EXHIBIT 10.1





Exhibit 10.1




SETTLEMENT AGREEMENT AND MUTUAL RELEASE




This Settlement Agreement and Mutual Release (“Agreement”) is made by and between Pinnacle
Entertainment, Inc. (“Pinnacle”) on the one hand, and RSUI Indemnity Company (“RSUI”) on the other
hand. Pinnacle and RSUI shall be referred to herein individually as a “Party” and collectively as
the “Parties.” The “Effective Date” of this Agreement is February 3, 2010.



RECITALS




WHEREAS, RSUI provided excess commercial property insurance to Pinnacle under policy NHD411008
(effective April 1, 2005 to April 1, 2006) with a limit of $50 million, part of $100 million excess
of $150 million (the “Fourth Excess Layer Participation”) and policy NHD 411018 (effective April 1,
2005 to April 1, 2006) with a limit of $150 million, excess of $250 million (the “Fifth Excess
Layer Participation”) (collectively, the “RSUI Policies”) that insured Pinnacle against, inter
alia, loss resulting from property damage and business interruption to, among other locations, the
Casino Magic hotel and casino and certain other Pinnacle properties formerly located in Biloxi,
Mississippi (“Casino Magic”), and the Boomtown Casino in Harvey, Louisiana (“Boomtown”), subject to
such policies’ terms and conditions; and



WHEREAS, on or about August 29, 2005, Hurricane Katrina made landfall in an area between
eastern Louisiana and western Mississippi, causing catastrophic damage to Casino Magic and
Boomtown; and


 


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WHEREAS, Pinnacle sought coverage under the RSUI Policies and other policies in its
first-party property insurance program for the 2005-2006 policy period for the losses it sustained
that related to or arose out of damage to Casino Magic, Boomtown, and other properties, caused by
Hurricane Katrina, including for property damage to Pinnacle’s covered property and resultant
business interruption loss (the “Insurance Claim”); and



WHEREAS, on or about August 1, 2006, Pinnacle filed a lawsuit in the United States District
Court for the District of Nevada (the “Court”), entitled Pinnacle Entertainment, Inc. v.
Allianz Global Risks US Insurance Company, et al., Case No. 2:06-cv-00935-RCJ-LRL, alleging,
inter alia, breach of contract, bad faith, and breach of statutory duties in violation of Nevada
Revised Statutes Section 686A.310, and seeking declaratory relief against RSUI, Allianz Global
Risks US Insurance Company (“Allianz”) and Arch Specialty Insurance Company (“Arch”) (the “Coverage
Action”); and



WHEREAS, on or about April 30, 2008, RSUI paid to Pinnacle $2,017,908.32 which RSUI contended
represented payment of its undisputed portion of the Insurance Claim (the “April 30, 2008
Payment”); and



WHEREAS, Pinnacle and RSUI desire to settle any disputes between them which they now have or
may later have regarding the Coverage Action and the Insurance Claim, including any claim, demand,
or cause of action related to the loss caused by Hurricane Katrina that was made or could have been made in the
Coverage Action and/or the Insurance Claim;


 


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NOW, THEREFORE, in consideration of the mutual promises, covenants, obligations, agreements,
and other undertakings set forth herein, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree by and among themselves, each with
the other, as follows:



AGREEMENT




1. PAYMENT.




1.1. Payment By RSUI. Within ten (10) calendar days of the Effective Date, RSUI shall pay via
wire transfer (at Pinnacle’s direction) the amount of Twenty-Three Million Four Hundred
Thousand Dollars ($23,400,000.00) to Pinnacle Entertainment, Inc. The foregoing payment shall
be referred to herein as the “Settlement Payment.” None of the Settlement Payment is for bad faith
damages claimed by Pinnacle.







 


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2. RELEASES.





