-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GXstSJaktMuNWxTpihMQILdqUfSSjEViyTxuuaO0qEhQJLjYbE3GE4cymH/RWhEh ablAHazSFjmKpFSqBe/pJQ== 0000912145-99-000010.txt : 19990817 0000912145-99-000010.hdr.sgml : 19990817 ACCESSION NUMBER: 0000912145-99-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERISTAR CASINOS INC CENTRAL INDEX KEY: 0000912145 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 880304799 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22494 FILM NUMBER: 99693245 BUSINESS ADDRESS: STREET 1: 3773 HOWARD HUGHES PKWY STREET 2: SUITE 490 SOUTH CITY: LAS VEGAS STATE: NV ZIP: 89109 BUSINESS PHONE: 702-567-7000 MAIL ADDRESS: STREET 1: 3773 HOWARD HUGHES PKWY STREET 2: SUITE 490 SOUTH CITY: LAS VEGAS STATE: NV ZIP: 89109 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 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 incorporation or organization) identification no.) 3773 Howard Hughes Parkway Suite 490 South Las Vegas, Nevada 89109 (Address of principal executive offices) (702) 567-7000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of August 13,1999, 20,360,000 shares of Common Stock of the registrant were issued and outstanding. AMERISTAR CASINOS, INC. FORM 10-Q INDEX Page No. Part I. FINANCIAL INFORMATION Item 1.Financial Statements: A. Condensed Consolidated Balance Sheets at December 31, 1998 and June 30, 1999 (unaudited) 3 - 4 B. Condensed Consolidated Statements of Operations (unaudited) for the six months ended June 30, 1998 and 1999 5 C. Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 1998 and 1999 6 D. Notes to Condensed Consolidated Financial Statements 7 - 8 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations 9 - 18 Item 3.Quantitative and Qualitative Disclosures about Market Risk 18 Part II. OTHER INFORMATION Item 1. Legal Proceedings 19 Item 4. Submission of Matters to a Vote of Security Holders 19 Item 6.Exhibits and Reports on Form 8-K 19 - 20 SIGNATURE 21 PART I. FINANCIAL INFORMATION ITEM 1.FINANCIAL STATEMENTS AMERISTAR CASINOS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) ASSETS December 31, June 30, 1998 1999 (Unaudited) --------- -------- CURRENT ASSETS: Cash and cash equivalents $ 18,223 $ 23,279 Restricted cash 119 126 Accounts receivable, net 1,476 1,554 Income tax refund receivable 2,815 2,088 Inventories 3,614 3,339 Prepaid expenses 4,794 4,784 Deferred income taxes 3,906 3,964 -------- -------- Total current assets 34,947 39,134 PROPERTY AND EQUIPMENT AND LEASEHOLD INTERESTS, at cost, less accumulated depreciation and amortization of $92,708 and $102,890, respectively 297,820 295,643 EXCESS OF PURCHASE PRICE OVER FAIR MARKET VALUE OF NET ASSETS ACQUIRED 15,046 14,848 DEPOSITS AND OTHER ASSETS 3,924 3,734 -------- -------- $351,737 $353,359 ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements. AMERISTAR CASINOS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) LIABILITIES AND STOCKHOLDERS' EQUITY December 31, June 30, 1998 1999 (Unaudited) -------- -------- CURRENT LIABILITIES: Accounts payable $ 6,324 $ 7,005 Construction contracts payable 913 - Accrued liabilities 26,359 28,639 Current obligations under capitalized leases 2,398 2,399 Current maturities of notes payable and long-term debt 9,924 10,152 -------- -------- Total current liabilities 45,918 48,195 -------- -------- OBLIGATIONS UNDER CAPITALIZED LEASES, net of current maturities 13,196 12,091 -------- -------- NOTES PAYABLE AND LONG-TERM DEBT, net of current maturities 217,203 215,907 -------- -------- DEFERRED INCOME TAXES 7,496 8,576 -------- -------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value: Authorized - 30,000,000 shares Issued - None - - Common stock, $.01 par value: Authorized - 30,000,000 shares Issued and outstanding - 20,360,000 shares 204 204 Additional paid-in capital 43,043 43,043 Retained earnings 24,677 25,343 -------- -------- Total stockholders' equity 67,924 68,590 -------- -------- $351,737 $353,359 ======== ========
The accompanying notes are an intetral part of these condensed consolidated financial statements. AMERISTAR CASINOS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Six Months Ended June 30, Ended June 30, 1998 1999 1998 1999 -------- -------- -------- -------- REVENUES: Casino $ 53,880 $ 62,865 $105,224 $120,949 Food and beverage 11,981 12,245 22,488 23,637 Rooms 3,757 4,628 6,305 8,561 Other 2,526 2,597 4,602 4,920 -------- -------- -------- -------- 72,144 82,335 138,619 158,067 Less: Promotional allowances 5,408 6,136 10,472 11,860 -------- -------- -------- -------- Net revenues 66,736 76,199 128,147 146,207 -------- -------- -------- -------- OPERATING EXPENSES: Casino 30,749 29,124 55,340 56,179 Food and beverage 5,057 8,069 12,251 15,413 Rooms 1,029 1,677 2,092 3,285 Other 2,118 1,658 4,084 3,992 Selling, general and administrative 19,056 22,370 36,511 41,489 Depreciation and amortization 6,026 5,893 11,096 12,173 Preopening costs - - 10,611 - -------- -------- -------- -------- Total operating expenses 64,035 68,791 131,985 132,531 -------- -------- -------- -------- Income (loss) from operations 2,701 7,408 (3,838) 13,676 OTHER INCOME (EXPENSE): Interest income 132 118 216 178 Interest expense (5,845) (6,150) (10,119) (12,247) Other (196) (79) 115 (483) -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAX PROVISION (BENEFIT) (3,208) 1,297 (13,626) 1,124 Income tax provision (benefit) (710) 518 (4,513) 458 -------- -------- -------- -------- NET INCOME (LOSS) $ (2,498) $ 779 $ (9,113) $ 666 ======== ======== ======== ======== EARNINGS (LOSS) PER SHARE: Basic $ (0.12) $ 0.04 $ (0.45) $ 0.03 ======== ======== ======== ======== Diluted $ (0.12) $ 0.04 $ (0.45) $ 0.03 ======== ======== ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING 20,360 20,360 20,360 20,360 ======== ======== ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements. AMERISTAR CASINOS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED) Six Months Ended June 30, 1998 1999 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (9,113) $ 666 -------- -------- Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 11,096 12,173 Amortization of debt costs 327 334 Change in deferred taxes (4,583) 1,022 Net (gain) loss on disposition of assets (14) 409 (Increase) decrease in other current assets (1,324) 200 Decrease in income tax refund receivable 2,020 727 Increase in other current liabilities 6,837 2,961 -------- -------- Total adjustments 14,359 17,826 -------- -------- Net cash provided by operating activities 5,246 18,492 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (23,317) (10,857) Decrease in construction contracts payable (13,785) (913) Proceeds from sale of assets 14 694 -------- -------- Increase (decrease) in deposits and other non-current assets 7,533 (144) -------- -------- Net cash used in investing activities: (29,555) (11,220) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of notes payable and long-term debt 35,741 250 Principal payments of notes payable, long-term debt and capitalized leases (2,174) (2,466) -------- -------- Net cash provided by (used in) financing activities: 33,567 (2,216) -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 9,258 5,056 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 13,031 18,223 -------- -------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 22,289 $ 23,279 ======== ======== SUPPLEMENTAL CASH FLOW DISCLOSURES: Cash paid for interest (net of amounts capitalized) $ 8,834 $ 12,034 ======== ======== Cash paid for income taxes $ 350 $ - ======== ======== Assets purchased with long-term debt $ - $ 44 ======== ======== Assets purchased with capitalized leases $ 6,671 $ - ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements. AMERISTAR CASINOS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The accompanying condensed consolidated financial statements include the accounts of Ameristar Casinos, Inc. ("Ameristar" or "ACI") and its wholly owned subsidiaries (collectively, the "Company"). The Company's principal subsidiaries, all of which are wholly owned, are Cactus Petes, Inc. ("CPI"), Ameristar Casino Vicksburg, Inc. ("ACVI"), Ameristar Casino Council Bluffs, Inc. ("ACCBI") and Ameristar Casino Las Vegas, Inc. ("ACLVI"). ACI also owns A.C. Food Services, Inc., a purchasing subsidiary, and AC Hotel Corp, a wholly owned subsidiary of ACVI that owns and operates the Ameristar Hotel in Vicksburg, Mississippi. All significant intercompany transactions have been eliminated. CPI owns and operates two casino-hotels in Jackpot, Nevada - Cactus Petes Resort Casino and The Horseshu Hotel and Casino. ACVI owns and operates Ameristar Vicksburg, a riverboat-themed dockside casino and related hotel and other land-based facilities in Vicksburg, Mississippi. ACCBI owns and operates Ameristar Council Bluffs, a riverboat casino and related hotel and other land-based facilities in Council Bluffs, Iowa. ACLVI owns and operates The Reserve Hotel Casino, an African safari and big game reserve themed facility in the Henderson-Green Valley suburban area of Las Vegas, Nevada that opened on February 10, 1998. The accompanying condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the condensed consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles. However, the accompanying unaudited condensed consolidated financial statements do contain all adjustments that, in the opinion of management, are necessary to present fairly the financial position and the results of operations for the interim periods included therein. The interim results reflected in the condensed consolidated financial statements are not necessarily indicative of results to be expected for the full fiscal year. Certain reclassifications, having no effect on net income, have been made to the prior periods' condensed consolidated financial statements to conform to the current periods' presentation. The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10- K/A for the fiscal year ended December 31, 1998. NOTE 2 - NOTES PAYABLE AND LONG-TERM DEBT The Company maintains a $125 million revolving credit facility (the "Revolving Credit Facility") pursuant to a Credit Agreement among Ameristar and its principal subsidiaries (the "Borrowers"), a syndicate of bank lenders and Wells Fargo Bank, N.A. as Agent Bank, Arranger and Swingline Lender. The Borrowers do not include AC Hotel Corp., a subsidiary of ACVI that owns the hotel at Ameristar Vicksburg, and a purchasing subsidiary. The Revolving Credit Facility binds the Borrowers to a number of affirmative and negative covenants, including promises to maintain certain financial ratios and tests within defined parameters. As of June 30, 1999, the Company was in compliance with all covenants. Ameristar issued $100 million in 10-1/2% Senior Subordinated Notes due 2004 under an Indenture dated July 15, 1997 (the "Senior Subordinated Notes"). All of Ameristar's current subsidiaries (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 Ameristar, and the Guarantors constitute all of Ameristar's direct and indirect subsidiaries. Ameristar is a holding company with no operations independent of those of the Guarantors and no assets other than its investments 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 included in this report because, in the opinion of management, they are not deemed 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 Ameristar in the form of cash dividends, loans or advances. NOTE 3 - EARNINGS (LOSS) PER SHARE In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 ("SFAS"), "Earnings Per Share", effective for fiscal years ending after December 15, 1997. The Company adopted SFAS 128 for the year ending December 31, 1997. SFAS 128 requires the computation and presentation of basic and diluted earnings per share for all periods for which an income statement is presented. For the three and six months ended June 30, 1998 and 1999, the Company had no material dilutive securities outstanding. Options to purchase 575,000 and 1,286,000 share of common stock were outstanding at June 30, 1998 and 1999, respectively, at exercise prices of $5.06 - $16.00 for the 1998 period and $2.64 - $3.47 for the 1999 period. For the 1998 periods, these options were not included in a pro forma computation of earnings per share assuming dilution because the options' exercise prices were greater that the average market price of the common shares during the respective periods presented. For the 1999 periods, the outstanding shares did not cause any dilution of the earnings per share. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company Ameristar Casinos, Inc. ("Ameristar" or "ACI") develops, owns and operates casinos and related hotel, food and beverage, entertainment and other facilities, with five properties in operation in Nevada, Mississippi and Iowa. Ameristar's principal operations are conducted through four wholly owned subsidiaries: Cactus Petes, Inc. ("CPI"); Ameristar Casino Vicksburg, Inc. ("ACVI"); Ameristar Casino Council Bluffs, Inc. ("ACCBI"); and Ameristar Casino Las Vegas, Inc. ("ACLVI"). Ameristar and its wholly owned subsidiaries are collectively referred to herein as the "Company." CPI owns and operates Cactus Petes Resort Casino and The Horseshu Hotel and Casino (collectively, the "Jackpot Properties"), two casino-hotels located in Jackpot, Nevada at the Idaho border. ACVI owns and operates a riverboat-themed dockside casino (the "Vicksburg Casino") and related land-based facilities, including a 150-room hotel that opened on June 5, 1998 (collectively, "Ameristar Vicksburg") in Vicksburg, Mississippi. ACCBI owns and operates a riverboat casino (the "Council Bluffs Casino") and related land-based hotel and other facilities (collectively, "Ameristar Council Bluffs") in Council Bluffs, Iowa across the Missouri River from Omaha, Nebraska. ACLVI owns and operates The Reserve Hotel Casino ("The Reserve"), an African safari and big game reserve themed facility in the Henderson-Green Valley suburban area of Las Vegas, Nevada. The Reserve opened February 10, 1998. The Company's quarterly and annual operating results may be affected by competitive pressures, the timing of the commencement of new gaming operations, the amount of preopening costs incurred by the Company, construction at existing facilities and general weather conditions. Consequently, the Company's operating results for any quarter or year may not be indicative of results to be expected for future periods. The following table highlights the results of operations of Ameristar's operating subsidiaries for its principal properties: Three months Six months ended June 30 ended June 30 -------------- -------------- 1998 1999 1998 1999 -------------- -------------- Consolidated cash flow information: Cash flow provided by operating activities $5,712 $13,399 $5,246 $18,492 Cash flow used in investing activities (7,245) (6,241) (29,555) (11,220) Cash flow provided by (used in) financing activities 709 (1,183) 33,567 (2,216) Net revenues: Jackpot Properties $14,282 $15,204 $26,695 $28,338 Ameristar Vicksburg 16,388 19,319 32,918 38,385 Ameristar Council Bluffs 24,030 28,268 48,143 53,640 The Reserve 12,036 13,408 20,391 25,844 Corporate and other - - - - ------- ------- ------- ------- Consolidated net revenues $66,736 $76,199 $128,147 $146,207 ======= ======= ======== ======== Adjusted operating income (loss)(1): Jackpot Properties $2,977 $3,518 $4,573 $5,940 Ameristar Vicksburg 2,713 3,952 6,193 7,598 Ameristar Council Bluffs 4,218 5,460 7,961 10,101 The Reserve (4,816) (2,137) (7,259) (4,012) Corporate and other (2,391) (3,385) (4,695) (5,951) -------- -------- ------- -------- Consolidated operating income $2,701 $7,408 $6,773 $13,676 ======== ======== ======= ======== Adjusted operating income (loss) margins (1): Jackpot Properties 20.8% 23.1% 17.1% 21.0% Ameristar Vicksburg 16.6% 20.5% 18.8% 19.8% Ameristar Council Bluffs 17.6% 19.3% 16.5% 18.8% The Reserve (40.0%) (15.9%) (35.6%) (15.5%) Corporate and other - % - % - % - % ------- ------- ------- ------- Consolidated operating income margin 4.0% 9.7% 5.3% 9.4% ======= ======= ======= ======= EBITDA (2) Jackpot Properties $3,790 $4,321 $6,197 $7,498 Ameristar Vicksburg 4,325 5,252 9,364 10,682 Ameristar Council Bluffs 5,978 7,297 11,443 13,750 The Reserve (3,057) (268) (4,605) (300) Corporate and other (2,309) (3,301) (4,530) (5,781) ------- -------- ------- -------- Consolidated EBITDA $8,727 $13,301 $17,869 $25,849 ======= ======== ======== ======== EBITDA Margins (2): Jackpot Properties 26.5% 28.4% 23.2% 26.5% Ameristar Vicksburg 26.4% 27.2% 28.4% 27.8% Ameristar Council Bluffs 24.9% 25.8% 23.8% 25.6% The Reserve (25.4%) (2.0%) (22.6%) (1.2%) Corporate and other - % - % - % - % ------- -------- ------- ------- Consolidated EBITDA margin 13.1% 17.5% 13.9% 17.7% ======= ======== ======= =======
(see following page for footnotes) Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) (1) Adjusted operating income (loss) for the 1998 periods is calculated before the write off of $10.6 million in preopening costs related to the opening of The Reserve on February 10, 1998. (2) EBITDA consists of income from operations plus depreciation, amortization and preopening costs. 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 flow 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 may calculate EBITDA in the same manner as the Company. Summary of Operating Results Ameristar had record growth in revenues for the three and six months ended June 30, 1999 and record income from operations for the three months ended June 30, 1999. Consolidated net revenues for the three months ended June 30, 1999, increased to $76.2 million compared to $66.7 million for the same quarter in 1998. Net revenues for the six months ended June 30, 1999, were $146.2 million compared to $128.1 million in 1998. The majority of these increases were related to improved casino revenue resulting from new slot product at certain of the properties and the additional 41 days of operation for The Reserve in 1999 compared to 1998 for the six-month period. Income from operations for the quarter ended June 30, 1999, was $7.4 million compared to $2.7 million for the same quarter in 1998. Total operating expenses as a percentage of net revenues decreased to 90.3 percent for the second quarter of 1999 compared to 96.0 percent for the quarter ended June 30, 1998. Income from operations for the six months ended June 30, 1999, was $13.7 million compared to $6.8 million before preopening costs and the related tax benefit for the same period in 1998. Loss from operations for the six months ended June 30, 1998, after preopening costs of $10.6 million was $3.8 million. Net income for the quarter ended June 30, 1999, was $0.8 million compared to a net loss of $2.5 million for the same period in 1998. For the six months ended June 30, 1999, net income was $0.7 million compared to a net loss of $2.0 million for the first six months of 1998 before preopening costs and the related tax benefit and $9.1 million after preopening costs. Earnings per share for the quarter ended June 30, 1999 were $0.04 compared to a loss per share of $0.12 for the same quarter in 1998. Earnings per share for the first six months of 1999 were $0.03 compared to a loss per share of $0.10 before preopening costs and $0.45 after preopening costs for the first six months of 1998. Revenues and Operating Income by Property Net revenues for Ameristar Council Bluffs were $28.3 million for the quarter ended June 30, 1999, compared to $24.0 million for the same quarter in 1998, an increase of $4.3 million or 17.9 percent. For the six months ended June 30, 1999, net revenues were $53.6 million compared to $48.1 million for the Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) same period in 1998, an 11.4 percent increase. Operating income increased by $1.2 million or 29.5 percent for the three months and $2.1 million or 26.9 percent for the six months ended June 30, 1999 compared to the same periods in 1998. Increased slot revenue, as a result of new slot product placed in service during the fourth quarter of 1998 and the first quarter of 1999 and continued growth in the market, are primarily responsible for these increases. However, operating costs also increased, particularly in marketing and direct mail packages. The Jackpot Properties increased net revenues to $15.2 million and $28.3 million, respectively, for the three and six months ended June 30, 1999 compared to $14.3 million and $26.7 million for the same periods in 1998. Operating income increased to $3.5 million and $5.9 million, respectively, for the second quarter and six- month period ended June 30, 1999, compared to $3.0 million and $4.6 million for the same periods in 1998. Most of the revenue increase is attributable to increased casino revenues due to a higher hold percentage on table games and enhanced slot product. In conjunction with the increased revenue, continued cost-control measures have improved the operating efficiency of the Jackpot Properties. Ameristar Vicksburg continues to be the gaming revenue market leader in Warren County, Mississippi with net revenues of $19.3 million for the second quarter of 1999 and $38.4 million for the first six months of 1999, compared to $16.4 million and $32.9 million, respectively, for the same periods in 1998. Operating income for the three and six months ended June 30, 1999 was $4.0 million and $7.6 million, respectively, compared to $2.7 million and $6.2 million in the same periods in 1998. The increase in net revenues was a result of a higher table games hold percentage, higher slot revenues due to the addition of 144 new, innovative slot machines to the casino floor and the June 1998 opening of the 150-room Ameristar Hotel Vicksburg. Operating costs were up in Vicksburg due to increased legal costs and increased marketing expenses. The hotel operations contributed $1.3 million in revenues and $0.4 million in operating income for the first six months of 1999. The Reserve had net revenues of $13.4 million for the three- month period ended June 30, 1999, compared to $12.0 million for the same period in the prior year. For the six months ended June 30, 1999, net revenues were $25.8 million compared to $20.4 million for the 140 days that the property operated during the first six months of 1998. The operating loss for the quarter ended June 30, 1999 was a loss of $2.1 million compared to a loss of $4.8 million for the same quarter in 1998. On a year-to-date basis, the operating loss before preopening costs and the related tax benefit was $4.0 million compared to a loss of $7.3 million for the same period last year. Along with improving revenues, material reductions in labor and food costs have contributed to the property's improved operating performance. Consolidated Revenues and Expenses On a consolidated basis for the quarter ended June 30, 1999 compared to the quarter ended June 30, 1998, casino revenues increased $9.0 million or 16.7 percent, food and beverage revenues increased $0.3 million or 2.2 percent, and rooms revenues increased $0.9 million or 23.2 percent. On a consolidated basis for the six months ended June 30, 1999 compared to the six months ended June 30, 1998, casino revenues increased $15.7 million or 14.9 percent, food and beverage revenues increased $1.1 million or 5.1 percent, and rooms revenues increased $2.3 million or 35.8 percent. These increases are due to the improved casino results discussed above, increased prices and additional covers in the food departments and the operations at Ameristar Hotel in Vicksburg for a full six months in 1999 compared to only 25 days of operation in 1998. Casino expenses decreased $1.6 million or 5.3 percent, food and beverage expenses increased $3.0 million or 60.0 percent, and rooms expenses increased $0.6 million or 63.0 percent for the quarter ended Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) June 30, 1999 compared to the 1998 second quarter. For the six month period ended June 30, 1999 compared to 1998, casino expenses increased $0.8 million or 1.5 percent, food and beverage expenses increased $3.2 million or 25.8 percent, and rooms expenses increased $1.2 million or 57.0 percent. The increase in food and beverage expenses resulted from higher food costs and increased covers. The increase in room expenses relates to the Vicksburg hotel that operated for the last 25 days of the 1998 periods. Selling, general and administrative expenses (including utilities and maintenance and business development) increased $3.3 million or 17.4 percent for the quarter ended June 30, 1999 compared to the same quarter of the prior year. For the six-month period ended June 30, 1999 selling, general and administrative expenses increased $5.0 million or 13.6 percent compared to the same period in 1998. Depreciation expenses for the first six months of 1999 increased primarily due to the inclusion of The Reserve facilities and the hotel at Vicksburg in the Company's depreciable asset base for a full six months. However, depreciation expense was down for the second quarter as compared to 1998 since many of the five-year assets in Vicksburg are now fully depreciated. Interest expense was $6.2 million and $12.2 million, respectively, for the three and six months ended June 30, 1999, compared to $5.8 million and $10.1 million for the same periods in 1998. The increased interest expense relates primarily to increased debt incurred to finance construction of The Reserve and the cessation of capitalized interest for that project. The Company's effective federal income tax rate for the six months ended June 30, 1999, was 40.7 percent, versus the federal statutory rate of 34 percent. The difference between the effective rate and the statutory rate is due to certain expenses deducted in the current period for financial reporting purposes which are not deductible for tax purposes. LIQUIDITY AND CAPITAL RESOURCES Cash flow provided by operations was $18.5 million for the six months ended June 30, 1999 compared to $5.2 million for the six months ended June 30, 1998. The majority of this increase was the result of improved operations at all of the properties and at The Reserve, in particular, offset by slightly higher corporate overhead. The Company had unrestricted cash of approximately $23.3 million as of June 30, 1999, an increase in cash of $5.1 million from December 31, 1998. This increase in cash at June 30, 1999, is a result of improved operations in the current period compared to the same period in 1998, offset by capital expenditures and repayments of notes payable, long-term debt and capital leases. Capital expenditures of $10.9 million for the six months primarily related to expansion projects at Vicksburg, Council Bluffs and The Reserve ($3.8 million), additional land purchased at The Reserve ($1.4 million), the purchase of new slot machines at each of the properties ($2.8 million), and other maintenance capital expenditures. The Company maintains a $125 million revolving credit facility (the "Revolving Credit Facility") pursuant to a Credit Agreement among Ameristar and its principal subsidiaries (the "Borrowers"), a syndicate of bank lenders and Wells Fargo Bank, N.A. ("WFB") as Agent Bank, Arranger and Swingline Lender. The Borrowers do not include AC Hotel Corp., a subsidiary of ACVI that owns the hotel at Ameristar Vicksburg, and a purchasing subsidiary. At June 30, 1999, the outstanding principal balance of the Revolving Credit Facility was $90.0 million. 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 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) prime interest rate. 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. As of June 30, 1999, the Borrowers have taken LIBOR draws totaling $90.0 million with an average interest rate of approximately 9.1 percent per annum. 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. For the six months ended June 30, 1999, the Company paid approximately $106,000 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. Under the Revolving Credit Facility, borrowings under the Revolving Credit Facility may not exceed 2.75 times the Borrowers' rolling four quarter EBITDA (as defined) and the Borrowers' total funded debt may not exceed the Borrowers' rolling four-quarter EBITDA (as defined), multiplied by a factor that varies over time and which is currently 5.25. As of June 30, 1999, borrowings under the Revolving Credit Facility and the total funded debt of the Borrowers were 2.0 times and 4.6 times the Borrowers' rolling four- quarter EBITDA (as defined), respectively. 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. The covenants require a Minimum Tangible Net Worth (as defined) of $50.0 million at June 30, 1999. As of June 30, 1999, the Company was in compliance with all covenants. Based on the rolling four quarter EBITDA (as defined) at June 30, 1999, the amount available for additional borrowing on the Revolving Credit Facility is approximately $34.1 million. Ameristar issued $100 million in 10-1/2% Senior Subordinated Notes due 2004 (the "Senior Subordinated Notes") under an Indenture dated July 15, 1997 (the "Indenture"). In addition to Ameristar and the trustee, all of Ameristar's subsidiaries (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. 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 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) 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 was in compliance with the covenants under the Indenture at June 30, 1999. At June 30, 1999, The Company had other indebtedness in an aggregate principal amount of $50.5 million. No assurance can be given that the Company will be able to satisfy, when necessary, the financial covenants under the Revolving Credit Facility, the Senior Subordinated Notes or other debt instruments for purposes of incurring additional debt, including additional draws under the Revolving Credit Facility. In addition, a failure to satisfy the financial covenants under the Revolving Credit Facility could either require the Company to reduce the outstanding balance of the Revolving Credit Facility, which requirements could adversely affect or exceed the Company's liquidity, or result in an event of default under one or more debt instruments. Adverse changes in the Company's operations or operating cash flow may affect the ability of the Company to satisfy these financial covenants. Additional information concerning the Revolving Credit Facility, the Senior Subordinated Notes and the Company's other indebtedness is set forth under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" in Ameristar's Report on 10-K/A for the fiscal year ended December 31, 1998. Consolidated capital expenditures during the first six months of 1999 were approximately $10.9 million. Management is proceeding with several capital expenditure projects at Ameristar Council Bluffs and Ameristar Vicksburg and has completed remodeling certain dining and meeting room areas at The Reserve. The projects in Council Bluffs include building a third level onto the riverboat casino, which will add 375 gaming positions, and erecting a 1,000- space parking garage. The Council Bluffs projects have an estimated budget of $24 million, a portion of which will be paid in 2000. In Vicksburg, projects include casino and restaurant remodeling that are expected to begin in the fourth quarter of 1999. The covenants under the Revolving Credit Facility currently allow the Company to make maximum capital expenditures during 1999 of approximately $13.2 million. The lenders under the Revolving Credit Facility have advised the Company that they will waive the maximum capital expenditure limitation under the Revolving Credit Facility specifically for the above-described projects at Ameristar Council Bluffs and Ameristar Vicksburg, but the formal waiver has not been received at the date of this filing. Management currently estimates that total capital expenditures during 1999 will be approximately $33.0 million, including approximately $20.0 million on the specified projects and approximately $13.0 million on other projects. However, the amount of capital expenditures may vary based on budget modifications, construction schedule changes or other factors. The above-described capital expenditure requirements are expected to 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). 