Exhibit 10.1

 

 

 

TAX MATTERS AGREEMENT

DATED AS OF JULY 20, 2015

BY AND AMONG

PINNACLE ENTERTAINMENT, INC.,

AND

GAMING AND LEISURE PROPERTIES, INC.

 

 

 

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TAX MATTERS AGREEMENT

THIS TAX MATTERS AGREEMENT, dated as of July 20, 2015 (this “Agreement”), is by
and among Pinnacle Entertainment, Inc., a Delaware corporation (“Pinnacle”) and
Gaming and Leisure Properties, Inc., a Pennsylvania corporation (“GLPI”). Each
of OpCo (as defined below), Pinnacle, and GLPI is sometimes referred to herein
as a “Party” and, collectively, as the “Parties.”

WHEREAS, the board of directors of Pinnacle has determined, among other things,
that it is in the best interests of Pinnacle’s stockholders (i) to create a new
publicly traded company (“OpCo”) that shall own the OpCo Assets, and distribute,
on a pro rata basis, all of the issued and outstanding shares of the common
stock of OpCo (the “OpCo Common Stock”) to Pinnacle’s stockholders and (ii) to
merge, pursuant to the terms of the Agreement and Plan of Merger by and among
Pinnacle, GLPI and Merger Sub (as defined below), dated as of July 20, 2015 (the
“Merger Agreement”), with and into a newly formed Subsidiary of GLPI, which will
be a Delaware limited liability company (“Merger Sub”), with Merger Sub
surviving such merger (the “Merger”) as a wholly-owned Subsidiary of GLPI;

WHEREAS, Pinnacle, OpCo and GLPI will enter into the Separation Agreement, a
form of which is attached to the Merger Agreement (the “Separation Agreement”),
pursuant to which, among other things (i) (a) Pinnacle will, and will cause its
Subsidiaries to, transfer the OpCo Assets to OpCo and its Subsidiaries, (b) OpCo
or certain of its Subsidiaries will assume certain liabilities of Pinnacle; and
(c) OpCo will distribute, directly or indirectly, to Pinnacle the proceeds of an
OpCo borrowing of $975 million, as such amount may be adjusted pursuant to the
Separation Agreement (the transactions described in this clause (i), together
with certain related transactions, the “Reorganization”); and (ii) Pinnacle will
distribute, on a pro rata basis, all of the issued and outstanding shares of the
OpCo Common Stock to the holders of the issued and outstanding shares, par value
one-tenth of one dollar ($0.10) per share, of Pinnacle (“Pinnacle Common Stock”
and such distribution, the “Distribution”);

WHEREAS, Pinnacle, GLPI and Merger Sub have entered into the Merger Agreement
pursuant to which Pinnacle will merge with and into Merger Sub, with Merger Sub
surviving the Merger as a wholly owned Subsidiary of GLPI; and

WHEREAS, in connection with the Reorganization and the Merger, the Parties wish
to provide for the payment of Tax liabilities and entitlement to Refunds,
allocate responsibility for, and cooperation in, the filing of Tax Returns, and
provide for certain other matters relating to Taxes.

NOW, THEREFORE, in consideration of the foregoing and the terms, conditions,
covenants and provisions of this Agreement, each of the Parties mutually
covenants and agrees as follows:

 

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ARTICLE I

DEFINITIONS

Section 1.01 General. As used in this Agreement, the following terms shall have
the following meanings:

“Accounting Firm” has the meaning set forth in Section 3.02(a).

“Adjustment” means an adjustment of any item of income, gain, loss, deduction,
credit or any other item affecting Taxes of a taxpayer pursuant to a Final
Determination.

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Assumptions” means, collectively, that (i) Pinnacle had U.S. federal net
operating loss carryforwards of $631,643,714 as of the close of the taxable year
ended December 31, 2014; (ii) Pinnacle had general business tax credits of
$19,766,633 as of the close of the taxable year ended December 31, 2014;
(iii) Pinnacle’s net operating loss carryforwards and general business credits
described in clauses (i) and (ii) will, to the extent not otherwise utilized
during a Pre-Closing Period (but only to the extent contemplated by clause (v)),
be available to offset taxable gain recognized in connection with the
Transactions for regular U.S. federal income tax purposes (disregarding for
these purposes any alternative minimum tax that may apply) and, in connection
with such availability to offset such taxable gain, will not be subject to any
limitation for regular U.S. federal income tax purposes including, but not
limited to, any limitation imposed by Section 382 or Section 383 of the Code
(disregarding for these purposes any limitations that may apply for alternative
minimum tax purposes); (iv) Pinnacle had an adjusted U.S. federal income tax
basis of $1,167,572,672 in the OpCo Assets as of the close of the taxable year
ended December 31, 2014; and (v) for U.S. federal income tax purposes,
(A) Pinnacle’s taxable income for the taxable year ended December 31, 2015
(excluding any taxable income attributable to the Transactions, any
Section 481(a) Adjustment, and any Adjustment otherwise made that results in a
change to the applicable recovery period of any of the Specified Assets to 39
years under Section 168(a) of the Code for Pre-Closing Periods or the portion of
any Straddle Period ending on the Closing Date, the “Pinnacle 2015 Operating
Taxable Income”) will not exceed the Adjusted Operating Taxable Income Cap and
(B) Pinnacle’s taxable income for the portion of the taxable year beginning
January 1, 2016 and ending on the Closing Date (excluding any taxable income
attributable to the Transactions, any Section 481(a) Adjustment, and any
Adjustment otherwise made that results in a change to the applicable recovery
period of any of the Specified Assets to 39 years under Section 168(a) of the
Code for Pre-Closing Periods or the portion of any Straddle Period ending on the
Closing Date) will not exceed the excess of (x) the Adjusted Operating Taxable
Income Cap over (y) the Pinnacle 2015 Operating Taxable Income, provided,
however, that the limitation contained in this clause (v)(B) shall not apply in
the event that the Closing has not occurred on or before March 31, 2016. For
purposes of this definition, “Adjusted Operating Taxable Income Cap” means the
sum of (A) $195 million and (B) the excess of (x) actual 2015 EBITDA (as
reported in the Company Financial Statements (as that term is defined in the
Merger Agreement)) over (y) $621,672,000.