2.1. Release by Pinnacle. Upon Pinnacle’s successful receipt of the Settlement Payment, but
subject to the Court’s entry of the stipulated dismissal referenced in Section 3.1, Pinnacle and
each of its parents, subsidiaries, predecessors, successors and assigns (the “Pinnacle Releasors”),
do forever release RSUI, and each of its past, present and future businesses, affiliates, parents, subsidiaries, joint venturers, assigns, trustees, owners, principals, officers, directors, shareholders, agents, employees, independent contractors, suppliers, reinsurers (but
only to the extent such reinsurer is a reinsurer of RSUI on the RSUI Policies), attorneys, and
representatives, and each of them (collectively, the “RSUI Releasees”), of and from any and all
liabilities, claims, defenses, causes of action, appeals, obligations, duties, penalties,
attorneys’ fees, costs, damages, or injuries of any nature whatsoever, whether based on contract,
tort, statute or other legal or equitable theory of recovery, including any claim for contribution,
indemnity or subrogation, whether contingent or liquidated, which the Pinnacle Releasors have
relating to or arising out of: (a) the Insurance Claim; (b) the Coverage Action, including,
without limitation, any claims for breach of the RSUI Policies, breach of any implied covenant of
good faith and fair dealing, bad faith, violations of Nevada Revised Statutes Section 686A.310,
and/or punitive, exemplary and/or extra-contractual damages or penalties; (c) the April 30, 2008
Payment; and/or (d) the Settlement Payment. Notwithstanding anything else in this Agreement, the
Pinnacle Releasors are not releasing the RSUI Releasees, or any of them, from any duties or
obligations under this Agreement.


 


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2.2. Release by RSUI. In exchange for the foregoing release and other valuable consideration,
RSUI, and each of its parents, subsidiaries, predecessors, successors and assigns (the “RSUI
Releasors”), upon Pinnacle’s
successful receipt of the Settlement Payment, but subject to the Court’s entry of the
stipulated dismissal referenced in Section 3.1, do forever release Pinnacle and each of its past,
present and future businesses, affiliates, parents, subsidiaries, joint venturers, assigns,
trustees, owners, principals, officers, directors, shareholders, agents, employees, independent
contractors, suppliers, insurers (including, without limitation, Allianz and Arch) , reinsurers
(but only to the extent such reinsurer is not a reinsurer of RSUI on the RSUI Policies), attorneys,
and representatives, and each of them (collectively, the “Pinnacle Releasees”), of and from any and
all liabilities, claims, defenses, causes of action, appeals, obligations, duties, penalties,
attorneys’ fees, costs, damages, or injuries of any nature whatsoever, whether based on contract,
tort, statute or other legal or equitable theory of recovery, including any claim for contribution,
indemnity or subrogation, whether contingent or liquidated, which the RSUI Releasors have relating
to or arising out of: (a) the Insurance Claim; (b) the Coverage Action, including, without
limitation, any claims for breach of the RSUI Policies, breach of any implied covenant of good
faith and fair dealing, bad faith and/or any claims relating to the tender or investigation of the
Insurance Claim; (c) the April 30, 2008 Payment; and/or (d) the Settlement Payment.
Notwithstanding anything else in this Agreement, the RSUI Releasors are not releasing the Pinnacle
Releasees, or any of them, from any duties or obligations under this Agreement.


 


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2.3. All Claims Included. With respect to the claims specifically released in Sections 2.1
and 2.2 above, the Parties agree that this Agreement includes all claims of every kind and nature
relating to the Settlement Payment, the April 30, 2008 Payment, the Insurance Claim, or the
Coverage Action. As it pertains to such released claims, the Parties hereby expressly waive any
and all rights and benefits conferred upon them by the provisions of Section 1542 of the California
Civil Code and all similar provisions of the laws of any other State, Territory or other
jurisdiction. Section 1542 reads in pertinent part:




A general release does not extend to claims which the creditor
does not know or suspect to exist in his or her favor at the time
of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.