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. The Company experienced an increase of $7.7 million in cash flow from operations and $4.6 million in EBITDA during the quarter ended June 30, 1999 over the same quarter in 1998. The increases resulted largely from operating improvements at The Reserve as well as improvements at all other properties. Management anticipates that the operating improvements will Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) continue during the remainder of the year. However, no assurances can be given with respect to the amount of operating cash flow or EBITDA of the Company for any future period or the timing, cost or scope of any project undertaken by the Company. At the present time, the Company does not anticipate undertaking capital expenditure projects during 1999 that could not be funded out of amounts anticipated to be available through anticipated internally generated cash flow and the Company's borrowing capacity under the Revolving Credit Facility. Ameristar has not declared any dividends on its Common Stock in the past, 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 and the Senior Subordinated Notes obligate the Company to comply with certain financial covenants that may restrict or prohibit the payment of dividends. YEAR 2000 READINESS DISCLOSURE Background 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. Risk Factors The Company is in many ways involved in a low-technology business. Nevertheless, the Company does use computers extensively to assist its employees in providing good service to its guests and to assist management in monitoring the Company's operations. The Company's hotel front desks, for example, are highly computerized so as to expedite check-in and check-out of guests. Similarly, the Company uses computers in the back-of-the-house to facilitate purchasing and maintaining inventory records. In the casino, computers are used to monitor gaming activity and maintain customer records, such as credit availability and points earned by members of the Company's players clubs. Computers on occasion fail, irrespective of the Year 2000 issue. For this reason, where appropriate, the Company maintains paper and magnetic back-ups and the Company's employees are trained in the use of manual procedures. When the front desk computer fails, for example, the Company's employees continue to check guests in and out using manual methods. This is not to imply that there is no risk to the Company from the Year 2000 issue. The risks could be substantial. Most of the Company's guest rooms, for example, are easily accessed only by elevator, and most elevators incorporate some computer technology. Likewise, the Company's heating, ventilation, life safety and air conditioning systems are highly computerized and, of course, critical to the Company's operations. The Company is also exposed to the risk that one or more of its vendors or suppliers could experience Year 2000 problems that may impact their ability to provide goods and services. Although this is not considered as significant a risk with respect to the suppliers of goods due to the availability of alternative suppliers, the disruption of certain services, in particular utilities and financial services, could, depending upon the extent of the disruption, have a material adverse impact on the Company's operations. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Strategy The Company has evaluated its front- and back-of-the-house computer operations. The majority of the casino and hotel systems are already Year 2000 compliant according to the vendors. Those that are not will be upgraded with Year 2000 compliant systems prior to November 1, 1999. The back-of-the-house accounting systems have been evaluated and the payroll system and all financial software programs will be replaced prior to November 1, 1999. Where important to the Company's business, inquiries are also being made of third parties with whom the Company does significant business, such as vendors and suppliers, as to their Year 2000 readiness. The Company used Year 2000 compliance as one of its criteria in choosing the computer systems for The Reserve. Some of these same systems have been or will be installed at the Company's other properties. The Company has not developed a comprehensive contingency plan, although as previously mentioned a number of its critical hotel and casino systems are currently backed up by manual procedures that have been utilized during times of system malfunctions. The Company will continue to assess the need for a comprehensive contingency plan as implementation of its corrective action plan continues. Costs It is difficult to calculate the cost to the Company of ensuring that its systems are Year 2000 compliant, in part because there are many different solutions to various Year 2000 situations. In the case of the Company's elevators, for example, the Company has requested that the third parties with whom it contracts for its elevator maintenance inspect each elevator system, as part of its normal maintenance, for any Year 2000 issues. The Company has estimated that total hardware and software for the back-of-the-house accounting system could cost approximately $750,000 on a companywide basis. The overall costs of addressing the Year 2000 issue have not been and are not expected to be material to the Company's financial condition or results of operations. FACTORS AFFECTING FORWARD-LOOKING INFORMATION 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, including but not limited to uncertainties concerning operating cash flow in future periods, the Company's borrowing capacity under the Revolving Credit Facility, the future operating performance of the Company's properties, particularly the recently opened The Reserve, the ability of the Company to undertake and complete capital expenditure projects and the ability of the Company and its vendors and service providers to successfully and timely resolve Year 2000 issues. 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 - Cautionary Information Regarding Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Forward-Looking Statements" in the Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 1998 for discussion of some of the factors, risks and uncertainties that could affect the outcome of future results contemplated by forward-looking statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Except for the Revolving Credit Facility, under which $90.0 million was outstanding at June 30, 1999, and certain other long-term debt outstanding at June 30, 1999 in the aggregate amount of $6.4 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 June 30, 1999, the average interest rate applicable to the Variable Rate Debt was 9.1 percent. An increase of one percentage point in the average interest rate applicable to the Variable Rate Debt outstanding at June 30, 1999, would increase the Company's annual interest costs by approximately $964,500. 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. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS PCL Construction Services, Inc. et al. v. Ameristar Casino Las Vegas, Inc. This suit was filed in the District Court of Clark County, Nevada on October 14, 1998 as case number A394783. The complaint was served on ACLVI on February 4, 1999. An amended complaint was filed on February 19, 1999 and served on ACLVI on March 1, 1999. The plaintiffs are PCL Construction Services, Inc., Tri-Star Theme Builders, Inc. and a joint venture comprised of these two firms. The joint venture was the contractor for certain of the interior work at The Reserve pursuant to a construction contract dated November 14, 1997. The contract, as amended through change orders, provided for a guaranteed maximum price not to exceed $25,482,532, inclusive of fees, to the contractor. The plaintiffs alleged that ACLVI is obligated to pay them $5,621,098, plus interest, in excess of the guaranteed maximum price for additional labor costs they invoiced to ACLVI. This case has been settled by mutual agreement of the parties, pursuant to which the guaranteed maximum price has been increased by $667,468, which has been paid. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS a. The Company's Annual Meeting of Stockholders was held on June 11, 1999. b. and c. The following table shows the tabulation of votes for all matters put to vote at the Company's Annual Meeting of Stockholders. Abstentions/ Against/ Broker Matters Put to Vote For Withheld Non-votes Election of Class A Director Larry A. Hodges 20,055,297 37,733 Proposal to approve 1999 Stock Incentive Plan 18,845,784 158,145 1,089,101 The terms of the following directors have continued after the meeting: Class B Directors (term expiring in 2000): Thomas M. Steinbauer and Paul I. Corddry Class C Director (term expiring in 2001): Craig H. Neilsen and Warren McCain ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits filed as part of this report 10.1 Amendment to Ground Lease, dated as of May 21, 1999, between Ameristar Casino Council Bluffs, Inc. ("ACCBI") and Council Bluffs Hotel Associates, L.C. ("CBHA"). 10.2 Ground Lease Agreement, dated as of May 28, 1999, between ACCBI and River Road Hotel Associates, L.C. ("RRHA"). 10.3 Letter Agreement, dated as of May 28, 1999, between ACCBI and RRHA. 10.4 Memorandum of Understanding, dated as of June 8, 1999, among ACCBI, CBHA and RRHA. 10.5 Employment Agreement, dated as of June 14, 1999, between Ameristar Casinos, Inc. and Jeffrey A. Bouhgrum* 10.6 1999 Stock Incentive Plan of Ameristar Casinos, Inc.* 27 Financial Data Schedule 99.1 Supplemental Agreement of Ameristar Casinos, Inc. * Denotes a management contract or compensatory plan or arrangement b. Reports on Form 8-K None SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERISTAR CASINOS, INC. Registrant Date: August 13, 1999 /s/Thomas Steinbauer Thomas Steinbauer Senior Vice President of Finance and Treasurer (Principal Financial Officer) EX-10 2 AMENDMENT TO GROUND LEASE This Amendment to Ground Lease is made and entered into as of the 21 day of May, 1999 by and between Ameristar Casino Council Bluffs, Inc., an Iowa corporation, with an address of 300 West Broadway, Suite 145, P.O. Box 1768, Council Bluffs, Iowa 51501 ("Ameristar") and Council Bluffs Hotel Associates, L.C., an Iowa limited liability company, with an address of 2 Quail Creek Circle, North Liberty, Iowa 52317 ("Kinseth"). RECITALS A. Ameristar, as ground lessor, and Kinseth Hotel Corporation, as the original ground lessee, entered into an Amended and Restated Ground Lease Agreement dated September 7, 1995 (the "Ground Lease"). Kinseth Hotel Corporation assigned its interest in the Ground Lease to Kinseth. B. The Ground Lease covers approximately .623 acres of real property in Pottawattamie County, Iowa (the "Leased Land," as defined in the Ground Lease), on which Kinseth constructed and continues to operate a 140 room Holiday Inn franchise hotel (the "Hotel"). C. The parties amended the Ground Lease as to certain operational issues pursuant to a letter agreement dated February 14, 1996 (the "Letter Agreement"). Hereafter, the term "Ground Lease" incorporates the terms of such Letter Agreement. All other capitalized terms not otherwise defined in this Amendment shall have the meaning defined in the Ground Lease. D. The Ground Lease allows Kinseth to expand the Hotel by up to an additional thirty-five (35) rooms, up to a total of 175 rooms, upon the satisfaction of certain terms and conditions as described therein. E. Kinseth desires to expand the Hotel by up to fifty (50) rooms, for a total of up to 190 rooms, and has requested Ameristar's consent for such expansion. The expansion will require an increase in the footprint of the Leased Land under the Ground Lease. F. Ameristar is willing to consent to such expansion, including an increase in the Leased Land, subject to the terms and conditions as stated below. NOW THEREFORE, for and in consideration of the mutual covenants, conditions and promises contained herein, Ameristar and Kinseth agree to amend the Ground Lease as follows: 1. Consent to Expansion. Section 2.1 of the Ground Lease is hereby amended to allow an expansion of the Hotel by up to fifty (50) additional hotel rooms, for a total of up to one hundred ninety (190) hotel rooms, subject to the following conditions: a) Approval of Plans. Prior to any construction, Kinseth shall deliver to Ameristar the plans and specifications for the exterior and interior proposed expansion by Kinseth. In addition to hotel rooms, such plans and specifications call for approximately 3000 square feet in additional meeting space, public area, and support facilities such as kitchen space. The plans and specifications must also incorporate any landscaping which may be necessary to blend the expanded Hotel into the remainder of the Casino Property. The parties acknowledge that a color rendering of the expansion has been produced by Ameristar and that the appearance of the exterior shall be substantially similar to that shown in the rendering. The parties further acknowledge and agree that the quality and appearance of the interior of the expansion shall be at least equivalent to and complimentary of the existing hotel. Any objection by Ameristar to the proposed plans and specifications for the expansion shall be made in writing within ten (10) days following the delivery of said plans and specifications by Kinseth to Ameristar. In the event of any such objection, each party agrees to cooperate with the other party and use its best efforts to immediately resolve the dispute. b) Description of Additional Land. The description of any additional land beyond the current Leased Land ("Additional Land") must be described and shown in a survey conducted by a licensed surveyor in the State of Iowa. The term "Leased Land" under the Ground Lease shall be amended to include the Additional Land effective upon the commencement of construction of the Hotel expansion. A description of the current proposed description for the perimeter of the Leased Land to include the Additional Land is described and shown on Exhibit "A" hereto, which shall constitute the revised Exhibit A to the Ground Lease. The parties agree, to the extent necessary, to execute additional addenda or amendments to the Ground Lease and the Memorandum of Ground Lease to specifically identify the Additional Land. c) Gaming Commission and Other Approvals. Ameristar must obtain any necessary approvals for this Amendment from the Iowa State Gaming Commission, or its designee, and any other consents and approvals to the Amendment and the Hotel expansion from any governmental authorities having jurisdiction over Ameristar, the Ground Lease or the Casino Property, which approvals Ameristar will pursue with reasonable diligence. In addition, Ameristar must satisfactorily complete a background investigation of Kinseth pursuant to the Ameristar Casinos, Inc. Gaming Compliance Program as a condition to the effectiveness of this Amendment, which Ameristar will pursue with reasonable diligence. Kinseth agrees to cooperate fully with such investigation to the extent reasonably requested by Ameristar. d) Kinseth Financing. Kinseth must obtain a commitment for construction financing by a reputable lender acceptable to Ameristar, which commitment may be subject only to conditions and contingencies that are customarily required by construction lenders. Ameristar shall have reasonable discretion to determine whether such conditions are acceptable. Subject to the terms of Section 4.2 of the Ground Lease, Kinseth shall have the right to refinance its interest in the Ground Lease and the improvements on the Leased Land, and Ameristar will reasonably cooperate with Kinseth in its efforts to obtain such financing. e) Construction Contracts. Kinseth shall have entered into all necessary contracts for the construction of the expansion, and provided Ameristar with a true and correct copy of such contracts. f) Ameristar Lender Approval. The expansion, and this Amendment, must be approved in writing by Ameristar's mortgage lender, and any amendments to agreements previously obtained under Section 4.1 of the Ground Lease must be obtained and Ameristar will pursue such approvals and amendments with reasonable diligence. g) Time for Satisfaction of Conditions. Kinseth agrees to use reasonable diligence to satisfy all conditions on its part stated herein. If the conditions for performance relating to the expansion are not satisfied within 60 days from the date of this Amendment, either party shall have the right to terminate this Amendment upon written notice to the other party. h) Costs of Construction. All construction costs relating to the expansion from the curb back shall be Kinseth's sole responsibility. Costs for new curb and gutter, and costs relating to changes from the curb forward (e.g., redirection of drainage, removal of existing improvements including asphalt in parking areas) necessitated by the expansion shall be Ameristar's sole responsibility. In addition, Ameristar shall continue to maintain the access road between the hotel and the river. However, any necessary alterations or improvements to such access road shall be the sole responsibility of Kinseth. All other terms and conditions of the Ground Lease relating to construction standards, insurance, indemnification and compliance with laws during construction of the expansion shall remain in full force and effect. 2. Rent. a) Section 1.4 (a) of the Ground Lease is hereby amended such that upon the earlier of Substantial Completion of the expansion, or two hundred forty (240) days from the date of the commencement of construction, the annual base rental for the Leased Land shall increase from $60,000 to $70,000, payable at $5833.33 per month, with any initial partial month to be prorated. However, the threshold amount of Gross Sales for calculating percentage rents in Section 1.4(b) of the Ground Lease shall remain at $2,000,000, and the percentage figure shall remain at five percent (5%). b) The second sentence of Section 1.4(b) of the Ground Lease is hereby amended to read: The term "Gross Sales" means the total price charged for all services and goods rendered or sold at, in on or from the Leased Land by Kinseth, whether for cash or on a charge, credit, time basis or otherwise, without reserve or deduction for inability or failure to collect, including without limitation room charges and rentals, food and beverage revenues (reduced by the cost of food and beverage items), but specifically excluding merchandise sales, telephone and vending machine revenues, video rental revenues and other miscellaneous sales. 3. Franchise Rating. The first sentence of Section 2.3(a) of the Ground Lease is amended to read as follows: "So long as Ameristar has gaming operations on the Casino Property, the Building must be operated as a franchise of Holiday Inn, or such other franchisor that is acceptable to Ameristar subject to the terms of Section 3.8(m) below". 4. Use of Marks. Section 3.7 of the Ground Lease is hereby restated in its entirety as follows: a) License to Use Ameristar Service Marks i. Ameristar hereby grants to Kinseth a nonexclusive worldwide right and license to use the names and service marks listed on Exhibit B hereto and such other names and marks as Ameristar may add to Exhibit B from time to time upon written notice to Kinseth (the "Ameristar Marks") in connection with the promotion and advertising of the hotel located on the Leased Land during the term of this Lease, subject to the limitations described in this paragraph. All other use of the Ameristar Marks by Kinseth is prohibited. ii. Each and every use of the Ameristar Marks shall include the service mark notices, colors, designs, and proportionate sizes, shapes, and features all precisely as indicated by Ameristar, from time to time. Kinseth shall submit to Ameristar for approval all proposed uses of the Ameristar Marks prior to Kinseth's publication, distribution or use thereof. iii. The rights and licenses granted under this Lease permitting the use of the Ameristar Marks shall not be assignable or transferable by Kinseth in any manner whatsoever, nor shall Kinseth have the right to grant any sublicenses, except by prior written consent of Ameristar, which consent Ameristar may grant or withhold in its sole discretion. Any unauthorized assignment or transfer by Kinseth shall be voidable by Ameristar. iv. Ameristar specifically reserves the right in its sole discretion to use and without limitation to license others to use and to license the Ameristar Marks. Kinseth acknowledges the ownership rights of Ameristar Casinos, Inc. and the licensed rights of Ameristar in the Ameristar Marks, and further acknowledges that Kinseth will not challenge such ownership or licensed rights in the Ameristar Marks. b) License to Use Kinseth and Franchisor Service Marks i. Kinseth hereby grants to Ameristar a nonexclusive worldwide right and license to use the names and service marks, including to the extent permissible, its franchisor's Marks and designations, listed on Exhibit C hereto and such other names and marks as Kinseth may add to Exhibit C from time to time upon written notice to Ameristar (the "Kinseth Marks") in connection with the promotion and advertising of the Casino during the term of this Lease, subject to the limitations described herein. All other use of the Kinseth Marks by Ameristar is prohibited. ii. Each and every use of the Kinseth Marks shall include the service mark notices, colors, designs, and proportionate sizes, shapes and features all precisely as indicated by Kinseth, from time to time. iii. The rights and licenses granted under this Lease permitting the use of the Kinseth Marks shall not be assignable or transferable by Ameristar in any manner whatsoever, nor shall Ameristar have the right to grant any sublicenses, except by prior written consent of Kinseth. Any unauthorized assignment or transfer by Ameristar shall be voidable by Kinseth. iv. Kinseth specifically reserves the right in its sole discretion to use and without limitation to license others to use and to license the Kinseth Marks. Ameristar acknowledges the ownership rights of Kinseth and its franchisor in the Kinseth Marks and further acknowledges that Ameristar will not challenge such rights in the Kinseth Marks. 5. Change of Franchisor. Section 3.8(m) is hereby added to the Ground Lease as follows: (m) Change of Franchisor. Notwithstanding references in this Ground Lease to Holiday Inn as franchisor of Kinseth, Kinseth may change its franchisor, but only upon prior written consent of Ameristar, which consent shall not be unreasonably withheld provided that quality standards are not diminished and the terms of this Ground Lease can be met by Kinseth under the terms of any new franchise agreement entered into in connection with such change. 6. Taxes. Article VI of the Ground Lease states that Kinseth is solely responsible for all taxes and assessments levied on the Leased Land and the improvements thereon. However, because the Leased Land is owned by Ameristar and taxed as part of a larger tract, the Pottawattamie County Assessor's Office does not tax the Leased Land separately. Thus, Ameristar and Kinseth agree to negotiate as soon as practicable as to a mutually acceptable methodology for allocating responsibility for such taxes, and to reduce such agreement to a letter to be signed by both parties. 7. Signage. Ameristar grants to Kinseth the right to erect a sign on Ameristar's property at a location to be approved by Ameristar in its sole and absolute discretion. The costs of acquiring, erecting and maintaining the sign shall be borne by Kinseth. Ameristar agrees to grant to Kinseth all necessary easements allowing the existence of the sign and access to Kinseth to maintain the sign. The proposed design of the sign shall be submitted by Kinseth to Ameristar and it shall not be inconsistent or interfere with the Ameristar sign or obstruct or interfere with "view corridors" of any Ameristar facility. In the event of any dispute with respect to the proposed design or location of the sign, such party agrees to cooperate with the other party and use its best efforts to immediately resolve the dispute. 8. Group Rate Referrals. If Ameristar refers a block of rooms which are part of a larger group to Kinseth as a result of an Ameristar generated group sale or promotions (including promotions designed to increase occupancy by offering specific hotel packages to potential guests), Kinseth shall match the group rate offered by Ameristar for such group unless Kinseth's hotel is or is reasonably expected to be "fully occupied" (i.e., more than 95% full). If Ameristar is fully occupied and refers an entire group to Kinseth, Kinseth will match the group rate offered by Ameristar for other groups booked in the Ameristar hotel in the same time period, unless Kinseth's hotel is or is reasonably expected to be fully occupied. Notwithstanding the foregoing, Kinseth shall not be obligated to accept hotel guests referred to Kinseth by Ameristar if the room rate is less than 50% of Kinseth's rack rate on a requested date for standard room types (i.e., king or double room types). 9. Option To Purchase. So long as Kinseth is proceeding with the planning, development and construction of the expansion, Ameristar agrees not to exercise the option to purchase contained in Section 11.11 of the Ground Lease until the Substantial Completion of the expansion. Section 11.11 of the Ground Lease is hereby amended such that, upon the Substantial Completion of the expansion the option period shall re-commence for a ten-year period. The option price shall be the greater of (a) $12,000,000 or (b) the "mean" appraised value (representing 125% of the mean of the two closest appraised values during the first year of the re-commenced option period, and 115% of such mean during the remainder of the option period and otherwise), determined pursuant to the terms of the Ground Lease. 10. Confidentiality. In addition to the confidentiality provisions in Section 6 of the Letter Agreement, Kinseth agrees to reasonably cooperate with Ameristar so as to provide to Ameristar, upon its request, names and addresses of Kinseth's hotel guests so that Ameristar can market, by direct mail, its gaming and dining operations. Kinseth acknowledges that such information is critical to Ameristar so that proper attention can be given to preferred customers of Ameristar's casino. Ameristar recognizes that such information is proprietary and of great value to Kinseth. Ameristar acknowledges and agrees that such lists are to be kept separate form other information, and that Ameristar is not authorized to use such information to market hotel rooms to individuals on such list without Kinseth's prior written approval. 11. Marketing. In addition to the provisions regarding marketing outlined in Section 8 of the Letter Agreement, Kinseth agrees that it shall have the right to provide marketing materials for Ameristar's casino in its hotel rooms, but shall not provide such materials relating to other casino properties. Ameristar shall have the right to inspect Kinseth's facilities and hotel rooms at reasonable times to verify that no marketing materials for competing properties are being distributed. 12. Additional Hotel. It is contemplated that an additional hotel may be constructed on Ameristar's property by Kinseth or an entity controlled by Kinseth. In the event of such construction, both parties agree to cooperate to the extent necessary with such construction, provided that any new building does not detrimentally interfere with their current operations, including driveways, parking areas, ingress, egress and compliance with local codes. The construction plans of such other hotel will call for a covered, climate controlled breezeway connecting the hotels and/or the casino (the "Link"). Kinseth agrees to use its best efforts to seek its franchisor's approval for the Link, if such approval is necessary. Ameristar, Kinseth and the owner of the additional hotel shall share equally in repairs, maintenance and periodic replacement (e.g., carpets) of items in the corridor from the Link through the existing hotel. The cost of constructing and maintaining the Link shall be borne by the owner of the new hotel. Kinseth and Ameristar shall cooperate with respect to policing conduct in the Link. Kinseth agrees that any agreements as to the Link will be structured in such a way as to continue in full force and effect upon any sale of the existing hotel or the new hotel. 13. Assignment. Section 10.1 of the Ground Lease is hereby amended to read as follows: Ameristar may assign its interests in this Lease upon written notice to Kinseth and its Leasehold Lender. Except for assignment to a Leasehold Lender as contemplated under Article IV of this Lease, Kinseth may not assign this Lease or sublet its interest in the Leased Land without the prior written consent of Ameristar, which consent shall not be unreasonably withheld by Ameristar provided that the proposed assignee is: (a) of equal or greater financial capacity and net worth as Kinseth on the date of such assignment, but in any event having a financial capacity and net worth reasonable, under the circumstances at the time of the assignment, to require for a lessee under this Lease; (b) an experienced manager and/or operator of similar hotel properties; (c) a franchisee of the same hotel chain as Kinseth or of another franchisor approved pursuant to Sections 2.3(a) and 3.8(m) above; and (d) highly reputable as a hotel and business operator. A change of the manager of Kinseth (currently Kinseth Hotel Corporation), (to an entity other than one in which Bruce Kinseth, Les Kinseth, Linda Skinner and Gary Kinseth or their families maintain, directly or indirectly, voting and operating control) or the failure of Bruce Kinseth, Les Kinseth, Linda Skinner, and Gary Kinseth or their families to maintain, directly or indirectly, voting and operating control of the manager of Kinseth shall be considered an assignment for purposes of this section. An assignment of 50% or more of the membership interests in Kinseth in and of itself shall not be considered an assignment for purposes of this section. In the event Ameristar gives its consent for any assignment or subletting of this Lease, the assignee or subtenant shall assume in writing all of Kinseth's obligations and duties under this Lease and shall be subject to all of the terms of this Lease, and Ameristar shall be subject only to those obligations and shall enjoy such rights and privileges as are set forth in this Lease. Such sublease or assignment shall not relieve Kinseth from its liability under this Lease without Ameristar's written consent, which shall be in Ameristar's sole discretion. The provisions of this Section 10.1 are specifically subject to the provisions of Section 4.5 of this Lease, and in the event of any conflict, the provisions of Section 4.5 shall control. 