“Barges” means, collectively, Ameristar Casino Hotel Vicksburg, Ameristar Casino
Hotel Kansas City, River City Casino Hotel, Ameristar Casino Resort Spa St.
Charles, L’Auberge Casino & Hotel Baton Rouge, and L’Auberge Casino Resort Lake
Charles.

“Closing Date” means the date on which the Merger is consummated.

“Code” means the Internal Revenue Code of 1986, as amended.

 

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“Commissioner” shall mean the Commissioner of the IRS.

“Controlling Party” has the meaning set forth in Section 5.03.

“Distribution” has the meaning set forth in the recitals to this Agreement.

“Effective Time” has the meaning set forth in the Merger Agreement.

“Employee Matters Agreement” has the meaning set forth in the Separation
Agreement.

“Final Determination” means the final resolution of liability for any Tax for
any taxable period, by or as a result of (i) a final decision, judgment, decree
or other order by any court of competent jurisdiction that can no longer be
appealed, (ii) a final settlement with the IRS, a closing agreement or accepted
offer in compromise under Sections 7121 or 7122 of the Code, or a comparable
agreement under the Laws of other jurisdictions, which resolves the entire Tax
liability for any taxable period, (iii) any allowance of a refund or credit in
respect of an overpayment of Tax, but only after the expiration of all periods
during which such refund or credit may be recovered by the jurisdiction imposing
the Tax, or (iv) any other final resolution, including by reason of the
expiration of the applicable statute of limitations or the execution of a
pre-filing agreement with the IRS or other Taxing Authority.

“GLPI” has the meaning set forth in the preamble to this Agreement.

“GLPI Entity” means any Subsidiary of GLPI immediately after the Effective Time,
including members of the Pinnacle Group.

“GLPI Group” means, individually or collectively, as applicable, GLPI and any
GLPI Entity.

“GLPI Returns” has the meaning set forth in Section 3.01.

“Income Taxes” means any Taxes based upon, measured by, or calculated with
respect to: (i) net income, profits, gains or net receipts (including, but not
limited to, any capital gains, minimum Tax or any Tax on items of Tax
preference, but not including sales, use, real or personal property, or transfer
or similar Taxes) or (ii) multiple bases (including corporate franchise, doing
business and occupation Taxes) if one or more bases upon which such Tax may be
based, measured by, or calculated with respect to, is described in clause (i).

“IRS” means the U.S. Internal Revenue Service.

“IRS Ruling” has the meaning set forth in Section 6.03 of this Agreement.

“IRS Submission” has the meaning set forth in Section 6.03.

“Law” means any U.S. or non-U.S. federal, national, supranational, state,
provincial, local or similar statute, law, ordinance, regulation, rule, code,
administrative pronouncement, order, requirement or rule of law (including
common law).

“Merger” has the meaning set forth in the recitals to this Agreement.

 

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“Merger Agreement” has the meaning set forth in the recitals to this Agreement.

“Merger Sub” has the meaning set forth in the recitals to this Agreement.

“Non-Controlling Party” has the meaning set forth in Section 5.03.

“OpCo” has the meaning set forth in the preamble to this Agreement.

“OpCo Assets” has the meaning set forth in the Separation Agreement.

“OpCo Common Stock” has the meaning set forth in the recitals to this Agreement.

“OpCo Entity” means any Subsidiary of OpCo immediately after the Effective Time.

“OpCo Group” means, individually or collectively, as the case may be, OpCo and
any OpCo Entity.

“Party” and “Parties” have the meaning set forth in the preamble to this
Agreement.

“Pinnacle” has the meaning set forth in the preamble to this Agreement.

“Pinnacle Entity” means any Subsidiary of Pinnacle immediately after the
Effective Time.

“Pinnacle Group” means, individually or collectively, as the case may be,
Pinnacle and any Pinnacle Entity.

“Pinnacle Returns” has the meaning set forth in Section 3.01.

“Person” has the meaning set forth in the Separation Agreement.

“Post-Closing Period” means any taxable period beginning after the Closing Date.

“Pre-Closing Period” means any taxable period ending on or before the Closing
Date.

