)) shall receive from the insurance proceeds the lesser of
(a) the then present value of the Minimum Rent payable to
Landlord for the remainder of the Term plus the amount equal to
the cost of rebuilding all damaged or destroyed land-based
facilities, or (b) 100% of the insurance proceeds. Any funds
remaining following the distribution of the insurance proceeds
paid to Landlord pursuant to the previous sentence shall be paid
to Tenant. Upon any termination of the Lease under this
provision, Tenant shall surrender possession of the Premises
within 90 days after notice of termination, whereupon each of the
parties shall be released thereby from any further obligations to
the other except for items which have theretofore accrued and are
then unpaid, and such termination shall be deemed to relate back
to the date of damage or destruction; provided, however, that if
the Project or any part thereof shall be kept open for business
after the date of damage and prior to the surrender of possession
of the Premises, the termination date shall be the date upon
which Tenant shall discontinue the conduct of its business on the
Premises. In the event of any termination pursuant to this
Section 15(a), and upon surrender of the Premises to Landlord,
Landlord shall refund to Tenant any unearned portion of Annual
Rent prepaid by Tenant. In addition, in the event Landlord
relets the Premises to another lessee, Landlord shall reimburse
Tenant for the prepaid Minimum Rent paid by Tenant due to the
termination of this Lease pursuant to this Section 15(a) from the
rent paid by such lessee.
(b) Casualty Reconstruction. In the event of
damage or destruction occurring to the Project (including the
Casino) other than as described in subsection (a) above, Tenant
shall (subject to compliance with the requirements of any
Leasehold Mortgage (as defined in Section 19)) repair and rebuild
the Project (including the Casino), and restore the Project to
full operation with reasonable diligence; Tenant shall direct,
control, coordinate and approve all such repairs, reconstruction
and restoration contemplated by this provision and shall have the
right to select any architects, engineers and contractors for
such repairs, reconstruction or restoration. All loss proceeds
shall be made available to Tenant and shall be applied to effect
such repair, reconstruction or restoration of the Project. No
component of Annual Rent or Additional Rent shall abate as a
result of any such damage or destruction, regardless of the
availability or sufficiency of loss proceeds to repair or restore
the Project, it being understood and agreed that Tenant shall
maintain such business interruption insurance as Tenant may
require in order to assure Tenant of the ability to continue to
meet Tenant's financial obligations under this Lease.
16. Condemnation.
(a) Definitions. Whenever used in this section,
the following words shall have the following respective
definitions and meanings: (i) "condemnation" or "condemnation
proceedings" - any action or proceeding brought by competent
authority for the purpose of the taking of the fee of the
Premises, the Project or any part thereof, as a result of the
exercise of the power of eminent domain, including a voluntary
sale to such authority either under threat of or in lieu of
condemnation or while such action or proceedings is pending; (ii)
"taking" - the event of vesting of title to the fee of the
Premises, or the Project or any part thereof, in the competent
authority pursuant to condemnation; (iii) "vesting date" - the
date of the taking.
(b) Defense of Taking. Landlord, immediately
upon obtaining knowledge of the institution of any proceedings
for the condemnation of the Premises or any part thereof, shall
notify Tenant of the pendency of such proceedings. Landlord
shall then, if requested by Tenant, file or defend its rights
thereunder and prosecute the same with due diligence to its final
disposition. Tenant may, but shall not be required to,
participate in any such proceedings and Landlord from time to
time will deliver to Tenant all instruments requested by it to
permit such participation. In the event Tenant chooses to
participate in any such proceedings, Landlord may be the nominal
party in such proceedings, but Tenant shall be entitled to
control and direct the same and to be represented therein by
counsel of its choice, at Tenant's cost. Landlord covenants and
agrees that it will use its best efforts and take all actions
necessary and appropriate to cause the County not to exercise its
powers of eminent domain with regard to the Premises, the Project
or any part thereof, and otherwise to assure to the greatest
extent possible that neither the Premises, the Project nor any
part thereof, shall be condemned during the Term.
(c) Total Taking. In the case of a taking of all
of the Premises and the Project, this Lease shall terminate as of
the vesting date and the Rent under this Lease shall be
apportioned to the date of termination, and upon surrender of the
Premises to Landlord, Landlord shall refund to Tenant any
unearned portion of Annual Rent prepaid by Tenant.
(d) Partial Taking - Termination or Arbitration.
In the case of a taking of less than all of the Premises and
Project (other than for a temporary use) Landlord and Tenant
mutually shall determine within a reasonable time after the
vesting date whether the remainder thereof can economically and
feasibly be used by Tenant. If Landlord and Tenant cannot
mutually agree upon such matter with 90 days after the vesting
date, it shall be determined by binding arbitration pursuant to
the provisions of Section 31. If it is determined by mutual
agreement or by arbitration that the remaining Premises and
Project cannot economically and feasibly be used by Tenant,
Tenant may terminate this Lease on not less than 10 days nor more
than 30 days notice to Landlord to such effect, provided that
such notice is given within 30 days after such determination, and
the Rent shall be apportioned to the date of termination. If
Tenant does not elect to terminate this Lease within the period
aforementioned, it shall continue in full force and effect with
respect to the remaining portion of the Premises. If this Lease
shall terminate pursuant to this provision, the award for the
Project shall be apportioned and paid, to the extent available,
in the following order of priority: (i) Landlord and Tenant
first shall be entitled to their reasonable expenses and charges
including, without limitation, reasonable attorneys' fees
incurred in connection with the taking; (ii) Landlord shall be
entitled to the value of the fee exclusive of the value of this
Lease; and (iii) Tenant shall be entitled to the balance of the
award. If the court in which the condemnation proceedings are
brought fails or refuses to apportion its award between Landlord
and Tenant, and if Landlord and Tenant cannot agree upon the
allocation defined in the above order of priority, such values,
allocation and apportionment shall be determined by binding
arbitration under the provisions of this Lease. The provisions
of this section regarding the apportionment of the award shall
also apply in the case of a total taking and shall survive any
termination of this Lease pursuant to this Section 16.
(e) Partial Taking - Reconstruction. In the case
of a partial taking where the Tenant does not elect to terminate
this Lease pursuant to the provisions set forth above, Tenant
shall commence and proceed with reasonable diligence to repair
and reconstruct the remaining improvements to a complete,
economically usable, architectural unit or units, including,
without limitation, temporary repairs, changes and installations
required to accommodate space subtenants and all other work and
replacements and additions of furniture and furnishings
incidental to and appropriate in connection with all of the
foregoing (all such repair, reconstruction, replacements and
additions and work being referred to in this section as
"restoration"); and the total award of the condemnation
proceedings, including the award for the Project shall be
apportioned and paid to the extent available in the following
order of priority: (i) Landlord and Tenant first shall be
entitled to their reasonable expenses and charges including,
without limitation, reasonable attorneys' fees incurred in
connection with the taking; (ii) Tenant shall be entitled to an
amount equal to the cost of restoration to the extent
contemplated by this section, such sums shall be turned over to
Tenant to be held in trust for the purpose of paying for the cost
of restoration; (iii) Landlord shall be entitled to the value of
the fee exclusive of the value of this Lease; (iv) Tenant next
shall be entitled to the value of its leasehold estate under this
Lease, the value of the Project, the value of the furniture,
fixtures and equipment of the Project and the balance of the
award. In the case of a partial taking where the Tenant does not
elect to terminate this Lease pursuant to the provisions set
forth above, the Rent payable for the balance of the Term of this
Lease shall be equitably reduced effective as of the date of such
partial taking to an amount fixed by agreement between Landlord
and Tenant or, in the event of their failure to agree within
thirty (30) days of such taking, by arbitration pursuant to the
provisions of Section 31.
(f) Temporary Taking. In the event of a taking
of all or any portion of the Premises and the Project for
temporary use, the foregoing provisions of this Section 16 shall
be inapplicable thereto. This Lease shall remain in full force
and effect and Tenant alone shall be entitled to make claim for,
recover and retain any award recoverable in respect of such
temporary use, so long as Rent is first paid from such award. If
any portion of the award for such temporary use is intended to
cover the cost of restoring the Premises and the Project to the
condition they were in prior to such temporary use, such portion
of the award shall be paid to Tenant to cover the cost of such
restoration and repair.
17. Adjacent Parcel.
(a) Development Parameters. Tenant and its
affiliates shall be permitted to submit proposals to Landlord for
the development of all or portions of the Adjacent Parcel. The
Adjacent Parcel may be developed by Landlord and/or other parties
for light industrial, commercial, retail, entertainment and/or
recreational uses. Structures of any size or height, such as
warehouses, distribution centers, manufacturing facilities,
hotels, shopping centers, entertainment, sporting or recreational
facilities, parking lots or garages, communications towers, and
docking facilities, may be constructed and operated on the
Adjacent Parcel. Landlord covenants that no use may be made of
the Adjacent Parcel which shall constitute a nuisance or
hindrance to the Project, detract materially from the aesthetic
appeal of the Project, generate excessive industrial noise or
noxious industrial or chemical odors, or materially impair access
to the Project. Neither the volume nor type of traffic,
including heavy truck traffic, on the Adjacent Parcel, including
any resulting noise or omissions, nor any signage or illumination
located on the Adjacent Parcel, shall be deemed to constitute a
nuisance, impairment or detraction. That portion of the Adjacent
Parcel which is within the 50' by 550' zone along the northern
perimeter boundary of the Premises identified on Attachment K
shall constitute a "Buffer Zone" between any development located
on the Adjacent Parcel and the Premises. Only green space or
landscaping shall be located within the Buffer Zone. Tenant
shall have a non-exclusive, irrevocable license during the Term
of this Lease, at Tenant's sole risk, cost and expense, at
Tenant's option, but without obligation, to enter upon the Buffer
Zone for the sole purpose of performing, maintaining, repairing
and replacing landscaping on the Buffer Zone should Tenant so
desire. Notwithstanding the foregoing provisions of this Section
17(a), the parties acknowledge and agree that a reconfiguration
of the roadway providing access to the Premises and/or the
Adjacent Parcel, if and as agreed to by the parties in connection
with a resolution of pertinent access issues, may entail access
to the Adjacent Parcel (i) via the bridge to be constructed by
Tenant or via the roadway to be constructed on the Premises, or
(ii) to provide alternate access to the Premises for emergency
vehicles.