14. Notices. Section 11.7 is amended such that the addresses for notices are as follows: If to Ameristar: Ameristar Casino Council Bluffs, Inc. Attention: General Manager 2200 River Road Council Bluffs, Iowa 51501 Fax: (712) 328-8882 with a copy to: Gordon R. Kanofsky, Esq. Saunders, Barnet, Goldman, Simons & Mosk 1901 Avenue of the Stars, Suite 850 Los Angeles, CA 90067-6078 Fax: (310) 553-2435 If to Kinseth: Council Bluffs Hotel Associates, L.C. Attention: Bruce Kinseth 2 Quail Creek Circle North Liberty, Iowa 52317 Fax: (319) 626-8350 with a copy to: Nicholas H. Roby, Esq. Davis, Brown, Koehn, Shors & Roberts, P.C. 666 Walnut Street, Suite 2500 Des Moines, Iowa 50309 Fax: (515) 243-0654 15. Continuing Effect. Except as specifically amended herein, the terms of the Ground Lease shall remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above. Ameristar: Ameristar Casino Council Bluffs, Inc., an Iowa corporation By: /s/ Thomas Steinbauer Its Vice President Kinseth: Council Bluffs Hotel Associates, L.C., an Iowa limited liability company By: /s/ Leslie B. Kinseth Its: Member EX-10 3 GROUND LEASE AGREEMENT GROUND LEASE AGREEMENT TABLE OF CONTENTS Page RECITALS 1 ARTICLE I 1 DESCRIPTION, TERM, AND RENTAL 1 1.1. Leased Land; Parking and Access Easements 1 1.2. Conditions to Performance 2 (a) Approval of Plans 2 (b) Gaming Commission and Other Approvals 2 (c) Kinseth Financing 2 (d) Kinseth Construction Contracts 2 (e) Ameristar Lender Approval 3 (f) Time For Satisfaction of Conditions 3 1.3. Term 3 1.4. Rental 3 (a) Base Rental 3 (b) Percentage Rental 3 (c) Place of Rental Payments 5 ARTICLE II 5 USE OF LEASED LAND AND TITLE TO IMPROVEMENTS 5 2.1. Use of Leased Land 5 (a) Plans and Specifications; Commencement of Construction 5 (b) Adjacent Hotel Pavilion 5 (c) Construction of Building 6 (d) Construction Standards 7 (e) Insurance During Construction 6 2.2. Compliance with Laws 6 2.3. Other Terms of Use 7 (a) Franchise and Rating 7 (b) Operations 7 (c) Restaurant 7 (d) Exclusive Right to Advertise 8 2.4. Title to Buildings 7 ARTICLE III 8 MAINTENANCE, REPAIRS, AND ALTERATIONS 8 3.1. General Maintenance and Repair 8 3.2. Parking; Snow Removal; Landscaping 9 3.3. Utilities 9 3.4. Governmental Authorities 10 3.5. Last Year of Term 10 3.6. Limitation on Ameristar's Responsibilities 10 3.7. Use of Marks 10 (a) License to Use Ameristar Service Marks 10 (b) License to Use Kinseth and Franchisor Service Marks 11 3.8 Operational Issues 12 (a) Reserving Rooms for Casino Functions 11 (b) Right of First Refusal 13 (c) Comping of Guests 12 (d) Integration of Kinseth's PMS System with Ameristar's POS System 12 (e) Referrals 12 (f) Group Rate Referrals 13 (g) Confidentiality 14 (h) Employee Parking 13 (i) Marketing Programs 13 (j) Use of Employee Facilities by Kinseth Employees 15 (k) Integration of Telephone System 14 (l) Food Service 14 (m) Change of Franchisor 14 ARTICLE IV 14 MORTGAGES AND LEASEHOLD LIENS 14 4.1. Encumbrance by Ameristar 14 4.2. Encumbrance by Kinseth 15 4.3. Certificates of Lease Status 17 4.4. Foreclosure of Leasehold Lien -- Option of Ameristar to Cure 16 4.5. Leasehold Lender Protection Provisions 17 (a) Notice to Ameristar 17 (b) Definitions 19 (c) Consent of Leasehold Lender Required 18 (d) Default Notices 18 (e) Notice to Leasehold Lender 20 (f) Procedure on Default 19 (g) New Lease 22 (h) New Lease Priorities 23 (i) Leasehold Lender Need Not Cure Specified Defaults 23 (j) Eminent Domain 25 (k) Casualty Loss 24 (l) No Merger 24 (m) Future Amendments 24 (n) Estoppel Certificate 26 (o) Notices 25 (p) Erroneous Payments 25 (q) Ameristar Pay-Off or Assumption 25 ARTICLE V 27 INSURANCE AND INDEMNIFICATION 27 5.1. Duty to Insure 26 5.2. Proceeds of Insurance 26 5.3. Public Liability Insurance 26 5.4. Policy Form; Content; Insurer 26 5.5. Indemnification 27 (a) Defense and Payment of Claims 27 (b) Mechanics' Liens 27 (c) Resisting Claims 29 ARTICLE VI 28 TAXES, ASSESSMENTS, LIENS, AND ENCUMBRANCES 28 ARTICLE VII 29 CONDEMNATION 29 7.1. Definitions 29 7.2. Parties' Rights and Obligations to be Governed by Lease 29 7.3. Total Taking 29 7.4. Partial Taking 29 7.5. Restoration of Improvements 30 (a) Restoration of Improvements 30 (b) Abatement or Reduction of Rent 30 7.6. Award Distribution 30 ARTICLE VIII 30 DEFAULT PROVISIONS; REMEDIES; ATTORNEYS' FEES 30 8.1. Default by Kinseth 30 (a) Rent or Other Payments 30 (b) Other Covenants or Conditions 31 (c) Abandonment 31 (d) Insolvency 31 (i) Appointment of Receiver 31 (ii) Voluntary Bankruptcy 31 (iii)Assignment for Creditors 31 (iv) Reorganization or Arrangement 31 (v) Involuntary Petition 31 8.2. Remedies 31 (a) Re-entry 32 (b) Suit for Sums Due 32 (c) Specific Performance 32 (d) Reletting 32 (e) Collection of Rents 32 (f) Termination 32 (g) Terminate Kinseth With Payoff or Assumption of Leasehold Lien 33 8.3. Cumulative Remedies 34 8.4. Attorneys' Fees 34 ARTICLE IX 34 COVENANTS AND WARRANTIES 34 9.1. No Warranties by Ameristar 34 9.2. Right to Execute 34 9.3. Peaceful Enjoyment 34 ARTICLE X 35 ASSIGNMENT, SUBLETTING AND SALE 35 10.1. Assignment 35 ARTICLE XI 35 MISCELLANEOUS PROVISIONS 35 11.1. Inspection by Ameristar 36 11.2. Negation of Partnership 36 11.3. Controlling Law 36 11.4. Surrender of Possession 36 11.5. Successors 36 11.6. Headings 36 11.7. Notices 36 11.8. Recording 37 11.9. Competing Hotel 37 11.10.Right of First Offer 37 11.11.Option to Purchase 37 11.13.Signage 38 EXHIBIT A -- Legal Description EXHIBIT A-1 -- Site Plan EXHIBIT B -- Ameristar Marks EXHIBIT C -- Kinseth and Franchisor Marks EXHIBIT D -- Memorandum of Lease GROUND LEASE AGREEMENT THIS GROUND LEASE AGREEMENT is made and entered into as of the 28th day of May, 1999, by and between Ameristar Casino Council Bluffs, Inc., an Iowa corporation, with an address of 2200 River Road, Council Bluffs, Iowa 51501 ("Ameristar"), and River Road Hotel Associates, L.C., an Iowa limited liability company, with an address of 2 Quail Creek Circle, North Liberty, Iowa 52241 ("Kinseth"). RECITALS A. Ameristar owns certain real property located in Council Bluffs, Iowa, on which it operates a hotel and a gaming establishment (the "Casino Property"). B. Ameristar and Council Bluffs Hotel Associates, L.C., an Iowa limited liability company that is an affiliate of Kinseth, have previously entered into that certain Amended and Restated Ground Lease Agreement dated as of September 7, 1995, as amended to date (the "1995 Ground Lease") with respect to a portion of the Casino Property, consisting of approximately 0.786 acres on which it operates a Holiday Inn hotel (sometimes referred to as the "adjacent hotel"). C. Ameristar wishes to lease to Kinseth another portion of the Casino Property, which portion consists of approximately 0.426 of an acre for the construction of another hotel of not less than 96 rooms, and desires to impose certain restrictions on the use of such parcel of real property, and Kinseth wishes to lease said portion of the Casino Property for such purpose, subject to Ameristar's restrictions. NOW, THEREFORE, for and in consideration of the mutual covenants, conditions and promises contained herein, Ameristar and Kinseth agree as follows: ARTICLE I DESCRIPTION, TERM, AND RENTAL 1.1 LEASED LAND; PARKING AND ACCESS EASEMENTS. On completion, satisfaction or written waiver of all conditions precedent set forth in this Lease, Ameristar hereby leases to Kinseth and Kinseth hereby leases from Ameristar the real property more particularly described in Exhibit "A," attached hereto and made a part hereof, and as generally set forth and located on the Site Plan attached as Exhibit "A-1" hereto and made a part hereof, situated in Council Bluffs, Pottawattamie County, Iowa (the "Leased Land") for the purpose of building and maintaining a hotel on the Leased Land in accordance with Section 2.1 below (the "Building"), excepting and reserving to Ameristar and to Ameristar's successors, assigns, and invitees a perpetual, nonexclusive easement for vehicular and pedestrian ingress and egress and for parking of vehicles upon and across roads, driveways, sidewalks, and parking areas on the Leased Land, as the same may exist from time to time. Ameristar hereby grants to Kinseth and to Kinseth's successors, permitted assigns, and invitees for the term hereof, a nonexclusive easement for vehicular and pedestrian ingress and egress to and from nearby public streets and roadways upon and across roads, driveways, and sidewalks upon Ameristar's adjacent and surrounding lands as the same may exist from time to time, and for the parking of vehicles upon nonreserved parking areas located from time to time upon such lands. Prior to Kinseth's construction of the Building, Ameristar may make minor adjustments to the precise location of the Leased Land and Building, provided that any such adjustment shall not materially prejudice Kinseth. Ameristar agrees to make available to Kinseth nonexclusive parking easement rights on parking spaces on the Casino Property sufficient to provide the Building with a parking ratio of not less than 1.1 space per hotel room. The nonexclusive easements reserved and granted herein as set forth on the proposed Site Plan attached hereto as Exhibit A-1 , shall be set forth in a recorded document which shall be recorded simultaneously with the memorandum of Lease referred to in Section 11.8 below, and may be moved or relocated by Ameristar, provided that such easements shall not be moved, modified or restricted in a manner which will materially and unreasonably interfere with Kinseth's operation of a hotel in the Building. Ameristar will cause any mortgagee of its interest in the Leased Land to join in the granting of such easements in favor of Kinseth, to enter into a nondisturbance agreement, or to subordinate its lien to such easements, to the extent necessary to assure that such easements would survive a foreclosure by any mortgagee of Ameristar. 1.2 CONDITIONS TO PERFORMANCE. The following shall be conditions precedent that must be completed or satisfied before the obligations of the parties under this Lease shall be effective: (A) APPROVAL OF PLANS. This Lease is conditioned on the review and approval by Ameristar of the plans and specifications for the construction of the Building by Kinseth, the exterior and interior appearance of Kinseth's proposed Building, and Kinseth's proposed contractor or construction manager. Any objection by Ameristar to the proposed plans and specifications shall be made in writing within ten (10) days following the delivery of said plans and specifications by Kinseth to Ameristar. In the event of any such objection, each party agrees to cooperate with the other party and to use its best efforts to immediately resolve the dispute. (B) GAMING COMMISSION AND OTHER APPROVALS. Ameristar shall have obtained all necessary approvals of this Lease from the Iowa Racing and Gaming Commission, or its designee, and any other consents and approvals to the performance of Ameristar's obligations under the Lease which may be required from any governmental authorities having jurisdiction over Ameristar, the Lease, or the Casino Property which approvals Ameristar will pursue with reasonable diligence. In addition, Ameristar must satisfactorily complete a background investigation of Kinseth pursuant to the Ameristar Casinos, Inc. Gaming Compliance Program as a condition to the effectiveness of this Lease, which Ameristar will pursue with reasonable diligence. Kinseth agrees to cooperate fully with such investigation to the extent reasonably requested by Ameristar. (C) KINSETH FINANCING. As a condition to the effectiveness of this Lease, Kinseth must obtain financing on or before September 1, 1999 for the construction of the Building, which financing Kinseth agrees to pursue with reasonable diligence. Immediately upon obtaining such commitment, Kinseth shall provide to Ameristar a copy of a written commitment for such financing issued by a reputable lender acceptable to Ameristar, which commitment must be subject only to conditions and contingencies that are customarily required by construction lenders in the issuance of such commitments, with Ameristar having reasonable discretion to determine whether such conditions or contingencies are acceptable. (D) KINSETH CONSTRUCTION CONTRACTS. Kinseth shall have entered into all necessary contracts for the construction of the Building, and provided Ameristar with a true and correct copy of such contracts, on or before September 1, 1999. (E) AMERISTAR LENDER APPROVAL. The Lease shall have been approved in writing by Ameristar's mortgage lender and any agreements from such lender required by Section 4.1 shall have been obtained. (F) TIME FOR SATISFACTION OF CONDITIONS. If these conditions to performance are not satisfied within ninety (90) days from the date this Lease is executed or such other earlier or later date as is provided herein for satisfaction of such condition, either party shall have the right to terminate this Lease upon written notice to the other party. 1.3 TERM. The term of this Lease shall be for a period of fifty (50) years (the "Term"), commencing on the first to occur of July 1, 1999 or the date that Kinseth sends written notice that it is prepared to commence construction on the Leased Land, or the date Kinseth actually commences such construction (the "Commencement Date") and terminating on the fiftieth (50th) anniversary date of the Commencement Date, unless sooner terminated pursuant to the provisions hereof. 1.4 RENTAL. (A) BASE RENTAL. Kinseth agrees to pay an annual base rental to Ameristar during the Term for the Leased Land and for the rights and privileges granted Kinseth under this Lease, at the time and place and in the manner specified herein, in the amount of Seventy Five Thousand Dollars ($75,000) (the "Base Rental"), payable Six Thousand Two Hundred Fifty Dollars ($6,250) per month in advance, with the initial payment to be made on the Rental Commencement Date. The "Rental Commencement Date" shall be the earlier of the date on which the Building is substantially completed or three hundred sixty-five (365) days after the Commencement Date. The amount of the initial Base Rental payment due on the Rental Commencement Date shall be pro-rated, if necessary, for the number of days between The Rental Commencement Date and the Commencement Date. Thereafter, Base Rental shall be paid monthly in advance. "Substantial Completion" shall mean that the Building is ready for occupancy and use as a hotel as evidenced by a Certificate of Occupancy for the Building or other like document issued by the appropriate governmental authority, and any franchisor or licensor's requirements for opening of the hotel have been met. In the event that during the initial fifteen (15) years of the Term, Ameristar ceases to operate a riverboat gaming operation based from the Casino Property, then for such portion of said fifteen (15) year period when gaming is not operated, there shall be a moratorium, in Base Rentals otherwise payable; provided, however, that during such moratorium if Ameristar elects at its option to cease to maintain and repair its adjacent Casino Property, Kinseth may, at its option, assume responsibility for all maintenance and repairs of the entrances, exits, parking areas and landscaping on the Casino Property to the extent Kinseth deems maintenance and repairs desirable in connection with the operation of Kinseth's Building. (B) PERCENTAGE RENTAL. In addition to the Base Rental, Kinseth shall pay to Ameristar a percentage rent (the "Percentage Rent") equal to six percent (6%) of the annual "Gross Sales" with respect to the Leased Land that exceeds the amount of One Million Two Hundred Fifty Thousand Dollars ($1,250,000). The term "Gross Sales" means the total price charged for all services and goods rendered or sold at, in, on or from the Leased Land by Kinseth, whether for cash or on a charge, credit, time basis or otherwise, without reserve or deduction for inability or failure to collect, including without limitation room charges and rentals, food and beverage revenues (reduced by the cost of catered food and beverage items), but specifically excluding merchandise sales, telephone and vending machine revenues, video rental revenues, and other miscellaneous sales. Gross Sales shall also include all of Kinseth's receipts, revenues or rights to payment from subtenants, licensees and concessionaires. There shall not be included, or if included in the calculation of Gross Sales, there shall be deducted, as the case may be, provided that specific record is made at the time of each transaction: (i) the actual net amount of refunds, credits or allowances actually made or allowed by Kinseth in accordance with reasonable business practices upon transactions included within Gross Sales (provided that any credit, service or item given in return shall be included in Gross Sales when used); and (ii) sales, room or occupancy taxes which are separately added by Kinseth to room rates or sales prices, paid directly by the customer, collected by Kinseth, and actually paid over by Kinseth to the governmental taxing authority, but not deducting from Gross Sales any other tax of any nature. The "Gross Sales" and the resulting "Percentage Rent" shall be calculated and paid quarterly, and reconciled on an annual basis as of the end of each fiscal year for Kinseth. Kinseth shall provide within thirty (30) days after each calendar quarter and fiscal year end a written calculation of the Gross Sales during that quarter or fiscal year and the amount of Percentage Rent due for that quarter or year. The Percentage Rent shall be paid no later than fifteen (15) days after the expiration of that thirty (30) day period. If the annual reconciliation indicates that Kinseth has overpaid Percentage Rent, Ameristar shall promptly refund the amount of such overpayment upon receipt of the appropriate request, statement, and supporting documentation. If Kinseth fails to deliver any statement of Gross Sales when due and does not cure such failure within ten (10) days after the written notice from Ameristar, in addition to all of Ameristar's other rights and remedies, (i) Kinseth shall pay to Ameristar, as additional rent, an amount equal to One Hundred Dollars ($100.00) for each day such statement is overdue after the aforesaid ten (10) day period; and (ii) upon not less than two (2) days' prior notice to Kinseth, Ameristar shall have the right to cause an audit of all books, records and bank accounts of Kinseth pertaining to the business conducted on the Leased Land and to prepare the statements that Kinseth has failed to deliver. The statements prepared by Ameristar shall be conclusive on Kinseth, and Kinseth shall promptly pay all expenses incurred in the preparation of such statements and all sums, if any, as may be shown by such audit to be due as Percentage Rent. The business of Kinseth shall be operated so that a duplicate dated sales slip, dated invoice, register receipt or similar evidence of payment, serially numbered, shall be issued with each transaction resulting in Gross Sales or exclusions therefrom. Kinseth shall keep a general ledger, sales receipts, sales records and other supporting documentation for at least three (3) years after the end of the period to which they pertain. All such documentation shall disclose in detail all information required to permit Ameristar to verify Kinseth's Gross Sales and conform to, and be in accordance with, generally accepted accounting principles consistently applied. Ameristar shall have the right at any time during normal business hours after not less than three (3) days' prior written notice to Kinseth, to cause an examination or complete audit to be made of the Kinseth's documentation. If any audit or examination shall disclose that any statement of Gross Sales provided to Ameristar understates Gross Sales for the reporting period (i) Kinseth shall pay to Ameristar upon demand the resultant deficiency in Percentage Rent, together with interest at a variable rate equal to two percent (2%) per annum above the "prime rate" announced by Wells Fargo Bank of Nevada, and (ii) if the shortfall in Percentage Rent is greater than five percent (5%) of the total Percentage Rents shown by that audit to be owed for that period, Kinseth shall pay the costs of the audit and examination, including travel expenses. In calculating the Percentage Rent that is due for the period from the Rental Commencement Date and the last day of that fiscal year, the $1,250,000 threshold for Percentage Rent calculation shall be pro-rated for the number of days between those two dates. As set forth in Section 4.5 below, Ameristar agrees that payment of Percentage Rent by Kinseth shall be subordinated to payment of debt service payments owed by Kinseth to an Institutional Lender holding a first position Leasehold Lien, to the extent Kinseth's net operating revenues are not sufficient to pay both. In such event Percentage Rent shall be deferred as to Kinseth, and shall be subsequently payable by Kinseth, but not by any Leasehold Lender and its successors and assigns, in the event Kinseth subsequently generates sufficient operating revenues over and above debt service payments to repay deferred Percentage Rent owed to Ameristar on an cumulative basis. The foregoing provision shall not be construed to require the refunding by Ameristar of any rent paid by Kinseth to Ameristar. (C) PLACE OF RENTAL PAYMENTS. All payments of rental required to be paid to Ameristar under the terms of this Lease shall be made in lawful money of the United States, free from all claims, demands, deductions, abatements, set-offs, prior notices, or counterclaims of any kind or character, and shall be payable at Ameristar's above address or at such other place or places as may from time to time be designated by Ameristar by written notice given to Kinseth. ARTICLE II USE OF LEASED LAND AND TITLE TO IMPROVEMENTS 2.1 USE OF LEASED LAND. So long as Ameristar shall be engaged in gaming operations on the Casino Property, Kinseth shall use the Leased Land solely for the purpose of constructing, maintaining, and operating a hotel with not less than 96 rooms (the "Building" or the "Hotel"). The Building shall be constructed and maintained at Kinseth's sole risk and expense in accordance with the following terms: (A) PLANS AND SPECIFICATIONS; COMMENCEMENT OF CONSTRUCTION. Kinseth shall submit construction plans and specifications for the Building (including signage) to Ameristar for Ameristar's review and approval on or before July 1, 1999, and on an ongoing basis throughout the term of this Lease with respect to any changes, modifications, or new construction, and Kinseth shall commence construction of the Building on the earlier of September 1, 1999 or thirty (30) days after Ameristar has approved such plans and specifications. (B) ADJACENT HOTEL PAVILION. Kinseth agrees to connect the Building to the adjacent hotel and/or pavilion and casino with a covered, climate controlled breezeway. So long as Ameristar is engaged in a gaming operation in connection with the Casino Property, and subject to the nonwaivable requirements of Kinseth's hotel franchisor or licensor, the exterior and interior finishes and decor of the Building and of common areas within the Building shall be in harmony with the finishes and decor of the adjacent hotel and/or casino. The foregoing provision shall be deemed to apply to the initial finishes and decor of the casino, and subsequent to the initial opening the hotel shall not be required to change finishes and decor merely because the casino changes its theme, finishes or decor. Kinseth and Ameristar shall cooperate with respect to security in the breezeway. Kinseth shall otherwise bear the responsibility and security for all of the Leased Land and the Building. (C) CONSTRUCTION OF BUILDING . Once construction is begun, Kinseth shall, with reasonable diligence, prosecute to completion all construction of improvements, additions, or alterations of the Building required to be constructed by Kinseth, and in any event shall have substantially completed construction of the Building three hundred sixty-five (365) days after the Commencement Date. The completion deadline shall be extended for a time period commensurate with the existence of any "force majeure," which prevents or hinders ongoing construction activities such as flood, storm, strikes, or similar occurrences outside Kinseth's control; provided, however, that in no event shall such completion deadline be extended longer than six (6) months. Ameristar shall have sole control of all design and construction decisions relating to the levee, roadways, driveways, entrances and exits on the Casino Property. Ameristar agrees at its expense (to the extent not otherwise provided by the relevant public or private utility companies) to stub basic utilities including water, sewer, electricity and telephone to within one hundred (100) feet of the Leased Land and to provide preliminary site grading on the Leased Land sufficient to bring the site to "rough grade." Ameristar shall be responsible for costs associated with ingress, egress, striping of parking areas, moving storm sewers, water retention, etc. As a general presumption, Ameristar will be responsible for costs related to items outside the "building envelope," which shall be approximately the "front of the curb." Kinseth will indemnify Ameristar, and hold Ameristar harmless from, any and all damage to Ameristar's property, including without limitation the parking lot, and from any costs, claims and liabilities asserted against Ameristar, as a result of Kinseth's construction activities. (D) CONSTRUCTION STANDARDS. All work shall be performed in a good and workmanlike manner with due regard for and without undue interference with Ameristar's use of the adjacent real property, shall comply with plans and specifications approved by Ameristar, and shall comply with all governmental permits, laws, ordinances, and regulations. All costs of construction shall be borne by Kinseth. Construction, staging and materials storage shall be restricted to certain areas as designated by Ameristar. (E) INSURANCE DURING CONSTRUCTION. Kinseth shall maintain, at Kinseth's sole expense, a policy of builder's risk insurance in effect with respect to the construction of the Building until construction has been completed. Policy limits must be approved by Ameristar, and shall be commensurate with the value of the Building and the nature of Kinseth's construction activities. Ameristar shall be named as an additional insured under the policy. 2.2 COMPLIANCE WITH LAWS. Kinseth shall not bring or cause or permit to be brought or kept on the Leased Land anything which will in any way conflict with any law, ordinance, rule, or regulation, or commit or suffer to be committed any waste upon the Leased Land, or use or allow the Leased Land or the Building to be used for any unlawful purpose. Kinseth agrees that throughout the terms of this Lease Kinseth shall fully comply with all rules, regulations and laws of any government authority having jurisdiction over the Leased Land or the Building or Kinseth, including without limitation, those relating to environmental quality, hazardous waste or hazardous substances. 2.3 OTHER TERMS OF USE. (A) FRANCHISE AND RATING. So long as Ameristar has gaming operations on the Casino Property, the Building must be operated as a franchise of Hampton Inn, or such other franchisor that is acceptable to Ameristar subject to the terms of Section 3.8 (m) below. Kinseth must obtain and maintain a "3 Diamond" or equivalent designation from the American Automobile Association or such other designation and rating agency acceptable to Ameristar with respect to the operation of the Building as a limited service hotel. All expenses associated with the operation of the Leased Land shall be borne by Kinseth. (B) OPERATIONS. So long as Ameristar has gaming operations on the Casino Property, the Building shall be operated continuously during the Term as a first class hotel, meeting the highest of standards set by the franchisor and the industry. (C) RESTAURANT. So long as Ameristar shall be operating a restaurant on the Casino Property, the Building cannot include a restaurant or coffee shop without the prior written consent of Ameristar which can be refused in Ameristar's sole discretion; however, Kinseth shall be permitted to provide a "continental breakfast" for its patrons between the hours of 6:30 a.m. and 10:00 a.m., may obtain its own liquor license, may bring in catered food and drink in conjunction with its rental of rooms for conventions and business meetings, and Kinseth may sell nonperishable snack products in its gift shop or through vending machines, and may operate a pantry-type warming station for service of such items. (D) EXCLUSIVE RIGHT TO ADVERTISE. During the Term and so long as Ameristar or its successors operates a casino on the Casino Property, Kinseth agrees that it shall not advertise or permit another casino to place literature or other material promoting such other casino on the Leased Land or in the Building. 