“Prime Rate” means the base rate on corporate loans charged by Citibank, N.A.
from time to time, compounded daily on the basis of a year of 365 or 366 (as
applicable) days and actual days elapsed.

“Refund” means any refund (or credit in lieu thereof) of Taxes (including any
overpayment of Taxes that can be refunded or, alternatively, applied to other
Taxes payable), including any interest paid on or with respect to such refund of
Taxes; provided, however, that for purposes of this Agreement, the amount of any
Refund required to be paid to another Party shall be reduced by the net amount
of any Income Taxes imposed on, related to, or attributable to, the receipt or
accrual of such Refund by the Party otherwise required to pay such amount.

“Riverboats” means Ameristar Casino Hotel East Chicago, Belterra Casino Resort,
Ameristar Casino Hotel Council Bluffs, Boomtown Casino & Hotel Bossier City, and
Boomtown Casino & Hotel New Orleans.

 

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“Reorganization” has the meaning set forth in the recitals to this Agreement.

“Required Party” has the meaning set forth in Section 2.07.

“Ruling Request” has the meaning set forth in Section 6.03.

“Section 336(e) Election” has the meaning set forth in Section 6.01.

“Section 481(a) Adjustments” has the meaning set forth in Section 6.02.

“Separation Agreement” has the meaning set forth in the recitals.

“Specified Assets” means, collectively, the Riverboats and the Barges.

“Straddle Period” means any taxable period beginning on or before the Closing
Date and ending after the Closing Date.

“Subsidiary” has the meaning set forth in the Separation Agreement.

“Tax” means (i) all taxes, charges, fees, duties, levies, imposts, or other
similar assessments, imposed by any U.S. federal, state or local or foreign
governmental authority, including, but not limited to, net income, gross income,
gross receipts, excise, real property, personal property, sales, use, service,
service use, license, lease, capital stock, transfer, recording, franchise,
business organization, occupation, premium, gaming, environmental, windfall
profits, profits, customs, duties, payroll, wage, withholding, social security,
employment, unemployment, insurance, severance, workers compensation, stamp,
alternative minimum, estimated, value added, ad valorem, escheat, unclaimed
property, and other taxes, charges, fees, duties, levies, imposts, or other
similar assessments, (ii) any interest, penalties or additions attributable
thereto and (iii) all liabilities in respect of any items described in clauses
(i) or (ii) payable by reason of assumption, transferee or successor liability,
operation of Law or Treasury Regulation Section 1.1502-6(a) (or any predecessor
or successor thereof or any analogous or similar provision under Law).

“Tax Attributes” means net operating losses, capital losses, investment tax
credit carryovers, earnings and profits, foreign tax credit carryovers, overall
foreign losses, previously taxed income, separate limitation losses, any other
losses, deductions, credits or other comparable items, and asset basis, that
could affect a Tax liability for any taxable period.

“Tax Matter” has the meaning set forth in Section 7.01.

“Tax Proceeding” means any audit, assessment of Taxes, pre-filing agreement,
other examination by any Taxing Authority, proceeding, appeal of a proceeding or
litigation relating to Taxes, whether administrative or judicial, including
proceedings relating to competent authority determinations.

“Tax Return” means any return, report, certificate, form or similar statement or
document (including any related or supporting information or schedule attached
thereto and any information return, or declaration of estimated Tax) required to
be supplied to, or filed with, a Taxing Authority in connection with the
payment, determination, assessment or collection of any Tax or the
administration of any Laws relating to any Tax and any amended Tax return or
claim for refund.

 

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“Taxing Authority” means any governmental authority or any subdivision, agency,
commission or entity thereof or any quasi-governmental or private body having
jurisdiction over the assessment, determination, collection or imposition of any
Tax (including the IRS).

“Time of Distribution” has the meaning set forth in the Separation Agreement.

“Transaction Documents” has the meaning set forth in the Separation Agreement.

“Transactions” means the Reorganization, the Distribution, the Merger, and the
other transactions contemplated by the Transaction Documents and the Merger
Agreement.

“Transfer Taxes” has the meaning set forth in Section 2.05.

“Treasury Regulations” means the final and temporary (but not proposed) income
Tax regulations promulgated under the Code, as such regulations may be amended
from time to time (including corresponding provisions of succeeding
regulations).

“U.S.” means the United States of America.

Section 1.02 Additional Definitions. Capitalized terms not defined in this
Agreement shall have the meanings ascribed to them in the Separation Agreement.

ARTICLE II

ALLOCATION OF TAX LIABILITIES

Section 2.01 General Rule. OpCo shall be liable for, and shall indemnify and
hold harmless the Pinnacle Group and the GLPI Group from and against any
liability for, Taxes that are allocated to OpCo under this Article II. GLPI
shall be liable for, and shall indemnify and hold harmless the OpCo Group from
and against any liability for, Taxes that are allocated to GLPI under this
Article II.

Section 2.02 Liability for Taxes. Except as otherwise provided in this Article
II, (i) OpCo shall be liable for any Taxes (a) of the Pinnacle Group for
Pre-Closing Periods or the portion of any Straddle Period ending on the Closing
Date and (b) of the OpCo Group, and (ii) GLPI shall be liable for any Taxes of
the Pinnacle Group for any Post-Closing Period or the portion of any Straddle
Period beginning the day after the Closing Date.

