Exhibit 10.1

Execution Version

ASIAN COAST DEVELOPMENT (CANADA) LTD.

THIRD AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

Dated as of May 24, 2013

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TABLE OF CONTENTS

 

          Page   ARTICLE 1 SCOPE AND EFFECT OF AGREEMENT      2    Section 1.1
   Support of Terms      2    Section 1.2    Terms to Prevail over Constating
Documents      2    Section 1.3    Amended and Restated Agreement.      3   
ARTICLE 2 GOVERNANCE AND MANAGEMENT OF THE COMPANY      3    Section 2.1   
Board Rights      3    Section 2.2    Pinnacle Advisor      11    Section 2.3   
Access to Information      11    ARTICLE 3 TRANSFERS AND RELATED COVENANTS     
14    Section 3.1    Transfer Restrictions      14    Section 3.2    Tag-Along
Right.      22    Section 3.3    Drag-Along Right      27    Section 3.4   
Minority Investor Exit Sale Right      30    Section 3.5    Right of First
Negotiation      31    Section 3.6    Disposition of Securities      32   
Section 3.7    Recognition of Transfers and Endorsement on Certificates      32
   Section 3.8    Waiver of Rights      33    ARTICLE 4 PREEMPTIVE RIGHTS     
33    Section 4.1    Preemptive Rights      33    Section 4.2    Waiver of
Rights      36    ARTICLE 5 REGISTRATION RIGHTS      36    Section 5.1   
Registration Rights      36    ARTICLE 6 CONSENT RIGHTS AND ADDITIONAL COVENANTS
     36    Section 6.1    Majority Vote Consent Rights      36    Section 6.2   
Minority Consent Rights      40    Section 6.3    Covenants of the Company     
47    Section 6.4    Additional Covenants and Representations of the Parties.   
  50    Section 6.5    Backstop Lookback Protection      53   

 

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Section 6.6    May 2013 Loan Agreement Lookback Protection      58    Section
6.7    Related Provisions      64    Section 6.8    Anti-Dilution Protection   
  65    Section 6.9    Creation of the Class VII Non-Voting Shares      68   
Section 6.10    Management Top-Up.      69    ARTICLE 7 DEFINITIONS AND
INTERPRETATION      69    Section 7.1    Certain Definitions      69    Section
7.2    Headings      89    Section 7.3    Extended Meanings      89    Section
7.4    Currency      89    ARTICLE 8 CONFIDENTIALITY      90    Section 8.1   
Confidentiality Covenant      90    Section 8.2    Other Permitted Disclosure   
  90    Section 8.3    Remedies      91    ARTICLE 9 [INTENTIONALLY OMITTED]   
  91    ARTICLE 10 MISCELLANEOUS      91    Section 10.1    Termination      91
   Section 10.2    Amendments      92    Section 10.3    Waiver      92   
Section 10.4    Assignment      92    Section 10.5    Enforcement      93   
Section 10.6    Notices      93    Section 10.7    Further Assurances      95   
Section 10.8    Binding Effect      95    Section 10.9    No Third Party
Beneficiaries      95    Section 10.10    Severability      95    Section 10.11
   Entire Agreement      96    Section 10.12    Governing Law      96    Section
10.13    Independent Legal Advice      96    Section 10.14    Expenses      96
   Section 10.15    Counterparts      96    Section 10.16    English Language   
  97   

 

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THIRD AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

This THIRD AMENDED AND RESTATED SHAREHOLDERS AGREEMENT (this “Agreement”), dated
as of May 24, 2013, is by and among (i) Asian Coast Development (Canada) Ltd., a
Canadian corporation (the “Company”), (ii) Harbinger II S.à r.l., Blue Line
ACDL, Inc., Breakaway ACDL, Inc., Credit Distressed Blue Line Master Fund, Ltd.,
Global Opportunities Breakaway Ltd., and Harbinger China Dragon Intermediate
Fund, L.P. (collectively, “Harbinger”), (iii) PNK Development 18, LLC, a
Delaware limited liability company and a subsidiary of Pinnacle
Entertainment, Inc., a Delaware corporation (such subsidiary, “Pinnacle”) and
(iv) PNK Development 31, LLC, a Delaware limited liability company and a
subsidiary of Pinnacle Entertainment, Inc. Capitalized terms used but not
otherwise defined in this Agreement shall have the meanings set forth in
Section 7.1.

RECITALS

WHEREAS, the Company, Harbinger and Pinnacle entered into the Shareholders
Agreement, dated as of August 8, 2011 (the “Original Shareholders Agreement”),
when Pinnacle made its initial investment in the Company pursuant to the
Pinnacle Subscription Agreement;

WHEREAS, the Company, Harbinger and Pinnacle entered into an Amended and
Restated Shareholders Agreement, dated as of August 29, 2012, in connection
with, inter alia, the 2012 Subscription Agreement as amended by the First
Amendment to the Amended and Restated Shareholders Agreement dated as of
September 28, 2012 (as amended, the “First Amended Shareholders Agreement”);

WHEREAS, the Company, Harbinger and Pinnacle entered into a Second Amended and
Restated Shareholders Agreement, dated as of December 6, 2012, in connection
with, inter alia, the Backstop Loan Agreement (the “Second Amended Shareholders
Agreement”);

WHEREAS, Harbinger and Pinnacle are shareholders of the Company; and

WHEREAS, the Company, Harbinger and Pinnacle desire to grant to Harbinger and
Pinnacle, as the case may be, certain rights with respect to their respective
investments according to the following terms and conditions.

NOW, THEREFORE, in consideration of the mutual premises and covenants set forth
herein, the parties hereto agree as follows:

 

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ARTICLE 1

SCOPE AND EFFECT OF AGREEMENT

Section 1.1 Support of Terms.

(a) Each of Harbinger and Pinnacle agrees with the other that it shall vote its
respective Voting Securities (or, if more convenient, execute written
shareholders’ consent resolutions) and in all other respects use its reasonable
best efforts and take all such steps as may reasonably be within its powers so
as to cause the Company or any Company Party to comply with and act in the
manner contemplated by the provisions hereof, and so as to implement to their
full extent the provisions of this Agreement and, to the extent, if any,
permitted by Applicable Law, shall each use reasonable best efforts and take all
such steps as may reasonably be within its powers so as to cause its respective
nominee(s) as director so to act. For purposes of this Section 1.1(a), the terms
“Harbinger” and “Pinnacle” shall include their respective Entity Affiliates that
own Equity Securities.

(b) The Company shall (i) comply with its obligations under this Agreement, and
(ii) use reasonable best efforts and take all such steps as may reasonably be
within its powers to otherwise implement to their full extent the provisions of
this Agreement.

The parties hereto agree that their intent is to grant to each of Harbinger and
Pinnacle (and their respective Entity Affiliates) certain rights with respect to
its investment as more particularly set forth in this Agreement, and in
accordance with the terms and conditions hereof, and that notwithstanding
anything to the contrary set out in the Existing Shareholders Agreement or the
Supplemental Agreement, the respective rights and obligations of the Company and
Harbinger (including its Entity Affiliates) vis-à-vis each other under the
Existing Shareholders Agreement and Supplemental Agreement shall, except as
otherwise expressly provided herein, be subject and subordinate to the further
agreements of the Company, Harbinger and Pinnacle set forth in this Agreement.
Harbinger further acknowledges that it shall irrevocably terminate and waive in
favor of the Company and Pinnacle certain of its governance consent rights and
covenants, including without limitation certain rights of first refusal and
preemptive rights, in each case as more particularly set out in the Termination
and Waiver dated as of August 29, 2012 granted by Harbinger in favor of the
Company and Pinnacle. Without limiting the foregoing, until the termination of
this Agreement in accordance with its terms, Harbinger acknowledges that,
notwithstanding section 6.6 of the Existing Shareholders Agreement, it and its
Entity Affiliates shall only be permitted to transfer Securities in accordance
with the terms of this Agreement.

Section 1.2 Terms to Prevail over Constating Documents. If any of the provisions
of this Agreement conflict with the Constating Documents, the provisions of this
Agreement shall prevail to the extent of each such conflict, and each of the
Company, Harbinger and Pinnacle shall, if reasonably possible, cause the
Constating Documents to be amended so as to eliminate such conflict.

 

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Section 1.3 Amended and Restated Agreement.

This Agreement is intended to represent a continuation of the Second Amended
Shareholders Agreement, as amended and restated upon the terms and conditions
set out herein, and from and after the date hereof supersedes and replaces the
Second Amended Shareholders Agreement (which in turn superseded and replaced the
First Amended Shareholders Agreement) in its entirety.

ARTICLE 2

GOVERNANCE AND MANAGEMENT OF THE COMPANY

Section 2.1 Board Rights.

(a) Non-Voting Period. At any time other than during a Voting Period, the
following provisions shall apply:

(i) Size and Composition.

(A) At any time during which Harbinger is the Majority Party:

(1) Subject to Section 2.1(a)(i)(A)(2), Harbinger and Pinnacle shall vote their
respective Voting Securities so that the Board shall be composed of at least
seven (7) but no more than twelve (12) directors, of which Pinnacle shall
nominate a number of individuals from the number of directors to be elected that
represents Pinnacle’s then ownership percentage of the Equity Voting Power,
rounded up or down to the nearest whole number, but not less than two
(2) directors (any director nominated by Pinnacle, a “Pinnacle Director”), with
the remaining directors being nominated by Harbinger (any director nominated by
Harbinger, a “Harbinger Director”), and Harbinger and Pinnacle shall vote their
respective Voting Securities to elect such Pinnacle Directors and Harbinger
Directors (including without limitation, the appointment of additional Harbinger
Directors or Pinnacle Directors, if any and as applicable, immediately following
the end of the Voting Period); provided, however, that (x) in no event shall
Harbinger vote its Voting Securities in a manner that would cause the number of
Pinnacle Directors serving on the Board at any time to be less than two
(2) directors, (y) Harbinger shall take all necessary action as promptly as
practicable, including without limitation effecting an increase in the size of
the Board or removal of some of the Harbinger Directors and causing the
appointment of Pinnacle Directors, such that the number of Pinnacle Directors
reflects the foregoing provision, and (z) any such appointment in furtherance of
this Section 2.1(a)(i)(A)(1) shall only be permitted in accordance with the
terms of the Constating Documents.

(2) Harbinger, as the Majority Party, shall have the sole right to recommend in
writing any increase or decrease in the size of the Board between seven (7) and
twelve (12) directors, and Pinnacle shall vote its Voting Securities so that the
Board shall be comprised of such number of directors as recommended by
Harbinger. In the event that the size of the Board is so increased or decreased,
Harbinger shall vote its Voting Securities so that the number of Pinnacle
Directors on the Board shall be in proportion to Pinnacle’s then ownership
percentage of the Equity Voting Power, rounded up or down to the nearest whole
number; provided, however, that in no event shall Harbinger vote its Voting
Securities in a manner that would cause the number of Pinnacle Directors serving
on the Board at any time to be less than two (2) directors. In the event that
the number of Pinnacle Directors on the Board at any time is less than its
proportionate share based on Pinnacle’s then ownership percentage of the Equity
Voting Power, rounded up or down to the nearest whole number, then Pinnacle
shall have the right to require (exercisable by written notice to Harbinger)
that Harbinger, as the Majority Party, take, and Harbinger shall take, all
necessary action, including without limitation effectuating an increase in the
size of the Board or removal of some of the Harbinger Directors and causing the
appointment of additional Pinnacle Directors and voting its Voting Securities
thereafter, such that the number of Pinnacle Directors reflects Pinnacle’s
proportionate share of such voting power; provided, however, that in no event
shall Harbinger vote its Voting Securities in a manner that would cause the
number of Pinnacle Directors serving on the Board at any time to be less than
two (2) directors.

 

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(B) At any time during which Harbinger is the Minority Party:

(1) Harbinger and Pinnacle shall vote their respective Voting Securities so that
(x) the Board shall be composed of at least seven (7) but no more than twelve
(12) directors, and (y) the number of directors nominated by each of Pinnacle
and Harbinger shall be proportionate to their then-respective ownership
percentages of the Equity Voting Power, rounded up or down to the nearest whole
number.

(2) Pinnacle, as the Majority Party, shall have the sole right to recommend in
writing any increase or decrease in the size of the Board between seven (7) and
twelve (12) directors, and Harbinger, as the Minority Party, shall vote its
Voting Securities so that the Board shall be comprised of such number of
directors as recommended by Pinnacle. In the event that the size of the Board is
so increased or decreased, Pinnacle shall vote its Voting Securities so that the
number of Harbinger Directors on the Board shall be in proportion to Harbinger’s
then ownership percentage of the Equity Voting Power, rounded up or down to the
nearest whole number; provided, however, that in no event shall Pinnacle vote
its Voting Securities in a manner that would cause the number of Harbinger
Directors serving on the Board at any time to be less than two (2) directors. In
the event that the number of Harbinger Directors on the Board at any time is
less than its proportionate share based on Harbinger’s then ownership percentage
of the Equity Voting Power, rounded up or down to the nearest whole number, then
Harbinger shall have the right to require (exercisable by written notice to
Pinnacle) that Pinnacle, as the Majority Party, take, and Pinnacle shall take,
all necessary action, including without limitation effectuating an increase in
the size of the Board or removal of some of the Pinnacle Directors and causing
the appointment of additional Harbinger Directors and voting its Voting
Securities thereafter, such that the number of Harbinger Directors reflects
Harbinger’s proportionate share of such voting power; provided, however, that in
no event shall Pinnacle vote its Voting Securities in a manner that would cause
the number of Harbinger Directors serving on the Board at any time to be less
than two (2) directors.

 

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(C) Independent Director. Subject to Section 2.1(d)(xii), at any time other than
during a Voting Period (whether Harbinger is the Majority Party or otherwise),
Harbinger shall be required to include an Independent Director as one of its
nominees for election as a director pursuant to Section 2.1(a); provided, that
during the period ending on or before the twelve (12) month anniversary of the
Class VI Closing Date, Harbinger shall be required to propose the Chairman
Nominee as its Independent Director nominee pursuant hereto for any election;
provided further, however, that in the event the Chairman Nominee is unable or
unwilling to serve or ceases to be an Independent Director, Harbinger shall be
required to propose an Independent Director to serve on the Board. In all such
events, Harbinger and Pinnacle shall vote their respective Voting Securities
such that the Independent Director nominee proposed by Harbinger would be
elected as a director to the Board. For the avoidance of doubt, as soon as
practicable following the termination of a Voting Period and solely to the
extent Pinnacle has nominated, and such director is at such time serving as, an
Independent Director, (1) the Independent Director (including the Chairman
Nominee if the Chairman Nominee is the Chairman of the Board) shall remain on
the Board, but shall be designated to be a Harbinger Director without derogating
from any of the rights set forth in Section 2.1(a)(i)(A) and (2) Pinnacle shall
be entitled to appoint a replacement Pinnacle Director and Harbinger agrees to
cause its appointed directors to act so as to effectuate Pinnacle’s right to
appoint such Pinnacle Director in accordance with the foregoing, including by
causing its directors to increase the size of the Board and fill a vacancy on
the Board with such replacement Pinnacle Director.

(ii) For the avoidance of doubt, neither Harbinger nor Pinnacle shall be
required to vote their respective Voting Securities in the manner set forth in
Section 2.1(a)(i) at any time during a Voting Period.

(iii) Subject to Applicable Law, the parties shall cause their nominees to the
Board to call and hold a special meeting of the shareholders of the Company if
necessary to effectuate the provisions of this Section 2.1(a).

(b) Voting Period. At any time during the duration of any Voting Period, the
following provisions shall apply:

(i) Size and Composition. Harbinger and Pinnacle shall vote their respective
Voting Securities so that the Board shall be composed of (A) such number of
directors as is set forth in Section 4.1(c) of the Existing Shareholders
Agreement, of which six (6) directors shall be nominated by Harbinger and shall
vote their respective Voting Securities to elect such six (6) nominees and
(B) no more than ten (10) directors. From and after the date of this Agreement,
Harbinger agrees to (A) nominate, as part of its slate of six nominees for the
election as directors, the number of individuals proposed by Pinnacle in writing
that, in respect of such slate of six (6) director nominees, represents
Pinnacle’s then ownership percentage of the Equity Voting Power, rounded up or
down to the nearest whole number; provided that Harbinger shall be required to
nominate at least two nominees proposed by Pinnacle; and (B) vote its Voting
Securities to elect such Pinnacle nominees. With respect to any remaining
directors that may be nominated for election as a director of the Company by the
Principal Shareholders in accordance with the terms and conditions of
Section 4.1(c) of the Existing Shareholders Agreement, Harbinger shall not (and
shall not permit its Subsidiaries to), without first obtaining Pinnacle’s
written consent (which consent shall not be unreasonably withheld or delayed),
make any affirmative decision as to the eligibility or qualifications of any
such nominees that may be proposed by the Principal Shareholders, provided that
rejection of nominees proposed by the Principal Shareholders shall not require
Pinnacle’s written consent.

 

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(ii) Board Observer. In addition to any right to nominate a director in
accordance with this Agreement, the Company shall invite and permit at least one
representative designated by the Majority Party, at least one representative
designated by the Minority Party and any other individuals in the Board’s
discretion to attend all duly called meetings of the Board and any committee
thereof (whether in person, telephonically or otherwise) solely in a non-voting
observer capacity (each, a “Board Observer”) and, in this respect, shall give
the Board Observer copies of all notices, minutes, consents and other materials
that the Company provides to its directors in connection with such meeting,
subject to the limitations set forth below in Section 2.3 and provided that the
Board Observer shall enter into an agreement with the Company providing that the
Board Observer shall hold in confidence and trust all information provided to
him or her or learned by him or her in connection with the observer rights
described herein, except to the extent otherwise required by Applicable Law and
any other regulatory process to which such party is subject. For the avoidance
of doubt, (1) the Board Observer designated by Pinnacle may share all such
information with PEI and its Entity Affiliates and (2) the Board Observer
designated by Harbinger may share all such information with Harbinger and its
Entity Affiliates.

(iii) Independent Directors. Subject to Section 2.1(d)(xii), at any time during
which Pinnacle is the Minority Party, Pinnacle may, but is not required to,
propose an Independent Director as one of its nominees for election as a
director pursuant to Section 2.1(b)(i), and Harbinger and Pinnacle shall vote
their respective Voting Securities such that the Independent Director nominee
proposed by Pinnacle would be elected as a director to the Board.
Notwithstanding the foregoing, during the period ending on the later of the
twelve (12) month anniversary of the Class VI Closing Date and the end of the
Voting Period, Pinnacle shall propose the Chairman Nominee as nominee for
election as an Independent Director pursuant to Section 2.1(b)(i); provided,
however, that in the event the Chairman Nominee is unable or unwilling to serve
or ceases to be an Independent Director, Harbinger and Pinnacle shall use their
reasonable best efforts to cause such person to resign from the Board, Pinnacle
shall be entitled to propose an Independent Director to serve on the Board, and
Harbinger and Pinnacle shall use their best efforts to cause their respective
directors to fill the vacancy such that the Independent Director nominee
proposed by Pinnacle would be elected as a director to the Board and, if
necessary, to otherwise vote their respective Voting Securities such that such
Independent Director is elected as a director to the Board.

 

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(c) For purposes of this Section 2.1, the terms “Harbinger” and “Pinnacle” shall
include their respective Entity Affiliates that own Voting Securities.

(d) In General. At all times during the term of this Agreement (whether during a
Voting Period or otherwise), the following provisions shall apply:

(i) Committees. Each of Harbinger and Pinnacle shall have the right to appoint
at least one director to each of the Audit Committee, the Compensation
Committee, the Nominating Committee, the Corporate Governance Committee, the
Investment Committee, and the Compliance Committee, and any other committees of
the Board formed after the date of this Agreement (including, but not limited
to, any executive committee, special committee, and the Operating Committee).
Each of Harbinger and Pinnacle shall, to the extent permitted by Applicable Law,
use its reasonable best efforts and take all such steps as may reasonably be
within its powers so as to cause its respective appointed directors to act so as
to effectuate each party’s right to appoint at least one committee member in
accordance with the foregoing sentence; provided, however, that the majority of
committee members on any such committee (other than the Executive Committee and
the Operating Committee) shall consist of directors appointed by the Majority
Party.

(ii) Executive Committee. Each of Harbinger and Pinnacle shall, to the extent
permitted by Applicable Law, use its reasonable best efforts and take all such
steps as may reasonably be within its powers so as to cause its respective
appointed directors to (A) appoint an Executive Committee of the Board with the
greatest director powers an executive committee of a board of directors may
possess under Applicable Law (the “Executive Committee”), and (B)(1) designate
the following Persons to constitute the Executive Committee: two directors
designated by the Majority Party and one director designated by the Minority
Party, who shall be the voting members of such Committee, and the Chief
Executive Officer of the Company and the Pinnacle Advisor, (2) not revoke or
alter the authority given to the Executive Committee, (3) not override any
decision made by the Executive Committee, (4) not terminate the appointment of,
or change the membership of, the Executive Committee, and (5) not fill vacancies
in the Executive Committee, except in the case of each of the foregoing clauses
(1) - (5), as provided herein or as otherwise may be agreed to in writing by
Harbinger and Pinnacle. Each of Harbinger and Pinnacle shall take all actions,
and shall to the extent permitted by Applicable Law, cause its respective
appointed directors to take all actions, necessary or appropriate to effectuate
the delegation of authority to the Executive Committee for the matters set forth
in this Section 2.1(d)(ii), including the adoption of resolutions of the Board
in accordance with Applicable Law.

(iii) Operating Committee. Each of Harbinger and Pinnacle shall, to the extent
permitted by Applicable Law, use its reasonable best efforts and take all such
steps as may reasonably be within its powers so as to cause its respective
appointed directors to (A) appoint an Operating Committee of the Board with such
director powers as to be set forth in a charter document mutually agreed upon by
Harbinger and Pinnacle (the “Operating Committee”), and (B)(1) designate the
following Persons to constitute the Operating Committee: one director designated
by the Majority Party, one director designated by the Minority Party, who shall
be the voting members of such Committee, and the Chief Executive Officer of the
Company and the Pinnacle Advisor, (2) not revoke or alter the authority given to
the Operating Committee, (3) not override any decision made by the Operating
Committee, (4) not terminate the appointment of, or change the membership of,
the Operating Committee, and (5) not fill vacancies in the Operating Committee,
except in the case of each of clauses (1) - (5), as provided herein or as
otherwise may be agreed to in writing by Harbinger and Pinnacle. Each of
Harbinger and Pinnacle shall take all actions, and shall to the extent permitted
by Applicable Law, cause its respective appointed directors to take all actions,
necessary or appropriate to effectuate the delegation of authority to the
Operating Committee for the matters set forth in this Section 2.1(d)(iii),
including the adoption of resolutions of the Board in accordance with Applicable
Law.

 

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(iv) Future Funding Committee. Each of Harbinger and Pinnacle shall, to the
extent permitted by Applicable Law, use its reasonable best efforts and take all
such steps as may reasonably be within its powers so as to cause its respective
appointed directors to (A) appoint a Future Funding Committee of the Board (the
“Future Funding Committee”) to make recommendations to the Board from time to
time apprising the Board of the Future Funding Committee’s beliefs as to the
Company’s need for additional financing, including the amount of financing being
recommended by the Future Funding Committee for the Company and an approximate
timetable for such recommended financing (the “Financing Need Recommendation”),
and (B)(1) designate the following Persons to constitute the Future Funding
Committee: one director designated by Harbinger, one director designated by
Pinnacle, the Independent Director(s) of the Company and any Board Observer of
the Company that would be an Independent Director if such individual were
appointed to the Board, (2) not revoke or alter the authority given to the
Future Funding Committee, (3) not terminate the appointment of, or change the
membership of, the Future Funding Committee, and (4) not fill vacancies in the
Future Funding Committee, except in the case of each of clauses (1) - (4), as
provided herein or as otherwise may be agreed to in writing by Harbinger and
Pinnacle. Upon receipt of a Financing Need Recommendation from the Future
Funding Committee, each of Pinnacle and Harbinger shall, to the extent permitted
by Applicable Law, use its reasonable best efforts and take all such steps as
may reasonably be within its powers so as to cause its respective appointed
directors to call a meeting of the Board in order for the Board to make a
determination as to whether the Financing Need Recommendation is in the best
interest of the Company in accordance with their fiduciary duties under
Applicable Law. Each of Pinnacle and Harbinger shall, to the extent permitted by
Applicable Law, use its reasonable best efforts and take all such steps as may
reasonably be within its powers so as to cause its respective appointed
directors to approve or reject the Financing Need Recommendation. Each of
Harbinger and Pinnacle shall take all actions, and shall to the extent permitted
by Applicable Law, cause its respective appointed directors to take all actions,
necessary or appropriate to effectuate the delegation of authority to the Future
Funding Committee for the matters set forth in this Section 2.1(d)(iv),
including the adoption of resolutions of the Board in accordance with Applicable
Law. For the avoidance of doubt and subject to the authority delegated to the
Independent Committee in Section 2.1(d)(v), the Board shall maintain sole and
absolute authority, in its sole discretion, to determine (A) the Company’s need
for additional financing, including the amount of any financing or the
approximate timetable related thereto, and (B) any and all matters being
considered and recommended by the Future Funding Committee.

 

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(v) Independent Committee. In connection with the Administrative Services
Agreement and certain actions as set forth in Section 6.1(b) and Section 6.2(a),
each of Harbinger and Pinnacle shall, to the extent permitted by Applicable Law,
use its respective reasonable best efforts and take all such steps as may
reasonably be within its respective powers so as to cause its respective
appointed directors to appoint an Independent Committee of the Board consisting
solely of Independent Directors (the “Independent Committee”). The Independent
Committee shall have the full power and authority of the Board with respect to
the review of any action to be taken by the Company in connection with (A) the
Administrative Services Agreement to the extent and in accordance with the
provisions therein, (B) the approval of any Replacement Funding on such terms as
the Independent Committee may determine, which approval must occur within ninety
(90) days of the date that the Company and Pinnacle become aware of the breach
by Harbinger (or its Affiliates) of an obligation to fund a commitment under the
Backstop Loan Agreement and (C) the approval of any Future Funding in accordance
with Section 6.1(b)(i)(C) and Section 6.2(a). Each of Harbinger and Pinnacle
shall, to the extent permitted by Applicable Law, use its reasonable best
efforts to, and take all such steps as may reasonably be within its powers as to
cause its respective directors to, (1) designate only Independent Directors to
the Independent Committee, (2) not revoke or alter the authority given to the
Independent Committee, (3) not override any decision made by the Independent
Committee, (4) not terminate the appointment of, or change the membership of,
the Independent Committee, and (5) not fill vacancies in the Independent
Committee, except in the case of each of clauses (1) - (5), as provided herein
or as otherwise may be agreed to in writing by the Company, Harbinger and
Pinnacle. Without derogating from the power and authority granted hereby or by
any resolution of the Board, the scope of any powers and authority of the
Independent Committee in addition to those set forth above shall, subject to the
Business Corporations Act (British Columbia) be set forth in a charter document
to be mutually agreed upon by Harbinger and Pinnacle. Each of Harbinger and
Pinnacle shall take all actions, and shall to the extent permitted by Applicable
Law, cause its respective appointed directors to take all actions, necessary or
appropriate to effectuate the delegation of authority to the Independent
Committee for the matters set forth in this Section 2.1(d)(v), including the
adoption of resolutions of the Board in accordance with Applicable Law.

(vi) Chairman of the Board. Subject to Section 2.1(b)(iii), during the period
ending on the twelve (12) month anniversary of the Class VI Closing Date,
Harbinger and Pinnacle shall vote their respective Voting Securities so that the
Chairman Nominee shall be nominated as a director and appointed as Chairman of
the Board. In the event that the Chairman Nominee is no longer serving as a
director of the Company during such twelve (12) month period or, following such
twelve (12) month period, the Board determines to appoint a different Chairman
of the Board, then the Board shall take such action as determined by the Board
to be in the best interests of the Company and its shareholders to select a new
Chairman of the Board, and each of the Majority Party and the Minority Party
agrees with the other that it shall to the extent, if any, permitted by
Applicable Law, use its reasonable best efforts and take all such steps as may
reasonably be within its powers so as to cause its respective nominee(s) as
director to vote to elect the nominee selected by the Board to be appointed as
Chairman of the Board.

 

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(vii) Removal and Replacement of Directors. Any director may be removed from the
Board or from any committee at any time, with or without cause, only at the
direction of the shareholder that designated such director. If a vacancy is
created on the Board or a committee as a result of the death, disability,
retirement, resignation, or removal of any director, then the shareholder that
designated such director shall have the right to designate such director’s
replacement.

(viii) Voting at Meetings. Each of Harbinger and Pinnacle shall vote their
Voting Securities at any meeting of shareholders called to elect directors in
favor of electing individual nominees to the Board in accordance with the
provisions of this Section 2.1.

(ix) Timing. To the extent permitted, the election or designation of Harbinger’s
and Pinnacle’s nominees as set forth above in this Section 2.1 will be effected
as soon as practicable following designation of such nominees.

(x) Termination of Board Rights. Notwithstanding the foregoing provisions of
this Section 2.1, if, at any time, the Minority Party (together with its Entity
Affiliates) shall cease to own at least seven and one half percent (7.5%) of the
Equity Voting Power (other than as a result of falling below such threshold
immediately following a Drag-Along Transaction under Section 3.3 herein, as
applicable), then (A) such Minority Party shall cease to have the right to
designate any director(s) or Board Observer pursuant to Section 2.1 and the
Majority Party shall no longer have any obligation with respect to voting its
Voting Securities accordingly, (B) the Minority Party shall cause any and all of
its directors to resign from the Board and any committees (or such director(s)
shall be removed from the Board and any committees), as applicable, as soon as
practicable and, in any case, prior to the date of the next Board or committee
meeting or action by written consent and (C) the Company shall no longer be
obligated to invite or permit Board Observers designated by the Minority Party
to attend meetings or have access to information regarding the Company.

(xi) Subsidiary Boards. If, and solely to the extent that, the Majority Party
determines to exercise any right to designate a member to any board of directors
or similar governing body of any Subsidiary of the Company, then the Majority
Party and the Minority Party shall each vote their respective Voting Securities
so that the number of directors nominated by each of the Majority Party and the
Minority Party to such board or governing body is in proportion to their then
respective ownership percentages of the Equity Voting Power, rounded up or down
to the nearest whole number.

(xii) Continued Appointment of Independent Director. Each of Harbinger and
Pinnacle shall use its best efforts to cause their respective directors to, and
if necessary to otherwise vote their respective Voting Securities to, ensure
that there is at all times at least one Independent Director on the Board and,
if at any time, any Independent Director ceases to be an Independent Director or
ceases to be on the Board, the party that nominated such Independent Director
shall act promptly to (including causing their respective directors to, and if
necessary to otherwise vote their respective Voting Securities to) appoint a
replacement Independent Director in the most expedient manner permitted by
Applicable Law and all parties shall take such other action as is necessary to
cause the election of the replacement Independent Director.

 

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Section 2.2 Pinnacle Advisor. In addition to Pinnacle’s right to appoint the
Pinnacle Director(s) and a Board Observer, Pinnacle shall also have the right to
appoint, at Pinnacle’s sole cost and expense, an employee of Pinnacle to serve
in a senior advisory capacity at the Company, subject to any additional
limitations that may be set forth in any management agreement related to the Ho
Tram Project (the “Pinnacle Advisor”). For the avoidance of doubt, (a) the
Pinnacle Advisor shall not be deemed to be an employee of the Company, (b) the
Pinnacle Advisor shall not have the right to attend or observe any meetings of
the Board or its committees unless and until requested by the Board (unless the
Person serving as the Pinnacle Advisor is also a Pinnacle Director or Pinnacle
Board Observer), except for the Operating Committee and the Executive Committee
as respectively set forth in Section 2.1(d)(ii)(B) and Section 2.1(d)(iii)(B),
and (c) no action taken by the Pinnacle Advisor shall constitute the act of or
otherwise serve to bind the Company. The Company shall give the Pinnacle Advisor
copies of all notices, minutes, consents, and other materials that the Company
provides to its directors in connection with any Board meeting, subject to the
limitations set forth below in Section 2.3 and provided that the Pinnacle
Advisor shall enter into an agreement with the Company providing that he or she
shall hold in confidence and trust all information provided to the Pinnacle
Advisor or learned by the Pinnacle Advisor in connection with the rights
described herein, except to the extent otherwise required by Applicable Law or
any other regulatory process to which Pinnacle, PEI or the Pinnacle Advisor is
subject or except as otherwise permitted under this Agreement. The Pinnacle
Advisor may, as it deems necessary or desirable, share all such information with
PEI and its Entity Affiliates, and their respective officers, directors,
employees and agents. For the avoidance of doubt, Pinnacle acknowledges that the
costs and expenses incurred by the Pinnacle Advisor in connection with their
actions undertaken pursuant to this Section 2.2 shall not constitute
reimbursable expenses of the consultant under the Administrative Services
Agreement.

Section 2.3 Access to Information.

(a) Books and Records.

(i) All books and records, including all records relating to or reflecting the
operations of the Ho Tram Project or any other Company project, shall be
(a) maintained at the principal executive offices of the Company, and (b) made
available to Harbinger and Pinnacle, the Harbinger Director(s), the Pinnacle
Director(s), the Pinnacle Board Observer and the Pinnacle Advisor for
examination, audit, inspection, and copying at any time; provided, however, that
the Board, following deliberations without any of the Pinnacle Director,
Pinnacle Board Observer or Pinnacle Advisor in attendance, reserves the right to
withhold any information and to exclude each Pinnacle Director, Pinnacle Board
Observer or Pinnacle Advisor, as the case may be, from any meeting or portion
thereof if access to such information or attendance at such meeting is presently
or in the future restricted or prohibited by the terms and conditions of any
management or other agreement relating to the Ho Tram Project or any other
Company project (including, as of the date hereof, the MGM Management
Agreement); provided, however, that the Board (excluding any Pinnacle Director,
Pinnacle Board Observer or Pinnacle Advisor) shall instruct management to use
its reasonable best efforts to identify and redact any prohibited or restricted
information from any such agreement in an effort to make the remainder of such
agreement available to Pinnacle, the Pinnacle Director(s), the Pinnacle Board
Observer and the Pinnacle Advisor, and the Board (excluding any Pinnacle
Director, Pinnacle Board Observer or Pinnacle Advisor) shall request that the
other party to such management or other agreement agree to minimize or eliminate
such restrictions and prohibitions. Upon termination of this Agreement or, if
earlier, at such time as either Harbinger or Pinnacle (together with its
respective Entity Affiliates) no longer owns at least seven and one half percent
(7.5%) of the Equity Voting Power, all such books and records shall be turned
over to the Company immediately and shall remain the property of the Company,
subject to access by such party upon reasonable notice for examination, audit,
inspection, and copying solely for purposes of such party’s accounting and tax
requirements or the calculation and verification of amounts remaining due
between the Company and such party following such termination. For the avoidance
of doubt, nothing contained in this Agreement other than this Section 2.3(a)
shall affect or limit the rights to access or inspect Company information and
books and records that either Harbinger or Pinnacle and its respective
Director(s) may have under the applicable corporate laws of the Company’s
jurisdiction of incorporation or organization.

 

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(ii) [Intentionally omitted]

(iii) Tax Reporting. In addition, the Company shall keep adequate books and
records and shall provide Harbinger and Pinnacle on a timely basis with access
to such books and records and with such other information that either reasonably
request to enable it to satisfy all its tax reporting obligations arising from
its ownership of an interest in the Company and to make such tax elections as it
deems appropriate. Without limiting the generality of the foregoing, such
information shall include (A) records of all distributions and other
transactions of the Company or any of its subsidiaries, (B) computations of
income, earnings and profits, ordinary earnings, net capital gains, tax basis
and foreign taxes, (C) PFIC Annual Information Statements as described in
Section 1.1295-1(g) of the Treasury Regulations (or any successor Treasury
Regulations) and any other information reasonably requested to enable Harbinger
and/or Pinnacle and their respective Entity Affiliates to elect to treat the
Company or any of its subsidiaries as a “QEF” under Section 1295 of the Code, to
continue such qualification as a QEF and to satisfy the Harbinger’s and/or
Pinnacle’s and their respective Entity Affiliates’ attendant reporting
obligations, and (D) if the Company is or becomes a “controlled foreign
corporation” within the meaning of Section 957 of the Code, such information as
the Harbinger and/or Pinnacle and their respective Entity Affiliates reasonably
request to satisfy their tax reporting obligations. The Company shall engage
U.S. tax advisors mutually acceptable to Harbinger and Pinnacle, and provide
such assistance and cooperation as is reasonably necessary for such U.S. tax
advisors to determine the tax basis, allocable share of income, earnings and
profits, ordinary earnings, net capital gains, tax basis and foreign taxes and
other tax attributes of the Company relevant to Harbinger’s and Pinnacle’s
interest in the Company.

