Exhibit 10.1
AMERISTAR CASINOS, INC.
3773 Howard Hughes Parkway
Suite 490 South
Las Vegas, NV 89169
February 27, 2011
Estate of Craig H. Neilsen
c/o Ameristar Casinos, Inc.
16633 Ventura Boulevard, Suite 1050
Encino, California 91436
Attention:  Mr. Ray H. Neilsen
                  Mr. Gordon R. Kanofsky
     Re:     Repurchase Transaction
Dear Mr. Neilsen and Mr. Kanofsky:
     The parties to this letter agreement (this “Letter Agreement”), Ameristar
Casinos, Inc., a Nevada corporation (the “Company”), and the Estate of Craig H.
Neilsen (the “Seller”), wish to document their agreement pursuant to which,
subject to and in accordance with the terms and conditions set forth in this
Letter Agreement and Annex A attached hereto (the “Term Sheet”), which terms and
conditions are incorporated into and shall be considered part of this Letter
Agreement, the Seller agrees to sell to the Company, and the Company agrees to
purchase from the Seller, certain shares of the Company’s common stock owned by
the Seller as further described in the Term Sheet. It is the parties’ intention
to negotiate and execute a mutually acceptable definitive agreement (the
“Definitive Agreement”) governing the Transactions (as defined in the Term
Sheet), however, the parties agree that the provisions set forth in this Letter
Agreement, including the Term Sheet, shall constitute a binding agreement
between the parties. The parties covenant and agree to work in good faith to
negotiate and execute the Definitive Agreement as quickly as possible and to
consummate the Transactions as expeditiously as possible, but they further agree
that the failure to do so shall in no way limit, alter or impact the contractual
requirements set forth in this Letter Agreement. The parties hereby stipulate
that this Letter Agreement (including the Term Sheet) includes all of the
material terms with respect to the Transactions, notwithstanding that certain
terms remain to be negotiated and described in the Definitive Agreement.
     This Letter Agreement shall be treated as “Evaluation Material” and
accorded confidentiality protection as provided in the confidentiality and
non-disclosure agreement, entered into as of September 7, 2007, between the
Company and Seller (the “Confidentiality Agreement”), which shall remain in full
force and effect and shall be binding on the parties hereto. It is the intention
of the parties to make a mutually acceptable public announcement regarding this
Letter Agreement and the Transactions following the execution of this Letter
Agreement. Notwithstanding the foregoing, neither the Company nor the Seller
will make any public announcement regarding the Transactions or the existence or
contents of this Letter Agreement without the prior approval of the other,
subject to requirements of law or regulatory bodies or to applicable listing
rules.

 

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     This Letter Agreement and the Confidentiality Agreement constitute the
entire agreement between the parties with respect to the subject matter hereof
and supersede all other prior or contemporaneous agreements and understandings,
both written and oral, between the parties with respect to the subject matter
thereof. The terms and conditions of this Letter Agreement may not be amended,
changed, supplemented or otherwise modified except by an instrument in writing
specifically designated as an amendment thereto, signed on behalf of each party.
Notwithstanding the foregoing, the parties to this Letter Agreement acknowledge
and agree that the execution and delivery of this Letter Agreement and the
Definitive Agreement shall not in any way modify the provisions of any existing
agreement between the Company and any person (including any representative of
the Seller), or of the Company’s articles of incorporation and bylaws, as the
same relate to such person’s rights as a director or officer of the Company, in
his or her capacity as such, to indemnification by, and/or advancement of
expenses from, the Company.
     This Letter Agreement and all disputes or controversies arising out of or
relating to this Agreement or the transactions contemplated hereby shall be
governed by, and construed in accordance with, the internal laws of the State of
Nevada, without regard to the laws of any other jurisdiction that might be
applied because of the conflicts of laws principles of the State of Nevada.
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     If you are in agreement with the foregoing, please sign and return one copy
of this Letter Agreement, which thereupon will constitute our agreement with
respect to its subject matter.

            Very truly yours,

AMERISTAR CASINOS, INC.
      By:   /s/ Larry A. Hodges         Name:   Larry A. Hodges        Title:  
President and Chief Operating Officer     

          Acknowledged and Agreed
as of February 27, 2011:
      /s/ Ray H. Neilsen       Ray H. Neilsen             

                  Co-Executors and Co-Personal Representatives
of the Estate of Craig H. Neilsen
  /s/ Gordon R. Kanofsky       Gordon R. Kanofsky           

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Annex A
Terms and Conditions
February 27, 2011

     
The Transactions
 
•    Subject to the terms and conditions set forth below, the Company will use
its reasonable best efforts to arrange new debt facilities on terms and
conditions satisfactory to the Company (the “New Financing”) with sufficient
borrowing capacity to enable the Company to retire its existing senior credit
facilities, retire or amend its existing senior notes and fund the purchase
price of the Repurchase Transaction (as defined below).
 