Section 2.03 Distribution Taxes. GLPI shall be liable for the excess of (a) the
amount of any Income Taxes imposed on any member of the OpCo Group or the
Pinnacle Group with respect to Pre-Closing Periods beginning on or after
January 1, 2015, or the portion of any Straddle Period ending on or before the
Closing Date, over (b) the amount of such Income Taxes that would have been
imposed with respect to such Pre-Closing Periods (or the portion of any Straddle
Period ending on or before the Closing Date), determined as if the Transactions
had not occurred (but such Pre-Closing Periods otherwise ended on the date such
Pre-Closing Periods actually

 

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ended); provided, however, that notwithstanding anything to the contrary
contained herein, the aggregate amount of Taxes for which GLPI is liable
pursuant to this Section 2.03 shall not exceed the aggregate amount of Income
Taxes for which GLPI would have been liable pursuant to this Section 2.03
(without regard to this proviso) had the Assumptions been accurate in all
respects. For purposes of this Section 2.03, in determining the limitation on
GLPI’s liabilities hereunder, clause (iii) of the Assumptions shall be modified
to factor in 50% of any utilization of or reduction in U.S. federal net
operating loss carryforwards or general business tax credits of Pinnacle
resulting from or attributable to either (i) the Section 481(a) Adjustments, or
(ii) any Adjustment otherwise made that results in a change to the applicable
recovery period of any of the Specified Assets to 39 years under Section 168(a)
of the Code for Pre-Closing Periods or the portion of any Straddle Period ending
on the Closing Date.

Section 2.04 Section 481(a) Adjustments and Associated Taxes.

(a) Without duplication of any amount for which OpCo is liable under Section
2.02, OpCo shall be liable for 50% of any Income Taxes resulting from (i) the
Section 481(a) Adjustments, or (ii) any Adjustment otherwise made that results
in a change to the applicable recovery period of any of the Specified Assets to
39 years under Section 168(a) of the Code for Pre-Closing Periods or the portion
of any Straddle Period ending on the Closing Date.

(b) Without duplication of any amount for which GLPI is liable under
Section 2.03, GLPI shall be liable for 50% of any Income Taxes resulting from
(i) the Section 481(a) Adjustments, or (ii) any Adjustment otherwise made that
results in a change to the applicable recovery period of any of the Specified
Assets to 39 years under Section 168(a) of the Code for Pre-Closing Periods or
the portion of any Straddle Period ending on the Closing Date.

Section 2.05 Transfer Taxes. GLPI shall be liable for any excise, sales, use,
transfer (including real property transfer), stamp, documentary, filing,
recordation and other similar Taxes (collectively, “Transfer Taxes”) imposed
with respect to the Transactions.

Section 2.06 Indemnity Payments.

(a) If a Party (or one or more of its Subsidiaries) is required under applicable
Tax Law to pay to a Taxing Authority a Tax that the other Party (the “Required
Party”) is liable for under this Agreement, the Required Party shall reimburse
the other Party within twenty (20) days of delivery by the other Party to the
Required Party of an invoice for the amount due, accompanied by evidence of
payment and a statement detailing the Taxes paid and describing in reasonable
detail the particulars relating thereto. The reimbursement shall include
interest on the Tax payment computed at the Prime Rate based on the number of
days from the date of the payment to the Taxing Authority to the date of
reimbursement under this Section 2.06.

(b) For all Tax purposes, the Parties agree to treat (a) any payment required by
this Agreement (other than payments with respect to interest accruing after the
Time of Distribution) as either a contribution by Pinnacle to OpCo or a
distribution by OpCo to Pinnacle, as the case may be, occurring immediately
prior to the Time of Distribution or as a payment of an assumed or retained
liability, and (b) any payment of interest as taxable or deductible, as the case
may be, to the Party entitled under this Agreement to retain such payment or
required under this Agreement to make such payment, in either case except as
otherwise required by applicable Law.

 

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Section 2.07 Allocations for Straddle Periods. For purposes of this Article II,
the portion of Taxes of a Straddle Period allocable to the portion of such
Straddle Period ending on the Closing Date shall be determined (i) in the case
of Income Taxes, via a “closing of the books” as of the Closing Date (with
deductions determined on a time basis, such as depreciation, allocated to the
period prior to and after the “closing of the books” on a daily basis consistent
with the principles set forth in clause (ii)), and (ii) in the case of other
Taxes, by comparing the number of days in such Straddle Period up to and
including the Closing Date to the total number of days in such Straddle Period
and allocating on a pro-rata basis.

Section 2.08 Post-Closing Actions. Notwithstanding anything to the contrary
contained herein, OpCo shall not be liable for any Taxes attributable to any
actions undertaken by the Pinnacle Group on the Closing Date but after the
Effective Time.

