INTEREST RATE COLLAR AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of the
10th day of August, 1998, by and between AMERISTAR
CASINOS, INC. ("Collar Purchaser"), and XXXXX FARGO BANK,
NATIONAL ASSOCIATION ("Collar Seller").
WHEREAS, Collar Purchaser desires to protect
against fluctuations in interest rates and has requested
that Collar Seller make payments to Collar Purchaser in
the event that the Floating Rate exceeds the Cap Rate.
WHEREAS, In exchange for Collar Purchaser's payment
of an amount equal to the Collar Fee and agreement to pay
Collar Seller in the event that the Floating Rate
declines below the Floor Rate, Collar Seller is willing to
make such payments on the terms set forth herein.
NOW THEREFORE, in consideration of their mutual
covenants, Collar Seller and Collar Purchaser agree as
follows:
1. Definitions. The capitalized terms "Cap Amount",
"Cap Rate", "Collar Fee", "Collar Fee Payment Date", "Collar
Interest Settlement Payment Dates", "Effective Date",
"Floating Rate", "Floating Rate Maturity", "Floor Amount",
"Floor Rate", "Reset Dates" "Termination Date" and "Trade
Date" shall each be as specified in the Collar
Confirmation. All other capitalized terms shall have the
meanings set forth below or as otherwise set forth in this
Agreement:
(a) "Business Day" means a day (other than
Saturday, Sunday or holiday) on which Collar Seller is open and
conducting its customary banking transactions in the State
of California.
(b) "Business Day Convention" means, for
purposes of determining each Calculation Period, that
convention specified in the Collar Confirmation for
adjusting any relevant date if it would otherwise fall
on a day that is not a Business Day, so that:
(i) if "following" is specified, that
date will be the first following day
that is a Business Day;
(ii) if "modified following" is
specified, that date will be the first
following day that is a Business Day
unless that day falls in the next
calendar month, in which case that
date will be the first preceding day
that is a Business Day; and
(iii) if "preceding" is specified,
that date will be the first preceding
day that is a Business Day.
(c) "Calculation Period" means, subject to
Business Day Convention, each consecutive period
designated in the Collar Confirmation, the first of which
will commence on, and include the Effective Date and
extend to, but exclude the first Reset Date. Each
subsequent Calculation Period, will commence on, and
include the Reset Date and extend to, but exclude the
next Reset Date. The final Calculation Period will
end on, but exclude, the Completion Date.
(d) "Collar Confirmation" means a
document, substantially in the form of Exhibit A
hereto, with the information required in each blank space
completed.
(e) "Completion Date" shall mean the Termination
Date unless an Early Termination Date has occurred, in which
case the Completion Date shall be the Early Termination
Date.
(f) "Day Count Convention" means that the
calculation of each Cap Interest Settlement and Floor
Interest Settlement will be based on the actual number
of days in the Calculation Period divided by a 360-day
year.
(g) "Early Termination Date" means the date, if
any, prior to the Termination Date upon which this
Agreement is terminated pursuant to Paragraph 4(a) below.
(h) "LIBOR" means, with respect to each
Calculation Period, the rate for deposits in U.S. Dollars
for a period equal to the Floating Rate Maturity, which
appears on Telerate Page 3750 as of 11:00 AM, London Time,
on the day that is two Business Days prior to the Reset
Date (or the Effective Date in the case of the initial
Period). If such rate does not appear on Telerate Page
3750, the rate for that Reset Date will be the
arithmetic mean of the rates quoted by major Banks in London,
selected by Cap Seller, for a period equal to the Floating
Rate Maturity, as of 11:00 AM, London Time, on the day
that is two Business Days prior to the Reset Date.
(i) Telerate Page 3750 means the display
designated as Page 3750 on the Dow Xxxxx Telerate Service
(or such other page as may replace Page 3750 on that service or
such other service as may be nominated by the British
Bankers Association as the information vendor for the purpose of
displaying British Bankers Association Interest Settlement
Rates for U.S. Dollar Deposits).
2. Collar Fee.
(a) As a condition precedent to its acquiring
any rights hereunder, Collar Purchase shall pay Collar
Seller the Collar Fee in cleared funds, no later than 3:00
p.m., California time, on the Collar Fee Payment Date.
(b) In order to establish the Cap Rate and perform
its obligations under this Agreement, Collar Seller may "hedge"
in the financial markets or otherwise make arrangements to
permit it to carry out its obligations under the terms of
this Agreement. Such actions may impose various costs and
risks on Collar Seller beyond those which it would
otherwise incur. Collar Purchaser acknowledges that the
Collar Fee is nonrefundable and reasonable compensation
for such additional risks and costs, regardless of whether
Collar Seller in fact "xxxxxx" in the financial markets.
3. Payment of Interest Settlements.
(a) At least five Business Days prior to the
end of each Calculation Period, Collar Seller will send
Collar Purchaser a written notice ("Settlement Notice")
specifying:
(i) the amount of interest which
would have accrued on the Cap Amount
during the Calculation Period at a rate
per annum equal
to the Floating Rate;
(ii) the amount of interest
which would have accrued on the Cap
Amount during the Calculation Period
at a rate per annum equal to the Cap
Rate; and
(iii) the excess, if any, of
the amount computed pursuant to
Paragraph 3(a)(i) over the amount
computed pursuant to Paragraph 3(a)(ii)
above ("Cap Interest Settlement").