 

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(b) Financial Reporting Requirements.

(i) Without limiting Section 2.3(a), subject to Applicable Law and compliance
with Article 8, the Company will, and will cause its Subsidiaries to furnish
promptly to Harbinger and Pinnacle all information concerning the business and
properties of the Company and its Subsidiaries, including financial information,
as Harbinger or Pinnacle may reasonably request, to the extent that Harbinger or
Pinnacle reasonably concludes that such information is necessary to permit it to
comply with any applicable securities laws (including, without limitation, any
such reporting obligations under Sections 13(a) and 15(d) of the Exchange Act
or, in the case of Pinnacle, in connection with an offering or sale of debt or
equity securities of PEI (or its Affiliates) (as applicable) in an offering
registered under the Securities Act or exempt from such registration, in such
form as reasonably requested by Harbinger or Pinnacle, as the case may be, to
comply with its respective Exchange Act or Securities Act reporting obligations,
which will mean, at a minimum, that the financial information will either be
presented in accordance with U.S. GAAP or in a manner which will permit
Harbinger or Pinnacle, as the case may be, to convert such information into
financial statements in accordance with U.S. GAAP without incurring material
cost or delay. In addition, the Company shall cause its officers, employees,
counsel and public accountants to cooperate with Harbinger and Pinnacle, as the
case may be, in connection with their respective compliance with applicable
securities laws or, in the case of Pinnacle, with any offering of PEI’s (or its
Affiliate’s) securities (as applicable), including customary assistance in
connection with underwritten offerings.

(ii) In particular, but without limiting the generality of paragraph (b)(i)
above, and subject to Section 2.3(a), the Company will make the following
financial information available to Harbinger and Pinnacle and each of their
outside independent auditors on a recurrent basis (without need of specific
request by Harbinger or Pinnacle) for examination, audit, inspection, and
copying:

(A) Monthly unaudited management reports of the Company and its Subsidiaries,
within thirty (30) days after the end of each month;

(B) Quarterly unaudited consolidated financial statements of the Company, within
forty (40) days after the end of each fiscal quarter (and with respect to the
quarterly unaudited consolidated financial statements and audit report of the
Company for the fiscal quarter ended March 31, 2012 and June 30, 2012, such
information will be provided by August 31, 2012, and if not made available by
such date, the Company shall provide access to the auditor’s work papers and any
and all proposed, recorded and past audit adjustments on a timely basis);

 

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(C) Annual consolidated financial statements of the Company accompanied by the
audit report of the auditor, within ninety (90) days after the end of each
fiscal year (and with respect to the annual consolidated financial statements
and audit report of the Company for the year ended December 31, 2011, such
information will be provided by August 31, 2012, and if not made available by
such date, the Company shall provide access to the auditor’s work papers and any
and all proposed, recorded and past audit adjustments on a timely basis); and

(D) Such non-consolidated financial statements and reports as may be requested
by Harbinger or Pinnacle, acting reasonably;

provided, however, that in the event that Harbinger or Pinnacle reports
financial results and financial position of the Company as a consolidated
subsidiary, then the Company will use commercially reasonable efforts to provide
the foregoing financial information and access to Harbinger’s and Pinnacle’s
independent outside auditors on such shorter time frames as Harbinger and
Pinnacle may reasonably specify taking into account their applicable periodic
reporting obligations under the Exchange Act.

ARTICLE 3

TRANSFERS AND RELATED COVENANTS

Section 3.1 Transfer Restrictions.

(a) Harbinger and Pinnacle Restrictions. Transfers of Securities held by either
Harbinger or Pinnacle shall be subject to the following provisions:

(i) Each of Harbinger and Pinnacle may Transfer its Securities (x) as permitted
under and in accordance with the terms and conditions of Section 3.2 and
(y) pursuant to a pro rata optional redemption by the Company of any Securities
that, by their terms, may be redeemed by the Company at its option.

(ii) Each of Harbinger and Pinnacle shall be permitted to Transfer Securities to
a parent, subsidiary, Affiliate or other legal entity, in each case, that
directly or indirectly “controls”, is controlled by or is under common control
with, Harbinger or Pinnacle, as applicable (such an entity or person, an “Entity
Affiliate”) without restriction (including, without limitation, any of the
Transfer restrictions contained in this Article 3). For purposes of this
provision, the holding of at least fifty-one percent (51%) of the equity or
voting interest of an entity, or the direct or indirect ability to direct or
cause the direction of the management of the business and affairs of an entity,
shall be deemed to constitute “control”.

(iii) Unsuitability.

 

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(A) If, at any time any Gaming Problem in Vietnam exists for the Company as a
result of issues relating to the Majority Party, the following provisions shall
apply:

(1) For as long a period as the Vietnam Gaming Authority will permit (the
“Majority Party Cure Period”), the Majority Party must use commercially
reasonable efforts to cure all regulatory concerns giving rise to the Gaming
Problem. During such period, the Minority Party shall not partake in any
discussions or negotiations with the regulator in question without the Majority
Party’s consent, except as may be required by Applicable Law or such regulator
(and in the event that the Minority Party is so required to partake in
discussions or negotiations with such regulator, the Minority Party shall give
the Majority Party such advance notice of such discussions or negotiations as is
reasonably practicable and use commercially reasonable efforts to seek
permission from the applicable regulator in question for the Majority Party to
jointly participate in such discussions or negotiations).

(2) During the Majority Party Cure Period, and for as long a period as the
Vietnam Gaming Authority will permit (not to exceed six (6) months after the
expiration of the Majority Party Cure Period, unless the Majority Party and the
Minority Party mutually agree on a longer period) (the “Majority Party Sale
Period”), the Majority Party shall be permitted to sell to an unaffiliated third
party its Securities (including in a sale to a third party of all of the
outstanding Equity Securities in the Company), in each case subject to the
Minority Party’s right of first negotiation under Section 3.5 and such six
(6) month period after the expiration of the Majority Party Cure Period shall
not commence until the Minority Party’s right of first negotiation shall have
expired.

(3) During the Majority Party Cure Period and the Majority Party Sale Period,
the Majority Party will use its commercially reasonable efforts to take such
action as is reasonably necessary and permitted by the Vietnam Gaming Authority
in order to seek to preserve the value of the Company, including, as determined
in the Majority Party’s sole discretion and to the extent not otherwise required
by the Vietnam Gaming Authority, Transferring its Securities to a Divestiture
Trust. Following one hundred and eighty (180) days after the termination of the
Majority Party Cure Period, the Minority Party or the Company may direct the
Majority Party to transfer its Securities to a Divestiture Trust.

(4) Following the expiration of the Majority Party Sale Period, the Minority
Party shall be provided with as long a period as the Vietnam Gaming Authority
will permit (not to exceed six (6) months after the expiration of the Majority
Party Sale Period, unless the Majority Party and the Minority Party mutually
agree on a longer period) (the “Minority Party Sale Period”) in which to sell to
an unaffiliated third party its Securities, subject to the Majority Party’s
right of first negotiation under Section 3.5 and such six (6) month period after
the expiration of the Majority Party Sale Period shall not commence until the
Majority Party’s right of first negotiation under Section 3.5 shall have
expired.

 

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(5) Following the expiration of the Minority Party Sale Period, if a sale of the
Minority Party’s Securities has not been effected (or a definitive agreement
with respect thereto has not been executed), or at such earlier time if the
Vietnam Gaming Authority so requires, the Minority Party shall have the right,
exercisable over a period of ninety (90) days following the expiration of the
Minority Party Sale Period (which ninety (90) day period shall commence on the
earlier of (x) the next Business Day following a period of six (6) months from
the commencement of the Minority Party Sale Period, or (y) the date on which
written notice from the Company or HTPCL, as applicable, to the Minority Party
is received to the effect that the Vietnam Gaming Authority has not permitted
the Minority Party Sale Period to run a full six (6) months or the Vietnam
Gaming Authority requires the period for the Minority Party’s right to require
the Company to purchase its Securities to commence earlier), to require the
Company to purchase all, but not less than all, of its Securities, unless prior
to the expiration of such ninety (90) day period the Majority Party transfers
its Securities to such a Divestiture Trust, in which case (I) such ninety
(90) day period shall be tolled, and (II) the Minority Party shall not have a
right to require the Company to purchase all of the Minority Party’s Securities,
in each such case of clauses (I) and (II), so long as the Majority Party’s
Securities are held by such a Divestiture Trust and the Vietnam Gaming Authority
permits the continuation of such holding by the Divestiture Trust. If the
Minority Party exercises such right, the Company shall repurchase such
Securities at an aggregate purchase price equal to the amount initially
allocated thereto as of the date of the Minority Party’s purchase of such
Securities (the “Purchase Price”). The form of consideration to be paid by the
Company may, in the Company’s sole discretion, be either cash or one or more
promissory notes issued to the Minority Party by the Company (A) in an aggregate
principal amount equal to the Purchase Price, (B) bearing no interest,
(C) having a term of thirty-six (36) months, and (D) which, subject to receipt
of any approval required under any Gaming Laws, shall be secured by a first
priority security interest, in form and substance reasonably satisfactory to the
Minority Party, in such Securities.

(B) If, at any time any Gaming Problem in the United States of America exists
for the Majority Party or the Minority Party, as applicable (such party with
such Gaming Problem, the “Affected Party”, and the other party which is not the
Affected Party, the “Non-Affected Party”) as a result of issues relating to the
Company, the following provisions shall apply:

(1) For as long a period as the relevant U.S. Gaming Authority will permit (the
“Affected Party U.S. Cure Period”), the Company must use reasonable best efforts
to cure all regulatory concerns giving rise to the Gaming Problem. During such
period, the Company shall not partake in any discussions or negotiations with
the applicable regulator in question without the Affected Party’s consent,
except as may be required by Applicable Law or such regulator (and in the event
that the Company is so required to partake in discussions or negotiations with
such regulator, the Company shall give the Affected Party such advance notice of
such discussions or negotiations as is reasonably practicable and use
commercially reasonable efforts to seek permission from the regulator in
question for the Affected Party to jointly participate in such discussions or
negotiations).

 

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(2) During the Affected Party U.S. Cure Period, and for as long a period as the
relevant U.S. Gaming Authority will permit, the Affected Party shall be
permitted to sell to an unaffiliated third party its Securities, subject to the
Non-Affected Party’s right of first negotiation under Section 3.5.

(C) If, at any time any Gaming Problem in the United States of America exists
for the Affected Party as a result of issues relating to the Non-Affected Party,
the following provisions shall apply:

(1) For as long a period as the relevant U.S. Gaming Authority will permit (the
“Non-Affected Party U.S. Cure Period”), such Non-Affected Party must use
commercially reasonable efforts to cure all regulatory concerns giving rise to
such Gaming Problem, including, without limitation, cooperating with the
Affected Party to provide such U.S. Gaming Authority such information about the
Non-Affected Party as the Affected Party may reasonably request and to partake
in discussions with such U.S. Gaming Authority to the extent requested by the
Affected Party. During such period, the Non-Affected Party shall not partake in
any discussions or negotiations with such U.S. Gaming Authority without the
Affected Party’s consent, except as may be required by Applicable Law or such
regulator (and in the event that the Non-Affected Party is so required to
partake in discussions or negotiations with such regulator, the Non-Affected
Party shall give the Affected Party such advance notice of such discussions or
negotiations as is reasonably practicable and use commercially reasonable
efforts to seek permission from the regulator in question for the Affected Party
to jointly participate in such discussions or negotiations).

(2) During the Non-Affected Party U.S. Cure Period, and for as long a period as
the relevant U.S. Gaming Authority will permit (the “Affected Party U.S. Sale
Period”), the Affected Party shall be permitted to (a) sell its Securities to an
unaffiliated third party, subject to the Non-Affected Party’s right of first
negotiation under Section 3.5, and/or (b) transfer its Securities to a
Divestiture Trust (and may continue any efforts to attempt to sell its
Securities while such Securities remain in such Divestiture Trust).

(3) In addition, at any time following the Non-Affected Party U.S. Cure Period,
the Affected Party shall have the right to require the Company to purchase all,
but not less than all, of its Securities. If the Affected Party exercises such
right, the Company shall repurchase such Securities at the Purchase Price within
thirty (30) days of the exercise of such right. The form of consideration to be
paid by the Company shall be cash; provided, however, the Company may, in its
sole discretion, pay the consideration for such purchase by issuing one or more
promissory notes to the Affected Party (a) in an aggregate principal amount
equal to the Purchase Price, (b) bearing no interest, (c) with the term (with
payment in full being due on the last day of the term) being a period of time
equal to five (5) years; provided, however, that such five (5) year term shall
be reduced by that number of days that is equal to the number of days after the
expiration of the Non-Affected Party U.S. Cure Period; provided, further, that
in no event shall the period of such term be less than three (3) years, and
(d) which, subject to receipt of any approval required under any Gaming Laws,
shall be secured by a first priority security interest, in form and substance
reasonably satisfactory to the Affected Party, in such Securities.

 

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(D) If, at any time any Gaming Problem in Vietnam exists for the Company as a
result of issues relating to the Minority Party, the following provisions shall
apply:

(1) For as long a period as the Vietnam Gaming Authority will permit (the
“Minority Party Cure Period”), the Minority Party must use commercially
reasonable efforts to cure all regulatory concerns giving rise to such Gaming
Problem. During such period, the Majority Party shall not partake in any
discussions or negotiations with the applicable regulator in question without
the Minority Party’s consent, except as may be required by Applicable Law or
such regulator (and in the event that the Majority Party is so required to
partake in discussions or negotiations with such regulator, the Majority Party
shall give the Minority Party such advance notice of such discussions or
negotiations as is reasonably practicable and use commercially reasonable
efforts to seek permission from the regulator in question for the Minority Party
to jointly participate in such discussions or negotiations).

(2) Following the expiration of the Minority Party Cure Period, and for as long
a period as the Vietnam Gaming Authority will permit (the “Minority Party
Vietnam Sale Period”), the Minority Party shall be required to use commercially
reasonable efforts to attempt to sell its Securities to an unaffiliated third
party, subject to the Majority Party’s right of first negotiation under
Section 3.5.

(3) During the Minority Party Cure Period and at any time thereafter, the
Minority Party may transfer its Securities to a Divestiture Trust. The Minority
Party’s Securities may remain in such a Divestiture Trust while the Minority
Party continues any efforts to attempt to sell its Securities during the
Minority Party Vietnam Sale Period.

(4) Following the expiration of the Minority Party Vietnam Sale Period, if a
sale of the Minority Party’s Securities has not been effected (or a definitive
agreement with respect thereto has not been executed) and if the Minority
Party’s Securities are not then currently held by a Divestiture Trust, the
Majority Party shall have the right, exercisable over a period of ninety
(90) days (which ninety (90) day period shall commence on that date written
notice from the Company or HTPCL, as applicable, to the Minority Party is
received to the effect that the Vietnam Gaming Authority has not permitted the
Minority Party Sale Period to continue) to purchase all, but not less than all,
of the Minority Party’s Securities immediately following the expiration of such
ninety (90) day period, unless prior to the expiration of such ninety (90) day
period the Minority Party transfers its Securities to such a Divestiture Trust,
in which case (a) such ninety (90) day period shall be tolled, and (b) the
Majority Party shall not have a right to purchase all of the Minority Party’s
Securities, in each such case of clauses (a) and (b), so long as such Securities
are held by such a Divestiture Trust and the Vietnam Gaming Authority permits
the continuation of such holding by the Divestiture Trust. In the exercise of
any such purchase right, the purchase price for such Securities by the Majority
Party shall be the Purchase Price for such Securities. The form of consideration
to be paid by the Majority Shareholder shall be cash; provided, however, that
the Majority Party may, in its sole discretion, pay the consideration for such
purchase by issuing one or more promissory notes to the Minority Party (a) in an
aggregate principal amount equal to the Purchase Price, (b) bearing no interest,
(c) with the term (with payment in full being due on the last day of the term)
being a period of time equal to five (5) years; provided, however, that such
five (5) year term shall be reduced by that number of days that is equal to the
number of days after the expiration of the Minority Party Cure Period; provided,
further, that in no event shall the period of such term be less than three
(3) years, and (d) which, subject to receipt of any approval required under any
Gaming Laws, shall be secured by a first priority security interest, in form and
substance reasonably satisfactory to the Minority Party, in such Securities.

 

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(5) Following the expiration of the ninety (90) day period set forth in
Section 3.1(a)(iii)(D)(4) above, the Majority Party or the Company may direct
the Minority Party to transfer its Securities to a Divestiture Trust.

(E) Notwithstanding anything to the contrary set forth in this
Section 3.1(a)(iii), immediately upon such time that the Company, the Majority
Party or Minority Party, as applicable, has taken any action which the
applicable regulator in question confirms has fully and finally remediated the
Gaming Problem or otherwise causes such regulator to withdraw or discontinue its
investigation or pursuit of any action with respect to such Gaming Problem, the
rights and obligations of the Company, the Majority Party and/or Minority Party,
as applicable, with respect to the Transfer of Securities pursuant to clauses
(A) through (D) above, and arising as a result of such Gaming Problem, shall
immediately terminate, it being acknowledged and agreed that all of such rights
and obligations shall remain fully applicable to any other Gaming Problem that
may have arisen or may thereafter arise.

(F) In furtherance of the foregoing and in connection with a Transfer of
Securities pursuant to this Section 3.1(a)(iii), the Company shall provide, and
shall cause its Subsidiaries, and shall use its reasonable best efforts to cause
each of its and their respective representatives, including legal, tax,
regulatory and accounting, to provide, all cooperation reasonably requested by
the Majority Party or the Minority Party, as applicable, in their capacity as a
Transferring party in accordance with the terms of this Section 3.1(a)(iii),
which cooperation shall include (1) providing, as promptly as practicable, to
the Transferring party all financial and other information regarding the Company
and its Subsidiaries (including information regarding the business, operations,
financial projections and prospects of the Company) as may be reasonably
requested by the Transferring party to assist in preparation of customary
materials to be used for the completion of the Transfer, except as may be
limited by Section 2.3, (2) affording prospective purchasers access to the
Company’s senior management, including due diligence sessions (including
accounting due diligence sessions), (3) executing and delivering (or using
reasonable best efforts to obtain from its advisors), and causing its
Subsidiaries to execute and deliver (or use reasonable best efforts to obtain
from the advisors of such Subsidiaries), customary certificates as to valid
existence, incumbency and due authorization, or other documents and instruments
related to such Transfer as may be reasonably requested by the Transferring
party as necessary and customary in connection with such a Transfer, and
(4) using its reasonable best efforts, to have its independent accountants
provide their reasonable cooperation in connection with such Transfer.

 

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(iv) Constating Documents.

(A) To the extent any Transfer is permitted pursuant to the terms of this
Agreement, the Company shall use reasonable best efforts, including without
limitation taking all such steps as may reasonably be within its powers, to
permit such Transfer to be effected in compliance with the terms of this
Agreement and the Constating Documents.

(B) The Company, Harbinger and Pinnacle shall each use their respective
reasonable best efforts, including without limitation taking all such steps as
may reasonably be within their respective powers (including, with respect to
each of Harbinger and Pinnacle, voting its respective Voting Securities (or, if
more convenient, executing written shareholders’ consent resolutions), so as to
cause any Transfer permitted under this Agreement to be deemed a permissible
Transfer under Section 2.11 of the Articles of the Company.

(C) The Company represents and warrants to Harbinger and Pinnacle that the Board
has resolved, by all required corporate action, that any Transfer permitted
under this Agreement shall be deemed a permissible Transfer under Section 2.11
of the Articles of the Company and that such Board approval shall satisfy the
requirement to obtain the approval of the Board for purposes of Section 2.11 of
the Articles of the Company. In addition, the parties hereto agree, in their
capacity as holders of a majority of the Common Shares, that any Transfer
permitted under this Agreement is hereby approved by them and shall therefore be
a permissible Transfer under Section 2.11 of the Articles.

(b) Additional Harbinger Transfer Provisions. In addition to Section 3.1(a) and
Section 6.4, Transfers of Securities held by Harbinger shall also be subject to
the following provisions:

(i) Subject to Pinnacle’s right to Transfer its Securities pursuant to
Section 3.2, or to acquire Harbinger’s Securities pursuant to Section 3.5,
Harbinger shall be entitled to Transfer and assign in whole or in part to an
unaffiliated third party any or all of its Securities, and any or all of its
right, title and interest in and to, and all of its obligations under or in
respect of, this Agreement and any such Securities or other agreement or
instrument, without restriction and without the consent of the Company or any
other Person.

(c) Additional Pinnacle Transfer Provisions. In addition to Section 3.1(a),
Transfers of Securities held by Pinnacle shall also be subject to the following
provisions:

(i) For as long as Pinnacle is the Minority Party and except as otherwise
permitted pursuant to this Article 3, Pinnacle shall not Transfer Securities
unless such Transfer is specifically approved by the Board and Harbinger, each
in their sole discretion.

 

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(ii) Following the earlier of (A) the first anniversary of the Opening Date of
the First Gaming Resort and (B) August 8, 2015, subject to Harbinger’s right to
Transfer its Securities pursuant to Section 3.2, Pinnacle shall be entitled to
Transfer and assign in whole or in part to an unaffiliated third party any or
all of its Securities, and any or all of its right, title and interest in and
to, and all of its obligations under or in respect of, this Agreement and any
such Securities or other agreement or instrument, without restriction and
without the consent of the Company or any other Person.

(iii) Pinnacle shall be required to Transfer its Equity Securities under and in
accordance with the terms and conditions of Section 3.3.

(iv) Pinnacle may, in its sole discretion, elect to Transfer its remaining
Securities under and in accordance with the terms and conditions of Section 3.4.

(v) Pinnacle may, in its sole discretion, elect to Transfer its remaining
Securities under and in accordance with the terms and conditions of
Section 6.1(c).

(vi) Pinnacle and its Entity Affiliates may, in their sole discretion, elect to
Transfer Securities or transfer interests in Pinnacle to PEI’s stockholders or
to conduct an initial public offering of interests of Pinnacle, in each case to
the extent that such action (A) is previously consented to in writing by the
Board (which consent shall not be unreasonably withheld), (B) occurs from and
after such time as any class of the Equity Securities is traded on an
established trading market (including, without limitation, the Hong Stock
Exchange, Singapore Stock Exchange or Toronto Stock Exchange), and (C) is not
effected until following the earlier of (1) the first anniversary of the Opening
Date of the First Gaming Resort, and (2) August 8, 2015.

(d) Related Provisions.

(i) Notwithstanding anything to the contrary in this Agreement, no Transfers
shall be permitted by either Harbinger or Pinnacle (A) if such Transfer would
violate any Applicable Law or involve a Transfer to a Non-Qualified Person,
(B) without the prior written consent of the Board and the Majority Party, if
such Transfer would impair a material license or regulatory approval of the
Company (or any of its Subsidiaries) or cause a change of control of any such
license without the Company having received all required approvals of
Governmental Authorities and other required approvals, or (C) without the prior
written consent of the Board (which shall not be unreasonably withheld) if such
Transfer would cause the Company or its Subsidiaries to be subject to the
reporting requirements of the Exchange Act.

(ii) Any transferee or Entity Affiliate of Harbinger or Pinnacle, as applicable,
that after the date of this Agreement acquires any Securities in a Transfer or
other acquisition in accordance with the terms and conditions of this Agreement
shall, as a condition precedent to effectiveness of the Transfer or other
acquisition of such Securities, (A) become a party to this Agreement by
completing and executing a counterpart signature page or joinder to this
Agreement in a form reasonably satisfactory to the Company and the Majority
Party, (B) assume the rights and obligations under this Agreement of the
transferor of such Securities as they relate to such transferred Securities
(including without limitation the transfer restrictions set forth in Article 3
and the preemptive rights set forth in Article 4), (C) execute all such other
agreements or documents as may reasonably be requested by the Company and the
Majority Party, (D) obtain all regulatory approvals needed in connection with
such Transfer or acquisition, (E) deliver such signature page and, if
applicable, other agreements and documents to the Company, and (F) to the extent
the Transfer and/or other acquisition of Securities by such transferee or Entity
Affiliate results in such transferee or Entity Affiliate, together with its
Entity Affiliates, owning at least fifty percent (50%) of the Equity Voting
Power, reaffirm in writing the effectiveness of the Pinnacle Management
Agreement in accordance with its terms. Such Person shall, upon satisfaction of
such conditions and its acquisition of such Securities in compliance with this
Agreement, be a party to this Agreement for all purposes hereunder.

 

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(iii) Any Transfer constituting a pledge of Securities or other grant of a lien
or security interest therein, directly or indirectly, for any debt or other
obligation must be made pursuant to a bona fide credit agreement, loan
agreement, indenture or other agreement pursuant to which credit is extended or
made available by an unaffiliated third party to the party making such pledge or
granting such lien or security interest. For purposes of clarity, the Parties
acknowledge that the Securities may not be pledged in violation of the foregoing
sentence.

(iv) In the event of a Transfer constituting a pledge of Securities or other
grant of a lien or security interest therein, directly or indirectly, the
beneficiary of such pledge, lien or security interest, in lieu of executing a
joinder to become a party hereto, shall execute and deliver a joinder agreeing
to be bound by all of the provisions of this Agreement with respect to the
Securities so pledged or subjected to such lien or security interest, except as
otherwise provided in Section 3.2(f)(ii), Section 3.3(f) and Section 3.5(a).

(v) Any Transfer or attempted Transfer of Securities in violation of any
provision of this Agreement shall be null and void.

Section 3.2 Tag-Along Right.

If either the Majority Party (to the extent the Majority Party does not elect to
exercise its Drag-Along rights in full under Section 3.3) or the Minority Party
or their respective Entity Affiliates (as the case may be, such party, together
with its Entity Affiliates, is referred to as the “Transferring Seller”)
proposes to Transfer any particular series or class of a Security (such specific
series or class of Security, a “Tag-Along Security”) that it holds directly or
indirectly to any Person other than an Entity Affiliate of Harbinger or
Pinnacle, as the case may be (the “Third-Party Offeror”), in a bona fide
transaction (the “Tag-Along Sale”), then the other party that is not the
Transferring Seller, together with its Entity Affiliates (such other party,
together with its Entity Affiliates, the “Tag-Along Party”), shall have the
right to participate in all Transfers of Tag-Along Securities by the
Transferring Seller to the Third-Party Offeror on the following terms and
conditions:

 

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(a) Mechanics.

(i) If the Transferring Seller has received an offer (including a preliminary
indication of interest) relating to potential Tag-Along Sale, the Transferring
Seller shall promptly, but no later than two (2) Business Days following receipt
of such offer (including a preliminary indication of interest) by the Third
Party Offeror, notify the Tag-Along Party in writing (A) specifying (to the
extent such information is known to the Transferring Seller) (i) the name and
address of the Third-Party Offeror intending to purchase the Tag-Along
Securities, (ii) the amount of Tag-Along Securities proposed to be purchased and
the purchase price the Third-Party Offeror is willing to pay for such Tag-Along
Securities to be purchased and the other material terms and conditions of the
Tag-Along Sale, and (iii) that the Tag-Along Party has the rights provided under
this Section 3.2 in respect of the proposed Tag-Along Sale and (B) attaching
copies of any written documentation embodying or relating to such offer (the
“Preliminary Tag-Along Notice”).

(ii) If such offer has developed into a reasonably definitive proposal for a
Tag-Along Sale and the Transferring Seller intends to proceed with the Tag-Along
Sale, the Transferring Seller shall promptly, but no later than two (2) Business
Days following receipt or conveyance of such reasonably definitive proposal,
notify the Tag-Along Party in writing (A) specifying (i) the name and address of
the Third-Party Offeror intending to purchase the Tag-Along Securities, (ii) the
amount of Tag-Along Securities proposed to be purchased and the purchase price
the Third-Party Offeror is willing to pay for such Tag-Along Securities to be
purchased and the other material terms and conditions of the Tag-Along Sale, and
(iii) that the Tag-Along Party has the rights provided under this Section 3.2 in
respect of the proposed Tag-Along Sale and (B) attaching copies of all written
documentation relating to such proposed Tag-Along Sale (the “Tag-Along Notice”).

(iii) The right of a Tag-Along Party to participate in a Tag-Along Sale may be
exercised by delivery of a written notice to the Transferring Seller (the
“Tag-Along Acceptance Notice”) within twenty (20) Business Days following
receipt of the Tag-Along Notice or, if later and if applicable, within
twenty-five (25) Business Days of receipt of the Majority Party’s written notice
to the Minority Party under Section 6.2(b)(ii)(B)(7)(b) of the Majority Party’s
or its Entity Affiliates’ proposed sale, Transfer or other disposition of
Financing Securities. The Tag-Along Acceptance Notice shall state the number or
amount of Tag-Along Securities that such Tag-Along Party wishes to include in
such Tag-Along Sale to the Third-Party Offeror (which shall not be in excess of
the applicable Pro Rata Tag-Along Portion). Upon the giving of a Tag-Along
Acceptance Notice, such Tag-Along Party shall be entitled and obligated to sell
the Tag-Along Securities set forth in the Tag-Along Acceptance Notice to the
Third-Party Offeror on the terms set forth in the Tag-Along Notice, and the
Transferring Seller shall not consummate the sale of any Tag-Along Securities to
the Third Party Offeror if the Third Party Offeror does not purchase all
Tag-Along Securities which each Tag-Along Party desires to sell (which shall not
be in excess of the applicable Pro Rata Tag-Along Portion or the Adjusted
Majority Party Pro Rata Tag Along Portion) pursuant to this Section 3.2.

 

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(b) Amount to be Sold. The Tag-Along Party shall be entitled to sell to the
Third-Party Offeror, in conjunction with the closing of the Third-Party
Offeror’s purchase of Tag-Along Securities from the Transferring Seller, up to
that portion of its Tag-Along Securities determined by:

(i) with respect to Tag-Along Securities other than Company Debt, multiplying
(A) the number of Tag-Along Securities that are held by the Tag-Along Party by
(B) the quotient obtained by dividing (1) the number of Tag-Along Securities to
be sold to the Third-Party Offeror by the Transferring Seller by (2) the total
number of Tag-Along Securities then held by the Transferring Seller; provided,
however, that in the event that the Minority Party and/or one or more of its
Entity Affiliates is the Transferring Seller and immediately prior to the
consummation of any such Tag Along Sale the Minority Party and its Entity
Affiliates collectively own thirty-three percent (33%) or less of the voting
power of the outstanding Voting Securities at such time of determination, the
Majority Party and its Entity Affiliates shall only be permitted to Transfer
fifty percent (50%) of the total number of Tag-Along Securities to be sold to
the Third-Party Offeror that the Majority Party and its Entity Affiliates would
otherwise have been permitted to Transfer in such Tag-Along Sale under the
formula described in this sentence excluding this proviso (the “Adjusted
Majority Party Pro Rata Tag Along Portion”);

(ii) with respect to Company Debt, multiplying (A) the principal amount of
outstanding Company Debt held by and accrued and unpaid interest owed to the
Tag-Along Party by (B) the quotient obtained by dividing (1) the principal
amount of outstanding Company Debt to be sold to the Third-Party Offeror by the
Transferring Seller by (2) the aggregate principal amount of outstanding Company
Debt held by and accrued and unpaid interest owed to the Transferring Seller;
and

(iii) the Transferring Seller shall use its commercially reasonable efforts to
include in the proposed Tag-Along Sale to the Third-Party Offeror all of the
Tag-Along Securities that the Tag-Along Party has requested to have included
pursuant to the applicable Tag-Along Acceptance Notice, it being understood that
the Third-Party Offeror shall not be required to purchase Tag-Along Securities
in excess of the number set forth in the Tag-Along Notice. In the event the
Third-Party Offeror elects to purchase less than all of the Tag-Along Securities
sought to be sold by the Transferring Seller and the Tag-Along Party, the number
of Tag-Along Securities to be Transferred to the Third-Party Offeror by the
Transferring Seller and the Tag-Along Party shall be reduced so that each such
shareholder is entitled to sell its Pro Rata Tag-Along Portion of the number of
Tag-Along Securities the Third-Party Offeror elects to purchase (which in no
event may be less than the number of Securities set forth in the Tag-Along
Notice). For purposes of this Section 3.2, the “Pro Rata Tag-Along Portion”
shall mean:

(A) Tag Along Securities other than Company Debt: with respect to the number of
Tag-Along Securities other than Company Debt to be sold by each shareholder
(whether the Transferring Seller or the Tag-Along Party, as the case may be),
the number of Tag-Along Securities other than Company Debt equal to the product
of (1) the total number of Tag-Along Securities that the Third-Party Offeror
proposes to purchase and (2) a fraction (x) the numerator of which is equal to
the number of Tag-Along Securities then held by such shareholder and (y) the
denominator of which is equal to the number of Tag-Along Securities then held
collectively by the Transferring Seller and the Tag-Along Party; provided,
however, that in the event that the Minority Party and/or one or more of its
Entity Affiliates is the Transferring Seller and immediately prior to the
consummation of any such Tag Along Sale the Minority Party and its Entity
Affiliates collectively own thirty-three percent (33%) or less of the voting
power of the outstanding Voting Securities at such time of determination, the
Majority Party and its Entity Affiliates shall only be permitted to Transfer the
Adjusted Majority Party Pro Rata Tag Along Portion (but for purposes of applying
that definition in this section, using the formula described in this sentence
excluding this proviso); and

 

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(B) Company Debt: with respect to the amount of Company Debt to be sold by each
shareholder (whether the Transferring Seller or the Tag-Along Party, as the case
may be), the amount of Company Debt equal to the product of (1) the total amount
of outstanding Company Debt that the Third-Party Offeror proposes to purchase
and (2) a fraction (x) the numerator of which is equal to the principal amount
of outstanding Company Debt held by and accrued and unpaid interest owed to such
shareholder and (y) the denominator of which is equal to the principal amount of
outstanding Company Debt held by and accrued and unpaid interest owed
collectively to the Transferring Seller and the Tag-Along Party.

(c) Consideration to be Received. The consideration to be received by the
Tag-Along Party shall be the same form and amount of consideration per Tag-Along
Security to be received by the Transferring Seller, and the terms and conditions
of the Tag-Along Sale shall be the same as those upon which the Transferring
Seller sells its Tag-Along Securities.

(d) Related Documentation.

(i) In connection with the transaction contemplated by Section 3.2, each
Tag-Along Party will agree to make substantially the same customary
representations, covenants, indemnities and agreements as the Transferring
Seller so long as they are made severally and not jointly and the liabilities
thereunder are borne on a pro rata basis based on the consideration to be
received by the Transferring Seller; provided that (A) any general indemnity
given by the Transferring Seller, applicable to liabilities not specifically
related to the Transferring Seller or its ownership of the respective Tag-Along
Securities to be Transferred by it, to the Third-Party Offeror in connection
with the Tag-Along Sale shall be apportioned with the Tag-Along Party according
to the consideration received by each of the Transferring Seller and the
Tag-Along Party, (B) the aggregate liability of any such Transferring Seller or
the Tag-Along Party in connection with such representations, covenants,
indemnities and agreements shall not exceed such party’s net proceeds from the
Tag-Along Sale, and (C) any representation and indemnification obligation
relating specifically to a Transferring Seller or the Tag-Along Party, its
respective Tag-Along Securities and/or its respective authorization, execution
and delivery of agreements and instruments in connection with the Tag-Along Sale
to the Third-Party Offeror shall be made and borne only by such party.

 

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(ii) Each Tag-Along Party shall execute and deliver all agreements and other
documents as the Transferring Seller executes and delivers in connection with
the Tag-Along Sale if so required by the Transferring Seller.

(e) Fees and Expenses. Harbinger and Pinnacle shall each pay its own fees and
expenses incurred in connection with a Tag-Along Sale under this Section 3.2, to
the extent not paid or reimbursed by the Company or the Third-Party Offeror.

(f) Application of Tag-Along.

(i) This Section 3.2 shall not apply to any Transfer of Equity Securities in a
Drag-Along Transaction for which the Transferring Seller shall have elected to
exercise its rights under Section 3.3 or an Exit Sale for which Pinnacle shall
have elected to exercise its rights under Section 3.4 (except to the extent
expressly provided otherwise in Section 3.4) or to a Transfer described in
Section 3.1(a) hereof or in Section 3.1(c)(vi) hereof.

(ii) Notwithstanding anything to the contrary in this Section 3.2, in the event
that (A) any party hereto enters into or executes a Transfer constituting a
pledge of Securities or other grant of a lien or security interest therein,
directly or indirectly, or (B) there is a further Transfer of the Securities so
pledged or subjected to such lien or security interest pursuant to a foreclosure
on such pledge, lien or security interest, or a Transfer in lieu of foreclosure
(any such further Transfer pursuant to a pledge, lien or security interest, a
“Subsequent Transfer”), this Section 3.2 (other than Section 3.2(f)(ii)) shall
not apply to any such Transfer or Subsequent Transfer. For purposes of clarity,
the transferee in any Subsequent Transfer shall comply with Section 3.1(d)(ii)
and be and become bound by the provisions of this Agreement, including without
limitation this Section 3.2.