ARTICLE III

PREPARATION AND FILING OF TAX RETURNS

Section 3.01 Pre-Closing Period and Straddle Period Tax Returns. OpCo shall
prepare and file when due (including extensions) any Tax Returns of the Pinnacle
Group or the OpCo Group for Pre-Closing Periods and any Tax Returns of the OpCo
Group for Straddle Periods (“Pinnacle Returns”). OpCo shall prepare any such
Pinnacle Returns that are Tax Returns of the Pinnacle Group for Pre-Closing
Periods in a manner that is consistent with past practice and in accordance with
Schedule A. GLPI shall prepare and file when due (including extensions) any Tax
Returns of the Pinnacle Group for Straddle Periods (“GLPI Returns”). The Parties
shall provide, and shall cause their Subsidiaries to provide, reasonable
assistance and cooperation to one another with respect to the preparation and
filing of Tax Returns.

Section 3.02 Review of Tax Returns.

(a) At least sixty (60) days prior to the due date for filing any Pinnacle
Return, OpCo shall provide a draft of such Pinnacle Return to GLPI for its
review and comment, to the extent (i) such Pinnacle Return relates to Taxes for
which GLPI would reasonably be expected to be liable under this Agreement, or
(ii) GLPI reasonably determines that it must inspect such Tax Return to confirm
compliance with the terms of this Agreement. OpCo shall consider in good faith
any comments made by GLPI with respect to such Tax Return. The Parties shall
negotiate in good faith to resolve all disputed issues. Any disputes that the
Parties are unable to resolve shall be resolved by a nationally recognized
independent public accounting firm (the “Accounting Firm”). The Parties shall
require the Accounting Firm to resolve all disputes no later than thirty
(30) days after the submission of such dispute to the Accounting Firm, but in no
event later than the due date for filing the applicable Pinnacle Return and
agree that all decisions by the Accounting Firm with respect thereto shall be
final and conclusive and binding on the Parties. OpCo and GLPI shall equally
share all fees and any other charges of the Accounting Firm.

(b) At least sixty (60) days prior to the due date for filing any GLPI Return,
GLPI shall provide a draft of such GLPI Return to OpCo for its review and
comment, to the extent

 

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(i) such GLPI Return relates to Taxes for which OpCo would reasonably be
expected to be liable under this Agreement, or (ii) OpCo reasonably determines
that it must inspect such Tax Return to confirm compliance with the terms of
this Agreement. GLPI shall consider in good faith any comments made by OpCo with
respect to such Tax Return. The Parties shall negotiate in good faith to resolve
all disputed issues. Any disputes that the Parties are unable to resolve shall
be resolved by the Accounting Firm. The Parties shall require the Accounting
Firm to resolve all disputes no later than thirty (30) days after the submission
of such dispute to the Accounting Firm, but in no event later than the due date
for filing the applicable GLPI Return and agree that all decisions by the
Accounting Firm with respect thereto shall be final and conclusive and binding
on the Parties. OpCo and GLPI shall equally share all fees and any other charges
of the Accounting Firm.

Section 3.03 Transfer Tax Returns. Notwithstanding anything to the contrary
herein, Tax Returns relating to Transfer Taxes shall be prepared and filed when
due (including extensions) by the Person obligated to file such Tax Returns
under applicable Law. The Parties shall provide, and shall cause their
Subsidiaries to provide, assistance and cooperation to one another with respect
to the preparation and filing of such Tax Returns.

Section 3.04 Distribution Tax Reporting. The Parties shall cause the
Distribution to be reported to holders of Pinnacle Common Stock on IRS Form
1099-DIV. The Parties shall not take any position on any U.S. federal or state
income tax return or take any other U.S. tax reporting position that is
inconsistent with the treatment of the Distribution as a distribution to which
Section 301 of the Code applies, except as otherwise required by applicable Law.

ARTICLE IV

REFUNDS, CARRYBACKS, AND AMENDMENTS

Section 4.01 Refunds.

(a) GLPI shall be entitled to all Refunds of Taxes for which GLPI is responsible
pursuant to Article II, and OpCo shall be entitled to all Refunds of Taxes for
which OpCo is responsible pursuant to Article II. A Party receiving a Refund to
which the other Party is entitled pursuant to this Agreement shall pay the
amount to which such other Party is entitled within ten (10) days after the
receipt of the Refund by the Party otherwise required to pay such amount.

(b) To the extent that the amount of any Refund under this Section 4.01 is later
reduced by a Taxing Authority or in a Tax Proceeding, such reduction shall be
allocated to the Party to which such Refund was allocated pursuant to this
Section 4.01, and an appropriate adjusting payment shall be made.

Section 4.02 Carrybacks. Unless OpCo consents in writing, no carryback of any
loss, credit or other Tax Attribute from any Post-Closing Period shall be made
to a Pre-Closing Period of any member of the Pinnacle Group.

Section 4.03 Amended Tax Returns. Unless required by a Final Determination, or
unless OpCo consents in writing, such consent not to be unreasonably withheld,
conditioned, or delayed, GLPI shall not be permitted to amend any Pinnacle
Returns.