The Parties each hereby acknowledge that the foregoing waiver of the provisions of Section
1542 of the California Civil Code and all similar provisions of the laws of any other State,
Territory or other jurisdiction was separately bargained for and that they would not enter into
this Agreement unless it included a broad release of all unknown claims relating to the Settlement
Payment, the April 30, 2008 Payment, the Insurance Claim and/or the Coverage Action. This release
does not include any claims of fraud and/or misrepresentation in the inducement of this Agreement.
The Parties each expressly agree that all release provisions in this Agreement shall be given full
force and effect in accordance with each and all of their express terms and
provisions, including those terms and provisions relating to unknown, unsuspected and/or
future claims, demands and causes of action. The Parties each assume for themselves the risk of
the subsequent discovery or understanding of any matter, fact or law, that if now known or
understood, would in any respect have affected his, her or its entering into this Agreement.


 


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3. COVENANTS.




3.1. Stipulated Dismissal With Prejudice And Withdrawal Of Motions. Pinnacle covenants that
within five (5) business days of its successful receipt of the Settlement Payment, it will deliver
to counsel for RSUI a stipulated dismissal with prejudice of the Coverage Action, and without
costs, sanctions, or attorneys’ fees against any of the Parties, in substantially the same form as
Exhibit 1 hereto. RSUI covenants that it shall, in turn, execute and file such stipulated
dismissal in the United States District Court for the District of Nevada. Each of the Parties
further covenant that upon this Agreement being fully executed, they shall both move the Court to
withdraw all pending motions filed against each other in the Coverage Action.





 


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4. REPRESENTATIONS AND WARRANTIES.





4.1. Prudence. The Parties, and each of them, represent and warrant that in executing this
Agreement they rely solely upon their own judgment, belief and knowledge, and the advice and
recommendations of their own independently selected counsel, concerning the nature, extent and
duration of
their rights and claims hereunder and regarding all matters which relate in any way to the
subject matter hereof, and that, except as provided herein, they have not been influenced to any
extent whatsoever in executing this Agreement by any representations, statements or omissions
pertaining to any of the foregoing matters by any party or by any person representing any party to
this Agreement. The Parties, and each of them, further represent and warrant to each other that
he, she or it has made such investigation of the facts pertaining to the settlement, this Agreement
and all of the matters pertaining thereto, as he, she or it deems necessary. Each Party assumes
the risk of mistake as to facts or law.



4.2. Authority to Extinguish Claims. The Parties hereby represent and warrant that the person
executing this Agreement on their behalf has taken all necessary action to approve the making and
performance of this Agreement, that he or she is competent to execute this instrument and that he
or she is duly authorized, and has the full right and authority, to execute this Agreement on such
Party’s behalf.



4.3. No Assignment or Transfer of Claims. The Parties, and each of them, warrant and
represent to each other that they retain the sole right to and ownership of all rights, title and
interest in and to every claim they release herein and that they have not assigned, committed, or
permitted, or agreed to any sale, encumbrance, hypothecation or transfer, whether by operation of
law
or otherwise, or otherwise transferred any interest in any of the claims they release herein
to any other person or entity.



 


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5. MISCELLANEOUS.




5.1. Headings. Section headings are for convenience only and shall not be construed to change
or affect the text of this Agreement.



5.2. Integration. Except for the RSUI Policies, this Agreement and the attachments
incorporated herein contain the entire agreement between and among the Parties relating to the
Settlement Payment, the April 30, 2008 Payment, the Insurance Claim and the Coverage Action, and
all prior or contemporaneous agreements, understandings, representations and statements, oral or
written, relating to those matters, including, without limitation, the February 3, 2010 Memorandum
of Understanding, are merged into this Agreement.



5.3. Governing Law And Jurisdiction. This Agreement is governed by Nevada law, without regard
to Nevada’s conflict of law principles. The United States District Court for the District of
Nevada shall retain exclusive jurisdiction to resolve any disputes that may arise as to the
validity, enforceability, performance, interpretation, administration or enforcement of this
Agreement.