(b) Enforcement. A restrictive covenant
consistent with the requirements of Section 17(a) shall be
recorded by Landlord against the Adjacent Parcel, and such
restrictive covenant shall be prior and paramount to any
mortgage, deed of trust or other encumbrance against the Adjacent
Parcel. Landlord shall have the right but not the obligation to
enforce compliance with such covenant to the extent the real
estate in question has been sold or transferred to a third party,
but Tenant, its successors and assigns, shall be designated in
the covenant as intended beneficiaries thereof with full right to
institute action, legal and equitable, for any violation thereof.
To the extent Landlord retains ownership of the real estate in
question and the violation complained of is committed by a tenant
or occupant of the real estate, Landlord shall use its best
efforts to enforce Landlord's rights under the covenant by
appropriate legal action, including seeking appellate relief, if
necessary.
(c) Original Lease. In the event of a conflict
between any provision of this Section 17 and any existing
provision of that certain Lease between Landlord, as successor to
NL Industries, Inc., and The Kiesel Company, as Tenant, dated as
of April 1, 1997, including any amendments thereto and
restatements thereof, the provisions of the latter such lease
shall control. In the event the operations of the Kiesel
Company, its successors, assigns or subtenants, on or from the
Kiesel Company premises, are interfering with, or will likely
interfere with, Tenant's development or operation of the Project,
in the reasonable judgment of Tenant, after written notice to
Landlord, and provided other measures taken by Landlord and the
Kiesel Company to obviate the interference or potential
interference are either unavailable or prove insufficient,
Landlord agrees to cancel the Kiesel Company lease at the
earliest permissible date.
18. Non-Disturbance and Attornment. Landlord shall
have the right to obtain from any lender (a "Mortgagee") a
mortgage secured by Landlord's interest in the Premises and/or
this Lease; provided, however, that this Lease, including all of
the rights of Tenant under or pursuant to this Lease, shall be
paramount to, and shall not be subject or subordinate to, any
mortgage, deed of trust or other security interest instrument
("Mortgage") that may now or hereafter affect Tenant's interest
in the Premises. Any Mortgage shall contain, as required terms,
the express acknowledgment that Tenant shall not be liable for
the payment of the sum secured by such Mortgage, nor for any
expenses in connection with the same. Neither such Mortgage nor
any instrument collateral thereto shall contain any covenant or
other obligation on Tenant's part to pay such debt, or any part
thereof, or to take any affirmative action of any kind
whatsoever; provided, however, that Tenant shall remain liable
under this Lease notwithstanding any foreclosure of Landlord's
interest in the Premises or any transfer of title to the
Premises, and provided further that Tenant shall agree to attorn
to such transferee. Such Mortgage shall expressly provide that
the Mortgagee shall not seek any money judgment against Tenant
related to any Mortgage obligation of Landlord. Each Mortgagee
shall agree to a non-disturbance and attornment agreement which
will require the Mortgagee to recognize that this Lease is
superior to Mortgagee's Mortgage, (ii) that Tenant shall be
entitled to use and occupy the Premises and the Project in
accordance with the terms of this Lease, (iii) that Tenant shall
be entitled to all of its rights under this Lease, (iv) that
insurance and condemnation awards and proceeds shall be disbursed
as provided in this Lease, and (v) Tenant's possession of the
Premises and the Project shall not be disturbed by Mortgagee or
by any person whose rights are acquired through foreclosure
proceedings or through a deed in lieu of foreclosure except as
may be expressly provided in this Lease, and any subsequent
transferee of such rights shall be so bound provided no Event of
Default occurs and is continuing under this Lease. The non-
disturbance and attornment agreement may require (x) that as a
condition to the making of any amendment or modification to this
Lease Landlord receive the prior written consent of such
Mortgagee, (y) that such Mortgagee shall receive notice of any
default claimed by or through Tenant against Landlord, and (z)
that such Mortgagee shall have the same right to cure such
default as is provided the holder of any Leasehold Mortgage
obtained by Tenant. Tenant shall within 10 days after receipt
from Landlord execute and deliver to Landlord and Landlord's
Mortgagee such estoppels and attornment agreements as may be
reasonably required in connection with any proposed financing or
refinancing involving the Premises and/or the Adjacent Parcel,
provided the terms and conditions of such estoppels or attornment
agreements are consistent with the provisions of this Section 18
and the same do not constitute a modification of this Lease.
19. Leasehold Mortgages.
(a) Right to Leasehold Mortgage. Tenant shall
have the right to mortgage and to refinance this Lease and
Tenant's leasehold estate and any improvements thereon, including
but not limited to the Project, ("Leasehold Mortgage") at any
time, and from time to time, on any terms Tenant may deem
desirable and to assign this Lease and any existing and future
subleases, license agreements and concession agreements, and the
rentals and fees payable to Tenant thereunder to the holder of
such mortgage ("Leasehold Mortgagee"), as additional collateral
security for the indebtedness secured by the Leasehold Mortgage.
In connection therewith, Landlord agrees to timely execute and
deliver an estoppel certificate, a non-disturbance agreement, and
such other documents in reasonably satisfactory form as shall be
requested by any Leasehold Mortgagee, so long as such
certificates, agreements or other documents are not inconsistent
with this Lease. Any Leasehold Mortgage shall be subject and
subordinate to Landlord's rights under this Lease and its fee
interest in the Premises, except as otherwise provided herein.
(b) Terms of Leasehold Mortgage. If Tenant shall
have executed and delivered a Leasehold Mortgage or Mortgages and
the Leasehold Mortgagee shall have notified Landlord in writing
to such effect giving its name and address:
(i) Landlord concurrently shall serve upon such
Leasehold Mortgagee a copy of each notice,
consent, approval, request or demand given to
Tenant under this Lease including, without
limitation, any notice, consent, approval,
request or demand under this Lease. No such
notice to Tenant shall be deemed to have been
given nor shall be effective unless copies
thereof are thus served upon the Leasehold
Mortgagee at such address and in the manner
provided pursuant to the Notice provisions
hereof.
(ii) Subject to the provisions set forth below,
such Leasehold Mortgagee shall have the
right, for a period of 30 days more than is
given to Tenant, to remedy or cause to be
remedied any default which is the basis of a
notice; and Landlord shall accept performance
by such Leasehold Mortgagee as performance by
Tenant. In the event that Tenant has
contested an event of default, such Leasehold
Mortgagee shall be given a 20 day period
after the date of a final decision affirming
the contested default within which to cure
such default on behalf of Tenant.
(iii)In the case of default by Tenant under this
Lease which is susceptible of being cured
only when such Leasehold Mortgagee has
obtained possession of the Premises and the
Project, other than a default in the payment
of Rent or Additional Rent, Landlord shall
take no action to effect a termination of
this Lease by service of a notice or
otherwise without first giving to such
Leasehold Mortgagee a reasonable period of
time (not to exceed 6 months) within which
diligently to obtain possession of the
Premises and the Project (including
possession by a receiver) and to cure such
default and/or diligently to institute and
complete foreclosure proceedings or otherwise
acquire Tenant's leasehold estate under this
Lease and to cure such defaults.
(iv) Upon acquisition of Tenant's interest in this
Lease by the Leasehold Mortgagee, or by any
purchaser of this Lease pursuant to any
foreclosure proceeding instituted by the
Leasehold Mortgagee, Landlord's right to
serve a notice of election to end the Term
based upon the occurrence of any default
(other than non-payment of Rent or Additional
Rent, or non-compliance with the provisions
of Sections 9, 10, 12, 14, 15 or 20) which
cannot with the exercise of due diligence be
remedied by such Leasehold Mortgagee or
purchaser shall be deemed waived.
(v) If, prior to any foreclosure sale brought by
a Leasehold Mortgagee, or if prior to the
date upon which Tenant's interest in this
Lease shall have been otherwise acquired by
Leasehold Mortgagee or other purchaser, the
default in respect of which Landlord shall
have given the notice shall have been
remedied and possession of the Premises and
the Project restored to Tenant, the
obligation of the Leasehold Mortgagee to
assume this Lease shall be null and void and
of no further effect.
(vi) Notwithstanding anything contained in this
Section 19 to the contrary, if for any reason
this Lease shall terminate prior to the
expiration of the Term, Landlord shall give
written notice thereof to the Leasehold
Mortgagee. Subject to the curing of any
Event of Default and the payment of all Rent
and Additional Rent owed Landlord by the
Tenant, and provided such cure occurs not
later than 60 days after Landlord's
termination of this Lease, Landlord shall
enter into a new lease for the Premises and
the Project with the Leasehold Mortgagee or
with any person, firm, corporation or entity
designated by the Leasehold Mortgagee for the
remainder of the Term, subject to approval by
Landlord, which approval shall not be
unreasonably withheld or delayed as provided
in clause (vii) below, commencing as of the
date of such termination, at the Rent and
upon the same terms, covenants and conditions
contained in this Lease (except those which
by their terms are no longer applicable).
Such new lease shall have priority equal to
this Lease. Concurrently with the execution
and delivery of such new lease, Landlord
shall turn over and/or assign to the new
tenant all of its right, title and interest
in and to moneys (including insurance
proceeds) if any, then held by or
subsequently paid to Landlord, which Tenant
would have been entitled to receive but for
such termination.