2.4 TITLE TO BUILDINGS. Title to the Building and appurtenances thereto on the Leased Land and all other improvements and fixtures constructed or placed on the Leased Land by Kinseth in conjunction with the construction, use or occupancy of the Building shall be and remain in Kinseth or such tenants during the Term unless otherwise approved or requested by Ameristar. Kinseth shall have the right to make alterations, changes, and repairs as provided herein. Title to the Building and all such other buildings, permanent improvements, and fixtures on the Leased Land shall automatically revert to Ameristar upon the expiration of the Term or other termination of this Lease. Kinseth covenants and agrees that upon expiration of the Term or other termination of this Lease it will yield up and deliver the Leased Land with any such buildings, permanent improvements, and fixtures upon the Leased Land to Ameristar or its successor in interest at such time free and clear of all liens and encumbrances of any kind, subject in the event such termination results from a default by Kinseth, to the rights of a Leasehold Lender to obtain a New Lease under the terms of Section 4.5(g) below. ARTICLE III MAINTENANCE, REPAIRS, AND ALTERATIONS 3.1 GENERAL MAINTENANCE AND REPAIR. Throughout the Term, Kinseth shall, at Kinseth's sole cost and expense, maintain the Building and any other improvements constructed on the Leased Land in first class condition and repair and in accordance with all applicable laws, rules, ordinances, orders, and regulations of (i) federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials, (ii) the insurance underwriting board or insurance inspection bureau having or claiming jurisdiction, (iii) all insurance companies insuring all or any part of the Building or other improvements on the Leased Land, (iv) the standards of comparable hotels in comparable markets and locations, as may be in effect from time to time, and (v) Kinseth's franchisor and the "3 Diamond" or equivalent designation from the American Automobile Association for limited service hotels or other such designation and rating agency acceptable to Ameristar. Kinseth shall manage and operate the Building in a first class and professional manner. If, at any time, Ameristar concludes, in its sole discretion, that the condition of the Building or the guest services provided by Kinseth do not meet the criteria listed in the preceding paragraph, Ameristar will give notice to Kinseth and shall state with as much specificity as possible the reasons for Ameristar's dissatisfaction. Ameristar's conclusion may be based, among other things, on the results of inspections conducted by Kinseth's franchisor, or the failure of Kinseth's franchisor to conduct such inspections. Thereafter, Kinseth shall have not less than ninety (90) days to cure any defects or faults alleged by Ameristar. If Ameristar is still dissatisfied with the inspection report from Kinseth's franchisor, or the failure of such franchisor to inspect, Ameristar may then request that the Building and the hotel be inspected by a mutually agreeable independent inspector, it being agreed that Richey International is acceptable, who will conduct an inspection using its standards for the "3 Diamond" hotels report, as certified by the American Automobile Association or a "3 star" hotels' report as certified by Mobil. The independent inspector shall then give a rating based on its inspection, exclusive of administrative matters and areas completely outside of Kinseth's control, as defined above, and shall determine whether the Building and the hotel are in compliance with 90% of the evaluation criteria for receiving a "3 Diamond" or "3 Star" rating. Kinseth shall be deemed to have failed the inspection if the rating is less than 90% compliant, provided that Kinseth will not be penalized for areas that are Ameristar's responsibility, such as maintaining all public areas and roadways, landscaping (except within the Leased Land) and parking areas. If Richey International is no longer in the business of inspecting and rating hotels, the parties shall mutually select another company to provide such services. If the parties cannot agree on such other party, but if they can agree on a person who is in the hotel business, then that third person shall select the inspection company. If the parties cannot agree on either an inspection company or a third person to select an inspection company, each party shall promptly choose an independent arbitrator, which two arbitrators shall in turn name a third arbitrator, and a majority of said arbitrators shall select an inspection company. Once Ameristar has requested that Richey International or another agreed upon independent inspector make inspections hereunder, such inspector shall make all future inspections for purposes of this Section 3.1, unless Ameristar gives notice to Kinseth that it will once again accept the rating and inspection of Kinseth's franchisor. Ameristar shall pay all costs of Richey International or the inspector chosen in lieu of Richey International. Kinseth shall pay all costs of the inspection conducted by its franchisor. If Kinseth fails to maintain a 90% compliance rating, whether such inspection is conducted by Kinseth's franchisor or another independent inspector, for three (3) consecutive inspections, but which time period shall in no event be fewer than twelve (12) months, Kinseth shall have three (3) months to cure any defect or fault. Thereafter a special inspection shall be ordered. If either such inspection or the next subsequent inspection shows that Kinseth has again failed to maintain a 90% compliance rating, Kinseth shall be in default under this Lease and Ameristar may terminate the Lease, subject to the provisions contained herein pertaining to Kinseth's Leasehold Lender. Ameristar covenants and agrees that so long as it is engaged in the conduct of a gaming operation in connection with the Casino Property, Ameristar will keep its public areas up to the standard described by the American Automobile Association as necessary to obtain a "3 Diamond" award. Except as provided in Section 3.5, in the event of damage or destruction of all or any part of the Building or other improvements, Kinseth shall promptly and diligently repair, restore, and replace improvements as required to comply with the preceding paragraph, or remedy all damage to or destruction of all or any part of the improvements. After completion of the repair, restoration, or replacement, the improvements on the Leased Land shall be at least equal in fair market value, quality, and use to the condition of the improvements before the damage or destruction occurred, except as expressly provided to the contrary in this Lease. Nothing in this Section defining the general duty of maintenance and repair shall be construed as limiting any specific right given elsewhere in this Lease to alter, modify, demolish, remove, or replace any improvement, or as limiting provisions relating to condemnation, or to damage or destruction during the final year or years of the Term. No deprivation, impairment, or limitation on use resulting from any event or work contemplated by this Section shall entitle Kinseth to any offset, abatement, or reduction in rent or to any termination or extension of the Term. 3.2 PARKING; SNOW REMOVAL; LANDSCAPING. Ameristar shall maintain the parking areas, and provide lighting for the parking areas on the Casino Property during the Term. Ameristar shall also keep parking areas and sidewalks and roadways giving access to the Building free and clear of ice and snow. Kinseth shall be responsible for installing and maintaining all landscaping on the Leased Land and shall provide for garbage removal. All landscaping must be approved by Ameristar. 3.3 UTILITIES. The cost of all utility services required for or provided to the Building or the Leased Land shall be borne by Kinseth, except that the cost of lighting parking areas on adjacent property owned by Ameristar shall be borne by Ameristar. 3.4 GOVERNMENTAL AUTHORITIES. During the Term, Kinseth shall promptly comply with all applicable laws, regulations, ordinances, requirements, and orders of governmental authorities relating to the Leased Land and any improvements thereon, including but not limited to the making, at its sole expense, of any installation, alteration, modification, change, or repair, whether structural or otherwise; provided, however, that nothing in this Section shall be construed to eliminate Kinseth's right to benefit from any exemption or "grandfather" provision, or its equivalent, or to challenge the validity, applicability, or interpretation of any such law, regulation, ordinance, requirement, or order and to defer compliance until the challenge is completed. 3.5 LAST YEAR OF TERM. Anything herein to the contrary notwithstanding, Kinseth shall not have the right during the last 365 days of the Term to alter, remove or demolish, in whole or in part, any buildings, structures, or other improvements which exist upon the Leased Land 365 days prior to the end of the Term, except with the prior written consent of Ameristar. 3.6 LIMITATION ON AMERISTAR'S RESPONSIBILITIES. This Lease shall not be construed to require Ameristar, under any circumstances, to furnish any services or facilities or to make any improvements, repairs, or alterations of any kind in or on the Leased Land except as expressly provided herein. Ameristar's election to perform any obligation of Kinseth on Kinseth's failure or refusal to do so shall not constitute a waiver of any right or remedy for Kinseth's default, and Kinseth shall promptly reimburse, defend, and indemnify Ameristar against all liability, loss, cost, and expense arising from it. 3.7 USE OF MARKS. (A) LICENSE TO USE AMERISTAR SERVICE MARKS. i. Ameristar hereby grants to Kinseth a nonexclusive worldwide right and license to use the names and service marks listed on Exhibit B hereto and such other names and marks as Ameristar may add to Exhibit B from time to time upon written notice to Kinseth (the "Ameristar Marks") in connection with the promotion and advertising of the hotel located on the Leased Land during the term of this Lease, subject to the limitations described in this paragraph. All other use of the Ameristar Marks by Kinseth is prohibited. ii. Each and every use of the Ameristar Marks shall include the service mark notices, colors, designs, and proportionate sizes, shapes, and features all precisely as indicated by Ameristar, from time to time. Kinseth shall submit to Ameristar for approval all proposed uses of the Ameristar Marks prior to Kinseth's publication, distribution or use thereof. iii. The rights and licenses granted under this Lease permitting the use of the Ameristar Marks shall not be assignable or transferable by Kinseth in any manner whatsoever, nor shall Kinseth have the right to grant any sublicenses, except by prior written consent of Ameristar, which consent Ameristar may grant or withhold in its sole discretion. Any unauthorized assignment or transfer by Kinseth shall be voidable by Ameristar. iv. Ameristar specifically reserves the right in its sole discretion to use and without limitation to license others to use and to license the Ameristar Marks. Kinseth acknowledges the ownership rights of Ameristar Casinos, Inc. and the licensed rights of Ameristar in the Ameristar Marks, and further acknowledges that Kinseth will not challenge such ownership or licensed rights in the Ameristar Marks. (B) LICENSE TO USE KINSETH AND FRANCHISOR SERVICE MARKS. i. Kinseth hereby grants to Ameristar a nonexclusive worldwide right and license to use the names and service marks, including to the extent permissible, its franchisor's Marks and designations, listed on Exhibit C hereto and such other names and marks as Kinseth may add to Exhibit C from time to time upon written notice to Ameristar (the "Kinseth Marks") in connection with the promotion and advertising of the Casino during the term of this Lease, subject to the limitations described herein. All other use of the Kinseth Marks by Ameristar is prohibited. ii. Each and every use of the Kinseth Marks shall include the service mark notices, colors, designs, and proportionate sizes, shapes and features all precisely as indicated by Kinseth, from time to time. iii. The rights and licenses granted under this Lease permitting the use of the Kinseth Marks shall not be assignable or transferable by Ameristar in any manner whatsoever, nor shall Ameristar have the right to grant any sublicenses, except by prior written consent of Kinseth. Any unauthorized assignment or transfer by Ameristar shall be voidable by Kinseth. iv. Kinseth specifically reserves the right in its sole discretion to use and without limitation to license others to use and to license the Kinseth Marks. Ameristar acknowledges the ownership rights of Kinseth and its franchisor in the Kinseth Marks and further acknowledges that Ameristar will not challenge such rights in the Kinseth Marks. 3.8 OPERATIONAL ISSUES. (A) RESERVING ROOMS FOR CASINO FUNCTIONS. Ameristar may from time to time, and at its option, reserve up to 60 rooms in the Hotel in advance of the date of actual use, but in no event may Ameristar reserve more rooms for any date than that number not previously reserved by other guests. The rate charged by Kinseth for such rooms shall be the lowest available rate for the date(s) of the reservation, including package plan rates. If the rate for the dates reserved have not yet been set, Kinseth shall advise Ameristar of the rate as soon as it is available. Ameristar shall advise Kinseth of the identity of the person who shall occupy a room. Except as otherwise provided herein, Kinseth shall collect its charges and fees directly from that guest. If the person is a "no-show", and if Kinseth in fact denies a person a room that night because there are no vacancies, Ameristar will pay Kinseth the cost of that room. Ameristar shall be responsible for the payment of the charge for rooms reserved by it, provided, however, that Ameristar shall not be charged for any rooms under the following circumstances: i. A guest designated by Ameristar actually uses the room, in which event Kinseth shall collect all fees and charges from the guest unless Ameristar has advised Kinseth that Ameristar intends to pay for such room; ii. A guest designated by Ameristar does not show, but Kinseth did not deny any person a room for that night because of unavailability; iii. Ameristar releases 40 or more reserved rooms at least 21 days before the scheduled date of use; iv. Ameristar releases 21 to 39 reserved rooms at least 14 days before the scheduled date of use; v. Ameristar releases up to 20 rooms at least 2 days before the scheduled date of use; and vi. With respect to rooms released by Ameristar outside of the time limits set forth in paragraphs ii, iii and iv hereof, Kinseth actually rents such rooms to another guest. (B) RIGHT OF FIRST REFUSAL. If Kinseth receives a request to reserve 50 or more rooms from any party, Kinseth shall first offer such rooms to Ameristar upon the terms specified in paragraph (a) hereof. Ameristar shall have twenty-four hours after such offer has been communicated to Ameristar's general manager or designee to accept or reject such offer. If rejected, Kinseth may accept the reservation with the third party. If Ameristar accepts the offer, Kinseth shall reserve the rooms for Ameristar and shall reject the reservation by the third party. (C) COMPING OF GUESTS. Ameristar may, at its option, decide to pay all or part of the bill of a guest of the Hotel. If Ameristar elects to pay all or part of a bill, it shall inform Kinseth according to procedures established by Ameristar and communicated to Kinseth. If Ameristar so notifies Kinseth of a comp, Kinseth shall not thereafter attempt to collect such amount from the guest. Kinseth shall bill Ameristar for any such amounts and Ameristar agrees to pay such amounts to Kinseth within 30 days. (D) INTEGRATION OF KINSETH'S PMS SYSTEM WITH AMERISTAR'S POS SYSTEM. At such time as it becomes technologically feasible, and subject to Kinseth's franchisor's approval, Kinseth agrees to cooperate with Ameristar to integrate its property management computer system ("PMS System") with Ameristar's point of sale system ("POS System"), and Ameristar agrees to cooperate with Kinseth in all reasonable respects with respect to such integration. Ameristar shall pay all out-of-pocket costs necessary to complete such integration. Until an integration of Kinseth's PMS system with Ameristar's POS System can be reasonably accomplished, Ameristar and Kinseth agree to devise a system where such charges can be handled in a manner mutually agreeable to both parties. (E) REFERRALS. Provided that Kinseth has not defaulted in the quality standards required to be maintained by it under the Lease Agreement between Kinseth and Ameristar, and to the extent permitted by law, Ameristar agrees to refer any guests it cannot accommodate to the Hotel. Provided that Ameristar maintains quality standards in its hotel at least equal to those maintained by Kinseth in its Hotel and to the extent permitted by law, Kinseth agrees to refer any guests it cannot accommodate in the Hotel or the adjacent hotel (so long as Kinseth or its affiliate owns the adjacent hotel) to Ameristar's hotel. Kinseth hereby grants Ameristar reasonable access to the Hotel from time to time for the purpose of inspecting the Hotel. Ameristar hereby grants Kinseth reasonable access to its hotel from time to time for the purpose of inspection Ameristar's hotel. (F) GROUP RATE REFERRALS. If Ameristar refers a block of rooms which are part of a larger group to Kinseth as a result of an Ameristar generated group sale (including promotions designed to increase occupancy by offering specific hotel packages to specific groups), Kinseth shall match the group rate offered by Ameristar for such groups unless Kinseth's hotel is or is reasonably expected to be "fully occupied" (i.e., more than 95% full). If Ameristar is or is reasonably expected to be fully occupied and refers an entire group to Kinseth, Kinseth will match the group rate offered by Ameristar for other groups booked in the Ameristar hotel in the same period, unless Kinseth's hotel is or is reasonably expected to be fully occupied. Notwithstanding the foregoing, Kinseth shall not be obligated to accept hotel guests referred to Kinseth by Ameristar if the room rate is less than 50% of Kinseth's rack rate on a requested date for standard room types (i.e. king or double room types). (G) CONFIDENTIALITY. Kinseth acknowledges and agrees that the identity of guests or patrons of the casino and Ameristar's willingness to provide complementary services to a guest or patron are valuable trade secrets of Ameristar. Kinseth covenants and agrees that it shall not use, during the course of Kinseth's lease with Ameristar or thereafter, any such confidential or proprietary information or divulge such information to any person, unless Kinseth is compelled to disclose such information by a governmental process. Ameristar acknowledges and agrees that the identity of guests or patrons of the Hotel and the identity of any such guests as members of Hampton Inn's frequent traveler/guest program, if any, are valuable trade secrets of Kinseth and/or Hampton Inn. However, Kinseth also acknowledges that such information is critical to Ameristar so that proper attention can be given to preferred customers of Ameristar's casino. Kinseth agrees to reasonably cooperate with Ameristar so as to provide to Ameristar, upon its request, the names and addresses of Kinseth's hotel guests. Ameristar shall keep such lists separate from other information. Ameristar is not authorized to use such information to market hotel rooms to individuals on such list without Kinseth's prior approval. Except as permitted herein, Ameristar covenants and agrees that it shall not use, during the course of Kinseth's lease with Ameristar or thereafter, any such confidential or proprietary information or divulge such information to any person without the prior consent of Kinseth, unless Ameristar is compelled to disclose such information by a governmental process. Notwithstanding the foregoing, Kinseth acknowledges that Ameristar may compile a list of gaming customers from sources independent of Ameristar's access to Kinseth's PMS system and that such list may include guests of the Hotel. Kinseth agrees that Ameristar's use of such independently compiled information will not violate the covenant of Ameristar hereunder. (H) EMPLOYEE PARKING. Kinseth agrees to use for employee parking only such spaces in the parking lot as Ameristar may designate for Hotel employee parking. Such spaces may be in a separate lot that is off-site and designated solely for Hotel employee parking. (I) MARKETING PROGRAMS. Ameristar and Kinseth agree to cooperate on any marketing programs that either party may desire to implement and, including proposals for joint marketing programs; provided, however, that such cooperation shall not be deemed to require a party to pay for the cost of a program beyond what it desires to pay. Kinseth shall have the right to provide marketing materials for Ameristar's casino in its hotel room, but shall not provide materials relating to other casinos. Ameristar shall have the right to inspect Kinseth's facilities and hotel rooms at reasonable times to verify that no marketing materials for competing casino properties are being distributed. (J) USE OF EMPLOYEE FACILITIES BY KINSETH EMPLOYEES. Ameristar may, at its option, require that all employees of the Hotel be out-of-uniform when they visit Ameristar's facilities. Employees of the Hotel shall not be eligible for promotions, programs, perquisites and other benefits offered to Ameristar employees. Hotel employees using such facilities must abide by all policies and procedures implemented by Ameristar, including, without limitation, all non-solicitation policies. Ameristar may deny use of the facilities to any Hotel employee for any or no reason. (K) INTEGRATION OF TELEPHONE SYSTEM. The parties will explore the possibility of integrating their respective telephone systems so that calls can be switched from one system to the other. If either party reasonably concludes that such integration is not feasible, Kinseth shall provide, to the extent permitted by its franchisor, and at Ameristar's cost, one of its PMS System terminals to Ameristar for installation in Ameristar's PBX room. The parties agree to divide equally the cost of any wiring required to attach such terminal to the PMS System. Such terminal shall be in addition to the terminal described in paragraph 3 above. (L) FOOD SERVICE. Kinseth has the right under Section 2.3(c) above of the Lease Agreement to offer the guests of the Hotel a continental breakfast between the hours of 6:30 a.m. and 10:00 a.m. From time to time Ameristar may also offer guests of the Hotel discounts on food at restaurants operated by Ameristar or gaming information and promotional items. If Ameristar desires to make these discounts available to guests of the Hotel, Kinseth agrees to make such offers available to its guests by allowing Ameristar to display information and promotional materials in public areas and in guest rooms. Kinseth shall have the right to approve all such material, provided that such consent shall not be unreasonably withheld. (M) CHANGE OF FRANCHISOR. Notwithstanding references in this Ground Lease to Hampton Inn as franchisor of Kinseth, Kinseth may change its franchisor, but only upon prior written consent of Ameristar, which consent shall not be unreasonably withheld provided that quality standards are not diminished and the terms of this Ground Lease can be met by Kinseth under the terms of any new franchise agreement entered into in connection with such change. ARTICLE IV MORTGAGES AND LEASEHOLD LIENS 4.1 ENCUMBRANCE BY AMERISTAR. Ameristar may, as security for its own obligations, encumber its interests in the Leased Land and assign its right to receive rentals and its interest as landlord under this Lease. Kinseth agrees that its interest in the Leased Land under this Lease shall be subordinate to existing or future liens in favor of Ameristar's lender(s), provided that Ameristar obtains from its lender a recognition, nondisturbance and attornment agreement in favor of Kinseth, whereby the interests of Kinseth under this Lease are and shall be subordinated to the lien granted by Ameristar, upon the condition that such lender or lienholder agrees to recognize Kinseth's interests under this Lease and to not disturb Kinseth and to attorn to Kinseth and any permitted successors and assigns and any Leasehold Lenders of Kinseth. Ameristar's lender or lienholder shall not claim any lien on or interest in the Building, except by virtue of its receipt of a collateral assignment of Ameristar's interest as landlord under this Lease, and the reversionary interest of Ameristar pursuant to Sections 2.4 and 11.4 herein. The parties agree to execute ordinary and customary documentation acknowledging and confirming their agreements in this Section 4.1 within fifteen (15) days of receipt of a written request by the other party or its lender that it do so. 4.2 ENCUMBRANCE BY KINSETH. So long as Kinseth shall not be in default under the terms of this Lease at the time of the granting, and subject to the terms hereof, Kinseth shall have the right to grant to an "Institutional Lender" as that term is defined in Section 4.5 below, a mortgage or trust deed lien upon or a security interest in its leasehold estate under this Lease and in the Building and any other improvements constructed by Kinseth on the Leased Land (a "Leasehold Lien"), and to refinance such Leasehold Lien; provided that each such Leasehold Lien shall be subordinate and subject to Ameristar's reversionary interest in the Building and Leased Land. The amount, terms and conditions of the obligations secured by or contained in a Leasehold Lien as defined by Section 4.5 below shall be subject to Ameristar's prior written approval, which shall not be unreasonably withheld or delayed. Any Leasehold Lien shall not be for a period exceeding the Term. In no event shall Ameristar's fee title or reversionary interest be encumbered by or be subject to the Leasehold Lien. Kinseth shall make payment when due and before delinquency of all principal, interest, and other charges for which Kinseth may be or become obligated under any obligations secured by or contained in a Leasehold Lien. In the event Kinseth grants such Leasehold Lien, the Leasehold Lender Protection Provisions set forth in Section 4.5 below, and the option set forth in Section 4.4 below of Ameristar to cure defaults in the monetary obligation secured by the Leasehold Lien, shall both apply. The aggregate amount of all Leasehold Liens shall not, at any time, exceed the greater of Four Million Five Hundred Thousand Dollars ($4,500,000) or seventy five percent (75%) of the then current appraised value of the Building and improvements (existing or to be constructed with the proceeds of the Leasehold Lien) on the Leased Land (the "Aggregate Principal Amount"). In the event such Leasehold Lien is collateralized by other assets of Kinseth or its affiliates, or proceeds of such financing are used for any assets or purposes unrelated to the Leased Land and Building, the Leasehold Lender shall agree to a fair and equitable allocation of such indebtedness and debt service between the Leased Land and Building and such other assets, and a specific "release price" to release the Leasehold Lien on the Leased Land and Building not to exceed at any time the Aggregate Principal Amount plus accrued interest and costs of collection attributable to the Leasehold Lien on the Leased Land, such that in the event of default by Kinseth hereunder or under the Leasehold Lien, Ameristar may exercise its rights pursuant to Sections 4.4, 4.5(f)(vii), and/or 11.11 herein to pay off or assume such portion of the financing attributable to the Building, the Leased Land, or the improvements located on the Leased Land. Notwithstanding anything herein to the contrary, the Aggregate Principal Amount of the "Initial Leasehold Lien" shall not exceed Four Million Five Hundred Thousand Dollars ($4,500,000). As used in this Lease, the term "Initial Leasehold Lien" shall mean the first permanent term loan, or the first combination construction-permanent "mini-perm" loan, placed by Kinseth on its leasehold interest in the Leased Land and on its interest in the Building, provided that the Initial Leasehold Lien shall have a term of not less than five (5) years following completion of construction of the Building on the Leased Land. 4.3 CERTIFICATES OF LEASE STATUS. Kinseth agrees, at any time and from time to time, upon receipt of not less than twenty (20) days' prior written request therefor from Ameristar to execute, acknowledge, and deliver to Ameristar a statement in writing, certifying, if such is the case, that this Lease is then unmodified and unamended and that the Lease is in full force and effect. If there have been modifications or amendments to this Lease, said statement shall certify that the Lease is in full force and effect as then modified and amended, and shall set forth or attach such modifications and amendments in full. Said statement shall further state the dates to which the basic rental or other charges have been paid, and whether or not there is any existing default by Kinseth with respect to any covenant, promise, or agreement on the part of Kinseth under this Lease. Ameristar agrees to provide similar statements upon the written request of Kinseth. 4.4 FORECLOSURE OF LEASEHOLD LIEN -- OPTION OF AMERISTAR TO CURE. Prior to commencing any action to foreclose a Leasehold Lien, the holder thereof (the "Leasehold Lender") shall notify Ameristar in writing of the default by Kinseth with a statement of the amount then due and offer to withhold any acceleration of maturity of the obligation, payment of which is secured by the Leasehold Lien, if Ameristar remedies such default within thirty (30) days of receipt of such notice. Ameristar shall have the option, but shall not be obligated, to cure Kinseth's default by making payment to the holder of all sums due and by curing any other defaults reasonably susceptible to cure by Ameristar within thirty (30) days of receipt of the notice. In the event Ameristar shall cure Kinseth's default, the Leasehold Lender shall reinstate the Leasehold Lien in all respects as if no default had occurred. If a default is not reasonably susceptible to cure by Ameristar within thirty (30) days, the Leasehold Lender shall not accelerate or exercise remedies so long as Ameristar has commenced to cure, and diligently pursues efforts to cure until completed, and all sums required to be paid under the Leasehold Lien are timely paid during the time periods provided in this Section 4.4. Any sums paid by Ameristar to the Leasehold Lender shall be considered additional rental immediately due and payable to Ameristar by Kinseth under this Lease, and the failure of Kinseth to pay such amounts in full within ten (10) days after Ameristar shall have sent written notice to Kinseth demanding payment shall be an event of default under this Lease. Any exercise of Ameristar's option to cure a default in a Leasehold Lien shall not constitute an assumption by Ameristar of the obligation nor a waiver of Kinseth's obligations to make payments and perform in full under the terms of any obligations secured by a Leasehold Lien. Subsequent and successive defaults by Kinseth in making payments required by any Leasehold Lien shall be subject to the foregoing provisions each time any such default occurs. In the event of a default by Kinseth on a Leasehold Lien, in addition to Ameristar's option to cure such default as set forth above without assuming the obligation of Kinseth under the Leasehold Lien, Ameristar shall, upon written notice to Kinseth and to Leasehold Lender and the failure of Kinseth to cure such default within the applicable time period specified herein, have the option to terminate, forfeit and/or acquire Kinseth's interest in the Leased Land and preserve this Lease in effect and may substitute itself as lessee under this Lease and assume the Leasehold Lien on the same "nonrecourse" basis as set forth in Section 4.5(f)(vii)(2) below, provided such actions shall not terminate this Lease nor extinguish the lien of the Leasehold Lender in the Leased Land and Ameristar obtains an opinion of Iowa legal counsel acceptable to Leasehold Lender that no "merger" of the leasehold interest in the Leased Land into the fee interest of Ameristar shall occur. Any judgment foreclosing a Leasehold Lien and the foreclosure sale thereunder shall not release Kinseth from any of Kinseth's obligations under this Lease. Kinseth shall ensure that all provisions contained in this Lease requiring the agreement of a Leasehold Lender shall be incorporated into documents to which such Lender is a party and that executed copies of all documents relating to the creation of a Leasehold Lien or an obligation secured thereby shall be delivered to Ameristar within ten (10) days of execution thereof. 