 


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5.4. Survival of Representations and Warranties. All representations and warranties set forth
in this Agreement shall be deemed continuing and shall survive the Effective Date of this
Agreement.



5.5. Further Assurances. The Parties agree to execute such other documents and take such
actions as may reasonably be necessary to further the purpose of this Agreement.



5.6. No Benefit to Non-Settling Parties. Except as expressly provided herein, this Agreement
shall not confer any right or benefit upon, or release from liability any person or entity who is
not a Party to this Agreement.



5.7. Counterpart Originals. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which shall constitute one agreement. Facsimile
signatures shall be considered the same as originals.



5.8. Binding Effect. This Agreement binds and inures to the benefit of the Parties, their
assigns, heirs, administrators, executors, representatives, beneficiaries and successors, and each
of them.



5.9. Modification. This Agreement cannot be modified or amended except by written agreement
signed on behalf of each of the Parties.



5.10. Waiver. No provision of this Agreement may be waived except by written instrument
signed by the Party waiving that provision. A waiver of
one provision is not a waiver of any other. Failure to enforce any provision of this
Agreement shall not waive that provision or any other.


 


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5.11. Construction. Any rule of construction to the effect that ambiguities in a writing are
to be construed against the drafting party does not apply in the interpretation of this Agreement,
or any portion hereof, which has actively been negotiated and drafted by counsel for each of the
Parties, and all of them.



5.12. No Admissions. None of the Parties have made, nor shall they be deemed to have made,
any admission of any kind by their negotiation of or entry into this Agreement. Neither this
Agreement nor any provision contained herein shall be construed by any person as an admission by
any of the Parties of any liability for, related to or arising out of any of the claims released
herein or any other claims of any other nature. The Parties are entering into this Agreement for
the purpose of resolving disputed issues between them and to avoid the costs and risks of
litigation with respect to such resolved issues. This Agreement shall have no precedential value
in any future claims between Pinnacle and RSUI or any other party.



5.13. Severability. Provided the remainder of this document does not frustrate the purpose
and intent of the law and the Parties in entering into this Agreement, in the event that any
portion of this Agreement shall be judicially determined to be invalid or unenforceable to any
extent, the same shall to that
extent be deemed severable from this Agreement and the invalidity or unenforceability thereof
shall not affect the validity and enforceability of the remaining portion of this Agreement.


 


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6. DECLARATIONS.




BY SIGNING THIS AGREEMENT, EACH PARTY ACKNOWLEDGES AND DECLARES: (A) THAT THE PARTY HAS FULLY
AND CAREFULLY READ THE AGREEMENT; (B) THAT THE PARTY CLEARLY UNDERSTANDS THAT THE AGREEMENT IS A
COMPLETE AND FINAL SETTLEMENT; (C) THAT THE PARTY CLEARLY UNDERSTANDS THE MEANING, PURPOSE, AND
INTENT OF EACH PROVISION OF THE AGREEMENT, AND THAT EACH PROVISION IS CLEAR AND DEFINITE; (D) THAT
PINNACLE ON THE ONE HAND, AND RSUI ON THE OTHER, HAVE NOT RELIED UPON ANY REPRESENTATION OF THE
OTHER IN AGREEING TO THE TERMS OF THIS AGREEMENT; AND (E) THAT THE PARTY HAS BEEN REPRESENTED BY
COMPETENT LEGAL COUNSEL WITH RESPECT TO NEGOTIATING, EXPLAINING, AND ENTERING INTO THIS AGREEMENT.


 


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IN WITNESS WHEREOF, the Parties, and each of them, hereby execute this Settlement Agreement
and Mutual Release in consideration of the mutual promises made herein, as of the dates indicated
below.



	 	 	 	 	 
	 	APPROVED AND AGREED TO:



PINNACLE ENTERTAINMENT, INC.