(vii)Landlord shall have no obligation (i) to
waive Landlord's lien rights (it being
understood and agreed that Landlord shall be
required only to subordinate such lien rights
to the security interests of the Leasehold
Mortgagee) or (ii) to agree to any
modification of any express term, covenant or
provision of this Lease, including, without
limitation, the disposition of the proceeds
of a condemnation or casualty contrary to the
provisions of this Lease. Landlord's
refusal to accept any proffered successor
tenant or operator of the Project shall be
deemed reasonable to the extent such party
fails to meet any of the Stated Criteria.
Tenant shall require any Mortgagee to provide
Landlord with notice of any default under the
terms of any loan agreements, mortgages or
promissory notes entered or provided to the
Mortgagee. In no event shall Landlord be
required to forbear in the exercise of any
remedies available to Landlord against New
Guarantor upon the occurrence of an Event of
Default by Tenant. In the event Landlord
shall refuse to approve a successor to Tenant
proffered by the Leasehold Mortgagee, the
sole remedy available to the Leasehold
Mortgagee shall be to commence arbitration
proceedings in accordance with the provisions
of Section 31. The arbitrators shall either
approve or disapprove the proposed successor
based on compliance with the Stated Criteria
and shall make no other award or
determination.
(c) Amendments Requested by Leasehold Mortgagee.
Landlord agrees, without obligation, to review and consider any
proposed amendments to this Lease requested by any Leasehold
Mortgagee or prospective Leasehold Mortgagee.
20. Indemnification.
(a) Indemnity Generally. Tenant shall defend,
pay, indemnify and hold harmless Landlord and its agents,
employees, servants and representatives (together, the
"Indemnified Parties") from and against any and all claims,
demands, injuries, damages, fines, penalties, lawsuits, actions,
proceedings, orders, decrees, judgments or liability of any kind
or nature by or in favor of anyone whomsoever and from and
against any and all costs and expenses incurred by any of the
Indemnified Parties, including reasonable attorneys' fees and
expenses, resulting or arising from or in connection with (i) any
accident, bodily injury, death, personal injury of any kind, or
property damage arising during the term of this Lease directly or
indirectly, out of or from or on account of any occurrence in,
upon, at, or about the Project; (ii) any accident, bodily
injury, death, personal injury or property damage arising,
directly or indirectly, out of or in connection with Tenant's
operation of gaming activities or the Casino; (iii) any use,
occupancy, non-use, or condition of the Project; and (iv) any
failure on the part of the Tenant to perform or comply with any
of the terms, covenants and conditions of this Lease.
(b) Defense. In case any action, suit or
proceeding is brought against any of the Indemnified Parties by
reason of any occurrence described in clauses (i) through (iv),
Tenant or Tenant's insurer, upon the request of Landlord, will,
at no expense to Landlord or the Indemnified Party, resist and
defend such action, suit or proceeding or cause same to be
resisted and defended by counsel reasonably acceptable to
Landlord, subject to the right of any applicable insurer to
direct and control such counsel. The Indemnified Party shall
have the right, at its discretion, to retain its own counsel and
be reimbursed by Tenant for all reasonable attorneys' fees and
costs incurred in the defense of any action. The obligations of
Tenant under this Section shall survive the termination of this
Lease.
(c) Environmental Indemnity and Release. In
addition to the foregoing, Tenant agrees to indemnify and hold
harmless the Indemnified Parties and to defend them against any
lawsuits or claims for any liability, injuries, damages,
penalties or fines (including reasonable attorneys' fees and
expenses) arising from or relating to the disposal, discharge,
release or spilling into or onto the air, water, soil, sewer
system or similar media of any Hazardous Substance which
disposal, discharge, release or spill, whether accidental or
intentional, occurs on, within or from the Project (including the
Casino, wherever located) during the Term. Tenant agrees that
Landlord shall have no liability or obligation of any kind to
Tenant on account of any Hazardous Substances released on or from
the Premises and covenants not to bring any action, claim or
demand against Landlord on account thereof; provided, however,
that such covenant to not sue Landlord shall not apply to any
release or migration of any Hazardous Substance onto the Premises
from the Adjacent Parcel which is caused by Landlord or any
tenant or occupant of the Adjacent Parcel, their respective
employees, contractors or agents, and which first occurs during
any period of Landlord's ownership after the Original Effective
Date.
(d) Survival of Indemnity. The provisions of
this Section 20 shall survive any termination of this Lease.
21. Right of Entry. Landlord and its authorized
agents and employees shall, upon reasonable notice and during all
reasonable business hours, have the right to enter upon the
Project to examine same; provided, however, that any such entry
shall not interfere with Tenant's use or the operation of the
Project, and provided further that Tenant shall have the right to
have a representative or employee of Tenant accompany any such
inspection by Landlord. Landlord shall have the right from time
to time to inspect the Premises and to conduct tests and
evaluations to confirm whether Hazardous Substances have been
released on or from the Project in violation of applicable
Governmental Requirements. Such tests shall be conducted at
Landlord's sole risk, cost and expense, except that if it is
determined that Tenant shall have violated the provisions of
Section 20 relating to the release of Hazardous Substances, then
Tenant shall, in addition to performing such remediation as may
be required, pay to Landlord all costs incurred by Landlord in
connection with such tests and evaluations, and such additional
tests and evaluations as Landlord may conduct to confirm
satisfactory completion of Tenant's remediation work.
22. Limitation of Claims. Landlord shall not be
responsible for any damage or loss to the Casino or the Project,
its furnishings, fixtures, equipment or other goods thereon due
to any cause whatsoever, including, but not limited to, theft,
vandalism, public disorder, fire, weather, collisions, floating
or underwater hazards, electrolysis, tie-up or boat defects.
Additionally, Landlord shall not be responsible for any damage or
injury to Tenant's patrons, wherever located, arising from any
source, and Tenant shall perform all acts necessary to provide
for the safety of its patrons while on the Premises or in the
Casino. Upon any sale of the Premises by Landlord, Landlord
shall be released from all obligations and liabilities accruing
under this Lease prior to the effective date of such sale,
provided the transferee shall expressly assume and agree to
perform for the benefit of Tenant all obligations of Landlord
under this Lease accruing after the effective date of such
transfer.
23. Attorneys' Fees and Expenses. Except as otherwise
expressly provided in this Lease, each party shall pay its own
attorneys' fees and expenses in connection with any matter
arising under this Lease.
24. Late Payments. Late payments shall be subject to
a 3% penalty and interest on late payments shall accrue from the
date of delinquency until paid at the rate of 2% in excess of the
from time to time publicly announced prime rate of interest of
The Bank of America; provided that a payment shall not be deemed
to be a late payment if such payment is made within any
applicable grace or cure period provided hereunder.
25. Default and Remedies.
(a) Tenant's Default. It shall be an Event of
Default if any one or more of the events described in the
following clauses (i) through (ix) shall occur and be continuing
after expiration of the applicable notice and cure period
provided for in such clause or otherwise provided for in
subsection (b):
(i) if default be made in the punctual payment of
any Rent payable to Landlord hereunder, when
and as the same shall become due and payable,
and such default shall continue for a period
of ten (10) days after written notice to
Tenant (except that Landlord shall not be
required to deliver notice of non-payment of
Rent on more than two occasions during any
Lease Year), or if default be made in the
punctual payment of any Additional Rent
payable hereunder, when and as the same shall
become due and payable, and such default
shall continue for a period of thirty (30)
days after written notice to Tenant;
(ii) if this Lease be mortgaged by Tenant except
as provided in Section 19, or if this Lease
be assigned or the Project (including the
Casino) or any part thereof be sublet, except
as provided in Section 12;
(iii)if Tenant shall abandon the Work or the
Project, or if Tenant shall fail to
continuously or fully operate the Project
after Project Opening as required under this
Lease;
(iv) if Tenant shall fail to timely file its
application for Gaming Licensure, or if
Tenant shall withdraw or effectively abandon
such application prior to termination of this
Lease in accordance with its terms or, after
first obtaining Gaming Licensure, if Tenant
for any reason ceases to be licensed to
conduct a gaming operation at the Project
pursuant to the laws of the State of
Missouri;
(v) if Tenant shall fail to observe, perform or
comply with any of the terms, covenants and
conditions in this Lease other than those
specified in subsections (i) through (iv)
above, within 30 days after notice from
Landlord specifying the nature of such
default;
(vi) if Tenant or New Guarantor shall file a
voluntary petition in bankruptcy or shall be
adjudicated bankrupt or insolvent or shall
file any petition or answer seeking any
reorganization, readjustment, liquidation,
dissolution or similar relief under any
bankruptcy or insolvency statute or law of
the United States or any State, or shall seek
or consent to or acquiesce in the appointment
of any bankruptcy or insolvency trustee,
receiver or liquidator of Tenant or New
Guarantor of all or any substantial part of
either of their respective properties or of
the Project;
(vii)if within 60 days after the commencement of
any involuntary proceeding against Tenant or
New Guarantor seeking reorganization,
readjustment, liquidation, dissolution or
similar relief under any bankruptcy or
insolvency statute or law, Tenant or New
Guarantor, as the case may be, fails to
secure a dismissal and discharge thereof;
(viii)if Tenant or New Guarantor shall make a
material misrepresentation in any
representation or warranty provided to
Landlord under this Lease or any of the New
Guarantees, as the case may be, or in any
report provided to Landlord pursuant to
Section 13; or
(ix) if New Guarantor shall be in default under
any covenant of New Guarantor contained in
any of the New Guarantees and such default
shall remain uncured beyond the period
provided therein for the cure thereof, if
any.
(b) Cure or Remedies. No Event of Default shall
be deemed to have occurred under clauses (ii) through (ix) unless
Tenant or New Guarantor, as the case may be, shall fail to cure
such default within 30 days after delivery by Landlord of written
notice of such default to Tenant, unless the same cannot be cured
within 30 days, in which event an Event of Default shall not be
deemed to have occurred if Tenant commences the cure of such
default within 30 days and thereafter diligently pursues such
cure to completion. Upon an Event of Default, Landlord, at its
option, may at any time thereafter declare this Lease and all
rights of Tenant under this Lease as expired and terminated and
Tenant shall remain liable as hereinafter provided.