4.5 LEASEHOLD LENDER PROTECTION PROVISIONS. In the event that Kinseth shall grant a Leasehold Lien to an Institutional Lender as contemplated pursuant to Section 4.2 above, the following provisions shall apply for the benefit of such Leasehold Lender, its successors and assigns (including any purchaser at a foreclosure sale or deed in lieu thereof) notwithstanding any contrary provisions in this Lease: (A) NOTICE TO AMERISTAR. i. (1) If Kinseth shall, on one or more occasions, grant a Leasehold Lien to an Institutional Lender and if the holder of such Leasehold Lien shall provide Ameristar with notice of such Leasehold Lien together with a true copy of such Leasehold Lien and the name and address of such Leasehold Lender, Ameristar and Kinseth agree that, following receipt of such notice by Ameristar the provisions of this Section 4.5 shall apply in respect to such Leasehold Lien. (2) In the event of any assignment of a Leasehold Lien or in the event of a change of address of a Leasehold Lender or of an Assignee of such Leasehold Lien, notice of the new name and address shall be provided to Ameristar. ii. Ameristar shall promptly upon receipt of a communication provided for by subsection (a)(i) above acknowledge by a written instrument receipt of such communication as constituting the notice provided for by subsection (a)(i) above or, in the alternative, notify Kinseth and the Leasehold Lender of the rejection of such communication as not conforming with the provisions of subsection (a)(i) and specify the specific basis of such rejection. iii. After Ameristar has received the notice provided for by subsection (a)(i) above, Kinseth if it has not already done so, shall with reasonable promptness provide Ameristar with copies of the note or other obligation secured by such Leasehold Lien and of any other documents pertinent to the Leasehold Lien as specified by Ameristar. Kinseth shall thereafter also provide Ameristar from time to time with a copy of each amendment or other modification or supplement to such instruments. All documents shall be accompanied by a certification by Kinseth that such documents are true and correct copies of the originals. From time to time, Kinseth shall notify Ameristar of the date and place of recording and other pertinent recording data with respect to such instruments as have been recorded. (B) DEFINITIONS. i. The Term "Institutional Lender" as used in this Article IV shall refer to a savings bank, savings and loan association, commercial bank, trust company, credit union, investment bank, insurance company, college, university, real estate investment trust or pension fund, investment banker, mortgage banker, or agents for any of the foregoing. The term "Institutional Lender" shall also include other lenders of substance which perform functions similar to any of the foregoing, and which have assets in excess of One Hundred Million Dollars ($100,000,000) at the time the obligation secured by the Leasehold Lien is made. ii. The term "Leasehold Lien" as used in this Article IV shall include a mortgage, a deed of trust, a deed to secure debt, or other security instrument by which Kinseth's leasehold estate is mortgaged, conveyed, assigned, or otherwise transferred, to secure a debt or other obligation. iii. The term "Leasehold Lender" as used in this Article IV shall refer to a holder of a Leasehold Lien in respect to which the notice is provided for by subsection (a) of this Section 4.5 has been given and received and as to which the provisions of this Section 4.5 are applicable. (C) CONSENT OF LEASEHOLD LENDER REQUIRED. No cancellation, surrender or modification of this Lease shall be effective as to any Leasehold Lender unless consented to in writing by such Leasehold Lender, which consent shall not be unreasonably withheld or delayed. (D) DEFAULT NOTICES. Ameristar, upon providing Kinseth any notice of: (i) default under this Lease or (ii) a termination of this Lease, or (iii) a matter on which Ameristar may predicate or claim a default shall at the same time provide a copy of such notice to Leasehold Lender. No such notice by Ameristar to Kinseth shall be deemed to have been duly given unless and until a copy thereof has been so provided to Leasehold Lender. From and after such notice has been given to a Leasehold Lender, such Leasehold Lender shall have the same period, after the giving of such notice upon it, for remedying any default or acts or omissions which are the subject matter of such notice or causing the same to be remedied, as is given Tenant after the giving of such notice to Tenant, plus in each instance, the additional periods of time specified in subsections (e) and (f) of this Section 4.5 to remedy, commence remedying or cause to be remedied the defaults or acts or omissions which are the subject matter of such notice specified in any such notice. Ameristar shall accept such performance by or at the instigation of such Leasehold Lender as if the same had been done by Kinseth. Kinseth authorizes each Leasehold Lender to take any such action at such Leasehold Lender's option and does hereby authorize entry upon the premises by the Leasehold Lender for such purpose. (E) NOTICE TO LEASEHOLD LENDER. i. Anything contained in this Lease to the contrary notwithstanding, if any default shall occur which entitles Ameristar to terminate this Lease, Ameristar shall have no right to terminate this Lease unless, following the expiration of the period of time given Kinseth to cure such default, Ameristar shall notify Leasehold Lender of Ameristar's intent to so terminate at least thirty (30) days in advance of the proposed effective date of such termination if such default is capable of being cured by the payment of money, and at least forty-five (45) days in advance of the proposed effective date of such termination if such default is not capable of being cured by the payment of money. The provisions of subsection (f) below of this Section 4.5 shall apply if, during such thirty (30) or forty-five (45) day Termination Notice Period, any Leasehold Lender shall: (1) notify Ameristar of such Leasehold Lender's desire to nullify such notice, and (2) pay or cause to be paid all rent, additional rent, and other payments then due and in arrears as specified in the Termination Notice to such Leasehold Lender and which may become due during such thirty (30) or forty-five (45) day period, and (3) comply or in good faith, with reasonable diligence and continuity, commence to comply with all nonmonetary requirements of this Lease then in default and reasonably susceptible of being complied with by Leasehold Lender; provided, however, that such Leasehold Lender shall not be required during such forty-five (45) day period to cure or commence to cure any default consisting of Kinseth's failure to satisfy and discharge any payment due to such Leasehold Lender on the Leasehold Lien, or any lien, charge or encumbrance against Kinseth's interest in this Lease or the Leased Land junior in priority to the Leasehold Lien held by such Leasehold Lender. ii. Any notice to be given by Ameristar to a Leasehold Lender pursuant to any provision of this Section 4.5 shall be deemed properly addressed if sent to the Leasehold Lender who served the notice referred to in subsection (a)(i)(1) unless notice of a change of Mortgage ownership has been given to Landlord pursuant to subsection (a)(i)(2). (F) PROCEDURE ON DEFAULT. i. If Ameristar shall elect to terminate this Lease by reason of any default of Kinseth, and a Leasehold Lender shall have proceeded in the manner provided by subsection (e) of this Section 4.5, the specified date for the termination of this Lease as fixed by Ameristar in its Termination Notice shall be extended for a period of six (6) months, provided that such Leasehold Lender shall, during such six (6) month period: (1) Pay or cause to be paid the rent, additional rent and other monetary obligations of Kinseth under this Lease as the same become due and continue its good faith efforts to perform all of Kinseth's other obligations under this Lease, excepting (A) Kinseth's obligations to pay any percentage rents to Ameristar pursuant to Section 1.4(b) herein, at any time during which Kinseth is delinquent on its monetary obligations to Leasehold Lender; (B) obligations of Kinseth to satisfy or otherwise discharge any payment due to Leasehold Lender on its Leasehold Lien, or any lien, charge or encumbrance against Kinseth's interest in this Lease or the Leased Land junior in priority to the lien of the mortgage held by such Leasehold Lender; (C) reimbursement of amounts advanced by Ameristar to Leasehold Lender on behalf of Kinseth to cure monetary defaults by Kinseth on the obligation secured by the Leasehold Lien; and (D) past nonmonetary obligations then in default and not reasonably susceptible of being cured by such Leasehold Lender; and (2) if not enjoined or stayed, take steps to acquire or sell Kinseth's interest in this Lease by foreclosure of the Leasehold Lien or other appropriate means and prosecute the same to completion with due diligence. ii. If at the end of such six (6) month period such Leasehold Lender is complying with subsection (f)(i), this Lease shall not then terminate, and the time for completion by such Leasehold Lender of its proceedings shall continue so long as such Leasehold Lender is enjoined or stayed and thereafter for so long as such Leasehold Lender proceeds to complete steps to acquire or sell Kinseth's interest in this Lease by foreclosure of the Leasehold Lien or by other appropriate means with reasonable diligence and continuity. Nothing in this subsection (f) of this Section 4.5, however, shall be construed to extend this Lease beyond the original term thereof, nor to require a Leasehold Lender to continue such foreclosure proceedings after the default has been cured. If the default shall be cured and the Leasehold Lender shall discontinue such foreclosure proceedings, this Lease shall continue in full force and effect as if Kinseth had not defaulted under this Lease. iii. If a Leasehold Lender is complying with subsection (f)(i) of this Section 4.5, upon the acquisition of Kinseth's interest herein by such Leasehold Lender or its designee or any other purchaser at a foreclosure sale or otherwise, this Lease shall continue in full force and effect as if Kinseth had not defaulted under this Lease. iv. For the purposes of this Section 4.5 the making of a Leasehold Lien shall not be deemed to constitute an assignment or transfer of this Lease or of the leasehold estate hereby created, nor shall any Leasehold Lender, as such, be deemed to be an assignee or transferee of this Lease or of the leasehold estate hereby created so as to require such Leasehold Lender, as such, to assume the performance of any of the terms, covenants or conditions on the part of Kinseth to be performed hereunder, but the purchaser at any sale of this Lease and of the leasehold estate hereby created in any proceedings for the foreclosure of any Leasehold Lien, or the assignee or transferee of this Lease and of the leasehold estate hereby created under any instrument of assignment or transfer in lieu of the foreclosure of any Leasehold Lien shall be deemed to be an assignee or transferee within the meaning of this Section 4.5, and shall be deemed to have agreed to perform all of the terms, and covenants and conditions on the part of Kinseth to be performed hereunder from and after the date of such purchase and assignment, but only for so long as such purchaser or assignee is the owner of the leasehold estate. If the Leasehold Lender or its designee shall become the holder of the leasehold estate and if the buildings and improvements on the premises shall have been or become materially damaged on, before or after the date of such purchase and assignment, the Leasehold Lender or its designee shall be obligated to repair, replace or reconstruct the building or other improvements only to the extent of the net insurance proceeds received by the Leasehold Lender or its designee by reason of such damage. However, should such net insurance proceeds be insufficient to repair, replace or reconstruct the building or other improvements to the extent required by Articles III and V and should the Leasehold Lender or its designee choose not to fully reconstruct the building or other improvements to the extent required by Articles III and V such failure shall constitute an event of default under this Lease. v. Any Leasehold Lender or other acquirer of the leasehold estate of Kinseth pursuant to foreclosure, assignment in lieu of foreclosure or other proceedings may, upon acquiring Kinseth's leasehold estate, without further consent of Ameristar, sell and assign the leasehold estate on such terms and to such persons and organizations as are acceptable to such Leasehold Lender or acquirer and thereafter be relieved of all obligations under this Lease; provided that such assignee has delivered to Ameristar its written agreement to be bound by all of the provisions of this Lease. vi. Notwithstanding any other provisions of this Lease, any sale of this Lease and of the leasehold estate hereby created in any proceedings for the foreclosure of any Leasehold Lien, or the assignment or transfer of this Lease and of the Leasehold Estate hereby created in lieu of the foreclosure of any Leasehold Lien shall be deemed to be a permitted sale, transfer or assignment of Kinseth's interest in this Lease and of the leasehold estate hereby created. vii. In the event of a default under the Leasehold Lien Leasehold Lender will notify Ameristar of such default and shall afford Ameristar the following rights: (1) In the event Leasehold Lender acquires Kinseth's interest in the Leased Land by foreclosure or deed in lieu of foreclosure, Ameristar shall have the exclusive option for a period of sixty (60) days from such notice, but not the obligation, to acquire the Leased Land from Leasehold Lender for the outstanding principal amount of the Leasehold Lien on the Leased Land (not to exceed the greater of (x) Four Million Five Hundred Thousand Dollars ($4,500,000) or (y) seventy five percent (75%) of the appraised value of the Leased Land, plus accrued interest and costs of collection, including foreclosure costs attributable to the Leasehold Lien on the Leased Land ("Option Price"). (2) In the event Leasehold Lender shall commence a foreclosure proceeding and at any time prior to the foreclosure sale and provided Ameristar has acquired, forfeited or terminated all of Kinseth's right, title and interest in the Leased Land, then at any time prior to the foreclosure sale and upon presentation to Leasehold Lender of reasonable evidence that it has acquired, forfeited or terminated Kinseth's interest in the Leased Land free of any lien, adverse interest or claim including rights available to Kinseth in bankruptcy, Ameristar shall have the right to bring all defaults current, including cost of collection and foreclosure costs attributable to the Leasehold Lien on the Leased Land, and to assume the Leasehold Lien for its then unpaid principal balance attributable to the Leased Land, said principal balance not to exceed the Aggregate Principal Amount, together with pro-rata interest, attorneys' fees and costs of collection attributable to the Leased Land. Ameristar, at its cost and expense, will execute such "nonrecourse" assumption documents as Leasehold Lenders may reasonably require to confirm the nonrecourse assumption of the Leasehold Lien and deliver to Leasehold Lender an endorsement to Leasehold Lender's loan policy of title insurance insuring Ameristar to be the owner of the leasehold interest in the Ground Lease free of any lien, adverse interest or claim including rights available to Kinseth in bankruptcy and continuing the insured priority of the Leasehold Lien on the Leased Land free of any exceptions to coverage other than as set forth in Leasehold Lender's existing loan policy. To the extent the Leasehold Lien encumbers property other than the Leased Land, upon such assumption, Leasehold Lender agrees to bifurcate and separate the Leasehold Lien documents into two separate sets of documents, one encumbering and creating a security interest upon the Leased Land and the other encumbering and creating a security interest in the other property and provided that the amount of the Leasehold Lien on the Leased Land will not exceed the Aggregate Principal Amount in principal indebtedness, together with pro-rata interest, attorneys' fees and costs of collection attributable to the Leased Land. The bifurcated loan applicable to the Leased Land shall have the same interest rate, amortization period, and remaining installment payment periods as under the Leasehold Lien. This right is subject to Leasehold Lender receiving an opinion satisfactory to it from Iowa counsel acceptable to Leasehold Lender that such bifurcation may accomplish the aforementioned results under Iowa law without affecting the Leasehold Lien security (other than the bifurcation) and does not create any impediment or obstacle to exercising the remedies available to Leasehold Lender under the Leasehold Lien documents. This right is personal only to Ameristar under the Ground Lease (and to Ameristar's mortgage lender) and shall not benefit any other party, including Kinseth, its successors and assigns. (G) NEW LEASE. In the event of the termination of this Lease as a result of Kinseth's default Ameristar shall, in addition to providing the notices of default and termination as required by subsections (d) and (e) above of this Section 4.5, provide each Leasehold Lender with written notice that the Lease has been terminated, together with a statement of all sums which would at that time be due under this Lease but for such termination, and of all other defaults, if any, then known to Ameristar. Subject to the provisions of Section 4.5 (f)(vii) above, Ameristar agrees to enter into a new lease ("New Lease") of the Leased Land with such Leasehold Lender or its designee for the remainder of the term of this Lease, effective as of the date of termination, at the rent and additional rent, and upon the terms, covenants and conditions (but excluding requirements which are not applicable or which have already been fulfilled) of this Lease, provided: i. Such Leasehold Lender shall make written request upon Ameristar for such New Lease within sixty (60) days after the date such Leasehold Lender receives Ameristar's Notice of Termination of this Lease given pursuant to this subsection (g). ii. Such Leasehold Lender or its designee shall pay or cause to be paid to Ameristar at the time of the execution and delivery of such New Lease, any and all sums which would at the time of execution and delivery thereof be due pursuant to this Lease but for such termination and, in addition thereto, all reasonable out- of-pocket expenses, including reasonable attorneys' fees, which Ameristar shall have incurred at such time or during such sixty day period by reason of such termination and the execution and delivery of the New Lease and which have not otherwise been received by Ameristar from Kinseth or other party in interest under Kinseth. Upon the execution of such New Lease, Ameristar shall allow to the tenant named therein as an offset against the sums otherwise due under this subsection (g)(ii) or under the New Lease, an amount equal to the net income derived by Ameristar from the Leased Land during the period from the date of termination of this Lease to the date of the beginning of the Lease term of such New Lease. In the event of a controversy as to the amount to be paid to Landlord pursuant to this subsection (g)(ii), the payment obligation shall be satisfied if Ameristar shall be paid the amount not in controversy, and the Leasehold Lender or its designee shall agree to pay any additional sum ultimately determined to be due plus interest at the rate of ten percent (10%) per annum and such obligation shall be adequately secured. iii. Such Leasehold Lender or its designee shall agree to remedy any of Kinseth's defaults of which said Leasehold Lender was notified by Ameristar's Notice of Termination and which are reasonably susceptible of being so cured by Leasehold Lender or its designee. iv. It shall be the intention and agreement of the parties that any New Lease made pursuant to this subsection (g) shall have the same priority and rights in relation to any mortgage or other lien, charge or encumbrance on the fee of the Leased Land and the tenant under such New Lease shall have the same right, title and interest in and to the Leased Land and the buildings and improvements thereon as Kinseth had under this Lease. v. The tenant under any such New Lease shall be liable to perform the obligations imposed on the tenant by such New Lease only during the period such person has ownership of such leasehold estate. (H) NEW LEASE PRIORITIES. If more than one Leasehold Lender shall request a New Lease pursuant to subsection (g)(i) of this Section 4.5, Ameristar shall enter into such New Lease with the Leasehold Lender whose mortgage is prior in lien, or with the designee of such Leasehold Lender. Ameristar, without liability to Kinseth or any Leasehold Lender with an adverse claim, may rely upon a mortgagee title insurance commitment issued by a responsible title insurance company or licensed attorney or governmental agency performing such services or doing business within the state in which the Leased Land located as the basis for determining the appropriate Leasehold Lender who is entitled to such New Lease. (I) LEASEHOLD LENDER NEED NOT CURE SPECIFIED DEFAULTS. Nothing herein contained shall require any Leasehold Lender or its designee as a condition to its exercise of rights hereunder to cure any default of Kinseth not reasonably susceptible of being cured by such Leasehold Lender or its designee, or otherwise excluded by agreement herein, including but not limited to: (i) the defaults referred to in Section 8.1(d); (ii) the franchise rating and operation covenants set forth in Sections 2.3(a) and (b) and 3.1(v); and (iii) the requirement of a minimum of 96 in-service hotel rooms, if Leasehold Lender determines in its reasonable business judgment that it cannot economically operate 96 in-service rooms in order to comply with the provisions of subsections (e) or (f) of this Section 4.5, or as a condition of entering into the New Lease provided for by subsection (g) of this Section 4.5. (J) EMINENT DOMAIN. Kinseth's share, as provided by Section 7.6 of this Lease, of the proceeds arising from an exercise of the power of Eminent Domain shall, subject to the provisions of such Section 7.6 be disposed of as provided for by the Leasehold Lien and shall be subject to the prior right of the Leasehold Lender to repay the indebtedness secured by the Leasehold Lien out of the award. (K) CASUALTY LOSS. A Standard Mortgagee Clause naming each Leasehold Lender may be added to any and all insurance policies required to be carried by Kinseth hereunder on condition that the insurance proceeds are to be applied in the manner specified in this Lease and the Leasehold Lien shall so provide; except that the Leasehold Lien may provide a manner for the disposition of such proceeds, if any, otherwise payable directly to Kinseth (but not such proceeds, if any, payable jointly to Ameristar and Kinseth) pursuant to the provisions of this Lease. The Leasehold Lien may condition the application of Kinseth's insurance proceeds to repair and restoration of the improvements as contemplated by Section 5.2 below, on reasonable requirements such as: (i) Kinseth not being in monetary default to the Leasehold Lender; (ii) the adequacy of such insurance proceeds, together with such other funds as may be provided by Kinseth, to pay for all costs of repair and restoration of the improvements; (iii) that the improvements, after repair and restoration, shall have an economic utility and fair market value equal to that which existed prior to the casualty; (iv) compliance with procedures for disbursement of such proceeds to insure application of the funds to repair and restoration, similar to those utilized in construction lending by Institutional Lenders; and (v) that the proceeds be held by the Leasehold Lender pending their disbursement to pay costs of repair and restoration. (L) NO MERGER. So long as any Leasehold Lien is in existence, unless all Leasehold Lenders shall otherwise expressly consent in writing the fee title to the Leased Land and the Leasehold Estate of Kinseth therein created by this Lease shall not merge but shall remain separate and distinct, notwithstanding the acquisition of said fee title and said leasehold estate by Ameristar, by Kinseth, or by a third party, by purchase or otherwise. (M) FUTURE AMENDMENTS. In the event on any occasions hereafter Kinseth seeks to mortgage its leasehold estate, Ameristar agrees to amend this Lease from time to time to the extent reasonably requested by an Institutional Lender proposing to make Kinseth a loan secured by a first lien upon Kinseth's leasehold estate, provided that such proposed amendments do not materially and adversely affect the rights of Ameristar or his interest in the Leased Land and all other Institutional Lenders consent in writing to such charge. All reasonable expenses incurred by Ameristar in connection with any such amendment shall be paid by Kinseth. The foregoing provisions shall be subject to reasonable approval rights in favor of Ameristar's lender. (N) ESTOPPEL CERTIFICATE. Ameristar shall, without charge, at any time and from time to time hereafter, but not more frequently than twice in any one- year period (or more frequently if such request is made in connection with any sale or mortgaging of Kinseth's leasehold interest or permitted subletting by Kinseth) within twenty (20) business days after written request of Kinseth to do so, certify by written instrument duly executed and acknowledged to any mortgagee or purchaser, or proposed mortgagee or proposed purchaser, or any other person, form or corporation specified in such request: (A) as to whether this Lease has been supplemented or amended, and if so, the substance and manner of such supplement or amendment; (B) as to the validity and force and effect of this Lease, in accordance with its tenor; (C) as to the existence of any default hereunder; (D) as to the existence of any offsets, counterclaims or defenses hereto on the part of Kinseth; (E) as to the commencement and expiration dates of the term of this Lease; and (F) as to any other matters as may be reasonably so requested. Any such certificate may be relied upon by Kinseth and any other person, firm or corporation to whom the same may be exhibited or delivered, and the contents of such certificate shall be binding on Ameristar. (O) NOTICES. Notice from Ameristar to the Leasehold Lender shall be mailed to the address furnished Ameristar pursuant to subsection (b) of this Section 4.5 and those from the Leasehold Lender to Ameristar shall be mailed to the address designated pursuant to the provisions of Section 11.7 hereof. Such notices, demands and requests shall be given in the manner described in Section 11.7 and shall in all respects be governed by the provisions of that Section. (P) ERRONEOUS PAYMENTS. Unless otherwise agreed in writing by a Leasehold Lender, no payment made to Ameristar by a Leasehold Lender shall constitute agreement that such payment was, in fact, due under the terms of this Lease; and a Leasehold Lender having made any payment to Ameristar pursuant to Ameristar's wrongful, improper or mistaken notice or demand shall be entitled to the return of any such payment or portion thereof provided he shall have made demand therefor not later than one (1) year after the date of its payment. (Q) AMERISTAR PAY-OFF OR ASSUMPTION. The foregoing provisions of this Section 4.5 limiting Ameristar's rights to terminate, forfeit or acquire Kinseth's interest in this Lease are expressly subject to, and shall be deemed to be consistent with, Ameristar's remedies for default by Kinseth under this Lease as set forth in Section 8.2(g) below relating to Ameristar's pay-off or assumption of a Leasehold Lien related to the Leased Land. ARTICLE V INSURANCE AND INDEMNIFICATION 5.1 DUTY TO INSURE. Throughout the Term, at Kinseth's sole cost and expense, Kinseth shall keep or cause to be kept insured for the mutual benefit of Ameristar and Kinseth as loss payees and with Ameristar as an additional insured, all improvements erected by Kinseth on the Leased Land against loss or damage by fire or such other risks as Ameristar may require. The amount of the insurance shall be sufficient to prevent either Ameristar or Kinseth from becoming a coinsurer under the provisions of the policies, but in no event shall the amount be less than the then actual replacement cost excluding costs of replacing excavations and foundations but without deduction for depreciation (herein called full insurable value). If any dispute whether the amount of insurance complies with the above requirements cannot be resolved by agreement, Ameristar may, not more often than once every twelve (12) months, request the carrier of the insurance then in force to determine the full insurable value, and the resulting determination shall be conclusive between the parties for the purpose of this Section. 5.2 PROCEEDS OF INSURANCE. Ameristar shall, at Kinseth's cost and expense, cooperate fully with Kinseth to obtain the largest possible recovery, and all policies of fire and extended coverage insurance required by the previous paragraph shall provide that the proceeds shall be paid directly to Kinseth and to Ameristar as their interests may appear, subject to the provisions of subsection 4.5(k) above. Where no right to terminate this Lease exists or is exercised by reason of any damage or destruction, Ameristar shall make the proceeds available to Kinseth (or, in Ameristar's discretion, shall apply the proceeds) for the sole purpose of reconstructing damaged improvements as stated in Section 3.1, above, and any insurance proceeds remaining after reconstruction shall, be shared equally by Ameristar and Kinseth. The foregoing provisions of this Section 5.2 are subject to the Leasehold Lender Protection Provisions in Section 4.5 above. 5.3 PUBLIC LIABILITY INSURANCE. Throughout the Term, at Kinseth's sole cost and expense, Kinseth shall keep or cause to be kept in force, for the mutual benefit of Ameristar and Kinseth as coinsureds, comprehensive broad form general public liability insurance against claims and liability for personal injury, death, or property damage arising from the use, occupancy, disuse, or condition of the Leased Land, improvements, or adjoining areas or ways, providing protection of at least Ten Million Dollars ($10,000,000) for bodily injury or death to any one person, at least Ten Million Dollars ($10,000,000 for any one accident or occurrence, and at least Five Million Dollars ($5,000,000) for property damage. The amounts of coverage set forth herein shall be subject to appropriate commercially reasonable increases every five (5) years upon written notice from Ameristar to Kinseth specifying the new policy limits. 5.4 POLICY FORM; CONTENT; INSURER. All insurance required by express provisions of this Lease shall be carried only by responsible insurance companies licensed to do business in the State of Iowa rated no lower than "AXII" in the most recent addition of A.M. Best's and "AA" in the most recent addition of Standard & Poor's. All such policies shall be nonassessable and shall contain language, to the extent obtainable, to the effect that (1) any loss shall be payable notwithstanding any act or negligence of Ameristar that might otherwise result in a forfeiture of the insurance, (2) the insurer waives the right of subrogation against Ameristar and against Ameristar's agents and representatives, (3) the policies are primary and noncontributory with any insurance that may be carried by Ameristar, and (4) the policies cannot be canceled or materially changed except after thirty (30) days' written notice by the insurer to Ameristar. Kinseth shall furnish Ameristar with copies of all such policies promptly on receipt of the copies, or with certificates evidencing the insurance. Before the Commencement Date, Kinseth shall furnish Ameristar with binders representing all insurance required by this Lease. At the expiration of the Term, if permitted by the insurer, Kinseth shall assign to Ameristar all Kinseth's right, title and interest in insurance required to be maintained by Kinseth and Ameristar shall reimburse Kinseth pro- rata for all prepaid premiums on such insurance. Kinseth may obtain for its own account any insurance not required under this Lease. Kinseth may provide any insurance required or permitted under this Lease by blanket policy covering the Leased Land, including improvements thereon, and any other properties. Ameristar agrees to use its best efforts to name Kinseth as an additional insured, as its interest may appear, on any public liability insurance policies obtained by Ameristar with respect to the Casino Property. 