(iii) With respect to warrants, options, stock appreciation rights or similar
rights with an exercise privilege or a settlement payment or mechanism at a
price related to any class or series of Securities or with a value derived in
whole or in part from the value of any series or class of Securities, which
warrants, options, stock appreciation rights or similar rights do not contain
any preferences, rights or obligations, other than the right to acquire, settle
at a price related to or with a value derived in whole or in part from the value
of, such underlying Securities (a “Derivative Instrument”), such Derivative
Instruments shall be included within the definition of Tag-Along Securities for
purposes of this Section 3.2. As a result of the foregoing sentence, in the
event that the Transferring Seller seeks to Transfer Derivative Instruments
pursuant to this Section 3.2, the Tag Along Party shall have the right to
participate in such Transfer of Derivative Instruments by Transferring to the
Third Party Offeror the number or amount of Derivative Instruments and/or
Securities underlying such Derivative Instruments as calculated under
Section 3.2(b)(i) or 3.2(b)(iii), as applicable; provided, that for purposes of
that calculation, Securities underlying such Derivative Instruments and such
Derivative Instruments shall be treated as equivalent Tag Along Securities. The
consideration to be received by the Tag Along Party in this context shall be the
same form and amount of consideration (as adjusted, as necessary, to account for
the lack of an exercise price associated with the Securities underlying such
Derivative Instruments being Transferred and to account for the value per unit
of the Securities underlying such Derivative Instrument where such Derivative
Instrument is exercisable for or relates to more than one unit of the Securities
underlying such Derivative Instrument) per Tag Along Security to be received by
the Transferring Seller, and the terms and conditions of the Tag Along Sale
shall be the same as those upon which the Transferring Seller sells its
Tag-Along Securities.

 

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(iv) For purposes of this Section 3.2, Common Shares and Class VII Non-Voting
Shares shall be deemed equivalent and treated as the same series or class of
Securities when determining the Tag-Along Security provided that (A)(1) if a
Transferring Seller proposes to Transfer Common Shares or Class VII Non-Voting
Shares in the relevant Tag-Along Sale, the Tag-Along Party’s right to
participate in such Tag-Along Sale shall first apply to the precise class of
shares which the Transferring Seller proposes to Transfer (either Common Shares
or Class VII Non-Voting Shares), to the extent held by such Tag-Along Party and
(2) only once such Tag-Along Party has included all shares it holds, if any, of
such precise class of shares in such Tag-Along Sale, shall the Tag-Along Party
be permitted to include shares of such other deemed equivalent class of shares
in such Tag-Along Sale, (B) if the Transferring Seller proposes to Transfer both
Common Shares and Class VII Non-Voting Shares in the relevant Tag-Along Sale,
the Tag-Along Party, if it chooses to participate in such Tag-Along Sale, shall
include in such sale Common Shares and Class VII Non-Voting Shares in the
closest proportion (in relation to each other) as possible to the proportion of
Common Shares and Class VII Non-Voting Shares (in relation to each other) being
Transferred by the Transferring Seller and, to the extent that such Tag Along
Party does not hold enough shares of a particular precise class to meet such
proportion, may include shares of the other deemed equivalent class of shares in
such Tag-Along Sale and (C) for purposes of this Section 3.2, all classes of
Company Debt having the same seniority shall be treated as the same series or
class of Securities when determining the Tag-Along Security.

Section 3.3 Drag-Along Right.

(a) General.

(i) If (A) Harbinger by itself or together with any other holder(s) of Equity
Securities proposes to Transfer Equity Securities which collectively represent
more than fifty percent (50%) of the Equity Voting Power in a single or series
of substantially related transactions to an unaffiliated third party (a
transaction in which this Section 3.3(a)(i) is applicable, a “Drag-Along
Transaction”) and (B), then if requested by Harbinger, Pinnacle (unless it then
owns Equity Securities representing thirty-three percent (33%) or more of the
Equity Voting Power) shall be required to sell its Pro Rata Drag-Along Portion
of its Equity Securities in the Drag-Along Transaction pursuant to this
Section 3.3. For purposes hereof, the “Pro Rata Drag-Along Portion” means that
portion of Securities determined by multiplying (A) the number of Common Shares
and Class VII Non-Voting Shares on a Fully Diluted Basis that are held by
Pinnacle by (B) the quotient obtained by dividing (1) the number of Common
Shares and Class VII Non-Voting Shares on a Fully Diluted Basis to be sold to
the purchaser by Harbinger (and such other holders, as applicable) by (2) the
total number of Common Shares and Class VII Non-Voting Shares on a Fully Diluted
Basis then held by Harbinger (and such other holders, as applicable). As near as
possible, composition of the Pinnacle’s Pro Rata Drag-Along Portion as between
Common Shares and Class VII Non-Voting Shares shall match the proportion of
Common Shares and Class VII Non-Voting Shares being Transferred by Harbinger.

 

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(ii) Without limiting the foregoing, (A) if the proposed Drag-Along Transaction
is structured as a sale of assets or a merger, amalgamation, consolidation,
liquidation, dissolution, winding-up, recapitalization or similar corporate
transaction or otherwise requires approval of Company shareholders, Pinnacle
will vote or cause to be voted all Voting Securities that it holds or with
respect to which Pinnacle has the power to direct the voting and which are
entitled to vote on such transaction in favor of such transaction and will waive
any appraisal, dissenters’ or similar rights which Pinnacle may have in
connection therewith, (B) if the proposed Drag-Along Transaction is structured
as or involves a sale, redemption, reorganization or recapitalization of Equity
Securities, Pinnacle agrees to sell its Pro Rata Drag-Along Portion of the
Equity Securities being sold in such Drag-Along Transaction on the terms and
conditions approved by Harbinger, and (C) if directed by Harbinger, Pinnacle
will exercise or convert, as applicable, all in-the-money options, warrants or
other rights to purchase or subscribe for Equity Securities or into Equity
Securities held by Pinnacle.

(b) Closing. Harbinger shall provide written notice (the “Drag-Along Notice”) to
Pinnacle not later than the date of acceptance of the Drag-Along Transaction by
Harbinger and in any event not later than fifteen (15) Business Days prior to
the closing date of the Drag-Along Transaction. The Drag-Along Notice shall set
forth the consideration to be paid by the purchaser for the Equity Securities,
the identity of the purchaser, and the material terms of the Drag-Along
Transaction.

(c) Consideration to be Received.

(i) In the event that immediately prior to the consummation of any Drag-Along
Transaction, Pinnacle (together with its Entity Affiliates) owns ten percent
(10%) or less of the Equity Voting Power, then the consideration to be received
by Pinnacle pursuant to such Drag-Along Transaction shall be solely in the form
of cash, regardless of the form of consideration per Equity Security to be
received by Harbinger based on the transaction value per Equity Security
designated in the applicable Drag-Along Transaction.

(ii) In the event that immediately prior to the consummation of a Drag-Along
Transaction in which some or all of the consideration to be received by
Harbinger and Pinnacle is non-cash consideration, Pinnacle (together with its
Entity Affiliates) owns in excess of ten percent (10%) of the Equity Voting
Power, then the consideration to be received by Pinnacle shall be the same form
and amount of consideration per Equity Security to be received by Harbinger, and
the terms and conditions of such sale shall be the same as those upon which
Harbinger sells its Equity Securities.

 

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(A) Notwithstanding the foregoing in Section 3.3(c)(ii), Pinnacle shall have the
right, with respect to one-half of the aggregate non-cash consideration that
Pinnacle is compelled to receive pursuant to such Drag-Along Transaction, to
require Harbinger to purchase in cash from Pinnacle up to US$75,000,000 of the
non-cash consideration received by Pinnacle based on the transaction value per
Equity Security designated in the applicable Drag-Along Transaction. In order to
exercise this right, Pinnacle must provide Harbinger with written notice within
ten (10) Business Days following the date the Drag-Along Notice is received by
Pinnacle pursuant to Section 3.3(b), or otherwise Pinnacle shall be deemed to
have forfeited any rights to require such purchase. In lieu of making any cash
payment otherwise required to be made by Harbinger to Pinnacle pursuant to the
first sentence of this clause (A), Harbinger shall have the right, but not the
obligation, to deliver one or more promissory notes to Pinnacle issued by
Harbinger (1) having an aggregate principal amount equal to the amount of such
cash payment otherwise so required, (2) bearing a rate of interest equal to two
percent (2%) per annum, (3) having a term of no later than one hundred and
twenty (120) days from the closing date of the Drag-Along Transaction,
(4) containing such terms and conditions (in addition to the aforementioned
principal amount, interest rate and term) as Harbinger determines is or could be
reasonably imposed by a financial institution lending to Harbinger on an
unrelated basis, and (5) which shall be secured by a first priority security
interest, in form and substance reasonably satisfactory to Pinnacle, in the
non-cash consideration purchased by Harbinger from Pinnacle.

(d) Related Documentation. In connection with a Drag-Along Transaction, Pinnacle
will agree to make substantially the same customary representations, covenants,
indemnities and agreements as Harbinger so long as they are made severally and
not jointly and the liabilities thereunder are borne on a pro rata basis based
on the consideration to be received by Harbinger; provided, that:

(i) any general indemnity given by Harbinger and such other holders (as
applicable), applicable to liabilities not specifically related to Harbinger or
such other holders (as applicable) or their ownership of the respective Equity
Securities to be Transferred by Harbinger and such other holders (as
applicable), to the purchaser in connection with such Drag-Along Transaction
shall be apportioned among Harbinger, such other holders (as applicable) and
Pinnacle according to the consideration received by each such party;

(ii) the aggregate liability of Pinnacle in connection with such
representations, covenants, indemnities and agreements shall not exceed
Pinnacle’s net proceeds from the Drag-Along Transaction;

(iii) any representation and indemnification obligation relating specifically to
a selling holder, its Equity Securities and/or its authorization, execution and
delivery of agreements and instruments in connection with the Drag-Along
Transaction shall be made and borne only by such selling holder; and

 

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(iv) Pinnacle shall not be required if requested by the purchaser in the
Drag-Along Transaction to enter into any non-compete agreements with respect to
the conduct of its and its Entity Affiliate’s businesses in connection with the
Drag-Along Transaction unless such non-compete restrictions:

(A) are limited to (1) any area within a three hundred (300) kilometer radius of
either the Ho Tram Project if Pinnacle or any of its Entity Affiliates is the
operator of any hotel or casino therein or any other then-existing Company
project at which Pinnacle or any of its Entity Affiliates is the operator of any
hotel or casino, and (2) the city of Da Nang and all areas of Vietnam south of
the sixteenth (16th) parallel; and

(B) do not limit (1) Pinnacle’s or its Entity Affiliate’s rights under the
Pinnacle Management Agreement, (2) Pinnacle’s or its Entity Affiliate’s ability
to operate any of its or its Entity Affiliates’ then-existing sites, or
(3) Pinnacle’s or its Entity Affiliates’ ability to develop, construct or
acquire any site with a hotel, casino, racetrack, sports, or entertainment venue
or related or ancillary businesses that is prior to the date of the Drag-Along
Notice subject to an executed term sheet (which may be non-binding) or
definitive agreement with an unaffiliated third party regarding the development,
construction or acquisition of such a facility, or located or to be located on a
parcel of land purchased, leased or otherwise controlled by Pinnacle or any of
its Entity Affiliates (including, without limitation, pursuant to an option to
purchase or lease such land) for the purpose of developing or constructing such
a facility.

(e) Fees and Expenses. Harbinger and Pinnacle shall each pay its own fees and
expenses incurred in connection with a Drag-Along Transaction, to the extent not
paid or reimbursed by the Company or the purchaser.

(f) Non-Applicability of Drag-Along Right. Notwithstanding anything to the
contrary in this Section 3.3, in the event that (A) any party hereto enters into
or executes a Transfer constituting a pledge of Securities or other grant of a
lien or security interest therein, directly or indirectly, or (B) there is a
Subsequent Transfer, parts (a) through (e) of this Section 3.3 shall not apply
to any such Transfer or Subsequent Transfer. For purposes of clarity, the
transferee in any Subsequent Transfer shall comply with Section 3.1(d)(ii) and
be and become bound by the provisions of this Agreement, including without
limitation this Section 3.3.

Section 3.4 Minority Investor Exit Sale Right.

(a) Following such time that (i) the Minority Party (together with its Entity
Affiliates) ceases to hold at least seven and one half percent (7.5%) of the
Equity Voting Power, or (ii) solely in Pinnacle’s or its Entity Affiliates’
case, a Competitor becomes the holder of Equity Securities in an amount equal to
or more than (A) ten percent (10%) of the outstanding Equity Securities on a
Fully Diluted Basis, or (B) ten percent (10%) of the Equity Voting Power, the
Minority Party and its Entity Affiliates shall have the right to elect at any
time following the consummation of an occurrence described in clause (i), or
solely in Pinnacle’s or its Entity Affiliates’ case, clause (ii), to Transfer
all or a portion of their then remaining Securities in a single transaction to
an unaffiliated third party (such unaffiliated third party, an “Exit Sale
Purchaser”, and such transaction, an “Exit Sale”), subject to the Majority
Party’s rights of first negotiation set forth in Section 3.5.

 

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(b) In the event that, pursuant to paragraph (a) of this Section 3.4, the
Minority Party (together with any of its Entity Affiliates) consummates an Exit
Sale to an unaffiliated third party, then the Majority Party shall retain its
right to elect to be a Tag-Along Party in such Exit Sale so long as the Minority
Party (together with its Entity Affiliates) is selling less than one hundred
percent (100%) of its Securities in such Exit Sale; provided, however, that the
Majority Party shall be entitled to sell to the Exit Sale Purchaser up to that
portion of its Securities equal to the Adjusted Majority Party Pro Rata
Tag-Along Portion, as applicable.

Section 3.5 Right of First Negotiation.

(a) In the event that either Harbinger or Pinnacle or any of their respective
Entity Affiliates proposes to Transfer any Securities (other than Transfers
permitted by Sections 3.1(a)(ii), and, solely in Pinnacle’s case, also
Section 3.1(c)(vi)) (such Transferring party, together with its Entity
Affiliates, the “ROFN Seller”), the ROFN Seller shall provide the other party,
together with its Entity Affiliates (such other party, together with its Entity
Affiliates, the “ROFN Buyer”), with written notice of its intent to Transfer
such Securities, which notice shall set forth the number of Securities proposed
to be Transferred (the “ROFN Notice”). For a period of twenty (20) Business Days
following receipt of the ROFN Notice (the “ROFN Period”), if and solely to the
extent initiated by the ROFN Buyer during the ROFN Period, the ROFN Buyer and
the ROFN Seller shall, on an exclusive basis, negotiate in good faith with one
another regarding a transaction pursuant to which the ROFN Buyer would acquire
all, but not less than all, of the Securities to be Transferred by the ROFN
Seller as set forth in the ROFN Notice (the “ROFN Transaction”). Unless and
until definitive documentation providing for the terms and conditions of a ROFN
Transaction is executed and delivered by all parties thereto, (i) the ROFN
Seller, except with respect to its obligation to negotiate in good faith on an
exclusive basis as set forth above, shall have no obligation or liability
whatsoever to the ROFN Buyer with respect to any ROFN Transaction, including any
obligation to enter into either a non-binding term sheet or letter of intent, or
definitive documentation, providing for the terms and conditions of the ROFN
Transaction, and (ii) the ROFN Buyer shall not have any claim of any nature
whatsoever (including any claim for breach of contract or detrimental reliance)
in connection therewith. Notwithstanding the foregoing, and for the avoidance of
doubt, (x) the provisions of this Section 3.5 shall not apply to entering into
or executing a Transfer constituting a pledge of Securities or other grant of a
lien or security interest therein, directly or indirectly, and (y) the
provisions of this Section 3.5 shall apply to Subsequent Transfers, except that
the ROFN Period with respect to such Subsequent Transfers shall be fifteen
(15) Business Days instead of twenty (20) Business Days.

(b) If at the expiration of the ROFN Period, the ROFN Seller and ROFN Buyer have
not entered into a non-binding term sheet or non-binding letter of intent with
respect to a ROFN Transaction, the ROFN Seller may, prior to the six (6) month
anniversary of the last day of the ROFN Period, seek to Transfer all or a
portion of its Securities covered by the ROFN Notice to an unaffiliated third
party subject to Section 3.2.

 

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(c) If prior to the expiration of the ROFN Period, the ROFN Seller and the ROFN
Buyer have entered into a non-binding term sheet or non-binding letter of intent
with respect to a ROFN Transaction, then for a period of forty (40) Business
Days following the execution of such non-binding term sheet or non-binding
letter of intent (the “ROFN Definitive Documentation Period”), the ROFN Buyer
and the ROFN Seller shall, on an exclusive basis, negotiate in good faith with
one another regarding definitive documentation providing for the terms and
conditions of the ROFN Transaction. Unless and until definitive documentation
providing for the terms and conditions of the ROFN Transaction is executed and
delivered by all parties thereto, (i) the ROFN Seller, except with respect to
its obligation to negotiate in good faith on an exclusive basis as set forth
above, shall have no obligation or liability whatsoever to the ROFN Buyer with
respect to any ROFN Transaction, including any obligation to enter into
definitive documentation providing for the terms and conditions of the ROFN
Transaction, and (ii) the ROFN Buyer shall not have any claim of any nature
whatsoever (including any claim for breach of contract or detrimental reliance)
in connection therewith.

(d) If at the expiration of the ROFN Definitive Documentation Period, the ROFN
Seller and ROFN Buyer have not entered into definitive documentation to
consummate a ROFN Transaction, the ROFN Seller may, prior to the six (6) month
anniversary of the last day of the ROFN Definitive Documentation Period, seek to
Transfer all or a portion of its Securities covered by the ROFN Notice to an
unaffiliated third party subject to Section 3.2.

(e) If the ROFN Seller does not consummate a sale of its Securities covered by
the ROFN Notice to an unaffiliated third party (or enter into definitive
documentation with respect thereto) prior to the six (6) month anniversary of
the last day of the ROFN Definitive Documentation Period, if applicable (or if
the ROFN Definitive Documentation Period is not applicable, the ROFN Period),
for any reason whatsoever, the ROFN Seller shall forfeit any and all rights to
consummate such a Transfer, and the ROFN Buyer’s right of first negotiation
under this Section 3.5 shall again be in full force and effect should the ROFN
Seller seek to Transfer such Securities again.

Section 3.6 Disposition of Securities. In connection with any disposition of
Securities by Harbinger or Pinnacle, to the extent still required by Applicable
Law or to the extent requested by Harbinger or Pinnacle, as the case may be, the
Company shall provide required information and reasonable assistance to
Harbinger or Pinnacle, as the case may be, in connection with any application
that may be made by such party for a certificate to be issued pursuant to
Section 116 of the Income Tax Act (Canada) (a “Section 116 Certificate”) or
related provisions, or any notification pursuant to Section 116 of the Income
Tax Act (Canada) or related provisions.

Section 3.7 Recognition of Transfers and Endorsement on Certificates. The
Company shall not recognize any Transfers of Securities made in violation of
this Agreement. Any and all certificates representing Securities now or
hereafter owned by either Harbinger or Pinnacle or their respective Entity
Affiliates during the term of this Agreement (whether such Securities are issued
initially or with respect to Transfer or otherwise) shall have endorsed thereon
in bold type the following legend:

 

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“The securities represented by this certificate are subject to the provisions of
a Third Amended and Restated Shareholders Agreement dated May 24, 2013, as
amended from time to time, and such securities are not transferable on the books
of the Company except in accordance and compliance with the terms and conditions
of such Agreement.”

Section 3.8 Waiver of Rights. Notwithstanding any other provision of this
Article 3, either Harbinger or Pinnacle may waive its rights with respect to any
particular offer or right given under this Article 3 by notice in writing to the
Company and the other party to this Agreement.

ARTICLE 4

PREEMPTIVE RIGHTS

Section 4.1 Preemptive Rights.

(a) The Company grants to each of Harbinger and Pinnacle (together with their
respective Entity Affiliates) separately the right to purchase up to its Pro
Rata Preemptive Portion of all or any part of Preemptive Securities that the
Company from time to time after the date hereof proposes to issue, or to grant
an option or other right for the purchase or subscription for; provided,
however, that at the relevant time, such shareholder (i) solely with respect to
the issuance by the Company of Equity Securities (and, for the avoidance of
doubt, this clause (i) of this proviso shall not apply to the extent that an
issuance by the Company of Securities consists of Debt of the Company, or other
interest or participation in Debt of the Company, or any combination of any of
the foregoing), continues to hold together with its Entity Affiliates at least
that number of Equity Securities as is equal to the lesser of (A) fifty percent
(50%) of the Equity Securities that are owned by such shareholder and its Entity
Affiliates immediately following the consummation of the transactions
contemplated by the Pinnacle Subscription Agreement, and (B) seven and one half
percent (7.5%) of the total amount of Equity Securities outstanding on a Fully
Diluted Basis on such date immediately prior to such issuance, and (ii) is an
“accredited investor” (as defined in Rule 501 of Regulation D promulgated under
the Securities Act) (each such shareholder, together with its Entity Affiliates,
a “Preemptive Person”).

(i) For purposes of this Article 4, “Pro Rata Preemptive Portion” means, with
respect to any Preemptive Person, on any issuance date for Preemptive
Securities, the amount of Preemptive Securities equal to the product of:

(A) New Class or Series of Preemptive Securities: With respect to the issuance
of a new class or series of Preemptive Securities not previously issued by the
Company (a “New Class of Securities”), the product of (x) the total number or
amount of such Preemptive Securities to be issued by the Company on such date,
multiplied by (y) a fraction (1) the numerator of which is equal to the total
number of Common Shares and Class VII Non-Voting Shares on a Fully Diluted Basis
then held by such Preemptive Person immediately prior to such issuance of
Preemptive Securities and (2) the denominator of which is equal to the total
number of Common Shares and Class VII Non-Voting Shares held by Harbinger and
Pinnacle (together with their respective Entity Affiliates) outstanding on such
date immediately prior to such issuance on a Fully Diluted Basis.

 

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(B) “Add-On” Securities: With respect to the issuance of Preemptive Securities
that are of a class or series previously issued by the Company prior to the
issuance of such Preemptive Securities (excluding the Common Shares and Class
VII Non-Voting Shares, the calculation for which is set forth below in
Section 4.1(a)(i)(C)) (“Add-On Securities”), the product of (x) the total number
or amount of such Preemptive Securities to be issued by the Company on such
date, multiplied by (y) a fraction (1) the numerator of which is equal to the
total number of such Preemptive Securities of such class or series, if any, then
held by such Preemptive Person immediately prior to such issuance of such
Preemptive Securities, and (2) the denominator of which is equal to the total
number of all such Preemptive Securities of such class or series outstanding on
such date immediately prior to such issuance on a Fully Diluted Basis; provided,
however, that Add-On Securities that are convertible into Common Shares and/or
Class VII Non-Voting Shares shall be treated as Securities of such previously
issued class or series rather than as the Common Shares and/or Class VII
Non-Voting Shares into which such Add-On Securities are convertible.

(C) Common Shares and Class VII Non-Voting Shares: With respect to the issuance
of additional Common Shares and/or Class VII Non-Voting Shares, the product of
(x) the total number or amount of such Preemptive Securities to be issued by the
Company on such date, multiplied by (y) a fraction (1) the numerator of which is
equal to the total number of Common Shares and Class VII Non-Voting Shares on a
Fully Diluted Basis then held by such Preemptive Person immediately prior to
such issuance of Preemptive Securities and (2) the denominator of which is equal
to the total number of Common Shares and Class VII Non-Voting Shares held by
Harbinger and Pinnacle (together with their respective Entity Affiliates)
outstanding on such date immediately prior to such issuance on a Fully Diluted
Basis.

(b) The number or amount of Preemptive Securities that the Preemptive Persons
may purchase pursuant to this Section 4.1 shall be referred to as the
“Preemptive Security Purchase Securities”. The purchase right provided in this
Section 4.1 shall apply at the time of issuance of any right, warrant, or option
or convertible or exchangeable security and not to the conversion, exchange or
exercise thereof. Except as expressly provided in this Article 4 or
Section 6.2(b)(ii)(B), Pinnacle shall not assert any preemptive rights pursuant
to any other agreements in existence as of the date hereof.

(c) The Company shall give written notice of a proposed issuance or sale
described in Section 4.1(a) to the Preemptive Persons within five (5) Business
Days after any such issuance or sale is duly approved by the Board and at least
twenty-five (25) Business Days prior to the proposed issuance or sale. Such
notice (the “Issuance Notice”) shall set forth the material terms and conditions
of such proposed transaction, including the proposed manner of disposition, the
number or amount and description of the Preemptive Securities proposed to be
issued, the proposed issuance date, and the proposed purchase price per
security, as applicable. Such notice shall also be accompanied by any written
offer from a prospective purchaser to purchase such Preemptive Securities.

 

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(d) At any time during the twenty-five (25) Business Day period following the
receipt of an Issuance Notice, each Preemptive Person shall have the right to
elect irrevocably (except as provided in the proviso to this sentence) to
purchase its Pro Rata Preemptive Portion of the number of Preemptive Security
Purchase Securities, at the purchase price set forth in the Issuance Notice and
upon the other terms and conditions specified in the Issuance Notice by
delivering a written notice to the Company, provided that if there is a material
change in the terms of the Preemptive Securities, the Company shall give written
notice of such change as promptly as practicable to the Preemptive Persons, in
which case any Preemptive Person may revoke any such election made by such
Preemptive Person by delivering a written notice to the Company. Except as
provided in Section 4.1(c), such purchase shall be consummated concurrently with
the consummation of the issuance or sale described in the Issuance Notice.

(e) If any Preemptive Person fails to exercise fully its right to purchase its
Pro Rata Preemptive Portion of all or any part of Preemptive Securities within
the periods described above, the Company shall be free to complete the proposed
issuance or sale of the Preemptive Securities described in the Issuance Notice
(including by selling such Preemptive Securities to Harbinger or Pinnacle) with
respect to which the Preemptive Persons failed to exercise the right set forth
in this Section 4.1 on terms no less favorable to the Company than those set
forth in the Issuance Notice (except that the number of securities to be issued
or sold may be reduced); provided that (i) such issuance or sale is closed
within ninety (90) days after the date the related Issuance Notice was given,
and (ii) the price and other material terms at which the Preemptive Securities
are issued or sold must be equal to or higher than the purchase price and on
terms no less favorable than the material terms described in the Issuance
Notice. In the event that the Company has not sold such Preemptive Securities
within such ninety (90) day period, the Company shall not thereafter issue or
sell any Preemptive Securities, without first again offering such securities to
Harbinger and Pinnacle in the manner provided in this Section 4.1.

(f) For the avoidance of doubt, any exercise of the Majority Party’s preemptive
rights may be subject to the Minority Party’s consent rights as and solely to
the extent applicable under Section 6.2.

(g) In addition to the preemptive rights set forth in this Article 4, the
Company agrees to negotiate in good faith with Harbinger and Pinnacle to grant
Harbinger and Pinnacle (together with their respective Entity Affiliates)
separately the right to purchase up to its Pro Rata Preemptive Portion (to the
extent permitted by Applicable Law) of all or any part of an issuance of
securities of a Subsidiary that is not, or would not be immediately following
the proposed issuance, wholly owned (directly or indirectly) by the Company that
such non-wholly owned Subsidiary from time to time after the date hereof
proposes to issue, or to grant an option or other right for the purchase or
subscription therefor. For the avoidance of doubt, there shall not be any
preemptive rights granted to Harbinger and/or Pinnacle (or their respective
Entity Affiliates) with respect to any securities issued at any time by a direct
or indirect wholly-owned Subsidiary of the Company, except for issuances of
securities as a result of which such Subsidiary would cease to be so
wholly-owned.

 

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Section 4.2 Waiver of Rights. Notwithstanding any other provision of this
Article 4, either Harbinger or Pinnacle may waive its rights with respect to any
particular offer or right given under this Article 4 by notice in writing to the
Company and the other party to this Agreement.

ARTICLE 5

REGISTRATION RIGHTS

Section 5.1 Registration Rights. The Company shall not confer upon any Person
(whether pursuant to a shareholders agreement or otherwise) any registration
rights or similar benefits with respect to Common Shares being registered under
the Exchange Act or Common Shares becoming listed or traded on a stock exchange
or stock market unless the Company delivers to Harbinger and Pinnacle notice
thereof and concurrently provides Harbinger and Pinnacle with equal or more
favorable registration rights and benefits (such rights and benefits to be
granted to Harbinger and Pinnacle in proportion to their then relative ownership
of Securities).

ARTICLE 6

CONSENT RIGHTS AND ADDITIONAL COVENANTS

Section 6.1 Majority Vote Consent Rights.

(a) The Company (which for purposes of this Section 6.1 shall include the
Company and its Subsidiaries) shall not, without first obtaining the affirmative
vote or written consent of the Majority Party, which affirmative vote or consent
shall be given or withheld in the Majority Party’s sole discretion following
consultation with the Minority Party, take any of the following actions (which
actions may also be subject to the Minority Party’s written consent if and
solely to the extent applicable under Section 6.2):

(i) enter into a merger, amalgamation, consolidation, disposal of all or
substantially all of the Company’s and its subsidiaries’ assets, restructuring,
reorganization or similar corporate transaction involving the Company or any of
its Securities;

(ii) dissolve, liquidate, voluntarily commence bankruptcy proceedings or wind-up
the operations of the Company or any subsidiary.

 

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(iii) establish or discontinue any significant line of business not expressly
permitted by the terms of the Company’s investment certificate;

(iv) change the legal form or jurisdiction of incorporation of the Company, or
make any amendment to the Articles of the Company;

(v) except as set forth in Section 3.1(a)(iii) or as contemplated by the terms
of the Series V Special Shares or the Class VI Shares, declare, set aside or pay
any dividend or other distribution (whether in cash, stock or property) in
respect of the Company’s capital stock, or pay or otherwise distribute any cash
or property to any of its security holders in their capacity as such;

(vi) issue or sell any capital stock of any class or series or any other
securities of the Company, or issue or grant any warrants, rights or options, or
securities that are exchangeable for, or convertible into, shares of the
Company’s capital stock, except for security issuances resulting from rights
granted as of the date hereof or contemplated herein (including without
limitation, (A) the grant or exercise of (1) the Pinnacle Option, (2) the
Backstop Warrants, (3) the May 2013 Warrants or (4) the Pinnacle Backstop
Warrants or Alternate Backstop Warrants, (B) top-up issuances pursuant to the
2011 Harbinger Subscription Agreement or the Pinnacle Subscription Agreement,
(C) the issuance, sale, grant, exercise, conversion or exchange of securities
pursuant to any Future Funding or Replacement Funding, (D) the exercise of
options or warrants outstanding as of the date hereof or (E) the conversion of
convertible securities outstanding as of the date hereof);

(vii) split, combine, reclassify or redeem (except as set forth in
Section 3.1(a)(iii), as expressly permitted by the terms of the Series V Shares
or the Class VI Shares) or materially modify any of the rights, preferences,
restrictions or conditions of any shares of capital stock of the Company, effect
a recapitalization or similar event or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of, or in substitution
for, shares of capital stock of the Company, or accelerate the vesting of any
options, restricted stock, stock appreciation rights or similar rights other
than as currently contemplated by any current Company option or Company plan; or

(viii) except as set forth in Section 3.1(a)(iii), as expressly permitted by the
terms of the Series V Shares or the Class VI Shares, redeem, repurchase or
otherwise acquire or offer to acquire any outstanding warrants, rights, or
options to acquire shares of capital stock of the Company;

(ix) except as set forth in Section 3.1(a)(iii) or pursuant to a Permitted
Encumbrance, the BIDV Facility or the BIDV Working Capital Facility, incur or
modify any Indebtedness for borrowed money in excess of US$5,000,000 in the
aggregate or guarantee any Indebtedness of another Person or guarantee any debt
securities of another Person;

(x) except and solely to the extent any of the following are specifically set
forth in the MGM Management Agreement, the Pinnacle Management Agreement, the
Administrative Services Agreement or any other management or administrative
agreement to be entered into by the Company with respect to the Ho Tram Project
as matters requiring the sole consent of the operator thereunder:

 

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(A) make any loans or advances to any other third Person (including any advance
of salary to employees), make any investments in or capital contributions to any
third Person or forgive or discharge in whole or in part any outstanding loans
or advances other than advances to employees for travel and business expenses or
in connection with intra-company loans or advances made in the ordinary course
of business and consistent with past practice;

(B) place or allow the creation of any Encumbrance on any of the assets or
properties of the Company, other than Permitted Encumbrances, the Capital
Mortgage Agreement and encumbrances pursuant to the BIDV Facility, the Backstop
Loan Agreement, the May 2013 Loan Agreement or the BIDV Working Capital
Facility;

(C) enter into, assume, amend or modify any of the following contracts of the
Company:

(1) any Contract or series or group of related Contracts that the Company
reasonably anticipates will, in accordance with its terms, involve aggregate
payments by the Company or any of its subsidiaries of more than US$5,000,000
over the life of such Contract;

(2) any Contract or series or group of related Contracts that the Company
reasonably anticipates will, in accordance with its terms, involve aggregate
payments to the Company or any of its subsidiaries of more than US$5,000,000
over the life of such Contract;

(3) any material joint venture or partnership contract, limited liability
company agreement or other contract involving the sharing of profits or losses
by the Company or any of its subsidiaries with any other Person; or

(4) any agreement relating to employment or severance or similar arrangement
that (a) the Company reasonably anticipates will, in accordance with its terms,
involve aggregate payments of more than US$300,000 within any twelve (12) month
period or, solely with respect to severance Contracts, US$750,000 over the life
of such severance Contract, (b) involves any change in compensation of any Key
Employee, or a change in any of the material terms of any employment,
compensation or severance agreement with any Key Employee, or an approval of any
discretionary or bonus payment to any Key Employee (other than annual bonus
payments pursuant to employment contracts), or (c) involves the creation or
establishment of any cash or equity-based incentive compensation plan or
contract or amendment thereto;

(xi) approve or modify, in any material respect, the Annual Budget of the Ho
Tram Project, the First Gaming Resort or the Second Gaming Resort, as
applicable;

 

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(xii) make, or commit to make after the date of this Agreement, any individual
or a series of related capital expenditures in excess of US$5,000,000 in the
aggregate, in each case other than capital expenditures made in accordance with
the approved Construction Budget for the First Gaming Resort or the Second
Gaming Resort or the Annual Budget;

(xiii) sell, dispose of, transfer, lease, sell and lease back or license any
material property, tangible asset or interest therein of the Company, except in
the ordinary course of business consistent with past practice;

(xiv) make any acquisition or disposition of assets in any single transaction or
series of related transactions, other than in the ordinary course of business in
accordance with the Annual Budget, for consideration in excess of US$5,000,000
in the aggregate;

(xv) hire or terminate the Company’s Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer, any General Director, any
General Manager, the General Counsel, the Chief Marketing Officer, the Chief
Development Officer, the Chief Administrative Officer, any President (or, with
respect to the foregoing, any other Person serving in a similar capacity) or any
other officer or employee with aggregate annual compensation in excess of
US$450,000 (such an employee, a “Key Employee”); or

(xvi) affect in a material adverse manner the tax position of the Securities
with respect to the amount of income, deduction, tax credit or other tax
attributes referable to the Company by making, revoking or changing any tax
election (other than as otherwise required by changes in Applicable Law or any
Vietnam VAT), or taking any other discretionary action with respect to a taxing
authority;

provided, however, that the Majority Party consent rights under this
Section 6.1(a) shall terminate from and after such time another shareholder
(together with its Entity Affiliates) of the Company owns Voting Securities with
voting power greater than the voting power possessed by the Voting Securities
then owned collectively by Harbinger and Pinnacle and their Entity Affiliates.

(b) Notwithstanding anything in Section 6.1(a) to the contrary, the consent of
the Majority Party or its Entity Affiliates shall not be required in the event
that (i) the Board approves a Financing Need Recommendation, (ii) either or both
of Harbinger and Pinnacle or their respective Entity Affiliates are the only
parties proposing terms for such financing, which terms shall be substantially
identical, or more favorable, to the Company than the terms of the Class VI
Shares (“Future Funding”), (iii) in connection with such Future Funding with
Harbinger and/or Pinnacle or their respective Entity Affiliates, the Independent
Committee (or, to the extent that no Independent Committee has been established
or there are no then current members, the Independent Director(s)) shall have
the full authority of the Board and the Company to approve the Future Funding
with Harbinger and/or Pinnacle or their respective Entity Affiliates on such
terms as the Independent Committee (or, to the extent that no Independent
Committee has been established or there are no then current members, the
Independent Director(s)) may determine without the consent of either Harbinger
or Pinnacle or their respective Entity Affiliates; provided, that any such
Future Funding shall only be exempt from such consent if Harbinger and/or
Pinnacle are the only parties participating in the Future Funding and (iv) each
of Harbinger and Pinnacle and its respective Entity Affiliates shall have the
right to participate in such Future Funding in accordance with the terms and
conditions of the preemptive rights set forth in Article IV. For the purposes of
the terms of the Series V Special Shares or Class VI Shares (as applicable),
this provision shall be deemed to constitute a consent to such Future Funding by
an instrument in writing signed by Harbinger or Pinnacle, as the case may be,
and its respective Entity Affiliates and delivered to the Company at its head
office.