(c) Surrender of Premises. Subject to the
provisions of Section 27, upon any such expiration or termination
of this Lease, Tenant shall quit and peacefully surrender the
Project to Landlord, and Landlord, upon any such expiration or
termination, may without further notice enter upon and re-enter
the Project and possess and repossess itself thereof, by force,
summary proceedings, ejectment or otherwise, and may dispossess
Tenant and remove Tenant and all persons and property from the
Project.
(d) Reletting of Premises. If this Lease shall
expire or be terminated, or if the Project or any part thereof
shall be abandoned by Tenant, or shall become vacant during the
Term, Landlord may in its own name, or as agent for Tenant if
this Lease not be terminated, enter into possession of and relet
the Project or any part thereof for such term or terms (which may
be greater or less than the period which would otherwise have
constituted the balance of the Term) and on such conditions as
Landlord, in its discretion, may determine and may collect and
receive the rents therefor.
(e) Direct Damages. No event of expiration or
termination of this Lease, abandonment or vacancy, shall relieve
Tenant of its liability and obligations under this Lease, whether
or not the Project shall be relet. In any such event Tenant
shall pay Landlord the Rent and all Additional Rent required to
be paid hereunder by Tenant up to the time of such event.
Thereafter:
(i) In the event of termination of the Lease,
Tenant, until the date which is the first to
occur of (a) the expiration of the Term or
(b) the expiration of the 15th Lease Year
subsequent to the date of termination, shall
be liable to Landlord as damages for Tenant's
default, the equivalent of the amount of the
Rent and Additional Rent which would be
payable under this Lease by Tenant if this
Lease were still in effect, less the net
proceeds of any reletting effected pursuant
to the provisions hereof, after deducting all
of Landlord's expenses in connection with
such reletting, including without limitation,
all repossession costs, brokerage and
management commissions, operating expenses,
legal expenses, reasonable attorneys' fees,
alterations costs, and expenses of
preparation of such reletting. The amount of
Additional Rent due in the event of
expiration or termination of this Lease shall
be equal to the Additional Rent paid to
Landlord in the year prior to the year of
termination divided into twelve equal monthly
installments. Tenant shall pay such damages
(herein called "deficiency") to the Landlord
on the days on which the net Rent would have
been payable under this Lease if this Lease
were still in effect, and the Landlord shall
be entitled to recover from Tenant each
deficiency as the same shall arise.
(ii) At any time after the expiration or
termination of this Lease, in lieu of
collecting any further deficiencies as
aforesaid, Landlord shall be entitled to
recover from Tenant, and Tenant shall pay to
Landlord, on demand, an amount equal to the
difference between the Rent which would have
accrued to Landlord under this Lease from the
date of termination to the date which is the
first to occur of (a) the expiration of the
Term or (b) the expiration of the 15th Lease
Year subsequent to the date of termination,
and the then fair and reasonable rental value
of the Premises for the same period as
provided in Section 25(f). Tenant shall
remain liable for any deficiencies not
previously recovered by Landlord.
(f) Value of Premises. If the Premises or any
part thereof be relet by Landlord for the unexpired Term, or any
part thereof, the amount of rent reserved upon such reletting
shall be deemed the fair and reasonable rental value for the part
or the whole of the Premises so relet during the term of the
reletting. Landlord agrees to make reasonable efforts to
mitigate its damages by listing the Premises with a licensed real
estate broker for reletting on terms and conditions acceptable to
Landlord, but Landlord shall have no obligation to relet the
Premises to any particular tenant or for any particular use,
including, without limitation, casino gaming.
(g) Additional Damages. If this Lease be
terminated, or if the Project is abandoned or becomes vacant, and
whether or not the Project be relet, Landlord shall be entitled
to recover from Tenant, and Tenant shall pay to Landlord, in
addition to any damages becoming due under this Section 25, the
following: an amount equal to all expenses, if any, including
reasonable attorneys' fees, incurred by Landlord in recovering
possession of the Project (whether or not litigation be commenced
in aid thereof), repairing any damage to the Project, and all
reasonable costs and charges for the care of said Project while
vacant, which damages shall be due and payable by Tenant to
Landlord at such time or times as such expenses are incurred by
Landlord. Tenant hereby expressly waives, as far as permitted by
law, the service of any notice of intention to re-enter provided
for in any statute, and except as is herein otherwise provided
Tenant, for and on behalf of itself and all persons claiming
through or under Tenant (including any leasehold mortgagee or
other creditor), also waives any and all right of redemption or
re-entry or repossession in case Tenant shall be dispossessed by
a judgment or by warrant of any court or judge or in case of re-
entry or repossession by Landlord or in case of any expiration or
termination of this Lease except as expressly provided in this
Lease. The terms "enter," "re-enter," "entry" or "re-entry" as
used in this Lease are not restricted to their technical legal
meanings.
(h) Waiver of Automatic Stay. In view of the
public interest in the integrity of the gaming process and the
involvement of the County and Landlord in the Project, in the
event of any voluntary or involuntary petition in bankruptcy
involving Tenant or New Guarantor, Tenant and New Guarantor
hereby waive, to the fullest extent permitted by law, any right
they may have to object to the waiver of vacation of the
automatic stay in all respects as to the rights of Landlord under
the Lease and the New Guarantees.
(i) Waiver of Jury Trial. Tenant hereby waives
all right to trial by jury in any action or proceeding hereafter
instituted by Landlord against Tenant with respect to this Lease
or the Project.
(j) Additional Remedies. In the event of any
breach by Tenant of any of the agreements, terms, covenants or
conditions contained in this Lease, Landlord shall have the right
to invoke any right and remedy allowed at law or in equity
including the right to seek specific performance of Tenant's
obligations under this Lease and to enjoin violations of this
Lease by Tenant.
(k) Landlord's Default. It shall be an event of
default on the part of Landlord (a "Landlord Default") if any one
or more of the events described in the following clauses (i)
through (iii) shall occur and be continuing after expiration of
the applicable notice and cure period provided for in such
clause:
(i) Landlord shall fail to make any payment which
Landlord agrees to make to or for the benefit
of Tenant pursuant to Section 2 or to
otherwise cure on a timely basis any
objection raised by Tenant under Section 2
which Landlord has theretofore agreed in
writing to cure, after 30 days prior written
notice to Landlord;
(ii) Landlord shall make a material
misrepresentation in any representation or
warranty provided to Tenant under Section
8(b) or to Assignee in the certificate to be
provided to Assignee pursuant to Section
1(d)(5), and such misrepresentation shall
materially and adversely affect any right or
benefit available to Tenant or Assignee under
this Lease; or
(iii)Landlord shall breach any express covenant of
Landlord under this Lease and shall fail to
cure such breach within 30 days after notice
from Tenant specifying the nature of such
breach, unless the same cannot be cured
within 30 days, in which event Landlord shall
not be deemed in default provided Tenant
commences the cure of such default within 30
days and thereafter diligently pursues such
cure to completion.
If a Landlord Default shall occur, Tenant shall have the right to
pursue any remedy available to Tenant at law or in equity on
account of such Landlord Default; provided, however, in no event
shall Tenant be entitled to (i) withhold, deduct or offset Rent
or Additional Rent, (ii) vacate or abandon the Project or close
the Casino (except pursuant to any express right of vacation or
closure granted Tenant under this Lease), (iii) seek or recover
consequential damages (such as for lost profits) from Landlord,
(iv) seek or recover damages or equitable relief in violation of
the provisions of Sections 20(c) or Section 22, or (v) terminate
this Lease (except pursuant to any express right of termination
granted Tenant under this Lease). Tenant hereby waives and
releases each of the claims specified in clauses (i) through (v)
hereof. In all events, any recovery of monetary damages (except
in connection with a breach of Section 10) by Tenant shall be
limited solely to the interest of Landlord in the Premises, which
shall include the Rentals and avails thereof.
26. Remedies Cumulative. Each right and remedy
provided for in this Lease shall be cumulative and shall be in
addition to every other right or remedy provided for in this
Lease or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the
exercise by Landlord or Tenant or any one or more of the rights
or remedies provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by Landlord or Tenant
of any or all other rights or remedies provided for in this Lease
or now or hereafter existing at law or in equity or by statute or
otherwise.
27. Surrender of Premises. Upon the expiration or
termination of this Lease, Tenant agrees to quit and surrender
the Premises, clean and free of any and all Hazardous Substances
released, spilled or discharged into or on the Project during the
Tenant's tenancy and in the same condition and repair as on the
date of execution hereof, and Tenant, at Landlord's option, shall
remove the Casino and any fixtures or structures installed or
located within the Premises or any public right of way at
Tenant's sole cost and expense and without expense to Landlord.
Tenant may, or, if directed by Landlord, shall remove all
personal property of Tenant from the Premises, including gaming
equipment and gaming machinery. If Tenant shall fail to remove
any of Tenant's property within 90 days after the receipt of
notice of termination or expiration of this Lease, Tenant's
property shall be deemed abandoned. If the Premises is not
surrendered as and when aforesaid, Tenant shall indemnify Tenant
against all loss or liability resulting from the delay of Tenant
in so surrendering the same including without limitation, any
claims made by any succeeding occupant founded on such delay.
Tenant's obligations under this Section shall survive the
expiration or sooner termination of the Term.
28. Cure of Tenant's Default. If Tenant shall fail to
make any payment or perform any act required hereunder to be made
or performed by Tenant then Landlord may, but shall be not be
obligated to, make such payment or perform such act with the same
effect as if made or performed by Tenant. Entry by Landlord upon
the Project for such purpose shall not waive or release Tenant
from any default or obligation hereunder. Tenant shall reimburse
Landlord for all sums paid and all costs incurred by Landlord in
performing the obligations of Tenant hereunder, including
attorneys' fees, upon Landlord's demand therefor which shall be
Additional Rent hereunder.