 	 
	Dated: February 4, 2010 	By:  	/s/ John A. Godfrey
 	 
	 	 	John A. Godfrey 	 
	 	 	Its: Executive Vice President, 
       General Counsel and
Secretary 	 
	 
	 	RSUI INDEMNITY COMPANY

 	 
	Dated: February 8, 2010 	By:  	/s/ Michael Koski
 	 
	 	 	Its: VP, Claims 	 
	 	 	 	 
	 




 


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Exhibit 1



BROWNSTEIN HYATT FARBER SCHRECK LLP

James J. Pisanelli (NV SBN 4027)

300 South Fourth Street, Suite 1200

Las Vegas, Nevada 89101

Telephone: (702) 382-2101




IRELL & MANELLA LLP

Marc S. Maister (CA SBN 155980)

Harry J. Schulz, III (CA SBN 205625)

840 Newport Center Drive, Suite 400

Newport Beach, California 92660-6324

Telephone: (949) 760-0991




Attorneys for Plaintiff

Pinnacle Entertainment, Inc.




UNITED STATES DISTRICT COURT




DISTRICT OF NEVADA




	 	 	 	 	 	 	 
	PINNACLE ENTERTAINMENT,

	 	 	)	 	 	Case No. 2:06-cv-00935-RCJ-LRL
	INC., a Delaware corporation,

	 	 	)	 	 	 
	
          

        	 	 	)	 	 	JOINT STIPULATION AND 
	
          
            Plaintiff, 

          

        	 	 	)	 	 	REQUEST FOR DISMISSAL
	
          

        	 	 	)	 	 	PURSUANT TO FEDERAL RULE
	
          vs. 

        	 	 	)	 	 	41(a); [PROPOSED] ORDER
          
	
          

        	 	 	)	 	 	THEREON
	
          ALLIANZ GLOBAL RISKS
            US 

        	 	 	)	 	 	 
	
          INSURANCE COMPANY, a
            California 

        	 	 	)	 	 	 
	
          corporation, ARCH SPECIALTY
          

        	 	 	)	 	 	 
	
          INSURANCE COMPANY, a
          

        	 	 	)	 	 	 
	
            Wisconsin corporation,
            and RSUI 

        	 	 	)	 	 	 
	
            INDEMNITY COMPANY,
            a New

        	 	 	)	 	 	 
	
            Hampshire corporation,

        	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	
          Defendants.

        	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	 






			
	 	 	 
	 
	 	STIPULATED REQUEST FOR DISMISSAL PURSUANT

TO FEDERAL RULE 41(a) AND ORDER THEREON






 


 








 





IT IS HEREBY STIPULATED AND AGREED TO by Plaintiff Pinnacle Entertainment, Inc. (“Pinnacle”)
and Defendant RSUI Indemnity Company (“RSUI”), through their designated counsel, that pursuant to
FRCP 41(a)(2), the above-captioned matter be, and hereby is, dismissed with prejudice. These two
parties have entered into a settlement agreement resolving all issues, claims and disputes with
respect to this matter. Each party is to bear its own attorneys’ fees, costs and expert
fees/costs. Since there are no more parties or claims in the case, this case should be dismissed
in its entirety.



	 	 	 	 	 
	Dated:  February __, 2010 	CLAUSEN MILLER PC

 	 
	 	By:  	
 	 
	 	 	Andrew Jacobson 	 
	 	 	Attorneys for Defendant
RSUI Indemnity Company 	 
	 
	Dated:  February __, 2010 	IRELL & MANELLA LLP

 	 
	 	By:  	
 	 
	 	 	Harry J. Schulz, III 	 
	 	 	Attorneys for Plaintiff

Pinnacle Entertainment, Inc. 	 
	 
	 	 	 	IT IS SO ORDERED:

 	 
	 	 	 	
 	 
	 	 	 	UNITED STATES DISTRICT JUDGE 	 
	 
	 	 	 	DATED: 	 








			
	 	 	 
	 	-1-	STIPULATED REQUEST FOR DISMISSAL PURSUANT

TO FEDERAL RULE 41(a) AND ORDER THEREON