(b) In addition, the Settlement Notice will
also include:
(i) the amount of interest
which would have accrued on the Floor
Amount during the Calculation Period at
a rate per annum equal to the Floor
Rate;
(ii) the amount of interest which
would have accrued on the Floor Amount
during the Calculation Period at a rate
per annum equal to the Floating Rate;
and
(iii) the excess, if any, of
the amount computed pursuant to
Paragraph 3(b)(i) over the amount
computed pursuant to Paragraph 3(b)(ii)
above ("Floor Interest Settlement").
(c) All calculations under Paragraphs 3(a) and
(b) above will be made on the basis of the
Day Count Convention.
(d) On each Collar Interest Settlement Payment
Date, Collar Seller will pay Collar Purchaser
the amount, if any, of the Cap Interest
Settlement that may be due by, at Collar Seller's
option, crediting Collar Purchaser's demand
deposit account with Collar Seller,
or by check payable to Collar Purchaser and sent to
Collar Purchaser at the address set forth below,
or by wiring funds to designated Collar Purchaser
account.
(e) On each Collar Interest Settlement Date, Collar
Purchaser will pay Collar Seller the amount (if any)
of the Floor Interest Settlement that may be due to
Collar Seller by, at Collar Seller's option,
Collar Seller's debiting Collar Purchaser's demand
deposit account with Collar Seller, or by wiring funds
to Collar Seller.
4. Early Termination.
(a) This Agreement shall expire on the Termination Date
and neither party may terminate this Agreement
prior thereto; provided, however that in the event of
a default by Collar Purchaser or Collar Seller in the
performance of any of its obligations hereunder,
unless such default is cured within five Business
Days following the defaulting party's receipt of
written notice thereof, the non-defaulting party
may terminate this Agreement.
(b) In the event of an early termination of this
Agreement pursuant to Paragraph 4(a) above, the
defaulting party shall promptly pay, on demand,
the non-defaulting party an amount equal to the
Termination Amount which the defaulting party
acknowledges to be a reasonable estimate of the
costs and loss of compensation incurred by the
non-defaulting party as a result of the default
and resulting early termination of this Agreement.
(c) "Termination Amount" means the amount in
U.S. Dollars equal to the sum of (i) the
arithmetic mean of the respective one-time all-in
fees (including documentation costs) communicated
to the non-defaulting party on the earliest
practicable Business Day following the Early
Termination Date by each of three leading commercial
banks or investment banking firms in San Francisco,
Los Angeles or New York selected in good faith by
the non-defaulting party as the fee that it would
charge to assume, as of the Early Termination Date
all of the rights and obligations of the defaulting
party under this Agreement, and (ii) the
aggregate amount of all amounts then due and owing
the non-defaulting party by the defaulting party
on the Early Termination Date; provided, however,
that if one or more such entities fail so to
communicate such a fee, the non-defaulting party
is not required to seek another such entity to obtain
a quote and the Termination Amount shall be determined
on the basis of the fee or fees so communicated to the
non-defaulting party by the other entities.
5. Limitations of Liability. In no event shall either
party hereto be liable to the other for loss of profit or indirect,
special, consequential, punitive or exemplary damages, arising out of any
default under this Agreement.
6. Notices. All notices and other communications
required or permitted to be given hereunder shall be in
writing and shall be deemed served when personally
delivered or, if mailed, upon the first to occur of
receipt or the expiration of seventy-two hours after
deposit in the United States Postal Service, certified
mail, or if sent by overnight courier service, upon the
first to occur of receipt or 3:00 p.m. (local time at place
of delivery) the next Business Day, addressed to Collar
Purchaser or Collar Seller at their respective addresses
set forth in the Collar Confirmation.
7. Successors; Assigns. This Agreement shall be
binding on and inure to the benefit of the successors and assigns
of the parties; provided, however, that Collar Purchaser
shall not, without the prior written consent of Collar
Seller, assign (whether by operation of law or
otherwise) its rights and obligations under this
Agreement or any interest herein and any such attempted
assignment shall be void and without force or effect.
8. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
California, without giving effect to any choice of law
doctrine.
9. No Third Party Beneficiary. This Agreement and
the payments to be made by the parties hereunder are solely for
the benefit of the parties hereto for the purposes stated
herein and no other person or entity shall have any rights
hereunder or be a beneficiary of either party's obligations
under this Agreement.
10. Counterparts. This Agreement may be executed in
any number of counterparts and by each party hereto on
separate counterparts, each of which when executed and
delivered shall constitute an original, but all the
counterparts shall together constitute but one and the same
instrument.