29. Notices. Unless otherwise indicated differently,
all notices, payments, requests, reports, information or demands
which any party hereto may desire or may be required to give to
any other party hereunder, shall be in writing and shall be
personally delivered or sent by a nationally recognized courier
service, telecopier or first-class certified or registered United
States mail, postage prepaid, return receipt requested, and sent
to the party at its address appearing below or such other address
as such party shall hereafter inform the other party hereto by
written notice given as aforesaid:
If to Landlord: St. Louis County Port Authority
Economic Council of St. Louis County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: Director of Real Estate
FAX: (314) 615-7666
Copies to: Economic Council of St. Louis County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: General Counsel
St. Louis County
41 South Central
Clayton, Missouri 63105
Attention: County Counselor
FAX: (314) 615-3732
If to Southboat Southboat Limited Partnership
Ltd. Partnership: 10205 Gravois Road
St. Louis, Missouri 63123
Attention: Mr. Dennis P. Long
Copies to: Frederick J. Berger, Esq.
Riezman & Berger, P.C.
7700 Bonhomme, 7th Floor
St. Louis, Missouri 63105
If to Assignee: Ameristar Casino St. Louis, Inc.
3773 Howard Hughes Parkway
Suite 490 South
Las Vegas, Nevada 89109
Attention: President
FAX: (702) 369-8860
Copies to: Gordon R. Kanofsky
Senior Vice President of Legal Affairs
Ameristar Casinos, Inc.
16633 Ventura Boulevard
Suite 1050
Encino, California 91436
FAX: (818) 995-7099
Steven E. Kushner
Stinson, Mag & Fizzell
100 South Fourth Street, Suite 700
St. Louis, Missouri 63102
FAX: (314)259-4599
All notices, payments, requests, reports, information or demands
so given shall be deemed effective upon receipt, or if mailed,
upon receipt or the expiration of the third day following the
date of mailing, whichever occurs first, except that any notice
of change in address shall be effective only upon receipt by the
party to whom said notice is addressed. Any notices relating to
maintenance shall be given to those parties locally responsible
as hereinafter designated by the parties upon completion of the
anticipated improvements. Prior to the Assignment Date, Tenant
and Assignee shall receive a copy of each and every notice
delivered by Landlord to Tenant or Assignee.
30. Unavoidable Delay. As used in this Lease, the
term "Unavoidable Delay" shall mean any delay if and to the
extent caused by a fire, flood, tornado, earthquake, severe
inclement weather or other Act of God, strike, lockout or other
labor dispute, material breach of a contractual obligation by a
party not affiliated with Tenant, Assignee or New Guarantor
(provided Tenant or Assignee uses its best efforts to enforce its
contractual rights and to secure performance by another
contractor if such right is available to Tenant or Assignee under
such contract), unavailability of essential materials, war,
insurrection, civil disorder or a change in law or regulation or
an order by the Commission. In no event shall the Investigation
Deadline be changed due to any Unavoidable Delay. In no event
shall lack of funds, Tenant's failure to comply with Tenant's
contractual obligations or changes in the economy or marketplace
constitute a basis for asserting an Unavoidable Delay.
31. Arbitration of Certain Disputes.
(a) Arbitration of Specific Disputes. In the
event of a dispute between the parties pursuant to Sections 9,
10, 12, 14, 16 or 19, the issue requiring resolution may be
submitted by either party to expedited arbitration in accordance
with the following procedures:
(b) Arbitration Procedures. Arbitration shall be
commenced by written notice thereof from the party seeking
arbitration to the other party. Not later than 10 days after
delivery of such notice, each party shall select an independent
arbitrator who shall be an attorney licensed to practice law in
any state and practicing law for not less than 20 years. Not
later than 20 days after their selection, the two arbitrators
shall jointly select a third arbitrator having the same
qualifications as themselves. The arbitration panel shall meet
and determine the rules for submission and hearing of evidence
and so advise Landlord and Tenant not later than 10 days after
their selection. The panel shall convene and conduct a hearing
according to the rules established by them and shall render a
written decision which shall be binding on the parties not later
than 60 days after the date the third arbitrator has been
selected. The decision of the arbitration panel shall be final
and binding on the parties. Each party shall bear the fees and
expenses of its own arbitrator and shall share equally in the
payment of the fees and expenses of the third arbitrator.
32. Estoppels. Each party acknowledges that from time
to time the other party may request, for the benefit of third
parties, information relating to the effectiveness of this Lease
and the New Guarantees, whether this Lease or the New Guarantees
have been modified or amended, the status of payments of Rent and
Additional Rent due hereunder, whether an Event of Default or a
Landlord Default has occurred and is continuing, and other
information reasonably and customarily required by lenders,
accountants and other parties having an interest in the Project,
or in Landlord, Tenant or New Guarantor and their respective
operations. Each party agrees to respond in writing to any
request it may receive from the other party within 10 days after
its receipt of such request, and to provide all such requested
information.
33. Relationship of Parties. Nothing contained in
this Lease shall be deemed to constitute or be construed or
implied to create the relationship of principal and agent,
partnership, joint venture or any other relationship between the
parties hereto, other than the relationship of the landlord and
tenant. The term "Landlord" as used in this Lease means only the
owner of the current interest of Landlord in the Premises or, as
the case may be, the successor thereto from time to time.
34. No Broker. Tenant covenants, warrants and
represents to Landlord that there was no broker instrumental in
consummating the Assignment and that no conversations or prior
negotiations were had by Tenant with any broker in connection
therewith. Tenant agrees to indemnify and hold the Landlord
harmless against and from all liabilities, including reasonable
attorneys' fees, arising from any claims for brokerage
commissions or finders' fees resulting from or arising out of any
conversations or negotiations had by Tenant directly with any
broker.
35. Conflict of Interest. The parties agree to abide
by all Governmental Requirements relating to conflict of
interest. Additionally, but not in limitation of the foregoing,
no member, officer, commissioner or employee of Landlord or any
branch of County government who has any power of review or
approval of any of the undertakings herein, shall participate in
any decisions relating thereto which affect his/her personal
interests or the interests of any corporation or partnership in
which he or she is directly or indirectly interested. No member,
official or employee of Landlord shall have any personal interest
direct or indirect, in this Lease, nor participate in any
decisions relating thereto which affect his or her personal
interests or the interests of any corporation or partnership in
which he or she is directly or indirectly interested. In the
construction and/or operation of the Project, Tenant shall not
knowingly, after due inquiry, employ or contract with any person
if a member of his or her immediate family is a member, officer,
commissioner or employee of Landlord or any branch of County
government in an administrative capacity, by which is meant those
who have selection, hiring, supervisory or operational
responsibility for the work to be performed pursuant to this
Lease. For the purposes of this section, "immediate family"
includes: wife, husband, son, daughter, mother, father, brother,
sister, brother-in-law, sister-in-law, father-in-law, mother-in-
law, aunt, uncle, niece, nephew, step-parent and stepchild.
36. Entire Lease. This Lease sets forth the entire
agreement between the parties. There are no understandings,
agreements, statements, promises, or representations or
warranties, express or implied, in respect of the Property, the
Project or this Lease which are not specified herein. This Lease
shall not be modified, amended or supplemented except by a
writing subscribed to by the party to be charged, nor may this
Lease be canceled by Tenant or the Project surrendered except in
accordance with the express provisions of this Lease.
37. Survival of Covenants. All representations,
warranties and indemnities set forth in this Lease shall survive
the execution hereof.
38. Binding Effect. This Lease binds the parties
hereto and inures to the benefit of their respective heirs,
personal representatives, successors or assigns.
39. Time of the Essence. Time is of the essence with
respect to the performance of this Lease and each and every
provision contained herein.
40. Venue. If and in the event of a dispute arising
hereunder, venue shall be vested in the Circuit Court of St.
Louis County, State of Missouri. Tenant acknowledges that it has
negotiated this Lease in the County, and has made numerous
business contacts and entered into agreements relating to real
estate and other matters sufficient to confer jurisdiction of the
courts of St. Louis County, State of Missouri.
41. Authorization and Capacity. The parties hereto
represent to each other that each has the full right, power and
authority to enter into this Lease and to fully perform its
obligations. The persons executing this Lease warrant and
represent that each has the authority to execute in the capacity
stated and to bind the parties hereto.
42. Third-Party Beneficiaries. Subject only to the
provisions of Sections 1(d) and (f), Landlord and Tenant are the
only parties to this Lease and the only parties capable of or
entitled to the enforcement of its provisions. Each party
confirms that no other parties are intended to be third party
beneficiaries of any covenant or provision of this Lease.
Notwithstanding the foregoing provisions of this Section 42,
Tenant acknowledges and agrees that the County shall be an
intended third party beneficiary of Tenant's designation of the
County as the "home dock" for the Project under Section 13.
43. Severability. In the event any provision of this
Lease is rendered void or unenforceable by a court of competent
jurisdiction, the remaining provisions of this Lease shall be
construed so as to constitute a complete agreement, and this
Lease, as so reformed, shall remain in full force and effect.
44. Non-Waiver Provision. Failure by either party
hereto, at any time, to require the performance by the other of
any term of this Lease, shall not in any way effect the right of
either party to enforce such terms, nor shall any waiver by
either party of any term hereof be taken or held to be a waiver
of any other provision of this Lease. No waiver of any term or
provision of this Lease shall be effective unless the same is in
writing, signed by the parties hereto.
45. Governing Law. This Lease is entered into in the
State of Missouri and shall be construed, enforced and governed,
as to both validity and performance, in accordance with the laws
of the State of Missouri and all of the rights and obligations of
the parties hereunder shall be determined in pursuant to the laws
of the State of Missouri.
46. Recording of Lease. From and after the
Commencement Date, either party may, at its own expense, cause a
memorandum of this Lease, approved by the other party, to be
recorded in the Office of the Recorder of Deeds for the County of
St. Louis.