 

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(c) Consent Sale. In the event (i) the requisite affirmative vote or written
consent of the Majority Party is obtained with respect to a transaction or
transactions described in Sections 6.1(a)(i) (merger, etc.),
(ii) (dissolution, etc.), (iii) (significant line of business), (vi) (issue
capital stock or other securities, etc.), (vii) (reclassify capital stock,
etc.), (ix) (incur Indebtedness, etc.) or (xi) (Encumbrances), and (ii) the
transaction(s) subject to such affirmative vote or consent of the Majority Party
is consummated, the Minority Party (together its Entity Affiliates) shall be
entitled, subject to the Majority Party’s right to Transfer its Securities
pursuant to Article 3 as a Tag-Along Party as well as the Majority Party’s right
of first negotiation pursuant to Section 3.5, to Transfer and assign in whole or
in part to an unaffiliated third party any or all of its Securities, and any or
all of its right, title and interest in and to, and all of its obligations under
or in respect of, this Agreement and any such Securities or other agreement or
instrument, without restriction and without the consent of the Company or any
other Person (such a Transfer or assignment, “Consent Sale”). The Minority Party
shall be required to provide the Company with written notice of its intent to
explore a Consent Sale within forty (40) Business Days following consummation of
the transaction subject to the Majority Party’s consent (which forty
(40) Business Day period shall run concurrently with the periods set forth in
Section 3.5). Within seven (7) months (or such longer period as may be
reasonably required in order to obtain any necessary regulatory approvals as
long as the Minority Party and the prospective transferee are using commercially
reasonable efforts to obtain such approvals) following the latest to occur of
(i) the expiration of such forty (40) Business Day period, (ii) the expiration
of the ROFN Period prior to entering into a non-binding term sheet or
non-binding letter of intent with respect to a ROFN Transaction, or (iii) the
expiration of the ROFN Definitive Documentation Period, if applicable, prior to
the execution of definitive documentation with respect to a ROFN Transaction,
the Minority Party will be required to consummate such Consent Sale if it is to
be consummated at all. In addition, any such Consent Sale shall also comply with
the notice, timing and other applicable Transfer requirements and obligations
set forth in Article 3 as relates to the Consent Sale (including, but not
limited to, the Majority Party’s rights under Sections 3.2); provided, however,
that in no event shall the provisions of Article 3 operate to shorten the time
periods expressed in the preceding sentence of this Section with respect to the
Minority Party’s ability to pursue and subsequently consummate a Consent Sale.

Section 6.2 Minority Consent Rights.

 

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(a) Notwithstanding anything in this Agreement to the contrary, the Company
shall not (and shall not permit its Subsidiaries to), without first obtaining
the Minority Party’s written consent, which consent shall not be unreasonably
withheld:

(i) amend, alter or repeal (including by means of a merger, consolidation or
otherwise) any provision of the Articles of Incorporation of the Company
(including, without limitation, the Notice of Articles) or Bylaws of the Company
in a manner that adversely affects the Minority Party; provided, however, any
amendment or modification that is ministerial in nature that does not affect the
Minority Party adversely shall not be taken into account for purposes of this
Section, and as a result, not require the Minority Party’s separate consent
pursuant hereto;

(ii) split, combine, reclassify, redeem (except as expressly permitted by the
terms of the Series V Shares or the Class VI Shares) or modify in a manner that
adversely affects the Minority Party (A) any Securities that the Minority Party
owns, or (B) any of the rights, preferences, restrictions, conditions or
privileges of any Securities that the Minority Party owns provided, however,
that, for purposes of this clause (ii), the Common Shares and the Class VII
Non-Voting Shares shall be treated as the same Security, so that this clause
(ii) shall be applicable with respect to a specified action with respect to the
Common Shares or the Class VII Non-Voting Shares, as the case may be, even if
the Minority Party does not own shares of such class of shares, as long as the
Minority Party owns shares of the other class of shares;

(iii) amend or modify the Existing Shareholders Agreement, other than to
terminate it in its entirety;

(iv) materially reduce (A) any element or amenity of the Scope (including,
without limitation, any of those elements or amenities identified in clauses
(i) – (xi) of the definition of Scope) of the First Gaming Resort, or (B) the
Standard of any Scope element or amenity of the First Gaming Resort;

(v) solely to the extent Pinnacle is the Minority Party, modify the Construction
Budget of the First Gaming Resort based solely on a Company Decision so as to
(A) increase the Scope or the Standard of the First Gaming Resort, or (B) alter
the construction timetable of the First Gaming Resort, in each case to an extent
that the expenditures directly related to the First Gaming Resort exceed three
percent (3%) of the amount of (I) in the case of Zone A-1 of the First Gaming
Resort, those items identified as “Items Subject to three percent (3%) Variance”
(the dollar amounts of such items are included in the Ho-Tram Resort Zone A-1
Cost Plan #14B) set forth on Schedule 6.2(a)(v) in the aggregate or (II) in the
case of Zone A-2 of the First Gaming Resort, the aggregate Construction Budget
first established for Zone A-2; provided, however, that Pinnacle’s consent shall
not be required if the amount of any such expenditure exceeds the amount of such
items (or of such first Construction Budget, in the case of Zone A-2) by more
than three percent (3%) but less than seven and one half percent (7.5%) in the
aggregate and an unaffiliated third party is willing to fund such excess
expenditure amount. For purposes of this subsection (v), a “Company Decision”
means a decision of the Company with respect to the Construction Budget, Scope
or the Standard of the First Gaming Resort that is within the sole discretion
and control of the Company and which is not based on factors or elements
(including, without limitation, Force Majeure events or increases resulting from
direct purchases of commodities) which are outside of the control of the
Company;

 

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(vi) solely to the extent Pinnacle is the Minority Party, make any modification
other than of an immaterial nature to (A) the Construction Budget of the Second
Gaming Resort, (B) any element or amenity of the Scope (including, without
limitation, any of those elements or amenities identified in clauses (i) – (xi)
of the definition of Scope) of the Second Gaming Resort, or (C) the Standard of
any Scope element or amenity of the Second Gaming Resort; provided, however,
that any increase in expenditures to the extent resulting from increases from
direct purchases of commodities or a Force Majeure event shall not be taken into
account for purposes of this Section, and as a result, not require Pinnacle’s
separate consent pursuant hereto; or

(vii) make expenditures in excess of US$1,000,000 per Company project, in the
aggregate, at any time prior to but not including the Opening Date of the Second
Gaming Resort; provided, however, that for the avoidance of doubt, expenditures
related to (A) the Ho Tram Project, (B) amenities, facilities and services made
available for the use and enjoyment of the prospective occupants of the Ho Tram
Project, or (C) any land or improvements not within or located upon the site of
the Ho Tram Project but which provide shared benefits to the Ho Tram Project,
shall each not be included within this limitation, and as a result, not require
the Minority Party’s separate consent pursuant hereto,

provided that, notwithstanding anything in this Section 6.2(a) to the contrary,
the consent of the Minority Party or its Entity Affiliates shall not be required
in the event that (A) the Board approves a Financing Need Recommendation,
(B) either or both of Harbinger and Pinnacle or their respective Entity
Affiliates are the only parties proposing terms for a Future Funding, (C) in
connection with such Future Funding with Harbinger and/or Pinnacle or their
respective Entity Affiliates, the Independent Committee (or, to the extent that
no Independent Committee has been established or there are no then current
members, the Independent Director(s)) shall have the full authority of the Board
and the Company to approve the Future Funding with Harbinger and/or Pinnacle or
their respective Entity Affiliates on such terms as the Independent Committee
(or, to the extent that no Independent Committee has been established or there
are no then current members, the Independent Director(s)) may determine without
the consent of either Harbinger or Pinnacle or their respective Entity
Affiliates; provided, that any such Future Funding shall only be exempt from
such consent if Harbinger and/or Pinnacle or their respective Entity Affiliates
are the only parties participating in the Future Funding and (D) each of
Harbinger and Pinnacle and its respective Entity Affiliates shall have the right
to participate in such Future Funding in accordance with the terms and
conditions of the preemptive rights set forth in Article IV. For the purposes of
the terms of the Series V Special Shares or Class VI Shares (as applicable),
this provision shall be deemed to constitute a consent to such Future Funding by
an instrument in writing signed by Pinnacle or Harbinger, as the case may be,
and delivered to the Company at its head office.

 

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(b) Notwithstanding anything in this Agreement to the contrary, the Company
shall not (and shall not permit its Subsidiaries), without first obtaining the
Minority Party’s express written consent determined in the Minority Party’s sole
discretion, enter into or make or amend any transaction, contract, agreement,
understanding or arrangement (including the terms of any Securities or any debt
or equity interests in a Company Subsidiary that are owned by a Related Party)
between the Company or any of its subsidiaries, on one hand, and a Related Party
or any of its Entity Affiliates, on the other hand (such transactions,
contracts, agreements, understandings or arrangements to include without
limitation (i) the making of any payment to such Related Party or any of its
Entity Affiliates, (ii) any purchase, sale, lease or exchange of property or
securities, the rendering of any service or the payment of any management,
advisory or similar fees, (iii) the making of any guarantee, support agreement
or similar arrangement for the benefit of such Related Party or any of its
Entity Affiliates, or (iv) the issuance of any Securities (including, without
limitation, issuances of Securities pursuant to the preemptive right under
Article 4 hereof or issuances to fund any increase the Construction Budget,
Scope or the Standard of the First Gaming Resort or the Second Gaming Resort
even if, as it relates to the First Gaming Resort, the Minority Party does not
otherwise have a consent right with respect to such increase) or amendment of
the terms of any Securities or any debt or equity interests in a Company
Subsidiary); provided, however, that the following agreements or transactions
shall not be included within this provision, and as a result, not require the
Minority Party’s separate consent pursuant hereto:

(i) transactions pursuant to existing agreements or instruments that were
entered into on or prior to the date of this Agreement (other than amendments
thereto from and after the date of this Agreement), which are set forth on
Schedule 6.2(b)(i); and

(ii) the issuance or sale by the Company of any Securities to an unaffiliated
third party (or parties) in which each of Harbinger and Pinnacle had an
opportunity to acquire such Securities pursuant to and in accordance with
Article 4 (the “Financing Securities”); provided, however, that in the event
Harbinger and/or its Entity Affiliates propose to acquire in excess of either
twenty percent (20%) or US $50,000,000 in aggregate value of such issuance or
sale of new Financing Securities:

(A) such acquisition of Financing Securities by Harbinger and/or its Entity
Affiliates (only if such acquisition is in excess of twenty percent (20%) of
such issuance or sale of new Financing Securities, and without regard to the
aggregate value of such Financing Securities acquired) shall require the prior
approval of a majority of the Independent Directors. For the avoidance of doubt,
at any such Board meeting, the excluded Harbinger Directors and Pinnacle
Directors may participate in any such meeting even though such excluded
directors’ votes will not be counted on such matter; and

(B) Subject to Section 6.2(b)(ii)(B)(4), for a period of three (3) years
following each issuance or sale of Financing Securities by the Company
contemplated by this Section 6.2(b)(ii) (each such issuance, a “Corresponding
Issuance”), Pinnacle (together with its Entity Affiliates) shall have the right
to acquire from Harbinger and its Entity Affiliates up to the Look Back Portion
of the Financing Securities acquired by Harbinger and its Entity Affiliates in
the Corresponding Issuance as calculated below (and for illustrative purposes
only, as set forth on Schedule 6.2(b)(ii)(B)):

 

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(1) Up to but not including the first anniversary of the completion of the
Corresponding Issuance (the “First Anniversary”), Pinnacle (together with its
Entity Affiliates) shall have the right, by delivering written notice to
Harbinger, to purchase from Harbinger and its Entity Affiliates up to such
amount of Financing Securities equal to the Look Back Portion at the price per
Financing Security paid by Harbinger and/or its Entity Affiliates in the
Corresponding Issuance.

(2) From the First Anniversary up to and including the third anniversary of the
completion of the Corresponding Issuance (the “Third Anniversary”), Pinnacle
(together with its Entity Affiliates) shall have the right, by delivering
written notice to Harbinger, to purchase from Harbinger and its Entity
Affiliates up to such amount of Financing Securities equal to the Sliding Look
Back Portion at the price per Financing Security paid by Harbinger and/or its
Entity Affiliates in the Corresponding Issuance. For purposes of this
subsection, the “Sliding Look Back Portion” means a number of Financing
Securities determined by multiplying (a) the Look Back Portion by (b) the
quotient obtained by dividing (1) the total number of days between (and
including) (x) the date of exercise of Pinnacle’s right to purchase the Sliding
Look Back Portion and (y) the Third Anniversary, by (2) seven hundred and thirty
(730). Such adjustment to Pinnacle’s Look Back Portion in arriving at the
Sliding Look Back Portion of Securities shall be referred to as the “Sliding
Look Back Adjustment”.

(3) Solely for purposes of this Section 6.2(b)(ii)(B):

a) each Corresponding Issuance shall be treated as a separate and independent
issuance or sale of a New Class of Securities for purposes of this
Section 6.2(b)(ii)(B), and the right of Pinnacle and its Entity Affiliates to
acquire from Harbinger and its Entity Affiliates the corresponding Look Back
Portion (as may be subject to a Sliding Look Back Adjustment) shall be subject
to a separate Look Back Portion determination and a separate Sliding Look Back
Adjustment determination.

b) the “Look Back Portion” applicable to an acquisition by Pinnacle and its
Entity Affiliates pursuant to this Section 6.2(b)(ii)(B) of Financing Securities
initially acquired by Harbinger or its Entity Affiliates from the Company as
part of the Corresponding Issuance shall equal:

i) the product of:

A) a fraction, the numerator of which shall equal the total number of Common
Shares and Class VII Non-Voting Shares on a Fully Diluted Basis then held by
Pinnacle and its Entity Affiliates immediately prior to such Corresponding
Issuance, and the denominator of which is equal to the total number of Common
Shares and Class VII Non-Voting Shares held by Harbinger and Pinnacle (together
with their respective Entity Affiliates) outstanding on such date immediately
prior to such Corresponding Issuance on a Fully Diluted Basis, expressed as a
percentage; multiplied by:

 

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B) the number of Financing Securities initially acquired by Harbinger or its
Entity Affiliates from the Company as part of the Corresponding Issuance;

minus

ii) the number of Financing Securities initially acquired by Pinnacle or its
Entity Affiliates from the Company as part of the Corresponding Issuance.

(4) Notwithstanding the foregoing, Pinnacle’s (together with its Entity
Affiliates’) ability to exercise its rights under this Section 6.2(b)(ii)(B)
shall:

a) terminate, with respect to any Financing Securities, upon a bona fide sale by
Harbinger to an unaffiliated third party of such Financing Securities not in
contravention of the terms and conditions of this Agreement.

b) terminate at the earlier of such time when (I) Pinnacle owns, together with
its Entity Affiliates, forty percent (40%) or more of the voting power of the
outstanding Voting Securities collectively held by Harbinger and Pinnacle
(together with their respective Entity Affiliates) at any such time of
determination, or (II) Harbinger, together with its Entity Affiliates, no longer
(x) has the right, either individually or collectively with Pinnacle in
accordance with the terms of Article 2, to appoint at least half of the
directors to the Board (and does not have nominees then serving on the Board
that represent at least fifty percent (50%) of all directors then serving on the
Board), and (y) owns at least fifty percent (50%) of the voting power of the
outstanding Voting Securities.

(5) The parties shall consummate such purchase by Pinnacle and sale by
Harbinger, and shall cause their respective Entity Affiliates to consummate such
purchase and sale if applicable, within fifteen (15) Business Days of the giving
of such written notice of exercise by Pinnacle to Harbinger.

(6) The right of Pinnacle (together with its Entity Affiliates) to purchase
Financing Securities pursuant to this Section 6.2(b)(ii)(B) shall include the
right of Pinnacle to acquire from Harbinger and its Entity Affiliates, at the
time of its purchase of Financing Securities in the Corresponding Issuance, at a
purchase price and on the timing set forth below, all Securities received by
Harbinger and its Affiliates in respect thereof or accrued in respect of such
Financing Securities as dividends (including without limitation accrued but
undeclared dividends), interest or other payments or distributions since the
time Harbinger and/or its Entity Affiliates acquired such Financing Securities
in the Corresponding Issuance (“PIK Securities”).

 

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(7) Pinnacle shall pay the consideration for PIK Securities by issuing one or
more promissory notes to Harbinger:

a) with an aggregate principal amount equal to the value of the PIK Securities;

b) bearing no interest;

c) with the term (with payment in full being due on the last day of the term)
being a period of time equal to the earliest to occur of (I) five (5) years,
(II) a bona fide sale by Pinnacle of such PIK Securities to an unaffiliated
third party, or any other liquidity event involving such PIK Securities in which
cash is received in full satisfaction of such PIK Securities (including, but not
limited to, a redemption in full for cash of such PIK Securities by the
Company), or (III) a bona fide sale by Harbinger of all, but not less than all,
of the Financing Securities related to the PIK Securities by Harbinger to an
unaffiliated third party, or any other liquidity event involving such Financing
Securities in which cash is received in full satisfaction of such PIK Securities
(including, but not limited to, a redemption in full for cash of such Financing
Securities by the Company); and

d) which shall be secured by a first priority security interest, in form and
substance reasonably satisfactory to Harbinger, in the PIK Securities.

(8) Related Notice Provisions.

a) In case the Company shall propose (I) to pay any dividend, make any interest
payment or other payment or distribution in respect of Financing Securities, in
cash or in any form other than additional Securities, (II) any repurchase,
retirement, redemption, refinancing, exchange, convert or other similar action
with respect to Financing Securities, (III) to effect any capital
reorganization, (IV) to effect any consolidation, merger or sale, organic
change, transfer or other disposition of all or substantially all of its
property, assets or business, or (V) to effect the liquidation, dissolution or
winding up of the Company, then in each such case, at least twenty (20) Business
Days before such action, the Company shall deliver to Pinnacle a written notice
of such proposed action, which shall specify the date on which a record is to be
taken for the purposes of such dividend, interest or other payment or
distribution or rights, or the date on which such repurchase, retirement,
redemption, exchange or other similar action, refinancing, reclassification,
reorganization, consolidation, merger, sale, organic change, transfer,
disposition, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of Financing Securities, if any
such date is to be fixed, and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such action
on the Financing Securities.

 

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b) In case Harbinger or its Entity Affiliates shall propose to sell, Transfer or
otherwise dispose of all or a portion of its Financing Securities, then in each
such case, at least twenty-five (25) Business Days before such action, Harbinger
shall deliver to Pinnacle a written notice of such proposed action. This
twenty-five (25) Business Day notice period shall run concurrently with the time
periods set forth in the various Transfer related provisions set forth in
Article 3.

(9) Harbinger and its Entity Affiliates each agree that, upon any exercise by
Pinnacle or its Entity Affiliates of their right pursuant to this Section 6.2 to
acquire any Financing Securities, Harbinger and its Entity Affiliates shall
transfer and assign good and marketable title to the relevant Financing
Securities to Pinnacle or its Entity Affiliates free and clear of any pledges,
liens, encumbrances, security interests or other charges.

Section 6.3 Covenants of the Company.

(a) Compliance Related Covenants

(i) The Company and each of its Subsidiaries will (A) fully comply at all times
with the U.S. Foreign Corrupt Practices Act, as amended, and the Canadian
Corruption of Foreign Public Officials Act, and (B) comply in all material
respects with all other applicable domestic and foreign anti-bribery or
anti-corruption laws and other Applicable Laws that prohibit payments to
improperly influence foreign or domestic government officials (collectively, the
“Anti-Corruption Laws”).

(ii) The Company and each of its Subsidiaries will fully comply at all times
with (A) all applicable U.S. and foreign government laws and regulations
concerning the exportation of any products, technology, technical data or
services, including those administered by, without limitation, the U.S.
Department of Commerce, the U.S. Department of State, and the U.S. Department of
the Treasury, and (B) U.S. and international economic and trade sanctions and
anti-boycotting laws and regulations, including, but not limited to, those
administered by the Office of Foreign Assets Control (“OFAC”), the Internal
Revenue Service and other agencies within the U.S. Department of the Treasury
(collectively, the “Export Control and Economic Sanctions Laws”).

(iii) The Company and each of its Subsidiaries will fully comply at all times
with all applicable anti-money laundering legal and regulatory requirements to
prevent and detect money laundering under U.S. or applicable foreign
(collectively, “Anti-Money Laundering Laws”). The Company and its Subsidiaries
shall develop, implement, and maintain anti-money laundering compliance programs
that are risk-based and reasonably designed to comply with applicable Anti-Money
Laundering Laws and to prevent and detect money laundering (“AML Programs”). The
AML Programs shall include a person or persons with responsibility for
overseeing the AML Program; procedures for identifying, verifying the identity
of, and conducting due diligence of customers on a risk basis and at certain
monetary thresholds; reasonable procedures and processes for identifying and,
where required or permitted by applicable laws and regulations, reporting to
competent government authorities suspicious activity; training for all
appropriate personnel; and independent testing to assess compliance with and the
effectiveness of the AML Programs.

 

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(iv) Neither the Company nor any of its Subsidiaries will, and the Company and
each of its Subsidiaries shall ensure that no director, officer, employee or
agent, or distributor, consultant or Affiliate over which the Company exercises
control, or other person acting on behalf of the Company or its Subsidiaries
will, take any action, either directly or indirectly, that would reasonably be
expected to result in a violation of the Anti-Corruption Laws, the Export
Control and Economic Sanctions Laws or the Anti-Money Laundering Laws, including
but not limited to:

(A) as applicable, making, offering, promising or authorizing any payment,
contribution, gift, entertainment, bribe, rebate, kickback, or any other thing
of value, regardless of form or amount, to any (1) foreign or domestic
government official or employee; (2) employee of a foreign or domestic
government-owned or controlled entity; (3) foreign or domestic political party,
political official, or candidate for political office; or (4) any officer or
employee of a public international organization, to obtain a competitive
advantage, or to receive favorable treatment in obtaining or retaining business;

(B) engaging in any sales, exports, re-exports, imports, transactions, or other
activities in, relating to, or involving, directly or indirectly, countries
subject to U.S. economic sanctions, or that otherwise would be prohibited if
performed by U.S. persons or entities; or

(C) engaging in any transaction, investment, undertaking, or activity in
violation of the criminal provisions against money laundering under U.S. or
applicable foreign law.

(v) The Company shall report to Pinnacle and Harbinger any (A) commissions,
fees, or political contributions made by the Company or any of its Subsidiaries,
or a director, officer, employee, agent, distributor, consultant, affiliate, or
other person acting on behalf of the Company or its Subsidiaries; or (B) any
corruption-related concerns or incidents relating to the Company or its
Subsidiaries, including but not limited to requests for any thing of value from
a government official or employee, or any political party or candidate for
political office, and offers or promises of any thing of value to a government
official or employee, or any political party or candidate for political office
by a director, officer, employee, agent, distributor, consultant, affiliate, or
other person acting on behalf of the Company or its Subsidiaries. Any such
report shall be made promptly in writing and will detail the concern or
incident, including by providing the nature, location, and employees or agents
involved in the incident, as well as any remedial measures taken.

 

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(vi) Notwithstanding anything to the contrary herein (including the restrictions
applicable to Pinnacle in Section 2.3 of this Agreement), for the purpose of
confirming compliance with the covenants in this Section 6.3, the Company and
its Subsidiaries shall permit Pinnacle and Harbinger each of their duly
authorized representatives or agents to inspect any of its assets or books and
records, visit any of its properties, to conduct appraisals and valuations, to
examine and make copies of its books and records, and to discuss its affairs,
finances, and accounts with, and to be advised as to the same by, its officers
and employees at such reasonable times and intervals as Pinnacle or Harbinger
may designate with reasonable prior notice to the Company and its Subsidiaries.

(vii) The Company and its Subsidiaries shall comply with the requirements of all
Gaming Laws, and the rules, regulations and decrees, directives and orders of
any Gaming Authority that are applicable to the Company or its Subsidiaries.

(b) Additional Covenants.

(i) Indemnification Agreements. The Company shall use reasonable best efforts
and take all such steps as may reasonably be within its powers to enter into
customary indemnification agreements with each of the Harbinger Directors and
the Pinnacle Directors, which indemnification agreements shall be substantially
similar to and on no less favorable terms than the existing indemnification
agreements between the Company and each member of the Board as in effect
immediately prior to the execution of this Agreement. In addition, the Company
shall use reasonable best efforts and take all such steps as may reasonably be
within its powers to enter into customary indemnification agreements with each
the Harbinger Board Observer(s), the Pinnacle Board Observer(s) and the Pinnacle
Advisor.

(ii) No Grant of Conflicting Rights. The Company will not grant any rights to
any party that would conflict with this Agreement including without limitation
rights of first refusal and consent rights, and will terminate, as soon as
reasonably practicable, any agreements granting such rights that are in
existence.

(iii) The Company will comply (and will cause any Subsidiary to comply) with the
requirements of all Applicable Laws (including Environmental Laws), rules,
regulations and decrees, directives and orders of any Governmental Authority
that are applicable to it or to any of its properties or the properties of its
Subsidiaries, except where non-compliance could not reasonably be expected to
have a Material Adverse Effect.

(iv) The Company will use its best efforts to comply with the Investment
Certificate and where it is unable to do so to make reasonable efforts to have
the Investment Certificate amended, except where non-compliance could not
reasonably be expected to have a Material Adverse Effect.

(v) The Company will comply with the Lease, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect.

 

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(vi) The Company will promptly give notice to Harbinger and Pinnacle upon
becoming aware of (A) any violation of any Environmental Law, (B) any claim,
inquiry, proceeding, investigation or other action, including a request for
information or a notice of potential liability under any Environmental Law, by
or from any Governmental Authority or any third party claimant, or (C) the
discovery of the release of any hazardous material at, on, under or from any of
its real or leasehold properties or any facility or equipment thereat in excess
of reportable or allowable standards or levels under any Environmental Law, in
each case with respect to the properties and operations of the Company and/or
its Subsidiaries, and in each case that could reasonably be expected to have a
Material Adverse Effect.

(vii) Except where failure to comply with this Section 6.3(b)(vii) could not
reasonably be expected to have a Material Adverse Effect, the Company will keep
its and its Subsidiaries’ insurable properties adequately insured at all times
by financially sound and reputable insurers; maintain such other insurance, to
such extent and against such risks, including fire and other risks insured
against by extended coverage, as is usually maintained in the same general area
by companies engaged in the same or similar businesses, including public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by it or the use of any products sold by it; and
maintain such other insurance as may be required by Applicable Law.

(viii) The Company will keep the Policy in full force and effect and will use
reasonable commercial efforts to ensure that the Policy is complied with by the
Company and its Subsidiaries in all material respects on an ongoing basis.

(ix) The Company shall provide each of Harbinger and Pinnacle, at the sole
expense of the requesting party, with all information reasonably requested by it
to enable it to satisfy their tax reporting obligations arising out of the
transactions contemplated by the 2012 Subscription Agreement.

Section 6.4 Additional Covenants and Representations of the Parties.

(a) Harbinger Compliance with Obligations Under the BIDV Facility.
Notwithstanding anything in this Agreement to the contrary, Harbinger shall, and
shall cause each of its Entity Affiliates other than the Company to perform
their respective obligations under the BIDV Facility including, without
limitation, the Undertaking dated March 22, 2011, and shall not, or permit any
of its Entity Affiliates to, exercise any rights or otherwise take or permit any
actions including, without limitation, with respect to their Equity Securities
in the Company that could result in a Potential Event of Default or Event of
Default under and as defined in the BIDV Facility, except any Potential Event of
Default or Event of Default that may result from a Transfer of Securities that
is required by Applicable Law or pursuant to the terms and conditions of
Section 3.1(a)(iii). Harbinger represents and warrants that as of the date of
this Agreement, Harbinger and each of its Entity Affiliates are in compliance
with their respective obligations under the BIDV Facility and have not taken any
actions that could result in a Potential Event of Default or Event of Default
under and as defined in the BIDV Facility.

 

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(b) Back-Stop Loan Agreement. For so long as Pinnacle is not party to the
Back-Stop Loan Agreement, Harbinger shall not permit any amendment or
modification to the Back-Stop Loan Agreement and the documents evidencing or
otherwise securing same without first obtaining Pinnacle’s express written
consent determined in Pinnacle’s sole discretion if such amendment or
modification seeks to (i) decrease the amount available for borrowing
thereunder, (ii) increase the interest payable for borrowings thereunder,
shorten the term of the loans available thereunder, or (iii) increase the
collateral provided as security therefor; otherwise, such consent may not be
unreasonably denied or delayed. Any request for Pinnacle’s consent to an
amendment or modification shall, to be effective, be accompanied by a reasonably
detailed explanation of the proposed amendment or modification and the
underlying reasons therefor or purpose, and provide Pinnacle with all
appropriate documents that may be necessary to properly evaluate the propriety
of the proposed amendment, together with a draft effecting same. The forgoing
consent provisions shall not apply in respect of prepayments made by the
Company.

(c) Confirmation of Pinnacle’s Rights. Harbinger and Pinnacle (but not the
Company) agree as follows:

(i) in the event that (A) an Additional Equity Event has occurred, (B) top-up
adjustments in favour of Harbinger and its Entity Affiliates under Section 3.7
of the 2011 Harbinger Subscription Agreement and in favour of Pinnacle and its
Entity Affiliates under Section 3.6 of the Pinnacle Subscription Agreement in
respect of such Additional Equity Event, if any, have been completed (the
“Top-Up Adjustments”), (C) after the completion of the Top-Up Adjustments, if
any, Pinnacle and its Entity Affiliates do not own a number of Common Shares
equal to the Target Percentage (as defined in the Pinnacle Subscription
Agreement on the assumption that Additional Equity Event has the meaning
specified in this Agreement and the time for determination of the Target
Percentage is immediately prior to the Additional Equity Event), and
(D) Harbinger and its Entity Affiliates have Harbinger Zero Consideration Rights
in connection with such Additional Equity Event and such Harbinger Zero
Consideration Rights have resulted in an equity issuance or adjustment in favour
of Harbinger and/or its Entity Affiliates (a “Harbinger Equity Adjustment”),
then Harbinger, on behalf of itself and its Entity Affiliates, shall take all
necessary action to cause Common Shares held by Harbinger and/or its Entity
Affiliates to be transferred promptly to Pinnacle and its Entity Affiliates,
such that following the Additional Equity Event, the Harbinger Equity Adjustment
and such transfer of Common Shares, Pinnacle and its Entity Affiliates own a
number of Common Shares as is equal to the Target Percentage (defined as
indicated above); and

(ii) in the event that (A) no Additional Equity Event has occurred and therefore
paragraph (c)(i) above does not apply and (B) Harbinger and its Entity
Affiliates have Harbinger Zero Consideration Rights and such Harbinger Zero
Consideration Rights have resulted in an equity issuance or adjustment in favour
of Harbinger and/or its Entity Affiliates (a “Non-Claim Adjustment”), then
Harbinger, on behalf of itself and its Entity Affiliates, shall take all
necessary action to cause Common Shares held by Harbinger and/or its Entity
Affiliates to be transferred promptly to Pinnacle and its Entity Affiliates,
such that following the Non-Claim Adjustment and such transfer of Common Shares,
Pinnacle and its Entity Affiliates own a number of Common Shares as is equal to
the Target Percentage (as defined in the Pinnacle Subscription Agreement on the
assumption that the time for determination of the Target Percentage is
immediately prior to the event that gives rise to such Non-Claim Adjustment).

 

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(iii) In the event of the transfer by Harbinger or its Entity Affiliates of all
or any portion of the Harbinger Zero Consideration Rights, the transferee shall
as a condition to the completion of such transfer assume the obligations of
Harbinger and its Entity Affiliates hereunder related to the Harbinger Zero
Consideration Rights so acquired. Such assumption of such obligations shall be
in writing in a form reasonably satisfactory to Pinnacle. For the avoidance of
doubt, the obligation of a transferor to ensure that a transferee of Harbinger
Zero Consideration Rights assumes the obligations hereunder related to the
Harbinger Zero Consideration Rights so acquired shall apply to successive
transfers of Harbinger Zero Consideration Rights and to subsequent transferors
and transferees thereof.

(d) Confirmation For purposes of clarity, the foregoing provisions of
Section 6.4(c) are not intended to duplicate the rights of Pinnacle under
Section 3.6 of the Pinnacle Subscription Agreement, or any other equity
adjustment rights in favour of Pinnacle, and the provisions of such section
shall be applied and construed accordingly. The parties acknowledge that nothing
contained in Section 6.4(c) shall derogate from or limit the rights of Pinnacle
and its Entity Affiliates under Section 3.6 of the Pinnacle Subscription
Agreement, nor shall anything contained in Section 6.4(c) derogate from or limit
the rights of Harbinger and its Entity Affiliates under Section 3.7 of the 2011
Harbinger Subscription Agreement.

(e) Zero Consideration Issuance Protection Rights. Harbinger, on behalf of
itself and its Entity Affiliates, agrees that any Harbinger Zero Consideration
Rights shall terminate and be of no further force or effect upon (i) the
consummation of a Qualified IPO, unless and to the extent that Harbinger and
Pinnacle mutually agree in writing that such rights should not be terminated
upon the consummation thereof, or (ii) the conversion of all Series V Preferred
Shares and Class VI Preferred Shares in a Qualifying Conversion. Harbinger, on
behalf of itself and its Entity Affiliates, further agrees that (i) neither the
issuance nor exercise of the Pinnacle Option, any Pinnacle Backstop Warrant, any
Additional Backstop Warrant, any Alternate Backstop Warrant, any May 2013
Warrant or any Alternate May 2013 Warrant is a zero consideration issuance and
(ii) neither such issuance or such exercise shall give rise to any anti-dilution
adjustment, zero consideration adjustment or other similar anti-dilution or zero
consideration equity adjustment or equity issuance rights in favor of Harbinger
or any of its Entity Affiliates.

(f) Taxes. In the event that an advance of funds by or on behalf of the Company
to HTPCL, including without limitation by way of loan, equity contribution or
charter capital contribution, gives rise for Canadian income tax purposes to a
deemed dividend in favour of any of Harbinger, Pinnacle or any Entity Affiliate
of such parties (each an “Affected Tax Party”) (as determined by the relevant
Affected Tax Party, acting reasonably), whether under existing or draft
legislation (but in the case of draft legislation only where the draft
legislation is intended to retroactively apply to the period of time which
includes the date of the advance) (the “Tax Legislation”), the Company shall
account for and remit to the appropriate tax authority the entirety of the tax
otherwise payable by each Affected Tax Party in respect of such deemed dividend
on behalf of the relevant Affected Tax Party. Such remittance shall be made at
the date that the investment is made in HTPCL for purposes of Section 212.3 of
the Income Tax Act (Canada) or such other date as required by law, and evidence
of payment of such withholding tax shall be provided to the relevant Affected
Tax Party. The Company’s obligation to pay withholding tax pursuant hereto shall
not extend to any investment made by the Company in HTPCL from the US
$60,000,000 subscription funds paid to the Company for Class VI Shares pursuant
to the 2012 Subscription Agreement or any Replacement Funding which replaces any
portion of the said US $60,000,000. Each of the parties hereto shall use
reasonable commercial efforts to exclude themselves and their respective Entity
Affiliates from the operation of the provisions of the Tax Legislation which
could reasonably impose any such deemed dividend, including by filing elections
as required to reduce or avoid the aforementioned deemed dividend; provided,
however, and for greater certainty, that such reasonable commercial efforts
shall not impose upon any party or any of its Entity Affiliates (i) any
restriction from reorganizing its corporate structure or transferring its
securities of the Company, or (ii) any requirement to reorganize its corporate
structure or transfer its securities of the Company. In the event that the
remittance is made and ultimately refunded to any Affected Tax Party, in whole
or in part, any such refunded amount shall be held in trust by the Affected Tax
Party for the benefit of the Company and returned to the Company forthwith.