 

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ARTICLE V

TAX PROCEEDINGS

Section 5.01 Notice. OpCo, on the one hand, and GLPI, on the other hand, shall
provide prompt notice to the other of any written communication from a Taxing
Authority regarding any pending Tax audit, assessment or proceeding or other Tax
Proceeding of which it becomes aware related to Taxes for which it is
indemnified by the other Party hereunder or for which it may be required to
indemnify the other Party hereunder. Such notice shall attach copies of the
pertinent portion of any written communication from a Taxing Authority and
contain factual information (to the extent known) describing any asserted Tax
liability in reasonable detail and shall be accompanied by copies of any notice
and other documents received from any Taxing Authority in respect of any such
matters. If an indemnified party has knowledge of an asserted Tax liability with
respect to a matter for which it is to be indemnified hereunder and such party
fails to give the indemnifying party prompt notice of such asserted Tax
liability, such failure shall not relieve the indemnifying party of any
liability and/or obligation which it may have to the indemnified party under
this Agreement except to the extent that the indemnifying party was actually
harmed by such failure.

Section 5.02 Control. OpCo shall have exclusive control over any Tax Proceeding
relating to a Pre-Closing Period and any Tax Proceeding of the OpCo Group
relating to a Straddle Period, in each case subject to Section 5.03. GLPI shall
have exclusive control over any Tax Proceeding relating to any Tax Proceeding of
the Pinnacle Group relating to a Straddle Period, subject to Section 5.03.

Section 5.03 Settlement and Participation Rights. The Party in control of a Tax
Proceeding, as determined under Section 5.02 (the “Controlling Party”), shall
have the sole right to contest, litigate, compromise and settle such Tax
Proceeding, without obtaining the prior consent of whichever of OpCo or GLPI is
not the Controlling Party (the “Non-Controlling Party”). Notwithstanding the
foregoing, with respect to any Tax Proceeding relating to Taxes for which the
Non-Controlling Party may be liable hereunder or which would reasonably be
expected to have an adverse effect on the Non-Controlling Party:

(a) (i) The Controlling Party shall keep the Non-Controlling Party informed in a
timely manner of all substantive actions taken or proposed to be taken by the
Controlling Party in such Tax Proceeding with respect to such Taxes; (ii) the
Controlling Party shall timely provide the Non-Controlling Party copies of any
written materials relating to such Tax Proceeding received from any Taxing
Authority with respect to such Taxes; (iii) the Controlling Party shall timely
provide the Non-Controlling Party with copies of any correspondence or filings
submitted to any Taxing Authority or judicial authority in connection with such
Taxes in such Tax Proceeding; (iv) the Controlling Party shall consult with the
Non-Controlling Party and offer the Non-Controlling Party a reasonable
opportunity to comment before submitting any written materials prepared or
furnished in connection with such potential Taxes in such Tax Proceeding;
(v) the Controlling Party shall defend such Tax Proceeding diligently and in
good faith; and (vi) the Controlling Party shall not settle any such Tax
Proceeding without the prior written consent of the Non-Controlling Party, which
shall not be unreasonably withheld, conditioned or delayed. The failure of the
Controlling Party to take any action specified in the preceding sentence shall

 

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not relieve the Non-Controlling Party of any liability and/or obligation which
it may have to the Controlling Party under this Agreement except to the extent
that the Non-Controlling Party was actually harmed by such failure.

(b) The Controlling Party shall provide the Non-Controlling Party with written
notice reasonably in advance of, and the Non-Controlling Party shall have the
right to attend, any formally scheduled meetings with Taxing Authorities or
hearings or proceedings before any judicial authorities in connection with any
potential adjustment in any such Tax Proceeding. The failure of the Controlling
Party to provide any notice specified in this Section 5.03(b) to the
Non-Controlling Party shall not relieve the Non-Controlling Party of any
liability and/or obligation which it may have to the Controlling Party under
this Agreement except to the extent that the Non-Controlling Party was actually
harmed by such failure.

ARTICLE VI

CERTAIN TAX MATTERS

Section 6.01 Section 336(e) Election. The Parties agree that Pinnacle shall
timely make an election under Section 336(e) of the Code (and any similar
provision of any U.S. state or local jurisdiction) and Treasury Regulation
Section 1.336-2(j) (a “Section 336(e) Election”) with respect to the
Distribution in accordance with Treasury Regulation Section 1.336-2(h). OpCo
shall prepare and timely file such forms as may be contemplated by applicable
Tax Law or administrative practice to effect such Section 336(e) Election. OpCo
shall determine the allocation of amounts to be reflected on such forms in its
reasonable discretion; provided, however that Pinnacle (and, after the Effective
Time, GLPI) shall have the opportunity to review such allocation, and the
Parties shall negotiate in good faith to resolve any disputed issues. The
Parties shall not and shall not permit any of their respective Subsidiaries to,
take any position for Tax purposes inconsistent with the relevant Section 336(e)
Election or the allocations described in the preceding sentence, except as may
be required pursuant to a Final Determination.