   
 
 
•    Following successful completion of the New Financing, the Company will
purchase from the Seller, and the Seller will sell to the Company, shares of the
Company’s common stock owned by the Seller on the terms and subject to the
conditions set forth below (the “Repurchase Transaction” and, together with the
New Financing, the “Transactions”).
 
   
 
  The consummation of the Transactions is referred to herein as the “Closing.”
 
   
Closing
  The consummation of the Repurchase Transaction (the “Closing”) will occur on
the third (3rd) business day following the satisfaction or waiver of all
conditions to the parties’ obligations set forth below under the headings
“Conditions to the Company’s Obligation to Consummate the Repurchase
Transaction” and “Conditions to the Seller’s Obligation to Consummate the
Repurchase Transaction” or such other date, time or place as the parties may
mutually agree.
 
   
Purchase Price Per Share
  $17.50 (the “Per Share Price”)
 
   
Total Shares Purchased
  26,150,000 shares (the “Purchased Shares”)
 
   
Board of Directors
  Following the Repurchase Transaction, the Company will no longer qualify under
the “Controlled Company” exemption of the NASDAQ listing rules. Accordingly, the
Company’s Board of Directors and its committees will be adjusted such that:
 
   
 
 
•    A majority of the directors will be independent; and
 
   
 
 
•    The Company will have an Audit Committee, a Nominating Committee and a
Compensation Committee comprised solely of independent directors.
 
   
 
  The Seller shall have no specific rights or privileges with respect to Board
seats or the nomination of directors, other than those rights and privileges
that inherently inure from the Seller’s ownership of the shares of Company
common stock not purchased in the Repurchase Transaction (the “Remaining Seller
Shares”).

 

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Registration Rights
  The Company acknowledges and confirms Seller’s existing registration rights
pursuant to the Plan of Reorganization dated November 15, 1993 among the parties
named therein. The Company and Seller agree to negotiate in good faith
appropriate and reasonable modifications to the Seller’s existing registration
rights with respect to the Remaining Seller Shares to accommodate, among other
things, Seller’s ability, if it desires, to sell the Remaining Seller Shares on
a continuous basis pursuant to an effective registration statement, including by
way of a 10b5-1 plan or otherwise.
 
   
Lock-Up Agreements
  The Company and the Seller agree to negotiate in good faith appropriate and
reasonable modifications to the Seller’s existing registration rights to
accommodate, in connection with any underwritten public offering of the
Company’s common stock by the Company, a reasonable lock-up agreement requested
by the underwriter(s) of such offering.
 
   
Representations &
Warranties
  The Definitive Agreement shall contain reasonable and customary
representations and warranties from both the Company and the Seller with respect
to the following:
 
   
 
 
•    Organization;
 
   
 
 
•    Authority;
 
   
 
 
•    No Conflicts, Required Filings and Consents
 
   
 
 
•    Finders Fees; and
 
   
 
 
•    Title to Shares (Seller only).
 
   
Covenants
 
•   The Company shall use its reasonable best efforts to (i) obtain the New
Financing on terms and conditions satisfactory to the Company and (ii) obtain
all required regulatory, gaming and other approvals.
 
   
 
 
•   The parties shall cooperate reasonably and in good faith to negotiate and
execute the Definitive Agreement as soon as practicable after the execution of
the Letter Agreement and prior to the consummation of the Transactions.
 
   
 
 
•   The Seller shall cooperate with the Company’s reasonable requests to assist
it with obtaining the New Financing in its capacity as a stockholder of the
Company.