 

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Section 6.5 Backstop Lookback Protection

(a) During the Backstop Lookback Period, Pinnacle (together with its Entity
Affiliates) shall have the right to require each Backstop Lender to assign to
Pinnacle up to the Backstop Proportionate Amount of each Backstop Advance made
by, or for and on behalf of, such Backstop Lender as calculated below:

(i) up to but not including the First Backstop Anniversary, Pinnacle (together
with its Entity Affiliates) shall have the right, by delivering written notice
to the Harbinger Agent, to require each Backstop Lender to assign to Pinnacle up
to the Backstop Proportionate Amount of each Backstop Advance made by, or for
and on behalf of, such Backstop Lender; and

(ii) from the First Backstop Anniversary up to and including the Third Backstop
Anniversary, Pinnacle (together with its Entity Affiliates) shall have the
right, by delivering written notice to the Harbinger Agent, to require each
Backstop Lender to assign to Pinnacle up to the Sliding Proportionate Backstop
Amount of each Backstop Advance made by, or for and on behalf of, such Backstop
Lender. For purposes of this subsection, the “Sliding Proportionate Backstop
Amount” means an amount determined by multiplying (A) the Backstop Proportionate
Amount by (B) the quotient obtained by dividing (1) the total number of days
between (and including) (x) the date of exercise of Pinnacle’s right to purchase
the Sliding Proportionate Backstop Amount and (y) the Third Backstop
Anniversary, by (2) seven hundred and thirty (730). Such adjustment to the
Backstop Proportionate Amount in arriving at the Sliding Proportionate Backstop
Amount shall be referred to as the “Sliding Backstop Adjustment”.

(b) Solely for purposes of this Section 6.5:

(i) the “Backstop Proportionality Factor” applicable to an assignment to
Pinnacle and its Entity Affiliates pursuant to this Section 6.5 of a portion of
a Backstop Advance shall equal:

(A) twenty-seven percent (27%); multiplied by

 

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(B) the Sliding Backstop Adjustment, if and as applicable.

(ii) the “ Backstop Proportionate Amount” applicable to an assignment to
Pinnacle and its Entity Affiliates pursuant to this Section 6.5 of a portion of
a Backstop Advance shall equal:

(A) twenty-seven percent (27%), multiplied by

(B) the amount of such Backstop Advance, net of any repayments or prepayments
thereon.

(c) In the event of a sale, transfer or other disposition by a Backstop Lender
of all or any portion the Backstop Advances or the Additional Backstop Warrants
(the Backstop Advances, the Additional Backstop Warrants and any Backstop PIK
Securities are each referred to herein as a “Backstop Asset” and, collectively,
as the “Backstop Assets”) to an unaffiliated third party which would cause such
Backstop Lender to hold less than twenty-seven percent (27%) of its original
interest in any Backstop Asset (the “Minimum Backstop Retained Original
Interest”), such transferee shall, as a condition to the completion of such
sale, transfer or other disposition, assume the obligations of such Backstop
Lender hereunder, provided, however, only in respect of such portion of the
percentage of the Backstop Asset so acquired by the transferee as relates to the
shortfall in such Backstop Lender’s Minimum Backstop Retained Original Interest;
provided, however that in the event of a sale, transfer or other disposition by
a Backstop Lender of all or any portion a Backstop Asset to Harbinger or any of
its Entity Affiliates, such transferee shall, as a condition to the completion
of such sale, transfer or other disposition, assume the obligations of a
Backstop Lender hereunder related to the percentage of the Backstop Asset so
acquired; provided, further that the required assumption of the obligations of a
Backstop Lender under this Section 6.5(c) shall not apply in the case of a sale,
transfer or other disposition by a Backstop Lender to Pinnacle or its Entity
Affiliates. An assumption of the obligations by a transferee as set forth in and
required by this Section 6.5(c) shall be in writing in a form reasonably
satisfactory to Pinnacle. For the avoidance of doubt, the obligation of a
transferor to ensure that a transferee of a Backstop Asset becomes subject to
this Section 6.5(c) and assumes the obligations hereunder relating to such
Backstop Asset shall apply to successive sales, transfers and other dispositions
of such Backstop Asset and to subsequent transferors and transferees thereof,
except in the case of a transfer to Pinnacle or its Entity Affiliates.

(d) The purchase price payable by Pinnacle (or its Entity Affiliates purchasing
a part of a Backstop Advance) to a Backstop Lender for an assignment of a part
of a Backstop Advance under this Section 6.5 shall be an amount equal to one
hundred percent (100%) of the original principal amount of the portion of such
Backstop Advance being assigned, net of any repayments or prepayments received
by such Backstop Lender as of immediately prior to the effective time of such
assignment to Pinnacle or its Entity Affiliates. Such assignment shall exclude
any and all accrued but unpaid interest on the original principal amount of such
Backstop Advance so assigned up to (but not including) the date of such
assignment, which excluded interest shall continue to be payable by the Company
to that Backstop Lender.

(e) The parties shall consummate such assignment (including the assignments of
Additional Backstop Warrants contemplated by Section 6.5(f) and of Backstop PIK
Securities contemplated by Section 6.5(g)) by a Backstop Lender to Pinnacle on a
Business Day within fifteen (15) Business Days of the giving of such written
notice of exercise by Pinnacle to the Harbinger Agent. The assigning Backstop
Lender or Pinnacle shall deliver to the Company the fully executed document(s)
pursuant to which such assignment was effected, together with all information
reasonably required by the Company to determine the appropriate future payments
to be made by the Company to the assigning Backstop Lender and Pinnacle in
respect of such Backstop Advance.

 

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(f) The right of Pinnacle (together with its Entity Affiliates) to require an
assignment of a part of a Backstop Advance pursuant to this Section 6.5 shall
include the right of Pinnacle to acquire from the relevant Backstop Lender on
the date of such assignment, at no additional cost to Pinnacle, subject to
compliance with Applicable Laws, Additional Backstop Warrants covering the
number of Common Shares equal to (A) the number of Common Shares covered by the
Additional Backstop Warrants originally issued to such Backstop Lender (as such
number of Common Shares may be adjusted pursuant to the terms of such Additional
Backstop Warrants), multiplied by (B) the Backstop Proportionality Factor,
multiplied by (C)(1) the amount of the part of the Backstop Advance(s) acquired
by Pinnacle (and/or its Entity Affiliates) from the relevant Backstop Lender,
divided by (2) the total amount of the Backstop Advances that Pinnacle (and its
Entity Affiliates) are entitled to acquire from such Backstop Lender pursuant to
Section 6.5(a) as of the date of such assignment (and for the avoidance of
doubt, Pinnacle and its Entity Affiliates shall remain entitled to acquire such
Additional Backstop Warrants covering their full entitlement of Common Shares
notwithstanding any repayment or prepayment of the associated Backstop Advance);
provided, however, that, such Additional Backstop Warrants shall be assigned to
Pinnacle and/or its Entity Affiliates notwithstanding that such assigned
Additional Backstop Warrants have been exercised in part prior to such
assignment, and Pinnacle and/or its Entity Affiliates shall have the benefit of
all remaining rights of such assigned Additional Backstop Warrants, including
without limitation, the right to an increase in the Additional Backstop
Entitlement pursuant to Section 6.8.

For the avoidance of doubt, any sales, transfers or other dispositions by
Harbinger of any Backstop Advances or Additional Backstop Warrants to any
Persons other than Pinnacle and its Entity Affiliates shall not reduce the
amount of Additional Backstop Warrants that Pinnacle or its Entity Affiliates
are entitled to acquire pursuant to this Section 6.5(f).

(g) The right of Pinnacle (together with its Entity Affiliates) to purchase a
part of a Backstop Advance together with a portion of the Additional Backstop
Warrants under this Section 6.5 shall include the right of Pinnacle (together
with its Entity Affiliates) to acquire from Harbinger and its Entity Affiliates,
at the time of its purchase of a portion of such Backstop Advance and associated
Additional Backstop Warrants , at a purchase price and on the timing set forth
below, all Securities (other than the Additional Backstop Warrants themselves,
which shall be included in the assignment of such Backstop Advance and other
than Common Shares issued upon exercise of the Additional Backstop Warrants not
in contravention of the terms of this Agreement) received by, or accrued in
favour of, Harbinger and its Entity Affiliates in respect of such Backstop
Advance or Additional Backstop Warrants as dividends (including, without
limitation, accrued but undeclared dividends) or other payments or distributions
(excluding interest (whether paid or accrued and unpaid) on such Backstop
Advance up to (but not including) the date of such purchase by Pinnacle (or its
Entity Affiliates)) since the time Harbinger and/or its Entity Affiliates made
such Backstop Advance (the “Backstop PIK Securities”). For greater certainty,
Backstop PIK Securities as defined herein shall exclude Original Backstop
Warrants and all Securities and other returns or distributions received by
Harbinger and its Affiliates in respect thereof.

 

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(h) Pinnacle shall pay the consideration for Backstop PIK Securities by issuing
one or more promissory notes to Harbinger or its applicable Entity Affiliate:

(i) with an aggregate principal amount equal to the value of the Backstop PIK
Securities;

(ii) bearing no interest;

(iii) with the term (with payment in full being due on the last day of the term)
being a period of time equal to the earliest to occur of (A) five (5) years,
(B) a bona fide sale by Pinnacle of such Backstop PIK Securities to an
unaffiliated third party, or any other liquidity event involving such Backstop
PIK Securities in which cash is received in full satisfaction of such Backstop
PIK Securities (including, but not limited to, a redemption in full for cash of
such Backstop PIK Securities by the Company), or (C) a bona fide sale by
Harbinger or its Entity Affiliates of all, but not less than all, of the
Backstop Advances related to the Backstop PIK Securities by Harbinger or its
Entity Affiliates to an unaffiliated third party, or any other liquidity event
involving such Backstop Advances in which cash is received in full satisfaction
of such Backstop PIK Securities (including, but not limited to, a repayment in
full for cash of such Backstop Advances by the Company and termination of any
further obligation to lend with respect thereto); and

(iv) which shall be secured by a first priority security interest, in form and
substance reasonably satisfactory to Harbinger, in the Backstop PIK Securities.

(i) Each Backstop Lender agrees, upon any exercise by Pinnacle or its Entity
Affiliates of their right to acquire any Backstop Assets of such Backstop
Lender, to transfer and assign good and marketable title to the relevant
Backstop Assets held by such Backstop Lender to Pinnacle or its Entity
Affiliates free and clear of any pledges, liens, encumbrances, security
interests or other charges (collectively hereinafter, “Liens”). In the event
that upon such exercise, in Pinnacle’s reasonable determination, a Backstop
Lender is not able to assign good and marketable title to any relevant Backstop
Asset to Pinnacle or its Entity Affiliates free and clear of Liens (such lender
in such case, a “Proposed Transferor Backstop Lender”), then in addition to all
other remedies at law and/or in equity that Pinnacle and/or its Entity
Affiliates may have against such Proposed Transferor Backstop Lender, upon
Pinnacle’s written notice to the Company (which notice shall state that Pinnacle
had attempted to acquire Backstop Assets from such Proposed Transferor Backstop
Lender identified in such notice in accordance with Section 6.5(a) and
Section 6.5(f)), the following transactions shall be consummated so as to afford
Pinnacle, to the maximum extent possible, the full benefit of its rights under
Section 6.5 and Section 6.8:

 

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(i) Pinnacle and/or its Entity Affiliates shall lend and the Company shall
borrow from Pinnacle and/or its Entity Affiliates, on substantially the same
terms and conditions as the Backstop Advance (including with respect to
maturity, interest rate and other terms), a principal amount equal to the
portion of the Payment Amount (as such term is defined in the Backstop Loan
Agreement) of the Backstop Advance that Pinnacle and/or its Entity Affiliates
sought to acquire from such Proposed Transferor Backstop Lender (such loan, an
“Alternate Backstop Loan”). In the event that Pinnacle or one of its Entity
Affiliates makes an Alternate Backstop Loan, Pinnacle or such Entity Affiliate
shall be and become a Backstop Lender for all purposes of this Agreement as if
Pinnacle or such Entity Affiliate had received an assignment of a portion of a
Backstop Advance from the Proposed Transferor Backstop Lender as the Backstop
Lender under Section 6.5(a). The Company shall deliver appropriate
documentation, in form and substance reasonably satisfactory to Pinnacle,
evidencing such Alternate Backstop Loan to Pinnacle and/or its Entity Affiliates
(such documentation referred to as the “Alternate Backstop Note”);

(ii) the Company agrees to apply all the cash proceeds of the Alternate Backstop
Loan promptly to prepay to such Proposed Transferor Backstop Lender its
respective portion of such Backstop Advance that Pinnacle and/or its Entity
Affiliates had intended to acquire from such Proposed Transferor Backstop
Lender;

(iii) the holder of an Alternate Backstop Note shall be entitled to its
proportionate interest in all of the benefits and security afforded to the
Backstop Lenders under and pursuant to the Backstop Loan Agreement. The Company,
Harbinger and each of Harbinger’s relevant Entity Affiliates agree to execute
and deliver all instruments and agreements, and to consent to such
registrations, as may be required in the opinion of Pinnacle, acting reasonably,
to properly entitle Pinnacle to all of the rights it would otherwise have been
entitled to receive as if the Backstop Assets referable to the Backstop Advance,
as replaced by the Alternate Backstop Loan, were assigned to Pinnacle by such
Proposed Transferor Backstop Lender;

(iv) the number of Common Shares covered by the Additional Backstop Warrants of
such Proposed Transferor Backstop Lender shall be automatically reduced, and
without requirement of any action on the part of such Proposed Transferor
Backstop Lender, by the number of Common Shares that would have been covered by
an Additional Backstop Warrant (or portion thereof) assigned to Pinnacle and/or
its Entity Affiliates pursuant to Section 6.5(f), and the Company shall notify
such Proposed Transferor Backstop Lender of the calculation of such reduction,
which calculation shall be conclusive absent manifest error;

(v) the Company agrees to and shall issue a warrant (an “Alternate Backstop
Warrant”) to Pinnacle or its Entity Affiliates, in form and substance
substantially identical to the form of Additional Backstop Warrants issued to
such Proposed Transferor Backstop Lender (including an Additional Backstop
Entitlement, which is subject to increase pursuant to Section 6.8, but excluding
any of the provisions as shall not be applicable to Pinnacle and its Entity
Affiliates including, without limitation, any restriction on exercise and any
automatic reduction in the shares covered by such warrant relating to PNK
Prepayments) covering the number of Common Shares covered by Additional Backstop
Warrants Pinnacle and/or its Entity Affiliates sought to acquire from such
Proposed Transferor Backstop Lender under Section 6.5(f). An Alternate Backstop
Warrant shall be an Additional Backstop Warrant for all purposes of this
Agreement as if Pinnacle or such Entity Affiliate had received an assignment of
all or a portion of an Additional Backstop Warrant from a Backstop Lender under
Section 6.5(f);

 

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(vi) the Additional Backstop Entitlement of such Alternate Backstop Warrant
shall be adjusted pursuant to the anti-dilution adjustments in Section 6.8 in
the case of a Qualifying Issuance, whether such Qualifying Issuance occurred
prior or subsequently to, or concurrently with, the issuance of such Alternate
Backstop Warrant; and

(vii) for greater clarity, the references to “Backstop Lender” and “Proposed
Transferor Backstop Lender” in this Section 6.5(i) shall not include Pinnacle
and/or its Entity Affiliates.

(j) Each Backstop Lender agrees that, during the Backstop Lookback Period, it
shall not exercise any Additional Backstop Warrant it holds with respect to more
than seventy-three percent (73%) of securities comprising the portion of the
original Additional Backstop Entitlement (as adjusted pursuant to the terms of
such Additional Backstop Warrant) exercisable on a cumulative basis under the
terms of such Additional Backstop Warrant. Any attempted exercise by such
Backstop Lender of any portion of such Additional Backstop Warrants as relates
to more than such seventy-three percent (73%) of such securities, as
aforementioned, shall be null and void, of no force or effect whatsoever, and
shall not be honoured by the Company.

Section 6.6 May 2013 Loan Agreement Lookback Protection

(a) During the May 2013 Lookback Period, Pinnacle (together with its Entity
Affiliates) shall have the right to require each May 2013 Harbinger Lender to
assign to Pinnacle up to the May 2013 Proportionate Amount of all May 2013
Advances made by, or for and on behalf of, such May 2013 Harbinger Lender as
calculated below:

(i) up to but not including the First May 2013 Anniversary, Pinnacle (together
with its Entity Affiliates) shall have the right, by delivering written notice
to the Harbinger Agent, to require each May 2013 Harbinger Lender to assign to
Pinnacle up to the May 2013 Proportionate Amount of all May 2013 Advances made
by, or for and on behalf of, such May 2013 Harbinger Lender; and

(ii) from the First May 2013 Anniversary up to and including the Third May 2013
Anniversary, Pinnacle (together with its Entity Affiliates) shall have the
right, by delivering written notice to the Harbinger Agent, to require each May
2013 Harbinger Lender to assign to Pinnacle up to the Sliding Proportionate May
2013 Amount of all May 2013 Advances made by, or for and on behalf of, such May
2013 Harbinger Lender. For purposes of this subsection, the “Sliding
Proportionate May 2013 Amount” means an amount determined by multiplying (A) the
May 2013 Proportionate Amount by (B) the quotient obtained by dividing (1) the
total number of days between (and including) (x) the date of exercise of
Pinnacle’s right to purchase the Sliding Proportionate May 2013 Amount and
(y) the Third May 2013 Anniversary, by (2) seven hundred and thirty (730). Such
adjustment to the May 2013 Proportionate Amount in arriving at the Sliding
Proportionate May 2013 Amount shall be referred to as the “Sliding May 2013
Adjustment”.

 

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(b) Solely for purposes of this Section 6.6:

(i) the “May 2013 Proportionate Amount” applicable to an assignment to Pinnacle
and its Entity Affiliates pursuant to this Section 6.6 of a portion of all May
2013 Advances made by, or for and on behalf of, a May 2013 Harbinger Lender
shall equal:

(A) twenty-seven percent (27%), multiplied by

(B) the amount of all such May 2013 Advances, net of any repayments or
prepayments thereon; minus

(C) the product of:

(1) the portion of any Pinnacle Advance (excluding PNK Prepayments under the May
2013 Loan Agreement) made by Pinnacle pursuant to the May 2013 Loan Agreement,
which reduced dollar-for-dollar the obligation of such May 2013 Harbinger Lender
to make a loan advance under the May 2013 Loan Agreement, multiplied by

(2) seventy-three percent (73%).

(c) In the event of a sale, transfer or other disposition by a May 2013
Harbinger Lender of all or any portion the May 2013 Advances, the May 2013
Warrants or all or any portion of its commitment under the May 2013 Loan
Agreement to make a May 2013 Advance (the May 2013 Advances, the May 2013
Warrants, such commitment under the May 2013 Loan Agreement to make a May 2013
Advance and any May 2013 PIK Securities are each referred to herein as a “May
2013 Asset” and, collectively, as the “May 2013 Assets”) to an unaffiliated
third party which would cause such May 2013 Harbinger Lender to hold less than
twenty-seven percent (27%) of its original interest in any May 2013 Asset (the
“Minimum May 2013 Retained Original Interest”), such transferee shall, as a
condition to the completion of such sale, transfer or other disposition, assume
the obligations of such May 2013 Harbinger Lender hereunder, provided, however,
only in respect of such portion of the percentage of the May 2013 Asset so
acquired by the transferee as relates to the shortfall in such May 2013
Harbinger Lender’s Minimum May 2013 Retained Original Interest; provided,
however that in the event of a sale, transfer or other disposition by a May 2013
Harbinger Lender of all or any portion a May 2013 Asset to Harbinger or any of
its Entity Affiliates, such transferee shall, as a condition to the completion
of such sale, transfer or other disposition, assume the obligations of a May
2013 Harbinger Lender hereunder related to the percentage of the May 2013 Asset
so acquired; provided, further that the required assumption of the obligations
of a May 2013 Harbinger Lender under this Section 6.6(c) shall not apply in the
case of a sale, transfer or other disposition by a May 2013 Harbinger Lender to
Pinnacle or its Entity Affiliates. An assumption of the obligations by a
transferee as set forth in and required by this Section 6.6(c) shall be in
writing in a form reasonably satisfactory to Pinnacle. For the avoidance of
doubt, the obligation of a transferor to ensure that a transferee of a May 2013
Asset becomes subject to this Section 6.6(c) and assumes the obligations
hereunder relating to such May 2013 Asset shall apply to successive sales,
transfers and other dispositions of such May 2013 Asset and to subsequent
transferors and transferees thereof, except in the case of a transfer to
Pinnacle or its Entity Affiliates.

 

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(d) The purchase price payable by Pinnacle (or its Entity Affiliates purchasing
a part of a May 2013 Advance) to a May 2013 Harbinger Lender for an assignment
of a part of a May 2013 Advance under this Section 6.6 shall be an amount equal
to one hundred percent (100%) of the original principal amount of the portion of
such May 2013 Advance being assigned, net of any repayments or prepayments
received by such May 2013 Harbinger Lender as of immediately prior to the
effective time of such assignment to Pinnacle or its Entity Affiliates. Such
assignment shall exclude any and all accrued but unpaid interest on the original
principal amount of such May 2013 Advance so assigned up to (but not including)
the date of such assignment, which excluded interest shall continue to be
payable by the Company to that May 2013 Harbinger Lender.

(e) The parties shall consummate such assignment (including the assignments of
May 2013 Warrants contemplated by Section 6.6(f) and of May 2013 PIK Securities
contemplated by Section 6.6(g)) by a May 2013 Harbinger Lender to Pinnacle on a
Business Day within fifteen (15) Business Days of the giving of such written
notice of exercise by Pinnacle to the Harbinger Agent. The assigning May 2013
Harbinger Lender or Pinnacle shall deliver to the Company the fully executed
document(s) pursuant to which such assignment was effected, together with all
information reasonably required by the Company to determine the appropriate
future payments to be made by the Company to the assigning May 2013 Harbinger
Lender and Pinnacle in respect of such May 2013 Advance.

(f) The right of Pinnacle (together with its Entity Affiliates) to require an
assignment from each May 2013 Harbinger Lender of a part of all May 2013
Advances made by, or for and on behalf of, such May 2013 Harbinger Lender
pursuant to this Section 6.6 shall include the right of Pinnacle to acquire from
each May 2013 Harbinger Lender on the date of such assignment, at no additional
cost to Pinnacle, subject to compliance with Applicable Laws, the May 2013
Warrants of each type of May 2013 Warrant (i.e., May 2013 Minimum Warrants and
May 2013 Primary Warrants) issued to such May 2013 Harbinger Lender (including
pursuant to any future entitlement to May 2013 Primary Warrants issuable upon a
Qualifying Conversion associated with the portion of all May 2013 Advances
acquired by Pinnacle from such May 2013 Harbinger Lender, as described in the
next following sentence) covering the number of Class VII Non-Voting Shares
equal to:

(i)(A) for each type of May 2013 Warrant, the number of Class VII Non-Voting
Shares covered by such type of May 2013 Warrant, in the aggregate, originally
issued to such May 2013 Harbinger Lender (as such number of Class VII Non-Voting
Shares may be adjusted pursuant to the terms of such May 2013 Warrants),
multiplied by

(B) twenty-seven percent (27%); minus

(C) the product of:

 

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(1) the number of Class VII Non-Voting Shares covered by such type of May 2013
Warrant associated with the portion of any Pinnacle Advance (excluding PNK
Prepayments under the May 2013 Loan Agreement) made by Pinnacle pursuant to the
May 2013 Loan Agreement, which reduced dollar-for-dollar the obligation of such
May 2013 Harbinger Lender to make a loan advance under the May 2013 Loan
Agreement; multiplied by

(2) seventy-three percent (73%);

(ii) multiplied by (1) the portion of the May 2013 Advance(s) acquired by
Pinnacle (and/or its Entity Affiliates) from such May 2013 Harbinger Lender,
divided by (2) the maximum portion of the May 2013 Advances that Pinnacle (and
its Entity Affiliates) are entitled to acquire from such May 2013 Harbinger
Lender pursuant to Section 6.6(a) as of the date of such assignment (and for the
avoidance of doubt, Pinnacle and its Entity Affiliates shall remain entitled to
acquire such May 2013 Warrants covering their full entitlement of Class VII
Non-Voting Shares notwithstanding any repayment or prepayment of the associated
May 2013 Advance);

(iii) multiplied by the Sliding May 2013 Adjustment, if and as applicable;

provided, however, that, such May 2013 Warrants shall be assigned to Pinnacle
and/or its Entity Affiliates notwithstanding that such assigned May 2013
Warrants have been exercised by the relevant May 2013 Harbinger Lender in part
prior to such assignment, and Pinnacle and/or its Entity Affiliates shall have
the benefit of all remaining rights of such assigned May 2013 Warrants. In the
event that, following Pinnacle’s exercise of its right to acquire a portion of
such May 2013 Advance(s) from such May 2013 Harbinger Lender, May 2013 Primary
Warrants are issued to such assigning May 2013 Harbinger Lender in respect of a
May 2013 Advance by such May 2013 Harbinger Lender, such May 2013 Harbinger
Lender shall promptly assign such May 2013 Primary Warrants to Pinnacle covering
the number of Class VII Non-Voting Shares pursuant to the formula in the
preceding sentence as if such May 2013 Primary Warrants had been issued to such
May 2013 Harbinger Lender prior to Pinnacle’s exercise of its right to acquire a
portion of such May 2013 Advance(s) from such May 2013 Harbinger Lender.

For the avoidance of doubt, any sales, transfers or other dispositions by
Harbinger of any May 2013 Advances or May 2013 Warrants to any Persons other
than Pinnacle and its Entity Affiliates shall not reduce the amount of May 2013
Warrants that Pinnacle or its Entity Affiliates are entitled to acquire pursuant
to this Section 6.6(f).

(g) The right of Pinnacle (together with its Entity Affiliates) to purchase a
part of a May 2013 Advance together with a portion of the May 2013 Warrants
under this Section 6.6 shall include the right of Pinnacle (together with its
Entity Affiliates) to acquire from Harbinger and its Entity Affiliates, at the
time of its purchase of a portion of such May 2013 Advance and associated May
2013 Warrants, at a purchase price and on the timing set forth below, all
Securities (other than the May 2013 Warrants themselves, which shall be included
in the assignment of such May 2013 Advance and other than Class VII Non-Voting
Shares issued upon exercise of the May 2013 Warrants not in contravention of the
terms of this Agreement) received by, or accrued in favour of, Harbinger and its
Entity Affiliates in respect of such May 2013 Advance or May 2013 Warrants as
dividends (including, without limitation, accrued but undeclared dividends) or
other payments or distributions (excluding interest (whether paid or accrued and
unpaid) on such May 2013 Advance up to (but not including) the date of such
purchase by Pinnacle (or its Entity Affiliates)) since the time Harbinger and/or
its Entity Affiliates made such May 2013 Advance (the “May 2013 PIK
Securities”).

 

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(h) Pinnacle shall pay the consideration for May 2013 PIK Securities by issuing
one or more promissory notes to Harbinger or its applicable Entity Affiliate:

(i) with an aggregate principal amount equal to the value of the May 2013 PIK
Securities;

(ii) bearing no interest;

(iii) with the term (with payment in full being due on the last day of the term)
being a period of time equal to the earliest to occur of (A) five (5) years,
(B) a bona fide sale by Pinnacle of such May 2013 PIK Securities to an
unaffiliated third party, or any other liquidity event involving such May 2013
PIK Securities in which cash is received in full satisfaction of such May 2013
PIK Securities (including, but not limited to, a redemption in full for cash of
such May 2013 PIK Securities by the Company), or (C) a bona fide sale by
Harbinger or its Entity Affiliates of all, but not less than all, of the May
2013 Advances related to the May 2013 PIK Securities by Harbinger or its Entity
Affiliates to an unaffiliated third party, or any other liquidity event
involving such May 2013 Advances in which cash is received in full satisfaction
of such May 2013 PIK Securities (including, but not limited to, a repayment in
full for cash of such May 2013 Advances by the Company and termination of any
further obligation to lend with respect thereto); and

(iv) which shall be secured by a first priority security interest, in form and
substance reasonably satisfactory to Harbinger, in the May 2013 PIK Securities.

(i) Each May 2013 Harbinger Lender agrees, upon any exercise by Pinnacle or its
Entity Affiliates of their right to acquire any May 2013 Assets of such May 2013
Harbinger Lender, to transfer and assign good and marketable title to the
relevant May 2013 Assets held by such May 2013 Harbinger Lender to Pinnacle or
its Entity Affiliates free and clear of any Liens. In the event that upon such
exercise, in Pinnacle’s reasonable determination, a May 2013 Harbinger Lender is
not able to assign good and marketable title to any relevant May 2013 Asset to
Pinnacle or its Entity Affiliates free and clear of Liens (such lender in such
case, a “Proposed May 2013 Lender Transferor”), then in addition to all other
remedies at law and/or in equity that Pinnacle and/or its Entity Affiliates may
have against such Proposed May 2013 Lender Transferor, upon Pinnacle’s written
notice to the Company (which notice shall state that Pinnacle had attempted to
acquire May 2013 Assets from such Proposed May 2013 Lender Transferor identified
in such notice in accordance with Section 6.6(a) and Section 6.6(f)), the
following transactions shall be consummated so as to afford Pinnacle, to the
maximum extent possible, the full benefit of its rights under Section 6.6:

 

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(i) Pinnacle and/or its Entity Affiliates shall lend and the Company shall
borrow from Pinnacle and/or its Entity Affiliates, on substantially the same
terms and conditions as the May 2013 Advance (including with respect to
maturity, interest rate and other terms), a principal amount equal to the
portion of the Payment Amount (as such term is defined in the May 2013 Loan
Agreement) of the May 2013 Advance that Pinnacle and/or its Entity Affiliates
sought to acquire from such Proposed May 2013 Lender Transferor (such loan, an
“Alternate May 2013 Loan”), which shall be recorded as set forth in the May 2013
Loan Agreement and have the same effect as if Pinnacle or such Entity Affiliate
had received an assignment of a portion of a May 2013 Advance from the Proposed
May 2013 Lender Transferor as the May 2013 Harbinger Lender under
Section 6.6(a);

(ii) the Company agrees to apply all the cash proceeds of the Alternate May 2013
Loan promptly to prepay to such Proposed May 2013 Lender Transferor its
respective portion of such May 2013 Advance that Pinnacle and/or its Entity
Affiliates had intended to acquire from such Proposed May 2013 Lender
Transferor;

(iii) the holder of an Alternate May 2013 Loan shall be entitled to its
proportionate interest in all of the benefits and security afforded to the May
2013 Lenders under and pursuant to the May 2013 Loan Agreement. The Company,
Harbinger and each of Harbinger’s relevant Entity Affiliates agree to execute
and deliver all instruments and agreements, and to consent to such
registrations, as may be required in the opinion of Pinnacle, acting reasonably,
to properly entitle Pinnacle to all of the rights it would otherwise have been
entitled to receive as if the May 2013 Assets referable to the May 2013 Advance,
as replaced by the Alternate May 2013 Loan, were assigned to Pinnacle by such
Proposed May 2013 Lender Transferor;

(iv) the number of Class VII Non-Voting Shares covered by each type of May 2013
Warrant of such Proposed May 2013 Lender Transferor shall be automatically
reduced, and without requirement of any action on the part of such Proposed May
2013 Lender Transferor, by the number of Class VII Non-Voting Shares that would
have been covered by such type of May 2013 Warrant (or portion thereof) assigned
to Pinnacle and/or its Entity Affiliates pursuant to Section 6.6(f), and the
Company shall notify such Proposed May 2013 Lender Transferor of the calculation
of such reduction, which calculation shall be conclusive absent manifest error;

(v) the Company agrees to and shall issue a warrant or warrants (each, an
“Alternate May 2013 Warrant”) to Pinnacle or its Entity Affiliates, in form and
substance substantially identical to the forms of May 2013 Warrants (including
without limitation any May 2013 Primary Warrants when and as issued in
connection with a Qualifying Conversion in the future) issued to such Proposed
May 2013 Lender Transferor (excluding any of the provisions as shall not be
applicable to Pinnacle and its Entity Affiliates including, without limitation,
any restriction on exercise and any automatic reduction in the shares covered by
such warrant relating to PNK Prepayments) covering the number of Class VII
Non-Voting Shares covered by May 2013 Warrants Pinnacle and/or its Entity
Affiliates sought to acquire from such Proposed May 2013 Lender Transferor under
Section 6.6(f). An Alternate May 2013 Warrant shall be a May 2013 Warrant for
all purposes of this Agreement as if Pinnacle or such Entity Affiliate had
received an assignment of all or a portion of a May 2013 Warrant from a May 2013
Harbinger Lender under Section 6.6(f); and

 

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(vi) for greater clarity, the references to “Proposed May 2013 Lender
Transferor” in this Section 6.6(i) shall not include Pinnacle and/or its Entity
Affiliates.

(j) Each May 2013 Harbinger Lender agrees that, during the May 2013 Lookback
Period, it shall not exercise any May 2013 Warrant it holds with respect to more
than:

(i) seventy-three percent (73%) of the securities comprising the aggregate
number of all Lenders’ original Class VII Non-Voting Share Entitlements under
the same type of May 2013 Warrant as such May 2013 Warrant (being either May
2013 Minimum Warrants or May 2013 Primary Warrants), in each case for the May
2013 Tranche in respect of which such May 2013 Warrant was issued (as adjusted
pursuant to the terms of such May 2013 Warrant); multiplied by

(ii) the quotient obtained by dividing (A) the amount of such Harbinger Lender’s
May 2013 Advance for the May 2013 Tranche in respect of which such May 2013
Warrant was issued, by (B) the amount of the May 2013 Advances made by all
Harbinger Lenders for the May 2013 Tranche in respect of which such May 2013
Warrant was issued,

(the “Unreserved Lookback Amount”).

Any attempted exercise by such May 2013 Harbinger Lender of any portion of such
May 2013 Warrant as relates to more than the Unreserved Lookback Amount shall be
null and void, of no force or effect whatsoever, and shall not be honoured by
the Company.

(k) For purposes of this Section 6.6, in the event that a May 2013 Harbinger
Lender assigns or transfers all or any portion of its commitment under the May
2013 Loan Agreement to make a May 2013 Advance (other than to Pinnacle), the
assigning or transferring May 2013 Harbinger Lender and the assignee or
transferee of such commitment (other than Pinnacle) shall be treated as one and
the same May 2013 Harbinger Lender, including without limitation for purposes of
the calculations contemplated by this Section 6.6 and for purposes of the
obligation to transfer May 2013 Assets to Pinnacle should Pinnacle exercise its
right to acquire May 2013 Assets as contemplated herein.

Section 6.7 Related Provisions

(a) In case the Company shall propose (i) to pay any dividend, make any interest
payment or other payment or distribution in respect of any Backstop Advances,
Additional Backstop Warrants, May 2013 Advances, May 2013 Warrants, Common
Shares or Class VII Non-Voting Shares, in cash or in any form other than
additional Securities (excluding interest accruals contemplated by the Backstop
Loan Agreement and the May 2013 Loan Agreement), (ii) any repurchase,
retirement, redemption, refinancing, exchange, conversion or other similar
action with respect to any Backstop Advances, Additional Backstop Warrants, May
2013 Advances, May 2013 Warrants, Common Shares or Class VII Non-Voting Shares,
(iii) to effect any capital reorganization, (iv) to effect any consolidation,
merger or sale, organic change, transfer or other disposition of all or
substantially all of its property, assets or business, or (v) to effect the
liquidation, dissolution or winding up of the Company, then in each such case,
at least twenty (20) Business Days before such action, the Company shall deliver
to Pinnacle a written notice of such proposed action, which shall specify the
date on which a record is to be taken for the purposes of such dividend,
interest or other payment or distribution or rights, or the date on which such
repurchase, retirement, redemption, exchange or other similar action,
refinancing, reclassification, reorganization, consolidation, merger, sale,
organic change, transfer, disposition, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of any
Backstop Advances, Additional Backstop Warrants, May 2013 Advances, May 2013
Warrants, Common Shares or Class VII Non-Voting Shares, if any such date is to
be fixed, and shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action on any Backstop
Advances, Additional Backstop Warrants, May 2013 Advances, May 2013 Warrants,
Common Shares or Class VII Non-Voting Shares.

 

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(b) In case Harbinger or its Entity Affiliates shall propose to sell, transfer
or otherwise dispose of all or a portion of its Backstop Advances, Additional
Backstop Warrants, May 2013 Advances or May 2013 Warrants then in each such
case, at least twenty-five (25) Business Days before such action, Harbinger
shall deliver to Pinnacle a written notice of such proposed action. This
twenty-five (25) Business Day notice period shall run concurrently with the time
periods set forth in the various Transfer related provisions set forth in
Article 3.

(c) The Company shall take all such action as may reasonably be required to give
effect to any assignment undertaken in accordance with this Section 6.7, the
Backstop Loan Agreement, the relevant Additional Backstop Warrants, the May 2013
Loan Agreement and the relevant May 2013 Warrants.