5.5 INDEMNIFICATION. (A) DEFENSE AND PAYMENT OF CLAIMS. Kinseth agrees to defend, indemnify, and hold Ameristar harmless together with all of its servants, agents, or employees, from and against all liability, loss or costs incurred, including reasonable attorneys' fees, arising out of or relating to injuries or deaths of persons or damages to property caused by Kinseth's acts or omissions to act, use of, or occupancy of the Leased Land, or as the result of Kinseth's operations on the Leased Land. Each party hereto shall give to the other parties prompt and timely notice of any claim or suit instituted coming to its knowledge which in any way, directly or indirectly, contingently or otherwise, affects or might affect the other party, and all parties shall have the right to participate in the defense of the same to the extent of each party's own interest. (B) MECHANICS' LIENS. In the event any mechanics' or other liens or orders for the payment of money shall be filed against the Leased Land or the Building or any other improvements thereon by reason of or arising out of any labor, material furnished or alleged to have been furnished, or to be furnished to, for or at the request of, Kinseth or its agents or contractors on the Leased Land, Kinseth shall, within thirty (30) days after it receives notice or knowledge thereof, either pay or bond against the same or provide for the discharge thereof in such manner as may be provided by law. Kinseth shall also defend on behalf of Ameristar at Kinseth's sole expense, any action, suit or proceeding which may be brought thereon, or for the enforcement of such liens or orders, and Kinseth shall pay any damage and discharge any judgment entered therein and save harmless Ameristar from any and all claims or damages resulting therefrom. Ameristar reserves the right, however, to defend or to direct the defense of any such suit or proceedings. Kinseth shall pay all expenses of such defense, including reasonable attorneys' fees, and shall pay any damage and discharge any judgment entered therein and save Ameristar harmless from any and all claims or damages resulting therefrom. (C) RESISTING CLAIMS. In the event Kinseth shall desire to resist any mechanics' or materialmen's liens, or any other claim against the hereinabove described premises on account of building, rebuilding, repairing, reconstructing or otherwise improving the Leased Land, Kinseth shall have the right to do so, provided Kinseth shall first place funds into escrow in an amount sufficient to pay said claim or lien, with said escrow directed to pay such claim or lien in the event of a result adverse to Kinseth, or provide for a bond or other financial arrangement sufficient to assure payment of the claim or lien. The foregoing requirements to post a bond or escrow for claims or liens shall not apply to claims or liens under Twenty-Five Thousand Dollars ($25,000) individually or in the aggregate unless such claims or liens threaten a foreclosure of any interest in the Leased Land or the Building. ARTICLE VI TAXES, ASSESSMENTS, LIENS, AND ENCUMBRANCES Kinseth shall be responsible for and shall pay and discharge all taxes and assessments to the extent accrued, levied, or coming into existence after the Commencement Date which may become a lien upon or which may be levied by the State, County, or any other tax levying body upon the Leased Land, the Building, or improvements thereon erected by Kinseth or property located thereon or therein. Ameristar shall promptly forward any tax or assessment notices received by Ameristar relating to the Leased Land to Kinseth. In the event that the taxing body with jurisdiction over the Leased Land does not segregate the Leased Land for taxation as a separate parcel, Kinseth and Ameristar shall agree on a mutually acceptable methodology for allocating responsibility for such taxes. Except as otherwise provided herein, Kinseth shall also be responsible for and shall pay all insurance premiums, and or all liabilities, charges, fees, obligations, liens, and encumbrances associated with or relating to the existence and use by Kinseth of this Lease, the Leased Land or the Building, including, but not limited to, all assessment installments due or payable after the date of this Lease. All payments of taxes or assessments or both, except permitted installment payments, shall be prorated between Ameristar and Kinseth for the initial lease year and for the year in which the Lease terminates. Kinseth may, in its own name, or to the extent necessary under Ameristar's name, contest in good faith by all appropriate proceedings, the amount, applicability, or validity of any lien, tax, assessment, or fine pertaining to the Leased Land, or to any improvement on the Leased Land, and in the event Kinseth does in good faith contest the applicability or validity of any lien, tax, assessment, or fine, Ameristar will cooperate in such contest whenever possible with Kinseth; provided that such contest will not subject any part of the Leased Land to risk of forfeiture or loss. If at any time payment of the whole or any part of such lien, tax, assessment, or fine shall become necessary in order to prevent any such forfeiture or loss, Kinseth shall pay the same or cause the same to be paid in time to prevent such forfeiture or loss. Ameristar and Kinseth shall utilize their reasonable best efforts to obtain separate assessment of taxes from all taxing authorities having jurisdiction with respect to the Leased Land, the Building, and the remainder of the Casino Property, and to the extent necessary under applicable law, to constitute the Leased Land as a separate legal parcel. ARTICLE VII CONDEMNATION 7.1 DEFINITIONS. (a) "Condemnation" means (i) the exercise of any governmental power, whether by legal proceedings or otherwise, by any condemnor and (ii) a voluntary sale or transfer by Ameristar to any condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending. (b) "Date of taking" means the date the condemnor has the right to possession of the property being condemned. (c) "Award" means all compensation, sums, or anything of value awarded, paid, or received on a total or partial condemnation. (d) "Condemnor" means any public or quasi-public authority or private corporation or individual having the power of condemnation. 7.2 PARTIES' RIGHTS AND OBLIGATIONS TO BE GOVERNED BY LEASE. If, during the Term or during the period of time between the execution of this Lease and the Commencement Date, there is any taking of all or any part of the Building, other improvements, or Leased Land or any interest in this Lease by condemnation, the rights and obligations of the parties shall be determined pursuant to the following paragraphs. 7.3 TOTAL TAKING. If the Leased Land and all improvements thereon are totally taken by condemnation, this Lease shall terminate on the date of taking. 7.4 7.4. PARTIAL TAKING. If only a portion of the Leased Land or of any improvements is taken by condemnation, this Lease shall remain in effect, except that Kinseth may elect to terminate this Lease if: (i) the remaining Leased Land or improvements could not be economically and feasibly used by Kinseth, and (ii) a reasonable amount of reconstruction (taking into account costs associated therewith, including unavoidable loss of use of portions of the Leased Land and rentals accruing hereunder during reconstruction) would not make the remaining Leased Land and improvements reasonably suited for Kinseth's continued occupancy for the uses and purposes for which the Leased Land has been leased; or, if (iii) Kinseth is unable to fulfill its covenants to Ameristar pursuant to Article II of this Lease, unless such particular covenants which cannot reasonably be fulfilled by virtue of such partial taking are waived by Ameristar in writing. If Kinseth elects to terminate this Lease, Kinseth must exercise its right to terminate pursuant to this Section by giving notice to Ameristar within thirty (30) days after the nature and the extent of the taking have been finally determined. If Kinseth elects to terminate this Lease as provided in this Section, Kinseth shall also notify Ameristar of the date of termination, which date shall not be earlier than ninety (90) days nor later than one hundred eighty (180) days after Kinseth has notified Ameristar of its election to terminate; except that this Lease shall terminate on the date of taking if the date of taking falls on a date before the date of termination as designated by Kinseth. If Kinseth does not terminate this Lease within the thirty (30) day period, this Lease shall continue in full force and effect, except that Rental from and after the effective date of the taking shall be reduced by a proportion equal to the ratio of the area of the Leased Land taken to the total area of the Leased Land immediately prior to the taking and that Base Rental shall be similarly reduced for purposes of future Rental adjustments. 7.5 RESTORATION OF IMPROVEMENTS. (A) RESTORATION OF IMPROVEMENTS. If there is a partial taking of the Leased Land and improvements located thereon and this Lease remains in full force and effect pursuant to Section 7.4 above, Kinseth, at its cost, shall accomplish all repair or restoration necessary to render the remaining improvements usable for the uses and purposes for which the Leased Land has been leased. (B) ABATEMENT OR REDUCTION OF RENT. To the extent specific rooms are damaged and thereby rendered unrentable, Rent shall be abated during the period of restoration, but all other obligations of Kinseth under this Lease shall remain in full force and effect. 7.6 AWARD DISTRIBUTION. If proceeds of condemnation are awarded separately to Ameristar and Kinseth based on their respective interests in the Leased Land, the Building, and any improvements, each party shall retain its own award, subject to the obligations of Kinseth under any Leasehold Lien. In the event of a single condemnation award, however, the award shall be apportioned between the parties as follows: first, to the unpaid principal and interest owed on the obligations secured by any Leasehold Liens; second Ameristar shall be entitled to the value of any portion of the Leased Land taken determined based on its highest and best use, but as if the Leased Land were unencumbered by this Lease; and third, the balance of any award, subject to the rights of any Leasehold Lender, shall go to Kinseth; provided, however, that in the event of any taking during the last ten (10) years of the Term, Ameristar shall also be entitled to receive a percentage of the remainder of the award equal to ten percent (10%) in the event of a taking in the tenth (10th) Lease year prior to the end of the Initial Term and an additional ten percent (10%) for each Lease year thereafter, and provided further that Ameristar shall be entitled to keep the entire condemnation proceeds in the event of a taking in the last two (2) years of the Initial Term. ARTICLE VIII DEFAULT PROVISIONS; REMEDIES; ATTORNEYS' FEES 8.1 DEFAULT BY KINSETH. Each of the following shall be deemed an event of default by Kinseth and a breach of this Lease: (A) RENT OR OTHER PAYMENTS. If Kinseth shall default in the payment of rent or other payments hereunder when due according to the terms of this Lease and shall not have fully corrected the same within ten (10) days after Kinseth's receipt of written notice from Ameristar. (B) OTHER COVENANTS OR CONDITIONS. If Kinseth shall default in the performance or observance of any other covenant or condition of this Lease or of any note, deed of trust, or other document relating to a Leasehold Lien to be performed or observed by Kinseth, whether or not Ameristar is a party to any such documents, and Kinseth shall not have fully corrected the same within thirty (30) days after notice thereof has been sent by Ameristar to Kinseth, or such other specific period of notice and opportunity to cure as may be expressly provided herein. (C) ABANDONMENT. Total abandonment by Kinseth of the Leased Land and any improvements constructed by Kinseth on the Leased Land. (D) INSOLVENCY. If during the Term of this Lease: I. APPOINTMENT OF RECEIVER. Kinseth shall apply for or consent in writing to the appointment of a receiver, trustee, or liquidator of Kinseth or of all or substantially all of Kinseth's assets or shall not obtain the termination of any such receivership or trusteeship involuntarily ordered; or II. VOLUNTARY BANKRUPTCY. Kinseth shall file a voluntary petition for relief under the United States Bankruptcy Code as that now exists or under amendment or successor law thereto or any other law dealing with the subject of bankruptcy or admit in writing its inability to pay its debts as they become due; or III. ASSIGNMENT FOR CREDITORS. Kinseth shall make a general assignment for the benefit of creditors; or IV. REORGANIZATION OR ARRANGEMENT. Kinseth shall enter into any reorganization, composition, or other arrangement with any or all of its creditors pursuant to any insolvency law or the common law; or V. INVOLUNTARY PETITION. Any creditor of Kinseth shall have commenced an involuntary proceeding under the United States Bankruptcy Code or any successor law or other law dealing with the subject of bankruptcy and Kinseth shall not have obtained the dismissal of the proceeding within ninety (90) days after its commencement. 8.2 REMEDIES. In the event of any breach or default of this Lease by Kinseth and so long as such breach or default is continuing, then subject to the rights of any Leasehold Lender under Article IV of the Lease, Ameristar, in addition to any other rights or remedies Ameristar may have, shall have the right, with or without notice to take any or all of the following actions: (A) RE-ENTRY. Immediately re-enter and take possession of the Leased Land, Building, and any other improvements and remove all persons and property from the Leased Land or the Building. Any property may be stored on the Leased Land or in any other place, for the account of and at the expense and at the risk of Kinseth. Except in the case of gross negligence or willful misconduct on the part of Ameristar, Kinseth hereby waives all claims for damages which may be caused by the re-entry of Ameristar and taking possession of the Leased Land, Building and other improvements or removing or storing the property as herein provided, and will save Ameristar harmless from any loss, costs or damages occasioned Ameristar thereby. No such re-entry shall be considered or construed to be a forceful entry. No such re- entry or taking possession of the premises by Ameristar shall be construed as an election on Ameristar's part to terminate this Lease unless a written notice of such intention is given to Kinseth; or (B) SUIT FOR SUMS DUE. Collect by suit or otherwise from time to time any unpaid rents or other sums due as they become due for the account of Kinseth; or (C) SPECIFIC PERFORMANCE. Enforce by suit any term of the Lease required to be kept or performed by Kinseth; or (D) RELETTING. Without terminating this Lease, relet the Leased Land or any part thereof, or any space in the Building for the account of Kinseth for such term or terms and at such rental or rentals and upon such other terms and conditions as Ameristar in Ameristar's sole discretion may deem advisable, with the right to make alterations and repairs to any improvements located on the Leased Land. Rentals received by Ameristar from such reletting shall be applied as follows; First, to the payment of any costs of such reletting; second, to the payment of the cost of any alterations and repairs to the Leased Land or improvements thereon made necessary by Kinseth's breach of the provisions of this Lease; third, to payment of any indebtedness, other than rent, due Ameristar hereunder from Kinseth; fourth, to the payment of rent due and unpaid hereunder; and the residue, if any, shall be held by Ameristar and applied in payment of future rent as the same may become due and payable hereunder. Should such rental received from such reletting be less than the rental agreed to be paid that quarter by Kinseth hereunder, then Kinseth shall pay such deficiency to Ameristar. Notwithstanding any such reletting without termination, Ameristar may at any time thereafter elect to terminate this Lease for such previous breach; or (E) COLLECTION OF RENTS. Without terminating this Lease, collect all rents, revenues and room charges from payable Building, with any such revenues to be applied in the manner set forth in subparagraph (d) immediately preceding; or (F) TERMINATION. Terminate this Lease. Should Ameristar at any time terminate this Lease for any breach, in addition to any other remedy Ameristar may have, Ameristar may recover from Kinseth all damages Ameristar may incur by reason of such breach, including without limitation the following: i. the worth at the time of award of any unpaid rent or other sums which had been earned or which were due at the time of such termination; plus ii. the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of rent loss that Kinseth proves could have been reasonably avoided; plus iii. the worth at the time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of rent loss that Kinseth proves could be reasonably avoided; plus iv. any other amount necessary to compensate Ameristar for all the detriment proximately caused by Kinseth's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom (but excluding consequential damages from lost profits to Ameristar's gaming operations), including, but not limited to, any costs or expenses incurred by Kinseth in retaking possession of the Leased Land and improvements thereon, including reasonable attorneys' fees, maintaining or preserving the Leased Land or improvements thereon after such default, preparing the Leased Land and other improvements thereon for reletting to a new tenant, including repairs or alterations to any improvements for such reletting, leasing commissions, or any other costs necessary or appropriate to relet the Leased Land; plus v. at Ameristar's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by the laws of the State of Iowa. As used in subparagraphs (i) and (ii), above, the "worth at the time of award" is computed by charging interest on each installment of rent or other sum from the due date at a variable rate which shall be equal to five percent (5%) per annum over the "prime rate" as announced by First Interstate Bank of Nevada. (G) TERMINATE KINSETH WITH PAYOFF OR ASSUMPTION OF LEASEHOLD LIEN. Terminate, forfeit or acquire Kinseth's interest in this Lease and the Leased Land as set forth herein, free of any lien, adverse interest or claim including rights available to Kinseth in bankruptcy, conditioned upon Ameristar concurrently therewith doing one of the following: i. pay off in full Leasehold Lenders for the lesser of then outstanding aggregate principal amount of the Leasehold Lien attributable to the Leased Land (not to exceed the greater of (x) Four Million Five Hundred Thousand Dollars ($4,500,000) or (y) seventy five percent (75%) of the appraised value of the Leased Land), plus accrued interest and costs attributable to the Leasehold Lien on the Leased Land; or ii. provided that Ameristar obtains an opinion of the Iowa legal counsel acceptable to Leasehold Lender that no "merger" of the leasehold interest and the fee interest in the Leased Land will occur, novate and substitute Ameristar itself as lessee under this Lease, and assume the Leasehold Lien for its then unpaid principal balance attributable to the Leased Land, said principal balance not to exceed the Aggregate Principal Amount as defined in Section 4.2 above, together with accrued interest, attorneys' fees and costs of collection attributable to the Leasehold Lien on the Leased Land. In such event, Ameristar, at its cost and expense, will execute such "nonrecourse" assumption documents as Leasehold Lenders may reasonably require to confirm the nonrecourse assumption of the Leasehold Lien and deliver to Leasehold Lender an endorsement to Leasehold Lender's loan policy of title insurance insuring Ameristar to be the owner of the leasehold interest in the Ground Lease free of any lien, adverse interest or claim including rights available to Kinseth in bankruptcy and continuing the insured priority of the Leasehold Lien on the Leased Land free of any exceptions to coverage other than as set forth in Leasehold Lender's existing loan policy. To the extent the Leasehold Lien encumbers property other than the Leased Land, upon such assumption, Leasehold Lender agrees to bifurcate and separate the Leasehold Lien documents into two separate sets of documents, one encumbering and creating a security interest upon the Leased Land and the other encumbering and creating a security interest in the other property and provided that the amount of the Leasehold Lien on the Leased Land will not exceed the lesser of the then outstanding balance of principal, and unpaid interest, costs and fees attributable to the Leased Land, or the Aggregate Principal Amount in principal indebtedness. The bifurcated loan applicable to the Leased Land shall have the same interest rate, amortization period, and installment payment periods as under the Leasehold Lien. This right is subject to Leasehold Lender receiving an opinion satisfactory to it from Iowa counsel acceptable to Leasehold Lender that such bifurcation may accomplish the aforementioned results under Iowa law without affecting the Leasehold Lien security (other than the bifurcation) and does not create any impediment or obstacle to exercising the remedies available to Leasehold Lender under the Leasehold Lien documents. This right is personal only to Ameristar under the Ground Lease (and to Ameristar's mortgage lender) and shall not benefit any other party, including Kinseth, its successors and assigns. 8.3 CUMULATIVE REMEDIES. The remedies herein given to Ameristar shall be cumulative, and the exercise or nonexercise of any one remedy by Ameristar on any occasion shall not exclude or constitute a waiver of any other remedy on the same or any other occasion. Without any previous notice or demand, separate actions may be maintained by Ameristar against Kinseth from time to time to recover any rent or damages which, at the commencement of any such action, have become due and payable to Ameristar, without waiting until the end of the Term. 8.4 ATTORNEYS' FEES. In the event of any default by Kinseth, Ameristar shall be entitled to recover from Kinseth, in addition to any other remedies, relief, or damages to which the Ameristar may be entitled hereunder or under applicable law, all costs, including reasonable attorneys' fees, incurred in enforcing its rights hereunder, recovering possession of the Leased Land or any improvements, or recovering damages for the breach hereof, whether incurred through litigation or otherwise. ARTICLE IX COVENANTS AND WARRANTIES 9.1 NO WARRANTIES BY AMERISTAR. Ameristar makes no warranties or representations whatsoever, express or implied, regarding the condition of the Leased Land, its value, its marketability, or its fitness for a particular use or development. Kinseth agrees to take possession of the Leased Land in an "as is" condition. Ameristar's right, title, and interest in and to the Leased Land, except for this Lease, shall not be subordinated or subject to any other claim or interest of Kinseth or to any other claim or interest of any mortgagee or other creditor in connection with the financing of the improvements to be constructed on the Leased Land. 9.2 RIGHT TO EXECUTE. The parties represent that each has full right and power to execute and perform this Lease and to grant the estate leased herein and the rights, easements, privileges, appurtenances, and hereditaments belonging or pertaining thereto. 9.3 PEACEFUL ENJOYMENT. Kinseth, on paying the rent herein reserved and performing the covenants and provisions hereof on its part to be performed, shall peacefully and quietly have and enjoy the Leased Land, and all such existing rights, easements, privileges, appurtenances, and hereditaments belonging or pertaining thereto, during the Term; provided, however, that Ameristar does not warrant that a governmental authority may not at some time during the Term, without the consent or permission of Ameristar, pass ordinances or perform acts which may be prejudicial to Kinseth through no fault of Ameristar. Ameristar shall provide to Kinseth's customers, guests and invitees, nonexclusive parking rights sufficient for the operation of the hotel on the designated parking areas as they exist from time-to- time on Ameristar's Casino Property, however, Kinseth shall have no right to designate or require a particular location or configuration with respect to such parking, or to interfere in any way with Ameristar's use and designation of parking areas. ARTICLE X ASSIGNMENT, SUBLETTING AND SALE 10.1 ASSIGNMENT. Ameristar may assign its interests in this Lease upon written notice to Kinseth and its Leasehold Lender. Except for assignment to a Leasehold Lender as contemplated under Article IV of this Lease, Kinseth may not assign this Lease or sublet its interest in the Leased Land without the prior written consent of Ameristar, which consent shall not be unreasonably withheld by Ameristar provided that the proposed assignee is: (a) of equal or greater financial capacity and net worth as Kinseth on the date of such assignment, but in any event having a financial capacity and net worth reasonable, under the circumstances at the time of the assignment, to require for a lessee under this Lease; (b) an experienced manager and/or operator of similar hotel properties; (c) a franchisee of the same hotel chain as Kinseth or of another franchisor approved pursuant to Sections 2.3(a) and 3.8(m) above; and (d) highly reputable as a hotel and business operator. A change of the manager of Kinseth (currently Kinseth Hotel Corporation) (to an entity other than one in which Bruce Kinseth, Les Kinseth, Linda Skinner and Gary Skinner or their families maintain, directly or indirectly, voting and operating control), or the failure of Bruce Kinseth, Les Kinseth, Linda Skinner, and Gary Kinseth or their families to maintain, directly or indirectly, voting and operating control of the manager of Kinseth shall be considered an assignment for purposes of this section. An assignment of 50% or more of the membership interests in Kinseth in and of itself shall not be considered an assignment for purposes of this section. In the event Ameristar gives its consent for any assignment or subletting of this Lease, the assignee or subtenant shall assume in writing all of Kinseth's obligations and duties under this Lease and shall be subject to all of the terms of this Lease, and Ameristar shall be subject only to those obligations and shall enjoy such rights and privileges as are set forth in this Lease. Such sublease or assignment shall not relieve Kinseth from its liability under this Lease without Ameristar's written consent, which shall be in Ameristar's sole discretion. The provisions of this Section 10.1 are specifically subject to the provisions of Section 4.5 of this Lease, and in the event of any conflict, the provisions of Section 4.5 shall control. ARTICLE XI MISCELLANEOUS PROVISIONS 11.1 INSPECTION BY AMERISTAR. Ameristar may enter upon the Leased Land at any reasonable time for any purpose necessary, incidental to, or connected with verification of the performance of Kinseth's obligations hereunder, but subject to any provisions with respect thereto otherwise contained herein. 11.2 NEGATION OF PARTNERSHIP. Nothing in this Lease shall be construed to render Ameristar in any way or for any purpose a partner, joint venturer, or associate in any relationship with Kinseth other than that of landlord and tenant, nor shall this Lease be construed to authorize either to act as agent for the other except as expressly provided to the contrary in this Lease. 11.3 CONTROLLING LAW. This Lease shall be deemed to be made and shall be construed in accordance with the laws of the State of Iowa. 11.4 SURRENDER OF POSSESSION. Kinseth agrees to yield and deliver to Ameristar possession of the Leased Land, the Building, and all other improvements on the Leased Land at the termination of this Lease, or as otherwise provided herein, in good condition and in accordance with the express obligations provided herein, except for reasonable wear and tear, and, although not required to effectuate a surrender, Kinseth shall execute and deliver to Ameristar a good and sufficient document of relinquishment, if and when requested. 11.5 SUCCESSORS. This Lease shall bind and inure to the benefit of any successor or assignee of Ameristar and any successors or permitted assignees of Kinseth, whether resulting from any merger, consolidation, reorganization, assignment, foreclosure, or otherwise. 11.6 HEADINGS. The article and section headings contained herein are for convenience and reference and are not intended to define or limit the scope of any provision of this Lease. 11.7 NOTICES. All notices, requests, consents and demands shall be given to or made upon the parties at their respective addresses set forth below, or at such other address as a party may designate in writing delivered to the other party. Unless otherwise agreed in this Lease, all notices, requests, consents and demands shall be given or made by personal delivery, by confirmed air courier, by facsimile transmission ("fax"), or by postage prepaid first class mail, to the party addressed as aforesaid. If sent by confirmed air courier, such notice shall be deemed to be given upon the earlier to occur of the date upon which it is actually received by the addressee or the business day upon which delivery is made at such address, as confirmed by the air courier (or if the date of such confirmed delivery is not a business day, the next succeeding business day). If mailed, such notice shall be deemed to be given upon the earlier to occur of the date upon which it is actually received by the addressee or the third (3rd) business day following the date upon which it is deposited in a first-class postage-prepaid envelope in the United States mail addressed to such address. If given by fax, such notice shall be deemed to be given upon the date it is actually received by the addressee, as confirmed by a return fax signed by the addressee. If to Ameristar: Ameristar Casino Council Bluffs, Inc. Attention: General Manager 2200 River Road Council Bluffs, Iowa 51501 Fax; (712) 328-8882 with a copy to: Gordon R. Kanofsky, Esq. Sanders, Barnet, Goldman, Simons & Mosk 1901 Avenue of the Stars, Suite 850 Los Angeles, CA 90067-6078 Fax: (310) 553-2435 If to Kinseth: River Road Hotel Associates, L.C. Attention: Bruce Kinseth 2 Quail Creek Circle North Liberty, Iowa 52317 Fax (319) 626-8350 with a copy to: Nicholas H. Roby, Esq. Davis, Brown, Koehn, Shors & Roberts, P.C. 666 Walnut Street, Suite 2500 Des Moines, Iowa 50309 Fax: (515) 243-0654 11.8 RECORDING. Ameristar and Kinseth agree to execute and have acknowledged, and Kinseth agrees to deliver to Ameristar, a memorandum of this Lease in the form attached hereto as Exhibit D. Such memorandum shall be recorded with the County recorder or clerk. 11.9 COMPETING HOTEL. Kinseth acknowledges that Ameristar operates, and may construct or permit the construction of another hotel or hotels on or near the Casino Property and that such hotel(s) will be entitled to compete with Kinseth's hotel. Nothing in this Lease shall be deemed to be a covenant by Ameristar not to compete with Kinseth or not to permit such competition by other hotel owners or operators, or to permit other hotel owners or operators or other third-parties to utilize parking areas on the Casino Property on a nonexclusive basis. 11.10 RIGHT OF FIRST OFFER. In the event that during the first fifteen (15) years of the Term Ameristar determines to sell or lease any portion of the Casino Property to any third-party for the construction of a hotel facility in which Ameristar has no ownership interest in the hotel operation and which would compete with the hotel in Kinseth's Building, Ameristar agrees to so notify Kinseth in writing, and for a period of thirty (30) days thereafter, Kinseth shall have a right to make an offer with respect to such additional hotel and if Kinseth makes such offer, for a period of thirty (30) days after such offer Ameristar will negotiate in good faith to determine if an acceptable transaction can be structured and agreed to with Kinseth. If no written agreement is reached between Ameristar and Kinseth during such subsequent thirty (30) day period, Ameristar shall be free to negotiate with any other party. The foregoing shall not apply to any transaction wherein Ameristar sells substantially all of the Casino Property to a third-party. 