Exhibit 10.54

[Pinnacle Entertainment Letterhead]

August 12, 2004

Dennis G. Coleman, Executive Director

St. Louis County Port Authority

121 S. Meramec

St. Louis, MO 63105

 

Re:    Lease and Development Agreement dated August 12, 2004 (the “Lease”) by
and between St. Louis County Port Authority (the “Authority”) and Pinnacle
Entertainment, Inc. (“Pinnacle”)

Dear Dennis:

This letter will confirm our mutual understandings and agreements regarding the
Lease, which you and we have executed and delivered today.

As all of us are aware, the effective date of Ordinance No. 21,908 (the “County
Ordinance”) has been stayed as a result of the petition drive to place the
County Ordinance on the November election ballot. We are pleased that both the
Authority and the County Counselor share our view that the County Ordinance is
not properly referable to the voters.

Quite apart from the County Ordinance, the County Council adopted a parallel
supporting resolution which is not targeted in the referendum drive. Pinnacle
and the Authority are in complete agreement that these resolutions are perfectly
adequate to implement the regulatory mechanisms provided for under Missouri law
for municipal and county input to the Commission as it makes its determination
regarding licensure. St. Louis County voters approved licensed casino gaming
more than 10 years ago, and the residents of Lemay have repeatedly demonstrated
their overwhelming support for the Pinnacle Project. For these reasons, we have
agreed to jointly urge and work with the County to challenge the referendum if
the petition drive should garner enough signatures for ballot certification. The
Authority and Pinnacle also agree to take reasonable cooperative legal actions,
as necessary, to assure that the Project proceeds as quickly as is possible
under the development schedule in the Lease and to assure that the Lease remains
in full force and legal effect.

While we are confident that a challenge of the referendum petition would be
successful, and while we do not intend to delay in proceeding under the Lease,
there is always the possibility that the referendum seeking to invalidate the
County Ordinance will be on the

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Dennis G. Coleman, Executive Director

August 12, 2004

Page 2

ballot and that the voters might vote in favor of the referendum which could
create challenges to the completion of the Project. In that circumstance, the
Authority acknowledges that Pinnacle shall have the right but not the obligation
to pursue whatever legal action might be needed to protect and complete the
Pinnacle Project. Moreover, the Authority further acknowledges that if there are
challenges to the completion of the Pinnacle Project arising from the
referendum, Pinnacle shall have the right, by delivery of written notice to the
Authority, to declare an event of force majeure and to suspend performance of
any or all of its ongoing obligations (tolling all relevant deadlines under the
Lease for the completion of work or the satisfaction of Conditions, other than
the Commission Acceptance Date Condition, including disbursements by Escrow
Agent under the Escrow Agreement) until such impediment has been fully and
finally removed to Pinnacle’s satisfaction. Finally, the Authority acknowledges
that if as a result of some action caused by the referendum petition process,
Pinnacle determines in its discretion that it cannot complete or operate the
Pinnacle Project as contemplated under the Lease, Pinnacle shall have the right
by delivery of written notice to the Authority to terminate the Lease without
penalty and receive a full refund of all Deposits and Prepaid Rent held by the
Escrow Agent or released by the Escrow Agent to the Authority in accordance with
any applicable provision of the Lease.

Even though the Authority recognizes that Pinnacle could declare an event of
force majeure now, the parties have determined to proceed on the Project by
agreeing that: (a) all references to the term Effective Date in Section l(c) and
2 of the Lease shall be the later of December 1, 2004, or the Commission
Acceptance Date; (b) in the event that without fault of Pinnacle, the Commission
Acceptance Date Condition, the Zoning Condition or the Site Permit Condition is
not timely satisfied (taking into account any force majeure delays for
satisfaction of the Zoning or Site Permit Conditions declared by Pinnacle
pursuant to the preceding paragraph), Pinnacle shall have the right, in its sole
discretion, to terminate the Lease without penalty, and in such event, if the
First Deposit, the Second Deposit and the Prepaid Rent have been placed in
escrow pursuant to the Lease, the funds shall be returned to Pinnacle as
provided in the paragraph above and neither party shall have any further
liability under the terms of the Lease; and (c) references to the Commission
Acceptance Date in Section 4 of the Lease shall be the later of December 1,
2004, or the Commission Acceptance Date. Notwithstanding the foregoing, Pinnacle
reserves its rights to declare a force majeure event at any time with respect to
challenges to the completion of the Project arising from the referendum and the
Authority agrees to recognize any such force majeure declaration and the rights
of Pinnacle outlined in the paragraph above.

In consideration of the foregoing, Pinnacle has agreed to reimburse $220,728.25
in out-of-pocket expenses borne by the Authority through July 31, 2004, in
connection with the selection process, the negotiation of the Lease, certain
on-going due diligence and

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Dennis G. Coleman, Executive Director

August 12, 2004

Page 3

attention to the concerns addressed in this letter, said amount to be payable
subject to Pinnacle’s review and approval of invoices furnished this date by the
Authority to Pinnacle. Furthermore, Pinnacle agrees to reimburse the Authority
for out-of-pocket expenses borne by the Authority concerning the development of
the Project submitted by Real Estate Strategies and reviewed and approved in
writing by Pinnacle. Subject to Pinnacle’s prior approval of the scope of
services for future legal fees billed by Bryan Cave LLP, Pinnacle also agrees to
reimburse the Authority for the actual costs of such fees and expenses subject
to approval in writing by Pinnacle.

Terms defined in the Lease and used herein shall have the same meaning as so
defined. In the event of any conflict between the Lease, the Escrow Agreement
and this letter agreement, this letter agreement shall control and all other
terms and provisions of the Lease shall remain in full force and effect. If the
foregoing meets with your approval, please sign where indicated below. On behalf
of Pinnacle Entertainment, we are pleased that the Authority shares our
commitment to this vital and exciting project and our confidence in its ultimate
success.

 

Very truly yours,

/s/ John A. Godfrey

John A. Godfrey

Senior Vice President, Secretary and

      General Counsel

 

Acknowledged and Agreed this

12th day of August, 2004

 

St. Louis County Port Authority

By:  

/s/ Dennis G. Coleman

Name:   Dennis G. Coleman Title:   Executive Director