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Conditions to the Company’s Obligation to Consummate the Repurchase Transaction
  The Company’s obligation to consummate the Repurchase Transaction is subject
to the satisfaction of the following conditions:

 
•   Receipt of all gaming, regulatory and other approvals required in connection
with the Transactions;
 
   
 
 
•   Consummation of the New Financing on terms and conditions satisfactory to
the Company, including immediate additional borrowing availability under a
revolving bank credit facility (after giving effect to the payment of all fees
and expenses associated with the New Financing) of at least $75 million;
 
   
 
 
•   Receipt of a solvency opinion with respect to the Transactions immediately
prior to Closing from the financial advisor engaged by the Transaction Committee
of the Company’s board of directors;
 
   
 
 
•   Satisfactory evidence that all liens on the Purchased Shares have been, or
will be concurrently with the Closing, released;
 
   
 
 
•   Continued accuracy of the Seller’s representations and warranties; and
 
   
 
 
•   The absence of any injunction, restraining order, ruling or other order
issued by any court of competent jurisdiction or governmental entity preventing
the consummation of any of the Transactions and the consummation of the
Transactions will not violate Nevada Revised Statutes 78.288.
 
   
Conditions to the Seller’s Obligation to Consummate the Repurchase Transaction
  The Seller’s obligation to consummate the Repurchase Transaction is subject to
the satisfaction of the following conditions:

 
•   Approval from the applicable probate court with respect to the Repurchase
Transaction;
 
   
 
 
•   Continued accuracy of the Company’s representations and warranties; and
 
   
 
 
•   The absence of any injunction, restraining order, ruling or other order
issued by any court of competent jurisdiction or governmental entity preventing
the consummation of any of the Transactions.

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Termination Provisions
  The Letter Agreement and the Definitive Agreement may be terminated as
follows:
 
   
 
 
(a) By the parties upon their mutual agreement;
 
   
 
 
(b) By either party, if a court of competent jurisdiction shall have issued an
order permanently restraining or prohibiting the Transactions and such order
shall have become final and nonappealable;
 
   
 
 
(c) By either party, if the Repurchase Transaction is not completed by June 30,
2011, subject to two (2) two-month extensions at the election of either party
(so long as the electing party is not in material breach of this Letter
Agreement or the Definitive Agreement) if the receipt of all gaming, regulatory
or other approvals with respect to each of the New Financing and the Repurchase
Transaction are the only remaining unsatisfied conditions to the consummation of
the Transactions;
 
   
 
 
(d) By the Seller if the Company breaches, in any material respect, any of its
obligations under the Letter Agreement or the Definitive Agreement and such
breach cannot be or has not been cured within 30 days following delivery to the
Company of written notice of such breach by the Seller; or
 
   
 
 
(e) By the Company if the Seller breaches, in any material respect, any of its
obligations under the Letter Agreement or the Definitive Agreement and such
breach cannot be or has not been cured within 30 days following delivery to the
Seller of written notice of such breach by the Company.

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Sale Proposal
  If, prior to Closing, (a) the Company has received a proposal from a third
party pursuant to which such third party would acquire at least eighty percent
(80%) of the Company’s common stock at a price per share in excess of the Per
Share Price (a “Sale Proposal) and (b) the Company enters a definitive agreement
with respect to such Sale Proposal (a “Sale Agreement”), at least eight
(8) business days prior to entering into such Sale Agreement, the Company shall
notify the Seller regarding the Sale Proposal and the Seller shall have the
right in its sole discretion unilaterally to have the Purchased Shares acquired,
on the same basis as the other shares of the Company’s common stock, in the
transaction contemplated by the Sale Proposal, exercisable by written notice by
the Seller to the Company within five (5) business days after receipt of such
notice from the Company (the “Tag-Along Right”). If the Seller elects to
exercise the Tag-Along Right and the Sale Agreement provides for the acquisition
of the Purchased Shares on the same basis as the other shares of the Company’s
common stock, then the Company may, in its sole discretion, unilaterally
(i) consistent with the Seller’s election of the Tag-Along Right, extend the
Closing for any duration the Company elects, provided that if the Sale Agreement
is terminated, the Closing must occur within six (6) months after such
termination or (ii) terminate this Letter Agreement and/or the Definitive
Agreement. If the Company enters into a Sale Agreement, then, in connection with
any vote of the Company’s stockholders required to approve the transactions
contemplated in the Sale Agreement, the Seller shall, and hereby agrees to, vote
all of its shares of Company common stock, including the Purchased Shares if
then outstanding, in a manner consistent with the recommendation of the Company
Board with respect to the Sale Agreement in the absence of a superior proposal
deemed such by the Company’s Board of Directors. If the Seller does not elect to
exercise its Tag-Along Right, this Letter Agreement and/or the Definitive
Agreement shall remain in full force and effect.
 
   
Expenses
  Each party will be responsible for its own legal, accounting, investment
banking and other expenses incurred by it in connection with the Transactions,
whether or not any of the Transactions are consummated.

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