11.11 OPTION TO PURCHASE. Kinseth hereby grants Ameristar an irrevocable option to purchase all of Kinseth's right, title and interest in and to the Leased Land, the Lease, the Building, any other improvements on the Leased Land, fixtures, equipment, personal property, contract rights and general intangibles, and any and all appurtenances thereto necessary to operate the hotel (the "Property Interests"), which option period shall commence three (3) years after the hotel opens for business in the Building, and the option shall terminate without further notice ten (10) years after the hotel opens for business in the Building. The option price shall be the greater of Seven Million Dollars ($7,000,000), or the "mean" appraised value, which shall be determined by taking the "mean" value of the two (2) closest of three (3) MAI appraisals of the foregoing Property Interests valued as an operating hotel. Upon Ameristar's giving written notice to Kinseth of its intention to exercise this option, unless Ameristar and Kinseth agree on an option price within thirty (30) days of such notice, Ameristar and Kinseth shall each choose an MAI appraiser, which appraisers shall then in turn select a third appraiser. For purposes of this Section 11.11, the "mean appraised value" shall mean during the first year of the option period one hundred twenty-five percent (125%) of the mean of the two (2) closest appraised fair market values of the Property Interests, and during the remainder of the option period the option price shall be equal to one hundred fifteen percent (115%) of such mean of the two (2) closest appraisals; provided, however, that in any event throughout the term of the option the option price shall not be less than the lesser of the outstanding balance owed on any Leasehold Lien(s) on the Property Interests subject to this option, or the Aggregate Principal Amount (plus accrued interest and costs of collection related to the Leased Land). Upon receipt of the appraisals necessary to determine the option price, Ameristar shall have sixty (60) days to determine whether to proceed in exercising the option. If Ameristar elects not to proceed with a closing under the option, it shall reimburse Kinseth for the out-of-pocket costs incurred by Kinseth for the appraisals. Any future notice of intention by Ameristar with respect to the option shall require new appraisals unless otherwise agreed by the parties. Ameristar agrees that in the event of any foreclosure sale by a Leasehold Lender under a Leasehold Lien, this option in favor of Ameristar shall be deemed to be subordinate to such Leasehold Lien, provided that prior to the time of such foreclosure sale, Ameristar shall have the rights specified in Sections 4.4, 4.5(f)(vii), and this Section 11.11 of this Lease. After the expiration of the option period set forth herein, through the remainder of the Ground Lease term Ameristar shall have, and is hereby granted by Kinseth, a right of first refusal for a period of sixty (60) days after Ameristar's receipt of notice from Kinseth to purchase the Property Interests for the same price and terms as Kinseth is willing to sell to any third-party offer Kinseth intends to accept. Kinseth agrees to provide Ameristar with a true and complete copy of any such offer at the same time as it gives Ameristar written notice pursuant to this right of first refusal. If Ameristar does not exercise its right of first refusal, and the proposed transaction does not close, or is modified in any way, Ameristar's right of first refusal shall continue as to the modified offer and any future or other offers which Kinseth would intend to accept. This right of first refusal granted by Kinseth herein shall expire immediately prior to any foreclosure sale conducted by Leasehold Lender, or upon Leasehold Lender's recording of a deed in lieu of foreclosure. 11.12 SIGNAGE. Ameristar grants to Kinseth the right to erect a sign on Ameristar's property at a location to be approved by Ameristar in its sole and absolute discretion. The costs of acquiring, erecting and maintaining the sign shall be borne by Kinseth. Ameristar agrees to grant to Kinseth all necessary easements allowing the existence of the sign and access to Kinseth to maintain the sign. The proposed design of the sign shall be submitted by Kinseth to Ameristar and it shall not be inconsistent or interfere with the Ameristar sign or obstruct or interfere with "view corridors" of any Ameristar facility. In the event of any dispute with respect to the proposed design or location of the sign, such party agrees to cooperate with the other party and use its best efforts to immediately resolve the dispute. IN WITNESS WHEREOF, the parties have caused this Ground Lease Agreement to be executed as of the above stated date. AMERISTAR: Ameristar Casino Council Bluffs, Inc. By: /s/Thomas Steinbauer Its: Vice President KINSETH: River Road Hotel Associates, L.C. By: /s/Leslie B. Kinseth Its: Member STATE OF NEVADA ) : ss. COUNTY OF Clark ) The foregoing instrument was acknowledged before me this 28th day of May, 1999, by Thomas Steinbauer, the Vice President of Ameristar Casino Council Bluffs, Inc., an Iowa corporation. My commission expires: /s/Barbara Jean Miller Notary Public 10/23/00 Residing at: Las Vegas, NV STATE OF IOWA ) : ss. COUNTY OF Cerro Gordo ) The foregoing instrument was acknowledged before me this 28th day of May, 1999, by Leslie Kinseth, the Member of River Road Hotel Associates, L.C., an Iowa limited liability company. My commission expires: /s/ Donald Jackson, Jr. Notary Public 9/26/2000 Residing at: 9 Plaza Dr. Clear Lake, IA EXHIBIT A LEGAL DESCRIPTION EXHIBIT A-1 SITE PLAN EXHIBIT B AMERISTAR MARKS EXHIBIT C KINSETH AND FRANCHISOR MARKS EXHIBIT D MEMORANDUM OF LEASE [To be recorded in County Records.] EX-10 4 May 28, 1999 Bruce Kinseth Kinseth Hotel Corporation River Road Hotel Associates, L.C. 2 Quail Creek Circle North Liberty, Iowa 52317 Re: Ground Lease dated May 28, 1999 between Ameristar Casino Council Bluffs, Inc. ("Ameristar") and River Road Hotel Associates, L.C. ("River Road") This is to confirm our understanding with respect to the Ground Lease Agreement dated May 28, 1999. Ameristar is willing to give River Road approval to enter onto the Leased Land (as defined in the Ground Lease) to begin preliminary site work for the construction of a Hampton Inn hotel. Pending the effectiveness of the Ground Lease, Sections 2.1 (d) (Construction Standards), 2.1(e) Insurance During Construction), 2.2 (Compliance with Laws), 3.4 (Governmental Authorities), 3.6 (Limitation on Ameristar's Responsibilities), 5.3 (Public Liability Insurance), 5.4 (Form of Insurance), and 5.5 (Indemnification) and Article VI (Taxes, Assessments, Liens and Encumbrances) of the Ground Lease shall apply to Kinseth's activities with respect to such preliminary site work. Such provisions of the Ground Lease will be applicable notwithstanding the existence of conditions precedent to the effectiveness of the Ground Lease and regardless of whether the Ground Lease becomes effective or is terminated. River Road will provide evidence of liability insurance in an amount satisfactory to Ameristar for such indemnity. River Road and Ameristar shall proceed with diligence to satisfy the Conditions to Performance in Section 1.2 of the Ground Lease. If the conditions to be satisfied by River Road are not satisfied within the applicable time periods and Ameristar terminates the Ground Lease, River Road will be responsible for all costs and expenses necessary to promptly restore the Leased Land to its condition prior to the execution of the Ground Lease and the commencement of the site work. Likewise, if the conditions to be satisfied by Ameristar are not satisfied within the applicable time periods and River Road terminates the Ground Lease, Ameristar will be responsible for all costs and expenses necessary to promptly restore the Leased Land to its condition prior to the execution of the Ground Lease and the commencement of the site work. Until the Ground Lease becomes effective, if ever, Kinseth Hotel Corporation shall be jointly and severally liable with River Road for the obligations under this letter. Please indicate your agreement to the above by signing in the space below. Ameristar Casino Council Bluffs, Inc., an Iowa corporation By: /s/Thomas Steinbauer Its: Vice President Agreed and Accepted River Road Hotel Associates, L.C., an Iowa limited liability corporation by its Manager Kinseth Hotel Corporation, an Iowa corporation By: /s/ Leslie B. Kinseth Its President Date May 28, 1999 Kinseth Hotel Corporation, an Iowa corporation By: /s/ Leslie B. Kinseth Its President Date May 28, 1999 EX-10 5 MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding made as of June 8, 1999 is between AMERISTAR CASINO COUNCIL BLUFFS, INC. ("AMERISTAR"), COUNCIL BLUFFS HOTEL ASSOCIATES, L.C. ("CBHA") and RIVER ROAD HOTEL ASSOCIATES, L.C. ("RRHA"). WHEREAS, Ameristar and CBHA's predecessor-in-interest have entered into that certain Amended and Restated Ground Lease Agreement dated as of September 7, 1995 (as amended, the "HOLIDAY INN LEASE"), pursuant to which CBHA leases from Ameristar certain land at Ameristar's riverboat casino complex in Council Bluffs, Iowa (the "AMERISTAR CASINO COMPLEX") and on which CBHA has constructed and operates, and intends to expand, a Holiday Inn Hotel & Suites (the "HOLIDAY INN"); and WHEREAS, Ameristar and RRHA have entered into that certain Ground Lease Agreement dated as of May 28, 1999 (the "HAMPTON INN LEASE"), pursuant to which RRHA will lease from Ameristar certain land at the Ameristar Casino Complex and on which RRHA intends to construct and operate a Hampton Inn (the "HAMPTON INN"); and WHEREAS, Section 2.1(b) of the Holiday Inn Lease provides in pertinent part as follows (references to Kinseth in the Holiday Inn Lease are references to CBHA): "Kinseth agrees to permit Ameristar, at Ameristar's cost, to connect the Building to an adjacent pavilion or docking facility with a covered breezeway, and Ameristar agrees to construct such breezeway, and a pavilion or docking facility."; WHEREAS, Section 11.12 of the Holiday Inn Lease provides as follows: "Concurrently with its execution of this Lease, Ameristar does hereby grant Kinseth an irrevocable license for a term concurrent with this Lease, and any renewals, to utilize the swimming pool and related facilities and appurtenances thereto to be constructed by Ameristar on its property adjacent to the Leased Land. Ameristar agrees to obtain Kinseth's prior written approval of the construction plans and specifications related to the pool, and the contractor bids for the pool, which approval shall not be unreasonably withheld or delayed. Kinseth agrees to reimburse one-half (1/2) of the initial cost of construction of the pool facilities (including necessary site work) to a maximum reimbursement by Kinseth of Three Hundred Seventy-Five Thousand Dollars ($375,000), and one-half (1/2) of the actual operating expenses of the pool on an ongoing annual basis. This license shall survive any foreclosure of the interest of Ameristar or Kinseth or any permitted successor, by any fee mortgage holder or any Leasehold Lender."; WHEREAS, Section 11.9 of the Holiday Inn Lease provides as follows: "Kinseth acknowledges that Ameristar may construct or permit the construction of another hotel or hotels on or near the Casino Property and that such hotel(s) will be entitled to compete with Kinseth's hotel. Nothing in this Lease shall be deemed to be a covenant by Ameristar not to compete with Kinseth or not to permit such competition by other hotel owners or operators, or to permit other hotel owners or operators or other third-parties to utilize parking areas on the Casino Property on a nonexclusive basis."; WHEREAS, Section 2.1(b) of the Hampton Inn Lease provides in pertinent part as follows (references in the Hampton Inn Lease are references to RRHA): "Kinseth agrees to connect the Building to the adjacent hotel and/or pavilion and casino with a covered, climate controlled breezeway."; WHEREAS, Section 11.9 of the Hampton Inn Lease provides as follows: "Kinseth acknowledges that Ameristar operates, and may construct or permit the construction of another hotel or hotels on or near the Casino Property and that such hotel(s) will be entitled to compete with Kinseth's hotel. Nothing in this Lease shall be deemed to be a covenant by Ameristar not to compete with Kinseth or not to permit such competition by other hotel owners or operators, or to permit other hotel owners or operators or other third-parties to utilize parking areas on the Casino Property on a nonexclusive basis."; WHEREAS, Ameristar has informed CBHA and RRHA that, under Ameristar's pre-existing master plan for the Ameristar Casino Complex, Ameristar may, at some time in the future, desire to build additional hotel rooms at the place (the "FUTURE DEVELOPMENT SITE") where the pool and fitness center shared by Ameristar and CBHA and the indoor walkway between the Holiday Inn and the pavilion at Ameristar Casino Complex (the "CURRENT FACILITIES") currently exist, and in connection with such construction Ameristar would intend to demolish and reconstruct the Current Facilities; WHEREAS, CBHA and RRHA have each advised Ameristar that they do not believe that Ameristar has any right to demolish the Current Facilities in connection with any such future development and construction; WHEREAS, Ameristar has requested that CBHA and RRHA waive any rights they may have that would restrict or prohibit Ameristar from demolishing and reconstructing the Current Facilities; provided, however, that Ameristar neither admits nor denies that CBHA and/or RRHA have any such rights; and WHEREAS, CBHA and RRHA are willing to agree in principle that Ameristar may demolish and reconstruct the Current Facilities without breaching either the Holiday Inn Lease or the Hampton Inn Lease subject to certain conditions, and Ameristar is willing to agree in principle to such conditions. NOW, THEREFORE, the parties hereto state that their mutual understanding and agreement in principle with respect to the subject matter hereof is as follows: 1. CBHA and RRHA acknowledge that Ameristar has right under the terms of the Holiday Inn Lease and the Hampton Inn Lease, respectively, to build additional hotel rooms and related facilities at the Ameristar Casino Complex, including without limitation at the Future Development Site. 2. Subject to the other provisions of this Memorandum of Understanding, Ameristar agrees (a) for the benefit of CBHA, and its lenders and other permitted assigns, to maintain a pool and fitness center for the benefit of the Holiday Inn; and (b) for the benefit of CBHA and RRHA, and each of their respective lenders and other permitted assigns, to maintain an indoor walkway from the Holiday Inn to the Pavilion. 3. Ameristar acknowledges construction of additional rooms will not be contemplated until there is market justification to build additional rooms. Market justification will include a study that would indicate there will not be a materially adverse impact on occupancy and average daily rate for each of the Holiday Inn and the Hampton Inn in comparison to the then current averages for comparable properties in the greater Omaha/Council Bluffs market. Ameristar further acknowledges that since each of the Holiday Inn Lease and the Hampton Inn Lease provide for percentage rentals, the level of rentals to be paid by CBHA and RRHA to Ameristar is materially dependent upon the ability to drive lodging demand through the existing and future amenities at the Ameristar Casino Complex. Ameristar currently contemplates that future amenities to be developed may include expanded gaming operations (it is acknowledged that development of a third level addition to the existing riverboat will commence in the near future), additional parking facilities (it is acknowledged that development of a parking structure in replacement of surface parking will commence in the near future), conference or meeting facilities, arcades, bowling alleys, movie theatres, restaurants, lounges, shopping outlets and other entertainment, food & beverage and retail facilities. The parties mutually contemplate that the development of future amenities will be necessary to warrant a market justification for the development of additional hotel rooms at the Ameristar Casino Complex; provided, however, that Ameristar does not commit to develop in the future any particular amenities. 4. If Ameristar does develop, or causes to be developed, additional hotel rooms at the Future Development Site that disturbs any of the Current Facilities, Ameristar agrees that it will, at a minimum: 4.1 If required to satisfy non-waivable requirements of CBHA's current franchisor, build a temporary or permanent swimming pool that will satisfy such requirements. Subject to such franchisor requirements, it is contemplated that any such pool may be an outdoor pool, with an adequate shelter to permit guest use during the cold weather seasons of the construction period, if any, or thereafter in the case of a permanent pool. Any such pool will be conveniently accessible to the Holiday Inn. If any such pool is constructed, Ameristar may either demolish it after construction or leave it in place as an additional outdoor pool for use by Holiday Inn guests. 4.2 Construct and maintain an alternative indoor walkway between the Holiday Inn and the Ameristar Casino Complex pavilion; provided, however, that if such an alternative indoor walkway is not feasible during any portion of the construction period, Ameristar may instead provide access to the Ameristar Casino Complex pavilion from the Holiday Inn and the Hampton Inn via continuously operating shuttle vans operated by Ameristar at its own expense. 4.3 Compensate CBHA and RRHA for lost operating profits. The lost operating profits will be determined based upon the monthly operating results experienced by CBHA and RRHA during the period of construction of the new hotel, pool, fitness center and/or indoor walkway, plus an additional three months immediately following the completion of such construction, as compared to the monthly operating profits for the corresponding calendar month immediately preceding the commencement of such construction; provided, however, that each of CBHA and RRHA shall have an obligation to seek to maximize operating profits during these time periods in accordance with their past business practices; and provided, further, that the aggregate compensation to CBHA and RRHA for lost operating profits during the three- month period immediately following completion of construction will not exceed $150,000. In addition Ameristar will pay CBHA and RRHA a marketing allowance of $40,000 and $10,000, respectively, to be used to assist in rebuilding its business. The payments under this paragraph will be the only financial consideration payable by Ameristar to CBHA and RRHA for the impact of the construction and operation by Ameristar of additional hotel rooms on the Future Development Site. 4.4 The design plan for any new facilities built in replacement of any Current Facilities must meet with CBHA, its permitted assigns, lender and current franchisor approval, such approvals not to be unreasonably withheld or delayed. In addition, the design plan for any new walkway in between the Holiday Inn and the Ameristar Casino Complex pavilion that may be built in replacement of the current walkway must meet with RRHA, its permitted assigns, lender and current franchisor approval, such approvals not to be unreasonably withheld or delayed. Any such new facilities will be of equal or better quality as the applicable Current Facilities, and the pool and fitness center shall have similar amenities to the Current Facilities and be sized to accommodate guests from the Holiday Inn and all other hotels utilizing such facilities. The location of any such new pool and fitness center will be within the footprint of the new facilities constructed on the Future Development Site, will be conveniently accessible to the Holiday Inn guests and will be readily identifiable as facilities shared by the Holiday Inn and Ameristar hotels. Any such new walkway will provide as convenient and as comfortable access as the current walkway and will provide access as direct as reasonably possible between the Holiday Inn and the Ameristar Casino Complex pavilion. 4.5 The development of the new hotel, including the construction thereof, will not unreasonably interfere with ingress, egress or parking of the Holiday Inn or Hampton Inn guests, employees or suppliers. Ameristar will at all times maintain the roadways, ingress, egress and parking so that the Holiday Inn and Hampton Inn guests, employees and suppliers have access to the respective hotels generally as convenient as in existence prior to the commencement of construction. Ameristar will cooperate with CBHA and RRHA so that construction times will not unreasonably interfere with their respective guests peaceful enjoyment of their hotel stay. Notwithstanding the foregoing, CBHA and RRHA acknowledge and agree that there may be some interference resulting from construction, and the provisions of Section 4.3 are intended as the sole compensation to CBHA and RRHA for such interference. 4.6 The cost of construction and opening the new facilities will be entirely paid by Ameristar. The cost of operation of the temporary and/or permanent pool(s) and fitness center will be split between CBHA and Ameristar on a per room pro- rata basis, except that if the new pool facilities require lifeguards or other supervision during operating hours then Ameristar will pay for all of those costs. 5. The parties hereto agree that this represents a Memorandum of Understanding and that the specific terms relating to the general principles will be contained in one or more definitive agreements and that each party agrees to participate, in good faith, in negotiating and creating such agreements with terms consistent with the provisions and intent of this Memorandum of Understanding. Dated as of the date first above written. AMERISTAR CASINO COUNCIL BLUFFS, INC. By: /s/ Thomas Steinbauer COUNCIL BLUFFS HOTEL ASSOCIATES, L.C. By: /s/ Leslie B. Kinseth RIVER ROAD HOTEL ASSOCIATES, L.C. By: /s/ Leslie B. Kinseth EX-10 6 EXECUTIVE EMPLOYMENT AGREEMENT AMERISTAR CASINOS, INC. EXECUTIVE EMPLOYMENT AGREEMENT This Executive Employment Agreement is made and entered into this 10th day of May, 1999, by and between JEFFREY A. BOUGHRUM ("Employee") and AMERISTAR CASINOS, INC. ("Company"), a Nevada corporation. WHEREAS, the Company has offered and the Employee has accepted a position of employment as CORPORATE SENIOR VICE PRESIDENT OF DEVELOPMENT; NOW, THEREFORE, for good and valuable consideration and in consideration of the mutual promises and mutual covenants contained herein, Company and Employee agree as follows: 1. EMPLOYMENT TERM This is a one (1) year Agreement commencing as of the 10th day of May, 1999, and continuing for one (1) year until the 9th day of May, 2000, unless terminated as hereinafter provided in Paragraphs 6-9. This Agreement will include a six (6) month severance package if terminated involuntarily without cause. This Agreement shall automatically renew from year to year unless either party gives written notice of their desire to terminate the Agreement thirty days prior to the expiration of the then- present term. As required by the Nevada Gaming Control Board and pursuant to Ameristar Casinos, Inc. Compliance Program, Employee is advised that this employment offer is subject to the satisfactory completion of an investigative process. 2. DUTIES Employee will perform the duties of the Corporate Senior Vice President of Development in accordance with the Company's bylaws and will perform such other duties and services as, from time to time, are required by the Company's Corporate Management Team. Employee will become an officer of Ameristar Casinos, Inc.. 3. OTHER SERVICES AND ACTIVITIES Employee will devote substantially all of his or her efforts to the Company's business. During the term of this Agreement, Employee will not engage in any other employment or business activity or hold any office or position in other companies or organizations that would pose a conflict of interest with the Company's business. Employee will obtain the express written consent of the Company's Corporate Management Team before engaging in any such activity. 4. COMPENSATION AND BENEFITS Employee will be paid an annual salary of Two Hundred Thousand Dollars ($200,000.00), payable in bi-weekly installments of Seven Thousand Six Hundred Ninety Two Dollars and 31/100th Dollars ($7,692.31). Upon Employee's hire date, Company will pay Employee a sign-on bonus of $15,000.00 less applicable taxes. If Employee voluntarily terminates his/her employment within one (1) year of Employee's hire date, immediate reimbursement of the sign- on bonus is required. Employee shall also receive 60,000 stock options with a unit value to be determined by the Board of Directors' Compensation Committee. The vesting schedule for all stock options will be five (5) years at the rate of 20% each year. All subsequent salary increases and/or discretionary incentive bonuses will be based on Employee's merit performance and the Company's financial performance in accordance with Company policy. For Employee's annual discretionary incentive bonus, Employee will be eligible for up to 35% of Employee's annual base salary. Employee will be eligible to participate in the Company's 401 (K) Plan in accordance with the Plan's guidelines. On the first day of employment, Employee will be eligible to enroll in the Company's Group Health Benefits Program in accordance with the Program's guidelines. In addition, Employee will be enrolled in the Company's Exec-U-Care Program in accordance with the Program's guidelines. In accordance with Company policy, Employee will receive food and beverage complimentary privileges for business and personal use. In accordance with Company policy, Employee will be eligible for complimentary use of the Company's condominiums in Sun Valley, Idaho. 5. ILLNESS OR DISABILITY OF EMPLOYEE If Employee is unable to perform services for the Company for a period of more than 90 days, Company may terminate this Agreement upon not less than 30 days written notice to the Employee. In the event of such termination, all of the Company's obligations hereunder will terminate immediately. 6. DEATH OF EMPLOYEE This Agreement will terminate immediately upon the death of the Employee. If Employee dies during the term of this Agreement, Company will pay to Employee's estate the compensation that would otherwise be payable to Employee through the end of the month of Employee's death. 7. TERMINATION FOR CAUSE Company may terminate this Agreement and all of its obligations hereunder upon occurrence of any of the following events: (a) Employee's material breach of this Agreement; (b) Employee's gross negligence or willful misperformance of his or her duties; (c) Employee's conviction of a felony or any other crime involving moral turpitude or dishonesty which, in the good faith opinion of the Company, would impair Employee's ability to perform his or her duties or the Company's business reputation; (d) Employee's failure or refusal to comply with Company policies, standards or regulations; (e) Employee's unauthorized disclosure of Company trade secrets and other confidential business information; (f) Employee's unsatisfactory job performance; (g) Employee's breach of his or her duty of loyalty; or (h) Employee's act of fraud, misrepresentation, theft or embezzlement or the misappropriation of corporate assets. 8. TERMINATION WITHOUT CAUSE SHOULD THE COMPANY TERMINATE EMPLOYEE WITHOUT CAUSE DURING THE TERM OF THE AGREEMENT, THE TOTAL AMOUNT OWING OF COMPENSATION, BENEFITS, AND WAGES SHALL BE SIX MONTHS' WORTH OF EMPLOYEE'S ANNUAL SALARY AT THE TIME OF TERMINATION. NO OTHER COMPENSATION, BENEFITS, OR WAGES WILL BE DUE AND OWING TO EMPLOYEE. 9. COVENANT NOT TO COMPETE If Employee voluntarily terminates employment with Company before the expiration of any employment contract, Employee is subject to a "non-compete" clause in companies that operate casinos for one (1) year from the date of Employee's voluntary termination. This non-compete clause will cover properties in the Las Vegas area. The parties agree that the restrictions and limitations contained in this Paragraph are reasonable as to scope and duration and are necessary to protect the Company's interests and to preserve for the Company the competitive advantage derived from maintaining such information as secret. In the event that any of the restrictions and limitations contained in this Paragraph are deemed to exceed the time or geographic limitations permitted by Nevada law, then such provisions of this Paragraph shall be reformed to the maximum time and geographical limitations permitted by Nevada law. 10. CONFIDENTIAL INFORMATION Employee agrees that he/she will not use or disclose (directly or indirectly) any Confidential Information and Trade Secrets of the Company whether in written, verbal, or model form, at any time or in any manner, except as required and authorized by the Company in the course of employment with the Company. The obligations of this Agreement are continuing and survive the termination of Employee's employment relationship with the Company. Employee acknowledges and agrees that such trade secrets and other confidential information constitute the Company's sole and exclusive property. For purposes of this Paragraph, the term "confidential information and trade secrets" refers to any information that is not generally known to persons engaged in business similar to that conducted or contemplated by the Company and includes, without limitation: know how, trade secrets, business plans, copyrights, inventions, patents, intellectual property, data, process, process parameters, methods, practices, products, product design information, research and development data, financial records, operational manuals, pricing, technical plans, computer programs, customer information, customer lists, price lists, supplier lists, marketing plans, financial information, and/or all other compilations of information which relate to the business of the Company, and any other propriety material of the Company, which have not been released by the Company to the general public. Upon termination of his or her employment, Employee shall turn over to the Company the originals, plus all copies, of any and all files, Rolodex cards, phone books, papers, notes, price lists, customer contracts, bids, customer lists, files, notebooks, books, memoranda, drawings, or other documents made, compiled by or delivered to him/her concerning any customer served by the Company or any product, apparatus, or process manufactured, used, developed or investigated by the Company or containing any Confidential Information or Trade Secrets or otherwise relating to Employee's performance of duties under this Agreement. Employee further acknowledges and agrees that all such documents are the Company's sole and exclusive property. 11. INDEMNIFICATION Employee will keep, save, protect, defend, indemnify and hold Company harmless from and against any and all costs, claims, expenses, damages, or deficiencies resulting from any misrepresentation, breach, default or non-fulfillment of any agreement or covenant set forth in this Agreement. 12. BREACH OF THE AGREEMENT In the event of any claimed breach of this Agreement, the party claimed to have committed the breach will be entitled to written notice of the alleged breach and a period of 10 days in which to remedy such breach. Employee acknowledges and agrees that a breach of any of the covenants contained in this Agreement will result in irreparable and continuing harm to the Company for which there will be no adequate remedy at law. The Company will be entitled to preliminary and permanent injunctive relief to restrain Employee from violating the terms and conditions of this Agreement in addition to other valuable remedies, at law and in equity. 