Section 6.02 Section 481(a) Adjustments. The Parties agree that, prior to the
Closing Date, Pinnacle shall file an application under Revenue Procedure 2015-13
(as modified by Revenue Procedure 2015-33) for consent of the Commissioner to
change Pinnacle’s method of accounting for depreciation of the Barges under
section 168(a) of the Code to a method of depreciating the Barges over a period
of 39 years. Further, in the event that Pinnacle obtains the IRS Ruling with
respect to the Riverboats, the Parties agree that Pinnacle shall promptly file
an application for consent of the Commissioner to change Pinnacle’s method of
accounting for depreciation of the Riverboats under section 168(a) of the Code
to a method of depreciating the Riverboats over a period of 39 years. Any
adjustments required under Section 481(a) of the Code (and any similar provision
of any U.S. state or local jurisdiction) with respect to the changes in method
of accounting referred to in this Section 6.02 are collectively referred to as
the “Section 481(a) Adjustments”. The Parties agree that OpCo shall cause
Pinnacle to make an “eligible acquisition transaction election” on the tax
return filed with respect to the final Pre-Closing Period pursuant to
Section 7.03(3)(d) of Revenue Procedure 2015-13 with respect to each of the
Section 481(a) Adjustments.

 

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Section 6.03 IRS Ruling. Pinnacle has submitted to the IRS a request (the
“Ruling Request”) for a private letter ruling from the IRS (the “IRS Ruling”) to
the effect that the Barges and the Riverboats will qualify as real property for
purposes of Section 856(c) of the Code. Until the Closing Date (and, after the
Closing Date, in the sole discretion of GLPI), Pinnacle shall use its
commercially reasonable efforts to obtain the IRS Ruling and, in consultation
with GLPI, shall prepare and submit to the IRS supplemental materials relating
thereto that Pinnacle determines are necessary or appropriate to obtain the IRS
Ruling (each, an “IRS Submission”). Pinnacle shall provide GLPI with a
reasonable opportunity to review and comment on each material IRS Submission and
shall consider any such comments in good faith. Pinnacle shall provide GLPI with
copies of each IRS Submission as filed with the IRS promptly following the
filing thereof. Pinnacle shall use its commercially reasonable efforts to notify
GLPI and GLPI’s representatives of any substantive communications with the IRS
regarding any material issue arising with respect to the Ruling Request. The
Parties acknowledge that the obtaining of the IRS Ruling is not a condition to
the consummation of any of the Transactions. The Parties further acknowledge
that Pinnacle shall not revoke the Ruling Request or otherwise cease attempting
to obtain the IRS Ruling (including, for clarification, the portion of the IRS
Ruling relating to the Riverboats) without the consent of GLPI, such consent not
to be unreasonably withheld, conditioned or delayed.

ARTICLE VII

COOPERATION

Section 7.01 General Cooperation. The Parties shall each cooperate fully (and
each shall cause its respective Subsidiaries to cooperate fully) with all
reasonable requests in writing from another Party hereto, or from an agent,
representative or advisor to such Party, in connection with the preparation and
filing of Tax Returns, claims for Refunds, Tax Proceedings, and calculations of
amounts required to be paid pursuant to this Agreement, in each case, related or
attributable to or arising in connection with Taxes of any of the Parties
(including matters related to a Party’s qualification as a “real estate
investment trust” under the Code) or their respective Subsidiaries covered by
this Agreement and the establishment of any reserve required in connection with
any financial reporting (a “Tax Matter”). Such cooperation shall include the
provision of any information reasonably necessary or helpful in connection with
a Tax Matter and shall include, without limitation, at each Party’s own cost:

(a) the provision of any Tax Returns of the Parties and their respective
Subsidiaries, books, records (including information regarding ownership and Tax
basis of property), documentation and other information relating to such Tax
Returns, including accompanying schedules, related work papers, and documents
relating to rulings or other determinations by Taxing Authorities;

(b) the execution of any document (including any power of attorney) in
connection with any Tax Proceedings of any of the Parties or their respective
Subsidiaries, or the filing of a Tax Return or a Refund claim of the Parties or
any of their respective Subsidiaries;

(c) the use of the Party’s reasonable best efforts to obtain any documentation
in connection with a Tax Matter; and

(d) the use of the Party’s reasonable best efforts to obtain any Tax Returns
(including accompanying schedules, related work papers, and documents),
documents, books, records or other information in connection with the filing of
any Tax Returns of any of the Parties or their Subsidiaries.

 

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Each Party shall make its employees, advisors, and facilities available, without
charge, on a reasonable and mutually convenient basis in connection with the
foregoing matters.

Section 7.02 Retention of Records. OpCo and GLPI shall retain or cause to be
retained all Tax Returns, schedules and work papers, and all material records or
other documents relating thereto in their possession, until sixty (60) days
after the expiration of the applicable statute of limitations (including any
waivers or extensions thereof) of the taxable periods to which such Tax Returns
and other documents relate or until the expiration of any additional period that
any Party reasonably requests, in writing, with respect to specific material
records and documents. A Party intending to destroy any material records or
documents shall provide the other Party with reasonable advance notice and the
opportunity to copy or take possession of such records and documents. The
Parties hereto will notify each other in writing of any waivers or extensions of
the applicable statute of limitations that may affect the period for which the
foregoing records or other documents must be retained.

ARTICLE VIII

MISCELLANEOUS

Section 8.01 Dispute Resolution. Except as otherwise specified herein, any
dispute between the Parties as to any matter covered by this Agreement shall be
resolved pursuant to Article VII of the Separation Agreement.