11. Amendments; Waivers. Any amendment or waiver of
any right under any provision of this Agreement shall be in
writing and, in the case of an amendment, signed by both parties
hereto, or in the case of a waiver, signed by the party
waiving such right. No failure or delay by either party
hereto in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
12. Trade Date; Interest Agreement Not Credit
Commitment. This Agreement shall be effective at, and as of, 12:01
a.m., California time, on the Trade Date. Nothing in this
Agreement shall be construed to (i) mean that Collar Seller
is committed to make a loan or extend any other credit to
Collar Purchaser, or (ii) amend or modify any
contract, instrument or document executed in connection
with any loan or other credit extended to Collar Purchaser
by Collar Seller.
13. Costs, Expenses and Attorneys' Fees. In the
event of any dispute or litigation between the
parties hereto, the prevailing party shall be entitled
to recover from the other party, immediately upon demand,
all costs and expenses, including reasonable attorneys'
fees, incurred by the prevailing party in connection with
the enforcement of its rights and/or the collection
of any amounts which become due to it under this
Agreement, and the prosecution or defense of any action in
any way related to this Agreement, including any of the
foregoing incurred in connection with any bankruptcy
proceeding relating to such other party.
14. Security. All obligations of the Collar
Purchaser to the Collar Seller under this Agreement are
secured by the collateral provided in that certain Credit Agreement
dated July 8, 1998 in the amount of $125,000,000 as
evidenced in the several Security Agreements dated July 8,
1998 provided thereto.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the day and year first written
above.
Collar Seller: Collar Purchaser:
XXXXX FARGO BANK, AMERISTAR CASINOS, INC.
NATIONAL ASSOCIATION
By:/s/Xxxxxx Xxxxx By:/s/Xxxxxx Xxxxxxxxxx
Name: Xxxxxx Xxxxx Name: Xxxxxx Xxxxxxxxxx
Title: Vice President Title: Senior Vice President/
Chief Financial Officer
August 10,1998
Ameristar Casinos, Inc.
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000X
Xxx Xxxxx, Xxxxxx 00000
ATTENTION: Xxxxxx Xxxxxxxxxx
(000) 000-0000
VIA FAX: (000) 000-0000
Dear Xxxxxx,
The purpose of this letter agreement ("Collar Confirmation") is
to confirm the terms and conditions of the Collar Transaction entered
into between Xxxxx Fargo Bank, N.A. ("Collar Seller") and Ameristar
Casinos, Inc. ("Collar Purchaser"). This Collar Confirmation is
effective at, and as of, 12:01 a.m., California time, on the Trade Date
specified below.
This confirmation supplements, forms part of, and is subject to
that Interest Rate Collar Agreement between Collar Seller and Collar
Purchaser dated August 10, 1998. In the absence of any other such
agreement, this communication itself constitutes a binding agreement
setting forth the essential terms of the Collar Transaction.
The terms of the Collar Transaction to which this Collar
Confirmation relates are as follows:
Collar Purchaser: Ameristar Casinos, Inc.
Collar Seller: Xxxxx Fargo Bank, N.A.
Trade Date: August 10,1998
Effective Date: August 12,1998
Termination Date: June 30, 2003
Cap Amount: $50,000,000
Floor Amount: $50,000,000
Collar Fee: $0
Collar Fee Payment Date: not applicable
Floating Rate: LIBOR
Cap Rate: 6.75%
Floating Rate Maturity: 3 months
Reset Date: The last day of each March, June, September,
and December, subject to adjustment in
accordance with the designated Business Day
Convention. The first reset date is August
12, 1998.
Floor Rate: 5.39%
Day Count Convention: Actual/360 days
Business Day Convention: modified following
Calculation Period: From the last day of each March, June,
September, and December, beginning with
August 12, 1998, up to the last day of the
following three month period, continuing
until the Termination Date, subject to
adjustment in accordance with the designated
Business Day Convention.
Collar Interest Settlement
Payment Dates: The last day of each March, June, September,
and December, beginning with September 30,
1998, continuing up to and including the
Termination Date, subject to adjustment
in accordance with the designated Business
Day convention.
Account Details:
Payments to Collar Seller: Made via Debit to DDA #4159-550797
Payments to Collar Purchaser: Made via credit to DDA #4159-550797
Security: All obligations of the Collar Purchaser to the
Collar Seller under this Agreement are secured
by the collateral provided in that certain
Credit Agreement dated July 8, 1998 in the
amount of $125,000,000 as evidenced in
the several Security Agreements dated July 8,
1998 provided thereto.
Addresses for Notices:
Collar Purchaser: Ameristar Casinos, Inc.
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000X
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
(000) 000-0000
FAX: (000) 000-0000
Collar Seller: Xxxxx Fargo Bank, National Association
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
XXX: 0000-000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
(000) 000-0000
FAX: (000) 000-0000
Please confirm that the foregoing correctly sets forth the terms
of our agreement by signing this facsimile and sending it as a return
acknowledgment to Xxxxx Xxxxxxx'x attention (FAX:(000) 000-0000. Collar
agreement documents will follow via overnight delivery. If you have any
questions, please call me at (000) 000-0000.
Sincerely,
CONFIRMED BY: /s/ Xxxxxx Xxxxxxxxxx
NAME: Xxxxxx Xxxxxxxxxx
TITLE: Vice President and Chief Financial Officer
DATE: August 10, 1998