13. DISPUTE RESOLUTION Except for a claim by either Employee or Company for injunctive relief, any dispute or difference of opinion between Employee and Company involving the meaning, interpretation, and application of any provision of this Agreement shall be adjusted exclusively through binding arbitration pursuant to the National Rules for the Resolution of Employment Disputes. The arbitrator shall have no authority, jurisdiction, or power to amend, modify, nullify, or add to the provisions of this Agreement. The arbitrator shall have no authority to award noneconomic damages or punitive damages except where such relief is specifically authorized by an applicable state or federal statute which creates a cause of action in the employment context. In such a situation, the arbitrator shall specify in his or her award the specific statute under which he or she has granted such relief. Costs shall be awarded to the prevailing party by the arbitrator. Each party shall pay their own attorney's fees. No request to arbitrate will be entertained or processed unless it is received in writing by either party to this Agreement within thirty (30) calendar days after the occurrence of the event giving rise to the dispute. In the event a request to arbitrate is made by a party, the parties to this Agreement hereby agree to select an arbitrator from the following list by mutual strike: Gerald R. McKay Geraldine M. Randall Randall Jones Sal Gugino Kirk Harrison Franklin Silver In the event that none of these designated arbitrators may serve, the parties agree to have the Las Vegas office of the American Arbitration Association furnish them a panel of seven (7) arbitrators all of whom are members of the National Academy of Arbitrators and who reside in Southern California or Southern Nevada from which an arbitrator shall be selected between the parties by mutual strike. 14. NOTICES Any notice required or desired to be given under this Agreement by either party to the other shall be in writing and may be effected by personal delivery or by registered or certified mail at the addresses listed below or at such other addresses as either party may notify the other: A. If to the Company, to: Corporate Vice President of Human Resources, or designee Ameristar Casinos, Inc. 3773 Howard Hughes Parkway, Suite 490S Las Vegas, Nevada 89109 B. If to the Employee, to: 1804 Crystal Glen Court Las Vegas, NV 89117 Notices personally delivered will be deemed effective upon receipt. Notices sent by registered or certified mail will be deemed effective three (3) days after mailing. 15. ENFORCEMENT This Agreement shall be construed in accordance with and governed for all purposes by the laws of the State of Nevada. In case any one or more provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. If moreover, any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to time, duration, geographical scope, activity or subject, it shall be construed, by limiting and reducing it, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear. 16. AMENDMENTS This Agreement may be amended or modified only by a writing executed and agreed upon by both parties. 17. WAIVER Waiver by either party of any term or condition of this Agreement or any breach hereof will not operate or be construed as a waiver of any other term or condition or subsequent breach. No waiver shall be binding unless executed in writing by the parties making the waiver. 18. ASSIGNMENT Employee acknowledges that his or her services are unique and personal and, accordingly, that Employee may not assign his or her rights or delegate his or her duties and obligations under this Agreement. The Company's rights and obligations under this Agreement will inure to the benefit of, and be binding upon, the Company's successors and assigns. 19. MERGER This Agreement constitutes the entire agreement of the parties and supersedes all prior agreements, arrangements and communications between the parties, whether oral or written. 20. HEADINGS The headings of the Paragraphs of this Agreement are for convenience only and shall not affect the construction or interpretation of any of its provisions. 21. REVIEW/UNDERSTANDING OF AGREEMENT Each party to this Agreement has reviewed the Agreement with legal counsel of their choice and has had the opportunity to modify or eliminate any ambiguous provisions. Therefore, it is agreed that each party hereto is considered a drafter of this Agreement and that the contract interpretation rule which holds ambiguities are to be interpreted against the original drafter of a document is expressly waived by the parties 22. COUNTERPARTS This Agreement may be executed in any number of counterparts conformed by facsimile signatures transmitted by telephone, each of which shall be deemed a duplicate original. COMPANY: EMPLOYEE: BY: /s/ John R. Sims BY: /s/ Jeffrey A. Boughrum ITS: Corp VP of Human Resources DATE: June 14, 1999 DATE: June 14, 1999 EX-10 7 AMERISTAR CASINOS, INC. 1999 STOCK INCENTIVE PLAN SECTION 1. Purposes. The purposes of the Ameristar Casinos, Inc. 1999 Stock Incentive Plan (the "Plan") are to (i) enable Ameristar Casinos, Inc. (the "Company") and Related Companies (as defined below) to attract, motivate and retain top-quality directors, officers, employees, consultants, advisers and independent contractors (including without limitation dealers, distributors and other business entities or persons providing services on behalf of the Company or a Related Company), (ii) provide substantial incentives for such directors, officers, employees, consultants, advisers and independent contractors of the Company or a Related Company ("Participants") to act in the best interests of the stockholders of the Company and (iii) reward extraordinary effort by Participants on behalf of the Company or a Related Company. For purposes of the Plan, a "Related Company" means any corporation, partnership, joint venture or other entity in which the Company owns, directly or indirectly, at least a twenty percent (20%) beneficial ownership interest. SECTION 2. Types of Awards. Awards under the Plan may be in the form of (i) Stock Options or (ii) Restricted Stock. SECTION 3. Administration. 3.1 Except as otherwise provided herein, the Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the "Board") or such other committee of directors as the Board shall designate, which committee in either such case shall consist solely of not less than two "non-employee directors" (as such term is defined in Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act") or any successor rule ("Rule 16b-3")) who shall serve at the pleasure of the Board, each of whom shall also be an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code and Section 1.162-27 of the Treasury Regulations or any successor provision(s) thereto ("Section 162(m)"); provided, however, that if there are not two persons on the Board who meet the foregoing qualifications, any such committee may be comprised of two or more directors of the Company, none of which is an officer (other than a non-employee Chairman of the Board of the Company) or an employee of the Company or a Related Company. If no such committee has been appointed by the Board, the Plan shall be administered by the Board, and the Plan shall be administered by the Board to the extent provided in the last sentence of this Section. Such committee as shall be designated to administer the Plan, if any, or the Board is referred to herein as the "Committee." Notwithstanding any other provision of the Plan to the contrary, if such a committee has been designated to administer the Plan, all actions with respect to the administration of the Plan in respect of the members of such committee shall be taken by the Board. 3.2 The Committee shall have the following authority with respect to awards under the Plan to Participants: to grant awards to eligible Participants under the Plan; to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall deem advisable; to interpret the terms and provisions of the Plan and any award granted under the Plan; and to otherwise supervise the administration of the Plan. In particular, and without limiting its authority and powers, the Committee shall have the authority: (a) to determine whether and to what extent any award or combination of awards will be granted hereunder; (b) to select the Participants to whom awards will be granted; (c) to determine the number of shares of the common stock of the Company, $0.01 par value (the "Stock"), to be covered by each award granted hereunder, provided that no Participant will be granted Stock Options on or with respect to more than 200,000 shares of Stock in any calendar year; (d) to determine the terms and conditions of any award granted hereunder, including, but not limited to, any vesting or other restrictions based on performance and such other factors as the Committee may determine, and to determine whether the terms and conditions of the award are satisfied; (e) to determine the treatment of awards upon a Participant's retirement, disability, death, termination for cause or other termination of employment or other qualifying relationship with the Company or a Related Company; (f) to determine that amounts equal to the amount of any dividends declared with respect to the number of shares covered by an award (i) will be paid to the Participant currently or (ii) will be deferred and deemed to be reinvested or (iii) will otherwise be credited to the Participant, or that the Participant has no rights with respect to such dividends; (g) to determine whether, to what extent, and under what circumstances Stock and other amounts payable with respect to an award will be deferred either automatically or at the election of a Participant, including providing for and determining the amount (if any) of deemed earnings on any deferred amount during any deferral period; (h) to provide that the shares of Stock received as a result of an award shall be subject to a right of first refusal, pursuant to which the Participant shall be required to offer to the Company any shares that the Participant wishes to sell, subject to such terms and conditions as the Committee may specify; (i) to amend the terms of any award, prospectively or retroactively; provided, however, that no amendment shall impair the rights of the award holder without his or her consent; and (j) to substitute new Stock Options for previously granted Stock Options, or for options granted under other plans, in each case including previously granted options having higher option prices. 3.3 All determinations made by the Committee pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and all Participants. 3.4 The Committee may from time to time delegate to one or more officers of the Company any or all of its authorities granted hereunder except with respect to awards granted to persons subject to Section 16 of the Exchange Act. The Committee shall specify the maximum number of shares that the officer or officers to whom such authority is delegated may award, and the Committee may in its discretion specify any other limitations or restrictions on the authority delegated to such officer or officers. SECTION 4. Stock Subject to Plan. 4.1 The total number of shares of Stock reserved and available for distribution under the Plan shall be 2,600,000 (subject to adjustment as provided in Section 4.3); 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, (i) the total number of shares of Stock issued upon the exercise of options under the Plan and the Company's Management Stock Option Incentive Plan, as amended and restated through September 4, 1996 (the "Prior Plan") plus (ii) the total number of shares of Stock issuable upon exercise of all outstanding options of the Company under the Plan and the Prior Plan plus (iii) the total number of shares of Stock underlying awards of Restricted Stock under the Plan (whether or not the applicable restrictions have lapsed) would exceed 2,600,000 shares (subject to adjustment as provided in Section 4.3). Shares of Stock issuable in connection with any award under the Plan may consist of authorized but unissued shares or treasury shares. 4.2 To the extent a Stock Option terminates without having been exercised, or shares awarded are forfeited, the shares subject to such award shall again be available for distribution in connection with future awards under the Plan, subject to the limitations set forth in Section 4.1, unless the forfeiting Participant received any benefits of ownership such as dividends from the forfeited award. 4.3 In the event of any merger, reorganization, consolidation, sale of substantially all assets, recapitalization, Stock dividend, Stock split, spin-off, split- up, split-off, distribution of assets or other change in corporate structure affecting the Stock, a substitution or adjustment, as may be determined to be appropriate by the Committee in its sole discretion, shall be made in the aggregate number of shares reserved for issuance under the Plan, the number of shares subject to outstanding awards and the amounts to be paid by award holders or the Company, as the case may be, with respect to outstanding awards; provided, however, that no such adjustment shall increase the aggregate value of any outstanding award. In the event any change described in this Section 4.3 occurs and an adjustment is made in the outstanding Stock Options, a similar adjustment shall be made in the maximum number of shares covered by Stock Options that may be granted to any employee pursuant to Section 3.2(c). SECTION 5. Eligibility. Participants under the Plan shall be selected from time to time by the Committee, in its sole discretion, from among those eligible. SECTION 6. Stock Options. 6.1 The Stock Options awarded to officers and employees under the Plan may be of two types: (i) Incentive Stock Options within the meaning of Section 422 of the Internal Revenue Code or any successor provision thereto ("Section 422"); and (ii) Non- Qualified Stock Options. If any Stock Option does not qualify as an Incentive Stock Option, or the Committee at the time of grant determines that any Stock Option shall be a Non-Qualified Stock Option, it shall constitute a Non-Qualified Stock Option. Stock Options awarded to any Participant who is not an officer or employee of the Company or a Related Company shall be Non- Qualified Stock Options. 6.2 Subject to the following provisions, Stock Options awarded to Participants under the Plan shall be in such form and shall have such terms and conditions as the Committee may determine: (a) Option Price. The option price per share of Stock purchasable under a Stock Option shall be determined by the Committee. (b) Option Term. The term of each Stock Option shall be fixed by the Committee, but in no event longer than one hundred twenty (120) months after the date of grant of such Stock Option. (c) Exercisability. Stock Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee. If the Committee provides that any Stock Option is exercisable only in installments, the Committee may waive such installment exercise provisions at any time in whole or in part. (d) Method of Exercise. Stock Options may be exercised in whole or in part at any time during the option period by giving written notice of exercise to the Company specifying the number of shares to be purchased, accompanied by payment of the purchase price. Payment of the purchase price shall be made in such manner as the Committee may provide in the award, which may include cash (including cash equivalents), delivery of shares of Stock acceptable to the Committee already owned by the optionee or subject to awards hereunder, any other manner permitted by law as determined by the Committee, or any combination of the foregoing. The Committee may provide that all or part of the shares received upon the exercise of a Stock Option which are paid for using Restricted Stock shall be restricted in accordance with the original terms of the award in question. (e) No Stockholder Rights. An optionee shall have no rights to dividends or other rights of a stockholder with respect to shares subject to a Stock Option until the optionee has given written notice of exercise and has paid for such shares. (f) Surrender Rights. The Committee may provide that Stock Options may be surrendered for cash upon any terms and conditions set by the Committee. (g) Non-Transferability; Limited Transferability. A Stock Option Agreement may permit an optionee to transfer the Stock Option to his or her children, grandchildren or spouse ("Immediate Family"), to one or more trusts for the benefit of such Immediate Family members, or to one or more partnerships or limited liability companies in which such Immediate Family members are the only partners or members if (i) the agreement setting forth such Stock Option expressly provides that such Stock Option may be transferred only with the express written consent of the Committee, and (ii) the optionee does not receive any consideration in any form whatsoever for such transfer other than the receipt of an interest in the trust, partnership or limited liability company to which the non-qualified option is transferred. Any Stock Option so transferred shall continue to be subject to the same terms and conditions as were applicable to such Stock Option immediately prior to the transfer thereof. Any Stock Option not (x) granted pursuant to any agreement expressly allowing the transfer of such Stock Option or (y) amended expressly to permit its transfer shall not be transferable by the optionee otherwise than by will or by the laws of descent and distribution, and such Stock Option shall be exercisable during the optionee's lifetime only by the optionee. (h) Termination of Relationship. If an optionee's employment or other qualifying relationship with the Company or a Related Company terminates by reason of death, disability, retirement, voluntary or involuntary termination or otherwise, the Stock Option shall be exercisable to the extent determined by the Committee; provided, however, that unless employment or such other qualifying relationship is terminated for cause (as may be defined by the Committee in connection with the grant of any Stock Option), the Stock Option shall remain exercisable (to the extent that it was otherwise exercisable on the date of termination) for (A) at least six (6) months from the date of termination if termination was caused by death or disability or (B) at least ninety (90) days from the date of termination if termination was caused by other than death or disability. The Committee may provide that, notwithstanding the option term fixed pursuant to Section 6.2(b), a Stock Option which is outstanding on the date of an optionee's death shall remain outstanding for an additional period after the date of such death. (i) Option Grants to Participants Subject to Section 16. If for any reason any Stock Option granted to a Participant subject to Section 16 of the Exchange Act is not approved in the manner provided for in clause (d)(1) or (d)(2) of Rule 16b-3, neither the Stock Option (except upon its exercise) nor the Stock underlying the Stock Option may be disposed of by the Participant until six months have elapsed following the date of grant of the Stock Option, unless the Committee otherwise specifically permits such disposition. 6.3 Notwithstanding the provisions of Section 6.2, no Incentive Stock Option shall (i) have an option price which is less than one hundred percent (100%) of the Fair Market Value (as defined below) of the Stock on the date of the award of the Stock Option (or less than one hundred ten percent (110%) of the Fair Market Value of the Stock on the date of award of the Stock Option if the Participant owns, or would be considered to own by reason of Section 424(d) of the Internal Revenue Code or any successor provision thereto, more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any parent or subsidiary of the Company at the time of the grant of the Stock Option), (ii) be exercisable more than ten (10) years after the date such Incentive Stock Option is awarded (five (5) years after the date of award if the Participant owns, or would be considered to own by reason of Section 424(d) of the Internal Revenue Code or any successor provision thereto, more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any parent or subsidiary of the Company at the time of the grant of the Stock Option), (iii) be awarded more than ten (10) years after the effective date of the Plan (or the latest restatement of the Plan) or (iv) be transferable other than by will or by the laws of descent and distribution. In addition, the aggregate Fair Market Value (determined as of the time a Stock Option is granted) of Stock with respect to which Incentive Stock Options granted after December 31, 1986 are exercisable for the first time by a Participant in any calendar year (under the Plan and any other plans of the Company or any subsidiary or parent corporation) shall not exceed $100,000. For purposes of the Plan, "Fair Market Value" in relation to a share of the Stock means, if the Stock is publicly traded, the mean between the highest and lowest quoted selling prices of the Common Stock on such date or, if not available, the mean between the bona fide bid and asked prices of the Common Stock on such date. In any situation not covered above, the Fair Market Value shall be determined by the Committee in accordance with one of the valuation methods described in Section 20.2031-2 of the Federal Estate Tax Regulations (or any successor provision thereto). SECTION 7. Restricted Stock. Subject to the following provisions, all awards of Restricted Stock to Participants shall be in such form and shall have such terms and conditions as the Committee may determine: (a) The Restricted Stock award shall specify the number of shares of Restricted Stock to be awarded, the price, if any, to be paid by the recipient of the Restricted Stock and the date or dates on which, or the conditions upon the satisfaction of which, the Restricted Stock will vest. The vesting of Restricted Stock may be conditioned upon the completion of a specified period of service with the Company or a Related Company, upon the attainment of specified performance goals or upon such other criteria as the Committee may determine. (b) Stock certificates representing the Restricted Stock awarded to an employee shall be registered in the Participant's name, but the Committee may direct that such certificates be held by the Company on behalf of the Participant. Except as may be permitted by the Committee, no share of Restricted Stock may be sold, transferred, assigned, pledged or otherwise encumbered by the Participant until such share has vested in accordance with the terms of the Restricted Stock award. At the time Restricted Stock vests, a certificate for such vested shares shall be delivered to the Participant (or his or her designated beneficiary in the event of death), free of all restrictions. (c) The Committee may provide that the Participant shall have the right to vote or receive dividends, or both, on Restricted Stock. The Committee may provide that Stock received as a dividend on, or in connection with a stock split of, Restricted Stock shall be subject to the same restrictions as the Restricted Stock. (d) Except as may be provided by the Committee, in the event of a Participant's termination of employment or other qualifying relationship with the Company or a Related Company before all of his or her Restricted Stock has vested, or in the event any conditions to the vesting of Restricted Stock have not been satisfied prior to any deadline for the satisfaction of such conditions set forth in the award, the shares of Restricted Stock which have not vested shall be forfeited, and the Committee may provide that the lower of (i) any purchase price paid by the Participant and (ii) the Restricted Stock's aggregate Fair Market Value on the date of forfeiture shall be paid in cash to the Participant. (e) The Committee may waive, in whole or in part, any or all of the conditions to receipt of, or restrictions with respect to, any or all of the Participant's Restricted Stock. (f) If for any reason any Restricted Stock awarded to a Participant subject to Section 16 of the Exchange Act is not approved in the manner provided for in clause (d)(1) or (d)(2) of Rule 16b-3, the Restricted Stock may not be disposed of by the Participant until six months have elapsed following the date of award of the Restricted Stock, unless the Committee otherwise specifically permits such disposition. SECTION 8. Election to Defer Awards. The Committee may permit a Participant to elect to defer receipt of an award for a specified period or until a specified event, upon such terms as are determined by the Committee. SECTION 9. Tax Withholding. 9.1 Each Participant shall, no later than the date as of which the value of an award first becomes includible in such person's gross income for applicable tax purposes, pay to the Company, or make arrangements satisfactory to the Committee (which may include delivery of shares of Stock already owned by the optionee or subject to awards hereunder) regarding payment of, any federal, state, local or other taxes of any kind required by law to be withheld with respect to the award. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company (and, where applicable, any Related Company), shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. 9.2 To the extent permitted by the Committee, and subject to such terms and conditions as the Committee may provide, a Participant may elect to have the withholding tax obligation, or any additional tax obligation with respect to any awards hereunder, satisfied by (i) having the Company withhold shares of Stock otherwise deliverable to such person with respect to the award or (ii) delivering to the Company shares of unrestricted Stock. SECTION 10. Amendments and Termination. No awards may be granted under the Plan more than ten (10) years after the date of approval of the Plan by the stockholders of the Company. The Board may discontinue the Plan at any earlier time and may amend it from time to time. No amendment or discontinuation of the Plan shall adversely affect any award previously granted without the award holder's written consent. Amendments may be made without stockholder approval except (i) if and to the extent necessary to satisfy any applicable mandatory legal or regulatory requirements (including the requirements of any stock exchange or over-the-counter market on which the Stock is listed or qualified for trading and any requirements imposed under any state securities laws or regulations as a condition to the registration of securities distributable under the Plan or otherwise), or (ii) as required for the Plan to satisfy the requirements of Section 162(m), Section 422 or any other non- mandatory legal or regulatory requirements if the Board of Directors deems it desirable for the Plan to satisfy any such requirements. SECTION 11. Acceleration of Vesting in Certain Circumstances. Notwithstanding any other provision of the Plan, upon the dissolution or liquidation of the Company or upon any reorganization, merger or consolidation with one or more corporations or other entities as a result of which the Company is not the surviving entity, or upon a sale of all or substantially all of the assets of the Company to another corporation or entity, the Committee may take such action, if any, as it in its discretion may deem appropriate: (i) to accelerate the time within which and the extent to which Options may be exercised, to terminate Options at or prior to the date of any such event or to provide for the assumption of Options by surviving, consolidated, successor or transferee corporations or entities; or (ii) to waive any restrictions applicable to any outstanding Restricted Stock awards under the Plan, following which such shares shall be deemed fully vested, or to provide that any securities or other consideration issuable to the Participant in respect of such Restricted Stock by the surviving, consolidated, successor or transferee corporations or entities shall remain subject to the restrictions applicable to such Restricted Stock award. SECTION 12. General Provisions. 12.1 If the granting of any award under the Plan or the issuance, purchase or delivery of Stock thereunder shall require, in the determination of the Committee from time to time and at any time, (i) the listing, registration or qualification of the Stock subject or related thereto upon any securities exchange or over-the-counter market or under any federal or state law or (ii) the consent or approval of any government regulatory body, then any such award shall not be granted or exercised, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions, if any, as shall be acceptable to the Committee. In addition, in connection with the granting or exercising of any award under the Plan, the Committee may require the recipient to agree not to dispose of any Stock issuable in connection with such award, except upon the satisfaction of specified conditions, if the Committee determines such agreement is necessary or desirable in connection with any requirement or interpretation of any federal or state securities law, rule or regulation. 12.2 Nothing set forth in this Plan shall prevent the Board from adopting other or additional compensation arrangements. Neither the adoption of the Plan nor any award hereunder shall confer upon any employee of the Company, or of a Related Company, any right to continued employment, and no award under the Plan shall confer upon any director any right to continued service as a director. 12.3 Determinations by the Committee under the Plan relating to the form, amount, and terms and conditions of awards need not be uniform, and may be made selectively among persons who receive or are eligible to receive awards under the Plan, whether or not such persons are similarly situated. 12.4 No member of the Board or the Committee, nor any officer or employee of the Company acting on behalf of the Board or the Committee, shall be personally liable for any action, determination or interpretation taken or made with respect to the Plan, and all members of the Board or the Committee and all officers or employees of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation. SECTION 13. Effective Date of Plan. The Plan shall be effective upon the approval of the Plan by (i) the Board of Directors of the Company and (ii) the stockholders of the Company acting by a majority of the votes cast at a duly held meeting of stockholders at which a quorum representing at least a majority of the outstanding shares is, either in person or by proxy, present and voting on the Plan. The Plan was duly approved by the Board of Directors of the Company on April 26, 1999 and by stockholders of the Company on June 11, 1999. EX-27 8
5 This data should be reviewed in conjunction with the financial statements included in this filing. 0000912145 AMERISTAR CASINOS, INC. 1,000 6-MOS DEC-31-1999 JUN-30-1999 23,279 0 1,554 0 3,339 39,134 398,533 102,890 353,359 48,195 100,000 0 0 204 68,386 353,359 146,207 146,207 0 132,531 0 0 12,247 1,124 458 0 0 0 0 666 0.03 0.03
EX-99 9 EXHIBIT 99.1 SUPPLEMENTAL AGREEEMENT 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 omitted exhibits and schedules to Exhibits10.1 and 10.2 to ACI's Quarterly Report on Form 10-Q dated August 13, 1999, relating to the ground leases at Ameristar Casino Council Bluffs. Each such Exhibit includes a list setting forth a description of the omitted exhibits and schedules. -----END PRIVACY-ENHANCED MESSAGE-----