Section 8.02 Tax Sharing Agreements. All Tax sharing, indemnification and
similar agreements, written or unwritten, as between OpCo or an OpCo Entity, on
the one hand, and GLPI or a GLPI Entity, on the other (other than this Agreement
or any other Transaction Document), shall be or shall have been terminated no
later than the Effective Time and, after the Effective Time, none of OpCo or an
OpCo Entity, or GLPI or a GLPI Entity shall have any further rights or
obligations under any such Tax sharing, indemnification or similar agreement.

Section 8.03 Interest on Late Payments. With respect to any payment between the
Parties pursuant to this Agreement not made by the due date set forth in this
Agreement for such payment, the outstanding amount will accrue interest at a
rate per annum equal to the rate in effect for underpayments under Section 6621
of the Code from such due date to and including the earlier of the ninetieth
(90th) day or the payment date and thereafter will accrue interest at a rate per
annum equal to 9%.

Section 8.04 Survival of Covenants. Except as otherwise contemplated by this
Agreement, all covenants and agreements of the Parties contained in this
Agreement shall survive the Effective Time and remain in full force and effect
in accordance with their applicable terms.

Section 8.05 Termination. This Agreement may not be terminated except by an
agreement in writing signed by each of the Parties to this Agreement; provided,
that if the Merger Agreement has been terminated in accordance with its terms,
this Agreement may be terminated in the sole discretion of Pinnacle without the
prior approval of any Person, including GLPI.

 

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Section 8.06 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced under any Law or as a matter of
public policy, all other conditions and provisions of this Agreement shall
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties to
this Agreement shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible in a mutually
acceptable manner.

Section 8.07 Joinder of OpCo. Promptly following the formation of Opco, Pinnacle
shall cause OpCo to execute a joinder to this Agreement in a form reasonably
agreed to by Pinnacle and GLPI.

Section 8.08 Entire Agreement. Except as otherwise expressly provided in this
Agreement, this Agreement constitutes the entire agreement of the Parties hereto
with respect to the subject matter of this Agreement and supersedes all prior
agreements and undertakings, both written and oral, between or on behalf of the
Parties hereto with respect to the subject matter of this Agreement.

Section 8.09 Assignment; No Third-Party Beneficiaries. This Agreement shall not
be assigned by any Party without the prior written consent of the other Party
hereto. This Agreement is for the sole benefit of the Parties to this Agreement
and their respective Subsidiaries and their permitted successors and assigns and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.

Section 8.10 Amendment. No provision of this Agreement may be amended or
modified except by a written instrument signed by the Parties to this Agreement.
No waiver by any Party of any provision of this Agreement shall be effective
unless explicitly set forth in writing and executed by the Party so waiving. The
waiver by any Party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any other subsequent breach.

Section 8.11 Rules of Construction. Interpretation of this Agreement shall be
governed by the following rules of construction: (a) words in the singular shall
be held to include the plural and vice versa and words of one gender shall be
held to include the other gender as the context requires; (b) references to the
terms Article, Section, paragraph, clause, Exhibit and Schedule are references
to the Articles, Sections, paragraphs, clauses, exhibits and schedules of this
Agreement unless otherwise specified; (c) the terms “hereof,” “herein,”
“hereby,” “hereto,” and derivative or similar words refer to this entire
Agreement, including the Schedules and Exhibits hereto; (d) references to “$”
shall mean U.S. dollars; (e) the word “including” and words of similar import
when used in this Agreement shall mean “including without limitation,” unless
otherwise specified; (f) the word “or” shall not be exclusive; (g) references to
“written” or “in writing” include in electronic form; (h) provisions shall
apply, when appropriate, to successive events and transactions; (i) the headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement; (j) Pinnacle and
GLPI have each participated in the negotiation and drafting of this Agreement
and if an ambiguity

 

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or question of interpretation should arise, this Agreement shall be construed as
if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or burdening either Party by virtue of the authorship of any of
the provisions in this Agreement or any interim drafts of this Agreement; and
(k) a reference to any Person includes such Person’s successors and permitted
assigns.

Section 8.12 Counterparts. This Agreement may be executed in counterparts each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile or portable
document format (PDF) shall be as effective as delivery of a manually executed
counterpart of any such Agreement.

Section 8.13 Coordination with the Employee Matters Agreement. To the extent any
covenants or agreements between the Parties with respect to employee withholding
Taxes are set forth in the Employee Matters Agreement, such Taxes shall be
governed exclusively by the Employee Matters Agreement and not by this
Agreement.

Section 8.14 Effective Date. This Agreement shall, apart from Section 6.02 and
Section 6.03, become effective only upon the occurrence of the Merger. Sections
6.02 and 6.03 shall become effective as of the date of this Agreement.

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the day and year first above written.

 

PINNACLE ENTERTAINMENT, INC. By /s/ John A. Godfrey Name: John A. Godfrey Title:
Executive Vice President, Secretary and General Counsel

[Signature Page to Tax Matters Agreement]

 

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GAMING AND LEISURE PROPERTIES, INC. By /s/ Brandon J. Moore Name: Brandon J.
Moore Title: Senior Vice President and General Counsel

[Signature Page to Tax Matters Agreement]

 

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