47. Attachments. All exhibits attached to this Lease
are incorporated herein and made part hereof by reference.
48. Headings. The captions, headings and arrangements
in this Lease are for convenience only and do not in any way
define, limit or modify the terms or provisions hereof.
49. Number and Gender of Words. Whenever the singular
number is used in this Lease, the same shall include the plural
where appropriate and words of any gender shall include the other
gender where appropriate.
50. Business Days. Except as provided in Section 11,
whenever it is provided in this Lease that an event shall occur
on a day which is a Saturday, Sunday or legal holiday in the
State of Missouri, such event shall occur instead on the next
business day.
51. Multiple Counterparts. This Lease may be executed
in a number of identical counterparts and if so executed, each
such counterpart is deemed an original for all purposes, and all
such counterparts shall collectively constitute one Lease.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Lease as the date first above written.
THIS LEASE CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES
LANDLORD:
ST. LOUIS COUNTY PORT AUTHORITY
By: /s/ Charles Wiegers
Name: Charles Wiegers
Title: Chair
APPROVED AS TO FORM
/s/ Elaine B. Wright
General Counsel, Economic Council
of St. Louis County
TENANT:
SOUTHBOAT LIMITED PARTNERSHIP
By: Southboat Lemay, Inc., its
general partner
By: /s/ Dennis P. Long
Name: Dennis P. Long
Title: President of
Southboat Lemay, Inc., Its
General Partner
SCHEDULE OF ATTACHMENTS
ATTACHMENT A
Description of the Property
ATTACHMENT B
Site Plan of the Premises
ATTACHMENT C
Diagram of Adjacent Parcel
Attachment D-1
New Project Proposal Preliminary Construction Documents
Attachment D-2
New Project Proposal Employment and Contracting Policies
Attachment E
Guarantee of Minimum Rent
Attachment F
Guarantee of Completion
Attachment G
Assignment and Assumption Agreement
Attachment H
Release of Landlord and St. Louis County
Attachment I
License and Indemnity for Early Entry onto the Premises
Attachment J
Legal Description of Premises
ATTACHMENT K
Adjacent Parcel Buffer Zone
ATTACHMENT E
GUARANTEE OF MINIMUM RENT
FOR VALUABLE CONSIDERATION, the receipt of which is
hereby acknowledged, and to induce the ST. LOUIS COUNTY PORT
AUTHORITY, a public body corporate and politic of the State of
Missouri ("Landlord") to approve the proposed assignment of the
right, title and interest of Southboat Limited Partnership, a
Missouri limited partnership ("Tenant") in that certain Amended
and Restated Lease and Development Agreement, by and between
Tenant and Landlord, dated as of February ___, 2000(the "Lease")
to Ameristar Casino St. Louis, Inc., a Missouri corporation
("Assignee"), AMERISTAR CASINOS, INC., a Nevada corporation
("Guarantor"), having its principal place of business at 3773
Howard Hughes Parkway, Suite 490 South, Las Vegas, Nevada 89109,
does hereby unconditionally covenant and agree with Landlord, its
successors and assigns, as follows:
1. Terms defined in the Lease and used in this
Guarantee of Minimum Rent (the "Rent Guarantee") shall have the
same meaning herein as so defined.
2. If an Event of Default shall occur under Section
25(a)(i) of the Lease at any time during the Guarantee Period (as
hereinafter defined) due to the failure of Tenant to pay, within
ten (10) days after notice of nonpayment (unless notice shall no
longer be required pursuant to such subsection), any component or
installment of Minimum Rent due Landlord pursuant to the Lease,
or if the Lease shall be terminated at any time during the
Guarantee Period due to an Event of Default, then Guarantor will
well and truly immediately pay Landlord on demand, in cash, the
full sum of unpaid Minimum Rent due Landlord under the Lease for
the remainder of the Guarantee Period (and said sum will not be
reduced by application of any "present value" formula), not to
exceed the total amount of all Minimum Rent allocable to the
Guarantee Period (the "Guaranteed Amount"). As used in this Rent
Guarantee, the term "Guarantee Period" shall mean that period
commencing on the Commencement Date and ending on the earlier to
occur of (a) the last day of the 15th Lease Year occurring after
the Commencement Date and (b) the date on which the Lease is
terminated in accordance with its terms (other than due to an
Event of Default). Notwithstanding the first sentence of this
Section 2, in lieu of paying to Landlord in one lump sum the
entire Guaranteed Amount, Guarantor may elect to pay to Landlord
the Minimum Rent as and when the same would have otherwise been
due under the Lease through the remainder of the Guarantee Period
had the Lease not been terminated or had an Event of Default
under Section 25(a)(i) not occurred. Notwithstanding the
foregoing, in the event of an Event of Default under this Rent
Guarantee, Guarantor's option to make installment payments of
Minimum Rent shall be null and void, and Guarantor shall
immediately pay to Landlord, on demand, in cash, the full sum of
the Guaranteed Amount due but unpaid.
3. This Rent Guarantee constitutes an absolute and
unconditional guarantee of payment of Minimum Rent accruing
during the Guarantee Period and is not a guarantee of collection.
It shall be enforceable against Guarantor, its successors and
assigns, without the necessity for any suit or proceedings by
Landlord against Tenant, its successors and assigns, and without
the necessity of any notice of acceptance of this Rent Guarantee.
In addition, Guarantor further waives any right Guarantor may
have to seek a reduction in, or a credit against payment of, the
Guaranteed Amount, or any portion thereof, for any reason other
than payment of the Guaranteed Amount; provided, however, that
the Guaranteed Amount shall be reduced by an amount equal to any
rent or license or operating fees actually received by Landlord
during the Guarantee Period from any new tenant, licensee or
operator of the Premises procured by or for Landlord, after
deduction of (i) all Rent and Additional Rent accrued under the
Lease but unpaid to Landlord, and (ii) Landlord's reasonable
expenses incurred in the enforcement of Tenant's obligations
under the Lease and Guarantor's obligations under this Rent
Guarantee, and in reletting or licensing the use of the Premises,
including, without limitation reasonable brokerage fees and
commissions and reasonable attorneys' fees and expenses.
4. Guarantor agrees that the validity of this Rent
Guarantee and the obligations of Guarantor shall in no way be
terminated, affected or impaired by reason of the assertion or
the failure or delay to assert by Landlord against Tenant, or
Tenant's successors and assigns, any of the rights or remedies
reserved to Landlord pursuant to the provisions of the Lease.
The single or partial exercise of any right, power or privilege
under this Rent Guarantee shall not preclude any other or the
further exercise thereof or the exercise of any other right,
power or privilege by Landlord.
5. Failure of Guarantor to honor any demand for
payment under this Rent Guarantee within ten (10) days after
notice thereof by Landlord (which notice shall not be required
more than twice during any twelve month period) and to make
payment of any sums due hereunder within 5 days after delivery of
such notice, or the breach by Guarantor of any representation or
warranty of Guarantor hereunder, shall constitute an Event of
Default hereunder.
6. This Rent Guarantee shall not be affected and the
liability of the Guarantor shall not be extinguished or
diminished (a) by Landlord's receipt, application or release of
security given for the performance and observation of the
covenants and conditions in the Lease to be performed or observed
by Tenant, its successors and assigns, including any sums paid by
Guarantor under the Guarantee of Completion issued by Guarantor
to Landlord on the Assignment Date (the "Completion Guarantee"),
(b) by the discharge of Tenant's liabilities through bankruptcy,
insolvency or any similar debt relief proceedings, (c) by reason
of sums paid or payable to Landlord from the proceeds of any
insurance policy or condemnation award (unless the Lease is
terminated incident to condemnation), or (d) by any extensions,
renewals, amendments, indulgences, modifications, transfers or
assignments in whole or in part of the Lease, whether or not
notice thereof is given to Guarantor.
7. Guarantor agrees that the liability of Guarantor
is co-extensive with that of Tenant and also joint and several.
8. Landlord's acceptance of a note or collateral of
Tenant or Guarantor shall not constitute the full cash payment
required herein. This Rent Guarantee is given in addition to all
other guarantees which may pertain to Tenant's indebtedness, and
is not subordinate to any other guarantees. Landlord's rights
under all guarantees, including this Rent Guarantee, shall be
cumulative and independently enforceable. It shall not be a
condition to the enforcement of this Rent Guarantee that any
other guarantees or collateral be resorted to by Landlord. Any
such collateral or guarantee, including the Completion Guarantee,
may be applied by Landlord in satisfaction of any obligation or
liability of Tenant under the Lease without thereby impairing,
reducing, diminishing or otherwise modifying the obligations of
Guarantor under this Rent Guarantee.
9. In order to induce Landlord to approve the
proposed assignment of Tenant's right, title and interest in the
Lease to Assignee, Guarantor makes the following representations
and warranties to Landlord:
(a) Guarantor is duly formed and validly existing as a
Nevada corporation;
(b) the execution and delivery of this Rent Guarantee
and the performance by Guarantor of Guarantor's obligations
hereunder have been duly authorized by all requisite corporate
action;
(c) this Rent Guarantee constitutes the legal, valid
and binding obligation of Guarantor and is enforceable against
Guarantor in accordance with its terms;
(d) no litigation or regulatory proceedings are
pending or, to the best of Guarantor's knowledge, threatened
against Guarantor which, if adversely determined, would likely
have a material adverse impact on Guarantor or on this Rent
Guarantee;
(e) Guarantor is not a party to, and neither Guarantor
nor Guarantor's properties, real or personal, are subject to, any
agreement, order, proceeding, ruling or other matter in conflict
with any provision of this Rent Guarantee or which materially and
adversely affects its ability to perform its obligations
hereunder;
(f) Guarantor is solvent and is not a party to any
assignment for the benefit of creditors or bankruptcy proceeding;
and
(g) Guarantor is not in material default of any
contract or agreement to which it is a party which materially and
adversely affects Guarantor's ability to perform its obligations
under this Rent Guarantee.