(d) For purposes of clarity, Pinnacle’s right to acquire Backstop Assets and May
2013 Assets from Harbinger and its Entity Affiliates shall be governed by
Section 6.5, Section 6.6, Section 6.7 and Section 6.8 (in the case of Backstop
Assets) and not Section 6.2 of this Agreement.

Section 6.8 Anti-Dilution Protection.

(a) Subject to Section 6.8(b), in the event that on or before the date that is
two (2) months after the date on which the First Gaming Resort is open to the
general public for both overnight accommodation and casino gaming, the Company
enters into a binding commitment for Debt Financing and/or Equity Financing,
excluding for all purposes:

(i) all Debt Financings where the applicable principal, interest and/or other
amounts to become due and owing are convertible or exchangeable into Common
Shares at a conversion or exchange price per Common Share which is equal to or
greater than the Conversion Denominator (as such term is defined in section 24.4
of the Company’s Articles (and any successor provision thereof)) as shall be
determined as of the closing date of the relevant Debt Financing transaction;
and

 

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(ii) all Equity Financings with third parties pursuant to which Common Shares or
other securities convertible or exchangeable into Common Shares are issued, at
an issue price per Common Share or at a conversion or exchange price per Common
Share which is equal to or greater than the Conversion Denominator (as such term
is defined in section 24.4 of the Company’s Articles (and any successor
provision thereof)) as shall be determined as of the closing date of the
relevant Equity Financing;

(in each case, a “Qualifying Issuance”)

then the Additional Backstop Entitlement of each Backstop Lender, subject to
allocation in accordance with Section 6.8(e), shall be increased by:

(A) in the case of a Backstop Lender that is not Pinnacle or any of its Entity
Affiliates, the lowest number of Common Shares that, when added to the number of
Common Shares and Class VII Non-Voting Shares owned by such Backstop Lender, on
a Fully Diluted Basis, at the time of the closing of such Qualifying Issuance,
would result in such Backstop Lender owning, on a Fully Diluted Basis, a
percentage of the outstanding Common Shares and Class VII Non-Voting Shares
(after giving effect to such Qualifying Issuance and any other adjustment(s)
made in respect of any other Backstop Lender(s) pursuant to this Section 6.8),
on a Fully Diluted Basis, equal to the percentage of the outstanding Common
Shares and Class VII Non-Voting Shares, on a Fully Diluted Basis, owned by such
Backstop Lender, on a Fully Diluted Basis, immediately prior to the closing of
such Qualifying Issuance; and

(B) in the case of a Backstop Lender that is Pinnacle or any of its Entity
Affiliates, the lowest number of Common Shares that, when added to the number of
Common Shares and Class VII Non-Voting Shares owned by Pinnacle and its Entity
Affiliates, on a Fully Diluted Basis, at the time of the closing of such
Qualifying Issuance, would result in Pinnacle owning, on a Fully Diluted Basis,
a percentage of the outstanding Common Shares and Class VII Non-Voting Shares
(after giving effect to such Qualifying Issuance and any other adjustment(s)
made in respect of any other Backstop Lender(s) pursuant to this Section 6.8),
on a Fully Diluted Basis, equal to the percentage (the “Pinnacle Reference
Percentage”) of the outstanding Common Shares and Class VII Non-Voting Shares,
on a Fully Diluted Basis, owned by Pinnacle and its Entity Affiliates, on a
Fully Diluted Basis, immediately prior to the closing of such Qualifying
Issuance (provided, that if any such increase in the Additional Backstop
Entitlement affects more than one holder of an Additional Backstop Warrant that
is Pinnacle and its Entity Affiliates, then such increase in the Additional
Backstop Entitlement shall be apportioned among such holders on a pro rata basis
in accordance with their holdings of Common Shares and Class VII Non-Voting
Shares on a Fully Diluted Basis). The parties agree that if Pinnacle (or any of
its Entity Affiliates) acquires an Additional Backstop Warrant after a
Qualifying Issuance, then (i) the Additional Backstop Entitlement with respect
to Pinnacle (or any of its Entity Affiliates) shall be increased in accordance
with this Section 6.8(a)(ii)(B) instead of Section 6.8(a)(ii)(A), as though
Pinnacle (or its Entity Affiliates) had acquired such Additional Backstop
Warrants on or prior to the date of the closing of such Qualifying Issuance and
(ii) the Pinnacle Reference Percentage shall give effect to the acquisition of
such Additional Backstop Warrant as if such acquisition occurred immediately
prior to the closing of such Qualifying Issuance,

 

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provided, however, that to the extent that a Backstop Lender owns Class VII
Non-Voting Shares on a Fully Diluted Basis, immediately prior to the closing of
such Qualifying Issuance, then in lieu of Common Shares solely, the Additional
Backstop Entitlement of such Backstop Lender shall be increased by an aggregate
number of Common Shares and Class VII Non-Voting equaling the Common Share
adjustment referenced above in such proportion as most closely approximates the
proportion of Common Shares and Class VII Non-Voting Shares such Backstop Lender
owns on a Fully Diluted Basis, immediately prior to the closing of such
Qualifying Issuance and provided further, however, that for purposes of this
Section 6.8, each reference to the number of Common Shares and Class VII
Non-Voting Shares owned by such Backstop Lender shall, as applicable, be
interpreted to mean and be determined, as follows:

(1) in respect of the Backstop Lender that is Harbinger II S.à r.l.:

a) the portion of the aggregate number of Common Shares and Class VII Non-Voting
Shares held by Harbinger II S.à r.l. that is attributable to Master Fund on the
basis of the aggregate debt and equity interests held by Master Fund in
Harbinger II S.à r.l, as shall be determined by Harbinger II S.à r.l.; and

b) the portion of the aggregate number of Common Shares and Class VII Non-Voting
Shares held by Harbinger II S.à r.l. that is attributable to Harbinger Capital
Partners Special Situations Fund, L.P. by its general partner, Special
Situations Fund, on the basis of the aggregate debt and equity interests held by
Special Situations Fund in Harbinger II S.à r.l., as shall be determined by
Harbinger II S.à r.l.;

(2) in respect of the Backstop Lender that is Blue Line ACDL, Inc., the
aggregate number of Common Shares and Class VII Non-Voting Shares held by Blue
Line ACDL, Inc. and Credit Distressed Blue Line Master Fund, Ltd., collectively,
and

(3) in respect of the Backstop Lender that is Breakaway ACDL, Inc., the
aggregate number of Common Shares and Class VII Non-Voting Shares held by
Breakaway ACDL, Inc. and Global Opportunities Breakaway Ltd, collectively.

(b) For each Backstop Lender that is not Pinnacle or any of its Entity
Affiliates, the adjustment pursuant to this Section 6.8 shall apply on any one
or more occasions on which a Qualifying Issuance occurs, and such adjustment or
adjustments shall apply notwithstanding that a Backstop Lender may have
previously purchased some or all of the Common Shares purchasable pursuant to
its Additional Backstop Warrant.

(c) In the case of a Backstop Lender that is Pinnacle or any of its Entity
Affiliates, the adjustment pursuant to this Section 6.8 shall (i) only be
available to such Backstop Lender if an adjustment has been made pursuant to
this Section 6.8 for any Backstop Lender that is not Pinnacle or any of its
Affiliates and (ii) apply on any one or more occasions on which a Qualifying
Issuance occurs, and such adjustment or adjustments shall apply notwithstanding
that a Backstop Lender may have previously purchased some or all of the Common
Shares purchasable pursuant to its Additional Backstop Warrant.

 

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(d) For greater clarity, an Additional Backstop Warrant may be exercised with
respect to an increase in the Additional Backstop Entitlement at any time prior
to, concurrently with or following a Qualifying Issuance, in each case in
accordance with the terms of the Additional Backstop Warrant.

(e) In the event of an assignment or transfer of an Additional Backstop Warrant
which results in the issuance of a new warrant to an assignee or transferee,
such assignee or transferee shall be entitled to its proportionate share of any
adjustment under this Section 6.8 to which the prior holder was entitled,
determined by reference to the number of Common Shares which such holder is
entitled to purchase; provided, however, that the adjustment under this
Section 6.8 to the Additional Backstop Entitlement of Additional Backstop
Warrants held by Pinnacle and/or its Entity Affiliates shall be determined under
Section 6.8(a)(ii)(B).

(f) Notwithstanding the foregoing, any holder of an Additional Backstop Warrant
may, in its sole and unfettered discretion, waive all or any part of the
adjustment obligation in its favour as set out in this Section 6.8.

(g) The adjustment in this Section 6.8 shall apply in addition to and
notwithstanding the completion of any other adjustment provided for in this
Agreement.

(h) The parties acknowledge and agree that the rights granted by this
Section 6.8 shall terminate and this Section 6.8 shall be of no further force
and effect following the conversion of all Series V Preferred Shares and Class
VI Preferred Shares in a Qualifying Conversion.

Section 6.9 Creation of the Class VII Non-Voting Shares

(a) As soon as reasonably practicable and in any event on or before June 21,
2013, the Company shall hold a shareholders’ meeting to approve and authorize
the creation of the Class VII Non-Voting Shares, a new class of non-voting
shares of the Company, which shall have all of the rights, entitlements,
privileges, restrictions and conditions of, and shall otherwise be identical or
equivalent in all respects to the Common Shares, with the exception of any
voting rights and shall provide that no amendment shall cause the terms of the
Class VII Non-Voting Shares to deviate from the terms of the Common Shares other
than that the Class VII Non-Voting Shares shall not have any voting rights. Each
of Harbinger and Pinnacle shall, subject to Applicable Law, use their best
efforts to cause their nominees to the Board to take such action as is necessary
to give effect to this Section 6.9.

(b) At the shareholders’ meeting referred to in Section 6.9(a), each of
Harbinger and Pinnacle shall vote their Voting Securities in favour of approving
and authorizing the creation of the Class VII Non-Voting Shares.

(c) The issuance of the May 2013 Warrants by the Company shall in all cases be
subject to and conditional upon the compliance by both Harbinger and Pinnacle
with their obligations as set forth in Section 6.9(b). Each of Harbinger and
Pinnacle acknowledges and agrees that, in the event that either Harbinger or
Pinnacle fails to comply with its obligations as set forth in Section 6.9(b),
the Company, without liability, shall not be required to authorize the creation
and issuance of the Class VII Non-Voting Shares nor deliver any Class VII
Non-Voting Shares after the exercise or purported exercise of any May 2013
Warrant.

 

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Section 6.10 Management Top-Up.

The Company acknowledges and agrees that, for the purposes of the exercise of
the rights of directors and management of the Company contained in the letter
agreement dated December 23, 2010, between the Company, Harbinger Capital
Investments S.a.r.l, Blue Line ACDL, Inc. and Breakaway ACDL, Inc. (the
“December 2010 Letter Agreement”), the term “New Warrants”, as used in the
December 2010 Letter Agreement, shall refer only to the Original Backstop
Warrants.

ARTICLE 7

DEFINITIONS AND INTERPRETATION

Section 7.1 Certain Definitions.

“Add-On Securities” has the meaning set forth in Section 4.1(a)(i)(B).

“Additional Backstop Entitlement” has the meaning set forth in each Additional
Backstop Warrant and each Alternate Backstop Warrant, as applicable.

“Additional Backstop Warrants” means the Harbinger Additional Backstop Warrants,
the Blue Line Additional Backstop Warrants and the Breakaway Additional Backstop
Warrants, and, if issued, the Alternate Backstop Warrants.

“Additional Equity Event” has the meaning set out in Section 3.6 of the Pinnacle
Subscription Agreement, on the assumption that the term “Equity Related Claim”
as used in Section 3.6 of the Pinnacle Subscription Agreement has the meaning
set out in this Agreement;

“Adjusted Majority Party Pro Rata Tag-Along Portion” has the meaning set forth
in Section 3.2(b)(i).

“Administrative Services Agreement” means the Administrative Services Agreement
to be negotiated and entered into pursuant to the Term Sheet dated as of
August 28, 2012, between the Company and PNK Development 31, LLC, among others.

“Affected Party” has the meaning set forth in Section 3.1(a)(iii)(B).

“Affected Party U.S. Cure Period” has the meaning set forth in
Section 3.1(a)(iii)(B)(1).

“Affected Party U.S. Sale Period” has the meaning set forth in
Section 3.1(a)(iii)(C)(2).

“Affected Tax Party” has the meaning set forth in Section 6.4(i).

 

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“Affiliate” means, when used with reference to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, the referent Person or such other Person, as the case may
be. For the purposes of this definition, the term “control” when used with
respect to any specified Person means the power to direct or cause the direction
of management or policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms “affiliated,” “controlling,” and “controlled” have meanings correlative of
the foregoing.

“Agreement” has the meaning set forth in the preamble, as this Agreement may be
amended or supplement from time to time.

“Alternate Backstop Loan” has the meaning set forth in Section 6.5(i)(i).

“Alternate Backstop Note” has the meaning set forth in Section 6.5(i)(i).

“Alternate Backstop Warrant” has the meaning set forth in Section 6.5(i)(vi).

“Alternate May 2013 Loan” has the meaning set forth in Section 6.6(i)(i).

“Alternate May 2013 Warrant” has the meaning set forth in Section 6.6(i)(v).

“Annual Budget” means the annual budget for the Ho Tram Project, the First
Gaming Resort or the Second Gaming Resort, as the context herein shall so
require.

“Anti-Corruption Laws” has the meaning set forth in Section 6.3(a)(i).

“Anti-Money Laundering Laws” has the meaning set forth in Section 6.3(a)(iii).

“Applicable Law” means as to any Person, the Constating Documents of such
Person, and all applicable provisions of (a) constitutions, treaties, statutes,
laws (including the common law), rules, regulations, ordinances, codes, or
orders of any Governmental Authority, (b) any consents or approvals of any
Governmental Authority, and (c) any orders, decisions, injunctions, judgments,
awards, decrees of, or agreements with any Governmental Authority.

“arm’s-length” has the meaning set forth in the Income Tax Act (Canada).

“Backstop Advance” means a loan advance completed by a Backstop Lender to the
Company pursuant to the terms of the Backstop Loan Agreement.

“Backstop Asset” has the meaning set forth in Section 6.5(c).

“Backstop Lender” means (a) each of Harbinger II S.à r.l., Blue Line ACDL, Inc.
and Breakaway ACDL, Inc., and (b) any Entity Affiliate of Harbinger II S.à r.l.,
Blue Line ACDL, Inc. and/or Breakaway ACDL, Inc. who becomes a party to the
Backstop Loan Agreement in connection with its assumption of a portion of one or
more Backstop Advances and (c) if and when it becomes a party to the Backstop
Loan Agreement or makes an Alternate Backstop Loan, Pinnacle and/or its Entity
Affiliates.

 

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“Backstop Loan Agreement” means the Amended and Restated Backstop Loan Agreement
dated December 6, 2012, by and among the Company and the Backstop Lenders, as
the same may be amended, restated, supplemented or otherwise modified from time
to time.

“Backstop Lookback Period” means the period commencing on December 6, 2012, and
ending on the third anniversary of the Final Backstop Advance Date; provided
that such period as it applies to each Backstop Lender shall be extended by any
Funding Default Period referable to such Backstop Lender.

“Backstop PIK Securities” has the meaning set forth in Section 6.5(g).

“Backstop Proportionality Factor” has the meaning set forth in
Section 6.5(b)(i).

“Backstop Proportionate Amount” has the meaning set forth in Section 6.5(b)(ii).

“Backstop Warrants” means collectively, the Harbinger Backstop Warrants, the
Blue Line Backstop Warrants and the Breakaway Backstop Warrants.

“BIDV” means Bank for Investment and Development of Vietnam.

“BIDV Facility” means the binding term loan facility granted by BIDV and HDBank
in favor of HTPCL, and all related loan and security agreements required in
connection therewith, whereby BIDV and HDBank have made a binding debt funding
commitment in favor of HTPCL in the amount of at least $175 million, together
with any Supplemental Agreements (as therein defined) pursuant to which
additional lenders join the binding term loan facility.

“BIDV Working Capital Facility” means the contemplated $35,000,000 working
capital facility with BIDV.

“Blue Line Additional Backstop Warrants” means the entitlement of Blue Line
ACDL, Inc. under Warrant Certificate CS-13 dated December 6, 2012, to 26,786,784
Common Shares upon exercise of the warrants evidenced thereby.

 

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“Blue Line Backstop Warrants” means the Blue Line Original Backstop Warrants and
the Blue Line Additional Backstop Warrants.

“Blue Line Minimum Warrants” means the aggregate entitlement of Credit
Distressed Blue Line Master Fund, Ltd. under the warrant certificate(s) issued
by the Company to Credit Distressed Blue Line Master Fund, Ltd. from time to
time pursuant to section 3.4 of the May 2013 Loan Agreement, upon exercise of
the warrants evidenced thereby, to a number of Class VII Non-Voting Shares up to
the aggregate Class VII Non-Voting Share Entitlement(s) contained therein.

“Blue Line Original Backstop Warrants” means the entitlement of Credit
Distressed Blue Line Master Fund, Ltd. under the Second Amended and Restated
Warrant Certificate CS-10 dated December 6, 2012, to 52,226,568 Common Shares
upon exercise of the warrants evidenced thereby.

“Blue Line Primary Warrants” means the aggregate entitlement of Credit
Distressed Blue Line Master Fund, Ltd. under the warrant certificate(s) issued
by the Company to Credit Distressed Blue Line Master Fund, Ltd. from time to
time pursuant to section 3.5 of the May 2013 Loan Agreement, upon exercise of
the warrants evidenced thereby, to a number of Class VII Non-Voting Shares up to
the aggregate Class VII Non-Voting Share Entitlement(s) contained therein.

“Board” means the Board of Directors of the Company as constituted from time to
time.

“Board Observer” has the meaning set forth in Section 2.1(b)(ii).

“Brand and License Agreement” has the meaning set forth in the Pinnacle
Subscription Agreement.

“Breakaway Additional Backstop Warrants” means the entitlement of Breakaway
ACDL, Inc. under Warrant Certificate CS-14 dated December 6, 2012, to 5,357,356
Common Shares upon exercise of the warrants evidenced thereby.

“Breakaway Backstop Warrants” means the Breakaway Original Backstop Warrants and
the Breakaway Additional Backstop Warrants.

“Breakaway Original Backstop Warrants” means the entitlement of Global
Opportunities Breakaway Ltd. under Amended and Restated Warrant Certificate
CS-11 dated December 6, 2012, to 10,445,313 Common Shares upon exercise of the
warrants evidenced thereby.

“Business Day” means a day other than a Saturday, Sunday or other day that is a
statutory or civic holiday in the Province of Ontario or in the State of New
York.

“Capital Mortgage Agreement” means the capital mortgage to be granted by the
Company in favour of Harbinger II S.à r.l., for the benefit of itself, Blue Line
ACDL, Inc. and Breakaway ACDL, Inc., in each case as lenders under the Backstop
Loan Agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

“Chairman Nominee” means the individual agreed upon by the Parties hereto.

“Class VI Closing Date” has the same meaning as “Closing” as defined in the 2012
Subscription Agreement.

“Class VI Shares” means the Class VI Preferred Shares of the Company.

“Class VII Non-Voting Share Entitlement” has the meaning set forth in each May
2013 Warrant and each Alternate May 2013 Warrant, as applicable.

“Class VII Non-Voting Shares” means the Class VII Non-Voting Shares of the
Company to be authorized and issued by the Company pursuant to Section 6.9.

“Closing Date” means the closing date of the purchase of the Pinnacle Purchased
Shares by Pinnacle pursuant to the Pinnacle Subscription Agreement.

 

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“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

“Common Shares” means the common shares in the capital of the Company.

“Company” has the meaning set forth in the preamble.

“Company Decision” has the meaning set forth in Section 6.2(a)(v).

“Company Parties” means the affiliates or subsidiaries of the Company, whether
currently in existence or created after or on April 17, 2007.

“Competitor” means any Persons or its Affiliates (a) that is or becomes engaged
in the operation or management of casinos and/or hotels as a material component
of its business activities, and (b) operates and/or manages 10,000 slot machines
(or equivalents, such as video poker terminals) or 250 gaming tables
collectively in the North America, Asia, Australia, and New Zealand regions.

“Confidential Information” means any information relating to the management,
operations, marketing, distribution and financial affairs, whether or not
reduced to writing, including but not limited to a formula, pattern,
compilation, program, method, technique or process, or information contained or
embodied in a product, device or mechanism and any research, data, know-how,
analysis or plan related to the Company’s business or any other business
opportunity considered by the Company, which is used, or may be used, in the
Company’s trade or business, including but not limited to the Company’s
business, is of value to the Company and is not generally known by competitors
or other participants in that trade or business and that Confidential
Information does not include information which a party can demonstrate (a) is in
the public domain prior to its disclosure to such party by the Company,
(b) becomes part of the public domain after its disclosure to a party without
violation of any obligation of confidentiality by such party, (c) is known by
such party prior to disclosure by the Company, (d) is in a recipient’s
possession prior to receipt thereof from a party, (e) is disclosed to a
recipient by the Company without a similar confidentiality agreement, (f) is
disclosed by a party pursuant to a requirement imposed by a governmental agency
or is otherwise required to be disclosed by operation of law, except that prior
to such disclosure, such party shall notify the Company and give the Company the
opportunity to object to such disclosure, or (g) is authorized by the Company to
be disclosed or is otherwise designated by the Company as no longer subject to
the provisions of Article 8.

“Consent Sale” has the meaning set forth in Section 6.1(c).

“Constating Documents” means the Notice of Articles and Articles of the Company,
together with any amendments thereto or replacements thereof.

“Construction Budget” means the construction budget for the Ho Tram Project, the
First Gaming Resort or the Second Gaming Resort, as the context herein shall so
require.

“Corresponding Issuance” has the meaning set forth in Section 6.2(b)(ii)(B).

 

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“Debt” means, in respect of any Person (a) all debts and liabilities of the
Person for borrowed money, whether incurred or assumed, (b) all guarantees,
sureties and similar obligations granted by the Person, (c) any obligation
evidenced by bonds, debentures, notes, or other similar instruments, (d) capital
lease obligations (as determined under GAAP) of such Person, (e) any obligation
secured by any lien existing on property owned or acquired by the Person,
(f) any debt or liability of the Person representing the deferred acquisition
cost of property or assets created or arising under any conditional sale
agreement or other title retention agreement, and (g) any liabilities,
contingent, unmatured or other, under indemnities or other agreements of the
Person given in respect of any bankers’ acceptance, letter of credit, or letter
of guarantee; provided, however, that “Debt” does not include deferred taxes or
obligations to trade creditors (including employees) incurred in the ordinary
course of business.

“Debt Financing” means a financing by the Company with a person other than a
party hereto or an Entity Affiliate thereof by way of (a) loan or similar
obligation, (b) any obligation evidenced by bonds, debentures, notes, or other
similar instruments, (c) capital lease obligations (as determined under GAAP),
(d) bankers’ acceptances, (e) any obligation secured by any lien existing on
property owned or acquired by the Company, (f) any debt or liability
representing the deferred acquisition cost or purchase price of property or
assets and (g) to the extent not included in subsections (a) to (f) above, any
binding commitment to provide funding to the Company which is not incurred or
issued in connection with an Equity Financing, which, in respect of each of
subsections (a) to (g) above, by its terms provides that principal, interest
and/or other amounts to be become due and owing in connection with such
financing is convertible or exchangeable into Common Shares.

“December 2010 Letter Agreement” has the meaning set forth in Section 6.10.

“Derivative Instrument” has the meaning set forth in Section 3.2(f)(ii).

“Dispute Period” means the period ending thirty (30) days following receipt by
the Company of either a Claim Notice or an Indemnity Notice.

“Divestiture Trust” means a divestiture trust for the benefit of the party that
is Transferring its Securities to such trust as is permitted by the applicable
Gaming Authority to remediate any Gaming Problem.

“Drag-Along Notice” has the meaning set forth in Section 3.3(b).

“Drag-Along Transaction” has the meaning set forth in Section 3.3(a)(i).

“Encumbrances” means all mortgages, liens, pledges, security interests, charges,
claims, restrictions and encumbrances of any nature whatsoever, excluding
licenses to intellectual property.

“Entity Affiliate” has the meaning set forth in Section 3.1(a)(ii).

“Environmental Law” means any and all applicable foreign, federal, provincial,
state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants.

 

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“Equity Financing” means a financing by the Company by way of the issuance to a
Person other than a party hereto or an Entity Affiliate thereof of (a) any
Common Share and/or (b) any other securities of the Company which entitle the
holder thereof to purchase or acquire, or is otherwise convertible or
exchangeable into, a Common Share;

“Equity Related Claim” means any potential claims, assertions or alleged
violations in respect of contract or law (whether made as a claim in contract or
otherwise) by any person who is or was a securityholder of the Company at any
time (or a person claiming to be a securityholder of the Company at any time) in
respect of, or related to, or involving acts or omissions occurring at any time,
past present or future, and whether asserted by such securityholder or person or
by its Affiliates, successors or assigns.

“Equity Securities” means any series or class of shares or equity securities of
the Company, including the Common Shares and any series or class of shares, or
any options, warrants, rights or other instruments or securities that are
directly or indirectly (and whether or not on a contingency) convertible into,
or exercisable or exchangeable for, any shares or equity securities of the
Company, including Common Shares (whether or not such derivative securities are
issued by the Company).

“Equity Voting Power” means the aggregate number of votes represented by (a) the
Voting Securities of the Company outstanding on the date of any relevant
determination of the “Equity Voting Power” (including, but not limited to the
Common Shares, the Series V Special Shares and the Class VI Shares), (b) the
shares underlying the vested portion of the Pinnacle Option, but excluding any
unvested portion of the Pinnacle Option and (c) the shares underlying any
outstanding warrants (but excluding any warrants which are outstanding but not
yet exercisable on the date of any relevant determination of the “Equity Voting
Power”).

“Exchange Act” means the United States Securities Exchange Act of 1934, as
amended from time to time and the rules and regulations promulgated thereunder.

“Executive Committee” has the meaning set forth in Section 2.1(d)(ii).

“Existing Shareholders Agreement” means the Amended and Restated Shareholders’
Agreement, dated April 15, 2010 (as amended to date), by and among the other
shareholder signatories thereto.

“Exit Notice” has the meaning set forth in Section 3.4(b).

“Exit Sale” has the meaning set forth in Section 3.4(a).

“Exit Sale Purchaser” has the meaning set forth in Section 3.4(a).

“Export Control Laws” has the meaning set forth in Section 6.3(a)(ii).

“Final Backstop Advance Date” has the meaning set forth in the Backstop Loan
Agreement.

 

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“Final May 2013 Advance Date” has the meaning ascribed to the term “Final
Advance Date” in the May 2013 Loan Agreement.

“Financing Securities” has the meaning set forth in Section 6.3(b)(ii).

“First Anniversary” has the meaning set forth in Section 6.2(b)(ii)(B)(1).

“First Backstop Anniversary” means, with respect any Backstop Lender, the first
anniversary of the earlier of (a) the later of (i) the Final Backstop Advance
Date and (ii) the date such Backstop Lender completes its funding under and
pursuant to the Backstop Loan Agreement and (b) the date upon which the Company
terminates the obligation to make all or any remaining portion of the Backstop
Advance(s) that have not been advanced by, or for and on behalf of, such
Backstop Lender as of that date, whether unilaterally or with the written
agreement of such Backstop Lender.

“First Gaming Resort” means the gaming resort on Zone A of the Ho Tram Project,
otherwise known as the gaming resort on “Zone A-1” of the Ho Tram Project.

“First May 2013 Anniversary” means, with respect any May 2013 Lender, the first
anniversary of the earlier of (a) the later of (i) the Final May 2013 Advance
Date and (ii) the date such May 2013 Lender completes its funding under and
pursuant to the May 2013 Loan Agreement and (b) the date upon which the Company
terminates the obligation to make all or any remaining portion of the May 2013
Advance(s) that have not been advanced by, or for and on behalf of, such May
2013 Lender as of that date, whether unilaterally or with the written agreement
of such May 2013 Lender.

“Force Majeure” means an act of God, act of state, labor dispute, shortage of
labor or materials, natural or man-made disaster or other casualty, taking,
civil commotion, riot, mob violence, insurrection, malicious mischief, sabotage,
rebellion, act of public enemy, terrorism, war, invasion, embargo, infectious
disease, material disruption in airline or other transportation systems, act of
a governmental authority in its sovereign capacity, local, regional or world
threats or outbreak of epidemic or pandemic disease(s), travel advisories or
alerts issued by any governmental authority or any international agency or body
or any other cause beyond the reasonable control of the Person to which such
condition relates, including any material and adverse changes in general
economic or market conditions directly or indirectly resulting from the
foregoing conditions, but excluding the inability of a Person to meet its
financial obligations.

“Fully Diluted Basis” means the aggregate number of Common Shares and Class VII
Non-Voting Shares, assuming the issuance, conversion or exercise (as the case
may be) into Common Shares and Class VII Non-Voting Shares of any and all
options (including the vested portion of such options, including the Pinnacle
Option, but excluding any unvested portion of such options, including the
Pinnacle Option), warrants (but excluding any outstanding May 2013 Minimum
Warrants and May 2013 Primary Warrants to the extent not yet exercisable on the
date of any relevant determination of the number of Common Shares and Class VII
Non-Voting Shares on a “Fully Diluted Basis”) and convertible or exchangeable
securities issued by the Company (including without limitation the Common Shares
underlying the Series V Special Shares and the Class VI Shares).

 

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“Funding Default Period” means (a) with respect to any Backstop Lender and as to
any Backstop Advance it is required to make under and pursuant to the Backstop
Loan Agreement, the period commencing as of the date such Backstop Lender was
required to make such Backstop Advance and ending as of the date such Backstop
Lender makes such Backstop Advance and (b) with respect to any May 2013 Lender
and as to any May 2013 Advance it is required to make under and pursuant to the
May 2013 Loan Agreement, the period commencing as of the date such May 2013
Lender was required to make such May 2013 Advance and ending as of the date such
May 2013 Lender makes such May 2013 Advance.

“Future Funding” has the meaning set forth in Section 6.1(b)(i).

“GAAP” means generally accepted accounting principles in Canada consistently
applied throughout the specified period and in the immediately prior comparable
period.

“Gaming” means to deal, operate, carry on, conduct, maintain or expose for play
any casino games of chance, gaming devices and other gaming activities in
accordance with applicable Gaming Laws.

“Gaming Authority” means those national, state, local, and other governmental,
regulatory, and administrative authorities, agencies, boards, commissions and
officials responsible for or involved in the regulation of gaming or gaming
activities or the interpretation or enforcement of Gaming Laws, whether in
Vietnam or in any other jurisdiction of the world to which the Company,
Harbinger or its Entity Affiliates, or Pinnacle or PEI or its Entity Affiliates,
is subject.

“Gaming Laws” means those laws pursuant to which any Gaming Authority possesses
regulatory, licensing, or permit authority over gaming, whether in Vietnam or in
any other jurisdiction of the world, and any Gaming License and/or other
approval granting to the Company, Harbinger or Pinnacle or any of their
respective Entity Affiliates the ability to conduct Gaming activities, as any of
the same may be amended from time to time.

“Gaming License” means any concession, certificate, decree, license, permit,
approval, authorization, registration, finding of suitability, franchise, or
entitlement issued by any Gaming Authority or Governmental Authority necessary
for or relating to the conduct of activities under any Gaming Laws.

“Gaming Problem” means any circumstance such that a party’s participation in the
Ho Tram Project is deemed likely, based on verifiable information or information
received from any Gaming Authority or otherwise, to preclude or materially
delay, impede, or impair the ability of such party or any other party to this
Agreement or any of their respective Entity Affiliates, or any business entity
with respect to which such party, such other party to this Agreement or such
Entity Affiliate holds a Gaming License, to obtain or retain any Gaming License
(whether upon initial grant, renewal or otherwise), or to result in the
imposition of disciplinary action, including without limitation financial
penalties or materially burdensome terms, limitations and conditions on any
Gaming License.

“Governmental Authority” means the government of the United States of America,
Canada or Vietnam or any other foreign government and, in each such case, any
state, commonwealth, territory, county or municipality thereof, or the
government of any political subdivision of any of the foregoing, or any
authority, agency, ministry, court or other similar body exercising executive,
legislative, judicial, regulatory or administrative authority of such
government.

 

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“Harbinger” has the meaning set forth in the preamble.

“Harbinger Additional Backstop Warrants” means the entitlement of Harbinger II
S.à r.l. under Warrant Certificate CS-12 dated December 6, 2012, to 57,145,140
Common Shares upon exercise of the warrants evidenced thereby.

“Harbinger Agent” has the meaning set forth in the Backstop Loan Agreement.

“Harbinger Backstop Warrants” means the Harbinger Original Backstop Warrants and
the Harbinger Additional Backstop Warrants.

“Harbinger Common Share Parties” means Harbinger II, S.à r.l., Credit Distressed
Blue Line Master Fund, Ltd. and Global Opportunities Breakaway Ltd.

“Harbinger Common Shares” means 252,527,842 Common Shares registered in favor of
the Harbinger Common Share Parties on August 8, 2011.

“Harbinger Director” has the meaning set forth in Section 2.1(a)(i)(A)(1).

“Harbinger Equity Adjustment” has the meaning set forth in Section 6.4(c)(i).

“Harbinger Minimum Warrants” means the aggregate entitlement of Harbinger II S.à
r.l. under the warrant certificate(s) issued by the Company to Harbinger II S.à
r.l. from time to time pursuant to section 3.4 of the May 2013 Loan Agreement,
upon exercise of the warrants evidenced thereby, to a number of Class VII
Non-Voting Shares up to the aggregate Class VII Non-Voting Share Entitlement(s)
contained therein.

“Harbinger Original Backstop Warrants” means the entitlement of Harbinger II S.à
r.l. under Amended and Restated Warrant Certificate CS-9 dated December 6, 2012,
to 111,416,678 Common Shares upon exercise of the warrants evidenced thereby.

“Harbinger Primary Warrants” means the aggregate entitlement of Harbinger II S.à
r.l. under the warrant certificate(s) issued by the Company to Harbinger II S.à
r.l. from time to time pursuant to section 3.5 of the May 2013 Loan Agreement,
upon exercise of the warrants evidenced thereby, to a number of Class VII
Non-Voting Shares up to the aggregate Class VII Non-Voting Share Entitlement(s)
contained therein.

“Harbinger Series V Parties” means Harbinger II S.à r.l., Blue Line ACDL, Inc.
and Breakaway ACDL, Inc.

“Harbinger Series V Shares” means 1,420,584 Series V Special Shares registered
in favor of the Harbinger Series V Parties on August 8, 2011.

 

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“Harbinger Subscription Agreements” means the historical subscription and
exchange agreements made between the Company and the Harbinger Common Share
Parties and/or their predecessors in interest, pursuant to which the Harbinger
Common Share Parties or their predecessors in interest acquired securities of
the Company or pursuant to which securities have been converted, exercised or
exchanged, and includes for greater certainty the 2011 Harbinger Subscription
Agreement.

“Harbinger Zero Consideration Rights” means any anti-dilution adjustment, zero
consideration adjustment or other similar equity adjustment or equity issuance
rights that Harbinger and its Entity Affiliates may possess in any Securities or
instruments owned, or similar rights held, by Harbinger and its Entity
Affiliates (including, without limitation, in (a) warrants acquired by Harbinger
and its Entity Affiliates in connection with that certain Loan Agreement dated
as of July 27, 2010 by and among certain Harbinger entities and the Company
(including, without limitation, any warrants substituted therefor) and
(b) Backstop Warrants acquired by Harbinger and its Entity Affiliates in
connection with or as a result of advances made pursuant to the Backstop Loan
Agreement (including, without limitation, any warrants substituted therefor),
but in each case excluding customary anti-dilution rights related to subdivision
of shares, consolidation of shares, stock dividend, merger, amalgamation or
similar event, and excluding top-up adjustments in favour of Harbinger and its
Entity Affiliates under Section 3.7 of the 2011 Harbinger Subscription
Agreement).

“HDBank” means Housing Development Commercial Joint Stock Bank.

“Ho Tram Project” means the development of Ho Tram resort, an entertainment
tourism and international conference center complex located on the Ho Tram Strip
property in Phuoc Thuan Village, Xuyen Moc District, Ba Ria–Vung Tau Province,
Vietnam.

“Holder” has the meaning set forth in each Additional Backstop Warrant, as
applicable.

“HTPCL” means Ho Tram Project Company Limited.