10. Guarantor agrees that it will, at any time and
from time to time, within ten (10) business days following
written request by Landlord, execute, acknowledge and deliver to
Landlord a statement certifying that this Rent Guarantee is
unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as
modified and stating such modifications). Guarantor agrees that
such certificate may be relied on by third parties. Should
Landlord be obligated by any bankruptcy or other law in
connection with any bankruptcy proceeding of Tenant or Guarantor
to repay to Tenant or to Guarantor or to any trustee, receiver or
other representative or any of them, any amounts previously paid
to Landlord, its successors and assigns, this Rent Guarantee
shall be reinstated in the amount of such repayments.
11. As a further inducement to Landlord to approve the
proposed assignment of Tenant's right, title and interest in the
Lease to Assignee and in consideration thereof, Landlord and
Guarantor covenant and agree that in any action or proceeding
brought on, under or by virtue of this Rent Guarantee, Landlord
and Guarantor shall and do hereby waive trial by jury. Without
regard to principles of conflicts of laws, the validity,
interpretation, performance and enforcement of this Rent
Guarantee shall be governed by and construed in accordance with
the laws of the State of Missouri, and Guarantor hereby consents
to jurisdiction and venue in the Circuit Court of St. Louis
County, Missouri, or in the United States District Court for the
Eastern District of Missouri, St. Louis, Missouri, wherein
Landlord at its election may bring an action for the enforcement
of this Rent Guarantee. If Landlord commences an action in such
court, Guarantor hereby agrees that it will submit to the
personal jurisdiction of such court and will not attempt to have
such action dismissed, abated or transferred on the ground of
forum non conveniens.
12. Guarantor covenants and agrees that for so long as
the restrictive covenant described in Section 10(c) of the Lease
shall remain in effect as against Tenant, Guarantor shall not
participate in any manner in the ownership, sponsorship, control,
management, operation or use of any riverboat gaming facility
along either the Illinois or Missouri banks of the Mississippi
River from the southern boundary of the City of St. Louis to the
northern boundary of Jefferson County, Missouri. Guarantor
acknowledges that the restrictive covenant contained in this
Section 12 (and made by the Tenant under the Lease) is reasonable
under all of the circumstances. The provisions of this Section
12 shall survive any termination of this Rent Guarantee.
13. Guarantor covenants and agrees to pay interest to
Landlord on any and all sums due Landlord hereunder which remain
unpaid for more than five (5) days after delivery of Landlord's
demand for payment, commencing on the date such payment is due,
at the rate of two percent (2%) in excess of the from time to
time publicly announced prime rate of interest of The Bank of
America.
14. If any provision or application of this Rent
Guarantee is invalid, unenforceable or illegal for any reason,
the parties agree that such invalid, unenforceable or illegal
provision or application shall be deemed modified to the extent,
but only to the extent, required to make such portion or
application enforceable, and that no such modification shall be
deemed to affect the remainder of this Rent Guarantee.
15. Unless otherwise indicated differently, all
notices, payments, requests, reports, information or demands
which any party hereto may desire or may be required to give to
any other party hereunder, shall be in writing and shall be
personally delivered or sent by a nationally recognized courier
service, telecopier or first-class certified or registered United
States mail, postage prepaid, return receipt requested, and sent
to the party at its address appearing below or such other address
as such party shall hereafter inform the other party hereto by
written notice given as aforesaid:
If to Guarantor: Ameristar Casinos, Inc.
3773 Howard Hughes Parkway
Suite 490 South
Las Vegas, Nevada 89109
Attention: President
FAX: (702) 369-8860
With copies to: Gordon R. Kanofsky
Senior Vice President of Legal
Affairs
Ameristar Casinos, Inc.
16633 Ventura Boulevard
Suite 1050
Encino, California 91436
FAX: (818) 995-7099
Steven E. Kushner
Stinson, Mag & Fizzell
100 South Fourth Street, Suite 700
St. Louis, Missouri 63102
Fax: (314) 259-4599
If to Landlord: St. Louis County Port Authority
Economic Council of St. Louis
County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: Director of Real
Estate
FAX: (314) 615-7666
With copies to: Economic Council of St. Louis
County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: General Counsel
FAX: (314) 615-7666
St. Louis County
41 South Central
Clayton, Missouri 63105
Attention: County Counselor
FAX: (314) 615-3732
All notices, payments, requests, reports, information
or demands so given shall be deemed effective upon receipt, or if
mailed, upon receipt or the expiration of the third day following
the date of mailing, whichever occurs first, except that any
notice of change in address shall be effective only upon receipt
by the party to whom said notice is addressed.
16. Guarantor hereby indemnifies and holds Landlord
harmless from and against any attorneys' fees and the expenses of
such attorneys, costs of collection and court costs which may be
incurred by Landlord in the enforcement of its rights hereunder,
whether or not litigation is commenced, but only if Landlord is
the prevailing party in any such enforcement action.
IN WITNESS WHEREOF, Guarantor has executed this Rent
Guarantee this ___ day of _____________.
AMERISTAR CASINOS, INC.
By:
Name:
Title:
ATTEST:
By:
Name:
Title:
ATTACHMENT F
GUARANTEE OF COMPLETION
FOR VALUABLE CONSIDERATION, the receipt of which is
hereby acknowledged, and to induce the ST. LOUIS COUNTY PORT
AUTHORITY, a public body corporate and politic of the State of
Missouri ("Landlord") to approve the proposed assignment of the
right, title and interest of Southboat Limited Partnership, a
Missouri limited partnership ("Tenant") in that certain Amended
and Restated Lease and Development Agreement, by and between
Tenant and Landlord, dated as of February ___, 2000 (the "Lease")
to Ameristar Casino St. Louis, Inc., a Missouri corporation
("Assignee"), AMERISTAR CASINOS, INC., a Nevada corporation
("Guarantor"), having its principal place of business at 3773
Howard Hughes Parkway, Suite 490 South, Las Vegas, Nevada 89109,
does hereby unconditionally covenant and agree with Landlord, its
successors and assigns, as follows:
1. Terms defined in the Lease and used in this
Guarantee of Completion (the "Completion Guarantee") shall have
the same meaning herein as so defined.
2. If Tenant shall abandon the Project after
commencement of any Work, or, if for reasons other than an
Unavoidable Delay or a delay caused by Landlord or St. Louis
County, any lien for services, labor or materials shall be filed
against the Property or the Project on account of the Work, and
such lien shall not be timely discharged or, in the event Tenant
or Guarantor shall elect to contest the lien in good faith and by
appropriate proceedings without providing security to Landlord in
accordance with Section 9(d) of the Lease, or in the event the
Work shall be defective in any material respect or not in
conformity with the Plans in any material respect and Tenant
shall fail or refuse to correct the Work after 30 days' prior
written notice, then Guarantor, at Guarantor's sole risk, cost
and expense, and subject to all of the provisions of the Lease
governing the Work, will well and truly immediately perform or
correct the Work, or pay and discharge the lien claim, as the
case may be. Guarantor shall pay all costs of the Work not paid
by Tenant and reimburse Landlord for any costs reasonably
incurred by Landlord in completing or correcting the Work or in
paying the cost of any lien claim or the defense thereof, as the
case may be.
3. This Completion Guarantee constitutes an absolute
and unconditional guarantee of completion of the Work in
accordance with the requirements of the Lease and payment of all
costs incurred by Tenant and/or Guarantor for or in connection
with the Work. This Completion Guarantee shall be enforceable
against Guarantor, its successors and assigns, without the
necessity for any suit or proceedings by Landlord against Tenant,
its successors and assigns, and without the necessity of any
notice of non-payment, non-performance or non-observance or any
notice of acceptance of this Completion Guarantee or any other
notice or demand to which Guarantor might otherwise be entitled,
all of which Guarantor hereby expressly waives. Nothing
contained in this Section 3, however, shall impair the right of
Guarantor to contest the validity of any claim for the cost of
labor or materials or to pursue any claim against a contractor,
subcontractor or supplier in connection with the Work; provided,
however, that in any such event the right of Guarantor to contest
or pursue any such claim shall be conditioned on delivery to
Landlord of reasonably adequate cash security to cover the cost
of the claim, together with reasonable attorneys fees and
expenses, or the reasonable cost required to complete or correct
the Work, as the case may be.
4. Guarantor agrees that the validity of this
Completion Guarantee and the obligations of Guarantor shall in no
way be terminated, affected or impaired by reason of the
assertion or the failure or delay to assert by Landlord against
Tenant, or Tenant's successors and assigns, any of the rights or
remedies reserved to Landlord pursuant to the provisions of the
Lease. The single or partial exercise of any right, power or
privilege under this Completion Guarantee shall not preclude any
other or the further exercise thereof or the exercise of any
other right, power or privilege by Landlord.
5. Failure of Guarantor to honor any demand for
performance or payment under this Completion Guarantee and to
make immediate payment of any sums due hereunder, or the breach
by Guarantor of any representation or warranty of Guarantor
hereunder, shall constitute an Event of Default hereunder.
6. This Completion Guarantee shall not be affected
and the liability of the Guarantor shall not be extinguished or
diminished (a) by Landlord's receipt, application or release of
security given for the performance and observation of the
covenants and conditions in the Lease to be performed or observed
by Tenant, its successors and assigns, including any sums paid by
Guarantor under the Guarantee of Minimum Rent to be issued by
Guarantor to Landlord on the Commencement Date (the "Rent
Guarantee"), (b) by the discharge of Tenant's liabilities through
bankruptcy, insolvency or any similar debt relief proceedings,
(c) by reason of sums paid or payable to Landlord from the
proceeds of any insurance policy or condemnation award (unless
the Lease is terminated incident to condemnation), or (d) by any
extensions, renewals, amendments, indulgences, modifications,
transfers or assignments in whole or in part of the Lease,
whether or not notice thereof is given to Guarantor. If the
Lease is terminated in accordance with its terms (other than due
to an Event of Default) prior to completion of the Work, the
obligations of Guarantor under this Completion Guarantee shall
thereafter be limited to securing the obligation of Tenant to pay
all costs incurred by Tenant in connection with the Work and to
remove all property of Tenant from the Premises in accordance
with the terms of the Lease.
7. Guarantor agrees that it shall have no rights of
indemnification or subrogation, and that Guarantor shall
subordinate its rights of recourse, against Tenant by reason of
any indebtedness or sums due to Guarantor, unless and until the
obligations secured by this Completion Guarantee are fully
performed. Guarantor agrees that it shall not assert any claim
which it has or may have against Tenant, including any claims
under this Completion Guarantee, until the obligations of Tenant
under the Lease in respect of the Work are fully satisfied and
discharged. The liability of Guarantor is co-extensive with that
of Tenant and also joint and several.
8. Landlord's acceptance of a note or collateral of
Tenant shall not constitute the full cash payment required
herein. This Completion Guarantee is given in addition to all
other guarantees which may pertain to Tenant's indebtedness or
obligations, and is not subordinate to any other guarantees.
Landlord's rights under all guarantees, including this Completion
Guarantee, shall be cumulative and independently enforceable. It
shall not be a condition to the enforcement of this Guarantee
that any other guarantees or collateral be resorted to by
Landlord. Any such collateral or guarantee, including the Rent
Guarantee, may be applied by Landlord in satisfaction of any
obligation or liability of Tenant under the Lease without thereby
impairing, reducing, diminishing or otherwise modifying the
obligations of Guarantor under this Completion Guarantee.
9. In order to induce Landlord to approve the
proposed assignment of Tenant's right, title and interest in the
Lease to Assignee, Guarantor makes the following representations
and warranties to Landlord:
(a) Guarantor is duly formed and validly existing as a
Nevada corporation;
(b) the execution and delivery of this Completion
Guarantee and the performance by Guarantor of Guarantor's
obligations hereunder have been duly authorized by all requisite
corporate action;
(c) this Completion Guarantee constitutes the legal,
valid and binding obligation of Guarantor and is enforceable
against Guarantor in accordance with its terms;
(d) no litigation or regulatory proceedings are
pending or, to the best of Guarantor's knowledge, threatened
against Guarantor which, if adversely determined, would likely
have a material adverse impact on Guarantor or on this Completion
Guarantee;
(e) Guarantor is not a party to, and neither Guarantor
nor Guarantor's properties, real or personal, are subject to, any
agreement, order, proceeding, ruling or other matter in conflict
with any provision of this Completion Guarantee or which
materially and adversely affects its ability to perform its
obligations hereunder;
(f) Guarantor is solvent and is not a party to any
assignment for the benefit of creditors or bankruptcy proceeding;
and
(g) Guarantor is not in material default of any
contract or agreement to which it is a party which materially and
adversely affects Guarantor's ability to perform its obligations
under this Completion Guarantee.
10. Guarantor agrees that it will, at any time and
from time to time, within ten (10) business days following
written request by Landlord, execute, acknowledge and deliver to
Landlord a statement certifying that this Completion Guarantee is
unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as
modified and stating such modifications). Guarantor agrees that
such certificate may be relied on by third parties. Should
Landlord be obligated by any bankruptcy or other law to repay to
Tenant or to Guarantor or to any trustee, receiver or other
representative or any of them, any amounts previously paid to
Landlord, its successors and assigns, this Completion Guarantee
shall be reinstated in the amount of such repayments.
11. As a further inducement to Landlord to approve the
proposed assignment of Tenant's right, title and interest in the
Lease to Assignee and in consideration thereof, Landlord and
Guarantor covenant and agree that in any action or proceeding
brought on, under or by virtue of this Completion Guarantee,
Landlord and Guarantor shall and do hereby waive trial by jury.
Without regard to principles of conflicts of laws, the validity,
interpretation, performance and enforcement of this Completion
Guarantee shall be governed by and construed in accordance with
the laws of the State of Missouri, and Guarantor hereby consents
to jurisdiction and venue in the Circuit Court of St. Louis
County, Missouri, or in the United States District Court for the
Eastern District of Missouri, St. Louis, Missouri, wherein
Landlord at its election may bring an action for the enforcement
of this Completion Guarantee.
12. Guarantor hereby indemnifies and holds Landlord
harmless from and against any attorneys' fees and the expenses of
such attorneys, costs of collection and court costs which may be
incurred by Landlord in the enforcement of its rights hereunder,
whether or not litigation is commenced, but only if Landlord is
the prevailing party in any such enforcement action.
13. Guarantor covenants and agrees to pay interest to
Landlord on any and all sums due Landlord hereunder which remain
unpaid for more than five (5) days after delivery of Landlord's
demand for payment, commencing on the date such payment is due,
at the rate of two percent (2%) in excess of the from time to
time publicly announced prime rate of interest of The Bank of
America.
14. If any provision or application of this Completion
Guarantee is invalid, unenforceable or illegal for any reason,
the parties agree that such invalid, unenforceable or illegal
provision or application shall be deemed modified to the extent,
but only to the extent, required to make such portion or
application enforceable, and that no such modification shall be
deemed to affect the remainder of this Completion Guarantee.
15. Unless otherwise indicated differently, all
notices, payments, requests, reports, information or demands
which any party hereto may desire or may be required to give to
any other party hereunder, shall be in writing and shall be
personally delivered or sent by a nationally recognized courier
service, telecopier or first-class certified or registered United
States mail, postage prepaid, return receipt requested, and sent
to the party at its address appearing below or such other address
as such party shall hereafter inform the other party hereto by
written notice given as aforesaid:
If to Guarantor: Ameristar Casinos, Inc.
3773 Howard Hughes Parkway
Suite 490 South
Las Vegas, Nevada 89109
Attention: President
FAX: (702) 369-8860
With copies to: Gordon R. Kanofsky
Senior Vice President of Legal
Affairs
Ameristar Casinos, Inc.
16633 Ventura Boulevard
Suite 1050
Encino, California 91436
FAX: (818) 995-7099
Steven E. Kushner
Stinson, Mag & Fizzell
100 South Fourth Street, Suite 700
St. Louis, Missouri 63102
Fax: (314) 259-4599
If to Landlord: St. Louis County Port Authority
Economic Council of St. Louis
County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: Director of Real
Estate
FAX: (314) 615-7666
With copies to: Economic Council of St. Louis
County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: General Counsel
FAX: (314) 615-7666
St. Louis County
41 South Central
Clayton, Missouri 63105
Attention: County Counselor
FAX: (314) 615-3732
All notices, payments, requests, reports, information
or demands so given shall be deemed effective upon receipt, or if
mailed, upon receipt or the expiration of the third day following
the date of mailing, whichever occurs first, except that any
notice of change in address shall be effective only upon receipt
by the party to whom said notice is addressed.
IN WITNESS WHEREOF, Guarantor has executed this
Completion Guarantee this ___ day of _______________.
AMERISTAR CASINOS, INC.
By:
Name:
Title:
ATTEST:
By:
Name:
Title:
EXHIBIT 21.1
SUBSIDIARIES OF AMERISTAR CASINOS, INC.
Cactus Pete's, Inc., a Nevada corporation
Ameristar Casino Vicksburg, Inc., a Mississippi corporation, ("ACVI")
Ameristar Casino Council Bluffs, Inc., an Iowa corporation
Ameristar Casino Las Vegas, Inc., a Nevada corporation
A.C. Food Services, Inc., a Nevada corporation
AC Hotel Corp., a Mississippi corporation (which also is a
subsidiary of ACVI)
Ameristar Casino St. Louis, Inc., a Missouri corporation
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This data should be reviewed in conjunction with the financial
statements and notes included in this filing.
</LEGEND>
<CIK> 0000912145
<NAME> AMERISTAR CASINOS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 15,531
<SECURITIES> 0
<RECEIVABLES> 2,080
<ALLOWANCES> 0
<INVENTORY> 3,268
<CURRENT-ASSETS> 31,150
<PP&E> 412,963
<DEPRECIATION> 108,949
<TOTAL-ASSETS> 378,645
<CURRENT-LIABILITIES> 58,112
<BONDS> 100,000
0
0
<COMMON> 204
<OTHER-SE> 68,169
<TOTAL-LIABILITY-AND-EQUITY> 378,645
<SALES> 300,286
<TOTAL-REVENUES> 300,286
<CGS> 0
<TOTAL-COSTS> 274,741
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,449
<INCOME-PRETAX> 545
<INCOME-TAX> 340
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 205
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report included in this 1999 Annual Report on
Form 10-K into the Company's previously filed Registration Statements on
Form S-8 (File Nos. 33-83378, 333-34313).
Arthur Andersen LLP
Las Vegas, Nevada
March 30, 2000
EXHIBIT 99.1
SUPPLEMENTAL AGREEMENT OF AMERISTAR CASINOS, INC.
Ameristar Casinos, Inc. ("ACI") hereby agrees to furnish
supplementally to the Securities and Exchange Commission a copy
of any of the following instruments defining the rights of
holders of long-term debt issued by ACI or its subsidiaries:
1. Purchase Money Deed of Trust Note executed by Ameristar
Casino Vicksburg, Inc., a Mississippi corporation ("ACVI"), in
favor of Magnolia Hotel Company, a Mississippi corporation
("Magnolia"), in the principal amount of $250,000.
2. Purchase Money Deed of Trust Note executed by ACVI in favor
of Magnolia in the principal amount of $4,329,725.85.
In addition, ACI hereby agrees to furnish supplementally to the
Securities and Exchange Commission a copy of all omitted exhibits
and schedules to the Asset Purchase and Sale Agreement filed as
Exhibit 10.12 to this Annual Report.