“Indebtedness” means, as to any Person (a) indebtedness created, issued or
incurred by such Person for borrowed money (whether by loan or the issuance and
sale of debt securities), (b) any obligation evidenced by bonds, debentures,
notes, or other similar instruments, (c) capital lease obligations (as
determined under GAAP) of such Person, (d) obligations of such Person to pay the
deferred purchase or acquisition price of property or services, other than trade
accounts payable arising, and accrued expenses incurred, in the ordinary course
of business, (e) indebtedness of others secured by an encumbrance on the
property of such Person, whether or not the respective indebtedness so secured
has been assumed by such Person, (f) obligations of such Person in respect of
letters of credit or similar instruments issued or accepted by banks and other
financial institutions for the account of such Person, and (g) indebtedness of
others guaranteed of such Person.

“Independent Committee” has the meaning set forth in Section 2.1(d)(iv).

“Independent Director” means an independent, neutral and impartial Individual
member of the Board who: (a) is not otherwise disqualified to act as a director
under the provisions of Section 124 of the Business Corporations Act (British
Columbia), and (b) has no material relationship (or has not had any material
relationship within the last three (3) years) with the Company or its Affiliates
(other than in his capacity as a director) or with any shareholder of the
Company who owns more than five percent (5%) of any class of capital stock of
the Company (or its Affiliates) including, but not limited to, Harbinger and
Pinnacle, or any of their respective Affiliates, such that the relationship
could reasonably be expected to interfere with the exercise of such director’s
independent judgment.

 

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“Individual” shall mean a natural person, whether acting for himself or herself,
or in a representative capacity.

“Investment Certificate” means the investment certificate dated March 12, 2008,
as amended on April 4, 2013, granted to HTPCL by the Government of Vietnam in
respect of the Ho Tram Lands.

“Issuance Notice” has the meaning set forth in Section 4.1(c).

“Lease” means the fifty (50) year lease of the Ho Tram Lands granted to HTPCL
pursuant to a lease agreement dated May 21, 2008, between HTPCL and the People’s
Committee of Ba Ria – Vung Tau Province.

“Liens” has the meaning set forth in Section 6.5(i).

“Liquidity Event” means a “going public” transaction by the Company (including,
without limitation, the Common Shares becoming listed on a stock exchange or
stock market).

“Loan Agreement” means the Loan Agreement, dated July 27, 2010, by and among
Harbinger and the Company, pursuant to which Harbinger agreed to loan the Loan
Amount to the Company to be used as charter capital to finance Phase 1 of Zone
A1 of the Ho Tram Project.

“Loan Amount” means the amount that Harbinger agreed to loan to the Company
pursuant to the terms and conditions of the Loan Agreement.

“Look Back Portion” has the meaning set forth in Section 6.2(b)(ii)(B)(3)(b).

“Majority Party” means whichever of Harbinger or Pinnacle (together with their
respective Entity Affiliates) owns the majority of the Equity Voting Power
collectively held by Harbinger and Pinnacle (together with their respective
Entity Affiliates) at such time of determination.

“Majority Party Cure Period” has the meaning set forth in
Section 3.1(a)(iii)(A)(1).

“Majority Party Sale Period” has the meaning set forth in
Section 3.1(a)(iii)(A)(2).

“Master Fund” means Harbinger Capital Partners Master Fund I, Ltd.

“Material Adverse Effect” means, with respect to any event, matter or
circumstance, any change or effect that individually or when taken together with
all other changes or effects that have occurred during any relevant period of
time before the determination of the occurrence of that change or effect, is or
is reasonably likely to (i) be materially adverse to the business, operations,
results of operations, prospects, assets, liabilities or financial condition of
the Company and its Subsidiaries on a consolidated basis, (ii) cause the review
of the Investment Certificate for a purpose that would be materially adverse to
the Company or its Subsidiaries, the revocation of the Investment Certificate or
the imposition of a burdensome condition or restriction on the Investment
Certificate by a Governmental Authority, or (iii) cause the Ho Tram Project to
be suspended, materially delayed or cancelled.

 

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“May 2013 Advance” means a loan advance completed by a May 2013 Harbinger Lender
to the Company pursuant to the terms of the May 2013 Loan Agreement.

“May 2013 Asset” has the meaning set forth in Section 6.6(c).

“May 2013 Harbinger Lender” means (a) each of Harbinger II S.à r.l. and Credit
Distressed Blue Line Master Fund, Ltd. and (b) any Entity Affiliate of Harbinger
II S.à r.l. or Credit Distressed Blue Line Master Fund, Ltd. who becomes a party
to the May 2013 Loan Agreement in connection with its assumption of a portion of
one or more May 2013 Advances.

“May 2013 Lenders” means (a) each May 2013 Harbinger Lender and (c) Pinnacle
and/or its Entity Affiliates (including, without limitation, if it makes a May
2013 Alternate Backstop Loan).

“May 2013 Loan Agreement” means the Loan Agreement dated May 24, 2013, by and
among the Company and the May 2013 Lenders, as the same may be amended,
restated, supplemented or otherwise modified from time to time.

“May 2013 Lookback Period” means the period commencing on May 24, 2013, and
ending on the third anniversary of the Final May 2013 Advance Date; provided
that such period as it applies to each May 2013 Lender shall be extended by any
Funding Default Period referable to such May 2013 Lender.

“May 2013 Minimum Warrants” means the Harbinger Minimum Warrants, the Blue Line
Minimum Warrants and the Pinnacle Minimum Warrants, and, if issued, the
Alternate May 2013 Warrants referable to such.

“May 2013 PIK Securities” has the meaning set forth in Section 6.6(g).

“May 2013 Primary Warrants” means the Harbinger Primary Warrants, the Primary
Warrants and the Pinnacle Primary Warrants, and, if issued, the Alternate May
2013 Warrants referable to such.

“May 2013 Proportionate Amount” has the meaning set forth in Section 6.6(b)(ii).

“May 2013 Tranche” has the meaning ascribed to the term “Tranche” in the May
2013 Loan Agreement.

“May 2013 Warrants” means the May 2013 Minimum Warrants and the May 2013 Primary
Warrants.

 

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“MGM Management Agreement” means the MGM Grand Resort & Casino, Ho Tram
Management Agreement, dated November 17, 2008, between Ho Tram Project Company
Limited and MGM Mirage Hospitality International Holdings Limited.

“Minimum Backstop Retained Original Interest” has the meaning set forth in
Section 6.5(c).

“Minimum May 2013 Retained Original Interest” has the meaning set forth in
Section 6.6(c).

“Minority Party” means whichever of Harbinger or Pinnacle (together with their
respective Entity Affiliates) owns the minority of the Equity Voting Power
collectively held by Harbinger and Pinnacle (together with their respective
Entity Affiliates) at such time of determination.

“Minority Party Cure Period” has the meaning set forth in
Section 3.1(a)(iii)(D)(1).

“Minority Party Sale Period” has the meaning set forth in
Section 3.1(a)(iii)(A)(4).

“Minority Party Vietnam Sale Period” has the meaning set forth in
Section 3.1(a)(iii)(D)(2).

“New Class of Securities” has the meaning set forth in Section 4.1(a)(i)(A).

“Non-Affected Party” has the meaning set forth in Section 3.1(a)(iii)(B).

“Non-Affected Party U.S. Cure Period” has the meaning set forth in
Section 3.1(a)(iii)(C)(1).

“Non-Claim Adjustment” has the meaning set forth in Section 6.4(c)(ii).

“Non-Qualified Person” means a Person that is themselves or is an Affiliate or
associate of, (a) a Person controlled by, or associated with organized crime, or
a Person convicted of an indictable offense, (b) a Person with whom contracting
or conducting business based on the identity of such Person’s owners or
officers, directors or executive employees or officers, directors or executive
employees of such owners would represent a violation of Applicable Laws, or
(c) a Person otherwise generally recognized in the business community as being a
person, firm, or corporation with whom neither a prudent business person nor a
reasonable financial institution would wish to associate in a commercial venture
such as the Ho Tram Project.

“OFAC” has the meaning set forth in Section 6.3(a)(ii).

“Opening Date” means the date on which the First Gaming Resort or the Second
Gaming Resort, as the case may be, or any portion thereof, is open to the
general public.

“Operating Committee” has the meaning set forth in Section 2.1(d)(iii).

 

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“Original Backstop Warrants” means the Blue Line Original Backstop Warrants, the
Breakaway Original Backstop Warrants and the Harbinger Original Backstop
Warrants.

“PEI” means Pinnacle Entertainment, Inc. or its successor or any parent entity
thereof.

“Permitted Encumbrances” means (a) mechanics’, warehousemen’s, materialmens’,
contractors’ and workmens’ liens, and other similar Encumbrances arising in the
ordinary course for obligations that are not delinquent, (b) liens for current
taxes and other statutory liens and trusts not yet due and payable or that are
being contested in good faith provided there are adequate reserves maintained
therefore, (c) liens, pledges or deposits incurred or made in connection with
workmen’s compensation, unemployment insurance and other social security
benefits, or securing the performance of bids, tenders, statutory obligations,
progress payments, surety and appeal bonds and other obligations of like nature,
in each case incurred in the ordinary course of business consistent with past
practice, and (d) liens and other Encumbrances that are immaterial in character,
amount and extent and which do not materially detract from the value or
materially interfere with the present or proposed use of the properties they
affect.

“Person” means any individual, corporation, co-operative, partnership, limited
partnership, firm, unincorporated association, joint venture, syndicate, trust
(including a business trust), estate, succession, governmental body, or other
form of entity or organization of any nature whatsoever.

“PIK Securities” has the meaning set forth in Section 6.2(b)(iii)(B)(6).

“Pinnacle” has the meaning set forth in the preamble.

“Pinnacle Advance” has the meaning set forth in the May 2013 Loan Agreement.

“Pinnacle Advisor” has the meaning set forth in Section 2.2.

“Pinnacle Backstop Warrants” means the entitlement of Pinnacle under (a) Warrant
Certificate CS-15 dated December 6, 2012, to 39,875,634 Common Shares upon
exercise of the warrants evidenced thereby and (b) Warrant Certificate CS-16
dated December 21, 2012, to 24,439,905 Common Shares upon exercise of the
warrants evidenced thereby.

“Pinnacle Director” has the meaning set forth in Section 2.1(a).

“Pinnacle Management Agreement” means the Resort Management Agreement entered
into on August 8, 2011, between HTPCL and PNK (VN), Inc. concerning the
management of the Second Gaming Resort.

“Pinnacle Minimum Warrants” means the aggregate entitlement of Pinnacle under
the warrant certificate(s) issued by the Company to Pinnacle from time to time
pursuant to section 3.4 of the May 2013 Loan Agreement, upon exercise of the
warrants evidenced thereby, to a number of Class VII Non-Voting Shares up to the
aggregate Class VII Non-Voting Share Entitlement(s) contained therein.

 

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“Pinnacle Primary Warrants” means the aggregate entitlement of Pinnacle under
the warrant certificate(s) issued by the Company to Pinnacle from time to time
pursuant to section 3.5 of the May 2013 Loan Agreement, upon exercise of the
warrants evidenced thereby, to a number of Class VII Non-Voting Shares up to the
aggregate Class VII Non-Voting Share Entitlement(s) contained therein.

“Pinnacle Option” means the option to purchase Common Shares granted to Pinnacle
pursuant to the Amended and Restated Stock Option Agreement dated as of
August 29, 2012, between the Company and PNK Development 31, LLC, as amended,
restated and/or otherwise modified from time to time.

“Pinnacle Reference Percentage” has the meaning set forth in
Section 6.8(a)(ii)(B).

“Pinnacle Subscription Agreement” means that certain Share Subscription
Agreement, dated as of May 25, 2011, between the Company and PNK Development 18,
LLC with respect to Pinnacle’s purchase of Common Shares and Series V Special
Shares, as amended, restated and/or otherwise modified from time to time.

“PNK Prepayment” has the meaning set forth in the Backstop Loan Agreement and
the May 2013 Loan Agreement, as the context may require.

“Policy” means the Anti-Corruption Policy attached hereto as Schedule “E”.

“Preemptive Person” has the meaning set forth in Section 4.1(a).

“Preemptive Securities” means Securities issued after the date hereof other than
(a) Equity Securities issued pursuant to share dividends, share splits or
similar transactions undertaken in accordance with this Agreement, (b) options
or Equity Securities issued pursuant to the Stock Option Plan to full time
employees of the Company or its Subsidiaries, (c) Equity Securities, options or
warrants of the Company or the Company Parties issued in connection with
corporate partnering, strategic alliance, technology transfer, equipment
financing, leasing, commercial credit or similar transactions representing up to
an aggregate of ten percent (10%) of the Common Shares and Class VII Non-Voting
Shares on a Fully Diluted Basis and with the approval of the Board, where such
transactions do not have the raising of capital as a primary objective and
provided that the securities so issued rank pari passu with the Common Shares
and Class VII Non-Voting Shares, (d) Equity Securities, options or warrants of
the Company or Company Parties issued in connection with bona fide acquisitions,
mergers or similar transactions representing up to an aggregate of ten percent
(10%) of the Common Shares and Class VII Non-Voting Shares on a Fully Diluted
Basis with the approval of the Board, where such transactions do not have the
raising of capital as a primary objective and provided that the securities so
issued rank pari passu with the Common Shares and Class VII Non-Voting Shares,
(e) Equity Securities or Debt of the Company Parties issued to the Company,
(f) Equity Securities issued pursuant to a Liquidity Event, provided that the
Liquidity Event results in the acquisition of Equity Securities on a Fully
Diluted Basis representing more than twenty percent (20%) of aggregate
entitlement upon liquidation or dissolution of the Company of all Equity
Securities of the Company and provided that the consideration to be raised and
paid to the Company in connection with the Liquidity Event is not less than
US$100 million, (g) any public offering of Equity Securities or any public
offering of Debt subsequent to the occurrence of a Liquidity Event in which the
consideration to be raised and paid to the Company in connection such event is
not less than US$100 million, and (h) the Pinnacle Option and the shares
underlying the Pinnacle Option.

 

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“Preemptive Security Purchase Securities” has the meaning set forth in
Section 4.1(b).

“Principal Shareholders” has the meaning set forth in the Existing Shareholders
Agreement.

“Pro Rata Drag-Along Portion” has the meaning set forth in Section 3.3(a)(i).

“Pro Rata Preemptive Portion” has the meaning set forth in Section 4.1(a).

“Pro Rata Tag-Along Portion” has the meaning set forth in Section 3.2(b)(iii).

“Proposed May 2013 Lender Transferor” has the meaning set forth in
Section 6.6(i).

“Proposed Transferor Backstop Lender” has the meaning set forth in
Section 6.5(i).

“Purchase Price” has the meaning set forth in Section 3.1(a)(iii)(A)(5).

“Qualified IPO” means the first completion of an underwritten public offering
for capital raising purposes that results in (a) each of (i) aggregate net
proceeds of at least US$75 million to the Company and (ii) the issuance of
Equity Securities which represent, immediately following such issuance, at least
fifteen (15%) of the Common Shares and Class VII Non-Voting Shares on a Fully
Diluted Basis, and (b) the listing of the Common Shares on a stock exchange or
stock market.

“Qualifying Conversion” has the meaning set forth in the May 2013 Loan
Agreement.

“Qualifying Issuance” has the meaning set forth in Section 6.8.

“Related Party” means the Majority Party and any Significant Party.

“Replacement Funding” has the meaning set forth in Section 6.1(b)(ii).

“Representatives” means the directors, officers, employees, managers and
advisors (including attorneys, accountants, investment bankers and consultants),
as well as the Affiliates, of a specified Person.

“ROFN Buyer” has the meaning set forth in Section 3.5(a).

“ROFN Definitive Documentation Period” has the meaning set forth in
Section 3.5(c).

“ROFN Notice” has the meaning set forth in Section 3.5(a).

“ROFN Period” has the meaning set forth in Section 3.5(a).

 

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“ROFN Seller” has the meaning set forth in Section 3.5(a).

“ROFN Transaction” has the meaning set forth in Section 3.5(a).

“Scope” means the overall scope of the First Gaming Resort or the Second Gaming
Resort, as applicable, which shall include without limitation all major elements
and amenities of the resort such as (i) the design and square footage of the
casino floor, (ii) the minimum number of slot machines (or equivalents) and
table games, (iii) the minimum number of hotel floors, (iv) the minimum, design,
square footage and number of hotel rooms and separate bungalows (including
number of suites), (v) the number, square footage, theme of restaurants, bars
and nightclubs, (vi) the square footage, location, number of retail space,
(vii) the square footage of any convention space, (viii) the overall size,
seating and production capacity and design of any venues for live concert or
events, (ix) the square footage, design and capacity of spa, pools and
recreation facilities and amenities, (x) the size and capacity of public and
employee parking structures, together with all exterior features, and (xi) all
on-site and off-site improvements and infrastructure related thereto.

“SEC” means the United States Securities and Exchange Commission.

“Second Gaming Resort” means the second gaming resort of the Ho Tram Project.

“Section 116 Certificate” has the meaning set forth in Section 3.6.

“Securities” means any Equity Security, Debt of the Company, or other interest
or participation in Equity Securities or Debt of the Company, or any combination
of any of the foregoing.

“Securities Act” means the United States Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated thereunder.

“Series V Amendments” means the amendments to the rights, preferences,
restrictions, conditions, and privileges of the Series V Shares set forth in
Schedule “F” to the 2012 Subscription Agreement.

“Series V Special Shares” means the Special Shares Series V of the Company.

“Significant Party” means any Person (together with its Entity Affiliates) that
owns twenty percent (20%) or more of the voting power of the outstanding Voting
Securities at any such time.

“Sliding Backstop Adjustment” has the meaning set forth in Section 6.5(a)(ii).

“Sliding Look Back Adjustment” has the meaning set forth in
Section 6.2(b)(ii)(B)(2).

“Sliding Look Back Portion” has the meaning set forth in
Section 6.2(b)(ii)(B)(2).

“Sliding May 2013 Adjustment” has the meaning set forth in Section 6.6(a)(ii).

 

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“Sliding Proportionate Backstop Amount” has the meaning set forth in
Section 6.5(a)(ii).

“Sliding Proportionate May 2013 Amount” has the meaning set forth in
Section 6.6(a)(ii).

“Special Situations Fund” means Harbinger Capital Partners Special Situations
GP, LLC.

“Standard” means the plans, specifications, and standards for the design,
construction, development, outfitting, and equipping of the hotel and the casino
on the First Gaming Resort or the Second Gaming Resort, as applicable, including
without limitation the quality of the building type, interior build-out,
interior and exterior finishes and amenities (which in the case of the First
Gaming Resort shall in general be at a world-class international luxury standard
and in the case of the Second Casino Resort shall in general be at standard
specified in the Brand and License Agreement), all as developed by the Company
and the operator of such gaming resort, the applicable architect, and the
applicable interior designer, as supplemented or modified from time to time, and
as approved by the Company, which in all events shall comply with the applicable
standard(s) set forth in the applicable management agreement.

“Stock Option Plan” means the Company’s currently in force stock option plan,
dated as of October 14, 2006, pursuant to which the Company is authorized to
grant options for the purchase of no more than fifteen percent (15%) of the
issued and outstanding Common Shares from time to time.

“Subsequent Transfer” has the meaning set forth in Section 3.2(f)(ii).

“Subsidiary” means, with respect to a Person, each other Person in which such
Person owns, directly or indirectly, capital stock or other equity interests
representing more than fifty percent (50%) of the outstanding capital stock or
other equity interests, the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such other
Person.

“Supplemental Agreement” means the Supplemental Agreement, dated as of
July 13, 2010 by and between the Company and Harbinger Capital Investments
S.a.r.l.

“Tag-Along Acceptance Notice” has the meaning set forth in Section 3.2(a)(iii).

“Tag-Along Notice” has the meaning set forth in Section 3.2(a)(ii).

“Tag-Along Party” has the meaning set forth in Section 3.2.

“Tag-Along Sale” has the meaning set forth in Section 3.2.

“Tag-Along Security” has the meaning set forth in Section 3.2.

“Tax Legislation” has the meaning set forth in Section 6.4(i).

“Third Anniversary” has the meaning set forth in Section 6.2(b)(ii)(B)(2).

 

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“Third Backstop Anniversary” means, with respect to any Backstop Lender, the
third anniversary of the earlier of (a) the later of (i) the Final Backstop
Advance Date and (ii) the date such Backstop Lender completes its funding under
and pursuant to the Backstop Loan Agreement and (b) the date upon which the
Company terminates the obligation to make all or any remaining portion of the
Backstop Advance(s) that have not been advanced by, or for and on behalf of,
such Backstop Lender as of that date, whether unilaterally or with the written
agreement of such Backstop Lender.

“Third May 2013 Anniversary” means, with respect to any May 2013 Lender, the
third anniversary of the earlier of (a) the later of (i) the Final May 2013
Advance Date and (ii) the date such May 2013 Lender completes its funding under
and pursuant to the May 2013 Loan Agreement and (b) the date upon which the
Company terminates the obligation to make all or any remaining portion of the
May 2013 Advance(s) that have not been advanced by, or for and on behalf of,
such May 2013 Lender as of that date, whether unilaterally or with the written
agreement of such May 2013 Lender.

“Third-Party Offeror” has the meaning set forth in Section 3.2.

“Top-Up Adjustments” has the meaning set forth in Section 6.4(c)(i).

“Transfer” means, directly or indirectly, to sell, transfer, assign, pledge,
encumber, hypothecate, or similarly dispose of, either voluntarily or
involuntarily, or to enter into any contract, option, or other arrangement or
understanding with respect to the sale, transfer, assignment, pledge,
encumbrance, hypothecation, or similar disposition of, any Securities owned by a
Person or any interest (including a beneficial interest) therein owned by a
Person. The foregoing notwithstanding, it is acknowledged and agreed that
“Transfer” as herein defined shall not, and shall not be deemed to, include:
(i) any Transfer of any interest in PEI (or of any entity that directly or
indirectly holds any interest in PEI), by any means whatsoever (including,
without limitation, by virtue of trading of such interests on a stock exchange
or other market, private transfers, new issuances, mergers, consolidations,
tender offers or any other transactions); (ii) the Transfer of any interest in,
or held by, any Subsidiary of PEI other than Transfers after which PEI no longer
owns, directly or indirectly, the respective Securities it owned immediately
prior to such Transfer, it being agreed that such continuing ownership shall not
be required with respect to a transfer of all or substantially all of the assets
of PEI and its Subsidiaries, and such transfer of all or substantially all of
the assets of PEI and its Subsidiaries shall not be and shall not be deemed a
Transfer for all purposes of this Agreement; or (iii) any pledge by PEI or any
of its Subsidiaries effected to secure the obligations under a PEI Debt
Facility, and any Transfers pursuant to the exercise of rights thereunder. “PEI
Debt Facility” for purposes hereof means any credit agreement, loan agreement,
indenture or other agreement pursuant to which credit is extended or made
available to PEI and some or all of its Subsidiaries.

“Transferring Seller” has the meaning set forth in Section 3.2.

“Treasury Regulations” means the regulations prescribed under the Code.

“2011 Harbinger Subscription Agreement” means that certain Subscription
Agreement dated August 8, 2011, between the Company, as issuer, the Harbinger
Series V Parties and the Harbinger Common Share Parties pursuant to which
Harbinger II S.à r.l. acquired common shares and Series V Special Shares of the
Company, as amended, restated and/or otherwise modified from time to time.

 

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“2012 Subscription Agreement” means that certain Share Subscription Agreement
dated as of August 28, 2012, between the Company, as issuer, and each of the
Harbinger and Pinnacle parties thereto, as subscribers, as amended and restated
on September 28, 2012, and as the same may be further amended and/or restated
from time to time, pursuant to which (a) such Harbinger parties will commit to
invest a total of US$44,400,000 in the Company to purchase up to 444,000 Class
VI Shares and (b) such Pinnacle parties will commit to invest a total of
US$15,600,000 in the Company to purchase up to 156,000 Class VI Shares.

“Unreserved Lookback Amount” has the meaning set forth in Section 6.6(j).

“U.S. GAAP” means generally accepted accounting principles in the United States
consistently applied throughout the specified period and in the immediately
prior comparable period.

“Vietnam” means the Socialist Republic of Vietnam.

“Voting Period” means that period of time during which the Existing Shareholders
Agreement remains in full force and effect and a valid and enforceable agreement
of the parties thereto.

“Voting Securities” means the Common Shares, the Series V Special Shares and the
Class VI Shares, and any other series or class of voting shares created by the
Company from time to time, and, to the extent required by the British Columbia
Business Corporations Act in respect of any matter, and only to such extent, the
Class VII Non-Voting Securities.

Section 7.2 Headings. The division of this Agreement into Sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement. The terms “this
Agreement”, “hereof”, “hereunder” and similar expressions refer to this
Agreement and not to any particular Section or other portion hereof and include
any agreement supplemental hereto. Unless something in the subject matter or
context is inconsistent therewith, references herein to Sections and Paragraphs
are to Sections and Paragraphs of this Agreement.

Section 7.3 Extended Meanings. In this Agreement words importing the singular
number only shall include the plural and vice versa, words importing the
masculine gender shall include the feminine and neuter genders and vice versa
and words importing persons shall include individuals, partnerships,
associations, trusts, unincorporated organizations and corporations.

Section 7.4 Currency. All references to currency herein are to lawful money of
the United States of America.

 

- 89 -

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ARTICLE 8

CONFIDENTIALITY

Section 8.1 Confidentiality Covenant. Except as required by Applicable Law, each
of Harbinger and Pinnacle hereby covenants and agrees that it shall not, without
the consent of the other shareholder and the Company, directly or indirectly,
communicate or disclose to any Person, or use for any purpose other than the
business or the administration of any investment by such shareholder, any
Confidential Information acquired by such shareholder, nor shall it utilize or
make available any such Confidential Information, directly or indirectly, in
connection with the Transfer or proposed Transfer of any of its Securities.
Nothing in this Agreement shall prevent disclosure of Confidential Information
to Harbinger’s or Pinnacle’s directors, officers, employees or agents or its
financial, legal, accounting or other advisors provided such advisors are
informed in advance as to the confidential nature of the communication and agree
to keep such information confidential.

Section 8.2 Other Permitted Disclosure.

(a) Each of Harbinger and Pinnacle may also disclose Confidential Information to
any potential purchaser of its Securities any relevant information, except for
trade secrets, with respect to the Company and its Subsidiaries, in order to
allow such a potential purchaser to determine whether to acquire such
Securities, provided that said shareholder shall first obtain from any Person to
whom information is to be disclosed, a confidentiality agreement as to such
information.

(b) Pinnacle and its Entity Affiliates may make disclosures to third Persons
(including, but not limited to, disclosures to security analysts or made during
earnings calls) regarding Confidential Information or such other information
about the Company so long as the disclosure of any such information is mutually
agreed to in writing from time to time by Pinnacle, the Company and Harbinger.
As a result of such pre-approval with respect to such information, Pinnacle and
its Entity Affiliates shall not be required to seek the approval of the Company
and Harbinger prior to each subsequent disclosure of such pre-approved
information.

(c) Notwithstanding anything in this Agreement to the contrary, the parties
thereto acknowledge that PEI and its Entity Affiliates shall be entitled to make
such disclosures regarding the Company and its Subsidiaries and their affairs
(including, without limitation, financial information) as they deem necessary or
appropriate in connection with (a) PEI’s and its Entity Affiliates’ reporting or
disclosure obligations under United States securities laws, rules and
regulations and rules and regulations of stock exchanges and stock markets where
their securities are listed or traded, whether in connection with documents
filed with or information supplied to the SEC, stock exchanges or other stock
markets on which its securities may be listed or traded (which for purposes
hereof shall include earnings releases filed by PEI with the SEC),
(b) disclosures to Governmental Authorities (including, without limitation,
Gaming Authorities), and (c) corporate transactions, including without
limitation public or private securities transactions, loans and other financing
transactions, proxy solicitations and merger and acquisition transactions,
including, without limitation, merger and acquisition transactions involving PEI
itself.

 

- 90 -

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Section 8.3 Remedies. Each of the parties agrees that the restrictions contained
in this Agreement are necessary and fundamental to the protection of the
Company’s business and that all such restrictions are reasonable and valid and
all defenses to the strict enforcement thereof are hereby waived. Each of the
parties acknowledges that a breach or threatened breach of any provision of this
Article 8 will result in the Company and the other shareholder party hereto
suffering irreparable harm not compensated by damages alone. Accordingly, the
parties agree that the Company and the other shareholder party hereto shall be
entitled to interim and permanent injunctive relief, specific performance and
other equitable remedies, in addition to any other relief to which such Person
may be entitled under Applicable Law.

ARTICLE 9

[INTENTIONALLY OMITTED]

ARTICLE 10

MISCELLANEOUS

Section 10.1 Termination.

(a) Subject to the early termination of any provision as a result of an
amendment to this Agreement agreed to by Harbinger and Pinnacle as provided
under Section 10.2:

(i) Upon the consummation of a Qualified IPO:

(A) the provisions of Article 2, Article 3 and Article 4 shall terminate; and

(B) all other provisions of this Agreement shall survive the consummation of a
Qualified IPO and continue in effect.

(ii) Upon the occurrence of a Liquidity Event other than a Qualified IPO:

(A) the provisions of Article 2, Article 3 and Article 4 shall terminate if the
managing underwriter advises the Company in good faith that, in its view, the
survival of any of Article 2, Article 3 or Article 4 following the consummation
of such offering would materially impair its ability to recognize fair value for
the Common Shares to be offered; and

 

- 91 -

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(B) all other provisions of this Agreement shall survive the consummation of a
such Liquidity Event and continue in effect.

(b) If either Harbinger or Pinnacle no longer directly or indirectly has any
beneficial interest in any Equity Securities and is otherwise not in default of
this Agreement, then from that point forward such Person shall be deemed to no
longer be a party to this Agreement; provided, further, that where such a Person
disposed of its Equity Securities in compliance with the provisions of this
Agreement it shall be entitled to the benefit of and be bound by the rights and
obligations set forth in this Agreement in respect of any matter occurring prior
to such disposition.

(c) Nothing in this Agreement shall relieve any party from any liability for the
breach of any obligations set forth in this Agreement. Nothing in this
Section 10.1 is intended to have any effect on other contracts or agreements to
which the Company is a party.

Section 10.2 Amendments. This Agreement and the provisions herein may be amended
only if any such amendment is in writing and has been approved by Harbinger,
Pinnacle and the Company and any permitted assignees and transferees of such
parties. A copy of each such amendment shall be sent to each shareholder that is
a party hereto and shall be binding upon each such shareholder; provided, that
the failure to deliver a copy of such amendment shall not impair or affect the
validity of such amendment.

Section 10.3 Waiver. The failure of a party in any one or more instances to
insist upon strict performance of any of the terms of this Agreement or to
exercise any right or privilege arising under it shall not preclude it from
requiring by reasonable notice that any other party duly perform its obligations
or preclude it from exercising such a right or privilege under reasonable
circumstances, nor shall waiver in any one instance of a breach be construed as
an amendment of this Agreement or waiver of any later breach. A party’s failure
or delay in exercising any right under this Agreement will not operate as a
waiver of that right.

Section 10.4 Assignment.

(a) The Company shall not assign this Agreement or its interest herein or any
part hereof except with the prior written consent of the Majority Party and the
Minority Party. Harbinger and Pinnacle shall not assign this Agreement except in
the manner expressly contemplated herein.

(b) Notwithstanding anything to the contrary in this Agreement, each Harbinger
entity that is a signatory hereto may assign from time to time any and all of
its right, title and interest in and to, and all of its obligations under or in
respect of, this Agreement and any Securities or other agreement or instrument
related thereto, to any other Harbinger entity that is a signatory hereto
without restriction and without the consent of the Company, the Board, Pinnacle
or any other Person, and immediately upon such assignment, any such Harbinger
transferee shall be deemed to include within the definition of “Harbinger” for
all purposes under this terms and conditions of this Agreement.

 

- 92 -

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(c) Notwithstanding anything to the contrary in this Agreement, neither
Harbinger nor Pinnacle nor their respective Entity Affiliates may Transfer
Securities except in compliance with the terms of this Agreement.

Section 10.5 Enforcement. The parties to this Agreement agree that irreparable
damage would occur in the event that any of the provisions of this Agreement to
be performed by Harbinger, Pinnacle or the Company were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that each of the Company and each non-breaching shareholder
shall be entitled to an injunction or injunctions or such other equitable relief
as may be deemed proper by a court of competent jurisdiction to prevent breaches
by any shareholder party or the Company to this Agreement and to enforce
specifically the terms and provisions of this Agreement applicable to any such
shareholder or the Company, this being in addition to any other remedy or relief
to which each such party is entitled under Applicable Law or in equity, and that
neither any shareholder or the Company shall resist an application for such
injunction, injunctions, or other equitable relief on the ground that the
Company or any other shareholder has an adequate remedy under Applicable Law. In
the event that the Company, Harbinger or Pinnacle shall file suit to enforce the
covenants contained in this Agreement (or obtain any other remedy in respect of
any breach thereof), the prevailing party in the suit shall be entitled to
recover, in addition to all other damages to which it may be entitled, the costs
incurred by such party in conducting the suit, including reasonable attorney’s
fees and expenses.

Section 10.6 Notices. All notices, demands or requests required or permitted
under this Agreement must be in writing, and shall be made by hand delivery,
certified mail, overnight courier service, electronic mail or facsimile to the
address, electronic mail address or facsimile number set forth below such
shareholder’s name, but any party may designate a different address, electronic
mail address or facsimile number by a notice similarly given to the Company. Any
such notice or communication shall be deemed given when delivered by hand, if
delivered on a Business Day, the next Business Day after delivery by hand if
delivered by hand on a day that is not a Business Day; four (4) days after being
deposited in the United States mail, postage prepaid, return receipt requested,
if mailed; on the next Business Day after being deposited for next day delivery
with Federal Express or a similar overnight courier; when receipt is
acknowledged, whether by facsimile confirmation or return electronic mail, if
sent by facsimile or electronic mail on a Business Day; and the next Business
Day following the day on which receipt is acknowledged whether by facsimile
confirmation or return electronic mail, if sent by facsimile or electronic mail
on a day that is not a Business Day.

(a) to the Company:

Asian Coast Development (Canada) Ltd.

 

- 93 -

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1055 West Hastings Street – Suite 2150

Vancouver, British Columbia

Canada V6E 2E9

Attention: Lloyd Nathan

Facsimile: (778) 329-0439

Email: lnathan@asiancoastdevelopment.com

with a copy, not constituting notice, to:

Heenan Blaikie LLP

#2200 – 1055 West Hastings Street

Vancouver, British Columbia

Canada V6E 2E9

Attention: John Legge

Facsimile: (604) 669-5101

Email: jlegge@heenan.ca

(b) to Harbinger:

Harbinger II S.à r.l.

412F, route d’Esch

L-1471 Luxembourg

Attention: Christine Bourg, Senior Corporate Officer

Facsimile: (+352) 47 11 01

with a copy, not constituting notice, to:

Milbank, Tweed, Hadley & McCloy LLP

1 Chase Manhattan Plaza

New York, NY 10005

Attention: Alexander Kaye

Facsimile: (212) 822-5171

Email: akaye@milbank.com

and with a further copy not constituting notice, to:

Harbinger Capital Partners Master Fund I, Ltd.

c/o Harbinger Capital Partners

450 Park Avenue, 30th Floor

New York NY 10022

Attention: General Counsel

Facsimile: (212) 898-1309

Email: rroger@harbingercapital.com

(c) to Pinnacle and PNK Development 31, LLC:

 

- 94 -

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PNK Development 18, LLC

8918 Spanish Ridge Ave.

Las Vegas, NV 89148

Attention: Corporate Secretary

Facsimile: (702) 784-7773

with a copy, not constituting notice, to:

Irell & Manella LLP

1800 Avenue of the Stars

Suite 900

Los Angeles, CA 90067-4276

Attention: Ashok Mukhey

Facsimile: (310) 203-7199

Email: amukhey@irell.com

Section 10.7 Further Assurances.

(a) Each of the parties hereto shall from time to time at the request of any of
the other parties hereto and without further consideration, execute and deliver
all such other additional assignments, transfers, instruments, notices, releases
and other documents and shall do all such other acts and things as may be
necessary or desirable to carry out the true intent and meaning of this
Agreement.

(b) The Company shall use its commercially reasonable efforts to negotiate
future Company contracts to provide that at such time as Pinnacle shall become
the holder of a majority of the voting power of the outstanding Voting
Securities, such event shall not constitute a “change of control” or similar
occurrence under any such future Company contract.

(c) Each of Harbinger and Pinnacle agrees to not, without the written consent of
the other party, amend the Harbinger Subscription Agreements or the Pinnacle
Subscription Agreement, respectively, or the 2012 Subscription Agreement.

Section 10.8 Binding Effect. This Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns.

Section 10.9 No Third Party Beneficiaries. Nothing expressed or referred to in
this Agreement will be construed to give any Person, other than the Company,
Harbinger and Pinnacle any legal or equitable right, remedy, or claim under or
with respect to this Agreement or any provision of this Agreement.

Section 10.10 Severability. If any provision of this Agreement is determined to
be invalid or unenforceable in whole or in part, such invalidity or
unenforceability shall attach only to such provision or part thereof and the
remaining part of such provision and all other provisions hereof shall continue
in full force and effect.

 

- 95 -

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Section 10.11 Entire Agreement. This Agreement constitutes the entire agreement
among the parties pertaining to the specific subject matter hereof and
supersedes any and all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties related to such specific
subject matter. There are no warranties, representations or other agreements
among the parties in connection with the specific subject matter hereof except
as specifically set forth herein and therein.

Section 10.12 Governing Law.

(a) This Agreement shall be deemed to be made in, and in all respects shall be
interpreted, construed and governed by and in accordance with the laws of the
Province of British Columbia and the federal laws of Canada applicable therein
without regard to any conflict of law principles thereof that would result in
the application of the laws of any other jurisdiction.

(b) Each of the parties agrees that any action or proceeding arising out of or
relating to this Agreement must be instituted in the Courts of the Province of
British Columbia, waives any objection which it may have now or later to the
venue of that action or proceeding, irrevocably and unconditionally submits to
the exclusive jurisdiction of those Courts in that action or proceeding and
agrees to be bound by any final judgment of those Courts.

Section 10.13 Independent Legal Advice. With respect to the preparation of this
Agreement and the rights and obligations herein, all parties to this Agreement
acknowledge and confirm that they have been advised to seek, and have sought or
otherwise have waived, independent legal advice with respect to this Agreement
and the documents delivered pursuant thereto.

Section 10.14 Expenses. Except as otherwise expressly provided herein, each
party will pay its own costs and expenses, including legal and accounting
expenses, related to the negotiation, preparation and execution of this
Agreement and the transactions occurring substantially simultaneously with the
execution of this Agreement.

Section 10.15 Counterparts. This Agreement may be executed by facsimile or other
electronic transmission and in as many counterparts as are necessary, each of
which shall be deemed to be an original, and shall be binding on each party when
each party hereto has signed and delivered one such counterpart. When a
counterpart of this Agreement has been executed by each party, all counterparts
together shall constitute one agreement.

 

- 96 -

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Section 10.16 English Language. The parties acknowledge that they have required
that these presents be drawn up in the English language. Les parties
reconnaissent avoir exigé que les présentes soient rédigées en langue anglaise.

[Signature Pages Follow]

 

- 97 -

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IN WITNESS WHEREOF the parties, intending to be legally bound, have executed and
delivered this Agreement.

 

ASIAN COAST DEVELOPMENT (CANADA) LTD.     HARBINGER II S.À R.L. Per:   /s/
Stephen Shoemaker     Per:   /s/ Robin Rogers Name:   Stephen Shoemaker    
Name:   Title:   Chief Financial Officer     Title:         Per:   /s/ Nicolas
Gérard       Name:   Nicolas Gérard       Title:   BLUE LINE ACDL, INC.    
BREAKAWAY ACDL, INC. Per:   /s/ Keith Hladek     Per:   /s/ Keith Hladek Name:  
    Name:   Title:       Title:   HARBINGER CHINA DRAGON INTERMEDIATE FUND,
L.P., By: Harbinger Capital Partners II LP, its investment manager     CREDIT
DISTRESSED BLUE LINE MASTER FUND, LTD., By: Harbinger Capital Partners II LP,
its investment manager Per:   /s/ Keith Hladek     Per:   /s/ Keith Hladek Name:
      Name:   Title:       Title:   GLOBAL OPPORTUNITIES BREAKAWAY LTD., By:
Harbinger Capital Partners II LP, its investment manager     PNK DEVELOPMENT 18,
LLC Per:   /s/ Keith Hladek     Per:   /s/ Carlos Ruisanchez Name:       Name:  
C. Ruisanchez Title:       Title:   CFO & Treasurer

[Signature Page to Third Amended and Restated Shareholders Agreement]

 

- 98 -

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PNK DEVELOPMENT 31, LLC Per:   /s/ Carlos Ruisanchez Name:   C. Ruisanchez
Title:   EVP, Chief Financial Officer & Treasurer

[Signature Page to Third Amended and Restated Shareholders Agreement]

 

- 99 -

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Schedule 6.2(a)(v)

Project Delta

Construction Budget Analysis – Zone A1

Items Subject to 3% Variance

Hard Costs:

Convention Center

Casino

Retail

Hotel

Back of House

External Works

Soft Costs:

FF&E/OS&E

IT Systems

Project Office

Nursery (Golf Course)

Acceleration Cost

Pre-Opening

Items Not Subject to 3% Variance

Remaining Budget Costs:

Consultant Fees

Local and Provincial Authority Fees

HTP OH / Insurance / MGM CAA Fees and Other

Buses

Helicopters

Currency conversion from USD to VND

Importation Duties

Cost Escalation

Project Contingency

--------------------------------------------------------------------------------

Schedule 6.2(b)(i)

All agreements and instruments referred to in Schedule “D” to the Pinnacle
Subscription Agreement to which Harbinger or any of its Entity Affiliates is a
party, together with (i) the Blue Line Loan Agreement, (ii) the Administrative
Services Agreement to be entered into between Asian Coast Development (Canada)
Ltd. and PNK Development 31, LLC, among others, pursuant to the Services
Agreement Term Sheet, (iii) the Stock Option Agreement dated as of August 29,
2012 between Asian Coast Development (Canada) Ltd. and PNK Development 31, LLC
and (iv) all Transaction Documents to which Harbinger or any of its Entity
Affiliates is a party.

--------------------------------------------------------------------------------

Schedule 6.2(b)(ii)(B)

Illustrative Examples of Purchase Right set forth in Section 6.2(b)(ii)(B)

This Schedule 6.2(b)(ii)(B) and the attached spreadsheet and timeline are for
illustrative purposes only and set forth several examples of Pinnacle’s right to
acquire from Harbinger and its Entity Affiliates Financing Securities pursuant
to the terms and conditions of Section 6.2(b)(ii)(B) (solely for purposes of
this Schedule and corresponding spreadsheet and timeline, the “Look Back
Right”). To the extent that there is a conflict between this Schedule, the
corresponding spreadsheet and timeline, on the one hand, and the Agreement, on
the other hand, the terms and conditions of the Agreement shall prevail.
Capitalized terms used in this Schedule, the corresponding spreadsheet and
timeline that are not defined herein shall have the meanings set forth in the
Agreement.

Universal Assumptions

The assumptions below shall apply to each illustrative example provided for in
this Schedule, and shall be in addition to the specific assumptions set forth in
each illustrative example in this Schedule. These universal assumptions assume
that immediately following the consummation of the transactions contemplated by
this Agreement:

 

  (a) the Company will have 100 Common Shares issued and outstanding.

 

  (b) Harbinger will own 70 Common Shares on a Fully Diluted Basis.

 

  (c) Pinnacle will own 26 Common Shares on a Fully Diluted Basis.

 

  (d) As a result, relative to one another:

 

  (i) Harbinger will own (A) 73% of the Common Shares collectively held by
Harbinger and Pinnacle and (B) 70% of the Common Shares on a Fully Diluted
Basis; and

 

  (ii) Pinnacle will own (A) 27% of the Common Shares collectively held by
Harbinger and Pinnacle and (B) 26% of the Common Shares on a Fully Diluted
Basis.

 

  (e) For purposes of this Schedule 6.2(b)(ii)(B), the terms “Harbinger” and
“Pinnacle” shall include their respective Entity Affiliates that own Equity
Securities.

(collectively, the assumptions above in clauses (a) – (e) are referred to in
this Schedule as the “Universal Assumptions”).

 

1

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Scenario #1

 

  •  

Three issuances of Common Shares by the Company.

 

  •  

Harbinger fully exercises its preemptive rights from Company in all issuances.

 

  •  

Pinnacle’s exercises of its preemptive rights varies by issuance.

 

  •  

Pinnacle exercises Look Back Right related to Issuance 2.

In addition to the Universal Assumptions, the following additional assumptions
apply to Scenario #1:

 

(1) The Company issues 100 Common Shares on Day 1 (“Issuance 1”).

 

  (a) Harbinger fully exercises its preemptive rights under Article 4, and as a
result of the calculations set forth in Section 4.1(a)(i)(C), acquires
72.92 Common Shares from the Company in Issuance 1.

 

  (i) i.e., 72.92 Common Shares equals:

 

  (A) 100 Common Shares issued by the Company in Issuance 1 multiplied by

 

  (B) a fraction, the numerator of which is 70 Common Shares held by Harbinger
prior to Issuance 1 and the denominator of which is 96 Common Shares held
collectively by Harbinger and Pinnacle prior to Issuance 1.

 

  (b) Pinnacle fully exercises its preemptive rights under Article 4, and as a
result of the calculations set forth in Section 4.1(a)(i)(C), acquires the
remaining 27.08 Common Shares from the Company in Issuance 1.

 

  (i) i.e., 27.08 Common Shares equals:

 

  (A) 100 Common Shares issued by the Company in Issuance 1 multiplied by

 

  (B) a fraction, the numerator of which is 26 Common Shares held by Pinnacle
prior to Issuance 1 and the denominator of which is 96 Common Shares held
collectively by Harbinger and Pinnacle prior to Issuance 1.

 

  (c) No remaining Common Shares in Issuance 1.

 

(2) Exactly one year following Issuance 1, the Company issues another 100 Common
Shares (“Issuance 2”).

 

  (a) Harbinger fully exercises its preemptive rights under Article 4, and as a
result of the calculations set forth in Section 4.1(a)(i)(C), acquires 72.92
Common Shares from the Company in Issuance 2.

 

  (i) i.e., 72.92 Common Shares equals:

 

  (A) 100 Common Shares issued by the Company in Issuance 2 multiplied by

 

2

--------------------------------------------------------------------------------

  (B) a fraction, the numerator of which is 142.92 Common Shares held by
Harbinger prior to Issuance 2 and the denominator of which is 196.00 Common
Shares held collectively by Harbinger and Pinnacle prior to Issuance 2.

 

  (b) Pinnacle exercises 50% of its preemptive rights under Article 4, and as a
result of the calculations set forth in Section 4.1(a)(i)(C), acquires 13.54
Common Shares from the Company in Issuance 2.

 

  (i) i.e., 13.54 Common Shares equals:

 

  (A) 100 Common Shares issued by the Company in Issuance 2 multiplied by

 

  (B) a fraction, the numerator of which is 53.08 Common Shares held by Pinnacle
prior to Issuance 2 and the denominator of which is 196.00 Common Shares held
collectively by Harbinger and Pinnacle prior to Issuance 2 divided by

 

  (C) 2 (i.e., 50%).

 

  (c) The remaining Common Shares from Issuance 2 (i.e., 13.54 Common Shares)
are acquired by stockholders other than Harbinger or Pinnacle.

 

(3) Look Back Right:

 

  (a) During the notice period with respect to Issuance 3 as provided for in
Section 4.1(c) and prior to the issuance in Issuance 3, Pinnacle fully exercises
its Look Back Right with respect to Issuance 2 to acquire 6.21 Common Shares
from the 72.92 Common Shares that Harbinger acquired in Issuance 2.

 

  (i) i.e., 6.21 Common Shares equals the difference between:

 

  (A) the product of:

 

  (I) Pinnacle’s Common Share ownership interest relative to Harbinger’s Common
Share ownership interest immediately prior to Issuance 2, expressed as a
percentage (27.08%), multiplied by

 

  (II) the Common Shares purchased by Harbinger from the Company in Issuance 2
(72.92 Common Shares).

minus

 

  (B) 13.54 Common Shares that Pinnacle purchased from the Company in
Issuance 2.

** Note: Because this Look Back Right is exercised before the First Anniversary
of Issuance 2, there is no Sliding Pro Rata Adjustment.

 

3

--------------------------------------------------------------------------------

(4) On the second anniversary of Issuance 1, the Company issues another
100 Common Shares (“Issuance 3”).

 

  (a) Harbinger fully exercises its preemptive rights under Article 4, and as a
result of the calculations set forth in Section 4.1(a)(i)(C), acquires
74.22 Common Shares from the Company in Issuance 3.

 

  (i) i.e., 74.22 Common Shares equals:

 

  (A) 100 Common Shares issued by the Company in Issuance 3 multiplied by

 

  (B) a fraction, the numerator of which is 209.63 Common Shares held by
Harbinger prior to Issuance 3 and the denominator of which is 282.46 Common
Shares held collectively by Harbinger and Pinnacle prior to Issuance 3.

 

  (b) Pinnacle fully exercises its preemptive rights under Article 4, and as a
result of the calculations set forth in Section 4.1(a)(i)(C), acquires
25.78 Common Shares from the Company in Issuance 3.

 

  (i) i.e., 25.78 Common Shares equals:

 

  (A) 100 Common Shares issued by the Company in Issuance 3 multiplied by

 

  (B) a fraction, the numerator of which is 72.83 Common Shares held by Pinnacle
prior to Issuance 3 and the denominator of which is 282.46 Common Shares held
collectively by Harbinger and Pinnacle prior to Issuance 3.

 

4

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Scenario #2

 

  •  

Issuance of New Class of Securities by the Company (e.g., Series VI Special
Shares).

 

  •  

Two additional issuances of Series VI Special Shares over a 2–year period.

 

  •  

Harbinger fully exercises its preemptive rights from Company in all issuances.

 

  •  

Pinnacle’s exercise of its preemptive rights varies with issuance.

 

  •  

Pinnacle exercises Look Back Rights.

In addition to the Universal Assumptions, the following additional assumptions
apply to Scenario #2:

 

(1) On Day 1, the Company issues 100 shares of a New Class of Securities – the
Series VI Special Shares (“Issuance 1”).

 

  (a) Harbinger fully exercises its preemptive rights under Article 4, and as a
result of the calculations set forth in Section 4.1(a)(i)(A), acquires
72.92 Series VI Special Shares from the Company in Issuance 1.

 

  (i) i.e., 72.92 Series VI Special Shares equals:

 

  (A) 100 Series VI Special Shares issued by the Company in Issuance 1
multiplied by

 

  (B) a fraction, the numerator of which is 70 Common Shares held by Harbinger
prior to Issuance 1 and the denominator of which is 96 Common Shares held
collectively by Harbinger and Pinnacle prior to Issuance 1.

 

  (b) Pinnacle exercises 25% of its preemptive rights under Article 4, and as a
result of the calculations set forth in Section 4.1(a)(i)(A), acquires
6.77 Series VI Special Shares from the Company in Issuance 1.

 

  (i) i.e., 6.77 Series VI Special Shares equals:

 

  (A) 100 Series VI Special Shares issued by the Company in Issuance 1
multiplied by

 

  (B) a fraction, the numerator of which is 26 Common Shares held by Pinnacle
prior to Issuance 1 and the denominator of which is 96 Common Shares held
collectively by Harbinger and Pinnacle prior to Issuance 1 divided by

 

  (C) 4 (i.e., 25%).

 

  (c) The remaining Series VI Special Shares from Issuance 1
(i.e., 20.31 Series VI Special Shares) are acquired by stockholders other than
Harbinger or Pinnacle.

 

5

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(2) Exactly six months following Issuance 1, the Company issues Add-On
Securities by issuing another 100 Series VI Special Shares (“Issuance 2”).

 

  (a) Harbinger fully exercises its preemptive rights under Article 4, and as a
result of the calculations set forth in Section 4.1(a)(i)(B), acquires 72.92
Series VI Special Shares from the Company in Issuance 2.

 

  (i) i.e., 72.92 Series VI Special Shares equals:

 

  (A) 100 Series VI Special Shares issued by the Company in Issuance 2
multiplied by

 

  (B) a fraction, the numerator of which is 72.92 Series VI Special Shares held
by Harbinger prior to Issuance 2 and the denominator of which is 100 Series VI
Special Shares issued and outstanding on a Fully Diluted Basis prior to
Issuance 2.

 

  (b) Pinnacle fully exercises its preemptive rights under Article 4, and as a
result of the calculations set forth in Section 4.1(a)(i)(B), acquires
6.77 Series VI Special Shares from the Company in Issuance 2.

 

  (i) i.e., 6.77 Series VI Special Shares equals:

 

  (A) 100 Series VI Special Shares issued by the Company in Issuance 2
multiplied by

 

  (B) a fraction, the numerator of which is 6.77 Series VI Special Shares held
by Pinnacle prior to Issuance 2 and the denominator of which is 100 Series VI
Special Shares issued and outstanding on a Fully Diluted Basis prior to
Issuance 2.

 

  (c) The remaining Series VI Special Shares from Issuance 2 (i.e.,
20.31 Series VI Special Shares) are acquired by stockholders other than
Harbinger or Pinnacle.

 

(3) Look Back Right – With Respect to Issuance 1:

 

  (a) One day prior to the issuance in Issuance 3 (and during the notice period
with respect to Issuance 3 as provided for in Section 4.1(c)), Pinnacle fully
exercises its Look Back Right with respect to Issuance 1 to acquire
6.51 Series VI Special Shares from the 72.92 Series VI Special Shares that
Harbinger acquired in Issuance 1.

 

  (i) i.e., 6.51 Series VI Special Shares equals the amount determined by:

 

  (A) the product of:

 

  (I) Pinnacle’s Common Share ownership interest relative to Harbinger’s Common
Share ownership interest immediately prior to Issuance 1, expressed as a
percentage (27.08%), multiplied by

 

  (II) the Series VI Special Shares purchased by Harbinger from the Company in
Issuance 1 (72.92 Series VI Special Shares)

 

6

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minus

 

  (B) 6.77 Series VI Special Shares that Pinnacle purchased from the Company in
Issuance 1

multiplied by

 

  (C) 0.50, which represents the Sliding Pro Rata Preemptive Portion, which is
equal to:

 

  (I) 366 (representing the number of days between the date on which Pinnacle
exercised the Look Back Right with respect to Issuance 1 and the Third
Anniversary of Issuance 1) divided by

 

  (II) 730.

 

(4) Look Back Right – With Respect to Issuance 2:

 

  (a) One day prior to the issuance in Issuance 3 and immediately following the
exercise of the Look Back Right on Issuance 1 (and during the notice period with
respect to Issuance 3 as provided for in Section 4.1(c)), Pinnacle fully
exercises its Look Back Right with respect to Issuance 2 to acquire
9.80 Series VI Special Shares from the 72.92 Series VI Special Shares that
Harbinger acquired in Issuance 2.

 

  (i) i.e., 9.80 Series VI Special Shares equals the amount determined by:

 

  (A) the product of:

 

  (I) Pinnacle’s Common Share ownership interest relative to Harbinger’s Common
Share ownership interest immediately prior to Issuance 2, expressed as a
percentage (27.08%), multiplied by

 

  (II) the Series VI Special Shares purchased by Harbinger from the Company in
Issuance 2 (72.92 Series VI Special Shares)

minus

 

  (B) 6.77 Series VI Special Shares that Pinnacle purchased from the Company in
Issuance 2

multiplied by

 

  (C) 0.75, which represents the Sliding Pro Rata Preemptive Portion, which is
equal to:

 

  (I) 551 (representing the number of days between the date on which Pinnacle
exercised the Look Back Right with respect to Issuance 2 and the Third
Anniversary of Issuance 2) divided by

 

  (II) 730.

 

7

--------------------------------------------------------------------------------

(5) On the second anniversary of Issuance 1, the Company issues Add-On
Securities by issuing another 100 Series VI Special Shares (“Issuance 3”).

 

  (a) Harbinger fully exercises its preemptive rights under Article 4, and as a
result of the calculations set forth in Section 4.1(a)(i)(B) and taking into
account the Look Back Rights exercised above, acquires 64.77 Series VI Special
Shares from the Company in Issuance 3.

 

  (i) i.e., 64.77 Series VI Special Shares equals:

 

  (A) 100 Series VI Special Shares issued by the Company in Issuance 3
multiplied by

 

  (B) a fraction, the numerator of which is 129.53 Series VI Special Shares held
by Harbinger prior to Issuance 3 and the denominator of which is 200 Series VI
Special Shares issued and outstanding on a Fully Diluted Basis prior to
Issuance 3.

 

  (b) Pinnacle fully exercises its preemptive rights under Article 4, and as a
result of the calculations set forth in Section 4.1(a)(i)(B), acquires
14.92 Series VI Special Shares from the Company in Issuance 3.

 

  (i) i.e., 14.92 Series VI Special Shares equals:

 

  (A) 100 Series VI Special Shares issued by the Company in Issuance 3
multiplied by

 

  (B) a fraction, the numerator of which is 29.84 Common Shares held by Pinnacle
prior to Issuance 3 and the denominator of which is 200 Series VI Special Shares
issued and outstanding on a Fully Diluted Basis prior to Issuance 3.

 

  (c) The remaining Series VI Special Shares from Issuance 3
(i.e., 20.31 Series VI Special Shares) are acquired by stockholders other than
Harbinger or Pinnacle.

 

8

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   Schedule 6.2(b)(ii)(B) - Spreadsheet Scenario #1    Three Common Shares
Issuances; Look Back Righton Issuance 2 Exercised Background    100.00    Total
Common Shares issued and outstanding prior to Issuance 1 70.00    Harbinger’s
Common Share ownership prior to Issuance 1 26.00    Pinnacle’s Common Share
ownership prior to Issuance 1 96.00    Harbinger’s and Pinnacle’s Common Share
Ownership prior to Issuance 1 70.00%    Harbinger’s % of total Common Shares
issued and outstanding prior to Issuance 1 26.00%    Pinnacle’s % of total
Common Shares issued and outstanding prior to Issuance 1 72.92%    Harbinger’s %
of total Common Shares held by Harbinger and Pinnacle prior to Issuance 1 27.08%
   Pinnacle’s % of total Common Shares held by Harbinger and Pinnacle prior to
Issuance 1 Issuance 1 (Day 1)    Issuance of Common Shares 100.00    Total
Common Shares Issued in Issuance 1 72.92    Harbinger’s 100% Common Share
acquisition from the Company in Issuance 1 27.08    Pinnacle’s 100% Common Share
acquisition from the Company in Issuance 1 0.00    Third Party acquisition from
the Company in Issuance 1 200.00    Total Common Shares issued and outstanding
following Issuance 1 Issuance 2 (1 year later)    Issuance of Common Shares
142.92    Harbinger’s Common Share ownership prior to Issuance 2 53.08   
Pinnacle’s Common Share ownership prior to Issuance 2 196.00    Harbinger’s and
Pinnacle’s Common Share ownership prior to Issuance 2 71.46%    Harbinger’s % of
total Common Shares issued and outstanding prior to Issuance 2 26.54%   
Pinnacle’s % of total Common Shares issued and outstanding prior to Issuance 2
72.92%    Harbinger’s % of total Common Shares held by Harbinger and Pinnacle
prior to Issuance 2 27.08%    Pinnacle’s % of total Common Shares held by
Harbinger and Pinnacle prior to Issuance 2 100.00    Total Common Shares issued
in Issuance 2 72.92    Harbinger’s 100% Common Share acquisition from the
Company in Issuance 2 13.54    Pinnacle’s 50% Common Share acquisition from the
Company in Issuance 2 13.54    Third Party acquisition from the Company in
Issuance 2 300.00    Total Common Shares issued and outstanding following
Issuance 2 Look Back Right    Prior to Issuance 3 27.08%    Pinnacle’s % of
total Common Shares held by Harbinger and Pinnacle prior to Issuance 2 72.92   
Harbinger’s 100% Common Share acquisition from the Company in Issuance 2 13.54
   Pinnacle’s purchased Common Shares in Issuance 2 6.21    Maximum number of
Common Shares subject to Look Back on Issuance 2 0.00    Sliding Pro Rata
Adjustment (N/A) 6.21    Common Shares purchased by Pinnacle from Harbinger via
Look Back Right on Issuance 2 72.83    Pinnacle’s Common Share ownership
following Look Back Right on Issuance 2 209.63    Harbinger’s Common Share
ownership following Look Back Right on Issuance 2

--------------------------------------------------------------------------------

Issuance 3 (2 years later)    Issuance of Common Shares 209.63    Harbinger’s
Common Share ownership prior to Issuance 3 72.83    Pinnacle’s Common Share
ownership prior to Issuance 3 282.46    Harbinger’s and Pinnacle’s Common Share
Ownership prior to Issuance 3 69.88%    Harbinger’s % of total Common Shares
issued and outstanding prior to Issuance 3 24.28%    Pinnacle’s % of total
Common Shares issued and outstanding prior to Issuance 3 74.22%    Harbinger’s %
of total Common Shares held by Harbinger and Pinnacle prior to Issuance 3 25.78%
   Pinnacle’s % of total Common Shares held by Harbinger and Pinnacle prior to
Issuance 3 100.00    Total Common Shares issued in Issuance 3 74.22   
Harbinger’s 100% Common Share acquisition from the Company in Issuance 3 25.78
   Pinnacle’s 100% Common Share acquisition from the Company in Issuance 3
Results    400.00    Total Common Shares issued and outstanding following
Issuance 3 283.84    Harbinger’s Common Share ownership following Issuance 3
98.62    Pinnacle’s Common Share ownership following Issuance 3 382.46   
Harbinger’s and Pinnacle’s Common Share Ownership following Issuance 3 70.96%   
Harbinger’s % of total Common Shares issued and outstanding following Issuance 3
24.65%    Pinnacle’s % of total Common Shares issued and outstanding following
Issuance 3 74.22%    Harbinger’s % of total Common Shares held by Harbinger and
Pinnacle following Issuance 3 25.78%    Pinnacle’s % of total Common Shares held
by Harbinger and Pinnacle following Issuance 3

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Schedule 6.2(b)(ii)(B) - Spreadsheet

 

Scenario #2      New Class of Securities Issuance with Add-Ons; Look Back Rights
Exercised        Background             100.00      Total Common Shares issued
and outstanding prior to Issuance 1        70.00      Harbinger’s Common Share
ownership prior to Issuance 1        26.00      Pinnacle’s Common Share
ownership prior to Issuance 1        96.00      Harbinger’s and Pinnacle’s
Common Share Ownership prior to Issuance 1        70.00%      Harbinger’s % of
total Common Shares issued and outstanding prior to Issuance 1        26.00%
     Pinnacle’s % of total Common Shares issued and outstanding prior to
Issuance 1        72.92%      Harbinger’s % of total Common Shares held by
Harbinger and Pinnacle prior to Issuance 1        27.08%      Pinnacle’s % of
total Common Shares held by Harbinger and Pinnacle prior to Issuance 1       
Issuance 1 (Day 1)      Issuance of New Class of Securities - Series VI Special
Shares        100.00      Total Series VI Special Shares Issued in Issuance 1
       72.92      Harbinger’s 100% Series VI Special Shares acquisition from the
Company in Issuance 1        6.77      Pinnacle’s 25% Series VI Special Shares
acquisition from the Company in Issuance 1        20.31      Third Party
acquisition from the Company in Issuance 1        100.00      Total Common
Shares issued and outstanding following Issuance 1        100.00      Total
Series VI Special Shares issued and outstanding following Issuance 1       
Issuance 2 (6 months later)      Issuance of Add-On Securities - Series VI
Special Shares        72.92      Harbinger’s Series VI Special Shares ownership
prior to Issuance 2        6.77      Pinnacle’s Series VI Special Shares
ownership prior to Issuance 2        100.00      Total Series VI Special Shares
issued and outstanding prior to Issuance 2        100.00      Total Series VI
Special Shares issued in Issuance 2        72.92      Harbinger’s 100% Series VI
Special Shares acquisition from the Company in Issuance 2        6.77     
Pinnacle’s 100% Series VI Special Shares acquisition from the Company in
Issuance 2        20.31      Third Party acquisition from the Company in
Issuance 2        100.00      Total Common Shares issued and outstanding
following Issuance 2        200.00      Total Series VI Special Shares issued
and outstanding following Issuance 2        Look Back Rights (1 day prior to
Issuance 3)            With respect to Issuance 1             27.08%     
Pinnacle’s % of total Common Shares held by Harbinger and Pinnacle prior to
Issuance 1        72.92      Harbinger’s 100% Series VI Special Shares
acquisition from the Company in Issuance 1        6.77      Pinnacle’s purchased
Series VI Special Shares in Issuance 1        12.98      Maximum number of
Series VI Special Shares subject to Look Back on Issuance 1        0.50     
Sliding Pro Rata Preemptive Portion (Third Anniversary - Exercise Date / 730)
       366.00      3rd Ann - Exercise Date 6.51      Series VI Special Shares
purchased by Pinnacle from Harbinger via Look Back Right on Issuance 1       
20.05      Pinnacle’s Series VI Special Share ownership following Look Back
Right on Issuance 1        139.33      Harbinger’s Series VI Special Share
ownership following Look Back Right on Issuance 1       
    With respect to Issuance 2             27.08%      Pinnacle’s % of total
Common Shares held by Harbinger and Pinnacle prior to Issuance 2        72.92
     Harbinger’s 100% Series VI Special Shares acquisition from the Company in
Issuance 2        6.77      Pinnacle’s purchased Series VI Special Shares in
Issuance 2        12.98      Maximum number of Series VI Special Shares subject
to Look Back on Issuance 2        0.75      Sliding Pro Rata Preemptive Portion
(Third Anniversary - Exercise Date / 730)        551.00      3rd Ann -
Exercise Date 9.80      Series VI Special Shares purchased by Pinnacle from
Harbinger via Look Back Right on Issuance 2        29.84      Pinnacle’s Series
VI Special Share ownership following Look Back Right on Issuance 2        129.53
     Harbinger’s Series VI Special Share ownership following Look Back Right on
Issuance 2            Issuance 3 (2 years later)      Issuance of Add-On
Securities - Series VI Special Shares        129.53      Harbinger’s Series VI
Special Shares ownership prior to Issuance 3        29.84      Pinnacle’s Series
VI Special Shares ownership prior to Issuance 3        200.00      Total Series
VI Special Shares issued and outstanding prior to Issuance 3        100.00     
Total Series VI Special Shares issued in Issuance 3        64.77     
Harbinger’s 100% Series VI Special Shares acquisition from the Company in
Issuance 3        14.92      Pinnacle’s 100% Series VI Special Shares
acquisition from the Company in Issuance 3        20.31      Third Party
acquisition from the Company in Issuance 3       

--------------------------------------------------------------------------------

Results       

    Common Shares

  

         100.00         Total Common Shares issued and outstanding following
Issuance 3     70.00         Harbinger’s Common Share ownership following
Issuance 3     26.00         Pinnacle’s Common Share ownership following
Issuance 3     96.00         Harbinger’s and Pinnacle’s Common Share Ownership
following Issuance 3     70.00%         Harbinger’s % of total Common Shares
issued and outstanding following Issuance 3     26.00%         Pinnacle’s % of
total Common Shares issued and outstanding following Issuance 3     72.92%   
     Harbinger’s % of total Common Shares held by Harbinger and Pinnacle
following Issuance 3     27.08%         Pinnacle’s % of total Common Shares held
by Harbinger and Pinnacle following Issuance 3

    Series VI Special Shares

  

         300.00         Total Series VI Special Shares issued and outstanding
following Issuance 3     194.30         Harbinger’s Series VI Special Shares
ownership following Issuance 3     44.77         Pinnacle’s Series VI Special
Shares ownership following Issuance 3     60.94         Third Party’s Series VI
Special Shares ownership following Issuance 3     239.06         Harbinger’s and
Pinnacle’s Series VI Special Shares Ownership following Issuance 3     64.77%   
     Harbinger’s % of total Series VI Special Shares issued and outstanding
following Issuance 3     14.92%         Pinnacle’s % of total Series VI Special
Shares issued and outstanding following Issuance 3     20.31%         Third
Party’s % of total Series VI Special Shares issued and outstanding following
Issuance 3     81.27%         Harbinger’s % of total Series VI Special Shares
held by Harbinger and Pinnacle following Issuance 3     18.73%        
Pinnacle’s % of total Series VI Special Shares held by Harbinger and Pinnacle
following Issuance 3

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LOGO [g545395114.jpg]

  

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LOGO [g545395115.jpg]

  

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SCHEDULE “E”

ANTI-CORRUPTION POLICY

ASIAN COAST DEVELOPMENT (CANADA) LTD. (THE “COMPANY”)

Anti-Corruption Policy

Purpose

The purpose of this policy is to inform all Company employees of our policy
regarding payments to government officials, and to set forth the requirement
that all staff avoid making improper payments to government officials or
otherwise violating any applicable anti-bribery or anti-corruption laws,
including the U.S. Foreign Corrupt Practices Act (the “FCPA”).

All employees are prohibited from making improper payments or gifts to
government officials and shall at all times maintain proper business contacts
and relationships with any government officials we encounter in the course of
our business. The Company expects all employees to be familiar with this policy
and will take a “zero tolerance” approach to its application, which covers all
payments to government officials, whether made by a Company employee or by a
third party with whom we work.

Policy

The Company requires all directors, officers, managers, employees, and those
acting on behalf of the Company, to abide by all applicable laws and regulations
at all times. The Company will not pursue any business anywhere that requires us
to participate in unethical or illegal activity in order to obtain or retain
business.

Prohibited payments to Government Officials

No employees or any person acting on the Company’s behalf (including
subcontractors or agents) shall:

 

1. Make any offer, payment, promise, or gift, or offer anything of value to any
government official—whether directly to a government official or directly or
indirectly through a third party—for the purpose of unlawfully:

 

  •  

influencing any act or decision of a government official in his official
capacity;

 

  •  

inducing a government official to do or fail to do anything in violation of his
or her duty;

 

  •  

inducing a government official to use his or her influence to affect or
influence any client act or decision to assist the Company in obtaining or
retaining business; or

--------------------------------------------------------------------------------

2. Make any offer, payment, promise, or gift, or offer anything of value to any
person or entity knowing or being aware (or where such employee or person acting
on the Company’s behalf should know or be aware) that any portion of the same
shall be used to unlawfully influence the acts of any client or any government
official.

In addition, no employees (or other persons for the Company’s benefit) may enter
into any agreement or other arrangement, whether directly or indirectly, with
any government official for the purposes described above.

Exceptions to the prohibition

The above prohibition is subject to the exceptions listed below. Many of the
exceptions have been the subject of specific legal interpretation. Accordingly,
you should check with the Chief Legal Officer prior to relying upon the listed
exceptions.

Exceptions

 

(1) the payment, gift, offer, or promise of anything of value that was made, is
lawful under the written laws and regulations of the foreign official’s,
political party’s, party official’s, or candidate’s country; or

 

(2) the payment, gift, offer, or promise of anything of value that was made, is
a reasonable and bona fide expenditure, such as travel and lodging expenses,
incurred by or on behalf of a foreign official, party, party official, or
candidate and was directly related to:

 

  (A) the promotion, demonstration, or explanation of products or services; or

 

  (B) the execution or performance of a contract with a foreign government or
agency thereof.

Indirect Payments Prohibited

If a direct payment would be improper under any applicable laws or the Company
policy, then having a third party make or receive the payment on either the
Company or government official’s behalf is also be prohibited. Indirect payments
of the type described include any transfer of funds, property, or services to
another organization or individual in order to unlawfully benefit a government
official for the purposes set forth above. Indirect violations also include any
transfer of funds, property, or services to any person or organization if there
is reason to know that the recipient will use any portion to make unlawful
payments on the Company’s behalf.

Written Contracts

Any contract between the Company and a third-party that is retained to assist
the Company in obtaining or retaining business must be in writing (and as with
all other written agreements must be reviewed by the Company’s Chief Legal
Officer prior to its execution). The contract must also contain anti-bribery
representations and warranties by the third-party.

--------------------------------------------------------------------------------

Books and Records

The Company shall keep books and records that accurately and fairly reflect the
transactions of the corporation and shall maintain an adequate system of
internal accounting controls.

Reporting Responsibility

If you are aware of any conduct that you believe may violate this policy, you
have a responsibility to report it to the Chief Legal Officer. Should you
encounter a situation that raises a question in your mind regarding the
propriety of the conduct involved, you should immediately contact the Chief
Legal Officer for guidance.

Violations of the Policy

Any violation of this policy may result in disciplinary action up to and
including termination.

Definitions

Employees: When used in this policy, “employees” refers to directors, officers,
managers, and employees of the Company.

Government Official: includes all employees of a government department or
agency, whether in the executive, legislative or judicial branches of government
and whether at the national, state or local level (or their equivalents). The
term covers part-time workers, unpaid workers, and any person “acting in an
official capacity.” Political parties, party officials, and candidates for
political office are included. Foreign officials also include employees of
public international organizations such as the World Bank, International
Monetary Fund or the European Union. The term covers officers and employees of
companies under government ownership or control (even if the ownership is a
minority interest).

Anything of value: Includes, but is not limited to, cash, gifts, entertainment,
travel expenditures, excessive business promotional activities, and covering or
reimbursing expenses of officials or their friends or relatives.